It makes for an unintentionally hilarious beat. In money-mad Manhattan, crowds laughed at (not with) the wicked Ambrose’s revelation that the real object of his maniacal lusts is a package of equity derivatives. Sure, he’ll take a few million bucks in a Swiss account — but only as a way of paying for Biocyte options, whose value will skyrocket once he tells the markets about A) a deadly new virus and B) the Biocyte drug that will cure it.

If this twist in his fiendish plot is something of a reach, it’s a highly calculated one. When Paramount approved “M:i-2′s” script, it assumed the intended audience (which is to say pretty much everyone in the world) understands stock options to be the ultimate way of getting rich quick — even more effective than pure old-fashioned theft — and that insider trading is one of the few latter-day cardinal sins.

In case any cineplex groundlings are hazy on the details, Ambrose even gives his CEO-victim a nice, succinct treatise on the power of leverage.

Options, he explains, let you buy stock on the cheap; then, when the stock rises on good news, you can sell it for much more money — “a billion dollars,” drools the Scot — as if the portly pharmaceutical exec hadn’t planned his whole life around the concept.

Until a few years ago, stock options were of interest almost exclusively to top corporate brass and the bankers who loved them. Some high-tech engineering talent began receiving them at the dawn of the chip industry in the late 1960s; by the early ’90s, reports of option-earning millionaires at Microsoft and Intel appeared in the popular press. Netscape’s unprecedented 1995 post-IPO run-up and endless stories of overnight wealth triggered the proliferation of equity into every level of the U.S. workforce. Just ask your UPS delivery person, who’s probably done very well with the options he or she got in last year’s multibillion-dollar IPO.

Sexy, sexy equity: For the first post-’90s summer blockbuster, just what the script doctor ordered. “M:i-2′s” dabbling in personal finance caps a trend we’ve seen developing for the past decade. CNBC, whose daytime ratings are up 250 percent since 1995, has become the TV station of choice at bars and beauty parlors nationwide. Mike Doonesbury got into the act on the comics pages with an IPO-bound tech start-up, and when Tony Soprano wanted to make some more moolah this past season, he muscled his way into the brokerage business. Silicon Valley author Po Bronson has been contracted to turn his 1999 book, “The Nudist on the Late Shift” — a tale of new economy culture that revolves almost entirely around options — into a film script, and he’s also got a network TV series about Bay Area options babies under development.

But none of these has worldwide demographic reach like a summer movie blockbuster. When one hits (and “M:i-2″ has definitely hit, having grossed $130 million after two weekends), a movie is one of the best ways to gauge the mass mind-set. So what was once an obscure financial instrument to corporate execs (and the bankers who love them) has assumed its place in the pop pantheon. When we have “M:i-2′s” arch-villain fixating on stock options as a way of punching up an action flick’s story line, Wall Street culture truly has become mass culture.

That makes a financial wonk’s heart lift. Just ponder the possibilities for “M:i-3′s” plot: A scurrilous Swede plans currency-arbitrage terrorism — he’ll devalue the French franc to postwar lows and make billions! Better still: A twisted Welsh securities analyst kidnaps the 13-year-old daughter of Goldman Sachs’ chairman, then demands that Daddy’s firm float him a bond issue with a coupon 150 basis points under prime. He’ll make billions!! No, wait: A diabolical Kiwi hacker with an unstoppable e-mail virus forces the entire population of Santa Clara County, Calif., to buy 1,000 shares of his worthless IPO — and hold them for two years. He’ll make billions!!!

Alternately, though, the high-profile role of options in “M:i-2″ may be a sign that the market for market obsession has topped. Ambrose’s ploy will seem so dated in a couple of years, so obviously Bubble-y. That’s something pop culture and Wall Street have long had in common: They’re cyclical and fickle. In the movies and in the markets, what’s hot this summer usually cools by the next quarter.

The Web toy business doesn’t look much fun for start-ups these days. Nickelodeon-backed RedRocket.com and Disney’s Toysmart.com both folded in the past few weeks, and KBKids.com announced a heavy layoff. Despite a rocky online start, Toysrus.com now has more traffic than former IPO wunderkind eToys, although the latter site still has the technical edge. Worse, eToys’ cash is going fast and its stock has sunk 93 percent from its 52-week high.

Which superhero will come to the rescue? None other than reigning online retail champ Amazon.com. Amazon could play vulture, waiting for eToys to expire, then nabbing its customers with some savvy marketing. But now that Toysrus.com has mouse-click momentum — not to mention a fresh $60 million cash infusion from Softbank — Amazon can’t risk losing shoppers to the brick-and-mortar giant. Long story short: If Amazon wants to stay in the game, it must move decisively.

What will happen: Amazon chief Jeff Bezos acquires eToys and becomes the No. 1 toy site in fourth quarter 2000. What happens then: He loses the war anyway. Toysrus.com is the toy-biz Terminator — impossible to kill. Its dot-com claims the top toy spot by Christmas ’01.

Viacom ($35 billion) or Bertelsmann (privately held)/CDNow ($100 million)

CDNow’s deathwatch has entered its fourth month. (Obit rumors began when its merger with Columbia House collapsed in March.) But to divine its future, you have to see the company as an online media distributor, rather than a compact disc retailer. It’s got great Web recognition — only Amazon sells more music online — and good technology. What it doesn’t have are pockets deep enough to weather changes in e-retailing and the entertainment businesses.

Few have bigger vaults than Viacom, which owns MTV, CBS and a vast number of other media properties, or similarly gargantuan Bertelsmann, home to BMG Music and Random House. Both will have major stakes in the rapidly evolving music-and-entertainment game, whatever that game turns out to be. Is CDNow’s name and know-how worth, say, $125 million to $150 million to one of them? Signs point to yes.

And the Web site goes to: Viacom, whose Net play, MTVi, surely would make creative use of a retail arm. Like what? Like: “Yo kids, get 30 percent off every song featured on ‘Return of the Rock’ if you one-click order while the video is being played on the show,” for example.

eBay ($8.2 billion)/Sotheby’s ($935 million)

Does Sotheby’s provide value for its buyers and sellers? No doubt.

Does its very old-school corporate culture do the best possible job of providing that value? Not exactly.

Its potentially crippling legal battles over alleged price-fixing also have made the older-than-old-economy art auction bastion into something of a poor cousin, at least in terms of market capital. And popular CEO Dede Brooks’ scandal-induced resignation has morale at a 52-week low.

EBay has plainly revolutionized the auction business. Yet it has struggled to get into fine art, its splashy purchase of second-tier auction house Butterfield’s notwithstanding. The ability to attract more upper-crust shoppers to eBay surely would be a boon. Even if the Sotheby’s types who came to browse through $100,000 paintings don’t end up buying any, they have the dough to bid on the rest of eBay’s oceanic inventory.

An upstart like eBay taking over Sotheby’s could provoke one of the great culture clashes in American corporate history. But if eBay plays it smart, it would end up with a fantastic franchise of knowledgeable people, while folks on the Sotheby’s side would be energized by a more dynamic, less elitist understanding of what auctions in the 21st century should provide: great service, trustworthy expertise and some casual fun.

Going once: Top-to-bottom auction dominance; it’s got a nice ring to it. Going twice? Sotheby’s price-fixing liabilities could turn into a billion-dollar-bummer.

McDonalds ($50.2 billion)/Starbucks ($5.8 billion)

It won’t be easy for the world’s biggest restaurant chain to keep growing. But if last year’s acquisition of Boston Chicken is a sign, Mickey D’s thinks shopping may be the answer.

Enter fair Starbucks. Although not a true New Economy company — no major technology involved here — it’s spiritually as NE as businesses get. The Great Barista has struggled to shed its reputation as just a coffee chain. But its overpriced, under-tasty sandwiches, Bundt cakes and biscotti have done little to help the cafe king expand its empire to the food realm. For all its new stores and snacks, Starbucks’ stock is barely higher than it was two years ago.

Gap Inc., which has Banana Republic and Old Navy under its belt, already has proven that retail success can come with a tiered model based on price and style. Think: BR is to Starbucks as the Gap is to McDonald’s. Meanwhile, customers at the Golden Arches would get better coffee and Starbucks could get a little expert help on the food side. Super-sized fries and a triple-shot frappuccino: the Very Happy Meal.

Consumer perk: You’ll never be more than 15 yards from a piping-hot cup of high-quality coffee. Corporate perk: Consolidated tort-defense costs, in re: “I scalded my mouth” suits.

Condi Nast (privately held) or AOL-TimeWarner ($210 billion)/iVillage ($239 million)

iVillage.com and its neck-and-neck competitor Women.com have conquered the women’s Web market, with each attracting about 6 million unique users a month. Advertisers are increasingly demanding that magazine publishers bundle Internet banners with print buys. Hearst already has a distribution deal with Women.com, making iVillage the prize to contend for.

Time Inc. surely wants more female readers. It spent heavily to launch the flailing monthly Real Simple this spring. It also has an inside track on iVillage: AOL has funded the Silicon Alley company from early on. Meanwhile, Condi Nast‘s audience is mainly female. (With Details’ demise and Lucky’s debut, 11 of its 17 titles cater to women.) But the Newhouse magazine empire has yet to assemble a meaningful Web presence.

With iVillage’s stock at $6 a share, down from a high of $67, it’s a good time for someone to strike. I say $300 million gets Steve Case or Si Newhouse iVillage, including famously combative CEO Candice Carpenter. And $325 million gets them iVillage without her, ba-dum dum.

Round 1: Newhouse mulls over takeover. Round 2: He can’t bring himself to pay so much for virtual property; goes after a minority stake. Round 3: AOL vetoes the sale, buys a controlling interest in IVIL in a private deal that enriches insiders without sending the stock price much higher. Round 4: Rejected suitor Condi spends another $30 million to revamp its own lackluster Web network. Round 5: It still doesn’t work.

Condi Nast (privately held)/Salon.com ($30 million)

Desperate for traffic, Si buys Salon in late 2000 or early 2001. Price tag: $50 million-$75 million.

Now, I’m just a poor columnist. I have no inside information about who, if anyone, has Salon in its scopes. (Nor do I own any Salon stock.) But there’s plenty of speculation that Salon will be bought. The site (or “site network,” depending on who you talk to) has great demographics and good traffic numbers that could thrive with a couple of well-executed distribution deals.

Salon could make sense to portals looking to augment their content offerings and traffic numbers, too. Per user, Wall Street’s paying about a quarter for Salon of what it’s paying for places like Ask Jeeves.com and CBS Sportsline, which also still lose money. Excite — of which I do own a few shares — seems the likeliest portal possibility.

What will happen: A brand-name portal makes a stronger offer than new-media manqui Condi.

What will happen then: We’re still here in 2002, beamed to you daily on your color-screen Web phone.

Keenan may be right. Last week we saw the first sign of things to come in
the $12.5 billion marriage between Spanish Internet service provider Terra Networks and Lycos, the
Massachusetts-based Web portal and site network.

It wasn’t covered as a Big Deal — the news generally got buried deep
inside the business section. And the proposed union certainly didn’t
impress Wall Street. Amid questions of cultural incompatibilities that
sound like a CNBC sitcom (Terra CEO Juan Villalonga and Lycos chief Bob
Davis don’t even speak the same language), along with dubious short-term
benefits — a round of analyst downgrades stung both stocks.

Despite the deal’s relative non-eventness — their b-list coupling is no
AOL Time Warner — it was a clear indication that portals and ISPs and
phone companies are moving to become one and the same thing.

But it’s not just the Terra-Lycos deal that will change the landscape. It’s
a combination of similar deals; if one company offers free service, its
competitors will have to follow.

More portal-telco hook-ups will be coming. Excite@Home (of which I own a
few shares) has been the subject of recent buyout rumors. DeutscheTelekom,
the German phone behemoth, has been developing its own portal/ISP combo,
but may be looking to buy others. Vodafone/Mannesman has climbed into bed
with French portal hopeful Vivendi. And lingering independents like
AltaVista are surely being shopped. Whatever the specific combinations turn
out to be, they’ll directly affect anyone who pays a monthly phone or Web
bill.

In other words, everyone.

Despite a potentially monumental domino effect on the industry, the biggest
impetus for Terra’s bold move was that greatest of motivators: abject fear.
Until now Terra has mainly functioned as an old-school ISP in Europe and
Latin America, akin to pre-flat-rate AOL. But its sales have been quickly
eroding. The reason: New Net customers across the Atlantic and Caribbean
have been flocking to free ISPs, which have thrived abroad far more than
they have in the United States. Terra has to offer free access to
compete. Free ISPs outside the country have made money by cutting deals
with local phone companies to share the call revenue generated by Internet
usage. But this model is likely to vanish within a few years, as local
calls in Europe move away from being metered by the minute.

Terra peered into the crystal ball and realized it had to get off the ISP
bus and jump onto the media company bandwagon, drawing revenues strictly
from ads and e-commerce partnerships. And what do you need to establish a
Web presence that creates lots of advertising and e-commerce traffic? A
portal. Hola, Lycos!

Despite the Street’s lack of enthusiasm, Lycos fares well in the buyout.
It’s getting a rich 40-percent premium on its current market cap –
although Terra’s shares, which will fund the deal, could fall further.
Equally important, Terra offers Lycos a big leg up in markets like Spain, Germany and Mexico, where it could become a leading portal instead of an also-ran
. (Lycos is a top-10 site in many European countries, but it’s made little
headway in the U.S. market.) U.S.-centric LCOS investors may have forgotten
that there’s Internet money to be made beyond these shores, but Bob Davis
seems to have kept that fact well in mind.

The deal also gets Lycos into the wireless arena. Terra is a subsidiary of

Telefonica, whose wireless holdings in Europe and Latin America are
among the world’s largest. Without Terra, Lycos would likely luck out on
the wireless Web boom. With Terra, the portal could be a player in a game
that ends up looking a lot like the ISP business. Providers of network
access will find that the best way to make money is to give that access
away, load the network with ads and shopping opportunities, then take a cut
of the consequences.

If portals — variations on ads-and-commerce are what will enable truly
free ISP services — then portal-like wireless features will cause the cost
of mobile phone calls to drop toward zero. Free mobile service will hit
Europe first because the technological infrastructure will allow it there
first. But it will spread to the States as well.

The end result would be a two-tiered system — those who pay for Web
access, phone service and the like, and those who don’t. AOL’s loyal
subscribers may choose not to budge from the pay-per-month structure, so
they don’t lose their instant-message buddy network. But hordes of others
may rush to the free model. And unlike now, they wouldn’t be relegated to
sub-par service.

People will have a choice — just like they have the option to subscribe to
HBO if they want premium programming. That’s all good for consumers, and
surely, the players in the game aren’t complaining.

Naturally, the industry is keeping an eye on Freetrade. If its give-it-away model takes off, it will force competitors into a price war, eroding revenues and many an e-brokerage’s chance of survival. But there are good reasons that won’t happen.

It comes down to getting what you pay for. At Freetrade, your zero dollars gets you simple buy or sell market orders, period. This is strictly no-frills trading, 100 percent virtual, with no phone support, no research, no fancy quote feeds, nada — the People’s Express of stock brokers.

It’s not a bad deal, but it’s not what investors look for. “The trend is actually in the other direction, toward richer features and better service,” says Dan Burke, an e-brokerage analyst at Gomez Advisors. Today’s biggest e-brokers — Charles Schwab and E-Trade, which offer a ton of customer support, research, education and the like — are by no means the cheapest.

In fact, Burke says, commission rates have remained stubbornly unchanged for the past 18 months. (Until last month, the only exception was American Express, which waives commissions for clients who keep over $100,000 in their brokerage accounts.)

And growth is as hardy as ever. Investors opened a record 2.5 million online accounts in the first quarter of the year. Like porn, decent brokerage services seem to be something people consider important enough to pay for.

So exactly whom does Freetrade intend to attract? It’s a bit of a mystery. (Not least because the company won’t talk to the press about it.)

At first, you’d expect the site’s core customers to be frenzied day traders. They conduct more transactions, pay more in commissions and have the most to gain from freebies. But active traders tend to use limit orders, which protect them against violent price swings. Limit orders cost $5 at Freetrade — cheap, but only slightly less than the competition. And if you’re trading so much that a few bucks an order would make a big difference to your bottom line, you’ve probably got a lot of money at stake almost every day. You’re going to want some insurance against network failures or other technical hazards — insurance like phone support.

That would suggest that the natural-born Freetrade customers might be buy-and-hold investors. Since they commit to a stock for months or years, they don’t need to sweat the fractions of a point that market orders often cost. But these sensible people who get no kick from gambling are exactly the folks who are going to want to do their homework before plunking down their money. They’ll want to see lots of data and research material. Freetrade has none.

The most likely Freetrade customers will fall into two groups. One group will be pennywise novices attracted by the prospect of no-cost stock buys. But for fear of bad P.R. or legal backlash (“You people seduced me into margining my sick mother’s house!”), Freetrade screens out absolute beginners by asking account applicants which discount broker they’ve been using, and for how long. I applied for a dummy account, claiming four months’ Web experience, and sure enough, they rejected me. The site seems to recognize that it’s walking a fine ethical line, offering something that could “Vegas-ize” the market even more.

The same concern may explain the following blurb, which appears in fine print on its home page: “Freetrade.com is not meant to increase customer trading activity … Obviously, if we do not charge a commission, we are not motivated to increase a customer’s trading activity.”

This is nonsense. Freetrade’s revenue will come from several sources: ads, margin interest and from selling your order flow to third-party brokers, a common industry practice. (Brokers often flip your market order for a bit more or less than the price they give you, so they’re willing to pay a few cents a share for the privilege of handling your trade.) More trading activity means more page views to sell against, more order flow to pimp and the possibility of more margin buying. There’s nothing inherently wrong with making money in any of those ways, which taken together constitute Freetrade’s entire business model. What’s interesting is that the company feels the need to implicitly disavow them, as though free trades were, potentially, the online-investing equivalent of crack.

The second customer group I’ll call the “schnorrers.” Some traders already maintain more than one online brokerage account, keeping enough money with a high-end firm like Schwab or DLJ Direct to reap its benefits and then doing their day-to-day trading at cheaper sites like Ameritrade. Freetrade could appeal here — but is it that big a market?

Consider instead what parent company Ameritrade admits is an entirely possible outcome: Freetrade’s low-ball experiment tanks. If no one is willing to give up better service to save on commissions, it would expose the fact that the thing most online brokerages charge for is not the thing for which customers are paying. In a field as competitive as e-brokerage, that revelation would surely shake up some business models. Freetrade’s failure is as likely to change the industry as its success.

Greenspan’s need to balance concerns of too-little-too-late vs. too-much-too-soon reminds me of another ’90s visionary. I’m speaking of the “pain management” specialist who visited me periodically during my post-surgery hospital stay a few years ago. The crucial thing, she explained, was to stay one step ahead of the pain. Once it started coming on, it would be far more difficult to stop. She encouraged me to ask freely for medication if I felt any discomfort, a suggestion I was happy to comply with. Yet somehow I was never dosed into oblivion, just the pleasant edge of lucidity.

Greenspan is our economic pain-management specialist. Judging by the unprecedented duration and vigor of the current expansion — the Greenspansion — he is every bit as effectual as my hospital-approved pusher. Maybe even more so: Where she had an entire pharmacopeia to choose from, Greenspan and his Fed cronies can only prescribe two drugs — higher rates or lower ones. Such broad-spectrum metabolic treatments and a stolid, cryptic bedside manner are all the chairman’s got, and his sure-handed dispensing has kept us a step ahead of economic pain for a long time.

But we’ve reached a critical point in the economy’s care. Five times in the last 11 months, Greenspan has detected inflationary symptoms. Each time, he doled out a quarter-point rate hike, the smallest dosage available to prevent undue economic swelling. Unfortunately, the low-dose boosters haven’t worked all that well. April’s unemployment rate sank to 3.9 percent, a 30-year low, while wages rose. Consumer confidence remains strong, and consumer prices, even excluding volatile energy products, are creeping up. Despite last week’s reports that retail sales and wholesale prices are retreating, analysts blamed last month’s unseasonably cool temperatures for discouraging Americans from building a spring wardrobe, and attributed the dip in producer prices to sharply lower oil prices. Wall Street may have reacted positively to the news, but the economy remains on inflation alert.

It’s essential to nip this sort of inflation in the bud, before everyone starts to raise prices in a self-fulfilling, viciously circling anticipation of higher costs. An unexpectedly high interest rate jump is the most effective way to do it.

One reason? Precisely because the market doesn’t expect it. “That was one of the most important lessons of 1994 and one that should not be lost on the Fed today,” says Morgan Stanley chief economist Stephen Roach. “The Fed is now in danger of falling behind the credibility curve and the only way to regain the upper hand is with a policy surprise.”

The Fed needs to reassert its potency. The economy and the stock market are confidence games. To some extent, things have gone well simply because people have believed they were in good hands. Chalk it up to the placebo effect. If Greenspan acts too gingerly and we see signs this summer that inflation has not only arrived, but is unpacking its bags, it could spell the end of his cult. For the market’s long-term faith in him to continue, it needs evidence that the central bank is still a player.

And if analysts are right, there’s little point to holding back. Nearly every report, analysis or prognostication about Tuesday’s Fed session follows a curious pattern: First, it predicts or calls for a half-point rise. Then in the next sentence, it says that the inflation threat is big enough that rates will have to rise even further this summer.

If they’re going to climb more in a few months, why not push them up now? The risk of goosing them too high is unnecessary recession. But we’re only talking an extra quarter-point here; any recessionary pressure from a 25 basis-point imbalance could be fixed with relative ease. Inflation doves might argue that an additional quarter-point up won’t do that much to ward off inflation. True enough. The value of a dramatic three-quarter-point move would be to signal that Greenspan & Co. are on the case — that they’re going to keep us ahead of the pain.