February 29, 2004
This Atlanta Jounal Constitution article discusses an issue that UCLA law professor Lynn LoPucki characterizes as a "race to the bottom" -- i.e., bankruptcy courts in certain jurisdictions bending federal bankruptcy law to market themselves to debtors' lawyers who often are instrumental in choosing the venue of big business reorganization cases. The cost attributable to this "race to the bottom" is considerable because the two main bankruptcy venues -- Delaware and the New York City -- commonly approve professional fees in big reorganization cases that are at the highest level of the profession. In comparison, the high hourly rates being charged and routinely approved in the Enron reorganization case in New York would likely not have been approved if the case had been filed in Houston where Enron is based and which is a far more convenient venue for the vast majority of Enron creditors.
A substantial part of the Justice Department's criminal cases against former Enron executives Jeff Skilling and Richard Causey involves their complicity in Enron's liberal use of "off-balance sheet" partnerships that Enron used to shift risk on debt that otherwise would have diluted Enron's net worth. In an ironic twist, history professor Niall Ferguson and economist Laurence Kotlikoff explain in this insightful paper how the United States Government uses the same off balance sheet liabilities in accounting for its Medicare and Social Security liabilities to mask the true financial condition of the Government. The entire paper is well worth reading, and here are a couple of tidbits:
During the Clinton Administration, the CBO routinely projected that, regardless of inflation or economic growth, the federal government would spend precisely the same number of dollars, year in and year out, on everything apart from . . . entitlements. At the same time, the CBO confidently assumed federal taxes would grow at roughly 6 percent each year. As a result, it was able to make dizzying forecasts of budget surpluses . . . These phantom surpluses were the money Al Gore promised to spend on voters and George W. Bush promised to return to them during the 2000 election.
[T]he crisis of the American welfare state remains a latent one. Few people, least of all in the government, wish to believe it is real. But the crisis could manifest itself with dramatic suddenness if there is a significant shift in the expectations of financial markets at home or abroad. And when the finances of the United States "go critical," there will inevitably be moves to cut back any federal program that lacks strong popular support. Though relatively inexpensive, and not in themselves a cause of American overstretch, "nation-building" projects in far-away countries will surely be among the first things to be axed.
Messrs. Ferguson and Laurence Kotlikoff also argue that our politicial leaders, the public, and bond market investors are all in denial about the large future liabilities that the government faces. This is provocative economic analysis and essential reading for anyone interested in understanding the financing of our government's future liabilities.
February 28, 2004
In this insightful piece, James K. Glassman of Tech Central Station ran an interesting analysis of U.S. companies that CNN financial commentator Lou Dobbs has criticized on his website and television show as "either sending jobs overseas or choosing to employ cheap foreign labor, instead of American workers." Mr. Glassman calculated that the annual return for a hypothetical stock fund of these companies over the past year (12 months ending Feb. 23, 2004), was a remarkable 72.44 percent, which compares with a return of 39.11 percent for the benchmark Standard & Poor's 500-Stock Index over the same period.
Outsourcing tech and other white-collar jobs is a common political canard that misguided or disingenuous demagogues promote to frighten voters. Accordingly, we will have to endure a great deal of this drivel over the next several months of this election year.
This NY Times article describes a fascinating situation that has developed regarding a fight for control of the Manchestor United soccer club -- the New York Yankees of England professional sports -- that also involves a racehorse named Rock of Gibralter and Malcolm Glazer, the owner of the NFL's Tampa Bay Buccaneers.
This NY Times article is about Amory B. Lovins, who makes a very good living by telling the oil and gas industry that the demand for oil is likely to tumble more rapidly than the industry has projected. Mr. Lovins then helps the oil and gas companies figure out how they can profit from leading the transition away from today's main uses of their core product. Interesting reading.
February 27, 2004
Despite the current vogue of questionable and therapeutic ideas like "zero tolerance" and "moral equivalence" that punish all who use force ? whether in kindergarten or in the Middle East ? striking first is a morally neutral concept. It takes on its ethical character from the landscape in which it takes place ? the Israelis bombing the Iraqi reactor to avoid being blackmailed by a soon-to-be nuclear Saddam Hussein, or the French going into the Ivory Coast last year, despite the fact that that chaotic country posed no immediate danger to Paris. The thing to keep in mind is that the real aggressor, by his past acts, has already invited war and will do so again ? should he be allowed to choose his own time and place of assault.
Hitler was ruthless in starting a war against Poland. Yet he could have been stopped far earlier in 1936 or so ? had the democracies preempted him. Indeed, a failure to preempt is often far worse than the act itself. Serbia posed no "imminent" threat to the United States in 1998; but President Clinton ? with no U.N. sanction, no U.S. Congress resolution ? finally decided to act and end that cancer before it spread beyond the Balkans.
As a way of suggesting bias or financial benefit from such testimony, trial attorneys often ask the opposition's experts whether they have frequently testified on one particular side of an issue. Although such cross-examination is widely assumed to be fair, the Iowa Supreme Court just handed down this interesting decision in ordering a new trial for a babysitter convicted of murdering a child under her care based in part on prosecutorial cross-examination along these very lines. The prosecution's theory was that the babysitter had caused blunt head trauma to the child, but the babysitter's expert testified that that the child's head trauma had occurred much earlier than when the prosecution asserted that it had happened. On cross, the prosecution questioning attempted to connect the defense expert's opinion to a presentation the expert had given "in front of all the defense lawyers here in the State of Iowa," and also asked the following question: "You are routinely hired by the defense in cases where children are allegedly victims of child abuse and you testify on behalf of the perpetrator; isn?t that true?" The prosecutor also implied in other questions that the defense expert had testified on 46 occasions on behalf of persons charged with killing children.
The Iowa Supreme Court's opinion condemns such prosecutorial questioning as an "improper effort to demean the witness," citing the ABA Standards for Criminal Justice, which provide: "The interrogation of all witnesses should be conducted fairly, objectively, and with due regard for the dignity and legitimate privacy of the witness, and without seeking to intimidate or humiliate the witness unnecessarily." Although this decision involves a criminal case, it should nevertheless provide pause for attorneys in civil cases who attempt to impeach an opponent's expert through derisive and suggestive questioning.
This Christian Science Monitor article details the signs that Jean-Bertrand Aristide was doomed to failure as President of Haiti. The CSM notes:
How a man hailed as a potential Nelson Mandela for his impoverished and oppressed nation of 8 million could fall so far appears to be as much a tale of wishful thinking by desperate Haitians and the international community that backed him, say experts, as it was a tale of the old cliché that "absolute power corrupts absolutely."
Aristide was given that rarest of political gifts - a second chance. But, reinstalled in the presidency in October 1994 by a multinational military force, he used his resurrection to perfect an autocratic style, say even those close to him who were interviewed for this story.
Today, having infuriated, humiliated, and - some allege, killed - any once-devoted followers who crossed him, Aristide has few political allies left. Even his strongest credential - his election to a second term in 2000 - counts little as rebels gobble up territory and threaten to take the capital.
Languishing in that familiar pre-coup limbo that is a trademark of modern Haitian presidencies, Aristide is a symbol of a political culture that has been bankrupt nearly since it began as a slave revolt 200-plus years ago. . .
Dr. Denton Cooley is one of Houston's many legendary doctors who have helped build the Texas Medical Center into one of the world's great medical centers. Dr. Cooley founded The Texas Heart Institute at St. Luke's Episcopal Hospital, and he performed the first successful heart transplant in the United States in 1968 and the first involving an artificial heart in 1969.
As Houston sportswriter Mickey Herskowitz writes in this column today, Dr. Cooley was a starting basketball player at the University of Texas at Austin in the late 1930's, and UT is honoring Dr. Cooley by naming its new basketball practice facility after him. The entire column is worth reading, but this part is essential for all fans of legendary former UT football coach Darrell Royal:
Among the speakers in Austin the other night were Mack Brown and Rick Barnes, who coach the marquee men's sports at UT. But the one who stole the show was Jody Conradt, the Hall of Famer who gave the Longhorns a national championship in women's basketball.
"They built the Erwin Center 21 years ago," she said, "and obviously it never occurred to anyone that the women would need a separate locker room. So every room in this place had urinals in it.
"Now we have one of our own. Before one of our games, coach Darrell Royal was kind enough to speak to my team. Before he left, someone asked what the biggest difference was between our locker room and all the ones he knew from all his years of coaching. Coach Royal said, `Offhand, I can't remember anyone ironing anything before a game in one of our locker rooms.' "
As noted in this earlier post on the Houston Livestock Show and Rodeo, today is Go Texan Day in Houston in which many Houstonians don their best Western wear clothing for the day. As the trailriders descend upon Memorial Park later today, the Chronicle reports that one of the trailrider groups will be led by the first woman trailride boss in history. The Rodeo kicks off tomorrow with the annual Rodeo Parade in downtown Houston beginning at 10 a.m.
February 26, 2004
As expected, the Justice Department this afternoon announced that it was filing an antitrust lawsuit to block the Oracle Corporation's $9.4 billion bid to acquire PeopleSoft Inc., its competitor in the business software market. Here is the Justice Department's Complaint.
Update: Here is the Wall Street Journal's ($) better article on Justice's complaint against the merger.
Comedian Argus Hamilton is offering a strategy that would give Al Gore sweet revenge for Ralph Nader's costing him the 2000 Presidential election while guaranteeing that Mr. Nader wouldn't collect enough Democratic votes to alter this year's election outcome. "There's only one way Al Gore can get even with Ralph Nader," Mr. Hamilton advises. "He's got to wait for the crucial moment in the campaign and then endorse him."
Bankruptcy filings in the federal courts remained high in calendar year 2003, according to data released today by the Administrative Office of the U.S. Courts. Total bankruptcies filed in the twelve-month period ending December 31, 2003, totaled 1,660,245, up 5.2 percent from the 1,577,651 bankruptcies filed in the prior year. The majority of bankruptcy filings are non-business filings, 1,625,208 in 2003 as compare to 1,539,111 in 2002. The number of business bankruptcy filings continued to decline, totaling 35,037 in 2003 as compared to 38,540 in 2002. Chapter 11 reorganization filings -- the most important bankruptcy statistic in terms of job preservation -- fell 16.6 percent to 9,404 in 2003 from the 11,270 filings in calendar year 2002. Thanks to my friend Joe Epstein for advising me of the publication of this annual report.
The Daubert trilogy of Untied States Supreme Court decisions -? Daubert, Joiner, and Kumho Tire, codified in Federal Rule of Evidence 702 -- has established new rules for the admissibility of expert witness evidence in federal court. However, the standards for admissibility of expert witness evidence in state courts is far more unsettled. George Mason University Law Professor David Bernstein and Jeffrey D. Jackson have published this handy law review article that analyzes the degree to which the holdings of the Daubert trilogy have been adopted by state courts. Surprisingly, there remains a wide diversity of tests within the states that, contrary to most lawyers' popular belief, the Daubert trilogy is not yet the majority standard. A good article to review for lawyers who commonly deal with expert witness issues.
Baylor University announced today that Dave Bliss, its former basketball coach, made improper payments to students, allowed major NCAA infractions to occur in his program and then tried to cover up the improprieties. A school-appointed committee made the findings in a report that was made public today. The committee was appointed last fall to study the university's basketball program after player Patrick Dennehy was killed last summer and another player was charged with his murder. The major infractions will result in either self or NCAA imposed penalties on the Baylor basketball program, which is another severe blow to an athletic department that has struggled to compete in the major sports of football and basketball ever since the creation of the Big 12 Conference in the mid-1990's.
This NY Times article reports on the consortium of international oil and gas companies that have formally agreed to proceed with a $29 billion development of the Kashagan oil field in Kazakhstan, the largest oil discovery since Prudhoe Bay in Alaska more than 30 years ago.
ENI of Italy leads the consortium, which includes Royal Dutch/Shell, Exxon Mobil, Total of France, ConocoPhillips and Inpex of Japan.
Total oil reserves in the Kashagan field are now estimated to be 13 billion barrels, several billion barrels higher than original estimates. One major production hurdle is the field's location under the Caspian Sea, which freezes over in winter. Initial production is expected to be 75,000 barrels a day, Shell said in a statement. Mr. Idrissov said production was expected to rise to more than 400,000 barrels a day by 2013.By 2015, the field is expected to yield more than a million barrels a day, about a third of Kazakhstan's target for oil production.
The announcement is a major step forward for oil and gas production in Kazakhstan, which is considered one of the United States' most promising alternatives to the Middle East for energy supplies. However, development has slowed in recent years because of the risk of investment in the region and the Kazakh government's desire to renegotiate contracts with foreign oil companies that had been entered into during the early 1990's.
Virginia Postrel writes about free trade in this NY Times piece. Inasmuch as you will be hearing much from the demagogues about this issue in the upcoming political campaigns, Ms. Postrel's article is timely reading.
On the heels of this announcement regarding Methodist Hospital's expansion, St. Luke's Episcopal Hospital in Houston's Texas Medical Center announced a $200 million expansion project that will involve razing the original St. Luke's Hospital building and the construction of a 10 story patient care center. St. Luke's is the home of the famous Texas Heart Institute.
As noted in earlier posts here and here, a political action committee ? Texans for a Republican Majority ? that House majority leader Tom DeLay of Houston created is the subject of a grand jury investigation in Austin. Yesterday, the Travis County District Attorney's office released information on over 50 subpoenas that it has issued in the investigation over possible criminal misuse of corporate funds in the 2002 legislative campaign. Here is the Chronicle article on this development.
February 25, 2004
Victor Davis Hanson is one of the most insightful current commentators on America's war against Islamic extremists, and his articles are often referred to in this blog. This LA Times piece is about this interesting man. Thanks to Occam's Toothbrush for the link.
Often at the outset of business reorganization cases, the debtor-in-possession will request as one of its "first day" motions that the Bankruptcy Court allow it to pay "critical vendors." Although these claims are unsecured claims that normally cannot be paid under bankruptcy law except pursuant to a chapter 11 reorganization plan, the theory behind allowing certain business debtors to pay "critical" vendors pre-petition claims is that the critical vendors would likely not do business with the debtor during the reorganization case unless their pre-petition claims are promptly paid. Stating the debtor's position simply, unless such payments are made, the risk increases dramatically that the debtor's reorganization would fail in its early stages.
At the outset of Kmart Corp's chapter 11 case, Kmart's Bankruptcy Court approved an order that authorized Kmart to pay the pre-petition claims of 2,330 "critical" suppliers, which collectively received about $300 million. Another 2,000 or so vendors were not deemed ?critical? and were not paid. They and 43,000 additional unsecured creditors eventually received about 10¢ on the dollar under Kmart's reorganization plan, mostly in stock of the reorganized Kmart. Fourteen months later, the District Court overruled the Bankruptcy Court's critical vendor order, and Kmart appealed that decision to the 7th Circuit Court of Appeals.
Today, the 7th Circuit issued this decision that affirms the District Court's order setting aside the Bankruptcy Court's approval of Kmart's payment of its critical vendor's pre-petition claims. The decision is written a bit untidily -- for example, the 7th Circuit describes the critical vendor payments as "preferential" (i.e, paid in preference to those of non-critical creditors). In reality, the critical vendor payments are post-petition payments and, by referring to them as preferential, the 7th Circuit risks confusion of those payments with voidable preferences, which can only be made prior to the commencement of a bankruptcy case. Nevertheless, the decision has a good overview on the law in this key area for business debtors, and is a good one for debtor's counsel to review before making a record on the necessity for critical payments at the outset of a chapter 11 case.
Thomas Sowell has a good WSJ ($) op-ed today in which, as former House Majority Leader Dick Armey -- an economist by trade -- put it: "Demagoguery beats data in making public policy." The entire article is well worth reading, but here is a tidbit:
At the state and local levels, this confusion of tax rates and tax revenues has led some local politicians to see higher tax rates as the answer to budget problems, even though higher tax rates can drive businesses out of the city or state, with adverse effects on the total amount of tax revenues collected.
Price controls are another area where very elementary economics is all that is needed to show what the consequences are: shortages, quality deterioration and black markets. It has happened repeatedly in countries around the world, over a period of centuries. Yet politicians keep selling the idea of price controls and voters keeping buying it.
Many economic issues are complex, but sometimes a single fact will tell you all you need to know. When you know that central planners in the Soviet Union had to set 24 million prices -- and keep adjusting them, relative to one another, as conditions changed -- you realize that central planning did not just happen to fail. It had no chance of succeeding from the outset. It is a wholly different ball game when hundreds of millions of people individually keep track of the relatively few prices they need to know for their own decision-making in a market economy.
Today is the 40th anniversary of Cassius Clay's (subsequently Muhammad Ali) spectacular upset of the notorious Sonny Liston in their 1964 world heavyweight championship fight. Here is a Times Online piece on the historical impact of that memorable fight, and another article on whether that match and the subsequent Clay-Liston rematch were fixed. Very interesting reading.
A recent study shows that United States Senators stock portfolios regularly outperformed the market by an average of 12% a year.
The Fifth Circuit Court of Appeals issued a decision yesterday on the important issue of expert witness testimony on damages. In this trade secrets case, the Fifth Circuit upheld the district court's decision admitting lost-profits testimony from two of the plaintiff's experts because the testimony had no impact on the jury verdict. Accordingly, the Fifth Circuit did not reach the issue of the testimony's reliability. The Court noted that that the relatively small size of the jury's $2.2 million award, in comparison with the $25 million in lost profits that the plaintiff claimed, indicated that the jury considered and rejected the entire lost-profits analysis of the plaintiff's experts. See Dresser-Rand Co. v. Virtual Automation, Inc., No. 02-20834 (5th Cir. Feb. 23, 2004) (DeMoss, Dennis, & Prado, JJ.).
College students or those of you with college age children, you will want to read this this piece about a job that will interest more than a few college students.
Harvard University Law Professor Mary Ann Glendon has a Wall Street Journal op-ed ($) today that addresses several important issues that are often overshadowed by the supporters' casting of the debate as one over civil rights issues:
Those judges are here in Massachusetts, of course, where the state is cutting back on programs to aid the elderly, the disabled, and children in poor families. Yet a four-judge majority has ruled in favor of special benefits for a group of relatively affluent households, most of which have two earners and are not raising children. What same-sex marriage advocates have tried to present as a civil rights issue is really a bid for special preferences of the type our society gives to married couples for the very good reason that most of them are raising or have raised children. Now, in the wake of the Massachusetts case, local officials in other parts of the nation have begun to issue marriage licenses to homosexual couples in defiance of state law.
A common initial reaction to these local measures has been: "Why should I care whether same-sex couples can get married?" "How will that affect me or my family?" "Why not just live and let live?" But as people began to take stock of the implications of granting special treatment to one group of citizens, the need for a federal marriage amendment has become increasingly clear. As President Bush said yesterday, "The voice of the people must be heard."
Indeed, the American people should have the opportunity to deliberate the economic and social costs of this radical social experiment. Astonishingly, in the media coverage of this issue, next to nothing has been said about what this new special preference would cost the rest of society in terms of taxes and insurance premiums.
The Canadian government, which is considering same-sex marriage legislation, has just realized that retroactive social-security survivor benefits alone would cost its taxpayers hundreds of millions of dollars. There is a real problem of distributive justice here. How can one justify treating same-sex households like married couples when such benefits are denied to all the people in our society who are caring for elderly or disabled relatives whom they cannot claim as family members for tax or insurance purposes? Shouldn't citizens have a chance to vote on whether they want to give homosexual unions, most of which are childless, the same benefits that society gives to married couples, most of whom have raised or are raising children?
As noted in this earlier post, Big Four accounting firm KPMG is the subject of a Manhattan federal grand jury investigation into the sale of tax shelters to corporations and wealthy individuals who used them to escape at least $1.4 billion in federal taxes. This investigation comes on the heels of an earlier IRS petition to enforce summons against KPMG. Today, the Wall Street Journal ($) has a front page story on KPMG's management decisions that led the firm into the tax avoidance promotion business. The entire article is well worth reading, and here is an example of the deals that KPMG was promoting:
KPMG marketed a range of shelters known by cryptic acronyms. In 1997, it sold Joseph J. Jacoboni a strategy called FLIP. That year, Mr. Jacoboni faced a capital gain of more than $28 million from the sale of his software-support business in Orlando. With KPMG's guidance, he initially invested $4.7 million in a series of transactions in late 1997, according to filings in federal court in Orlando. He bought stock in a Swiss bank and an expensive warrant from a private Cayman Island company, which in turn bought shares in the Swiss bank. He also bought "put" options and sold "call" options.
As a result of this activity, Mr. Jacoboni's 1997 tax return showed more than $30 million in capital losses, erasing roughly $7.5 million in tax liability on the sale of his company. His actual cost, after factoring in the return on his investment, was only $2.4 million. The cost included a fee of $437,500 for KPMG. In 2001, the IRS started an audit of Mr. Jacoboni's 1997 return. He then sued KPMG for fraud and negligent misrepresentation -- allegations the firm denies. A trial is scheduled for next month.
FLIP, OPIS and another shelter called BLIPS are under scrutiny by federal prosecutors in the criminal-fraud investigation. The three strategies combined earned KPMG fees of almost $100 million from 1996 through 2000, according to the Senate subcommittee report.
In an expected move, Parmalat's dairy subsidiaries in the United States filed for bankruptcy protection yesterday in New York City. Included in the filing yesterday were the Parmalat USA Corporation and its Farmland Dairies and Milk Products of Alabama units. The move was expected after Parmalat, the food and beverage giant, sought bankruptcy protection in Italy in December amid an accounting scandal.
Following on yesterday's post about Mel Gibson's new movie, "The Passion," neither the Chronicle nor the NY Times reviewers were particularly impressed from a filmmaking standpoint. From the Chronicle review:
It's a stylish and visually polished re-creation of the last 12 hours in the life of Jesus -- unrelieved suffering and martyrdom, in other words. Controversy over whether it will inflame anti-Semitism guarantees huge audiences, and many people may be profoundly moved. But as a film it is quite bad.
It isn't awful merely because of Gibson's obsessive need to zoom in and linger on bloodletting, although this makes it difficult to watch. It's awful because everything he knows about storytelling has been swept aside by proselytizing zeal. Without doubt, this is a heartfelt expression of religious faith, but it is so naked an expression -- untempered by detached, mediating intelligence -- that it speaks solely to the converted.
And the NY Times review adds:
"The Passion of the Christ" is so relentlessly focused on the savagery of Jesus' final hours that this film seems to arise less from love than from wrath, and to succeed more in assaulting the spirit than in uplifting it. Mr. Gibson has constructed an unnerving and painful spectacle that is also, in the end, a depressing one. It is disheartening to see a film made with evident and abundant religious conviction that is at the same time so utterly lacking in grace.
Mr. Gibson's raw images invade our religious comfort zone, which has long since been cleansed of the Gospels' harsher edges. Most Americans worship in churches where the bloodied body of Jesus is absent from sanctuary crosses or else styled in ways so abstract that there is no hint of suffering. In sermons, too, the emphasis all too often is on the smoothly therapeutic: what Jesus can do for me.
More than 60 years ago, H. Richard Neibuhr summarized the creed of an easygoing American Christianity that has in our time triumphantly come to pass: "A God without wrath brought men without sin into a kingdom without judgment though the ministrations of a Christ without a cross." Despite its muscular excess, Mr. Gibson's symbol-laden film is a welcome repudiation of all that.
Indeed, Mr. Gibson's film leaves out most of the elements of the Jesus story that contemporary Christianity now emphasizes. His Jesus does not demand a "born again" experience, as most evangelists do, in order to gain salvation. He does not heal the sick or exorcise demons, as Pentecostals emphasize. He doesn't promote social causes, as liberal denominations do. He certainly doesn't crusade against gender discrimination, as some feminists believe he did, nor does he teach that we all possess an inner divinity, as today's nouveau Gnostics believe. One cannot imagine this Jesus joining a New Age sunrise Easter service overlooking the Pacific.
Like Jeremiah, Jesus is a Jewish prophet rejected by the leaders of his own people, and abandoned by his handpicked disciples. Besides taking an awful beating, he is cruelly tempted to despair by a Satan whom millions of church-going Christians no longer believe in, and dies in obedience to a heavenly Father who, by today's standards, would stand convicted of child abuse. In short, this Jesus carries a cross that not many Christians are ready to share.
The religious website beliefnet has been sponsoring an online debate over The Passion and the theological issues it raises. The participants are two scholars representing diverse theological and academic perspectives. John Dominic Crossan is a well-known liberal New Testament scholar whose approach to Jesus is creative, but rather bizarre and skeptical. Ben Witherington III is an outstanding academic from Asbury Theological Seminary who advocates orthodox Christian theology. These two scholars are publishing a measured dialogue that is must reading for people who want to wrestle with the serious issues raised by The Passion of the Christ.
February 24, 2004
That is the only explanation for this normally risky move in a white collar criminal case.
The Bleeding of the Christ
I went to see "The Passion" tonight, and I would like point out a few things to those of you considering seeing it.
First, on an entertainment level, it isn't much of a movie in the traditional sense, so if you're looking for entertainment skip it, this movie is downright painful for anyone not looking for an affirmation of their faith.
Second, on all the Anti-Semitism charges, the really shouldn't be that much controversy - the movie is anti-Semitic only inasmuch as the gospels are. Don't get me wrong, Jews come off quite badly, and are the primary causes of Jesus' death in the film, but that's pretty much the way the gospels went the last time I read them, so you can't exactly blame Gibson for that. I do think the Movie will cause some Anti-Semitism (especially in parts of the world prone to it) but again, you can't blame Gibson for that either.
When it comes to depicting the Jews, the movie mixes up the Sanhedrin, the Kohanim, and the Pharisees in general, into an all purpose villainous group. but it wasn't all that horrible on that front.
Cinematically it was quite good, and the actors were terrific, though some of them seemed to have problems with the cadence of their Aramaic and Hebrew (I'm nitpicking here). James Caviezel was great as the suffering Jesus, but I thought he was a little stiff during the flashback scenes.
The problem for me though, is that I'm not a Christian (I'm an Orthodox Jew BTW), and so I didn't really have any emotional involvement other than simple curiosity, and that makes the film just about worthless. The violence didn't "move" me, it just seemed like a ridiculous amount of overkill. They should have called this "The Bleeding of the Christ," most of the movie is just that, Jesus bleeding. Charge me with deicide if you will, but after about 2/3's of the movie I was begging for the guy to die already so we could all go home.
To sum up, if you're a Christian and want your faith bolstered, tweaked or whatever this is supposed to do, go see it. It certainly seems to work (the two girls sitting next to me were sobbing), But if you aren't, stay home and I'll sum it up for you?Bleeding, lots of it.
Although I am a Christian, I share the concerns of many Jewish leaders regarding the potential anti-Semitic impact of the film. James Carroll's book "Constantine's Sword" is flawed in several respects, but its thorough analysis of the troubling history of Christian persecution of the Jews is daunting and thought provoking. Viewed in that broad context, Jewish concerns regarding potential anti-Semitic reaction to Mr. Gibson's movie are entirely reasonable. Christians accept that all of mankind is responsible for Christ's death, and Jews certainly should bear no greater responsibility for his death than anyone else. What is more important to me is God's forgiveness of my complicity in that sin, for which I am eternally grateful.
My law practice mostly involves lawsuits over business transactions, and I am constantly reminded in my practice that most non-business people dramatically underestimate the difficulty involved in running a business successfully. This NY Times article reports that 34 percent of businesses with 500 or fewer employees close within two years of opening, and 50 percent fold after four years. These business difficulties highlight the importance of sound business reorganization and bankruptcy law, and the United States is blessed to have the best business reorganization and bankruptcy system in the world. More on this point later, but it is not a feather in the hats of either the Bush Administration or the Republican Party that they are currently urging Congress to amend the United States Bankruptcy Code.
As noted earlier in this post, the street rebuilding project that has been going on in downtown Houston during almost the entire administration of former Mayor Lee Brown has been one of the mostly poorly managed public works projects in recent Houston history. This Chronicle article gives a good example of the legacy of this mess that new Mayor Bill White has inherited.
Brian Coyne, 58, a Houston defense lawyer who caused a downtown car wreck in January, 2003 that killed Michael Bruns, a Chase Bank officer from The Woodlands, was sentenced Monday to five days in jail, eight years' probation, fined $10,000, and ordered to perform 350 hours of community service after pleading guilty to criminally negligent homicide in December. Mr. Coyne could have faced up to 10 years in prison.
This marks the end of legal proceedings over this incident, which is one of those unspeakable trajedies that reminds us of the shortness of life and the unforseen irreversible consequences that sometimes result from serious errors in judgment. Mr. Bruns was a pillar in The Woodlands community, and his death left a loving wife without a husband and three young children without a father. I do not know Mr. Coyne, but it my understanding from those who do is that he is a caring man and good attorney, and his statement to the court during his sentencing reflects the pain that he will experience for the rest of his life. May the Lord be with the Bruns Family and Mr. Coyne as they piece their lives back together after his tragic incident.
Houston has grown into a remarkably diverse city, but its heritage as a quintessential Texas city is reflected best by the annual Houston Livestock Show and Rodeo. Unless you are a Houstonian, it's a bit difficult to explain "the Rodeo," as Houstonians call it. But it's an event that lasts almost three weeks each March, involves volunteer efforts of thousands of Houstonians, brings hundreds of thousands of people into Houston, raises millions of dollars for academic scholarships, and provides some of the most interesting and unique entertainment that one could ever imagine.
Started in the early 1930's in downtown Houston, the Rodeo has grown into a huge event that literally envelopes the entire Reliant Park complex, including Reliant Stadium and the adjacent convention facility. The Rodeo kicks off with 5,000 trailriders descending on Houston's Memorial Park this Friday, which is "Go Texan Day" in Houston in which most folks go to work in some type of cowboy attire. After a wild night of campfire parties at Memorial Park, the Trailriders ride the five miles down Memorial Drive to downtown Houston early Saturday morning for the annual Rodeo Parade, which is great fun. Then, it's off to the Rodeo at Reliant Park.
The Rodeo always has a first rate lineup of entertainers who perform after each night of the rodeo event, and this year is no exception. However, this year is particularly special for me in that rising country music star Dierks Bentley is one of the headline performers. Dierks is the younger brother of an old friend of mine, Houston real estate attorney Bart Bentley, who happens to be a pretty fair guitarist himself in the popular Houston rock band, Mid-Life Crisis and the Hot Flashes.
Although my teenage daughters undoubtedly will want to see Dierks' show at the Rodeo, I most enjoy the Livestock Show in the Reliant Convention facility while visiting the Rodeo. Over the years, I have seen more incredible animals in the Livestock Show than in any zoo that I have ever visited.
Accordingly, if you are visiting Houston during March, do not miss the opportunity to visit the Houston Livestock Show and Rodeo. Not only will you be highly entertained, but you will learn more about Texas in general and Houston in particular than you could anywhere else.
February 23, 2004
This Washington Times article describes a movement among certain National Football League owners to revise the NFL's Trust, the master business agreement that maintains that shared national revenue structure that has propelled the NFL into a multi-billion dollar industry and makes the NFL the envy of virtually every other professional sports league.
In this post from last week, it was noted the plaintiff in the landmark Roe v. Wade abortion case had sought Fifth Circuit review of a District Court order denying her Fed. R. Civ. P. 60(b) motion that attempted to reopen that controversial case. Today, the Fifth Circuit cancelled oral argument, which is not surprising because the Court often does not grant oral argument on appeals that are subject to summary disposition. Inasmuch as the appellant's appeal in this case is a long shot, my sense is that the Fifth Circuit is preparing to affirm the District Court's denial of the appellant's motion and dismiss the appeal. Thanks to Howard Bashman for the tip on this development.
As the civil war worsens in Haiti, Daniel Drezner and Tyler Cowan point to Haiti Pundit, a blog about news and views on Haitian politics and culture. With American armed forces entering Haiti today, this is a good source of current information on the Haitian situation.
Mr. Rumsfeld's efforts to transform the Pentagon have an interesting background that stretches back several decades. Author Robert Coram compellingly presents this interesting story in his book, "Boyd: The Fighter Pilot Who Changed the Art of War." Suffice it to say that appearances are deceiving with regard to the Pentagon, the special interests that attempt to control it, and the elected officials that attempt to lead it. This is not a story that the mainstream media has covered well, so Mr. Coram's book and a few others that deal with this interesting story are essential to a sound understanding of the key issues confronting the United States Armed Forces in the context of modern warfare.
The Wall Street Journal ($) reports that Martha Stewart's legal team is seriously considering not putting Martha on the stand during her defense of the criminal case against her. The Stewart defense team apparently thinks that the prosecution's laborious month long presentation of its case against Martha chloroformed the jury. Accordingly, the defense team is considering a minimalist defense that could be done by the end of the week.
Although understandable given the prosecution's apparent mishandling of this case, not putting Martha on the stand is a risky strategy. Particularly in white collar prosecutions, jurors want to hear from the defendant. If the case is a closer call than what it appears, then Martha's failure to defend herself on the stand could tilt jurors against her.
February 22, 2004
Ethan Bronner, deputy foreign editor of the NY Times, has a review in today's New York Times Book Review on several recent books that share a central theme -- i.e., that the War on Terror combined with Attorney General John Ashcroft, as one book put it, ''are responsible for some of the most egregious civil liberties violations in the history of our nation.'' Mr. Bronner is much more measured than that statement, and the entire article is well worth reading. Here are a couple of tidbits:
If you believe these changes are eroding the liberties that make this nation great, these books are for you. They will give texture and sharpness to your rage. You can pick from among them based on your level of concern. If you are incensed, go for the Brown essay collection, ''Lost Liberties.'' In it, Aryeh Neier says, ''We are at risk of entering another of those dark periods of American history when the country abandons its proud tradition of respect for civil liberties.'' And Nancy Chang of the Center for Constitutional Rights says that executive measures taken in the wake of the Patriot Act ''are responsible for some of the most egregious civil liberties violations in the history of our nation.'' Given the suspension of the writ of habeas corpus during the Civil War, the Palmer raids in World War I and the internment of Japanese-Americans in World War II, both of these statements seem to me hard to defend.
Of course, one legitimate complaint that Ashcroft and many others could lodge against nearly all these books is that they fail to spend any time on the threat to liberty not from Ashcroft but from Al Qaeda. Liberty is meaningless without security, as Viet Dinh, the former assistant attorney general who wrote much of the Patriot Act, has often said. Stuart Taylor Jr., a legal journalist, put it this way in The National Journal in December 2002: ''Should we eschew fishing expeditions through Ryder truck rental records and fertilizer purchases? Not if we want to prevent terrorist mass murders. And I, for one, am a lot less worried about the government snooping through my credit card bills and psychiatric records than about being anthraxed in the subway or killed by a nuclear explosion in my downtown Washington office.'' While this strikes me as too far in the other direction, such words are useful to keep in mind while reading of Ashcroft's sins.
President Bush announced that Dr. Mark B. McClellan, the food and drug commissioner, will be named to run Medicare and Medicaid, the health insurance programs for more than 70 million Americans. Dr. McClellan, 40, is a graduate of The University of Texas at Austin, the brother of the White House press secretary, Scott McClellan, and a son of the Texas comptroller, Carole Keeton Strayhorn, who has been carrying on a public spat with Governor Perry and has hinted that she might run against Governor Perry in the 2006 Republican Primary.
The NY Times has a couple of interesting articles in its Sunday business section. In this one, Times business reporter Ken Gilpin notes that the stock market has moved steadily higher since last summer, even though insider stock sales have far outnumbered purchases. Mr. Gilpin interviews Jonathan Moreland, a money manager and the director of research at InsiderInsights.com, as to the reason for this apparent contradiction.
Another Times article reports on a recent academic study that challenges the popular reason for not worrying about the high price-to-earnings ratio in the stock market today -- i.e., the idea that the ratios should be high when interest rates are low. According to the traditional Fed Model, stock earnings growth should be slower when Treasury note rates are high and faster when those rates are low. However, that has not been the case historically, according to the new study, "Inflation Illusion and Stock Prices," by Harvard finance professors John Y. Campbell and Tuomo Vuolteenaho. According to the study, the stock market has tended to become significantly undervalued in times of high inflation and overvalued in times of low inflation. As a result, the situation in the market today may be the mirror opposite of what prevailed in the late 1970's -- that is, stocks may be as overvalued today as they were undervalued then.
This new book -- Confessions of a Tax Collector: One Man's Tour of Duty Inside the IRS by former 12 year IRS agent, Richard Yancey -- looks potentially interesting. Mr. Yancey describes his 12 years with the IRS in which he relates everything from his General Patton-type trainer who wished he could carry a gun to his own development into someone who could close down a four-person woodworking shop for failure to pay payroll taxes and seize homes of the tax delinquent without losing sleep.
Eric Berger of the Houston Chronicle does a good job in this article summarizing the structure of Enron's plan of reorganization that is scheduled for a confirmation hearing in the New York Bankruptcy Court in April.
I'm been quite involved in the Enron case, initially representing a suitor of Enron's online trading business, and then representing a former high-level Enron executive in several civil litigation matters and advising another former Enron executive and a former Arthur Andersen partner in regard to matters relating to the case. So, I've got a pretty good sense of what's going on in the case. Inasmuch as Enron's most recent Disclosure Statement -- the document that a chapter 11 debtor distributes to creditors to provide them adequate information on which to make an informed judgment on the reorganization plan -- was nearly 2000 pages, summarizing the plan in the context of a short newspaper article is no small feat. So, kudos to Mr. Berger.
One small nit, though. Eric, that's "substantive" consolidation, not "substantial."
February 21, 2004
A savvy businessman once told me that there is an inverse relationship between the independence of a board of directors and the level of perks that the board approves for management. This NY Times article details some of the absurd perks that were paid to some of the corporate executives who are defendants in ongoing criminal cases. Not a pretty picture.
Now, this is my kind of law review article!
This Dallas Morning News article is about the proposal that Dallas officials have made to Dallas Cowboys owner Jerry Jones to bring a new Dallas Cowboys stadium to Fair Park, which is the location of the Cotton Bowl, the stadium that the Cowboys' left 33 years ago when they moved to Texas Stadium in Irving. Dallas officials are pitching the proposal after rejecting the Cowboys' overture to redevelop an industrial area near downtown. Fair Park, which is already developed, would require less public investment and benefit from having the Cowboys' stadium replace the outdated Cotton Bowl.
Within the past five years, Houston has lapped Dallas in terms of sports facilities and related infrastructure. During that time, Houston has built two retractable domed stadiums--Minute Maid Park and Reliant Stadium--and the new Toyota Center basketball arena. In addition, Minute Maid Park and Toyota Center are adjacent to Houston's downtown Convention Center and related hotel complex, and Reliant Stadium is in Reliant Park, which includes the Reliant Center convention facility and the Astrodome. Each of these facilities played a major role in Houston's successful hosting of Super Bowl XXXVIII, and the NFL's recent announcement that it intends to return the Super Bowl to Houston toward the end of this decade. Those developments have been a tremendous boon for Houston's ability to attract large conventions, which had been lagging for many years. If Dallas builds a new football stadium for the Cowboys, then it would become one of the increasingly few cities that has adequate facilities and infrastructure to accomodate major conventions and events such as the Super Bowl.
This Houston Chronicle article relates ex-Enron CEO and COO Jeff Skilling's inadvertent meeting at the Houston Federal Courthouse this past Thursday with ex-Enron treasurer Ben Glisan, who was ex-Enron CFO Andrew Fastow's right hand man during the final year and a half before Enron's collapse and the first former Enron officer to be imprisoned. Glisan is currently serving a five year prison term after negotiation of this plea bargain with the Enron Task Force last September.
February 20, 2004
From the always insightful Stu's Views:
Charles O. Rossotti is a Republican businessman who was commissioner of the IRS for five years during the last part of the Clinton Administration and the first part of the Bush Administration. In this recent PBS interview , Rossotti told Bill Moyers that we are paying about 15% too much in taxes due to illegal tax cheats. According to Rossotti, roughly $250-300 billion a year is owed but not being paid. "Which basically means everybody is paying 15 percent more," says Mr. Rossotti. "You could give everybody twice as big a refund, if they average it out, if you just collected all the taxes that are due." Mr. Rossetti says that the the biggest single amount of unpaid taxes is attributable to abusive tax shelters promoted by the very people we trust to keep the system honest -- accounting firms and law firms.
I think it's safe to say that Mr. Rossotti will not be on the KPMG expert witness defense team in the investigation noted earlier here.
As noted in this earlier post, the legislative reaction to the corporate scandals over the past few years has had unintended consequences--i.e., exorbitant compliance costs.
In this article, UCLA corporate law professor Stephen Bainbridge decries the lack of legislative cost-benefit analysis that was done in connection with enacting the onerous Sarbanes-Oxley Act (SOX). As Professor Bainbridge notes:
As an investor, I don't want my portfolio companies spending a dollar on "good corporate governance" unless doing so adds at least a buck to the bottom line. I don't have any voice in how much to spend on corporate governance, however. The board of directors and top management make that decision (as they should, of course). Unfortunately for the bottom line, however, directors and management have a strong incentive to over-invest in corporate governance consultants and so on.
Why? The answer lies in the incentive structures of the relevant players. Who pays the bill if a director is found liable for breaching his federal or state duties? The director. If the director has adequately processed decisions and consulted with advisors, will the director be held liable? Unlikely. Who pays the bill for hiring corporate governance consultants, lawyers, investment bankers, auditors, and so on to advise the board? The corporation and, ultimately, the shareholders.
Victor Davis Hanson, a registered Democrat and among the most insightful current commentators on America's role in the Middle East, predicts in this NRO Online piece that the Democratic party's approach to the current Presidential campaign is doomed to failure. The entire piece is well worth reading, but here is a tidbit:
No one wishes to occupy a country. But after the instability in Iraq and a cost nearing 400 combat deaths the Democrats are now not merely questioning the tactics of achieving democracy in Iraq, but the entire notion of occupation itself. But once they go down that road they will discover history is not on their side and will be hard put to offer better alternatives to the present course.
For the record, not occupying Germany in 1918 led to the myth that the Prussians were never beaten, but stabbed in the back while occupying foreign territory ? a terrible mistake not repeated with postwar Japan and Germany. It might have been neater and quicker to leave Afghanistan after the Soviets were expelled in the 1980s and to depart Haiti in a flash, but the wages of those exit strategies were the Taliban and September 11 as well as the current mess in the Caribbean. The first Bush administration left the present jumble in Iraq to the second, which to its everlasting credit is determined not to leave it to others. Had Mr. Clinton bombed and then just left the Balkans, rather than the present costly and bothersome peace we would have had the sectarian and tribal sort of ruin that surely will get worse if we run now from Iraq.
Since the Democrats viciously and clumsily have attacked one of the most courageous (and humane) policies of any administration in the last 30 years, the American people will soon come to ask what they in fact will propose instead ("put up or shut up"). Most of us are cognizant that bombing from 40,000 feet gives an "exit strategy," but, without soldiers on the ground, postpones the problem of tyrannical resurgence ? and thus will inevitably leave either another war for another generation or something far worse still on the horizon like September 11.
There were a number of legitimate areas of debate for the fall campaign ? deficits, unfunded security measures at home, moral scrutiny over postwar contracts, more help for Afghanistan, greater control of domestic entitlements, unworkable immigration proposals, and the like. But instead of statesmanship from the opposition, we got slander about Mr. Bush's National Guard service, misrepresentations about intelligence failures that had hampered both previous administrations and the present congress, preference for an unsupportable European position over our own, and stupidity about what to do in Iraq.
The Democrats may have seen some short-term gains from all the attention given to their bluster, but theirs still remain untenable issues. And so nemesis will bite them like they will not believe in the autumn ? and, of course, just when it matters most.
The Chronicle reports that Houston-based Plains Resources executives are joining Seattle billionaire and Microsoft co-founder Paul Allen to buy out and take private the midstream energy company for about $395 million in cash and the assumption of $50 million in debt. Plains' board voted in favor of the sweetened $16.75-per-share price, unlike last month when it turned down an earlier offer of $14.25 per share. Plains Resources is Mr. Allen's first sizable investment in the energy business in general and in pipelines specifically.
The NY Times reports federal grand jury in Manhattan is investigating the sale of tax shelters by Big Four accounting firm KPMG to corporations and wealthy individuals who used them to escape at least $1.4 billion in federal taxes. This announcement comes on the heels of KPMG's recent shake up of its tax practice and removal of three senior executives in the wake of widening Congressional, IRS, and civil lawsuit scrutiny over failed tax shelters that the firm promoted. KPMG was among the most aggressive sellers of tax shelters, collecting $124 million in fees for tax shelters from 1997-2001, acccording to a recent Senate Permanent Investigations subcommittee report.
As noted in an earlier post, a political action committee ? Texans for a Republican Majority ? that House majority leader Tom DeLay of Houston created is the subject of a grand jury investigation in Austin. Yesterday, the Chronicle and the Austin American Statesman report that the investigation turned to Texas House Speaker Tom Craddick and six other Republican lawmakers Thursday as Travis County prosecutors subpoenaed records of the speaker's race. the primary issue in the investigation is whether Texans for a Republican Majority improperly used corporate contributions to help finance the campaigns of more than 20 Republican candidates for the Texas House of Representatives in 2002. Campaign finance watchdog organizations believe the investigation will affect whether "soft money" ? that is, unlimited contributions from corporations, unions and wealthy individuals ? will become a primary financing source for state and local elections.
The Chronicle reports and the Texas Lawyer reports here on the plaintiff in the landmark Roe v. Wade abortion case seeking a Fed. R. Civ. P. 60(b) order allowing her to return to the courtroom in the hope of overturning the U.S. Supreme Court's decision that made the procedure legal. After losing in the District Court on her motion, the plaintiff has appealed that denial to the Fifth Circuit Court of Appeals, which has set oral argument on the matter for March 2.
In an ironic twist, the Chronicle also runs a front page story today about twin baby girls born Feb. 11 in Houston, one of whom weighed 2.8 pounds and the other 12 ounces at birth. Houston's fabulous Texas Children's Hospital in the Texas Medical Center has long been one of the nation's leader's in the care of premature babies.
All the major newspapers have multiple articles on yesterday's indictment of former Enron CEO and COO, Jeff Skilling. The best are The Houston Chronicle, The Wall Street Journal ($), and The New York Times.
As mentioned in earlier posts, I have read all of the books that have been published over the past couple of years on the Enron collapse, and the best one by far is Bethany McLean and Peter Elkind's "Smartest Guys in the Room."
February 19, 2004
The U.S. Securities and Exchange Commission announced that it has decided to conduct a formal investigation into London-based Royal/Dutch Shell Group's surprise announcement on Jan. 9 that it was downgrading 20 percent of its proved reserves and reclassifying them into less certain unproved categories. The SEC had been making an informal inquiry into the matter since Shell's announcement. A formal investigation usually means that SEC regulators have reason to believe laws may have been broken, but do not have sufficient evidence to make that conclusion. The investigation gives the SEC legal power to subpoena documents and testimony from Shell.
This London Telegraph story relates the hilarious story of an Oxford engineering student "blagging" his way through a series of lectures on global finance to Chinese business PhD students. The only problem was that the lectures were supposed to be given by a New York economics professor who happened to have the same name as the Oxford student. Ah, the inscrutable nature of economics!
As noted earlier in an earlier post, the indictment continues a government strategy in the Enron-related criminal cases to allege dozens of criminal counts that would result in the equivalent of a life sentence for Mr. Skilling if he is convicted on all or simply most of the counts. The criminal case against Mr. Skilling landed in federal District Judge Sim Lake's court, who is smart and fair, and an outstanding trial judge. This case is shaping up to be a real donneybrook.
In Bank of China v. NBM LLC, No. 02-9267 (2d Cir. Feb. 17, 2004), the 2nd Circuit reversed a jury's $132 million civil RICO verdict in a bank fraud trial, in part because of a Fed. R. Evid. 701 violation. The plaintiffs offered an employee to testify in the form of lay opinion about various aspects of banking practice and custom and the district court admitted the testimony, citing the witness' years of experience in international banking and "common sense." Inasmuch as the testimony was based exclusively on the experience of the witness, the 2nd Circuit held that the testimony was subject to Fed. R. Evid. 702's disclosure requirements for expert evidence, and not properly admissible as lay opinion. Although the 2nd Circuit observed that the Fed. R. Evid. 701 violations are subject to a harmless error analysis, the Court nevertheless concluded that the evidentiary error was not harmless, given that the witness' testimony comprised nearly a thousand pages of the trial transcript.
Moral to this decision: Disclose your experts!
Houston-based Crown Castle International Corp, which owns and operates a network of 15,500 towers and rooftop sites that hold a variety of communications transmissions equipment, on Wednesday reported a net loss of $171.4 million on fourth-quarter revenue of $253.8 million for the period ending Dec. 31, 2003. For the year ending Dec. 31, 2003, Crown Castle had total revenue of $930.3 million (up from $902 million in 2002), but a net loss for fiscal year 2003 of $420.9 million, which increased from the 2002 net loss of $273 million. This more optimistic analysis of Crown Castle's prospects appeared in the Houston Business Journal last September.
One of my favorite magazines is Atlantic Monthly. In the February edition, North Korea dictator Kim Jong II's former cook pens an article ($) about the decade he spent cooking for the, might we say, idiosyncratic Mr. Kim. The entire article is well worth reading, but here is a sampling:
Kim Jong Il is an avid equestrian, and has even appeared in a TV movie atop a snow-white horse. (All horses belonging to the Kim family are white.) I often accompanied him on long rides. . . One day in 1992, as I was riding behind Kim Jong Il at a right-turning path, I noticed that his horse was standing by itself. Kim had fallen off the horse. It had apparently slipped on a bed of pebbles laid over some asphalt being repaired. Kim Jong Il had hit his head and shoulder quite hard and had fallen unconscious. A doctor was called immediately.
I'm not sure when he regained consciousness, but the next day we all returned to Pyongyang by his private train. From that day, every evening at 10:00 P.M. for the next month, five or six of his administrative staff members and I would be injected with the same painkiller that Kim Jong Il was taking. He was afraid he would become addicted to it, and didn't want to be the only one.
The Chronicle reports the Wal-Mart is planning to build a huge distribution center in Chambers County that will boost container tonnage through the Port of Houston and create hundreds of jobs. The 2-million square foot distribution facility, which will be one of the largest import centers in the country, will be at Cedar Crossing Business Park just outside of Baytown. The structure will cover roughly 50 acres of land under one roof.
Following an earlier post on last week's Chronicle article on the impact that tort reform is having on Harris County jurors, Professor Richard Alderman, who holds the Dwight Olds Chair in Law at the University of Houston Law Center, writes this op-ed in which he criticizes the effect of tort reform propaganda on the civil justice system. Professor Alderman notes the following in a part of his op-ed:
The United States does not regulate the marketplace by legislation. We regulate through the civil justice system. Private attorneys represent private citizens injured as the result of negligent, incompetent, careless or even willful conduct. Professionals maintain high standards, corporations follow the law, manufacturers develop safe products, landlords maintain security systems, and newspapers and television stations check and double check stories because of lawsuits. Our civil justice system is often the only recourse you have when you lose your money, your health or even your life. And an essential part of that system is the damages the Legislature and courts have determined may be recovered by an injured individual. Just as jurors must make the hard decision to imprison or even sentence a criminal to death, civil jurors have a duty to follow the law and award damages authorized by the Legislature.
The Chronicle reports that the FBI has investigated The University of Texas Health Science Center at Houston and found no evidence that employees regularly accessed child pornography websites. The investigation was commenced after a UT-Houston auditor expressed concern last fall that a number of employees, including physicians, might have violated child predator laws when they visited porn sites on UT Houston computers. An earlier post about this matter is here.
February 18, 2004
For those interested in a thorough analysis of President Bush's service record in the Air National Guard, you should read this Bryon York article. If you prefer to criticize the President on this issue regardless of the facts pertaining to his Air National Guard service, then you should ignore Mr. York's article.
The Chronicle is reporting that the Houston federal grand jury investigating the demise of Enron Corp. indicted Jeff Skilling, Enron's former CEO, this afternoon. Mr. Skilling surrendered to the FBI to the FBI in Houston early Thursday. Earlier posts regarding Mr. Skilling are located here, here and here. Other relevant documents are the indictment against former Enron CFO and Skilling confidant Andrew Fastow and the indictment against former Enron chief accountant, Richard Causey.
A serial Ponzi scheme promoter, Lanny Lown, 40 -- who posed as an international businessman operating under the name of One West Financial from 2001-03 and scammed nearly $15 million from hundreds of Houston Ship Channel-area retirees -- has been sentenced to life in prison, the Houston Chronicle reports here.
State District Judge Michael Wilkinson on Monday also fined Lown $10,000 and ordered him to repay $14.9 million as a condition of any parole after serving at least 15 years. Grizzled courhouse veterans speculated that Lown would have a hard time raising that kind of money while serving his sentence.
In the understatement of the year to date, Lown's defense attorney told the Chronicle that "he regretted allowing the judge, rather than the jury, decide the sentence."
The Astros' main rival in the National League Central Division--the Chicago Cubs--will announce today that they have signed Greg Maddux, a certain future Hall of Famer and one of the best pitchers of the past two decades in Major League Baseball.
Assuming everyone stays healthy, the Cubs and Astros can throw the following pitching rotations at each other:
An Alabama federal jury yesterday awarded a group of ranchers $1.28 billion in damages after it found that Tyson Fresh Meats, the country's largest beef packer and a division of Tyson Foods, used illegal cattle contracts to hold down the prices it paid them. The cattle ranchers originally filed their suit against IBP Inc., which was later bought by Tyson Fresh Meats. This is the first verdict in the three class actions that cattle ranchers have brought against three of the four largest beef packing companies in the U.S. The other two cases remain pending in Alabama federal court.
For my money, Holman Jenkins of the Wall Street Journal (subscription requried) is one of the most insightful commentators on business and related political matters on the scene today. In today's column, Mr. Jenkins analyzes Comcast's bid for Disney. The entire piece is well worth reading, but here are a few tidbits:
Four years ago we adopted Disney and Michael Eisner as our standard example of how the world had been left off-kilter by the absence of hostile takeovers. Nothing would do more to redress the imbalance of power that puts CEOs in the catbird seat, we said, than restoring a lively market for corporate control, which had been all but outlawed by court decisions and state laws.
Picking at the scab in several subsequent columns has finally paid off. That said, last week's Comcast offer isn't a good deal for Disney, even if Comcast's Brian Roberts is hoping Mr. Eisner no longer has the credibility to say so. Disney is a "content" company, and even if badly run, gets up every morning with a chance to start anew. Comcast is the one that finds itself nowadays in a strategic pickle.
* * *
A final note on the content vs. distribution quandary: The merest whiff of a media merger brought out the Chicken Littles, consisting of self-appointed consumer groups in full cry about media monopolization. Listen closely and the substance of current complaints about the media is exactly the opposite: too little control, too many voices, too much programming that serves tastes and values the critics disapprove of.
* * *
Unquestionably, public anxiety over the expanding media cacophony is a real phenomenon, as evidenced by the urge to link every act of juvenile delinquency to something learned on the Internet or heard on a heavy-metal record. There's almost a neurosis at work here: What critics want is Big Brother, but saying so would be the ultimate political incorrectness, so they phrase their agenda as fear of Big Brother, usually bearing a resemblance to Rupert Murdoch.
Cingular won the bidding war for AT&T Wireless, beating Vodafone with an offer of $41 billion. Regulators are expected to approve the deal to create the largest U.S. wireless company. As usual, the Wall Street Journal (subscription required) is all over the story, and the NY Times also has extensive coverage on the merger.
Houston Mayor Bill White announced Arturo Michel, a partner at Bracewell & Patterson, as the new city attorney Tuesday. As City Attorney, Mr. Michel will oversee an attorney staff of approximately 100, which primarily handles contract matters for the city, prosecutes municipal offenses, and defends the city in civil litigation.
Houston based El Paso Corporation disclosed that it is reducing the value of its estimated proven reserve base of its oil and gas properties by 41%. Proven reserves represent what an oil and gas company can reasonably expect to produce based on economic conditions and technology. As a result, El Paso will record a one-time, non-cash charge against its fourth-quarter earnings of about $1 billion on a pretax basis, which, under federal securities rules, must be taken to reflect the decline in value of the proven reserve base on El Paso's books.
El Paso's move comes on the heels of Royal Dutch/Shell Group's announcement last month that it was reducing the value of its proven reserve base by 20 percent and El Paso's warning to investors earlier this month that it expected to make a material negative revision in its proven reserve estimates.
El Paso continues to struggle under a heavy debt load. It has also been liquidating a number of assets over the past year to raise cash and reduce debt.
Update: The Houston Business Journal this afternoon reports that El Paso's stock price was hammered today on the report of the reserve write down. The HBJ article includes analysis on El Paso from John Olson of the Sanders Morris Harris investment firm. Mr. Olson gained local fame when he was one of the only investment analysts who was bearish on the stock of Enron Corp. well before Enron melted down in late 2001.
February 17, 2004
Southwest Recreational Industries Inc., the Leander, Texas-based maker of the sports field surface AstroTurf, has filed bankruptcy and has requested a Georgia Bankruptcy Court that that it be allowed to liquidate on orderly basis under chapter 11, the Austin American Statesman reports here. SRI's initial motion to use cash collateral describes a surprisingly highly-leveraged business that essentially choked under a combination of high debt service payments and the costs associated with installing its product. SRI's initial bankruptcy docket can be reviewed here. Although SRI's corporate offices are in Leander, Texas (25 miles northwest of Austin), its manufacturing operations are in Georgia where the bankruptcy case was filed.
Walt Disney Co. has rejected Comcast's initial takeover offer. Inasmuch as Comcast's offer was low-ball, this is no surprise. However, Comcast will likely sweeten the offer and ultimately Disney's board will likely be forced to allow shareholders an opportunity to accept a Comcast tender offer. Stay tuned for developments.
Meanwhile, the Wall Street Journal has an excellent editorial (subscription required) today, a part of which points out the following:
Whatever the outcome, Comcast's bid for Disney shows that the mere threat of takeovers can have benefits. Even if it fends off Comcast, Disney's board is finally going to have to address the company's failings. * * * Research shows that when shareholders are a dominant management influence, companies do better. * * * Our own hope is that Disney's board lets its bosses -- the shareholders -- first decide who they want running the company. With that out of the way, Disney can then work on the details of recapturing its former financial glory.
A Sul Ross State economics professor who criticized his students' academic competence in an obscure magazine article was surprised to learn that his students (and the local townspeople) actually read the article.
The Houston Chronicle leads with a story today that the long expected indictment of former Enron CEO Jeff Skilling this week does not mean that the government will have an easy time convicting Mr. Skilling of a crime. The same thought was expressed last week in an earlier post on Mr. Skilling.
Interestingly, although numerous former Enron executives have been indicted, the Enron Task Force has yet to take one of the cases to trial. Indeed, the only Enron-related prosecution to date has been the conviction of corporate defendant Arthur Andersen, which by no means was an easy (or clear cut) victory for the government.
Virtually every Enron-related indictment to date has contained so many alleged offenses that a conviction would lead to a prison sentence of draconian length. Accordingly, rather than risk an extremely long prison sentence after a trial in an environment that is extremely hostile to anyone related to Enron, most of the Enron defendants are electing to cop plea bargains, such as the plea bargain that ex-Enron CFO Andrew Fastow agreed to last month.
The government's strategy in the Enron criminal cases is at least mildly troubling. The government indicts an individual with so many counts of alleged crimes that the defendant is confronted with the choice of risking trial and the potential of virtual life imprisonment or striking a plea bargain that limits their jail time, but waives valid defenses to the alleged wrongdoing. The government's job is to indict and convict wrongdoers, not to sledgehammer citizens into copping pleas. I am hopeful that the District Judges involved in the Enron criminal cases (and there are several very good Southern District of Texas Judges involved in these cases) dismiss criminal counts that the government has merely added for leverage purposes and allows the government to proceed to trial only on those counts where there is sufficient evidence that a fact finder could decide that a crime occurred.
The Houston Bar Association Bankruptcy Section's monthly lunch meeting is tomorrow at 11:30 a.m. in the Houston Club in downtown Houston at 811 Rusk Ave (map here, but takes a while to load). Houston bankruptcy attorneys Preston Towber and Joe Epstein will be giving a talk on practice and procedure relating to involuntary bankruptcy cases.
Also, new Bankruptcy Judge Marvin Isgur (a prior post detailing Judge Isgur's background is here) will use this luncheon to introduce his new staff to the local attorneys in attendance. Admission cost for the seminar and lunch is $30, payable at the door. If you plan to attend, please call Michelle Pittman at 713.216.4075 to reserve a seat.
Finally, next Tuesday, February 24, the HBA Bankruptcy Section will host a reception for Judge Isgur at 5:30 p.m. in the foyer of The Hobby Center in downtown Houston after Judge Isgur's formal Investiture ceremony earlier that afternoon. If you plan to attend the reception, please call Ms. Pittman at 713.216.4075 to let her know so that a reasonably accurate head court can be estimated prior to the reception.
Elaine McAnelly is the Chair of the HBA Bankruptcy Section, and Elaine and her staff have been doing a great job coordinating recent events honoring incoming Judge Isgur and retiring Judge Leal. Good work, Elaine!
I have returned to the office from jury duty, and I am happy to report that I did not traumatize any young attorneys during voir dire. Mike Mayes, Judge of the 410th District Court of Montgomery County, did a great job greeting the jurors and explaining the importance of citizen juries in our civil justice system. Mike is running for re-election in the Republican Primary, and is well-deserving of any Montgomery County citizen's vote.
February 16, 2004
Blogging will be light at least early tomorrow as I have been called for jury duty in the morning. I look forward to jury duty because it allows me to experience what jurors endure in connection with voir dire and measure how they react to it. It is a valuable learning experience.
The last time I was on jury duty several years ago, the panel was about 50 people for a DWI case. Both the prosecutor and the defense attorney were male, quite young, and neither could have been more than a few years out of law school. The prosecutor's voir dire was boring and dreadful, and included him asking the patronizing question to a housewife (she had three children) on the panel: "Do you have a job?" Ouch!
At any rate, after the prosecutor finished, the young defense attorney introduced himself and his client, and then launched into the opening of his voir dire:
"The State has accused my client of being a drunk driver. That's a very serious charge, my client denies it, and we will prove that it is a false charge. However, for some people, it is simply impossible to keep an open mind about a person who has consumed an alcoholic beverage and then driven a car. Out of fairness to my client, to serve on this jury, you need to have an open mind and not already determined that my client is guilty simply because he had a drink before driving his car."
"So," the young defense attorney asked the panel. "Do any of you already have a belief as to my client's guilt or innocence?"
Looking around and seeing no one else responding, I raised my hand.
"Yes," noted the defense attorney. "Juror number 32. Mr. Kirkendall. Do you have a belief as to my client's guilt or innocence?"
"Yes I do," I responded.
"What is it," asked the defense attorney.
"Your client is innocent," I observed. "Until proven guilty."
I don't know whether it was because the other jurors expected me to say that I could not have an open mind on a DWI case, the prosecutor's dreadfully boring voir dire, the formality of the courtroom, or a combination of those factors. However, the entire jury panel, the judge, the lawyers, the bailiffs, and the defendant all cracked up laughing over my response. "Thank you, Mr. Kirkendall," said the judge from the bench, still chuckling. "We all needed that."
To his credit, the young defense attorney recovered nicely, complimented me for my correct answer to his question, and finished his voir dire quickly. Although the prosecutor laughed at my response to the question, he immediately used one of his peremptory challenges to strike me from the panel.
I promise to behave myself tomorrow. ;^)
The Texas Law Blog points to a Houston Chronicle weekend article that interviews various Harris County judges and attorneys regarding the increased difficulty that courts are having in finding jurors who are willing to follow Texas law in awarding damages in personal injury cases. Many jurors are now advising attorneys and courts during voir dire that they are unwilling to consider awarding damages in regard to certain types of injury such as mental anguish, and some are admitting that they are unwilling to award punitive damages. In the face of intense political debate in Texas regarding tort reform over the past couple of years, the article is more anecdotal evidence that the tide of Harris County public opinion is turning against the awarding of large personal injury damages.
The NY Times reports that a political action committee ? Texans for a Republican Majority ? that House majority leader Tom DeLay of Houston created is the subject of a grand jury investigation in Austin. The investigation follows a complaint filed with the Travis County District Attorney last year by Texans for Public Justice campaign watchdog group.
According to sources for the Times article, the primary issue in the investigation is whether Texans for a Republican Majority improperly used corporate contributions to help finance the campaigns of more than 20 Republican candidates for the Texas House of Representatives in 2002.
Campaign finance watchdog organizations believe the investigation will affect whether "soft money" ? that is, unlimited contributions from corporations, unions and wealthy individuals ? will become a primary financing source for state and local elections.
Houston-based Garden Ridge has filed its initial operating report in its pending chapter 11 case. Also, the U.S. Trustee has filed its notice of appointment of the Creditors' Committee in the case. Prior posts regarding the Garden Ridge case may be reviewed here, here and here.
Bob Ryan's calm personnel analysis in the Boston Globe reflects that the Yankees' acquisition of Alex Rodriguez over the weekend does not necessarily mean that the Yankees' lineup this season will be significantly better than the Red Sox.
For the most part, Ryan's analysis is reasonably accurate, although he is wrong in suggesting that the Red Sox's Pokey Reese is better than any Yankee alternative at second base. Although many people watch baseball, far fewer understand (even some in the baseball business) what attributes make a truly good baseball player. Reese is a poster child for the tendency of unknowlegeable fans to equate flashy fielding (which Reese can do) with quality production as a player (which Reese has rarely done). Reese's main contribution to teams on which he has played is to make an unusually high number of outs.
As a potential bonus, the Yankees will have A-Rod available in the event Jeter gets hurt. Not many clubs could envision losing a Derek Jeter and improving themselves at shortstop.
February 15, 2004
This pragmatic Washington Post editorial (free registration required) calls on Senator Kerry to clarify his position on several key issues, including the following:
The most important confusion surrounds Mr. Kerry's position on Iraq. In 1991 he voted against the first Persian Gulf War, saying more support was needed from Americans for a war that he believed would prove costly. In 1998, when President Clinton was considering military steps against Iraq, he strenuously argued for action, with or without allies. Four years later he voted for a resolution authorizing invasion but criticized Mr. Bush for not recruiting allies. Last fall he voted against funding for Iraqi reconstruction, but argued that the United States must support the establishment of a democratic government.
Mr. Kerry's attempts to weave a thread connecting and justifying all these positions are unconvincing. He would do better to offer a more honest accounting. His estimation of the cost of expelling Iraq from Kuwait in 1991 was simply wrong; and if President Bush was mistaken to think in 2003 that there was an urgent need to stop Saddam Hussein from stockpiling weapons of mass destruction, Mr. Kerry made the same error in 1998.
Tom Mighell of Dallas is the granddaddy of Texas bloggers. His blog--Inter Alia--is an outstanding source of current information on technological and web-based developments in legal and related forms of research. One item that Tom produces weekly (usually on Sunday) is the Internet Legal Research Weekly, which provides Tom's insights and helpful links regarding legal and related forms of research. Over the past couple of years, I have obtained more useful information from Tom's blog and weekly research update than from any other information source. I recommend highly that you visit Inter Alia often and subscribe to Internet Legal Research Weekly. These are special resources.
The Houston Symphony has announced its 2004-05 season. The Symphony has gone through a tough financial stretch over the past couple of years, but it is a class organization and deserving of Houstonians' generous support. The Symphony plays in Houston's venerable Jones Hall, which is located in the heart of Houston's downtown Theatre District.
Texas senators Kay Bailey Hutchison and John Cornyn have recommended to President Bush that he nominate McAllen, Texas attorney Micaela Alvarez to the U.S. Senate to fill the federal district judgeship for the Southern District of Texas, Laredo Division, that will become vacant later this year when present Judge Keith Ellison transfers to the Houston Division. When he was Governor of Texas, President Bush appointed Ms. Alvarez in 1995 to a state district judgeship in Hildalgo County, but she was subsequently defeated in the 1996 election (Hildalgo County is in the Rio Grande Valley of Texas, which is predominantly Democrat). Ms. Alvarez is a 1980 graduate of the University of Texas at Austin and a 1989 graduate of the University of Texas Law School. Between undergraduate school and law school, Ms. Alvarez worked as a social worker, and she has been in private practice in McAllen since 1996.
February 14, 2004
The LA Times reports today that Disney has hired longtime mergers and acquisitions specialist, Martin Lipton, to advise the Disney Board regarding Comcast's recent bid. Mr. Lipton is credited in legal circles as being one of the lawyers who devised the poison pill strategy, which Professor Bainbridge explained recently here. However, my sense is that Disney will not be adopting a poison pill strategy in defending against the Comcast bid. The Board has already been heavily criticized for its unwavering support of CEO Michael Eisner despite Disney's lagging stock price. A poison pill strategy would be widely viewed as the Board again supporting a strategy mainly benefitting Mr. Eisner and an unproductive management team at the expense of Disney's shareholders. However, Mr. Lipton is a heavyweight in defending these matters, so Disney is clearly signaling to Comcast its willingness to rumble by retaining him.
Sound email policies are important for any business. If you don't believe it (or even if you do), then you need to read this.
Paul Sperry of the Frontpage Magazine reports that a former FBI linguist has made potentially explosive allegations to the 9/11 Commission regarding the subversive actions of a key FBI Middle Eastern agent. Read the entire article, but here is tidbit:
When linguist Sibel Dinez Edmonds showed up for her first day of work at the FBI, a week after the 9-11 attacks, she expected to find a somber atmosphere. Instead, she was offered cookies filled with dates from party bowls set out in the room where other Middle Eastern linguists with top-secret security clearance translate terror-related communications.
She knew the dessert is customarily served in the Middle East at weddings, births and other celebrations, and asked what the happy occasion was. To her shock, she was told the Arab linguists were celebrating the terrorist attacks on America, as if they were some joyous event. Right in front of her supervisor, one translator cheered:
"It's about time they got a taste of what they've been giving the Middle East."
She found out later that it was her supervisor's wife who helped organize the office party there at the bureau's Washington field office, just four blocks from the J. Edgar Hoover Building.
The credibility of these allegations coming from a former (and presumably disgruntled) employee is still untested. However, given the U.S. intelligence failures documented in Gerald Posner's "Why America Slept," Laurie Mylroie's "The War Against America" and "Bush vs. the Beltway," and Robert Baer's "See No Evil," these allegations need to be investigated carefully.
Meanwhile, in Policy Review, Richard L. Russell, professor of national security affairs at the National Defense University?s Near East-South Asia Center for Strategic Studies, provides an insightful analysis of the intrinsic problems in the U.S. intelligence apparatus and proposals for remedying them.
The NY Times has a good follow up article on the indictment of baseball star Barry Bonds' personal trainer and three others for illegal distribution of steroids. The indictment and other information on this story can be reviewed here.
The Austin American-Statesman (registration required) reports that University of Texas law students, lawyers and civil rights advocates are contending that Army Intelligence questioning of people on the UT campus in Austin was an unjustified attempt to dampen free speech on the campus. The agents visited the UT Law School this past Monday to request a list of participants in a Feb. 4 conference at the UT Law School on women's issues in Muslim countries. When informed that the conference was open to all citizens and that no such list existed, the agents interviewed students and asked for the contact information of the female who organized the conference.
Although the investigation of this conference is perhaps a bit over the top, the self-righteous reaction of some UT students and faculty members is even more so. The United States is at war, and reasonable intrusions on U.S. citizens' civil liberties during war time are legal. Denouncing intelligence agents publicly simply because they are doing their job reflects a widespread attitude in current American society that it is unnecessary to sacrifice for the war effort. I am quite glad that the parents and grandparents of these UT students and faculty members did not have the same attitude during WWII.
The NY Times reports today on an interesting study in the Journal of Empirical Legal Studies that concludes that Texas, generally thought to be the death penalty capital of the U.S., actually sentences a smaller percentage of people convicted of murder to death than the national average because the conventional view fails to take into account the large number of murders in Texas.
"Texas' reputation as a death-prone state should rest on its many murders and on its willingness to execute death-sentenced inmates," wrote the authors of the study, "It should not rest on the false belief that Texas has a high rate of sentencing convicted murderers to death."
As a percentage of murders, Nevada and Oklahoma impose the most death sentences, at 6 and 5.1 percent. In Texas, the percentage is 2 percent. The rate in Virginia, another state noted for its commitment to capital punishment, is 1.3 percent. The national average is 2.5 percent; the median is 2 percent.
Using the same analysis, the study concluded that blacks are actually underrepresented on the nation's death row in that blacks commit 51.5 percent of all murders nationally, but only comprise 42 percent of death row inmates.
The NY Times follows yesterday's Houston Chronicle report with this article on the impending indictment of former Enron CEO, Jeff Skilling. Mr. Skilling and former Enron Chairman Ken Lay are the two highest ranking former Enron officers who have not been indicted by the U.S. Justice Department's Enron Task Force. Messrs. Skilling and Lay are coming under intense scrutiny at this time because of the recent plea bargain that ex-Enron CFO Andy Fastow struck with the government last month, as noted in this earlier post. Here are links to the Fastow indictment and plea bargain agreement.
February 13, 2004
For the next three years, it would be a very good idea to avoid this area around the Spur 527 into downtown Houston from the Southwest Freeway as a major road renovation project gets underway this weekend. Frankly, it would be a good idea to avoid the entire stretch of the Southwest Freeway from Kirby or Shepard Drives on the west to the 288 Freeway on the east. Until drivers get used to this project and readjust driving routes, be scared. Very scared.
If reasonable people thought Saddam possessed forbidden weapons, that was because Saddam sought to give the impression that he possessed them. He may have believed he possessed them. (His fearful and corrupt scientists, Kay hypothesized, may have been running a sham weapons program.) For four years after the 1991 Persian Gulf War, Iraq successfully hid its chemical weapons program. When a defector blew the whistle, weapons inspectors were stunned at the extent of Saddam's deception. The Iraqis responded not by coming clean but by redoubling their efforts to obstruct and intimidate -- for example, interfering with inspectors' helicopter flights and, at one point, firing a grenade into their headquarters. No one could have failed to conclude that Saddam was hiding the truth.
The truth he hid, however, was not his weapons but his weakness. Or perhaps his minions were hiding his weakness from him. In either case, his power and prestige depended upon his fearsome reputation at home and his defiant posture abroad. He was contained but could not afford to let anyone know it, for fear of being invaded or overthrown. So he waved what looked like a gun and got shot.
Many people now demand to know why American intelligence was so badly fooled. The subject certainly merits investigating. Questions should be asked. Chins should be stroked. But even without an investigation, we know the most important reason we were fooled: Saddam Hussein did everything in his power to fool us, and by the time he stopped trying to fool us -- if he stopped trying -- it was too late for anyone ever to believe him.
The war was based on lies. Not Bush's or the CIA's; Saddam Hussein's.
''Is that (Greg) Norman's boat?''
The NY Times Dave Anderson weighs in with this piece that points out that professional golfer Vijay Singh's current streak of finishing in the top 10 in 12 straight Tour events is not particularly impressive in comparison to the streaks that Byron Nelson and the late Ben Hogan put together years ago. Author Dan Jenkins, the defender of all things old in regard to professional golf, would heartily agree with Mr. Anderson.
One of Texas' great business success stories--Southwest Airlines--is causing heartburn to U.S. Airways in the Philadelphia market with Southwest's tried and true formula of low fares and prompt service.
Two first rate economists--Jeffrey Faux and Bradford DeLong--take a close look at the legacy of former Clinton Administration Treasury Secretary Robert Rubin's fiscal policies in this exellent piece from The American Prospect Online. A sampling of the observations:
(from Mr. Faux): As Rubin tells the story in his new memoirs, he persuaded Clinton early on to make financial-market "confidence" the administration's chief economic priority. Key to the strategy was Greenspan, who was supposedly concerned that spiraling federal deficits would ignite inflation, forcing him to raise interest rates and thus choke off growth. Cut the deficit, argued Rubin, and Greenspan will let the economy live. * * * So Rubin's plan worked, but the cost was high. Hopes that the peace dividend from the end of the Cold War would finance major new programs in health care, education, and other areas of public need were dashed. Social investments as a share of the country's national income actually declined over the Clinton years. Fights over free trade split the party and contributed to the loss of the House of Representatives, from which Democrats have still not recovered. And deregulation led to an orgy of irresponsible speculation and fraud that eventually left workers without pensions, small-scale shareholders with worthless paper, and California -- among other places -- without the money to pay for basic services.
(from Professor DeLong):
Running surpluses now, giving the country the debt capacity to finance these forthcoming rises in social-insurance expenditures, seemed to us a wise policy. The alternative -- to merely stabilize the debt-to-GDP ratio and make no special provision for the generational future -- seemed to us likely to create a situation in which a) the elderly programs eat the rest of the social-insurance state alive and b) they then self-destruct.
Mr. Faux closes by posing this interesting question: "Does anyone believe that more investment in health care and education would have been less productive for the American economy in the 1990s than yet more private investment in financial derivatives or shopping malls increasingly loading up consumers with imported toys and unsustainable debt? "
Virtually every major newspaper is all over the Comcast bid for Disney. My vote for best coverage so far is the Wall Street Journal (subscription required), although the LA Times and the NY Times are doing a good job, too. Past posts about the proposed merger are here and here.
Professor Stephen Bainbridge of the UCLA School of Law made the interesting observation in his blog yesterday that the absence of a poison pill in Disney's corporate takeover defense strategy may ultimately play an important role in the success of Comcast or some other company's bid for Disney. In so doing, Professor Bainbridge provides an excellent summary explanation of poison pills and how they are used to fend off hostile takeovers.
The college baseball season begins this weekend in Houston with the annual Minute Maid College Classic at Minute Maid Park. The six team event, which includes Rice, Houston, Texas, Texas Tech, Ohio State, and Kansas State, runs through Sunday and is held in conjunction with the Astros' Fan Funfest at the ballpark.
College baseball is big in Texas in general and Houston in particular. Rice is the defending NCAA National Champion and Texas won the championship the year before. Moreover, Houston has an outstanding program, and almost knocked out Rice last year and Texas the year before in the NCAA Regional Finals. Finally, both Rice and Houston have outstanding on-campus ballparks that make watching a game at either place a highly enjoyable experience.
Although not as popular as either big-time college football or basketball, a good case can be made that college baseball is a much better structured and a truer college sport than either football or basketball. Unlike professional football and basketball, professional baseball has a well-established minor league (i.e., apprentice) system. Consequently, high school players with professional baseball potential have a choice coming out of high school--either sign a professional contract and apprentice in the minor leagues or take lesser pay (i.e., the value of a full or partial college athletic scholarship) and play baseball in college for a few years. As a result, big-time college baseball programs are generally comprised of an attractive mix of players--a few players with professional potential who have opted to develop for a time in a fun college environment and the majority of players who are simply playing for a little scholarship money and the love of the game.
In contrast, high school players with professional football potential really do not have much of a choice. With no minor league football system in place, they must apprentice in college football--regardless of whether they have any interest in a college education--because few high schoolers are physically developed sufficiently to qualify for an NFL team. Professional basketball is somewhat different, primarily because the personnel requirements of the professional teams are signicantly less than football or baseball and thus, the professional teams can use a few of their roster spots to develop young phenom players who are not ready yet to play at the NBA level. Nevertheless, unless a high school basketball player with professional potential is a phenom, his only real alternative is to develop in college basketball, again regardless of whether the player really has any interest in a college education.
Accordingly, professional football and basketball have shifted much of the risk and cost of player development to big-time college football and baseball. As a result, those college sports are filled with players who really do not appreciate or belong in a university environment. So long as university presidents are willing to accept that risk from the pros, I do not expect any meaningful reform in college football or basketball to occur. However, if the university presidents want a model of how to reform those sports, they need to look no further than college baseball for an excellent example of how a college sport can thrive without being an apprentice league for professional sports.
The Houston Chronicle reports today that the Enron Task Force is close to indicting Jeff Skilling, the former CEO of Enron, possibly as early as next week. The recent plea bargain of former Enron CFO and Skilling protege Andrew Fastow, noted in this earlier post, probably means that the Government is using Mr. Fastow as a prime source and eventual witness in its case against Mr. Skilling.
Despite the public perception that a conviction in a criminal case against Mr. Skilling is the legal equivalent of a gimme, I'm not buying it. For all its well-publicized excesses and arrogance, Enron spent multi-millions each year on outside legal and accounting analysis and review of its various deals and public disclosures. You can bet that Mr. Skilling's capable defense lawyer--Bruce Hiler of Washington, D.C.--will point repeatedly to Mr. Skilling's disclosure to and reliance on Enron's accountants--Arthur Andersen--and its top notch law firms--Vinson & Elkins, among many others--in defending against any allegation of criminal intent in his conduct of Enron's affairs.
February 12, 2004
The NY Times reports that single season home run champ Barry Bonds' personal trainer--Greg F. Anderson--was indicted today in San Francisco with three others for illegal distribution of steroids. The indictment is here.
Bonds is a magnificent player, clearly the best of his generation and one of the best baseball players of all-time. However, in the first 14 years of his career, Bonds hit 40 or more home runs three times, 40 (1993), 42 (1996) and 46 (1997). In the past four seasons in which he has gone from age 36 to 40, Bonds has hit 49, 73, 46, and 45. Moreover, his on-base average and slugging percentage--probably the two most important individual offensive statistics in baseball--have been significantly higher in Bonds' past three seasons than they were in the previous 15. Finally, when Bonds broke into the big leagues in 1986 at the age of 22, he weighed a sleek 186 lbs. He now looks like a chiseled heavyweight of almost 230 lbs.
Uh, Barry, please pass some of those Wheaties over here.
One of the most perplexing stories recently is this one pertaining to the documentary that The History Channel recently ran regarding conspiracy theories that link the late former President Lyndon Johnson to the assassination of the late President John F. Kennedy.
What is most perplexing about this story is that it appears that no one at The History Channel performed even the slightest amount of research on the subject of this documentary before allowing it to air. If they had, then they would have read Gerald Posner's 1994 classic "Case Closed," which is the definitive book on the Kennedy Assassination. In that book, Mr. Posner systematically and dispositively debunks each one of the conspiracy theories that have been promoted over the years regarding the Kennedy Assassination and describes in an equal amount of detail how Lee Harvey Oswald pulled off the assassination by himself. That The History Channel allowed the foregoing documentary to air without at least a rebuttal from someone of Mr. Posner's stature is a serious affront to President Johnson's legacy and the Johnson Family.
The Houston Chronicle is reporting that a Galveston County Grand Jury has indicted Robert Durst again, this time on charges of "tampering with evidence" (I'm not sure that's exactly how I would characterize cutting up a corpse and throwing it into Galveston Bay, but what the heck). As noted in a prior post, Mr. Durst is well represented by noted Houston criminal defense attorneys, Dick DeGuerin and Mike Ramsey. Mr. DeGuerin, who must feel as if the Durst cases are an annuity for him, commented about the new indictment: "It's just sour grapes."
Houston-based Plains Exploration & Production Co. has agreed to buy Houston-based Nuevo Energy Co. in a stock deal valued at almost $600 million. If completed, Plains will issue about 37.5 million shares to Nuevo shareholders (based on Plains' $15.89 per share Wednesday closing price), and assume $350 million of debt and convertible securities. The deal is scheduled to close in the 2nd quarter of this year.
In preparing for Valentine's Day, a Maryland Bankruptcy Judge issues an interesting opinion ruling that a debtor's engagement ring should be returned to her ex-boyfriend even after her bankruptcy because the ring was the subject of a conditional gift. The opinion includes the judge's hilariously understated description of what must have been one wild hearing over the ring. Thanks to Stuart Levine at Tax and Business Commentary for the cite.
Hal Varian of the NY Times pens an interesting piece today on how lagging productivity in the service sectors of the U.S. economy has been dramatically improved through innovation in information technology.
Professor Eugene Volokh, constitutional law professor at the UCLA School of Law and founder of the Volokh Conspiracy blog, pens a provocative op-ed in the LA Times regarding the swirling controversy over Congressional review of federal district judge's implementation of Congressionally-mandated sentencing guidelines in federal criminal cases. Although voters should be skeptical of a politician's motives in attempting to limit judges' discretion in handling criminal cases, Professor Volokh is certainly correct that judges--as are congressman--are governmental officials and not immune from criticism or legislation that limits their discretion.
In his noteworthy How Appealing blog, Howard Bashman files a good post regarding the ongoing debate over proposed Federal Rule of Appellate Procedure 32.1, which would allow counsel to cite an appellate court's unpublished opinions in briefs to the court. Mr. Bashman is a supporter of the proposed rule, as am I.
Following an earlier post on deficit spending, Harvard economics professor, Martin Feldstein, Chairman of the Council of Economic Advisors during the Reagan Administration, weighs in with this op-ed in the WSJ (subscription required). In parts of his op-ed, Professor Feldstein observes as follows:
Although fiscal deficits impose a burden on future generations, it would be wrong to respond now with a tax increase. Raising tax rates would hurt the expansion and weaken the incentives that drive long-term growth. Rescinding the Bush tax cuts on high income individuals would not only be economically counterproductive but would also have little effect on future budget deficits. A 15% increase in the taxes of those with incomes over $200,000 (e.g., taking the 35% top rate back to 40%) would reduce future budget deficits by a mere three-tenths of 1% of GDP aside from the adverse effect on long-term growth. *** The medium-term goal for U.S. fiscal policy should, at a minimum, be a constant or declining ratio of debt to GDP. Achieving that goal requires bringing the deficit down to about 2.5% of GDP or less. Recent analysis by the Congressional Budget Office indicates that there is ample time to decide whether more is needed to achieve this than tight controls on spending. The low interest rates on long-term bonds also show that the participants in financial markets have confidence that future deficits will be coming down. *** Shrinking the deficit to a level at which the debt is no longer rising faster than GDP will require tight spending controls or GDP growth at a faster pace than in the past 10 years. There is no reason to consider a tax increase at this time. The big budget challenges for the years ahead are to continue the tough controls on discretionary domestic appropriations, to use the defense transformation to limit the budget outlays for national security, and to start the reforms of Social Security and Medicare that will be needed to avoid a budgetary explosion when the baby boom generation begins to collect retiree benefits.
Following up on this earlier post, the Houston Chronicle reports that Texas Republican congressman Joe Barton will replace retiring Louisiana Republican Billy Tauzin as chairman of the House Energy and Commerce Committee.
In other energy news, the Chronicle reports that, despite the current run-up in oil prices, many in the energy industry believe that the better long-term play is in natural gas.
Following on yesterday's post regarding the Comcast bid for Walt Disney Co., the Wall Street Journal (subscription required) provides its typically thorough coverage here, notes Comcast President's Stephen Burke's familiarity with Disney here, speculates on rival suitors here, and provides a handy timeline-lineup card here.
February 11, 2004
Jay Leno last night in his monologue on The Tonight Show:
"This is unbelievable to me. Vice President Dick Cheney went duck hunting with Supreme Court Justice Antonin Scalia, private jet, you know, a hunting reserve up in the mountains.
And Scalia went with him while the Supreme Court is still deciding a case involving Dick Cheney's energy task force. Cheney said today there is no conflict of interest.
And just to be sure, he said as soon as Halliburton finishes construction of Justice Scalia's new home, he will look into it personally to make sure there is no problem."
Two fine federal appellate judges with Texas ties will be getting married to one another this summer. Chief Judge Carolyn Dineen King and Senior Circuit Judge Thomas M. Reavley, of the Fifth Circuit Court of Appeals in New Orleans, are getting married this summer. All the best to both of these fine jurists.
As noted in this earlier post, Ryan Lizza of the New Republic Online has been writing a terrific blog from the Democratic Party presidential campaign trail. Today's entry focuses on the demise of the Wes Clark Campaign, which one Democratic pundit characterized as "Michael Jordan playing baseball."
The Houston Chronicle reports on Houston's Museum of Fine Arts' announcement of the late Caroline Wiess Law's bequest of almost 60 artworks valued at between $60-85 million. Mrs. Law was a daughter of Harry Wiess, one of the founders of Humble Oil Co., the predecessor to Exxon Mobil. Mr. Wiess and his wife Olga were founding members of the Museum of Fine Arts, which has grown into the centerpiece of Houston's Museum District just north of the Texas Medical Center.
The WSJ (subscription required) weighs in with this article on Philadelphia-based Comcast's bid for Walt Disney Co. (can something be surprising and expected a the same time?). The LA Times article is also on top of the story, including a copy of Comcast's letter to Disney's Michael Eisner.
Given Eisner's poor recent performance as Disney's CEO and his stubborn refusal to give up the reins to Disney, the fact that an adverse takeover bid has emerged is not surprising. However, it is surprising that a company such as Comcast is the bidder. Comcast, essentially a cable TV company, controls a rather unusual programming line, including the controversial talk-show host Howard Stern's show, the Golf Channel, and G4, a videogame channel.
My sense is that the late Walt Disney would not be particularly bullish on the potential market benefits of combining Tinkerbell with Howard Stern.
Acquiring assets from a company in bankruptcy is arguably the best way to acquire assets in a way that prevents the bankrupt companies' creditors from asserting any interests or claims against the assets. However, such bankruptcy "cleansing" of sales is not limitless. John Higgins, a Houston attorney and old friend, oversaw the writing of this Houston Business Journal article on asset sales in bankruptcy. It is a good overview of the law in this area for businesspersons and non-bankruptcy lawyers.
This previous post reported on the National Football League's recent loss in attempting to prevent former Ohio State underclassman running back Maurice Clarett from entering this year's NFL Draft. Yesterday, the NFL requested that the federal district judge stay the order requiring the NFL to allow Clarett to be eligible for its 2004 draft pending the NFL's appeal of that order.
Clarett's attorneys have an interesting strategic decision to make here. Clarett would be eligible for the 2005 NFL Draft under the league's current rules. Also, my sense is that Clarett has a strong case on appeal and will probably win it. Inasmuch as any such stay would be conditioned upon the NFL posting a rather large bond, Clarett may be better off strategically attempting to move the District Judge to set a high bond in favor of Clarett in connection with granting the NFL a stay of the order. In that case, Clarett could use the next year preparing for the 2005 NFL Draft (I'm sure Ohio State would not mind having him back for a season) and recover a windfall if the NFL posts the bond and then loses the subsequent appeal. Certainly something to consider.
LeBron James is an 19 year old phenom (his favorite breakfast food is Fruity Pebbles) who signed a $19 million contract out of high school with the Cleveland Cavaliers of the National Basketball Association. This Forbes article explains why James is a bargain, even at that price:
By the time the 19-year-old James turns 25, the muscular 6-foot-8, 240-pound forward will have earned upwards of $200 million from playing basketball and sponsoring sneakers, trading cards and soft drinks. That's a record for an NBA rookie: Not even Michael Jordan made that much in his first seven years.
Could one player be worth so much? Actually he's a bargain. By James' seventh season, FORBES calculates, he'll have generated $2 billion in revenues for his team and all his sponsors. Not a bad return.
The increasing political unrest in Haiti was noted earlier here. Today, the Christian Science Monitor provides a good overview of the current conflict. Meanwhile, the U.S. State Department warned Americans against travel to Haiti.
The Houston Chronicle reports today that Methodist Hospital in Houston's Texas Medical Center has announced a huge expansion that will likely cost just under a billion dollars when completed. Methodist Hospital and St. Luke's Episcopal Hospital are two of the major hospitals in the Texas Medical Center. Baylor College of Medicine, one of two medical schools in the Medical Center, has traditionally used Methodist as its primary teaching hospital, but has recently expanded its relationship with St. Luke's amidst widespread speculation that Baylor is considering termination of its relationship with Methodist. It will be interesting to see how or if Methodist's expansion impacts Baylor's decision on whether to maintain its long relationship with Methodist.
February 10, 2004
In the aftermath of Enron's demise, Congressmen fell over themselves in self-righteous indignation proposing legislation that would ensure that such a debacle would never occur again. Not only does the nature of man ensure that another Enron debacle will occur, Congressional laws enacted in a misguided attempt to overwrite man's nature often have unintended (and in this case, quite costly) consequences.
The Wall Street Journal reports today (subscription required) that U.S. companies are complaining that new Enron-resultant rules regarding corporate accountability are costing extraordinary amounts of money and management time.
The rules stem primarily from the 2002 Sarbanes-Oxley Act, which Congress enacted for the purpose of enhancing corporate governance on the heels of the Enron, Tyco, and WorldCom accounting scandals. The regulations were intended to strengthen corporate accountability and thus, restore investor confidence. Proponents of the statute contended that the new regs will help companies save money because they will avoid costly problems that would occur but for the additional regs.
However, reality is often far different than theory. As the WSJ article points out:
While there is agreement that governance rules are needed, some companies cited the increased cost of complying. "The real cost isn't the incremental dollars, it is having people that should be focused on the business focused instead on complying with the details of the rules," said Peter Bible, chief accounting officer at General Motors Corp. "Everybody feels they have to do something to react to the corporate scandals, [but] you really have to scratch your head and say, 'How is this really benefiting our shareholders?' "
The rules are coming into effect at a time when corporations already are battling other increasing costs, including health-care expenses. Even before the most expensive Sarbanes-Oxley rules take effect, companies say their audit costs are increasing by as much as 30% or more this year due to tougher audit and accounting standards, including complex rules to bring more off-balance-sheet items onto the books. Companies also are paying steep fees to fund a new accounting-oversight board -- as much as $2 million apiece annually for some large businesses.
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A survey of 321 companies released Tuesday shows that businesses with more than $5 billion in revenue expect to spend an average of $4.7 million each implementing the new 404 rule this year, according to Financial Executives International, which represents top corporate officials. Much of the money is being spent on consultants, lawyers, auditors and new software.
One of my sage clients summed it up in this manner: "The lawyers win again."
The Seattle Times runs a good article on the brewing storm between Google and Microsoft , and how Microsoft better not think that Google will be as easy to defeat as Netscape was in the browser war.
The NY Times reports that OPEC made a surprise announcement earlier today that it was cutting its production quotas. The Houston Chronicle reports that Crude prices rose on the news. The Wall Street Journal's analysis of the action is here (subscription required).
By this action, OPEC is attempting to do its part to maintain oil prices at their highest level in two decades. My sense is that this move may benefit the OPEC members in the short term, but that long term prices will fall from increased exploration and production that will result.
Yesterday's Wall Street Journal includes an interesting section (subsciption required) on trends in ten selected industries: Travel, the Internet, Aviation, Professional Sports, Commercial Real Estate, Television, Telecom, Banking, Oil and Gas, and Pharmaceuticals. A subscription to the Journal is expensive, but this type of coverage makes a WSJ subscription a good investment.
The thoughtful Daniel Drezner reminds us of the Economist's definition of when a recession becomes a depression:
When your neighbour loses his job it?s a slowdown (or, if you dislike him, a correction); when you lose yours, it?s a recession; when an economic journalist loses his, that?s a depression.
WaPo and the NY Times report on a recently discovered memo requesting more Al Qaeda support for Iraqi insurgent groups. The shadowy ties between Saddam's Iraq, Al Qaeda, and various other Islamic extremist groups is explored in great detail in Laurie Mylroie's book, "The War Against America."
Word to serious Democratic presidential candidates: Steer clear of this loose cannon.
Having Super Bowl hangover? Check out the Westminster Dog Show this evening on USA Network. The Houston Chronicle reports on the increasingly popular event, which was hilariously depicted in Christopher Guest's spoof documentary, Best in Show. This is very good dog--and people--watching.
February 9, 2004
Between the Super Bowl and Martha Stewart's trial, it's easy to miss that Haiti is dealing with yet another revolution. You can read about it here. I think it's safe to say that the U.S. will not invade this time, as we did in 1994.
Previous posts on Coach Bobby Knight's latest run-in with his employers are here and here. Now, the Smoking Gun has posted the Texas Tech Chancellor's memorandum to file regarding his argument with Knight at the local salad bar.
Frankly, my daughters have more sophisticated arguments than the one between Knight and the Chancellor.
Houston retailer Garden Ridge, currently in a surprising chapter 11 case filed last week and noted in these earlier posts, filed over the weekend a Motion to reject certain store leases that apparently will be a part of its reorganization plan.
In 1998, CFO Magazine gave an Excellence award to Scott Sullivan, the chief financial executive of WorldCom. In 1999 it gave one to Andrew Fastow of Enron. And in 2000, it gave one to Mark Swartz of Tyco. All three have since been indicted.
I'm not much of a professional basketball fan anymore. But I remain a solid Mickey Herskowitz fan, the longtime sportswriter for the Houston Chronicle and author. Mickey writes today about the Houston Rockets, a rather boring and generally underachieving NBA team, and observes about the frustrations that the coach must feel:
A great basketball coach once said that to appear successful, one who chose the profession needed an image shaped by two conditions: white hair for the look of distinction and hemorrhoids for the look of distress.
It's a bit difficult to recall a figure of national stature falling as quickly as Al Gore. This article details how Gore's endorsement of Howard Dean ended up being the booby prize for Dean. My sense is that Gore's abysmal treatment of his 2000 running mate Joe Lieberman during this campaign season reflects Gore's true character.
The mercurial Victor Davis Hanson weighs in with another fine piece that makes a compelling case for the war against Iraq. As Hanson adroitly notes:
The real outrage is instead that at a time of one of the most important developments of the last half-century, when this country is waging a war to the death against radical Islamic fascism and attempting to bring democracy to an autocratic wasteland, we hear instead daily about some mythical rogue CIA agent who supposedly faked evidence, Martha Stewart's courtroom shoes, Michael Jackson's purported perversion, and Scott Peterson's most recent alibi. Amazing.
Thomas Friedman of the NY Times, a supporter of the war, nevertheless criticizes the Bush Administration's approach to prosecuting it. Thanks to my friend Professor Scott Hagen for pointing me toward Friedman's piece.
Finally, Ryan Scarborough of the Washington Times makes the point that the successes of our intelligence agencies are often ignored in the rush to criticize their errors.
Heavyweight Champ Lennox Lewis announced his retirement over the weekend. Lewis' legacy will be similar to that of former champ Larry Holmes--that is, a very good but underappreciated champion.
Part of Lewis' problem is that he is not American (Lewis is a Jamaican raised in Canada), so the U.S. boxing community never really embraced him as champ. Part of Lewis' problem is that he never really had a defining fight against a well-regarded opponent. The other part of Lewis' problem is his two losses--one was to the unheralded Oliver McCall and the other was to Hasim Rahman on a fourth-round knockout. That loss may actually be the fight that Lewis will be best known for. Lewis spent the final two weeks in training before that fight "acting" during the filming of the movie, Ocean's 11.
In a prior post, I noted that The Producers is playing at the Hobby Center the next couple of weeks. One of my sons, my wife and I went to this past Friday's performance, and it is truly a great show. Even Everett Evans, the Chronicle's tough theatre critic, gives the show a spectacular review. This is Broadway at its finest, so don't miss it.
This looks like a pretty sweet deal for the Williams Company, Texas' largest highway construction contractor.
John McClain, the Houston Chronicle's main NFL reporter, weighs in with an articlethat Houston's success in hosting Super Bowl XXXVIII will likely result in another Super Bowl later in the decade.
Frankly, I do not have a clue on how Jacksonville is going to handle Super Bowl XXXIX next year. To handle the various festivities for this year's Super Bowl, Houston used two large convention centers, Minute Maid Park, the Astrodome, the Reliant Stadium, thousands of hotel rooms, two distinct entertainment areas (Main Street and the Galleria area), and hundreds of restaurants. Jacksonville simply does not have facilities of that size or nature. Already, the NFL and Jacksonville are planning on docking a fleet of cruise ships in Jacksonville Harbor to make up for the lack of hotel rooms in the area.
The Super Bowl may have become such a huge event that only a few cities are going to have the facilities and infrastructure to handle it. Stay tuned.
After a weekend of no blogging because of resolving some technical issues with the blog site, I'm back blogging. Hopefully, we have all the tech issues resolved with the blog and are good to go for an extended time.
February 6, 2004
From the incomparable Stu's Views:
This Lubbock Avalanche Journal article updates the current saga of Texas Tech basketball coach Bobby Knight. The chancellor has written a memo to the file about his recent run-in with Coach Knight at a salad bar. This incident was addressed in a prior post.
The following link will take you to the transcript of CIA Director George Tenet's address on U.S. prewar intelligence on Iraqi weapons of mass destruction.
Although Bob Dole's 1996 presidential campaign was one of the worst of the past quarter-century, he was an outstanding senator and is a great American. In today's Wall Street Journal, Mr. Dole weighs in insightfully on recent criticism of President Bush's military service:
On Fox News recently, my friend John Kerry stated: "I've never made any judgments about any choice somebody made about avoiding the draft, about going to Canada, going to jail, being a conscientious objector, going into the National Guard."
Sen. Kerry did make a judgment, in 1992, when Bill Clinton -- who did not serve -- was running against Sen. Bob Kerrey, a Vietnam veteran. After Bob Kerrey criticized Gov. Clinton, John Kerry said, "We do not need to divide America over who served and how." He should stick to his previous position by acknowledging the honorable service of President Bush and the hundreds of thousands of other National Guard members defending America every day. The president piloted an F-102 in the National Guard and received an honorable discharge when his requirements were met.
Democratic Party Chairman Terry McAuliffe also said last Sunday that service in the National Guard wasn't service "in the military."
These attacks are offensive. Service in the National Guard is one of the finest things any citizen can do, and there are tens of thousands of guardsmen and women serving our country today all over the world. Thousands are serving in Iraq, and some of those have made the supreme sacrifice in the service of their country.
It should be incumbent upon presidential candidates to disavow accusations that have no proof or substance behind them. Gen. Wesley Clark learned the price of irresponsibility the hard way as thousands of voters deserted him in the weeks since he intimated President Bush might have been a deserter. Enough.
Sen. Kerry is a war hero, but if campaigns were about war records, I would have won easily in 1996. Campaigns are about issues, and the candidates of both parties owe the American people a compelling vision for the future of America.
In a related Seattle Times editorial, Collin Levey makes the accurate point that, among a political candidate's attributes, military service is generally overrated.
The Delaware Bankruptcy Court approved Houston-based geophysical seismic company Seitel, Inc.'s Disclosure Statement yesterday. Seitel filed a chapter 11 case last year after a change in accounting rules relating to valuation of its library of geophysical seismic resulted in a substantial writedown in the value of that library. The case was also spiced by some colorful allegations regarding the company's former CEO, and Warren Buffet's failed attempt to take over the company pursuant to an alternative plan that his company had proposed during the chapter 11 case. The hearing on confirmation of Seitel's reorganization plan is scheduled for March 18th.
February 5, 2004
My wife is reading this daily.
O.K., I admit it, I'm reading it daily, too. ;^)
As to this report from the Martha trial, I can only shake my head, for a variety of reasons.
The NY Times has put together a blog for the 2004 Presidential Campaign that is continuously updated. It is reported and edited from the Times' Washington bureau. The "Trail Mix" section highlights issues, candidates, and regions. In the meantime, The Daily Show is maintaining a clever website called "Indecision 2004", which is a humorous take on the 2004 Presidential campaign. As host comedian Jon Stewart puts it, "We're to the news what malt liquor is to reality." Good stuff for you political junkies.
Maurice Clarett, the talented running back who led Ohio State to a thrilling victory over Miami in the 2003 National Championship game, sued the National Football League several months ago in this complaint alleging that the NFL was violating anti-trust laws by not allowing Clarett to become eligible for the NFL Draft until 2005. Today, the District Court issued this decision ruling in Clarett favor and enjoining the NFL from not allowing Clarett to be eligible for the 2004 NFL Draft.
Although this decision may seem surprising, it is not to those of us who follow professional sports and anti-trust law. As a matter of fact, the NFL's record in past anti-trust cases is not all that great. Part of the reason for the NFL's phenomenal growth and business success over the past 40 years is that it has avoided investing the money necessary to capitalize a minor league football system similar to what exists in Major League Baseball. Rather, through rules such as the one Clarett challenged, the NFL has shifted the financial risk of minor league football to Division I-A college football teams.
The Clarett decision probably will not result in many high school football players moving directly from high school to the NFL similar to what often occurs with regard to high school basketball players moving directly to the NBA. As a general rule, high school football players simply are not ready physically for the rigors of the NFL. However, a few such as Clarett probably are, and the decision in Clarett's case correctly gives them the opportunity to pursue that goal if they prefer that goal over a subsidized college education.
Richard W. Rahn, an adjunct scholar at the Cato Institute, writes an excellent Wall Street Journal op-ed (subscription required) today on deficit spending. During political campaigns, no other economic policy is subject to more demagoguery than deficit spending. Contrary to the rhetoric of most politicians, deficit spending is not inherently bad and, in some cases, absolutely essential. As Rahn points out:
As long as individuals or businesses have a yearly rise in income, they can take on more debt without getting into trouble, provided the cost of the additional debt service does not rise faster than the rise in income. The same is true for government. Forty years ago, in 1962, federal government debt as a percentage of GDP was 43.6%. It fell to a low of 23.8% in 1974, rose to a high of 49.5% in 1993, and then dropped back to 33.1% in 2001. Currently, it is about 35% of GDP, and the CBO projects it to fall back to 30.7% in 2013.
At the end of World War II, U.S. government debt was more than 100% of GDP. That level of debt was borne by the generations that came after the war, but clearly we are all better off because the war was won with debt financing. We are also better off because the Reagan administration engaged in a military buildup, financed partly through increased debt, to win the Cold War. Placing a debt burden on future generations is not wrong if it is done to help secure their liberty and prosperity.
The LA Times reports more today on James Lewis, an Orange County businessman who promoted a $200 million Ponzi scheme before things started falling apart last year. Lewis was arrested in Houston late last month after using his senior citizen discount in paying for his room at a local Comfort Inn.
The Chronicle reports today on a big case involving several large gas pipeline companies, the Port of Houston and the U.S. Army Corps of Engineers. In this opinion, the Fifth Circuit recently overturned federal District Judge Lynn Hughes' summary judgment in favor of the pipeline companies that shifted a substantial amount of the relocation cost of some pipelines to the Port.
Mel Brooks' Tony Award winning (Best Musical of 2001) smash hit musical, The Producers, started a two and half week run in Houston this week. It is a part of the fabulous Hobby Center's annual Broadway Series. The Producers was originally one of Brooks' first movies, and Zero Mostel and Gene Wilder's performances in that 1968 classic helped make it into a cult comedy classic. Nathan Lane and Matthew Broderick reprised Mostel and Wilder's roles when Brooks turned the show into a musical and the play took Broadway by storm during the 2001 season, winning a record 12 Tony Awards. This is a great show, and my family and I are looking forward to enjoying it while it is in Houston.
The Houston Chronicle reports today that drilling budgets for the coming year are remaining at the past year's level among major exploration and production companies. In related news, Ennis, TX Congressman Joe Barton, who has a petroleum engineering background, is in line to replace La. Congressman Billy Tauzin as chairman of the House Energy and Commerce Committee.
February 4, 2004
The Houston Chronicle is reporting that New Houston Mayor Bill White has announced a delay in the Smith Street rebuilding project in downtown Houston. The downtown street rebuilding project in Houston was begun early in former Mayor Lee Brown's administration, and it may have been the most badly botched public works project in the city's history. It's a good move for Mayor White to attempt to get this mess under control before tearing up Smith Street, one of the main arteries in downtown Houston.
In a development that concerns my two teenage daughters greatly, Gadzooks, Inc., a Carrollton, TX-based retailer of teenage girl's clothing, filed a reorganization case under chapter 11 on Tuesday in the Bankruptcy Court for the Northern District of Texas. The case landed in Bankruptcy Court of Judge Harlan D. "Cooter" Hale, who gets my vote for having the best nickname of any Bankruptcy Judge in the country. Here is the initial docket in the case and the list of 20 largest creditors.
Based on this Houston Chronicle story, a budding friendship appears to be one of the results of the recent well-publicized murder trial of Robert Durst in Galveston.
Dick DeGuerin, Durst's attorney, is another of the unusual number of excellent Houston-based criminal defense attorneys, which was also noted in this earlier post. Among the many others in that formidable Houston criminal defense bar--many of whom were mentored by Racehorse Haynes and the late Percy Foreman--are Dick's brother, Mike DeGeurin (yes, the brothers spell their last name differently), Mike Ramsey, Jack Zimmerman, Rusty Hardin, David Berg, Joel Androphy, Robert Scardino, Mike Hinton, Dan Cogdell, Tom Hagemann and Robert Sussman. Houston's criminal defense bar compares favorably with the criminal defense bar of any city in the country.
The U.S. intelligence community has endured much criticism since 9/11. For example, Gerald Posner's "Why America Slept" is an excellent account of the background and result of the intelligence failures that preceded the 9/11 attacks.
However, in this clever piece from the NY Times, William Safire tells an interesting story about an intelligence operation that was a resounding success and reminds us that intelligence agencies perform an essential service. Thanks to my old friend Don Looper for the tip on Safire's piece.
Victor Davis Hanson has been one of the most insighful commentators on the Bush Administration's policy in fighting the war against the Islamic fascists. Dr. Hanson weighs in again with another excellent piece in National Review Online that sorts out the many agendas regarding the war in Iraq.
From Ryan Lizza's campaign journal at The New Republic, on the difference between the Howard Dean and John Edwards' campaigns:
"If Dean's events sometimes look like the bar scene from Star Wars, Edwards's traveling show has the feel of an Abercrombie and Fitch fashion shoot."
And James T. Hamilton, describing his theory of rational ignorance in his new book, "All the News That's Fit to Sell":
"The logic of rational ignorance predicts that many viewers will not choose to learn about politics and government, a logic confirmed every day by the relatively low audience for The NewsHour with Jim Lehrer on PBS."
In an earlier post, I noted a report that the Justice Department is currently focusing on whether to indict former Enron Chairman and CEO Ken Lay. In a NY Times piece today, the timing of which is not good for Mr. Lay, Bethany McLean and Peter Elkind --authors of the best Enron debacle book to date, "The Smartest Guys in the Room"--question why Martha Stewart is enduring a securities fraud trial over a relatively trifling matter while Mr. Lay has still not even been indicted?
The probable answer is that the criminal case against Ms. Stewart is simpler than any possible criminal case against Mr. Lay in regard to the hyper-complicated affairs of Enron. However, the more troubling issue is whether Ms. Stewart's high profile status has generated a high publicity prosecution by the Justice Department attorneys in a case that probably would have never been prosecuted (or at least been settled quietly) had the defendant not been as high profile as Ms. Stewart.
Author Crispin Sartwell pretty much reflects my thinking in this piece on the dreadful Super Bowl XXXVIII halftime show. Meanwhile, Janet Jackson's show ending performance has set at least one type of record, which is described here.
February 3, 2004
Bob McNair, the majority owner of the NFL's Houston Texans, is an old friend and a wonderful man. Bob and the Texans just completed a masterful job in leading Houston's hosting of the highly successful Super Bowl XXXVIII, and now it appears that Bob may have struck gold again.
Drew Henson, the former University of Michigan quarterback and NY Yankee minor leaguer, announced today that he has finally given up on baseball and is going to play in the NFL. In last year's NFL Draft, many folks scratched their heads when Bob and the Texans used a sixth round draft choice on Henson. The Texans already have a young franchise QB in David Carr and Henson was still playing baseball with the Yankees AAA team at the time. However, Bob and the Texans knew what they were doing.
Henson's poor on base average and mediocre slugging percentage in AAA reflected that he was not a Major League Baseball prospect. However, Henson is an excellent football talent, and many scouts considered him a better prospect than Tom Brady, the Super Bowl MVP who was his teammate at Michigan. With Henson now turning to football, the Texans retain his contract rights until this year's NFL Draft, and there will be several teams bidding for his services. The Texans will likely come out of this deal smelling like a rose, and likely will pick up at least a higher draft pick in this year's draft in return for the right to sign Henson.
My early bet on the Henson sweepstakes: the Miami Dolphins.
Many of my friends in business complain regularly (and with much validity) about how often they are required to consult attorneys. They will derive much pleasure from this NY Times article, which explains that now law firms are hiring general counsel to advise their lawyers on the difficult client issues that many firms face in the post-Enron world.
The New York Times carries a front page story today regarding the increasing trend of employers to restrict health insurance coverage for their retirees. In my view, the failure of the Bush Administration to address the spiraling problems in the health care finance system in the United States is an issue that will cause President Bush trouble in the upcoming Presidential Campaign.
Based on this article from the Lubbock Avalanche, it looks like Bobby Knight is ready to implode again. Knight's mercurial career as basketball coach at the University of Indiana ended as a result of incidents similar to this one.
For all his faults, Knight is not the poster boy for the hyprocrisy of college athletics. An undeniably great basketball coach, his ill-tempered personality has everyone around him walking on egg shells for fear of provoking an outburst. On the other hand, he genuinely cares for his players, and the percentage of players from his teams who graduate from college is one of the highest of any other major college program in the United States.
Knight is the subject of one of the most interesting sports sociology books of the past 20 years, John Feinstein's "A Season on the Brink."
One of my many bright nephews suggests that this car is the one he really wants.
The Wall Street Journal today has a front page article (subscription required) on Bernard Lewis, the Princeton historian who is one of America's leading experts on Islam and the Middle East. Dr. Lewis' "What Went Wrong"--a book about the reasons behind the failure of many Islamic countries to modernize--was a bestseller after the 9/11 attacks. Lewis' thinking about Islam and the Middle East is influencing many policy makers in the Bush Administration, so this is important reading.
The Houston Chronicle reports today that the FBI has commenced an investigation into teen porn websites that certain individuals at the University of Texas Health Science Center at Houston apparently visited on a regular basis. The UT Health Science Center is home to the University of Texas Medical School, one of two medical schools (Baylor Medical School is the other) in Houston's famed Texas Medical Center.
The Kirkendall family has long and deep ties with the UT Health Science Center. My late father--Dr. Walter M. Kirkendall--was a longtime and loved Professor of Medicine at the UT Medical School at Houston from 1972 until his death in 1991, and the school still holds an annual lectureship in his name. I also have a brother (Matt of Dubuque, Iowa) and sister (Mary of Boerne, TX) who graduated from the UT Medical School at Houston.
The Houston Chronicle reports on yesterday's Garden Ridge Corporation chapter 11 filing.
The first major motion in the Garden Ridge case--i.e., it's Motion for Approval of Post-Petition Financing (in other words, a "Judge, let us borrow money so that we can stay alive" motion)--provides Garden Ridge management's analysis of what caused the company's financial problems. Earlier today, the Court approved Garden Ridge's motion on an interim basis in this order.
February 2, 2004
Garden Ridge is one of those companies that is difficult to figure out. Rapid expansion, high margins, and good locations (for example, generally near WalMart Super Centers). On the other hand, there is literally nothing in the stores that interests me in the slightest, although my wife would point out that that is meaningless because I hate to shop. The filing in Delaware indicates to me that the company's financing entities may be a driving force behind this move. Stay tuned.
Today is the first day on the job for new Houston Bankruptcy Judge, Marvin Isgur. Marvin replaces longtime Bankruptcy Judge Manuel Leal, who is retiring.
Marvin has an interesting background. A lifelong Houstonian, Marvin is a graduate of South Houston High School, the University of Houston (B.A.), Stanford Univeristy Business School (M.B.A.), and the University of Houston Law Center (J.D.). Before becoming an attorney, Marvin was a successful businessman in Houston in the real estate development and management business with his longtime mentor and uncle, the late Eugene Winograd, M.D. As Marvin managed Dr. Winograd's real estate empire through the prolonged depression in the Houston real estate market during the mid-1980's, he became interested in reorganization and insolvency law and decided to attend the University of Houston while running a multi-million real estate business. Not surprising to anyone who knows Marvin, he finished at the top of his law school class while continuing to manage Dr. Winograd's real estate business.
Before becoming an attorney, Marvin was a favorite business client of mine. After becoming an attorney, he was an outstanding partner in my downtown Houston law firm for ten years before I established my solo practice in 2000 and Marvin joined the Houston firm of Floyd, Isgur, Rios & Wahrlich, P.C. Most of all, Marvin is one of my best friends.
Marvin has an exceptional mind and an unusual depth of business and legal experience. Those qualities will combine with his deep sense of humanity and wonderful sense of humor to make Marvin an outstanding jurist. Marvin's addition to the other Houston Bankruptcy judges--William Greendyke, Karen Brown, Letitia Clark, and Wesley Steen--makes Houston's Bankruptcy bench one of the strongest in the nation.
Judge Isgur's Court homepage is already available. Best of luck in your new job, Judge Marvin!
The Wall Street Journal's John Emshwiller reports (subscription required) today that federal investigators are hunkering down on their investigation of former Enron Chairman and CEO, Ken Lay. Mr. Emshwiller has been reporting on the Enron meltdown from the beginning back in mid-2001, so his sources are generally good.
Probably the most worrisome Enron-related indictment for Mr. Lay to date is the one against former Enron CFO Andrew Fastow. Mr. Fastow's recently entered into a plea agreement with the government in regard to his indictment.
By the way, Mr. Lay is well-represented by Houston criminal defense attorney, Mike Ramsey. Mr. Ramsey was on the legal defense team that gained a fair degree of national coverage recently in successfully defending Joseph Durst from murder charges in Galveston. He is one of the group of first rate Houston criminal defense attorneys who make Houston's criminal defense bar one of the best in the nation.
Mr. Emshwiller has written a book on Enron's meltdown called "24 Days,", which is a decent read. However, for those of you interested in the best and most thorough book on the Enron debacle to date, pick up a copy of Bethany McLean and Peter Elkind's "The Smartest Guys in the Room."
Houston is the home of remarkably diverse and talented business and professional communities. Houston's Clear Thinkers is a weblog that focuses on developments in law, business, medicine, sports and other areas of special interest to the Houston legal, business and medical communities. My personal and professional background information may be reviewed here.
By way of background, Houston's Clear Thinkers is the natural evolution of a private email group that I have maintained over the past five years. Over that period, this email group steadily grew into an eclectic mix of over a hundred businesspeople, attorneys, doctors, accountants, teachers, and professors from Houston and other parts of the United States.
I am blessed to count each of these email group members as friends, and it is my hope that the Houston's Clear Thinkers weblog will introduce me to many new friends while I pass along matters of interest to the Houston business and professional communities.
February 2, 2004