? May 2004 | Main | July 2004 ?
June 30, 2004
Stros edge Cubs
The Rocket pitched seven stellar innings, Bidg cranked two solo yaks, and Brad Lidge hurled two innings of clutch relief as the struggling Stros rode Carlos Beltran's ninth inning tater to a 3-2 win over the Cubs at Wrigley on Wednesday afternoon.
Clemens was his usual pit bulldog self, giving up only a run on five hits with five walks in his seven innings. Lidge bailed the Stros out of another relief pitcher mess that Miceli produced in the eighth, and then mowed the Cubs down in order in the ninth. Although it does not show up in the box score, Everett made at least three difficult plays in the field that kept the Cubs from gaining any momentum.
The mismatch of the season takes place in the rubber game as the Stros' Pete Munro takes on the Cubs' Astro-killer, Mark Prior on Thursday afternoon. The Stros return to the Juice Box for a weekend series with the Rangers before visiting the Padres and the Dodgers in the following week leading up to the All-Star game on July 13th at the Juice Box.
Posted by Tom at 6:55 PM | Comments (4) | TrackBack (0)
The tale of a tax shelter lawyer
This NY Times article reports on the interesting story of tax shelter lawyer Raymond J. Ruble, a former Manhattan-based partner with Sidley Austin Brown & Wood. Mr. Ruble was well-known at Sidley, Austin for his aggressive work on tax strategies for investors, and was one of the biggest earners for the firm.
However, Mr Ruble is at the center of a government investigation into Sidley, Austin's promotion of abusive tax shelters. In October, Mr. Ruble was dismissed, a highly unusual move by such a prestigious law firm. Days earlier, government investigators told the firm that millions of dollars from a San Francisco-based seller of tax shelters had gone - apparently unknown to the law firm - into a Delaware trust created by Mr. Ruble.
At least four civil lawsuits name Mr. Ruble and his former employer as defendants. Some of the lawsuits contend that he also worked with Ernst & Young and Deutsche Bank, among others, to promote a variety of abusive tax shelters.
The entire article is interesting reading, and includes the following tidbit on Mr. Ruble's promotion of tax shelters in a continuing education publication:
In any case, in an article, "The Professional Responsibilities of a Tax Lawyer in the Context of Corporate Tax Shelters," published by the Practicing Law Institute in its course handbook series for lawyers, Mr. Ruble argued that tax lawyers had a first duty not to the tax system but to their clients.He began the article by quoting from the Gospel of Matthew: "No man can serve two masters."
Posted by Tom at 7:25 AM | Comments (0) | TrackBack (0)
June 29, 2004
Stros fall to Cubs
Bidg's drop of a fly ball in the seventh resulted in two unearned Cub runs and a 7-5 Cub victory over the Stros in the first game of their key three game series at Wrigley.
Neither Kirk Bullinger nor David Weathers could hold Stros' leads after Andy Pettitte muddled through five innings without good command. Pettitte ended up giving three runs on four hits with three walks and seven K's. Miceli looked to have bailed Weathers out, but Biggio's error sealed the win for the Cubs.
Carlos Beltran belted his first yak for the Stros and JK and Ensberg both had extra base hits to generate most of the Stros' runs. However, Kent injured his hamstring on his double and appears headed to the disabled list, and Bidg and Bags continue to scruff. Despite their long and heralded service to the ballclub, the Stros are clearly suffering at the plate from their first baseman and leftfielder's lack of production. Meanwhile, Jason Lane inexplicably has not been seen in the past four games.
Just to make sure that the evening was a complete downer, the Stros announced that Wade Miller -- 7-7 with a 3.35 ERA -- was being placed on the disabled list because of an a sore shoulder. Miller has been inconsistent this season, and has suffered from a lack of command. He is one of the league leaders in walks, which means he is at risk of throwing more pitches in fewer innings than other pitchers. Newly-acquired Jeremy Griffiths (acquired as a throw-in in the Hidalgo trade) was called up from AAA New Orleans to replace Miller in the rotation, a move that does not say much about the quality of the Stros' AAA pitching prospects. The Stros did make at least one positive move on Tuesday in that they replaced Tim Redding in the rotation with Pete Munro, a move that they should have made weeks ago.
The Rocket takes the hill for the Stros in Wednesday afternoon's game against the Cubs' Matt Clement. That game may be the first must win game for the Stros in this once promising, but now quickly fading, season.
Posted by Tom at 9:59 PM | Comments (0) | TrackBack (0)
Promising new approach to treating Alzheimer's
This Wall Street Journal ($) article reports on a significant advancement for the next generation of Alzheimer's treatments, Neurochem Inc says it will begin recruiting patients for a large efficacy trial of its drug Alzhemed in the next few weeks.
Unlike current drugs that generally treat the symptoms of Alzheimer's, the new drugs target the underlying illness itself. The goal of these new these new medicines are to halt the devastating progression of the disease or prevent it entirely. Alchemed is at the cutting edge of the new medicines that offer hope to the 4.5 million Americans struck with the memory-robbing illness.
Alzhemed, which helps prevent the formation of the plaques many scientists believe are the culprit in Alzheimer's disease, could be on the market within four years. The new study will enroll 950 patients over 18 months at 70 sites in the U.S. and Canada.
For a long time, Alzheimer's research was a depressing area that simply was not producing any insights to a possible cure for the disease. That is changing, as the clinical trials described in this article appear quite promising.
Posted by Tom at 10:06 AM | Comments (0) | TrackBack (0)
Big law firms' numbers up
This Wall Street Journal ($) article reports on the annual American Lawyer review of law firm finances, which found that America's richest law firms got even richer last year.
New York City based Wachtell, Lipton, Rosen & Katz topped the list with average profits per partner of $2.58 million. Other New York firms, helped by the Wall Street recovery, dominated -- claiming 13 of the top 15 spots.
Strong revenue growth generated a 9.8% increase in average profit per equity partner to $930,700. Nonequity partners made an average $357,597 per partner.
Posted by Tom at 7:22 AM | Comments (0) | TrackBack (0)
Lay and lawyers in D.C. to try and meet with Enron Task Force
On the heels of an extraordinary front page NY Sunday Times interview, the Chronicle reports that former Enron CEO Ken Lay is in Washington, D.C. this week to lobby for a meeting between the Lay's lawyers and the prosecutors working on the Enron Task Force.
I expect that Lay will be indicted soon, maybe even before the July 4th weekend.
Posted by Tom at 7:02 AM | Comments (0) | TrackBack (0)
June 28, 2004
United, this is getting monotonous
The federal Air Transportation Stabilization Board announced today that it was not going to change its its June 17 decision to deny United Airlines government backing for a government credit enhancement that was the central component of United's reorganization plan in its pending chapter 11 case. United will now be forced to retool its reorganization plan based upon the higher financing costs that it will incur in the private market.
Hurt by a slowing economy and the Sept. 11, 2001 terrorist attacks on New York and Washington, United initially applied for $1.8 billion in loan guarantees in June 2002, just before the deadline for airline applications. The company's request was the largest of the 16 carriers that applied to the panel that was created after the September 11 attacks to help airlines lower the cost of new capital.
The loan board initially denied United in December 2002, which resulted in United filing its chapter 11 case. United has reduced costs and shrunk its operations in chapter 11, but the company's operations still are not particularly competitive with the emerging low-cost airlines that have expanded their market share dramatically over the past two years.
As noted here earlier, the ATSB's decision is the correct one. The creditors and employees with stakes in United's survival should share the full economic risk of reorganizing the company. The risk of loss and threat of failure are much better and more powerful inducements to reorganizing a big company correctly than government largesse that often covers up and delays changes that need to be made.
Posted by Tom at 12:50 PM | Comments (0) | TrackBack (0)
SCOTUS sentencing decision reviewed
In this article, the Wall Street Journal ($) does a good job of summarizing the initial reactions to the U.S. Supreme Court's decision last week in Blakely v. Washington, a decision that could have major implications for the federal sentencing guidelines and, for at least eight states, holds that judges cannot increase a defendant's sentence based on facts and behavior that were not presented to a jury. Though the decision involved just one state's sentencing system, legal specialists on guidelines say that the decision could affect the guidelines under the federal system.
The federal sentencing guidelines evolved from the Sentencing Reform Act passed by Congress in 1984. Congress created a commission to set guideline ranges that specify sentences for each class of convicted person. Courts generally select sentences from within the range based on the consideration of acts or behavior of the defendant that often was not the subject of the criminal charges. Legal sentencing guideline specialists say the Supreme Court's ruling in Blakely could invalidate everything within that range except for the lowest level.
In Blakely, the majority said all facts essential to the sentence must be tried before a jury. Federal and many state sentencing guidelines currently involve finding facts during the non-jury sentencing phase that may increase a convict's time served. Blakely would appear to hold that all such facts would have to be charged and tried before a jury, or those facts are formally waived for sentencing purposes.
Yesterday's decision is the second in a week questioning the validity of sentencing laws. Last Friday, U.S. District Judge William Young ruled that federal sentencing laws were unconstitutional because they gave prosecutors too much power.
Moreover, the Journal article speculates that another sentencing appeal that will be closely watched as a result of Blakely is the sad case of Jamie Olis, the midlevel executive of Dynegy Corp. who was recently convicted and sentenced to 24 years based partly on an expert's estimate of the amount of market value that was lost as a result of the fraud in which Mr. Olis participated. The Journal article states that the government expert's estimate was not presented to the jury. However, my recollection is that the government expert's testimony on that subject was presented to the jury, but not rebutted by the defense during trial, and that U.S. District Judge Sim Lake concluded that he could not consider the defense expert's estimate post-trial if it was not presented during trial.
Look for Professor Ribstein to comment on these developments upon his return from vacation.
Posted by Tom at 11:52 AM | Comments (0) | TrackBack (1)
Confessions of a "rich" businessman
Howard Blake is the pen name of a small businessman from the Midwest, who has written this AEI Online article that is brilliant in its simplicity. By Democratic Party standards, Mr. Blake and his wife are wealthy and should be taxed more. However, Mr. Blakes points out that appearances can be deceiving, particularly in economic matters:
From that $71,000 of actual cash flow, subtract our federal tax payments of $24,539 and our state income taxes of around $4,000, and you find that our cash available for living expenses is actually around $43,000. Sufficient for our needs. But clearly a good deal short of true wealth.I suppose my wife and I do what we do because we like to. We must, because if you divide our $43,000 of spendable income last year by the 6,000 hours of labor, much of it manual, that the two of us put into our business (we kept track), our time works out to be compensated at around $7.50 an hour. Just the same, incentives do matter. And it is a concrete fact that cash alone fuels our growth. With more cash, our business will grow faster; we're a small player in a big industry, and the market is there for additional growth. We're constrained only by the availability of investment capital, and that has to be generated by our business.
My wife and I have a passion for our little enterprise. It's been our life for 20 years, demanding whatever creative abilities we have, consuming most of our waking moments, focusing our energies on producing the best products we can, and beckoning us to work seven days a week to ensure good service for our customers.
Then every four years the Democratic nominee for President informs us we don't pay enough taxes. We are called greedy and self-serving special interests. We're told that we are "rich," and that we have wealth only because we are lucky.
I have described my financial situation in some detail in the hope that this snapshot will help people understand who most of the top 5 percent of taxpayers really are, and how taxes affect the folks who make America work. I know I'm fortunate, but I certainly don't feel rich. I have fond hopes of some day becoming wealthy (a goal I share with most of my fellow citizens), and a tax policy that encourages my efforts toward that end would not only benefit me, but the rest of society as well. But the reality is that my wife and I have to work extremely hard every day just to hold our current position.
We've been managing our finances with care, investing in our business with the kind of concentration that comes from spending our own money, and providing jobs for dozens of our neighbors. I dare say that the country benefits from our stewardship--and that of hundreds of thousands of other "rich" people just like us--more than it would from any of John Kerry's plans for our money.
In representing business people over the past 25 years, I have learned that non-business people often grossly underestimate how hard it is to run a business profitably and well. Also overlooked or underappreciated is the great benefit that communities derive from the employment that is generated through small businesspeople's willingness to undertake the risk of their enterprise. Mr. Blake's article explains a big part of the reason why running a business is such a formidable task, made even more so in this current climate in which many normal business practices are being criminalized. Hat tip to Newmark's Door for the link to Mr. Blake's piece.
Posted by Tom at 6:49 AM | Comments (0) | TrackBack (0)
The Selling of the Expos
In the first of a three part series, this Washington Post article by Steve Fainaru examines the tactics that Major League Baseball Commissioner Bud Selig is using in auctioning the Montreal Expos off to the highest bidder among several investor groups and American cities. The article provides an excellent background on how Selig and Major League Baseball owners have used baseball's anti-trust exemption and public financing of stadiums to increase the value immensely of MLB franchises, an approach that several expert commentators -- particularly Professor Sauer over at the Sports Economist -- have criticized on economic and political grounds.
The entire article is well worth reading, and includes nuggets of information such as the following about Jeffrey Loria, the former majority owner of the Expos who ended up owning the Florida Marlins after Selig engineered a swap of franchises when MLB bought the Expos several years ago. Loria's handling of the Expos is the subject of litigation brought by Loria's limited partners, who were pursuing that litigation even as New Yorker Loria's new team was playing in last season's World Series. You certainly did not hear about the following on the MLB broadcast as the World Series Trophy was being handed to Loria and the Marlins:
On their way out of Montreal, Loria and Samson stripped the franchise. With them went computers containing scouting reports on every Expos player, dozens of signed home run balls, even life-size cutouts of the team's former superstar right fielder, Vladimir Guerrero. The Expos' limited partners, meantime, became unwitting owners of 6 percent of the Marlins. In July 2002, they filed a racketeering suit in U.S. District Court in Miami. It charged Loria, Samson, Selig, DuPuy and the Office of the Commissioner of Baseball of illegally conspiring in what the suit called an "Expos Elimination Enterprise."The ongoing suit could complicate baseball's plans for the Expos. The limited partners have 90 days to seek an injunction if baseball tries to move the team.
Last October, Loria's Marlins miraculously found themselves in the World Series against the New York Yankees. "Can you imagine?" anguished one of the limited partners. "I'm sitting here. I'm an owner of the Florida Marlins. I'm rooting for the Yankees!"
And then, of course, the Marlins won.
This spring, nearly all the limited partners received World Series rings, even as they continued to sue Loria and Major League Baseball for racketeering in U.S. District Court.
Posted by Tom at 6:09 AM | Comments (0) | TrackBack (0)
June 27, 2004
Roy O and Beltran step up
Roy O pitched eight innings of shut out ball and Carlos Beltran scored the only run and made a spectacular catch to take away another as the Stros salvaged the third game of their weekend series with the Rangers, 1-0. Even when they win, this Stros team is tough to watch, as the Astro In Exile attests.
Oswalt was spectacular, giving up four hits in eight innings, walking none (he hit one batter), and fanning nine. Lidge looked good again in closing, and Beltran's over the wall catch in the first immediately goes on ESPN's ten best catches of the season.
As they leave Arlington for Chicago, the Stros are 39-36 and six and a half games back of the NL Central leading Cards. Apart from the great acquisition of Beltran, nothing has changed much for the club since my last analysis of the Stros' season two weeks ago. Apart from Berkman and now Beltran, the hitters are a bunch of slap single hitters with little power. The pitchers have continued a trend of generally improving performances, but Redding's performance has been among the worst in the league and, thus, pulls the staff's overall improved performance down.
Here are the Stros' hitters' runs created against average ("RCAA," explained here) through Saturday's games, courtesy of Lee Sinins:
Lance Berkman 40
Jeff Bagwell 13
Craig Biggio 9
Mike Lamb 8
Jeff Kent 4
Carlos Beltran 1
Eric Bruntlett 1
Jason Lane 0
Morgan Ensberg -3
Orlando Palmeiro -3
Jose Vizcaino -3
Raul Chavez -5
Adam Everett -6
Richard Hidalgo -6
Brad Ausmus -14
The Stros' team RCAA of 36 ranks fifth in the National League overall, which is behind division rivals Reds (64), Cubs (48) and just a bit in front of the Cards (30).
Even though he has cooled off over the past two weeks, Berkman remains one of the best hitters in baseball, and Beltran would have a solid 20 RCAA if you include his RCAA from his time with Kansas City this season.
Bags' 13 is deceptive because that is only the eighth or ninth best RCAA among first basemen in the National League (Jim Thome is leading NL first basemen with an RCAA of 41 and Sean Casey is second at 37). Biggio continues his fine season, but is not among the top NL producers in left field. With the exception of Lamb, the rest of the club continues to scruff. Note that JK's performance is barely above-average despite the propoganda of a great season that the Chronicle exudes about him, and Everett's negative six figure should place him at the bottom of the lineup, where Jimy Williams had him in the game today.
Finally, the veteran outmaker -- Ausmus -- now has the sixth worst RCAA figure among NL starters, and it is clear that Chavez makes the Stros a better team offensive and defensively (he threw another baserunner out today in a key situation) when he replaces Ausmus. Don't hold your breath that Williams will notice, though. Ausmus is a veteran who "handles pitchers" well, whatever that means.
Here are the Stros' pitchers' runs saved against average ("RSAA," explained here):
Roger Clemens 15
Wade Miller 8
Brad Lidge 7
Octavio Dotel 4
Mike Gallo 3
Dan Miceli 3
Pete Munro 3
Andy Pettitte 3
Kirk Bullinger 2
Roy Oswalt 2
David Weathers 0
Brandon Backe -3
Chad Harville -3
Ricky Stone -3
Jared Fernandez -6
Brandon Duckworth -10
Tim Redding -13
The Stros' team RSAA of 12 ranks seventh in the National League overall, which is behind division rivals Cubs (33), Cards (28), and Brewers (44).
There is actually much good news here. With Pettitte's return and Roy O's RSAA figure uncharacteristically low, both of their RSAA should improve over the next several weeks. The Stros would realize a big benefit from simply replacing Redding with Munro, which should happen unless the Stros' management goes brain dead. If Pettitte, Oswalt, Miller, and Lidge all trend toward joining the Rocket at the double digit RSAA level, then that will reflect a strong pitching staff for the second half of the season.
Based on current team RCAA and RSAA figures, the Cubs actually should be leading the NL Central by a long shot, so they are actually underperforming more in the win-loss column than the Stros. If performances remain relatively steady (that assumption does not always hold), look for the Cubs to overtake the Cards after the All-Star break, and expect the Stros and Cards to battle it out for second place in the NL Central. I still expect the Reds and Brewers to tail off, the Reds because of abysmal pitching (their great first half hitting will likely tail off in the second half of the season) and the Brewers because of their poor hitting (but they are getting very good pitching, which could keep them in the race longer than the Reds).
The Stros close out the first half of the season with seven games over the next week, four against the Cubs at Wrigley and then a weekend series at the Juice Box next weekend against the Rangers. The club really needs to step it up during these games because losing most of those games against these two good teams could put the Stros so far down by the All-Star break that any hitch in their giddyup in the second half of the season will drop them quickly out of the race for a playoff spot.
Posted by Tom at 4:40 PM | Comments (0) | TrackBack (0)
June 26, 2004
Ken Lay gives an incredible interview on Enron
In an unusually bold move in connection with an incredibly difficult case to defend, former Enron chairman and CEO Kenneth Lay is the subject of a wide-ranging interview on the Enron criminal investigation that appears in this NY Times Sunday front page article.
Normally, a defense attorney would never allow a client under scrutiny from multiple grand juries to discuss the subject of those investigations on the front page of the NY Times. However, the Enron case is not normal, and Mr. Lay's able defense attorneys likely figure that Lay will be indicted and has nothing to lose at this point in attempting to mount a public relations campaign in a probably futile attempt to counter the extraordinarily negative image that anyone related to Enron evokes throughout American society.
Mr. Lay said that he had remained silent on the advice of lawyers, but is coming forward now to explain his views of a story that he says has become infused with myths. While not saying so explicitly, he suggested that he was motivated by a desire to tell his side both to the prosecutors on the Justice Department�s Enron Task Force who have been investigating him and the citizens of Houston who may well sit in judgment on him.
That said, the article is simply astounding given Lay's current situation:
"If anything, being friends with the Bush family, including the President, has made my situation more difficult,'' Mr. Lay said in a recent interview, "because it's probably a tougher decision not to indict me than to indict me.''
Now, on the eve of what may be the government's final decision on whether to charge him with a crime, Mr. Lay is talking for the first time about the company's collapse in 2001 and the scandal that enveloped it. In more than six hours of interviews with The New York Times, Mr. Lay remained steadfast in his expressions of innocence, even as he acknowledged, as head of the company, accountability for the debacle rests rightfully with him. "I take full responsibility for what happened at Enron,'' said Mr. Lay, 62. "But saying that, I know in my mind that I did nothing criminal.''
And even though Mr. Lay takes full responsibility, that does not stop him from pointing the finger of fault against others, including his probable main accuser:
As Mr. Lay describes it, the Enron collapse was the outgrowth of the wrong-headed and criminal acts of the company's finance organization, and specifically its chief financial officer, Andrew S. Fastow. He says that both he and the board were misled by Mr. Fastow about the activities and true nature of a series of off-the-books partnerships that played the decisive role in the company's collapse.
In the end, Mr. Lay said, the Enron story is one of corrupt executives in a finance organization led by Mr. Fastow, the former chief financial officer, who took advantage of the company for their own personal benefit and ultimately destroyed it. Mr. Fastow has pleaded guilty to fraud and is cooperating with the government.�At our core, regrettably, we had a chief financial officer and a few other people who in fact mismanaged the company�s balance sheet and finances and enriched themselves in a way that once we got into a stressful environment in the marketplace, the company collapsed,� he said. �But by the same token, most and I mean 98 percent of the people who worked at Enron were good, honest, hardworking individuals. They were not crooks.�
And what about Mr. Lay's former net worth of almost a half billion?:
The years since the Enron collapse have transformed Mr. Lay. The changes in his financial status are stunning. At the beginning of 2001, Mr. Lay said, he had a net worth in excess of $400 million � almost all of it in Enron stock. Today, he says his worth is below $20 million, and his total available cash not earmarked for legal fees or repayment of debt is less than $1 million.
The article goes on to do a reasonably good job of explaining Lay's Enron stock sales during the company's demise in late 2001, most of which were forced sales to meet margin calls. Those stock sales are reportedly a big part of the current criminal investigation against Lay, who continues to maintain his innocence of any criminal wrongdoing:
Despite the rumblings that criminal charges against him could well be imminent, Mr. Lay says he is sanguine. �I know in my mind I did nothing wrong and nothing criminal,� he said. �But I�d say if it does happen, it�s a great miscarriage of justice.�But, if faced with indictment, would Mr. Lay consider pleading guilty? �Absolutely not.�
Posted by Tom at 9:08 PM | Comments (0) | TrackBack (1)
Stros lose to Rangers again
Hank Blalock cranked a tie-breaking eighth inning yak off of Dan Miceli to lead the Rangers to an 8-7 win over the Stros on Saturday afternoon in Arlington.
The Stros' Tim Redding pitched batting practice for the Rangers, giving up ten hits and six runs over four innings. Hopefully, the only reason that Redding remains in the rotation is because Andy Pettitte has not yet returned to the rotation. However once Pettitte returns, there simply is no reason not to hand the ball every fifth day to Pete Munro rather than Redding, who now has among the worst statistics of any starting pitcher in the National League.
The Stros hitters still are not hitting on all cylinders, but Barry Bonds, Jr. did nail a bases loaded double to tie the game at seven during a four run uprising in seventh. However, a season long power drain continues to plague Bags (slugging percentage of .470 this season against a career .546) and Ensberg (.354 slugging percentage compared with .530 last season), while manager Jimy Williams inexplicably insists on maximizing at bats for Everett (slugging percentage of .361) by batting him second in the order and playing unproductive hitters such as Viz (slugging percentage of .357) and Bruntlett (last night, slugging percentage of .403 in 67 career AB's) rather than arranging the lineup to make sure that better hitters such as Lamb (slugging percentage of .550) and Lane (lifetime slugging percentage .522) are playing as much as possible. It is becoming increasingly clear to me that the Stros' margin for error in scoring runs is not large enough to compensate for Williams' dubious personnel decisions.
Roy O attempts to bail the Stros out during the Sunday afternoon game against the Rangers, as the Stros prepare to go to Wrigley for four with the Cubs next week that may just determine whether this club will be able to contend for a playoff spot during the remainder of this once promising season.
Posted by Tom at 8:32 PM | Comments (1) | TrackBack (0)
VDH takes stock of the war and the home front
In his latest NRO column, Victor Davis Hanson is bullish on the prospects for a successful conclusion of the Iraqi front of the war against the radical Islamic fascists, but more bearish on American society's capacity to sustain the effort necessary to achieve that successful conclusion:
As we neared three years of fighting in World War II, Patton was stalled near Germany for want of gas, V-2 rockets began raining down on England, and we were fighting to take the Marianas in preparation for future B-29 bases. In comparison, what exactly is our current status in this, our confusing third year of war against Islamic fascists and their autocratic sponsors?Unlike the Cold War, when our tactical options were circumscribed by nuclear enemies, today the world's true powers are decidedly unfriendly to radical Islam — and growing more so daily.
Two-thirds of al Qaeda's leadership are either dead or in jail. Their sanctuaries, sponsors, and kindred spirits in Afghanistan and Iraq are long gone. Detention is increasingly common for Islamicists in Europe and America. The Hamas intifada has failed. Its implosion serves as a warning for al Qaeda that Western democracies can still fight back. There is also a lesson for America that even in our postmodern world most people still admire principled success: No one is lamenting the recent targeted killings of Hamas bullies or the preemptive assassination of suicide bombers.
We are winning the military war in Iraq and Afghanistan. The terrorists are on the run. And slowly, even ineptly, we are achieving our political goals of democratic reform in once-awful places. Thirty years of genocide, vast forced transfers of whole peoples, the desecration of entire landscapes, a ruined infrastructure, and a brutalized and demoralized civilian psyche are being remedied, often under fire. All this and more has been achieved at the price of political turmoil, deep divisions in the West — here and abroad — and the emergence of a strong minority, led by mostly elites, who simply wish it all to fail.
Whether this influential, snarling minority — so prominent in the media, on campuses, in government, and in the arts — succeeds in turning victory into defeat is open to question. Right now the matter rests on the nerve of a half-dozen in Washington who are daily slandered (Bush, Rumsfeld, Cheney, Rice, Wolfowitz), and with brilliant and courageous soldiers in the field. They are fighting desperately against the always-ticking clock of American impatience, and are forced to confront an Orwellian world in which their battle sacrifice is ignored or deprecated while killing a vicious enemy is tantamount to murder.
No, we — along with those brave Iraqis who have opted for freedom — could very easily still lose this war that our brave troops are somehow now winning.
Posted by Tom at 12:02 PM | Comments (0) | TrackBack (0)
The doping scandal investigation
Sally Jenkins, fresh off of hammering Tiger Woods for his behavior during last weekend's U.S. Open, goes after the United States Anti-Doping Agency and its investigative tactics in this Washington Post column. Ms. Jenkins observes:
Let's see if we can sum up the conduct of this investigation so far:Sprinter Marion Jones has been dragged through the accusatory mud without a formal charge. A purported, damning version of Tim Montgomery's grand jury testimony, which was by law secret, has been illegally leaked and he now faces total ruin and a lifetime ban from his sport. The twenty-some other athletes who testified before the BALCO grand jury must also worry if their testimony will be aired and used against them, too.
I'll say it straight out: I believe Marion Jones when she says she's innocent, based on what is a persuasive piece of evidence in her favor. In the last four years, Jones has not gotten faster. She's gotten slower. Whatever Jones may be taking, it isn't performance enhancing.Here is an example of the kind of job USADA is doing in its inquiry into Jones's ties to BALCO. Several weeks ago, Jones met with a trio of USADA officials, including Madden. They presented her with a calendar that purported to be her BALCO doping schedule. It bore several notations and the initials MJ.
"That's not my calendar," she said.
"Then why does it have your sprint times on it?"
Jones replied evenly, "If those are my sprint times, then I just shattered the world record by a second."
The sprint times on the calendar could not have been those of Jones, or of any woman. They were too fast. The USADA representatives didn't even recognize the difference between the sprint times of a male and a female.
You get an uneasy feeling from watching USADA's bumbling zealots. You get the feeling they'd waive the U.S. Constitution if they could -- which is a pretty unsettling thing to feel about an organization that is funded by U.S. taxpayer dollars and a grant from the White House.
There is one good product of the USADA's bumbling investigation -- more work for defense attorneys!
Posted by Tom at 10:11 AM | Comments (0) | TrackBack (0)
Good news on the Iraqi Front
Daniel Drezner reports good news on the Iraqi front.
Posted by Tom at 9:54 AM | Comments (0) | TrackBack (0)
June 25, 2004
Stros scruff against Rangers
Kenny Rogers kept the Stros off balance all Friday night as he led the Rangers to a 3-1 win in the opening game of the Long Star Series.
Rogers made it look like the Stros played 18 innings the night before rather than the Rangers. He gave up only two singles and a double, walked only one and threw less than 100 pitches in chalking up his 10th win of the season. Meanwhile, Stros starter Wade Miller was all over the place, walking six and throwing 116 pitches in five and a third. Miller is among the league leaders in walks, and that lack of command is keeping him from being anything other than a barely above-average pitcher.
I've been quiet on the Jimy Williams front lately, but tonight he fielded just a ridiculous lineup. He has a team that is struggling at the plate and he bats Everett second (sorry, Jimy, Everett is a below average hitter regardless of how many times he lays down a sacrifice bunt), he DH's JK so that he can play the punchless Brumlett at second, and, of course, we always have the incredible out machine Ausmus. That's a third of the lineup that cannot hit their weight. By playing Kent at second, Williams could have DH'ed either Lamb or Lane and there is absolutely no reason with Beltran around to be batting Everett second in the lineup.
Wake up, Jimy. Your team is struggling. Play as many of your good hitters that you can and bat them more than your below average hitters. This is not rocket science.
Things could get ugly on Saturday as Tim Redding tees it up for the Rangers' potent lineup. My bet is that Redding's RSAA (explained here) is well into negative double digits once the Rangers get through with him.
Posted by Tom at 9:56 PM | Comments (0) | TrackBack (0)
June 24, 2004
Stros win and close trade for Beltran
The Stros nipped the Pirates 3-2 at the Juice Box on Thursday night as the Rocket picked up his 10th win of the season and the struggling Stros won for the fourth time in five games.
However, the bigger news out of the Juice Box on Thursday night was that the Stros consummated a trade that will bring star Kansas City centerfielder Carlos Beltran to Houston for reliever Octavio Dotel and AAA catcher John Buck (the Royals then shipped Dotel to Oakland for a couple of minor league prospects).
First, the game. The Rocket was his usual dependable self, scattering four hits and two runs over seven innings. Miceli and new closer Brad Lidge closed out the victory as Morgan Ensberg had the game winning hit for the second time in three games.
Now, the trade. Beltran is one of the best young players in baseball, with a .368 on base average, a slugging percentage of .527, and an RCAA (explained here) of 17 this season. Dotel has been one of the best relievers in baseball over the past three seasons, but he was having a down season so far and Lidge is ready to handle the closer's role. Buck was once the Stros' best minor league prospect before his development was derailed a couple of years ago by injuries and the club's failure to field a high A farm team until last year. However, Buck has rebounded nicely this season at AAA New Orleans and is likely ready for an opportunity to play in the bigs.
So, although far from a great deal (at least as of yet), the trade is a reasonable gamble for the Stros, who were probably going to finish third (at best) in the NL Central if they played a pat hand the rest of the season. Beltran is clearly the type of player who can elevate the Stros' performance level to equal that of the Cubs and Cards. Of course, the downside is that Beltran is probably a three month rental for the Stros, as his uber-agent Scott Boras has already announced that he is going to auction Beltran's talents to the highest bidder on the free agent market after this season. Don't look for the Stros to win that horse race.
Hopefully, Beltran will be in the Stros' lineup on Friday night as they send Wade Miller to the hill in the first game of the Lone Star Series with the hard-hitting Rangers at Arlington. Redding and Roy O will pitch the next two games of the series.
Posted by Tom at 10:17 PM | Comments (0) | TrackBack (1)
McMurtry on "My Life"
Larry McMurtry, Texas' finest novelist and the author of the incomparable 1986 Pulitzer Price winner Lonesome Dove, reviews former President Bill Clinton's autobiography My Life in this NY Times Review of Books review. Mr. McMurtry gives the book a generally positive review, and observes the following:
During the silly time when Clinton was pilloried for wanting to debate the meaning of "is," I often wondered why no one pointed out that he was educated by Jesuits, for whom the meaning of "is" is a matter not lightly resolved.To judge from this book, Clinton has never been able to understand why Kenneth Starr, the special counsel appointed to investigate Whitewater, pursued him so ferociously. The answer is to be found in the soil Kenneth Starr sprang from. His hometown, Thalia, Tex., lies along what local wits sometimes refer to as the "Floydada Corridor," a bleak stretch of road between Wichita Falls and Lubbock that happens to run through the tiny town of Floydada, Tex. It's a merciless land, mostly, with inhabitants to match. Towns like Crowell, Paducah and Matador lie on this road, and nothing lighter than an elephant gun is likely to have much effect on the residents. Proust readers and fornicating presidents will find no welcome there.
Posted by Tom at 9:18 AM | Comments (1) | TrackBack (0)
The legacy of business risk
From the always entertaining Stu's Views:
Posted by Tom at 7:03 AM | Comments (0) | TrackBack (0)
Methodist Hospital continues on the offensive
After the controversial split earlier this year (previous posts here) with longtime partner Baylor College of Medicine, The Methodist Hospital has been announcing a series of bold moves as it attempts to define its post-Baylor research and teaching role in Houston's famed Texas Medical Center. Yesterday, Methodist announced its boldest move yet -- a 30 year primary affiliation agreement with Cornell University's Weill Medical School in New York City.
No one can of another teaching hospital-medical school partnership in which such a vast distance separated the from its medical school. According to the Chronicle article on the deal, Methodist President Dr. Ron Girotto downplayed the mileage separating the hospital from Cornell, saying "distance is not an obstacle. Technology today makes anything possible -- the sharing of information, quality data and collaboration on research and patient care."
Cornell's Weill Medical College's primary teaching hospital has long been New York-Presbyterian Hospital which is one of the largest hospitals in the country. That affiliation will not change, as Methodist's deal with the medical school includes a Methodist affiliation with New York-Presbyterian, also.
Still unclear from Wednesday's announcement is how the affiliation deal will work in practice. Given the distance between Houston and New York, the relationship would appear to limit the typical type of faculty-student relationships that a teaching hospital typically enjoys with a medical school. Under the agreement, Methodist physicians can choose to have faculty appointments at Cornell, which Methodist believes will be a lure in recruiting. Methodist also contends that the affiliation will accelerate the development of the hospital's new research institute, which it recently announced.
Notably, the affiliation with Cornell and New York-Presbyterian is not an exclusive arrangement, and Methodist will continue to search for other medical school partners. Methodist forsees having multiple affiliations and are open to other ones in Texas. In that connection, talks are still ongoing between Methodist and the University of Texas Health Science Center at Houston, the other medical school in the Medical Center.
Posted by Tom at 6:20 AM | Comments (0) | TrackBack (0)
Enron Task Force adds charges in Nigerian Barge case
The Enron-related criminal case dubbed the "Nigerian Barge case" would already be in trial but for a conflict with the Judge's previously scheduled vacation that resulted in a postponement of the trial until mid-August. Using that delay to their advantage, the Enron Task Force yesterday filed a superceding indictment that added two new wire fraud charges against all six defendants and a new false statement charge against Defendant Dan Boyle, the former vice president of Enron's Global Finance unit. Previous posts on this case may be reviewed here.
The Chronicle article on this development speculates that the superceding indictment may result in a further postponement in the trial of the case, but that's highly unlikely. Inasmuch as the charges relate to the same transaction as the previous indictment in the case, there probably is not any unfair prejudice to the defendants in indicting them on the new charges, although the late indictment coming a month and a half before trial certainly calls into question the Task Force's handle on the case. If the new charges would justify a postponement of the trial date for the defendants, U.S. District Judge Ewing Werlein would probably dismiss the new charges before he would postpone the current August 16 trial date.
Posted by Tom at 5:53 AM | Comments (0) | TrackBack (0)
June 23, 2004
Stros stumble
Newly-acquired David Weathers served up Jason Kendall's first career grand salami and that's all she wrote as the Pirates cruised to a 7-2 win over the Stros at the Juice Box on Wednesday night.
Stros starter Pete Munro actually pitched reasonably well, giving up four hits and four runs over six and a third. But Weathers really screwed the pooch, giving Kendall only his second yak of the season. The Stros bats -- not exactly bursting with energy these days -- went into deep sleep after Kendall's tater put the game out of reach.
The biggest Stros news of the day was the rumor that the Stros were dangling Octavio Dotel as trade bait in a proposed three way deal with Oakland and Kansas City that would bring Carlos Beltan to the Stros. Beltran, 27, is one of the best young players in baseball, so he would be a wonderful addition to the Stros. However, the proposed deal violates the "too good to be true" because the term of Beltran's $6 million contract expires at the end of this season and my sense is that the Stros would not give up Dotel to rent Beltran for half the season. So, any such deal would probably have to involve working out a new deal with Beltran, which is a long shot at best given his prospects on the free agent market. Thus, I recommend not to get too worked up over this proposed deal -- I just don't think it will happen.
In other positive news, Andy Pettitte had a good outing this evening in Round Rock and will likely come off the DL for his next start. Look for Tim Redding to be the odd man out as Munro is pitching better and deserves a shot at the fifth spot in the rotation.
The Rocket tries to make sure the Stros take three out of four against the Bucs on Thursday night before the Stros ship off to Arlington to battle the vastly-improved Rangers in the World Series of Texas this weekend.
Posted by Tom at 10:13 PM | Comments (0) | TrackBack (0)
United revises bid for federal financing
As noted in this earlier post, the federal Air Transportation Stabilization Board announced last week that it had rejected Chicago-based United Airlines' application for a $1.6 billion federal loan guarantee, which was the foundation of United's reorganization plan to emerge from its pending chapter 11 bankruptcy case.
Well, that government credit enhancement is just too attractive to pass up. Yesterday, only six days after the Board's rejection of the prior proposal, United Airlines scaled back its request for federal loan guarantees to $1.1 billion from $1.6 billion and offered several other concessions in an effort to obtain the Board's approval of the request.
Interestingly, Sen. Peter Fitzgerald (R., Ill.), a staunch opponent of the airline-aid program, yesterday asked the acting inspector general of the Treasury Department to investigate whether "any inappropriate political pressure or intimidation has been or is being applied to" the Treasury nominee on the loan board.
If the ATSB ultimately turns United Airlines down for a third time, the carrier will be forced to overhaul its business plan, cut its expenses further and hunt for a financing package in the open market, which, of course, is exactly what United Airlines should be required to do. Inasmuch as the company is reasonably flush with cash (that's one of the advantages of operating in chapter 11 for a long time), United isn't in any immediate danger of liquidation. However, United's unrestricted cash, which was nearly $2 billion as of March 31, is projected to fall to under $800 million by year end. Airline analysts estimate that a comfortable level of unrestricted cash for an airline the size of United would be at least three times that amount. That's why United is trying so hard to obtain this federal credit enhancement and also why the ATSB should not grant it.
Meanwhile, the Wall Street Journal's Holman Jenkins, Jr. expands on Professor Ribstein's position that good economic policy not only allows companies to thrive, but also to die:
What should be causing beads of sweat on the policymaking community's collective brow is a structural impasse that makes it nearly impossible for failing airlines to die. Blame the bankruptcy courts, international route regulation, foolish antitrust prejudices or misguided investors. Blame Congress, which shouts "oligopoly" at any hint of an airline disappearing. Whatever the culprit, the country's in a bad fix. It has too many network carriers trying to shrink their way to profitability when what we really need are fewer, bigger network airlines. Three such carriers would be plenty and two would probably be enough in a world where regional jets are coming on strong and where low-cost, entrepreneurial operators will show up on any route when money's to be made by undercutting the incumbent.Meanwhile, low-cost airlines now account for 29% of the business, up from single digits 15 years ago. They're moving out onto the longer-hop routes (partly because fewer Americans rely on the plane for short trips since the security hassles tipped the balance in favor of driving). Frontier, Southwest and others are even developing what look suspiciously like hubs and spokes.
Posted by Tom at 6:52 AM | Comments (0) | TrackBack (0)
June 22, 2004
Stros win third in a row
The struggling Stros are showing signs of life thanks to the lowly Pirates as they reeled off their third win in a row at the Juice Box on Tuesday night, 5-4.
Roy O pitched a gutty eight innings, giving up nine hits but no walks, and threw an incredible 24 first pitch strikes to the 33 batters that he faced. Morgan Ensberg came up with the key hit, a two out, two run triple in the seventh that came after the Stros had left a bushel full of runners on base in scoring position with less than two outs throughout the game.
You have to feel good for Ensberg getting the big hit, but the reality is that he has been extremely disappointing this season, with no yaks (after hitting 25 taters last season) and a paltry slugging percentage of .358, which is the same as the light-hitting Viz. In comparison, Barry Bonds, Jr.'s is slugging at an incredible .633 and Bidg, Bags and Kent are all ranging between .470 and .510, which is where Ensberg should be.
Pete Munro takes the hill tomorrow night as the Stros try to keep it going in the third game of the four game set with the Bucs. After the Thursday game, the Stros travel to Arlington for the first part of their annual home and home series with the Rangers.
Posted by Tom at 9:51 PM | Comments (0) | TrackBack (0)
Chiseling in on Oscar Wyatt's Enron asset play
Reuters reported Tuesday that Enron Corp. has received an offer for its CrossCountry Energy unit from an unidentified "investment-grade company" that is substantially larger than the earlier bid that Houston oilman Oscar Wyatt's company made earlier this year. This Chronicle story reports that the new suitor for the assets is Southern Union Co.
Wyatt and his financial partners (which includes Citigroup) offered Enron $2.2 billion for CrossCountry, a collection of Enron's North American natural gas pipelines. The Wyatt offer included $1.74 billion in cash, the assumption of $461 million in debt, and a $25 million "stalking horse" fee if Wyatt's group were to be outbid for the pipelines.
The new offer includes about $55 million more in cash and is not conditioned on the payment of a "stalking horse" fee. Consequently Enron's largest unsecured creditors are now requesting that U.S. Bankruptcy Judge Arthur Gonzalez accept the new offer instead of the bid from the Wyatt-led consortium. A hearing is scheduled on the matter this Thursday in New York.
Posted by Tom at 3:24 PM | Comments (0) | TrackBack (0)
Enron criminal defendants: This is your Judge!
One U.S. District Judge is doing something about the federal sentencing guidelines.
Here is a follow-up NY Times article on the opinion.
Posted by Tom at 10:41 AM | Comments (0) | TrackBack (0)
Another tax shelter lawsuit
This NY Times article reports on the latest investor lawsuits that seek damages from German financial giant Deutsche Bank and several accounting, law and financial services firms -- including American Express -- for selling abusive tax shelters from 1999 to 2001. The investor plaintiffs in both cases, who collectively owe the federal government millions of dollars in back taxes as a result of the tax shelters being disallowed, are seeking to recover fees, interest and penalties.
Let's see if I understand the theory of the plaintiffs' case in these lawsuits. We rich people make speculative invesments in tax shelters to save big bucks from non-payment of taxes. We know that the deals are shady, but what the heck, we don't like paying taxes. Now that the tax shelters have been disallowed, we should not have to pay the taxes that we owed in the first place. Rather, these financial institutions should have to pay for indulging our greedy desire not to pay our share of taxes. How dare they take advantage of us like that?
Only in America.
Posted by Tom at 10:25 AM | Comments (0) | TrackBack (0)
June 21, 2004
Stros come back to beat Pirates
The Stros battled back from a four run deficit with a five spot in the fifth and rode fine relief pitching from Bullinger, Weathers, Miceli and Dotel to beat the Pirates, 7-4 on Monday night in the first game of their four game set at the Juice Box.
As usual, Barry Bonds, Jr was the hitting star, driving in four runs, three of which came on a key double in the fifth. Jason Lane pounded a solo yak, and the light-hitting Viz continues his recent rampage with three singles.
Two cautionary notes - JK left the game in the eighth with a sore wrist. Given that he missed considerable time with tendonitis in his left wrist last season, that is not good news. Chris Burke, are you ready? The other is that the Pirates pounded Tim Redding like a batting practice pitcher for eight hits and four runs in three and a third -- with an RSAA (explained here) approaching negative 10, it's time for the Stros to give the ball to someone other than Redding every five days.
The Stros send Roy O to the hill in the Tuesday night game to try to win their third in a row. Statistically, the Stros should be in third place (behind the Cards and Cubs, but in front of the Reds and Brewers), so there is a reasonable chance that the club will ascend to that position as the season wears on. However, overtaking either the Cards or the Cubs is increasingly appearing to be a pipe dream for the Stros.
Posted by Tom at 10:27 PM | Comments (0) | TrackBack (0)
Well, this is an interesting approach
Mike Ramsey, the Houston-based criminal defense attorney who is representing former Enron CEO and Chairman Ken Lay, has requested another meeting with the Enron Task Force to plead his case that Mr. Lay should not be indicted.
Ramsey's move in requesting the meeting with prosecutors is unusual, but the Enron case is such a hot button item culturally and politically that creative tactical decisions are necessary. Ex-Enron CEO Jeff Skilling asked for a similar meeting before he was indicted earlier this year, but it did not do much good -- Skilling was indicted on 35 felony counts a few days later.
Lawyers close to the case have said federal prosecutors plan to ask a grand jury any day to indict Lay on charges relating to the last few months he was at the helm of Enron as the company plummetted into bankruptcy in late 2001.
Posted by Tom at 6:42 PM | Comments (0) | TrackBack (0)
Sally Jenkins on Tiger Woods
Sally Jenkins is the daughter of Dan Jenkins, who is simply the best golf writer of all-time. However, Sally is currently writing on golf for the Washington Post, and she is fast joining her father as one of the best commentators on the golf scene. In this piece, Ms. Jenkins takes Tiger Woods down a notch or two over Woods' behavior during this past weekend's U.S. Open golf tournament. The following is a tidbit:
The Woods who played in the U.S. Open at Shinnecock Hills this week was not an especially great player, nor was he a very good guy. Among the things that Woods blamed for his final round of 76, his worst final round in an Open since turning pro, and 10-over-par finish: the weather, the United States Golf Association, modern photography, the press and his former coach, Butch Harmon.My first suggestion for Woods's immediate and long-term recovery is that he spend four years in the Peace Corps. Planting crops in Ethiopia or Zaire while teaching children to read and write would have a salutary effect on his attitude, which at the moment resembles that of a spoiled Venetian princess.
Read the entire piece. Good stuff.
Posted by Tom at 8:42 AM | Comments (5) | TrackBack (0)
June 20, 2004
Stros take Angels series
The Stros took advantage of Wade Miller's gutty pitching performance and scored runs from unlikely sources as they beat the Angels 3-1 Sunday afternoon to take two out of the three game series at the Juice Box.
Miller gave up six hits and four walks in seven innings, but the only run the Angels could plate against him came when JK went brain dead and made an error when he double clutched an easy throw to first base on a two out, bases loaded grounder in the fifth. Lidge and Dotel had a couple of anxious moments in the eighth and ninth, but muddled through to secure the win.
Meanwhile, the Stros' fielded an incredibly weak lineup that included below average hitters Viz, Ausmus, and Eric Brumlett, but all three of those negative RCAA ("runs created against average," explained here) hitters contributed to the Stros' offense. Brumlett hit his second career yak in the fifth, and then Viz doubled and scored on Ensberg's broken bat single. Ausmus then plated the third run with a perfect suicide squeeze bunt in the sixth. Based on this veritable offensive explosion, Manager Jimy will probably play these guys for the next week.
The Stros are now 35-33 and trail the Cards (41-28) by 5.5 games in the NL Central. The Pirates (26-39) now visit the Juice Box for four games beginning on Monday night, and it would be a very opportune time for the Stros to get back in the NL Central race. Anything less than three wins over the next four games would not bode well for the Stros' chances for the remainder of the season. Redding, Roy O, Munro and the Rocket are the Stros' scheduled pitchers for the Pirates series.
Posted by Tom at 7:44 PM | Comments (0) | TrackBack (0)
That's one wild law firm
The Curmudgeonly Clerk sorts out a rather odd situation that developed in a husband and wife law firm in San Antonio.
An enterprising duo, to say the least.
Posted by Tom at 11:30 AM | Comments (0) | TrackBack (0)
Russian trial on capitalism
This NY Times article provides an excellent analysis of the trial of Mikhail B. Khodorkovsky, who, until his arrest eight months ago, was the chief executive of Russia's Yukos Oil, which he had transformed into one of Russia's biggest and most shrewdly operated companies. He also had amassed a personal fortune of at least $15 billion. Here is an earlier post on Yukos' financial problems.
The trial of Mr. Khodorkovsky is attracting widespread interest in Russia and around the world business community:
"This should be Russia's O. J. trial and should be the most public and most important bit of jurisprudence in modern Russian history," said Bernard Sucher, a Moscow investment banker, referring to the attention on the trial of O. J. Simpson in the United States. "Most people want to look deeply at what happened here in the 1990's, and this is a chance to come to terms with how the country ended up the way it did at the end of the Yeltsin years."
The charges against Mr. Khodorkovsky are essentially that he orchestrated Yukos' bilking of the Russian government to the tune of several billion dollars worth of taxes. Surprisingly, however, the market is not viewing the ominous tax debt as a death sentence for Yukos:
Yukos shares still soared on Thursday and Friday, suggesting that investors believe some sort of deal will be struck, possibly one in which the Russian government receives a stake in the company in exchange for settling the tax case.Many of the early privatizations in the 1990's involved banks ostensibly lending money to industrial companies in exchange for controlling stakes, a widely derided program known as loans for shares. If the Russian government continues to assert itself with Yukos, then loans for shares may morph into shares for taxes, giving the Russian government a new foothold in the economy.
Some observors of the trial view it as a contest between competing visions for how Russia's economic power will be wielded in the post-Communist era:
Although the standoff between the men has been widely characterized as political, economic factors also forced Mr. Putin's hand. Last year, Mr. Khodorkovsky tried to sell a large stake in Yukos to an American company, Exxon Mobil, without consulting the Kremlin - at a time when oil was becoming a pivotal geopolitical and economic resource prized by Mr. Putin. Mr. Khodorkovsky had also tried to shop an oil pipeline deal with China, a move at odds with Kremlin policy. A senior Yuko