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July 31, 2004
Stros tread water in Cincy
First, the Stros blew the suspended game from last night to the Reds in 13 excrutiating innings 3-2, but then they came back to salvage Saturday afternoon's game, 8-0.
The completion of the suspended game was pure agony. 13 innings, four hits, only one extra base hit (a double) against the worst pitching staff in the National League. Watching bowling or billiards would have been much more exciting than enduring that travesty.
And despite Darren Oliver's five inning, one hit, no walks, 6 K performance in replacing injured Andy Pettitte in Saturday's regular game, the Stros had scored only 2 runs through eight innings in that affair. There is no better indictment of the Stros' main problem this season -- hitting generally and hitting with power particularly -- than scoring just 4 runs in 21 innings against this Reds pitching staff. The last time I looked, the Reds' staff had a negative 63 RSAA, which means that they have given up 63 more runs this season than an average National League pitching staff has allowed.
Beltran cranked a three run yak and Lamb followed with a two run toaster to run the score up in the ninth inning of the Saturday afternoon game. But make no mistake about it: If the Stros cannot score more than 4 runs in 21 innings against this Reds pitching staff, then the wildcard playoff spot will likely be out of reach for the Stros in about another week.
Roy O goes against Cincy's most reliable starter this season -- Paul Wilson -- in Sunday's rubber game. The way the Stros are struggling at the plate, I recommend highly that you keep the clicker close so that you can check out the golf tournament at frequent intervals.
Posted by Tom at 6:11 PM | Comments (0) | TrackBack (0)
John Edwards' vision through the prism of John O'Quinn
In this American Spectator piece, New York Sun columnist William Tucker relates to his past interview with famed Houston plaintiffs' attorney John O'Quinn in interpreting fellow trial lawyer and Democratic Party vice-presidential candidate John Edwards' world view:
When it came to defining his core vision, here's what Edwards said:"Tonight, as we celebrate in this hall, somewhere in America, a mother sits at the kitchen table. She can't sleep because she's worried she can't pay her bills. She's working hard trying to pay her rent, trying to feed her kids, but she just can't catch up.It didn't use to be that way in her house. Her husband was called up in the Guard. Now he's been in Iraq for over a year. They thought he was going to come home last month, but now he's got to stay longer.
She thinks she's alone. But tonight in this hall and in your homes, you know what? She's got a lot of friends.
We want her to know that we hear her...
So, when you return home some night, you might pass a mother on her way to work the late shift, you tell her: Hope is on the way."
Let's look at what's going on here. First and foremost, we've got a lonely woman. There's a passing reference to Iraq and her husband, but that's basically to get him out of the house and out of the picture. (Remember, these are the same people who brought you the welfare system, also designed to get men out of the house and out of the picture.)
She has no friends, no relatives, no religion, no community, nothing to rely on. Her husband? Well, he doesn't even seem to write anymore. And so she sits by herself at the kitchen table, waiting for someone to come along.
What a beautiful vision of America -- a nation of lonely, isolated women, in dire need of help, abandoned by everyone, waiting for some handsome trial lawyer to come knocking on their door.
Hope is on the way.
Read the entire piece. Hat tip to Michael over at Southern Appeal for the link.
Posted by Tom at 11:00 AM | Comments (0) | TrackBack (0)
Stros-Reds' game suspended
Bags singled home the tying run during a deluge in the top of the sixth inning and a third rain delay forced the umpires finally to make dinner reservations and call a suspended game between the Stros and Reds on Friday night in Cincy.
The game will resume Saturday at 11:30 a.m. with the score tied at 2 and two Astros on base in the top of the sixth. The regularly scheduled game for Saturday will follow, with Andy Pettitte seeing how many pitches he can throw in that one. The bullpen better be ready today.
Posted by Tom at 5:07 AM | Comments (0) | TrackBack (0)
July 30, 2004
Sex, Love and Voting
Ray C. Fair is a professor of economics at Yale University. In this Wall Street Journal ($) article, , Professor Fair's new book -- Predicting Presidential Elections and Other Things -- is reviewed and it sounds like a winner:
How can you guess who might be having an extramarital affair? This is an important question, and it deserves to be treated with scientific rigor.Start with a theory. As a first approximation, it seems reasonable to suppose that the likelihood of having an affair depends on income, age, number of years married, marital satisfaction and religiousness. Next, find some data -- say, a sex survey published in a magazine like Psychology Today or Redbook. Now fit the data to the theory (which means having your computer run a line through a cloud of points -- a technique called linear regression) and do a statistical test to see whether the theory is any good. And what do you know? It is!
Now comes the fun part: prediction. Using the results, you can guess which of your friends and neighbors might be straying from the matrimonial paddock. Likely candidates for an affair are those who (1) have a high wage rate, (2) have been married a long time, (3) are relatively young given the length of their marriage, (4) aren't very happily married and (5) aren't particularly religious. Want something more quantitative? Well, all else being equal, an extra 10 years of marriage increases the predicted number of adulterous encounters per year by about six. (Warning: Blackmail based on these findings is strongly discouraged.)
Predicting adultery is only one of the interesting subjects that Professor Fair addressed. However, during this political season, the most interesting subject is his model for predicting Presidential elections:
By trial and error, Mr. Fair comes up with a list of eight: the growth rate of the economy, inflation, the number of economic "good news" quarters leading up to the election, whether an incumbent is running, how long the incumbent party has held the White House, whether there is a war on and, finally, a "party variable" in case the electorate has an innate preference for one party over the other. As data, he uses election results from 1996 (when President Clinton beat Bob Dole) back to 1916 (when President Wilson beat Charles Hughes).After fitting the data to the theory, Mr. Fair finds that all eight variables affect voting at greater than chance levels.
And applying Professor Fair's model to the Presidential elections from 1916 through 1996 reflects that it is pretty darn accurate:
From 1916 to 1996, Mr. Fair's theory only calls two elections incorrectly. In 1960 Nixon received 49.9% of the vote, but according to the theory he should have received a 51.1% -- a relatively small discrepancy. More embarrassing to the author's analysis is the 1992 election, in which President Bush's predicted share of the major-party vote was a winning 50.9%, whereas his actual share was 46.5% -- a whopping 4.4 percentage-point error.Moving to the 2000 election, which lies outside the data set used to construct the theory and is therefore a good test of its validity, Al Gore should have received (a losing) 49% share of the vote that went to the two major parties, but he actually got (a losing) 50.3% share. Not bad.
So, how does the Professor size up the 2004 election?:
Mr. Fair's analysis will be cheering to President Bush, who, as a Republican president running for re-election when the Republicans have been in power only one term, enjoys the best possible incumbency situation. The only way he can lose, the theory suggests, is if the economy suddenly tanks.
Looks like another book to add to my reading stack.
Posted by Tom at 9:08 PM | Comments (0) | TrackBack (0)
Enron Broadband defendant pleads guilty
Ken Rice, the former head of Enron’s broadband Internet business, became the 11th person to plead guilty to an Enron-related crime when he admitted to a single count of securities fraud this morning before U.S. District Judge Vanessa Gilmore in Houston.
The plea agreement requires Mr. Rice, who is 45, to cooperate with the government in ongoing investigations and trials and forfeit $13.7 million in cash and property. Mr. Rice faces a maximum 10 years in prison and a $1 million fine.
Mr. Rice faced charges of conspiracy, securities fraud, wire fraud, money laundering and insider trading in this multi-count indictment. Attorneys close to the case have been expecting Mr. Rice to reach a deal with prosecutors for several weeks. As a division head, Mr. Rice reported directly to former Enron CEO and COO Jeffrey Skilling, and may have had regular contact with former Enron Chairman Kenneth Lay as well. Both Messrs. Skilling and Lay have pled not guilty to a variety of Enron-related charges in another pending criminal case.
Mr. Rice's plea deal centers on a Jan. 20, 2000 meeting with analysts where Rice and others at the company touted the current and future abilities of Enron’s broadband network. That same meeting was mentioned in the indictment against Mr. Skilling, which claims he made similarly false claims about the abilities of the network and the potential of the business. It’s certainly possible that Enron Task Force prosecutors will Rice as a witness in an attempt to corroborate the charges against Mr. Skilling.
According to the Enron Task Force, Mr. Rice sold 1.2 million shares of Enron stock for more than $76 million while he knew Enron Broadband Services was failing. The unit never generated a profit and was abandoned shortly after Enron's bankruptcy filing in early December 2001. Mr. Rice quit the company in 2001 after his stock sale and several months before Enron went bankrupt. He had served as CEO of Enron's trading unit -- Enron Capital and Trade -- from 1996 to 1999 before taking over the high profile broadband unit that Enron claimed was responsible for millions in profits. Enron's share price spiked to $90 in August 2000 as Enron promoted the venture, among other ventures. Mr. Rice was indicted on April 29, 2003 -- along with seven other former broadband employees -- in a 218-count indictment that claimed the men lied about the value and capabilities of Enron’s internet business.
The remaining defendants in the Enron broadband case are Joe Hirko, another former broadband CEO; Kevin Hannon, former chief operating officer; Scott Yeager and Rex Shelby, former senior vice presidents; and Kevin Howard and Michael Krautz, former executives. Each one has pled not guilty to all charges. The trial of the case is scheduled to begin to begin Oct. 4. The first criminal trial involving former Enron executives will take place in the "Nigerian Barge case," which is scheduled for trial beginning on August 16.
Posted by Tom at 3:13 PM | Comments (0) | TrackBack (0)
Shell reaches settlements on reserve overstatement
Royal Dutch/Shell Group, the world's third-biggest public oil company, reached preliminary settlements with U.S. and British authorities to pay penalties of about $150 million for overstating its energy reserves. Earlier posts are here about the Shell overstatement controversy.
Shell announced the hefty settlements after months of negotiations with regulators. Shell ousted top executives, turned over millions of pages of documents and shared with the regulators the findings of an internal Shell investigation of the company's overstatements of oil and natural-gas reserves. Shell essentially bet that cooperating with regulators would shorten the regulatory investigations and soften the blow from U.S. authorities, and the bet played out well.
Shell has agreed to pay a $120 million penalty to the Securities and Exchange Commission, which is one of the biggest penalties levied by the SEC on a foreign company in recent years. The agreement settles SEC findings that Shell violated the antifraud, reporting, record-keeping and internal-control procedures of U.S. securities laws and related SEC rules. Shell also said it agreed to pay £17 million ($30.9 million) to Britain's Financial Services Authority, which had already found that Shell had violated British market-abuse regulations. As is usual in such settlements, Shell did not admit or deny the conclusions.
Although the announcements are clearly progress, Shell is not out of the woods just yet. The SEC must formally approve its settlement, and it can still bring civil charges against individuals involved in the fiasco. Moreover, the U.S. Justice Department is continuing its own investigation into the overstatement of reserves. Finally, Shell and its executives still could face costly civil settlements.
Posted by Tom at 6:39 AM | Comments (0) | TrackBack (0)
New Houston Bankruptcy Judge appointed
Well-known bankruptcy litigation specialist Jeff Bohm of Austin has been appointed as the new bankruptcy judge for the the United States Bankruptcy Court for the Southern District of Texas, Houston Division. Jeff replaces William Greendyke, who resigned effective June 1 to join Houston-based Fulbright & Jaworski.
I have known Jeff for a long time and been involved in several cases with him over the years. He is an outstanding lawyer and will make a fine bankruptcy judge. Although Jeff has been practicing for 20 years and has been a partner at Austin-based McGinniss, Lochridge for 15 years, Jeff's background is interesting in that he did not go directly to law school after undergraduate school. Rather, he chose to work for several years for a large bank in Houston in a variety of positions. I believe that this background is a part of the reason why Jeff has an unusual depth of perspective regarding financial and insolvency-related disputes, and also why he developed a resolution-oriented style of lawyering in his practice (I have found that lawyers who were formerly clients tend to prefer this style). Although an effective litigator, Jeff has always had a refreshing knack for resolving legal disputes in the most efficient and reasonable manner possible under the circumstances.
Jeff joins what has become a powerhouse group of bankruptcy judges in the Southern District of Texas. As noted earlier here, outstanding Houston bankruptcy lawyer Marvin Isgur joined chief Bankruptcy Judge Karen Brown and Bankruptcy Judges Wesley Steen and Letitia Clark on the Houston bankruptcy bench earlier this year. With the additions of Judges Isgur and Bohm, the Houston bankruptcy judges are one of the strongest groups of bankruptcy judges in any one federal district in the country.
Posted by Tom at 5:57 AM | Comments (2) | TrackBack (0)
July 29, 2004
Stros lose to DBacks
The Stros dropped two games at home to the National League's worst team as the Diamondbacks held on for a 6-4 win on Thursday afternoon at the Juice Box. The Stros go to Cincy 14½ games behind NL Central-leading Cards and 5½ games behind the Padres for the NL Wild Card playoff spot.
The crowd of nearly 40,000 booed the Stros lustily throughout the game, particularly starter Tim Redding, who again struggled with his control. Redding gave up six runs on nine hits in 5 2/3 innings, while walking two, both in the DBacks' 3 run first inning. After his rough start, Redding recovered to retire 12 of the next 13, but started to unravel in the fifth. After giving up a double, Adam Everett made a key throwing error on an infield hit by Gonzo, and then Hillenbrand followed with a two run dinger. Those three unearned runs pushed the DBacks' lead to 6-1.
All of that went over about like a turd in the punchbowl with the Juice Box crowd.
The Stros had nine hits -- including two doubles and a yak by Bidg -- but could never put together the big inning against the DBacks' rookie starter to pull even. Bidg's first double was the 544th double of his remarkable career, moving him past Tony Gwynn for 19th all-time in the majors. His double in the fifth allowed Bidg to pass Reggie Jackson for 70th on the career hits list. It was Bidg's 2,586th.
Pete Munro pitches for the Stros against the Reds in the first game of their weekend series on Friday in Cincy. Although the Reds can flat out bash the ball, their pitching is even worse than the DBacks. So, this series ought to be another good opportunity for the Stros to pad their hitting statistics. That means that they will probably score five runs total in the three games. That's the kind of season it's been.
Posted by Tom at 10:55 PM | Comments (1) | TrackBack (0)
The prison of radical Islam
In this Opinion Journal.com piece, Danielle Crittenden reviews a new book -- "Inside the Kingdom" -- by Osama Bin Ladin's former sister-in-law, Carmen bin Ladin.
Inasmuch as women of radical Islamic families risk severe punishment for speaking out, first person accounts of life in this culture are rare. As Ms. Crittendon notes, Ms. Bin Ladin is not a distant relative seeking to cash in on her the Bin Ladin family's notoriety. Rather, her story is arguably the most vivid account yet to appear in the West of the oppressive lives of Saudi women:
Carmen's life in Saudi Arabia began when her car pulled up to Yeslam's mother's compound outside Jeddah. In the mid-1970s, the town was still not much more than a donkey crossroads in the middle of the desert. If winds weren't whipping up the sand in blinding funnels, the sun was scorching down with unbearable heat. Shrouded in her unfamiliar and suffocating black robes, Carmen entered what sounds like a luridly decorated marble tomb. From then on, she was no longer free.Each day, Yeslam vanished to work. Carmen and her young daughter passed the hours in the company of his mother and sister. Rarely could she leave the house--rarely, even, did she see sunlight. Courtyards had to be cleared of male servants before she could poke her head outside; she was not even permitted to cross the street alone to visit a relative. When she did venture out, she had to wear a choking abaya and thick socks to hide her ankles. "It was like carrying a jail on your back," she writes.
Nor was she much freer inside the house. She could not listen to music, pick up an uncensored book or newspaper, or watch anything on television but a dour man reading the Quran. Nor could she absorb herself in household tasks. These were left to foreign servants, including the care of children.
Carmen was horrified by the effects of this isolation and uselessness. "The Bin Laden women were like pets kept by their husbands;. . . .Occasionally they were patted on the head and given presents; sometimes they were taken out, mostly to each other's houses;. . . .I never once saw one of my sisters-in-law pick up a book. These women never met with men other than their husbands, and never talked about larger issues even with the men they had married. They had nothing to say."
Posted by Tom at 6:57 AM | Comments (0) | TrackBack (0)
Revising "The Deal"
Rich Karlgaard is the publisher of Forbes magazine. In this Wall Street Journal ($) column, Mr. Karlgaard examines what has gone wrong at Microsoft and what Bill Gates is doing to try and fix it:
Today Microsoft is struggling to figure out what attracts and motivates the most talented employees within capitalism's free-agent system. The company had no such problem figuring that out in the 1980s and '90s. Microsoft CEO Steve Ballmer liked to call the old motivational carrot "The Deal." That arrangement worked like this: Come and work for Microsoft. Make do with a so-so salary but partake lavishly of options. Sure, you might be forced to grind away on 80-hour weeks for six or seven years. But you'll change the world and get rich -- wildly rich.Microsoft's stock has been flat since 1999. The Deal is broken. Not only that, but most of today's change-the-world projects in computing live outside of Microsoft. These include open-source software, search engines, Web services, Flash video, WiFi, iPods, etc. For reasons of pay and excitement, Microsoft is losing its grip on a new generation of IQ.
Then, Mr. Karlgaard notes that the fortunes of companies in the technology world can changes just as fast as the technologies that they sell:
Digital Equipment Corporation reached its peak market value in 1988 but four years later sold to Compaq for a tenth the price. IBM was a titan throughout the 1980s yet nearly went bankrupt in 1992, before Lou Gerstner stepped in. At both IBM and DEC, the stellar 1980s financial results were lagging indicators of future vitality. The leading indicator was the flow of talent. By the late 1980s, even as DEC and IBM were at the peak of their financial powers, they already had lost the war for young IQ. The bright and bold were flocking to the new personal computer industry.It's hard to believe, but Microsoft, in 2004, has become a company run by gray hairs. Mr. Gates and Mr. Ballmer will turn 50 in the next 20 months. Older yet, with snowy white hair, is Jim Allchin, who directs the future of the company's crown jewel, the Windows operating system . . .
In this context, Mr. Karlgaard suggests that the true purpose of Microsoft's recent stock buyback program and dividend announcement is actually to reinvigorate "the Deal:"
My guess is that outside investors were not Microsoft's primary audience for last week's announcement of a one-time $32 billion dividend payment, a $30 billion stock buyback, and a doubling of the annual dividend payment. No, this move was done to rally employee shareholders and future employee shareholders. Microsoft needs a way to attract and keep future Bill Gateses and Steve Ballmers. It needs to revive The Deal.A year ago, Microsoft announced it had removed the heart of The Deal -- stock options -- in favor of restricted grants. An army of Microsoftologists parsed the move for deeper meaning. One analysis had it that Microsoft was merely acknowledging what Mr. Gates's good friend Mr. Buffett had asserted -- that the early 2000s would produce lousy returns in the stock market. If that turned out to be true, stock options would only disappoint employees, lead to bad morale at Microsoft and make it harder to recruit.
In retrospect, maybe Microsoft should have been more optimistic about the stock market. It might have joined Intel, Cisco and others in the battle to keep stock options. But Microsoft didn't do that, and since there are no longer options for employees, only share reward -- paying a higher dividend -- is available as an incentive for high-IQ employees.
It's not The Deal, but it's a start.
Posted by Tom at 5:54 AM | Comments (0) | TrackBack (0)
July 28, 2004
The Rocket rocks on
The Rocket pitched seven innings of five hit ball as the Stros continued their domination of the hapless DBacks by winning 6-1 in the third game of their four game series on Wednesday night at the Juice Box.
As usual, Clemens was reliable, striking out eight while giving up only one run. JK and Bags whacked yaks again, while the Stros continued to improve their hitting statistics against the DBacks pitchers not named Johnson or Webb.
Tim Redding takes the hill tomorrow in the Businessman's Special against Lance Cormier, who has a 14+ ERA. The Stros then take off to Cincy for a weekend series before returning home next week to face the Braves and the Expos.
Posted by Tom at 9:46 PM | Comments (0) | TrackBack (0)
More Medical Center political strife
Daniel Arnold, a member of the Baylor College of Medicine board of trustees and the former chairman of that board, has sent the full board a July 14 letter calling for Baylor President Dr. Peter Traber to be fired for failed leadership. Mr. Arnold's letter states that Traber's management of Baylor is "deleterious" and "divisive," and that "his lack of realistic vision and fundamental errors in judgment" are not what Baylor needs in a leader. Here is the Houston Chronicle article on this latest Medical Center dustup. The letter is expected to be discussed today at a meeting of the 48-member board.
Corby Robertson, the current chairman of the Baylor board, told the Chronicle that he believes that Dr. Traber has the board's support
Mr. Arnold sent his letter amid the recent political fallout over the split of the long teaching relationship between Baylor and The Methodist Hospital (earlier posts here). The institutions have been in open conflict since deciding to sever their 50-year relationship in which Methodist served as the teaching hospital for Baylor students and residents. Last week, Baylor threatened legal action against Methodist if the hospital does not cease actions that Baylor alleges are interfering with Baylor's operations, including Methodist's "aggressive recruiting" of Baylor faculty members.
Mr. Arnold was the Baylor board chairman who butted heads with popular Baylor faculty member and president, Dr. Ralph Feigin. In that conflict, Mr. Arnold attempted to force Dr. Feigin to choose between the presidency and his other job as physician-in-chief at Texas Children's Hospital. Dr. Feigin subsequently announced he was stepping down, only to have the decision overturned a month later after key faculty and trustees objected. Dr. Traber replaced Dr. Feigin in March, 2003 when Dr. Feigin resigned at the age of 65.
Update: The Baylor board voted unanimously (with one abstention) to support Dr. Traber.
Posted by Tom at 8:24 PM | Comments (0) | TrackBack (0)
Enron objects to employee settlement
Setting up a potential jurisdictional battle between two federal courts, Enron Corp. filed an objection in U.S. Bankruptcy Court in Manhattan yesterday seeking to block a settlement payment of the $85 million in insurance proceeds to approximately 20,000 current and former Enron employees that is emanating out of pending litigation in the U.S. District Court for the Southern District of Texas. Here is an earlier post on the proposed settlement.
Enron employees lost hundreds of millions of dollars when the Enron stock in their 401(k) plan became worthless as the company spiraled into bankruptcy in late 2001. After they sued Enron in 2002, U.S. District Judge Melinda Harmon in Houston approved the tentative settlement to the former Enron retirement-plan participants earlier this summer. The final hearing on the proposed settlement is scheduled for Aug. 19.
The settlement, which would be the largest to date for a case involving company stock in retirement plans, would be largely paid by Associated Electric & Gas Insurance Services Ltd. and Federal Insurance Co. Enron had $85 million in liability insurance to cover company employees who were acting as fiduciaries.
In pleadings filed with the Enron bankruptcy court in New York, Enron and its creditors argue the money is an asset of the bankruptcy estate and the bankruptcy court should decide who gets it. Enron and many of its creditors have previously filed pleadings in the bankruptcy case asserting that the employees' claims should be subordinate to all other creditors.
Posted by Tom at 5:39 AM | Comments (0) | TrackBack (0)
July 27, 2004
Stros pound DBacks
Roy O pitched seven shutout innings and Adam Everett cranked two solo yaks as the Stros downed the Diamondbacks, 10-3 on Tuesday night at the Juice Box.
Oswalt was masterful as he struck out five while giving up only two hits and walk during his seven innings. The DBacks jumped on Kirk Bullinger for their three runs in the eighth, but Chad Harville finally pitched a decent inning in throwing a scoreless ninth.
The Stros' hitters had extended batting practice against the DBacks' Edgar Gonzalez and Steve Sparks as they pounded 12 hits, including Everetts' two yaks, JK's two run shot, and Bags' three run tater. Morgan Ensberg chipped in with a couple of doubles as he continues his long road to a respectable OPS.
The Stros are looking good again tomorrow night as the Rocket takes the hill against ex-Texas Aggie Casey Fossum (6.17 ERA). Isn't it nice getting the DBacks when Randy Johnson is not pitching?
Posted by Tom at 9:45 PM | Comments (0) | TrackBack (0)
More on Houston's light rail boondoggle
Following this earlier post on the economic absurdity of light rail systems, Randal O'Toole, one of the economists over at The Commons, cites the Houston light rail system as one example why cities such as Denver and Austin should reject such systems:
Houston opened a 7.5-mile light-rail line in its downtown on January 1. It has so far caused more than 50 collisions with autos or pedestrians (including a few during testing before January 1). While the transit agency blames bad auto drivers, the accident rate is twenty times the national average for light-rail lines.
Mr. O'Toole notes other economic disasters involving rail systems in other cities, and then aptly summarizes as follows:
The push for rail transit comes from construction companies that seek to soak the taxpayers building it, downtown property owners who hope to enhance the value of their properties, anti-auto environmentalists who view congestion with schadenfreude, and collectivists who think we would be better off in collective transit than private autos. None of these reasons are very appealing so they cloak their goals behind specious claims that rails will reduce traffic congestion and air pollution, something that rail transit has never done.
Amen.
Posted by Tom at 6:53 AM | Comments (4) | TrackBack (0)
Mike Tyson, Debtor-in-Possession
Former heavyweight champion boxer Mike Tyson is currently a debtor-in-possession in a chapter 11 bankruptcy case. This NY Times article outlines Tyson's plan of reorganization, which is based on the income stream that Mr. Tyson supposedly will generate from fighting an unusually aggressive schedule on pay-for-view television:
The reorganization assumes that Tyson (50-4) will fight five times through November 2005 (with dispensation to stretch the fights out over two more years, when he'll be 41), an extraordinary amount of work for a boxer who has not fought in 17 months and has not beaten a great opponent since Ronald Reagan was in his second term.The reorganization requires that after keeping $2 million from each fight, Tyson must pay into a reorganization trust fund 50 percent of the after-tax proceeds from his bouts, or $19 million, to pay his taxes and his former wife Monica Turner.
Tyson's first payment to the trust fund, $890,000, . . . is due next month. He must then pay the fund $4.9 million in each of the quarters ending Jan. 31 and April 30, 2005, followed by a payment of $3.7 million in the quarter ending October 31, 2005, and $4.6 million in the quarter ending January 31, 2006.
The plan does not state what will happen if he does not make the payments.
I can answer that one: Liquidation, which is where Tyson should probably be anyway.
It also turns out that Mr. Tyson has settled matters with his former promoter, Don King:
The best news for his finances is the $14 million that will come from the recent settlement of the $100 million federal lawsuit he filed in 1998 that alleged financial fraud against Don King, his former promoter.King will pay Tyson $8 million soon after the reorganization plan goes into effect, $3 million plus interest in January 2005 and $3 million plus interest in January 2006.
For all the money that Tyson charged that King had siphoned off, he will get none of it; all of it will go for debts.
Meanwhile, those pesky chapter 11 operating reports provide some interesting information on Mr. Tyson's current life:
According to the monthly financial reports Tyson files with the bankruptcy court, his personal earnings in February, $26.54, were overwhelmed by $67,960 in personal expenses. In March, his income improved to $15,127, while his expenses fell to $25,389. And in April, his income soared to $125,055 and his expenses rose again, to $62,589.
Mike Tyson is not a particularly good fighter anymore. Nevertheless, just as many people watch NASCAR events to see the crashes, many folks will tune into a Tyson fight in order to see the inevitable meltdown of Tyson in living color. About when you think the fight game has gone as low as it can go, people leeching off of Tyson push it even lower. Only in America.
Posted by Tom at 6:11 AM | Comments (0) | TrackBack (0)
The usual government solution
Count the Wall Street Journal's ($) George Melloan as skeptical that the 9/11 Commission's recommendation of a new cabinet department headed by a "National Intelligence Director" is a good idea:
The late William E. Simon, Treasury secretary in the Nixon and Ford administrations, once described to a small group of Journal editors the origin of what would later become the U.S. Department of Energy.As deputy to Treasury Secretary George Shultz in 1973, he had been sitting in for his boss at a Nixon cabinet meeting and offered a report on the energy "crisis." Mr. Nixon chewed on his pencil for a moment and then, inspired by a thought, told Mr. Simon that he was putting him in charge of a White House energy policy office, a job that later earned him the title of "energy czar." In 1977, Congress and Jimmy Carter created a full-blown cabinet-level department to try to deal with the still-unsolved "energy crisis." Today, the DOE has wide-ranging powers and a budget of roughly $20 billion.
The interesting thing about this story is that it was a clumsy attempt to correct a problem the government itself had created. The "energy crisis" had been caused primarily by the price controls President Nixon adopted in 1971 as a response to inflation, also of the government's own making. That's one way government grows, or metastasizes if you will. It adds new functions to try to correct the problems of existing functions. This new cell growth is always popular inside the Beltway, because it creates jobs and opportunities.
Mr. Melloan notes that the Commission's recommendation of bringing all intelligence under one master and coordinating the exchange of information sounds like a good idea on the surface, but is it really?:
A new department, Homeland Security, was created under Secretary Tom Ridge only two years ago. It already has spent $70 billion and wants $40 billion more next fiscal year, notes Forbes magazine. The DHS is hard at work, organizing better security for nuclear plants, arranging point-of-origin certification of shipboard containers, asking banks to monitor transfers from places like Saudi Arabia. But Forbes still rates these risks at the "yellow" level and gives a high-risk "red" to the threat of computer network hacking.
Mr. Melloan then points out that more government bureaucracy may be the problem, not the solution:
It wasn't that the U.S. had no defenses [before the 9/11 attacks]. It has many thousands of law enforcement officers at all levels of government and as many as 20,000 people in the CIA alone. But all of these people, many of them very able, were trapped in a morass of government bureaucracy.
Some of the restrictions are mind-boggling. Most big cities in the U.S. have "sanctuary" ordinances, pressed on them by "civil rights" groups, which prohibit city employees, especially the police, from checking with the Immigration and Naturalization Service on the immigration status of anyone who runs afoul of the law. As a result, thousands of illegal aliens are at large in the U.S. and encounter no trouble with the INS even if they are picked up for theft or drunken driving. And of course, airport screeners, under the same "civil rights" pressures, are barred from "profiling" passengers and thus, in the words of one critic, must accost a "blue haired 70-year-old woman with an aluminum walker" and nine other average travelers for every able-bodied 30-year-old Mideast male.The INS also has little coordination with the overseas consular offices of the State Department, which approve visas for visitors to the U.S. The State bureaucracy is responding to homeland security fears by tightening up on visa grants, but with no evident system for distinguishing between possible terrorists and innocent students, business travelers and the like. The CIA's failure to insert spies into al Qaeda was a major shortcoming. One wonders what it does with its estimated $40 billion budget.
Congress is itself fragmented, politically polarized and mired in the oversight methods of yesteryear, and so is not up to the requirements for legislating a more streamlined and efficient defense against terrorism. For example, Secretary Ridge has had to testify to 80 committees and subcommittees since taking office. What they do with all that duplicative information and how he finds time to do anything else is a mystery.
Posted by Tom at 5:37 AM | Comments (0) | TrackBack (0)
July 26, 2004
Stros go low against DBacks
Brandon Webb handcuffed the Stros with his array of sinkers and dinkers as the Arizona Diamonbacks beat the Stros 4-1 Monday night in the first game of their four game series at the Juice Box.
Webb was masterful, giving up 6 singles and one run in 7 1/3rd innings. This game was essentially infield practice for the DBacks as Webb's sinkers had the Stros pounding the ball into the ground with futility the entire game.
Andy Pettitte only gave up three hits in five innings, but the problem was that two of them were back to back gopher balls in the first inning to Gonzo and Hairston. That was all Webb needed on this night. Pettitte left after the fifth game because of soreness in his left elbow, a problem that has bothered him all season. Given the club's disminishing playoff chances, the Stros will soon have to give serious consideration to shutting Pettitte down for the season.
The best news for the Stros on this day was the signing of Troy Patton, the Tomball High School lefty who was projected as a high draft choice until he announced that he would be attending the University of Texas on a baseball scholarship. Most major league clubs backed off on him as a result of that news, but the Stros took a flyer on him in the ninth round of the draft earlier this summer and the bet has paid off. Patton will report to the club’s affiliate in Greeneville of the Appalachian League.
Patton was 12-0 with an 0.91 ERA during his senior season at Tomball High. He struck out 142 hitters in 77.1 innings pitched, while walking only 24 and allowing 24 hits. Patton threw three no-hitters this spring, including one perfect game, and opponents hit only .122 against him in 2004.
Roy O tries to get the Stros back on track on Tuesday night against some fellow with a 12+ ERA for the DBacks. The way this season is going, the game will probably be a nailbiter.
Posted by Tom at 10:08 PM | Comments (0) | TrackBack (0)
More on the politics of bashing
Awhile back, Professor Ribstein and I discussed (here, here. and here) the unique nature of current vitriolic criticism of President Bush.
Today, the always insightful Virginia Postrel weighs in with one possible reason for the intensity of the Bush-bashing:
When I was in New York a few weeks ago, a friend in the magazine business told me he thinks the ferocious Bush hating that he sees in New York is a way of calming the haters' fears of terrorism. It's not rational, but it's psychologically plausible--blame the cause you can control, at least indirectly through elections, rather than the threats you have no control over. I thought of that insight today when I glanced at Maureen Dowd's column and read this sentence, "Maybe it's because George Bush is relaxing at his ranch down there (again) while Osama is planning a big attack up here (again)."That is the voice of a petulant child, angry that she has a tummy ache while Daddy is at work or Mommy is visiting a friend, or the voice of a grouchy wife angry that she has a migraine while her husband is out coaching the kids' baseball team. You're upset that you're in pain (we've all been there), so you get mad at someone whose presence wouldn't make the pain any better.
Professor Ribstein is not buying Ms. Postrel's speculation, and contends that an underlying condescending nature is the root of the Bush bashing.
Posted by Tom at 7:06 AM | Comments (3) | TrackBack (1)
Addressing the obesity epidemic
Clinical psychologist Gerard Musante was the first person to adapt the principles of behavior modification to the eating habits of significantly overweight people. For the past 30 years, Dr. Musante has taught these principles at Structure House, the residential weight loss facility he founded in Durham, N.C.
In this Tech Central Station op-ed, Dr. Mustante addresses that the national debate over responsibility for our society's obesity overlooks the effect that the debate has on how individuals perceive their personal battles with being overweight or obese:
[O]ur national debate on obesity is evolving into two camps. One emphasizes that obesity results from such factors as genes, a disease state or physiology. The other focuses on the role personal responsibility plays and possibly defines obesity as a personal failing.While the first camp paints the individual as a victim of forces beyond his control, the latter argues from a moral or social viewpoint. While I strongly support personal responsibility, even the discourse to this effect fails to address the most critical reason for espousing such a perspective. What is too often absent from both viewpoints is a direct consideration of the ramifications these arguments themselves can have on how individuals view their personal battles with overweight and obesity.
Dr. Mustante points out that the biggest problem is defining the issue as being out of an individual's control:
If one defines a problem as out of his control, then he remains powerless to influence it. However, nearly all experts acknowledge obesity ultimately results from violating a simple principle: calories consumed should equal calories expended. The idea that individuals are victimized by their own bodies or a toxic environment is problematic. For starters, it's untrue. But as importantly, it stymies their motivation and perceived ability to control their weight loss.
The key lies in a related psychological concept called self-efficacy, which was defined by Albert Bandura, a noted Stanford University psychologist, in 1977. He theorized that people's expectations of their ability to be effective influence whether and how they will act. It will affect how much effort they expend, and how long they will sustain their efforts in the face of challenges. If a person believes he lives in a "toxic food environment" or is suffering from a disease state, how can he have confidence in his ability to change his predicament?
Dr. Mastante then points out that "quick fix" diet plans are usually counterproductive to obesity because the personal sense of failure that an individual experiences triggers a false sense that the individual is powerless to overcome the problem. And that false sense of powerlessness is becoming more popular:
Worsening the problem, we now are seeing efforts to sue food establishments, to demonize various industries, and to rid schools of vending machines. By blaming industries and products, society only makes individuals feel increasingly powerless about their ability to lose weight, and that perceived lack of control makes them less likely to attempt or experience success. Frivolous lawsuits against the food industry and the classification of obesity as a disease only reinforce the idea that obesity is something people cannot control.
Read the entire article, and then take a look at this piece in which the authors point out that the obestiy epidemic is partly the unintended consequence on the anti-smoking campaign over the past generation.
Posted by Tom at 6:44 AM | Comments (1) | TrackBack (1)
Debating American foreign policy
John Lewis Gaddis is the Robert A. Lovett professor of history and political science Yale University and Paul Kennedy is the J. Richardson Dilworth professor of history at the same school. In this NY Times Book Review interview, the two debate their views on American foreign policy. The entire piece is well worth reading, and the following are a couple of tidbits of their insights:
How Did 9/11 Change America's Thinking About Foreign Policy?GADDIS. The whole premise of our thinking had been that threats come from states. Then suddenly, overnight, levels of damage were done exceeding those at Pearl Harbor by a gang most of us had never heard of. That is a profound change in the national security environment. It exposes a level of vulnerability that Americans have not seen since they were living on the edge of a dangerous frontier 150 years ago.
KENNEDY. I'd agree, and then add another slant. The whole system of international law was predicated upon states. There's no thought given in the U.N. Charter to nonstate actors. There needs to be agreement on what states can do now with threats from nonstate actors.
Does the United States Have an Empire?GADDIS. The really important question is to look at the uses to which imperial power is put. And in this regard, it seems to me on balance American imperial power in the 20th century has been a remarkable force for good, for democracy, for prosperity. What is striking is that great opposition has not arisen to the American empire. Most empires in history have given rise to their own resistance through their imperious behavior. For most of its history as an empire, the United States did manage to be imperial without being imperious. The great concern I have with the current administration is that it has slid over into imperious behavior.
KENNEDY. John has put his finger on something very interesting, which is this dominant position of the U.S. not yet causing the emergence of counterweights. And I say ''yet'' because I think there's quite a considerable danger that it will. We now have a Europe with a larger G.D.P., and we have a China growing so fast you can hardly keep your eyes on it. Our great power status is unchallenged at the orthodox military level. But it's beginning to look a little bit more fragmented in other dimensions.
Posted by Tom at 6:04 AM | Comments (0) | TrackBack (0)
July 25, 2004
Stros pummel Brew Crew
Pete Munro pitched seven shutout innings and Mike Lamb drove in three runs with a pair of doubles to lead the Stros over the Brewers 9-1 on Sunday in the rubber game of their weekend series at the Juice Box. The Stros have now won four of their last five games.
After giving up a pair of singles to lead off the second inning, Munro (2-2/4.46 ERA/0 RSAA) settled down and retired 13 of his next 15 batters. He allowed six hits, struck out a season-high five and walked none.
The Stros took a 4-0 lead in the third on Lamb's bases-loaded double off the left-field scoreboard and Morgan Ensberg's two-run single. Lamb, who started at first in place of Bags, made it 5-0 in the fifth with an RBI double, and Adam Everett doubled in another run in the sixth.
In one of the more entertaining moments of the game, Jeff Kent was ejected by plate umpire Chris Guccione in the seventh after arguing a called strike two on a pitch Kent thought was low. Kent -- who, as baseball people say "has a little turd in him" and yelled at Guccione "with sincerity" -- kicked and threw dirt on home plate before he left the field with gusto. Jose Vizcaino replaced Kent with a 2-2 count and promptly nailed an RBI double on the next pitch. After a run-scoring wild pitch, Brad Ausmus cranked a rare yak to complete the Stros' scoring. The Stros ended up with 12 hits, five of them doubles.
Despite the Stros' power surge over the past week, their runs created against average ("RCAA," explained here) continues to lag near the bottom of the National League (11th out of the 16 teams). Here are the updated individual RCAA figures, courtesy of Lee Sinins:
Lance Berkman 35
Craig Biggio 13
Carlos Beltran 8
Jeff Bagwell 7
Mike Lamb 6
Eric Bruntlett 1
Chris Burke -1
Jeff Kent -1
Jason Lane -2
Jose Vizcaino -3
Orlando Palmeiro -4
Richard Hidalgo -10
Raul Chavez -11
Morgan Ensberg -12
Adam Everett -13
Brad Ausmus -23
Thus, the Stros have only five players who are hitting above what an average player would generate and four regular players (Ausmus, Chavez, Ensberg, and Everett) who are hitting well below what an average player would produce. Inasmuch as Ensberg is the only likely candidate of those four to improve much during the second half of the season, and Bagwell is unlikely to increase his relatively pedestrian production during the remainder of the season. Consequently, I do not expect the Stros' offense to improve enough in the second half to make them a viable playoff contender.
Meanwhile, the Stros pitchers' runs saved against average ("RSAA," explained here) remains in the upper half of the National League (sixth out of the 16 teams). The individual RSAA numbers are as follows:
Roger Clemens 23
Brad Lidge 13
Wade Miller 11
Roy Oswalt 9
Octavio Dotel 5
Dan Miceli 4
Andy Pettitte 3
Kirk Bullinger 1
Mike Gallo 1
Darren Oliver 1
Pete Munro 0
Chad Qualls -1
David Weathers -1
Brandon Backe -2
Jeremy Griffiths -3
Ricky Stone -3
Jared Fernandez -6
Chad Harville -6
Brandon Duckworth -8
Tim Redding -11
Although the pitching staff is performing above-average overall, the production is still a bit deceptive. Miller and Dotel, both of whom contributed above-average production, are no longer pitching for the club (Dotel has been traded and Miller's return this season is questionable at this point due to a shoulder injury). Moreover, Harville, Duckworth and Redding are time bombs every time they take the mound, as their well-below average RSAA numbers reflect. Oswalt is a definite candidate to improve his RSAA during the second half and Redding could if he returns to his form of last season, but some leveling off of Clemens' incredible performance is to be expected. Accordingly, even though I expect the Stros' pitching performance to remain above-average, I do not expect the performance to improve enough over the last part of the season to compensate for the Stros' below average hitting and allow the Stros to compete for the wildcard playoff spot.
And, just so you will not be misinformed by the Chronicle sportswriters' baseless criticism of Stros' management for trading Hidalgo, Wagner, and Dotel, each of those three players has had decidedly mediocre performance this season. Although Hidalgo has a +5 RCAA since joining the Mets, he is still a -5 for the season, which makes him the best paid below average rightfielder in the National League. Dotel has a barely above average RSAA when his numbers from Houston and Oakland are combined, and Wagner has battled injuries all season while posting a relatively mediocre +5 RSAA for the Phillies. Truth be known, Stros' management did a good job in trading each one of those players, particularly given the over-market contracts that both Hidalgo and Wagner enjoy.
The Stros send Andy Pettiitte to the hill on Monday in the first game of a four game set with the DBacks at the Juice Box. After that series, the Stros go to Cincy for a weekend series with the Reds before returning home in the first week of August for a six game homestand against the Braves and Expos.
Posted by Tom at 6:21 PM | Comments (0) | TrackBack (0)
UT-ex Ricky Williams announces retirement
Former University of Texas star running back and Heisman Trophy winner Ricky Williams has stunned the Miami Dolphins and the National Football League by announcing his retirement from professional football while in the prime of his career.
Posted by Tom at 7:41 AM | Comments (0) | TrackBack (0)
Mike Ramsey interviewed
Following on this earlier Wall Street Journal ($) profile, Mary Flood, who has been covering the Enron case for the Houston Chronicle, interviews Mike Ramsey, lead criminal defense attorney for Kenneth Lay, in today's Chronicle. Not much of Mr. Ramsey's insight on the Enron case is provided in the interview, although Mr. Ramsey does comment on Mr. Lay's controversial strategy of vigorously defending himself in public statements, interviews, and press conferences from the criminal charges:
Q: Other lawyers have said you are taking risks in letting Lay speak publicly now and in demanding a speedy trial. Why have you chosen these strategies?A: I think basically at the behest of Mr. Lay. I have been over the documents enough to know and trust that he is, in fact, innocent. But he has been silent for two and a half years, while he has suffered a lot in the press. I think it's about time that he speaks out.
Now, it is a high-risk strategy in some cases to have a defendant testify. But Ken Lay is smart, he's the master of the facts, he knows what happened, and I don't have to go hold hands with him when he talks.
Another interesting comment comes after Mr. Ramsey explains why he decided to go into the practice of criminal law:
. . . [I]f there is a danger to the Republic, it comes from concentration of power in the hands of a few in Washington, not from an outside force of any sort. We're impervious to that.No one will topple America from the outside. But we may very well lose liberties internally. And if people are not willing to stand up and challenge the government, then the government continues to assume more and more power over us as individuals.
Until you see how vicious it becomes out on the point of a stick where it pierces flesh, you don't understand how powerful the government really is and needs to be held in check.
And if there is any redeeming social value to the defense practice, it is that we are the people to whom it is given the high duty, I believe, to stand up and tell the government to go to hell when they need to be told that.
And this is such a case.
Q: Do you see the Enron Task Force as part of this potential growing evil?
A: Yes. I think that the constitution of any special group of prosecutors who pick their target before they do their investigation is dangerous and an aberration that shouldn't be tolerated.
Posted by Tom at 7:02 AM | Comments (0) | TrackBack (0)
July 24, 2004
Stros beat Brew Crew
Tim Redding pitched three-hit ball over five innings in his return to Stros' starting rotation as the Stros beat the Brewers 6-3 on Saturday night at the Juice Box.
Redding (4-6/5.66 ERA/-14 RSAA) was demoted to the bullpen after his a poor start against Texas on June 26. He made four relief appearances for the Stros before making his 15th start of the season, in which he fanned six and walked three. Darren Oliver -- who the Stros picked up from Florida on Friday -- made his first appearance and struck out three in two scoreless innings of relief work. After Mike Gallo made things interesting by giving up a couple of yaks (the Brew Crew has 17 against the Stros this season) and 3 runs in 2/3rd's of an inning in the eighth, Brad Lidge gutted up after throwing over 40 pitches in last night's game and pitched a scoreless ninth to pick up the save.
Adam Everett and Jason Lane cranked yaks for the Stros, and Everett also had a double and Lane a sac fly to plate another run. The Stros continued their mild hitting surge, whacking 11 hits that generated 20 total bases.
Pete Munro pitches the rubber game for the Stros in Sunday's matinee at the Juice Box, while Andy Pettitte gets the start on Monday in the first game of the next series with the DBacks.
Posted by Tom at 10:41 PM | Comments (0) | TrackBack (0)
That's one wild vacation bible school
And it's in The Woodlands, no less!
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Kerry's financial support
This Washington Post article does a good job of analyzing the financial support for John Kerry's Presidential campaign. Mr. Kerry's supporters are made up of several disparate group, which WaPo summarizes as follows:
• Lawyers, especially trial lawyers, are the engine of the Kerry fundraising operation. Lawyers and law firms have given more money to Kerry, $12 million, than any other sector. One out of four of Kerry's big-dollar fundraisers is a lawyer, and one out of 10 is an attorney for plaintiffs in personal injury, medical malpractice or other lawsuits seeking damages.• Much of the seed money for the Kerry presidential campaign was collected through donors to his Senate campaigns, including lobbyists with interests before two of the Senate committees on which Kerry serves: the Finance Committee and the Commerce, Science and Transportation Committee.
• Fueling Kerry's money surge havebeen credit card collections on the Internet, a technique pioneered by his onetime rival Howard Dean in 2003 but used with even greater success this year by the presumptive Democratic nominee. Kerry has been raising more than $10 million a month on the Internet, for a total of more than $65 million, compared with $8.7 million for Bush in the past year, according to officials with both campaigns.
• Kerry appears to have succeeded in creating a new class of donors for the Democratic Party. Dozens of his fundraisers are relative neophytes in big-money politics and have not been active in making their own contributions. A review of federal campaign contributions of the big Kerry fundraisers shows that one-third of them have not made more than $20,000 in campaign contributions since 1990.
• Kerry's donor base is overwhelmingly bicoastal. Almost half of the big-money fundraisers hail from either California or New York. Seventeen of the fundraisers are from Kerry's home of Massachusetts. Kerry has substantially outraised Bush in California and New York, $39.7 million to $28.5 million; Bush has crushed the Democrat in Florida and Texas, $36 million to $8 million.
WaPo also compares the fundraising base of Mr. Kerry with that of President Bush's:
Overall, Kerry's fundraising base is much different from Bush's. Kerry draws heavily on professionals with advanced degrees, academics, scientists and technology workers, in contrast to Bush's strong base in the business community. Bush has close to 100 major fundraisers -- Pioneers or Rangers, as the president's campaign calls them -- from the agribusiness, energy and power, construction, and transportation industries, compared with no more than half a dozen for Kerry.According to PoliticalMoneyLine, five times as many corporate CEOs, presidents and chairmen gave to Bush as Kerry: 17,770 to 3,393. Conversely, the number of professors who gave to Kerry is 11 times the number of those who gave to Bush, 3,508 to 322. Actors split 212 for Kerry, 12 for Bush; authors, 110 to 3; librarians, 223 to 1; journalists, 93 to 1; and social workers, 415 to 32.
Posted by Tom at 2:38 PM | Comments (0) | TrackBack (0)
Tax simplification
James Edward Maule is a professor of tax law at Villonova University School of Law who authors a blog in which he frequently opines on various issues relating to tax policy. Today, the issue is income tax simplification and he is not optimistic about the prospects for reform:
The Democrats are trying to make tax simplification a highlight of their campaign promises. This is an amusing thought, but it’s also frightening because there are people who will believe it.The Democrats, after all, were the pioneers in modern tax hypercomplexity. Beginning with Kennedy’s investment tax credit and magnified by a huge array of other credits, deductions, and exclusions, the tax law was made even more complicated through the enactment of phaseouts, scalebacks, and other hidden tax increases.
Not to be outdone, it didn’t take the Republicans long to get on the special interest complexity tax train. Absurd capital gain rate structures, a new cluster of credits, and all other sorts of finely tailored specially-directed provisions were crammed into an already bloated code. To use an analog from an astrophysics lecture I attended yesterday, the tax universe is expanding at a constant rate and is moving toward increasing disorder. Just like the cosmos.
Professor Maule then evaluates the Kerry Campaign's proposals for tax simplification:
John Kerry’s tax proposals are inconsistent with the notion of tax simplification, so it will be interesting to see how the Democrats reconcile the party’s “tax simplification” message and Kerry’s proposals. To be fair, Kerry cannot be blamed for all of the tax complexity in the Code or even all of the complexity bestowed on us by the Democrats in Congress. He isn’t even to blame for some of the stuff enacted while he was in the Congress.Nonetheless, why is Kerry willing to make his proposals within the confines of a Republican tax design? The tax on dividends is a fine example. The Republicans create complexity by making most dividends (a selection process that is itself complex) subject to lower tax rates essentially the same as the bizarre rate structure applicable to capital gains. As readers of my blog and listserv posts know, this is an approach wholly inconsistent with fairness, implification, and common sense. Kerry proposes to eliminate this rate twist by restricting it to taxpayers with incomes under $200,000. This creates yet another layer of complexity onto the already complex dividend taxation structure.
I’d be far more impressed if Kerry took the following position: “Look, folks, dividends are just one form of income. A person with a lot of income, no matter its source, ought to pay tax at a higher rate than someone with much less income. A person with interest income from certificates of deposit is no less entitled to a low rate than is a person with dividend income. In other words, the basic tax rate structures ought to reflect this principle, and favoritism of one sort of income over another is wrong, no matter the income level. To tax a retired person who has no pension and lives on social security and $30,000 of dividend income at a lower rate than her neighbor who has no pension income and lives on social security and $30,000 of interest income is flat out wrong and contrary to all principles of fairness.”
So, why doesn't the Kerry Campaign from addressing this issue in such a common sense manner?:
What stops Kerry (or his advisors) from tackling this head on? Surely it has something to do with trying to make everyone think he or she is better off under Kerry’s proposals (which in fact is not the case). In an election campaign directed pretty much at the 10% of the voters who are “swing votes” where’s the advantage in Kerry’s existing proposals? It doesn’t make much sense politically. So I’m wondering if in fact the Kerry tax advisors don’t quite know how to cut the Gordian knot of taxation.
Which leads Professor Maule back to where we always seem to be after each election campaign (with the notable exception of the Reagan Administration). Both political parties initially talk about tax simplification, but then promptly ignore the issue while dividing pork to special interests through tax "policy":
So as far as I’m concerned, with the exception of a few individual members of Congress whose voices of common sense are drowned out in a sea of special interest tax pandering, both major parties and both major Presidential candidates don’t earn any points on the tax question.So no matter who wins, the tax law will become even more disordered. Will it end as the astrophysicists predict the cosmos will “end”? Will the system collapse of its own weight, becoming a black hole that swallows all? Does anyone other than a few “tax mavens” even understand the seriousness of the problem?
Right now, I’m going to go back to looking in 360 degrees at two shades of blue. I’ll let my brain process tax stuff later.
As an independent voter, one of my greatest disappointments with the Bush Administration and the Republican-controlled Congress is their failure to address and propose enactment of meaningful tax simplification reform. As with reform of America's broken health care finance system, the Republicans talk a good game, but then generally buckle to pressure from special interests that lobby to maintain the status quo. Professor Maule makes a good point that a Kerry Administration likely would not be any better in regard to tax simplification reform. Nevertheless, my sense is that the Republican Party badly underestimates the frustration of independent voters with their inaction on the issues of tax simplification and health care finance reform.
Given this Administration's inaction on these issues, I think it is fair to ask the following question: Are we at a point where only a Democratic Administration initiative on these issues -- modified through responsible Republican Congressional opposition -- is the only (albeit messy) route to meaningful reform legislation?
Posted by Tom at 12:52 PM | Comments (0) | TrackBack (0)
The Blawg Channel - An intriguing new blawg
Six of the pioneers of legal blogs (i.e., "blawgs") -- Tom Migdell, Dennis Kennedy, Ernest Svenson, Marty Schwimmer, Denise Howell, and Rick Klau -- are collaborating on a new blawg called The Blawg Channel. Ernie described the purpose of the new blawg in the following manner:
[to promote] some positive changes in the legal world, and, more particularly, in the newly-minted realm of lawyer blogs. Somehow the Internet seems to have injected steroids into the concept of self-publication, and we believe that we can use this blog in a way that is beneficial to lawyers (especially those that who aren't themselves blogging but who, nevertheless, want to tap into blogs as a source of useful legal information). And, since I mentioned steroids, I should mention, for what it's worth, that a couple of us are even willing to submit to drug tests.
Dennis kicked it off with a post "What five things can lawyers do to better serve entrepreneurs and their businesses?" Given the contributors' knowledge and insight, this new blawg has great potential as a resource for lawyers. I recommend that you check it out regularly.
Posted by Tom at 11:24 AM | Comments (0) | TrackBack (0)
Enron Task Force PR staff fights back
The unusual nature of Ken Lay's somewhat desperate public relations campaign in connection with the criminal charges that are pending against him has been noted earlier here, here, and here.
Not to be outdone, the Enron Task Force pumped its PR machine into action by leaking to the Houston Chronicle this allegedly secret memo between former Enron CFO Andrew Fastow and former Enron chief accountant Richard Causey.
The gist of the Chronicle article is that, according to the Task Force, the memo proves that Fastow and Causey had secret side deals in which Enron guaranteed a great rate of return for the off-balance sheet partnerships that Fastow ran and in which Enron allegedly parked poorly-performing assets and hid enormous amounts of debt. The Task Force contends that the secret memo agreement between Fastow and Causey proves that the off-balance sheet partnerships were not entities at risk and, thus, should have been reported as a part of Enron's consolidated financial statements. If that had been done, then Enron would have been revealed to the marketplace as a highly-leveraged company that would not have generated anything close to the investor interest that pushed the stock price to $80 a share in early 2001.
The Chronicle goes on to speculate that the revelation of the memo puts pressure on Mr. Causey to plea bargain with the Task Force:
A handwritten memo detailing secret side deals between ex-Enron Chief Accounting Officer Rick Causey and ex-Chief Financial Officer Andrew Fastow has defense lawyers predicting that Causey is under greater pressure to seek a deal with the government.The document, which prosecutors have called the "global galactic" agreement, seemed a part of Enron folklore until it was cited as an actual written agreement in the indictment of ex-Chairman Ken Lay earlier this month.
Since Fastow has already pleaded guilty to two felony charges and is cooperating with the government, the written document can't hurt him in the criminal arena. Most lawyers contacted this week suspect prosecutors received the written agreement from Fastow."It's a very difficult document for team Causey. It's as tough a document to refute as I've seen in the Enron case," said a lawyer for one of the Enron criminal defendants who asked that his name not be used.
He and other defense lawyers in Enron cases, who spoke off the record, said there is growing expectation, largely because of this document, that Causey could be pressured to cooperate with the government.
As if facing what amounts to be a life sentence if convicted of the criminal charges against him is not enough incentive for Mr. Causey to entertain a plea bargain.
Despite the representations in the Chronicle article, most attorneys close to the Enron case have known for some time about the Fastow-Causey memo. And, although not a good piece of evidence for Mr. Causey, it is a decidedly double-edged sword for the Task Force in regard to the other Enron-related defendants. Unless the Task Force can prove that other Enron defendants such as Mr. Lay or former CEO Jeffrey Skilling knew of the Fastow-Causey memo, then the memo may be used as exculpatory evidence for other Enron defendants who could reasonably claim that the Fastow-Causey agreement was secret, that they would have never approved of it, and that the memo proves that Mr. Fastow truly was the loose cannon who manipulated Enron's finances for personal gain to the extent that he ultimately triggered its collapse.
Posted by Tom at 9:56 AM | Comments (0) | TrackBack (1)
July 23, 2004
Stros fall to Brew Crew
The Brew Crew lit up the Rocket for five runs in 5 2/3 innings and a big Stros comeback was thwarted as the Brew Crew held on for a 7-6 win on Friday night at the Juice Box.
Clemens uncharacteristically gave up three gopher balls, including a killer 3 run shot by Ben Grieve that landed in the first row of the Crawford Boxes. The Stros battled back gamely after being down 5-0, but Lidge lived dangerously in two innings of work and the Brewers were eventually able to push a run on a sac fly across in the top of the ninth for the game winner.
Tim Redding gets a rare start in the Saturday night game, and Pete Munro has been announced as the Stros' starter in the Sunday matinee game.
Posted by Tom at 10:39 PM | Comments (0) | TrackBack (0)