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October 31, 2004
2004 Weekly local football review
Texans 20 Jaguars 6. In their most impressive overall performance to date, the Texans beat the Jags decisively at Reliant Stadium in Houston. The Texans actually should have had another TD except that Jabbar Gaffney somehow fumbled the ball out of the endzone in the second quarter without being hit a moment before reaching the goal line. The Texans' often shaky defense was outstanding in this game, holding the Jags to a paltry 39 yards rushing and about 3.5 yards per pass, and tacking on a TD on DeMarcus Faggins' fourth quarter interception return to ice the game. Meanwhile, David Carr had probably his best game as a pro, hitting on 26-34 throws for 276 yards, a TD, and most importantly, no turnovers (well, actually he did have a fumble, but the refs blew the call). The Texans are now an improbable 4-3, but face tough road games at Denver and then Indianapolis over the next two weekends.
Cowboys 31 Lions 21. Meanwhile, the our north, the Cowboys avoided sending the Big Tuna toward another coronary infarction with a win over the visiting Lions at Texas Stadium. The Cowboys finally found a run defense in this one, something that has been strangely absent this season for their usually formidable run defense. The 3-4 Pokes have a winnable game next Sunday at Cincinnati before returning home the following week for a showdown with the NFL East-leading Eagles.
Texas Longhorns 31 Colorado 7. The Horns' increasingly formidable defense keyed this win, as Colorado could muster only 3 yards rushing and 221 yards total offense. The Horns still can't pass a lick, which will be a problem against teams that have the defensive strength to stuff their rushing attack. However, a big difference in Texas this season is that their defense is good enought to win low scoring games. My friends in college coaching told me before the season that Dick Tomey would make a difference in Texas' defensive unit, and I am now a believer.
Baylor 35 Texas Aggies 34. The Aggies almost laid an egg at home last week against Colorado, but they went ahead and laid a whopper in Waco against the Bears. Frankly, I was not surprised that Baylor gave A&M a game, as I had been on the sidelines of the Baylor-Iowa State game the weekend before and concluded then that the Bears -- although undermanned at several line positions -- were very well motivated and well-coached. The Ags put the ball on the ground a few times and, before you now it, the Bears determined that they could win the game. The decision of Baylor coach Guy Morris to go for two points after pulling to within 34-33 in the first overtime is one of those decisions that anyone who enjoys college football just has to admire. The 6-2 Aggies must now try to regroup before Oklahoma comes to College Station next Saturday night. Given the performance of the Aggie defense over the past two games, here is a betting recommendation on that game -- take "the over."
Houston 24 Tulane 3. The Coogs, who really have played a brutal schedule this season, finally caught a break and pounded a poor Tulane team at Roberston Stadium in Houston. This one was over by halftime as the Coogs coasted in the second half against either a dominating defensive effort or an imcompetent Tulane offensive performance, depending upon your viewpoint. The 2-6 Coogs have another winnable game next Saturday at home against 2-5 East Carolina.
Tulsa 39 Rice 22. The Owls' once promising season has now officially fallen apart as they lost decisively to a bad Tulsa team in Tulsa. The 3-5 Owls now face Fresno State and the Mike Price-revived UTEP in two of their final three games. Those games could be very ugly for the Owls.
And remember to review Kevin Whited's excellent weekly review of Big 12 games.
Posted by Tom at 7:46 PM | Comments (2) | TrackBack (0)
More business crime? Or just more prosecutions?
Readers of this blog know that I am critical of several recent "popular" prosecutions of business executives, and this NY Times article reports on the opinions of several experts who agree with my view:
"It is exaggerated to say that there is much more corporate malfeasance than in the past," said Luigi Zingales, a professor of economics at the University of Chicago. "Malfeasance is just more likely to be revealed in recessions."
"Prosecutors are going after white-collar crime with an eagerness we hadn't seen before," said James D. Cox, a professor of law at Duke University. "The state attorneys general realized that the governor-in-waiting, otherwise known as the attorney general, can get a lot of headlines."
"In a bubble, people want to be lied to," said John C. Coffee Jr., a professor at Columbia Law School. "It was more than a conflict of interest - securities analysts boosted stocks because people wanted them to."
The article concludes by noting that the investing public's attitudes often changes with which way the investing winds are blowing, and that such changes have an effect on the resulting prosecutions of business executives:
[W]hen the market went south, . . . faith in self-regulation took a beating, and new regulations like the Sarbanes-Oxley rules for corporate governance were passed. Suddenly less prosperous, Americans became much more willing to catch and punish abuses, and admiration for high fliers turned to suspicion."The social dynamics are sometimes more important than the law," Mr. Coffee said.
And we should all be concerned about that. For when we allow the law to be twisted to appeal to the "social dynamics" of a particular situtation, then the law becomes just another convenient political tool and the rule of law erodes.
And for those who would respond -- "So what? What's the problem with eroding the rule of law a bit to nail some greedy business executives?" -- I would remind them of Thomas More's advice to his son-in-law-to-be Will Roper from A Man for All Seasons:
"Oh? And when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down -- and you're just the man to do it, Roper! -- do you really think you could stand upright in the winds that would blow then?""Yes, I'd give the Devil the benefit of law, for my own safety's sake!"
Posted by Tom at 7:21 AM | Comments (0) | TrackBack (0)
October 30, 2004
Was Abe gay?
This LA Weekly article reviews the late C.A. Tripp's forthcoming book -- The Intimate World of Abraham Lincoln (Free Press 2005) -- in which the author concludes that there is a reasonable probability that Abraham Lincoln was gay. There actually has been speculation about Tripp's conclusion in historical circles for quite some time. Indeed, I recall Gore Vidal stating in television interviews years ago that, in researching his 1984 historical novel Lincoln, he began to suspect that Lincoln was gay. Give the article a look, and then wait for the return volleys from the more traditional Lincoln biographers.
Posted by Tom at 10:38 AM | Comments (1) | TrackBack (0)
Enron's mismanagement of trust
R. Preston McAfee is the J. Stanley Johnson Professor at the California Institute of Technology and formerly held the Murray S. Johnson Chair at the University of Texas at Austin. In this concise and insightful article for The Economists’ Voice entitled The Real Lesson of Enron’s Implosion: Market Makers Are In the Trust Business, Professor McAfee explains in plain terms that, in the end, Enron's demise was caused by a loss of trust:
How did Enron, a firm worth $60 billion, collapse over the discovery of a billion or so in hidden debt and fraudulent accounting? It didn’t. Or, at least, not directly. Market makers like Enron and Ebay are in the “trust” business, just as banks and insurance companies are. Once trust was lost, the rest of Enron’s value quickly disappeared. The maintenance of customer trust is an important, and frequently mismanaged, aspect of business strategy.
Professor McAfee begins by pointing out that the disclosures of financial problems at Enron were insufficient along to bring Enron down:
At the time of its collapse, Enron’s market capitalization exceeded $60 billion, after growing at over 50% per year for a decade. The company collapsed after the revelation of $1.2 billion in hidden debt. This represented the visible portion of something over $8 billion in total hidden debts, a fraction of the value of the enterprise.Moreover, the Enron business model provided real value to its customers, permitting them to contract over longer time horizons and to improve risk
management. So why did a company that was making a profit and providing real value to customers vanish so abruptly? Why aren’t the profitable lines of
business operated by Enron thriving today?
After pointing out that Enron was hardly along among major corporations in engaging in questionable accounting practices, Professor McAfee addresses why Enron's irregularities caused a meltdown when others did not:
So why did Enron collapse, when other firms with questionable accounting survive? The answer is that Enron’s business-model was hostage to the trust that customers placed in Enron’s financial integrity. Once confidence in Enron waned, as I will explain, participants in Enron’s innovative markets were unwilling to engage in the purchasing or selling of a long-term contract that might not be fulfilled. Bid-ask spreads diverged, and Enron’s markets unraveled.
Read the entire piece. Inasmuch as the mainstream media struggles to keep something as seemingly broad as Enron's demise in perspective, analysis such as this is quite helpful to a proper understanding of Enron's failure.
Posted by Tom at 10:00 AM | Comments (0) | TrackBack (0)
Another financial institution settles in Enron class action
Confirming a deal noted here earlier, Lehman Brothers announced on Friday that it has agreed to pay $222.5 million to settle the the Enron class-action litigation against it in which the plaintiffs claimed that Lehman and other financial institutions helped Enron mislead investors.
The Lehman settlement is the third and the largest since the case was filed in late 2001 just before Enron went into chapter 11 during the first week of December 2001 amid public disclosure of hidden debt, inflated profits and accounting improprieties. As noted in this earlier post, Bank of America agreed to pay $69 million to settle similar allegations of liability for loss of value to securities it underwrote for Enron. The Enron class action plaintiffs also reached a $40 million settlement in July 2002 with Andersen Worldwide, the former parent company of the accounting firm Arthur Andersen.
Despite these settlements, the Enron class action plaintiffs continue to make overall settlement demands in the $30-40 billion range, so it appears that -- based on the total sum of the three settlements to date -- the plaintiffs' lawyers have some work left to do with the remaining financial institution defendants in the case. Bank of America and Lehman were underwriters in just a handful of Enron-related deals, so attorneys involved in the case believe their roles (and thus their settlement payments) are small in comparison to firms like Citigroup Inc. and J.P. Morgan Chase & Co. who did more Enron-related deals. Citigroup and J.P. Morgan are among the firms that have reserved billions of dollars to cover Enron-related exposure.
Posted by Tom at 9:27 AM | Comments (0) | TrackBack (0)
October 29, 2004
Chess players -- check this out
Thinking Machine 4. Play a computer that shows you the various moves that it is considering. Very, very cool.
Posted by Tom at 11:12 AM | Comments (0) | TrackBack (0)
You gotta love the European Tour
Not only do they kick the American team's rear in the Ryder Cup, the European Tour is much more interesting than the usually staid American Tour.
First, this article reports on Seve Ballesteros going nuclear on a European Tour official, apparently over some rules controversy that occurred years ago. Are you taking your medication, Seve?
And this piece reports on the efforts of the first transsexual to attempt to obtain a card on the women's European Tour. Does this portend a call for hormone analysis on competitors on the women's tours?
Posted by Tom at 10:34 AM | Comments (0) | TrackBack (0)
Stros' first off-season moves
In two moves that surprised no one familiar with the Stros, the club announced that it was exercising its option on the contract of outfielder Craig Biggio and declining its option on second basemen Jeff Kent. As a result, the Stros will pay Bidg $3 million next season and will pay Kent $700,000 rather than pick up the option to pay him $9 million for next season.
Bidg enjoyed his second straight solid season after several seasons of decline. After -11 RCAA/.734 OPS in 2002 and 1 RCAA/.763 OPS season in 2003, Biggio hit .469 SLG, .337 OBA, .806 OPS, 8 RCAA in 156 games in 2004 (RCAA, or "runs created against average" is explained here, courtesy of Lee Sinins). He has a .807 career OPS, compared to his league average of .756, and 346 RCAA in 2,409 games. Bidg is the first true Stro Hall of Fame candidate.
Kent is a player in decline, although he is still one of the better hitting second basemen in MLB. After 46 RCAA/.933 OPS and 13 RCAA/.860 OPS seasons, Kent hit .531 SLG, .348 OBA, .880 OPS, 12 RCAA in 145 games. He has a .858 career OPS, compared to his league average of .769, and 237 RCAA in 1,777 games. Kent also has a decent shot at the Hall of Fame.
Both of these moves were the right ones. The Stros are probably overpaying Bidg a bit, but he will likely be at least an average National League hitter next season and he brings valuable leadership to the ballclub. Bidg's restructuring of his batting swing this season -- at the ripe age of 38 -- is one of the more remarkable athletic achievements that I have seen this year. That type of dedication and work ethic is worth paying a reasonable premium to retain.
However, Bidg in the outfield is causing some problems. Although he has gamely done whatever the Stros have asked him to do in the outfield, he remains a below average fielder with a far below average arm. Moreover, Bidg's continued role as a starter is blocking the development of Jason Lane, who is ready for a starting role in the Stros' outfield. If the Stros are able to retain Beltran's services (probably a longshot, but we can dream, can't we?), then my sense is that the best role for Bidg next season would be as a fourth outfielder/backup second baseman utilityman.
On the other hand, not picking up the option on Kent's contract was clearly the right move. Kent is simply no longer a $9 million a year player and the Stros can use the money saved on Kent's contract to go after Beltran. Moreover, the Stros' best minor league player this season -- Chris Burke -- is ready to take over at second base next season. Inasmuch as Kent's lack of range at second may make a shift to third base a smart move in the autumn of his MLB career, the Stros should entertain negotiating a new contract with Kent in the same range as Bidg's so long as he would agree to such a move. However, the Stros should have no interest in JK if he insists on remaining a second baseman.
Finally, my sense is that the Stros enter this off-season in decent shape. Although Berkman and Oswalt are both arbitration eligible and are due for big contract increases, and signing Beltran and Clemens will command big bucks, the Stros were able to ditch the big Hidalgo and Kent contracts this past season. Thus, the Stros have only the Bagwell contract as the last remnant of the big early decade contracts that are much higher than the existing market prices of player contracts.
Unfortunately, Bags' contract is really out of whack -- $39 million over the next three seasons: $15 million in 2005, $17 million in 2006, and a $7 million buyout of an $18 million 2007 contract. After his fifth straight season of declining offensive numbers, Bags is, at best, a $4-5 million a season player. Consequently, the Stros are overpaying Bags by probably about $25 million (or about $8.3 million per year) over the next three seasons.
So, what to do? Here's my strategy. Either persuade Bags to restructure his deal to allow the Stros to pay it out over a longer term or trade Bags to an American League team and pay that club up to $20 million to take on Bags' contract. Increase the team payroll to $100 million (certainly justified by the record attendance and popularity of the club) and dedicate $50 million of that payroll to signing Beltran, Berkman, Oswalt and Clemens. That leaves roughly $50 million for the other 21 roster players, who provide solid alternatives at each position with the exception of catcher.
If the Stros could pull the foregoing off, then my sense is that we could all feel pretty darn comfortable going into the 2005 season. At least so long as the Stros do not re-sign Ausmus as the starting catcher! ;^)
Posted by Tom at 10:13 AM | Comments (3) | TrackBack (0)
October 28, 2004
Nigerian Barge case goes to the jury
Final arguments ended today in the Enron-related criminal trial of four former Merrill Lynch executives and two former mid-level Enron executives in what has become known as the Nigerian Barge trial. Earlier posts on the trial may be reviewed here, here, here, and here.
As noted in the earlier posts, this has been a mess of a trial, which likely would have never been pursued at all had not the pariah known as Enron been involved. Remarkably, all of the main prosecution witnesses had copped pleas bargains with the government, were not primary players in the transaction that was at the heart of the trial, and could not personally implicate any of the defendants in the alleged wrongdoing. In a normal case, this ledger would be a prescription for acquittal of all the defendants.
However, the extraordinary public bias against anything having to do with Enron -- a bias that the Enron Task Force repeatedly appeals to in its public statements -- makes this a much tougher case to call. Add to that mix that three (former Merrill execs Bayly, Furst and Brown) out of the six defendants chose not to testify and there is a decent probability that the prosecution will obtain at least a few convictions out of the trial.
My bet is that Sheila Kahanek, the mid-level Enron accountant who testified, and William Fuhs, the lowest-level Merrill executive of the defendants and the only one to testify, will be acquitted. Daniel Boyle, the other former Enron executive on trial, has a decent shot at acquittal, but frankly did not do as good a job as either Kahanek or Fuhs on the witness stand. The other three Merrill execs -- Messrs. Furst, Bayly, and Brown -- did not testify and I believe have a higher risk of facing convictions. As Martha Stewart learned, juries in white collar criminal cases want to hear from the defendant.
Posted by Tom at 5:03 PM | Comments (0) | TrackBack (0)
Where is your polling place?
Tom Mighell points us toward My Polling Place, where you can input your address and zip code, and the site provides you the address of the polling place where you are to vote and a map to the the polling place. Very handy. Check it out.
Posted by Tom at 9:25 AM | Comments (0) | TrackBack (0)
Arnold Kling on the Four Myths of Social Security
In this Tech Central Station essay, Arnold Kling of EconLog does a good job of explaining four myths about Social Security: The Pension Myth, the Transition Cost Myth, the Baby Boomer Myth, and the Medicare Myth.
Posted by Tom at 9:00 AM | Comments (0) | TrackBack (0)
Reflecting on personal investing
Jonathan Clements has written The Wall Street Journal's ($) Getting Going personal finance column since October 1994. In this week's column, he reflects on ten years of providing personal finance advice, and his views are quite interesting and somewhat surprising for a columnist of a newspaper that advocates investment:
The fact is, over the decade I have written this column, my optimism has taken a beating. Yes, I still believe it is possible for ordinary investors to make decent money on Wall Street. But it has become increasingly clear to me that the odds are stacked against us.
First, Mr. Clements notes that gains in stock prices are almost certainly going to slow over the next several decades:
[T]he collapse in stock prices has made me look harder at historic market returns -- and I don't like what I see. According to Chicago's Ibbotson Associates, the Standard & Poor's 500-stock index has clocked an impressive 10.4% a year since 1925.A significant part of that gain, however, came from both rich dividend yields and rising price/earnings multiples. Today, with dividend yields so low and P/E ratios so high, long-run returns will almost certainly be lower -- even assuming robust economic growth.
The nosebleed valuations are especially worrisome given the aging of the U.S., Europe and Japan. In 30 years, 20% of the U.S. population will be age 65 or older, up from 12% today. With fewer workers per retiree and massive government spending needed for Social Security and Medicare, we are going to face some grim financial choices.
Thanks to their younger population, developing nations should post faster economic growth. That is why I am a big fan of emerging-market stock funds. . . These funds, however, aren't a sure thing, in part because the countries involved don't offer the political stability and commitment to property rights that we enjoy in the U.S.
Indeed, when the costs attributable to investing are assessed, the potential gains look even slimmer:
If the markets' raw results are a tad slim in the decades ahead, the gains may all but disappear after figuring in investment costs, taxes and inflation.Suppose you own a balanced portfolio of stocks and bonds that scores 6% a year. Knock off two percentage points for investment costs, and you will be down to 4%. Lose 25% to taxes, and that 4% will become 3%. Wouldn't mind earning 3%? Problem is, that 3% could easily be devoured by inflation, leaving you with no real return.
Faced with such potentially meager results, the solutions are obvious enough, and I find myself advocating them ever more stridently. Want to make your investment portfolio grow? You need to save like crazy, make the most of tax-sheltered retirement accounts, trade sparingly and favor low-expense funds, especially market-tracking index funds.
After ten years of reviewing the travails of the individual investor, Mr. Clements is no fan of the Bush Administration's proposal to privatize Social Security:
Unfortunately, during the past decade, my confidence in the investment acumen of ordinary investors has been shaken. I have come across too many serial blunderers, folks who jumped from technology stocks in the late 1990s, to bonds in the bear market, to real-estate investment trusts in 2004, always buying after the big money has already been made.These investors have neither the education nor the emotional fortitude to invest sensibly. That is one of the reasons I believe replacing traditional company pension plans with 401(k) plans has been a mistake. Similarly, I fear that the privatization of Social Security will be a disaster unless it is accompanied by a slew of safeguards.
And perhaps most surprisingly, Mr. Clements levels his harshest criticism for the industry that makes its living off of advising people on how to invest:
Of course, wayward investors could be straightened out with sound investment advice. But that isn't exactly a safe bet.Over the years, I have met some fine brokers and financial planners. I have also, however, heard too many horror stories. As e-mail has spread, journalists have become more accessible to readers -- and that means I get a steady stream of e-mails from aggrieved investors who were taken to the cleaners by unscrupulous advisers.
To make matters worse, Wall Street appears to have scant interest in fixing this mess. In theory, we should be entering a golden age of investment advice, with brokers and planners helping legions of aging baby boomers to manage their burgeoning nest eggs.
Yet rather than helping investors, Wall Street seems more intent on profiting from them. Brokerage firms could refuse to sell bad investment products and ruthlessly weed out rotten brokers. Instead, they appear content to let their brokers loose on the unsuspecting public. What about the legal problems that inevitably follow? That, it seems, is viewed as simply the price of doing business.
Posted by Tom at 8:01 AM | Comments (0) | TrackBack (0)
October 26, 2004
And if you want to know what I really think . . .
Writing in this National Journal op-ed, Stuart Taylor is not particularly impressed with the quality of the two major parties' Presidential candidates this year:
One candidate is an intellectually shallow, closed-minded, strangely smirking, free-spending, hard-right culture warrior who combines smug ideological certitude with stunning indifference to facts and evidence, who is obsessed with shifting the tax burden from the wealthiest Americans to future generations, who claims virtually unlimited power to suspend constitutional liberties, who has alienated millions of America's onetime admirers abroad, and who has never made a mistake he would not repeat.The other is a both-sides-of-tough-issues, unlikable, aloof, cheap-shotting, free-spending political careerist whose domestic policies might make the Bush deficits even worse, whose Iraq policy shifts with every political wind, and who has long been close to his party's quasi-pacifist, lawsuit-loving Left.
Ouch!
Posted by Tom at 3:50 PM | Comments (1) | TrackBack (0)
The Houston Open - consequences of bad decisions
This Chronicle article about the downturn in the Houston Golf Association's charitable donations after a less than stellar Shell Houston Open this past spring brings to mind how even well-intentioned people can bungle a good thing through a series of bad decisions.
The HGA has operated the Houston Open PGA Tour golf tournament for about 60 years. Although Houston has a rich golf tradition, the Houston Open has not always been a resounding success. Indeed, I vividly recall a time in the 1970's when, after a particularly unfulfilling Houston Open, the Houston Post's cranky golf columnist, the late Jack Gallagher, penned a controversial column in which the basic thrust was "if this is the best you can do, then why don't we just forget about having the Houston Open." The HGA's members were not pleased with Gallagher's column, but what he had to say had some merit.
To the HGA's credit, however, it turned things around. In 1975 or so, the HGA entered into a long term agreement with The Woodlands Corporation, which at the time was in the early stages of developing a master-planned suburban community on the far northside of Houston's metropolitan area. For the next 26 years, the Houston Open and The Woodlands enjoyed a mutually beneficial relationship as the golf tournament rode The Woodlands' extraordinary success and growth to become one of the top tournaments on the PGA Tour in terms of the amount of money raised for charity each year. That status was cemented when Royal Dutch/Shell Corporation stepped up in the 1990's to become a stable title sponsor for the tournament.
However, in the late 90's, the partnership between the HGA and The Woodlands Corporation began to have problems. The HGA believed that the tournament needed to move from the Tournament Players Course in The Woodlands, which had parking problems and was not a particularly popular venue with many of the top players. After The Woodlands Corporation developed the outstanding Carlton Woods Golf Club on the westside of The Woodlands, the HGA concluded that The Woodlands Corporation had reneged on its commitment to build a new Tom Fazio-designed TPC Course on the westside of The Woodlands to host the Houston Open. The Woodlands Corporation -- now owned by different owners than the ones who had struck the original deal with the HGA -- concluded that the HGA did not sufficiently appreciate how much the growing attractiveness of The Woodlands had contributed to the success of the tournament and that The Woodlands really did not need the golf tournament to continue its phenomenal success.
Consequently, in 2002, the HGA decided to leave The Woodlands and relocate to Redstone Golf Club on the northeast side of Houston. Although the local media typically mimics the HGA's endlessly positive pronouncements regarding the move to Redstone, the decision is beginning to look like a monumental blunder.
First, despite HGA protestations to the contrary, the Redstone Golf Course is not a PGA Tour-quality golf course. Redstone is the renovated result of the old El Dorado Country Club course and, although the redesign improved that old course significantly, it is still not close to as good a tournament venue as the TPC in The Woodlands.
Second, Redstone Golf Club is out in the middle of nowhere with no nearby quality hotels and other accomodations to attract the Tour players or visitors to the golf tournament. Consequently, the Tour players must stay in either second rate Intercontinental Airport-area hotels or far away quality hotels in either the downtown or Galleria-areas of Houston.
In the meantime, The Woodlands has developed the Houston area's best destination resort, along with a beautiful downtown riverwalk area dotted with quality restaurants, entertainment venues, shops, and hotels. As one anonymous Tour player commented to me after viewing the latest commercial developments in The Woodlands: "They [meaning the HGA] left this for that [meaning Redstone]?"
The short terms results tend to support that view. Not only are charitable donations generated by the tournament down for the first time in 12 years, this year's Houston Open attracted only 3 of the top 20 money-winners on the PGA Tour. Prospects for next year's tournament do not look much better.
Meanwhile, the HGA is valiantly attempting to make the best of the situation. The HGA-Redstone partnership hired noted golf course designer Rees Jones to design a new tournament course at Redstone that will become the tournament course in 2006. Also, the HGA is lobbying the PGA Tour hard for a more attractive date for the tournament when the Tour's existing television contract expires in 2006. The HGA has long believed that the current date just two weeks after The Masters Tournament has been a deterrent to attracting the best players to participate in the Houston Open.
However, my sense is that the move to Redstone has blown the HGA's opportunity to turn the Houston Open into one of the premier non-major tournaments on the PGA Tour. Playing on a mediocre golf course in an isolated part of Houston with a less than stellar field, the Houston Open has little to attract either the best professional golfers or golf fans. The situation may improve if the new Rees Jones course turns out to be popular with the Tour players, but unless a more attractive date for the tournament is obtained and quality accommodations closer to the course are arranged for the players, any improvement in the overall situation will likely be temporary and marginal. In short, the Houston Open has probably seen its better days.
What is sad about all of this is that it did not have to occur. The HGA and The Woodlands had a great partnership going and, with reasonable compromises on both sides, the Houston Open could have continued to prosper in The Woodlands. Now, the HGA is back to square one, and it is going to be a long, tough road to make the Houston Open more than a blip on the radar screen of the PGA Tour.
Posted by Tom at 10:40 AM | Comments (1) | TrackBack (1)
October 25, 2004
Hard to get a word in edgewise
As noted in this earlier post, John O'Neill is a prominent Houston attorney and Swift Boat Veteran who is a co-author of Unfit for Command that is highly critical of John Kerry's Vietnam War service and subsequent anti-war activities. Mr. O'Neill had a hard time getting a word in edgewise in this hilarious television interview with MSNBC analyst and Kerry supporter, Lawrence O'Donnell.
I must say that it is impressive that Mr. O'Donnell's performance made moderator Pat Buchanan appear to be absolutely moderate! ;^) Hat tip to the TigerHawk for the link to this interview.
Posted by Tom at 8:34 AM | Comments (0) | TrackBack (0)
Checking in again on the Nigerian Barge trial
The first Enron-related criminal trial -- the mess known as the Nigerian Barge trial (previous trial posts here, here, and here) -- will conclude its evidentiary phase today and U.S. District Judge Ewing Werlein will complete the charge to the jury. Final arguments are scheduled to begin on Tuesday, and likely will extend into Wednesday. Stay tuned for updates.
Posted by Tom at 7:39 AM | Comments (0) | TrackBack (0)
More on Bush Administration's discretionary spending policies
Following up on the analysis noted in this previous post, Victor over at the Dead Parrot Society has posted the second part of his analysis on the Bush Administation's record on domestic, non-defense, non-homeland security, discretionary spending. Inasmuch as the Bush Administration has come under criticism (including here) for its apparent profligacy in this area, I highly recommend reviewing Victor's analysis, which concludes as follows:
Bush's record on discretionary spending is not nearly as clear cut as the conventional wisdom would suggest. Bush has dramatically increased discretionary spending in certain specific areas like education. But if we are to try to glean information from his first-term record in order to predict his second term, the evidence is mixed. He isn't as frugal as Reagan, but isn't necessarily profligate, either. Upon examining his record in this much detail, I truly cannot say with much certainty whether a second Bush term would be fiscally conservative or whether his view of "compassionate conservatism" necessarily means more spending.(All of this analysis, of course, ignores the elephant in the room which is the Medicare Prescription Drug bill. But again, there, I'm not sure he'll do something like that again.)
Posted by Tom at 7:22 AM | Comments (0) | TrackBack (0)
Joseph Ellis on George Washington
Brandeis history professor David Hackett Fischer -- author of Washington's Crossing and (Oxford 2003) and Paul Revere's Ride (Oxford 1994) -- provides this favorable book review of Mount Holyoke College history professor Joseph J. Ellis' (author of Founding Brothers (Vintage 2002) and biographies on Thomas Jefferson and John Adams) new book, His Excellency: George Washington (Knopf 2004).
Professor Fischer notes that Professor Ellis' book is skeptical of the "conventional idea of Washington as a leader who won the trust of others by honesty, virtue, dignity, and character; a man not consumed by ambition or avarice, but driven by his ideals, and devoted to the principles of the Revolution:"
He dismisses it as a fiction and even a deliberate falsehood, "fabricated" in large part by Washington himself. In its place, he argues that the true Washington was a man of "tumultuous passions," "aggressive instincts," "bottomless ambition," "personal avarice," and "a truly monumental ego with a massive personal agenda."Many men who knew Washington agreed on the passions but believed that he gained full control of them. Ellis argues to the contrary that Washington never mastered himself, and "his aggressive instincts would remain a dangerous liability" through his career. The thesis of this book is that Washington's life was a continuing struggle against dark inner forces, which led to an "obsession with control," which in turn caused him to favor control mechanisms for America, including a highly disciplined regular army, strong central government, and hierarchical society. . .
Some elements of Ellis's conflict model are solidly confirmed by other sources. Jefferson wrote of Washington, "his temper was naturally high toned, but reflection and resolution had obtained a firm and habitual ascendancy. If however, it broke its bounds, he was most tremendous in his wrath." Adams added, "He had great self-command. It cost him great exertion sometimes, and a constant constraint."
Read the entire review. Professor Ellis' latest book is yet another in a long line of fine books over the past decade that have focused on America's Revolutionary War-era leaders.
But wait a minute. Just how good are these books? In this review, Matthew Price reviews University of Georgia historian Peter Charles Hoffer" new book, Past Imperfect: Facts, Fictions, Fraud -- American History from Bancroft and Parkman to Ambrose, Bellesiles, Ellis, and Goodwin (PublicAffairs 2004) contends that the history profession has condoned sloppy scholarship and an "anything-goes" ethical climate:
Hoffer revisits the now-familiar cases of a quartet of historians brought low by scandal in 2002: former Emory University professor Michael Bellesiles, who was accused of falsifying data in "Arming America," his controversial 2000 study of 18th- and 19th-century gun culture; Stephen Ambrose and Doris Kearns Goodwin, who were both found to have used material from other scholars without full attribution; and Mount Holyoke's Joseph Ellis, who was rebuked for spinning tales of his nonexistent Vietnam combat record in classes and newspaper articles. According to Hoffer, these were not just isolated incidents but symptoms of a wider problem -- one that goes far beyond the headlines to the very way history is written and consumed in America.
. . . Hoffer is particularly harsh on Bellesiles, who resigned from his job at Emory and was stripped of the Bancroft Prize in the wake of the controversy over "Arming America."To his defenders, the former Emory historian was the victim of a conservative plot, spearheaded by the National Rifle Association, to discredit Bellesiles' conclusion that, contrary to the image of the musket-wielding patriot, few early Americans owned functional guns. But in Hoffer's telling, Bellesiles engaged in deliberate "falsification" of his data. Furthermore, Hoffer asserts, Bellesiles published his book with the trade publisher Knopf (which eventually withdrew the book from circulation) rather than a scholarly press "in order to claim . . . immunity from close professional scrutiny." (While an investigative panel formed by the AHA found no outright falsification, they condemned Bellesilles' evasiveness about his source records, many of which could not be traced.)
As for Goodwin and Ambrose, who are also published by trade presses, Hoffer brushes aside their claims that the instances of missing footnotes or insufficient citations were just unintentional and isolated lapses in otherwise sound work. Whatever the intention, Hoffer writes, the end result is the same: "plagiarism," which under AHA standards, he notes, does not require actual intent to deceive. (He brings greater sympathy to the case of Joseph Ellis, whose scholarship itself was not questioned, suggesting that the same imaginative powers that led him to lie about his life story may have helped him write more subtle and nuanced books.)
Posted by Tom at 6:10 AM | Comments (2) | TrackBack (0)
October 24, 2004
2004 Weekly local football review
The Texans were off in Week 7 of the NFL season. They play the Jags at Reliant Stadium in Houston next Sunday.
Green Bay 41 Dallas 20. If there was any doubt that the Cowboys were in deep trouble to date, then this game removed all doubt. The Packers toyed with the Cowboys, who were incapable of stopping either the Pack's ground or aerial game. In the meantime, the Cowboys have no rushing attack and no real deep threat in the passing game. This 2-5 Cowboy team is a good bet to reach 10-12 losses this season. The improved Lions are up next for the Pokes at Texas Stadium next Sunday.
Texas 51 Texas Tech 21. The 6-1 Horns proved again that they can dominate a team that cannot stop the run. Unfortunately, Texas' problem is with the teams that can stop the run and force the Horns to rely on their questionable passing game. None of the Horns next four games are going to be picnics -- at Colorado, home against Okie State, at Kansas, and the annual Thanksgiving weekend grudge match against the Texas Aggies. Interestingly, it may be Texas' relatively unnoticed but much improved defense that pulls the Horns through these next four games.
Texas Aggies 29 Colorado 26 (OT). After back-to-back impressive road wins over the past two weeks, the Ags came home and almost laid an egg before winning their sixth straight. The Aggies came out flat in the first half of this game, but mounted a couple of impressive second half comebacks to tie the game in regulation. The Buffs sprayed the ball all around Kyle Field in generating almost 400 yards of passing offense, so the Aggies' secondary better shore up quickly if they want to stay on the same field with OU's high-powered offense in two weeks. The 6-1 Ags tune up for the OU showdown by taking on Baylor next week in Waco.
TCU 34 Houston 27. The Coogs are in a clear freefall as their record deteriorates to 1-6 in a game that was not as close as the score reflects. Houston is looking like a 1-10 or 2-9 team to me. What a comedown after Art Briles' magical first season as UH's coach.
Navy 14 Rice 13. The Owls made a nice fourth quarter comeback against a strong Navy squad only to undermine their chance for victory in overtime by blowing the PAT after the second TD. The 3-4 Owls are just a couple of breaks away from being 5-2 and in the thick of the race for a minor bowl appearance, but the Owls are now facing a brutal final month of the season beginning next Saturday at Tulsa. Rice will struggle to finish with a .500 record this season.
And, as usual, Kevin Whited has his excellent weekly review of Big 12 games.
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October 23, 2004
Daniel Drezner is voting for Kerry
Daniel Drezner, the assistant professor of poli sci at the University of Chicago who runs the smart Daniel W. Drezner blog, has decided to vote for John Kerry for president, albeit unenthusiastically. His post in which he publishes his decision links to a series of posts over the past several weeks in which Professor Dresner evaluates the pros and cons of each candidate. The series of posts is a highly informative resource for evaluating the positions of the candidates, particularly in the foreign policy arena.
I believe that Professor Drezner places too much emphasis in making his decision on criticism of the Bush Administration's tactical decisions in Iraq. History instructs us that even successful battlefronts rarely are without significant tactical errors -- unfortunately, such is the essential nature of the messy business of war. However, Professor Drezner's point about the lack of reasoned policy analysis and lack of intellectual flexibility in the Bush Administration is a valid criticism and reflects my biggest reservation about the current administration.
Posted by Tom at 9:04 AM | Comments (0) | TrackBack (0)
Delta Airlines Chapter 11 filing imminent
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Posner on law review articles
Seventh Circuit Judge Richard Posner takes dead aim at law review articles in this Legal Affairs article, and the hilarious sub-headline sums up his viewpoint:
Welcome to a world where inexperienced editors make articles about the wrong topics worse.
Any article by Judge Posner is well worth reading and this one is no exception. He notes the result of the system of law review articles:
The result of the system of scholarly publication in law is that too many articles are too long, too dull, and too heavily annotated, and that many interdisciplinary articles are published that have no merit at all. Worse is the effect of these characteristics of law reviews in marginalizing the kind of legal scholarship that student editors can handle well—articles that criticize judicial decisions or, more constructively, discern new directions in law by careful analysis of decisions. Such articles are of great value to the profession, including its judicial branch, but they are becoming rare, in part because of the fascination of the legal academy with constitutional law, which in fact plays only a small role in the decisions of the lower courts. Law reviews do extensively analyze and criticize the constitutional decisions of the Supreme Court, but the profession, including the judiciary, would benefit from a reorientation of academic attention to lower-court decisions. Not that the Supreme Court isn't the most important court in the United States. But the 80 or so decisions that it renders every year get disproportionate attention compared to the many thousands of decisions rendered by other appellate courts that are much less frequently written about, especially since justices of the Supreme Court are the judges who are least likely to be influenced by critical academic reflection on their work.
Read the entire article. Also, U.T. Law Prof Brian Leiter has some interesting comments on Judge Posner's views.
Posted by Tom at 8:00 AM | Comments (0) | TrackBack (0)
October 22, 2004
The Bush Administration's discretionary spending
Victor over at the Dead Parrot Society has performed this interesting analysis of this earlier American Enterprise Institute study (linked in this earlier post via Marginal Revolution) in which the author of the AEI study -- Virginia de Rugy -- concluded that the Bush Administration compares poorly with other administrations over the past 40 years in terms of reducing the amount of major governmental agency or department spending. Victor focuses on comparing the second Clinton Administration's spending with the Bush Administration, and concludes as follows:
The numbers are ambiguous. By focusing only on discretionary expenditures, much -- but not all -- of the cyclical impact of the recession has been removed from the data. When you do this, Bush's spending looks much better outside of the well documented cases where he has made a conscious push to increase spending (like education). However, he still has not achieved a real reduction in any federal agency.But if you look at the actual Budget Authority levels, his administration actually has achieved a few reductions.
In both cases, of course, this has occurred in an environment where many agencies are adding homeland security requests to their budgets; I have only anecdotally adjusted for that. Regardless, the overall spending picture isn't quite as dreary as implied by DeRugy's original analysis.
Read the entire post. And as noted in this previous post, the prospect is remote that a Kerry Administration would be more restrained in terms of governmental spending than a second Bush Administration.
Quare: Is the difference between the increase in discretionary spending that would likely occur during the next four years under a second Bush Administration as compared to the increase that would likely take place under a Kerry Administration so marginal that it is not really a meaningful reason to favor one administration over the other?
Posted by Tom at 8:37 AM | Comments (2) | TrackBack (0)
October 21, 2004
Cards top Stros to win NLCS
Scott Rolen hit a two out, two run yak in the sixth off of Roger Clemens to break a 2-2 tie and lead the Cardinals to a 5-2 win over the Stros in Game 7 of a thrilling 2004 National League Championship Series on Thursday night in St. Louis. The win propels the Cards into their 15th World Series against the American League Champion, the Boston Red Sox.
The loss was a bitter one for the Stros, who improbably got within 10 outs of the World Series after struggling for much of the season. A late season surge in which they won 36 of their last 46 games allowed the Stros to win the National League Wild Card spot, and then the Stros won their first post-season series over the Braves in the Divisional Series. The Stros accomplished all of this without two of their starting pitchers -- Andy Pettitte and Wade Miller -- and lost in the seventh game of the NLCS to the club that had the best record in Major League Baseball this season. Those are remarkable accomplishments.
However, the Stros' bugaboo during their struggles for much of the season has been lack of consistent hitting, and that trait reappeared over the last three games of the NLCS to undermine the Stros' chances of getting to the World Series. In the final three games of the NLCS, the Stros had only 11 runs and 16 hits, and 11 of those hits were singles. The Stros could only eke out 3 hits in Game 7, including Bidg's lead off tater, and none of the Stros' hitters looked comfortable the entire game. The bottom line is that two of the Cards' top hitters -- Rolen and Pujols -- came through in the clutch, and the Stros top hitters -- Berkman, Beltran and Bags -- were held without a hit in Game 7. The Cards deserved to win the game and the series.
The Rocket was great through five innings, but clearly tired in the sixth when Pujols doubled in the tying run on an inside fast ball that did not have Clemens' usual bite, and then Rolen cranked a letter high fast ball on the first pitch to put the Cards ahead 4-2. If the Stros' bats had been clicking, then the Rocket's performance might have been good enough. Alas, it was not to be.
Oh, but what a ride it's been. The city of Houston came alive for the past two months as this team jelled and came within a nose of the first World Series for Houston and Texas. The Stros have been one of Major League Baseball's most successful clubs over the past decade, and now their task is to transition from the Bagwell and Biggio Era to the Berkman and (hopefully) Beltran Era. After the run that this club made at the end of this season and into the playoffs, I'm not betting against the Stros figuring out a way to get this done and remain among the elite clubs in the National League.
Posted by Tom at 10:57 PM | Comments (1) | TrackBack (0)
Keeping the price of oil in perspective
Vaclav Smil is Distinguished Professor of Geography at the University of Manitoba, Canada, and is the author of many books on energy and the environment. In this Tech Central Station op-ed, he reminds us of something that the mainstream media generally fails to report regarding the recent run up in the price of oil:
The years of the highest oil prices were 1980 and 1981 (thanks to Ayatollah Khomeini and fall of the Pahlavi dynasty in Iran) when the Arabian Light/Dubai crude traded at nearly $36/bbl and when the West Texas Intermediate went for almost $38. In 2004 monies this is, rounded for easy memorization, between $ 70-75. The peak of the last few days -- $ 55/bbl -- is obviously well above what will be the annual mean for the year 2004 and it is no more than 73-78% of the record averages. But this is a wholly inadequate adjustment. Between 1980 and 2003 the amount of oil that the US economy used to generate an average dollar of its GDP fell by 43% as its oil intensity declined somewhat faster than the overall relative energy use.
And so in order to get an approximate but realistic comparison of how much today's prices impact an average manufacturer or average household purchases, we should multiply the current high price of $55/bbl by 0.57 to get an effective comparable price of around $30, or no more than 40% of the average record price we paid in 1980. Moreover, between 1980 and 2003 average hourly earnings in services, where most new jobs were created, rose by about 30% and so another adjustment taking into account this higher earning power reduces the comparable price to just over $20. Other, more sophisticated adjustments, are possible but this one is easy to execute and easy to remember: the effective -- that is inflation-, oil/$GDP- and earning power-adjusted -- cost of oil at $(2004)53-55 is no more than about 30% of the average record price we paid in 1980 and 1981. That is why recent "record" oil prices have not had any substantial effect on the way this continent uses, and wastes, the most convenient of all fossil fuels.
Posted by Tom at 5:40 AM | Comments (0) | TrackBack (0)
October 20, 2004
Cards force Game 7
Well, I think it's safe to say that Dan Miceli will not be pitching for the Stros tomorrow.
Miceli served up a walk off gopher ball to Jim Edmonds in the 12th inning as the Cardinals edged the Stros 6-4 in Game 6 on Wednesday at Busch Stadium in St. Louis to force a seventh game in this extraordinary 2004 National League Championship Series. Since the advent of the NLCS about 20 years ago, there had never been a walk off dinger in any NLCS game. Now, there has been one in the last two games of this series. Unbelievable.
The Stros were behind for most of this game, as the Cards racked Stros starter Pete Munro for 4 runs and eight hits in 2 1/3rd innings. However, the Stros bullpen was extraordinary, as Harville, Qualls, Weaver, and then Lidge held the Cards at bay for the next nine innings. After Mike Lamb's solo yak in the 4th brought the Stros to within 4-3, it was not until Bags' clutch base hit with two out in the ninth that the Stros were able to catch the Cards and send the game into extra innings.
Even though Lidge was magnificent in retiring the Cards in order in the ninth, tenth, and eleventh innings, the Stros really lost the game in the ninth. After Bags' hit and a double steal, the Stros had Beltran on third and Bags on second with two out and Berkman batting. Berkman worked the count to 2-2 against Cards' closer Isringhausen before striking out on a low inside pitch that would have been ball three if he could have laid off it. The Stros never threatened after that.
So, this series goes to Game 7, and anything less would not do it justice. This incredible series simply deserves a heart-pounding Game 7. As with the final game of the Braves' series, I feel reasonably good about Game 7 with the Rocket starting on full rest and Roy O also available for relief duty on three days' rest. Although I'm concerned that Lidge is pitched out after pitching in the past four games, the Cards' best relievers Isringhausen and Taveras have also been extended.
So, I like the Stros' chances. But hang on tight because it's going to be one wild ride!
Posted by Tom at 7:51 PM | Comments (1) | TrackBack (0)
WaPo on Justice's Corporate Task Force
This Washington Post article does a decent job of reviewing the work over the past two years of the Justice Department's Corporate Task Force that was created as a result of the meltdown of Enron Corp.
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Paul Johnson on tough Presidential campaigns
British historian Paul Johnson (author of "Modern Times," "History of the Jews," "History of Christianity," "A History of the American People," and his more recent "Art, A New History," among others) is one of my favorites. In this WSJ ($) op-ed, Mr. Johnson notes that the nastiness of the 2004 Presidential Campaign really does not hold a candle to the campaign of 1928 between Andrew Jackson and John Quincy Adams:
[The 1928 campaign] inaugurated the habit of long campaigns, since Tennessee nominated Jackson for president as early as Spring 1825, more than three years before the vote. . .Adams's supporters retaliated by the campaign poster known as the Coffin Handbill, listing 18 murders Jackson was supposed to have committed. Those who claim the current election is the dirtiest know little about 1828. An English visitor, shown a school in New England (where Adams was paramount), put questions to the class, including "Who killed Abel?" A child promptly replied "General Jackson, Ma'am." An Adams pamphlet accused Jackson of "trafficking in human flesh," another accused his wife of being a bigamist and adulterer. After seeing it, she took to her bed and died shortly after the election. To his dying day Jackson believed his political enemies had murdered her. On his side, pamphlets accused Adams of fornication, procuring American virgins for the Tsar while serving as ambassador in Russia, and being an alcoholic and sabbath-breaker. A White House inventory listing a billiard-table and a chess-set led to the accusation that Adams had introduced "gambling furniture." (His most curious presidential habit, of taking a daily swim in the Potomac stark naked, went unnoticed.)
Jackson won the popular vote in this first razzmatazz election, 647,276 to 508,064, and the College by a clear majority. His inauguration was followed by a saturnalia in which thousands of his supporters invaded the White House and engaged in a drinking spree. The Spoils System (a new term) was inaugurated by the ejection of Adams's men from public offices, a process called The Massacre of the Innocents.
And what does Mr. Johnson think about the qualitiy of the current campaign? Apparently, not much:
In recent decades the most significant election was 1980, when Reagan beat Jimmy Carter and so inaugurated the policies which demolished the "Evil Empire" of the Soviet Union, and ended the Cold War in a Western victory. Reagan won this election, which I covered closely, with wit and one-liners. The current election is likely to be significant, too, in deciding the strategy and tactics of the war against terrorism. But wit, alas, will play little part.
Posted by Tom at 7:19 AM | Comments (0) | TrackBack (0)
More on Kerry's income taxes
This post from last week addressed the hypocrisy of John Kerry's political position that the federal government should raise taxes on the wealthiest Americans while his wife continues to use loopholes in the tax laws to pay a lower percentage of taxes than most other Americans.
In this editorial, the Wall Street Journal ($) takes deal aim at the issue and points out the advantages that super-rich folks such as Mrs. Heinz-Kerry have over working stiffs, starting with Ms. Heinz-Kerry's avoidance of the payroll (i.e., Social Security) tax:
One point we failed to mention is that Mrs. Kerry paid only a token Social Security tax. That's because the payroll tax is assessed on wages, and Mrs. Kerry declared very little wage income. She gets most of her income from dividends and interest, as many wealthy people do. This is fine by us, but it is one more advantage she has over the vast majority of Americans who draw a weekly paycheck and must (with their employer) cough up the 15.3% payroll levy.
And that advantage is just one of many that super-rich folks such as Ms. Heinz-Kerry enjoys under that income tax system that Mr. Kerry seeks to perpetuate:
Our main point is that this is one more advantage Mrs. Kerry would have over working stiffs on salary if her husband wins the White House and follows through on his plan to raise taxes.It's very hard to dodge a tax increase on salary income, especially for middle-class folk who need the money. Many couples who earn more than $200,000 a year are non-wealthy Americans who happen to be at the peak of their earning years and have big bills (such as college educations) to meet now or down the road. They haven't had time -- or been lucky enough to marry rich -- to build up the assets to be able to live off tax-free investments the way Mrs. Kerry can. The super-rich, as opposed to the merely successful, are the ones who are really able to avoid taxes -- which, come to think of it, may be why so many billionaires are supporting John Kerry.
The data on average tax rates actually reflects the highly progressive nature of the tax system, except for the super-rich who can hire lawyers and accountants to avoid paying taxes:
As it happens, the IRS has just released its data on individual income tax returns for 2002. And they reinforce our point about average tax rates. Recall that Mrs. Kerry paid an average tax rate of 12.4% on her declared income of $5.07 million. In 2002, even after the first round of Bush tax cuts, the average rate paid by all taxpayers was still higher than that at 13.03%.As for the folks in her wealthy neighborhood, in 2002 the top 1% of taxpayers paid an average rate (also known as the effective tax rate) of 27.25%. By the way, the income threshold for getting into that 1% group was only $285,424, down substantially from 2000 and 2001. And that same top 1% of earners paid 33.7% of all income taxes in 2002. The way to think about these numbers is that, despite the Bush tax cuts that allegedly so favored the rich, the tax code remains highly progressive. And these people kept paying the lion's share of all taxes even though their earnings declined amid the recession and stock-market slump.
But the most interesting question in regard to Ms. Heinz-Kerry's tax return is the following:
But back to Mrs. Kerry: Some readers wondered how she could be worth nearly $1 billion (as the Los Angeles Times has estimated) and earn only $5.07 million in 2003. Good question. It's impossible to tell given that Mrs. Kerry has disclosed only two pages of her 1040 form and declines to explain how her assets are deployed. But we agree with those readers who suggest that much of her wealth must be tied up in trusts and estates that don't require a declaration of income. Like many of the super-rich, Mrs. Kerry can afford to hire lawyers and accountants to create these shelters for her and her heirs.The late, great Wall Street Journal editor Barney Kilgore used to say that the rich don't mind high taxes because they already have their money. Mrs. Kerry and her husband are cases in point.
Inasmuch as the Bush Administration has done nothing during its first four years on making the income tax system in the U.S. simpler and more transparent, it is disappointing to me that the Democratic challenger's platform in this area is a hypocritical and demogogic appeal for votes rather than a substantive proposal for reform of a broken system.
Posted by Tom at 6:55 AM | Comments (0) | TrackBack (0)
Continental posts big 3rd quarter loss
Houston-based Continental Airlines reported a net loss for the third quarter on Tuesday as high fuel prices and competition from low-cost carriers continued to savage the "legacy carrier" segment of the airline industry. In announcing the loss, the fifth-largest U.S. airline in terms of passenger traffic predicted that it expects to report a significant loss for this year and will do the same next year if conditions persist
As with other reeling legacy carriers such as United Airlines and Delta Airlines, Continental continues to fare badly in competing with the widespread fare discounting of such low-cost carriers as JetBlue Airways and Southwest Airlines. Continental has slashed costs through layoffs and negotiating better deals with suppliers, but it has had insufficient liquid reserves to be able to hedge high fuel prices and now there there is not much they can do about the soaring fuel costs.
Despite the loss, Continental is actually faring better than many of its traditional competitors, which are expected to report even steeper losses later this week. Continental's revenue continues to grow at a steady rate because its hubs such as Newark, N.J. have particularly strong local traffic bases. Revenue in the latest quarter rose 8.4% to $2.56 billion as Continental boosted capacity, flew more miles and filled more of its seats.
Continental's unit costs, which are expenses spread over each seat mile flown, rose 4.9% to 9.45 cents mostly because of a higher fuel bill. Had fuel prices been at year-earlier levels, Continental's unit costs would have fallen 2.1%.
Posted by Tom at 6:20 AM | Comments (0) | TrackBack (0)
October 19, 2004
Lay's bid for a separate trial backfires
U.S. District Judge Sim Lake >ruled unexpectedly on Tuesday that former Enron Chairman and CEO Ken Lay will face two separate criminal trials -- one with former Enron CEO Jeff Skilling and former chief Enron accountant Richard Causey, and another one in which he will be the sole defendant.
To put it mildly, this is not the result that Lay's lawyers expected.
Judge Lake refused to separate Lay, Skilling and Causey into three discrete trials as all three had requested. But Lake did separate the government's four criminal charges against Lay relating to his personal banking into a second trial that would be tried separately from the Enron-related charges against the three former executives.
Causey and Skilling are each accused of 35 or more counts of conspiracy, fraud and insider trading in a scheme to manipulate the earnings of Enron to enrich themselves. Lay is accused of only 11 charges, seven of which relate to fraud and conspiracy at Enron and four of which relate to his personal banking.
In all likelihood, unless Lay presses the issue, the trial of the banking charges against Lay will be postponed until after the trial of the three former executives takes place, which means that they likely will never be tried. Regardless of the outcome of the first trial as to Lay, the government will likely cut some type of deal with Lay on the banking charges. My best guess at this point is that the trial against Lay, Skilling and Causey will crank up in mid-2005.
In another Enron-related development, the ongoing trial of the Nigerian Barge criminal case has been postponed for the rest of the week because U.S. District Judge Ewing Werlein became ill. Assuming the trial begins again next Monday, there is a good chance that the trial will conclude by the end of next week.
Posted by Tom at 9:32 PM | Comments (0) | TrackBack (1)
Oscar Wyatt's deal with the devil
This NY Times article follows up on last week's news that longtime Houstonian Oscar Wyatt is one of three individuals and four companies that federal investigators are focusing on for who allegedly receiving vouchers for oil from Saddam Hussein as he sought to flout United Nations sanctions. The Times article notes the close relationship between Mr. Wyatt and Saddam:
Mr. Wyatt . . . traveled to Baghdad as recently as early 2003, as the United States was preparing for war, to meet with officials in Mr. Hussein's government. Mr. Wyatt - once called in Texas Monthly magazine "the most hated oilman in Texas" - met Mr. Hussein in 1972, just after Iraq's oil industry had been nationalized, and eventually became one of the biggest United States importers of Iraqi oil.The two met again in 1990, after Iraq invaded Kuwait and Mr. Wyatt flew to Baghdad on a company jet to help negotiate the release of nearly two dozen American oil workers whom Mr. Hussein had turned into "human shields."
The relationship was so close that when the United Nations authorized Iraq in 1996 to begin selling oil again, under the Oil for Food program, Mr. Wyatt and Coastal secured the first tanker shipment to leave the country.
And that close relationship is at the heart of the criminal investigation into Mr. Wyatt's activities:
The years of effort on Mr. Wyatt's part to court Iraqi officials and build a venture to export Iraqi oil to the United States produced ample rewards: he and companies that he has been linked to earned an estimated $23 million in profit in the seven years of the Oil for Food program, according to sales and profit estimates included in the C.I.A. report by Charles Duelfer; Mr. Wyatt disputes that figure.
And, lest we forget, Mr. Wyatt's used his relationship with Saddam to attain a humanitarian achievement:
By the late 1980's, Coastal was importing as much as 250,000 barrels of oil a day from Iraq. As these oil imports became more and more important to Coastal's operations, Mr. Wyatt became more outspoken in his opposition to any threatened or standing trade sanctions by the United States in the Middle East, . . . including a move by Congress to impose restrictions on trade with Iraq after Mr. Hussein used poison gas against the Kurds.It was Mr. Wyatt's surprise trip to Baghdad in December 1990, however, that finally brought his relationship with Iraq into the spotlight. He met then with Mr. Hussein to negotiate the release of American hostages. The effort was opposed by the administration of George H. W. Bush, but Mr. Wyatt came home a hero and he wept at a meeting of the released hostages and their families.
"It was not a stunt," said Bobby Parker, a drilling rig electrician who had been held for 128 days before being rescued. "Oscar Wyatt is just not that type of person."
The hostages were safe, but ultimately, Mr. Wyatt's goal had not been fully achieved. He had hoped to prevent a military move by the United States on Iraqi-occupied Kuwait, a war that, he said, the United States had no reason to start.
Five years later in 1996, Mr. Wyatt's relations with Iraq were again in the news:
Mr. Wyatt's ties to Iraq again raised eyebrows, when the first tanker laden with crude oil sailed out of Mina al-Bakr, Iraq's main export oil terminal, in December 1996, in Iraq's legal return to global oil markets.The ship had been chartered by one of Mr. Wyatt's companies.
This was the start of the Oil for Food program, which ultimately would result in the export of 3.4 billion barrels, earning $65 billion for the Iraqi government over the next seven years, money that was used to buy food and medicine, maintain oil fields and pay reparations from the first gulf war, among other spending.
My Wyatt, through spokespersons, declines to comment on any of this other than to deny that he engaged in any wrongdoing with regard to his business relations with Iraq. However, the Times article notes that one competitor characterized Mr. Wyatt's propensity to enter into difficult business deals in the following manner:
"He is not afraid of the devil."
Posted by Tom at 4:12 PM | Comments (1) | TrackBack (0)
On Brad Lidge
Please excuse me for having a hard time getting the Stros off of my mind. Amid