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July 31, 2006

Colbert strikes yet again

Eventually, Congressional staffers are going to refuse to allow their bosses to be interviewed by Comedy Central's Stephen Colbert (previous posts here).

However, until they do, let's continue to enjoy Colbert exposing the hilarious (and somewhat frightening) lack of perspective among our nation's members of Congress, this time of Eleanor Holmes Norton of the District of Columbia (remember, it's not a state):

Posted by Tom at 7:28 AM | Comments (0) | TrackBack (0)

Baseball fans, beware

If you are interested in Major League Baseball races from the past, do not go to this new website (described below) if you have some pressing deadlines -- you will not be able to leave for awhile:

BaseballRace.com is the creation of . . . Christopher J. Falvey. It is an online application that allows you to view any Major League Baseball season, split by league or division (even wild card races), as an animated, date-by-date race between the various teams you choose.

It was designed to bring a historical season to live more so than mere standings or graphs. With BaseballRace.com, you can experience an entire season "live."

The data goes back to 1901, and includes every game of every season up through yesterday (7/30/2006).

Unless you are a Phillies fan, go to September 20 of the 1964 National League season and watch what happens over the final two weeks of the season. Hat tip to Eric McErlain for the link.

Posted by Tom at 6:28 AM | Comments (0) | TrackBack (0)

The Wylys go to Congress

Following on this previous post from last year, this WSJ ($) article reports that colorful Dallas-based investor Sam Wyly (previous posts here) and his brother Charles get hauled in front of the Senate's Permanent Subcommittee on Investigations tomorrow in connection with the panel's investigation into the Wylys' use of the the Isle of Man tax haven to protect assets and avoid US income taxes.

The Isle of Man is a quasi-independent, largely agrarian republic of about 75,000 people in the sea between England and Ireland that operates under its own financial laws, the most important of which is that a foreign government cannot enforce a claim for unpaid taxes against an Isle of Man entity. As a result, wealthy foreigners for years have used Isle of Man-based shelf corporations and trusts to shield assets and limit taxes. This arrangement has often led to the unusual scene of $1,000 per hour London soliciters and barristers waiting for their court hearing to be called in the Isle of Man courts while the judge (called "the Dempster") adjudicates a dispute between local farmers over such matters as, say, the ownership of a goat.

The Senate panel has been probing offshore tax havens for several years under the direction of its panel's senior Democrat, Sen. Carl Levin of Michigan. Interestingly, Sam Wyly is one of the largest benefactors of the business school at Senator Levin's home state university, the University of Michigan.

As noted in the previous post, the Wylys are already the subject of a criminal investigation by the Manhattan District Attorney's office, the IRS and the SEC over their Isle of Man arrangements. The WSJ article reveals for the first time that the Wylys were advised on their Isle of Man investments by a network of shady characters, including former attorney David Tedder, a California-based, self-styled "asset-protection expert" who was disbarred in California before moving his practice to Florida in the 1990's. Tedder is currently serving a five-year federal prison sentence on tax and money laundering charges unrelated to his work for the Wylys.

Unlike most Senate hearings on rather dry financial matters, this one could be pretty entertaining.

Posted by Tom at 4:57 AM | Comments (0) | TrackBack (0)

July 30, 2006

A classy Houstonian makes the Hall of Fame

The best radio announcer that the Houston Astros Baseball Club has ever had -- Gene Elston -- will be inducted into the Baseball Hall of Fame today in Cooperstown, NY. Here is my previous post on Elston at the time that his induction was announced, and the Chronicle's David Barron has this interesting interview of Elston in the today's Chronicle.

I couldn't help but notice Elston's response to Barron's question about his opinion of former Cardinals and Cubs announcer, the late Harry Caray:

What did [Elston] think of Harry Caray?

"Harry Caray was a gem. He was one in a million. He was one of the greatest guys you would ever want to meet. Just absolutely fabulous.

"He was not a good play-by-play man, but he was the fans' announcer. He was an entertainer. He sold the game. He probably sold the game more just by being there than anybody I can think of."

A little bit different opinion of Caray than that expressed by another Hall of Fame announcer for the Stros, don't you think?

Update: Richard Justice has the story from Elston's induction ceremony.

Posted by Tom at 9:05 AM | Comments (1) | TrackBack (0)

July 29, 2006

Richard Justice's revisionist thinking

Chronicle sports columnist Richard Justice wrote the following answer to a question in his blog recently (toward the end of the blog post):

I love [disabled Stros slugger Jeff Bagwell] to death, but his big contract and him not wanting to admitt his playing day's are over has cost this 2006 team more than we thought it would.

I don't think so. Drayton McLane was told last summer that if he allowed Bagwell to be activated in September, his chances of winning an insurance claim would be reduced 50 percent. He was advised not to let him come to spring training because they'd be reduced another 50 percent.

He made the decision because it was the right thing to do. Did he nudge Bagwell toward retirement? Sure he did. No matter what happened, he was going to be obligated to pay Bagwell $17 million this season. What happens between the Astros and the insurance company may takes years to settle.

There's a fairness issue. Bagwell wanted to play. He still wants to play. Problem is, he can't. One doctor told him he has the biggest bone spur in his right shoulder he'd ever seen. If Bagwell chooses to have it removed, he risks doing permanent damage to his deltoid muscle. His alternative is a shoulder replacement procedure. Neither choice is very good.

To the many people who ask, he comes around only occasionally. He has purchased a home in San Diego and spends more and more time there. He also has a home in Cabo San Lucas and spends time there.

So, Justice is suggesting that Stros owner Drayton McLane acted reasonably with regard to Bags' injury? How on earth does Justice square that view with his broadsides against McLane over McLane's handling of the Bagwell injury situation set forth in previous blog posts here, here, here and here?

Kevin Whited over at blogHouston.net has previously noted the tendency of Justice to take both sides of an issue, although not usually in the same article. However, Justice's diplomatic blog post above regarding McLane's handling of the Bagwell injury situation is hard to square with his previous over-the-top criticism of McLane in regard to the matter while, at the same time, ignoring Bagwell's somewhat childish behavior.

I'll give Justice credit in that he is willing to admit when he takes a position that turns out wrong. Will Justice publicly apologize to McLane for his previous criticism of him over the Bagwell injury situation? Inquiring minds want to know.

Posted by Tom at 6:21 AM | Comments (0) | TrackBack (0)

July 28, 2006

Meet Steven Gerrard

I don't follow soccer closely (previous posts here), but I've come to appreciate the sport during this World Cup season and I particularly enjoyed Chronicle sports columnist John Lopez's World Cup reports from Germany.

Now, Bill Simmons passes along this video of star Liverpool, P.C. midfielder Steven Gerrard's ten greatest goals, which is well-worth the seven minutes it takes to view it. Gerrard is the English soccer equivalent of Reggie Bush, so take a moment to marvel at this wonderful talent.

By the way, the comments of the British announcers are priceless!

Posted by Tom at 8:37 AM | Comments (2) | TrackBack (0)

Local player agent suspended

In a story that appears to be flying underneath the radar of the local media, Houston-based sports player agent and lawyer Carl Poston has been suspended from representing NFL players for two years by the NFL Players Association because of alleged "bad faith efforts to delay, frustrate and undermine" an arbitration hearing about Poston's role in a contract dispute between NFL linebacker LaVar Arrington and the Washington Redskins. The NFLPA licenses agents of NFL players as a right granted under its collective bargaining agreement with NFL owners.

The NFLPA's disciplinary committee previously suspended Poston for two years due to his actions in connection with the December 2003 contract extension signed by Arrington with the Redskins. Inasmuch as the most recent action is a separate two-year suspension, Poston could now be barred from representing NFL players for up to four years.

Since the mid-1990's or so, Poston and his Michigan-based brother Kevin have made a splash for themselves for their "take no prisoners" approach to representing high-profile professional athletes, such as former NBA star Penny Hardaway, NFL All-Pro tackle Orlando Pace of the St. Louis Rams, Kellen Winslow Jr. of the Cleveland Browns, Charles Woodson of the Oakland Raiders, and Charles Rogers of the Detroit Lions. The Postons were somewhat unique in that they tended to represent linemen, defensive backs, and other NFL players who traditionally have earned far less than the marquee players at the skill positions.

But controversy has increasingly dogged the Postons recently, as many management-types within the NFL considered them to be unrealistic and needlessly adversarial in contract negotiations. Last year, Pace fired the Postons as his agents after they failed to secure a long-term contract for him with the Rams, and then quickly obtained a lucrative contract with the Rams after retaining another agent to represent him.

The Arrington case is particularly troubling for the Postons because the main issue is whether the team negotiated one contract and then -- unbeknownst to Carl Poston -- slipped Arrington another to sign, minus a $6.5 million bonus. That a lawyer didn't bother to read the contract of his client before having the client sign it is not a particularly effective basis for the client's claim.

Posted by Tom at 5:52 AM | Comments (0) | TrackBack (0)

Let's do lunch

Yes, lunch in LA can be so interesting.

You remember Barry Munitz, don't you? Former UH wunderkind president, Maxxam executive, California state university administrator and besieged Getty Museum director, the talented Mr. Munitz certainly knows how to get around the key social circles in SoCal. Previous posts on Munitz are here.

And remember California attorney general Bill Lochyer? He is that gem of statesmanship who told an interviewer in 2001 during the aftermath of the California power crisis that "I would love to personally escort [the late former Enron chairman and CEO Ken] Lay to an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey.'" Of course, left unsaid by Lockyer was that Lay and Enron had little to do with that crisis, which was caused primarily by California state politicians (including then state senator Lockyer) who botched deregulation of electric utilities by freezing retail power rates while utilities bought juice from a newly-created wholesale market at prices that had no caps. Lockyer is the sort of politician who prefers to rely on myths and appeal to resentment rather than confront the truth.

Lockyer's office launched an investigation of then Getty Museum chief Munitz in mid-2005 after the LA Times reported that Munitz had made grants to friends, demanded a raise amid cost-cutting, traveled lavishly, expense and used staff to perform personal errands, all at the expense of the non-profit Getty (subsequent post here). Munitz resigned as the Getty Museum CEO this past February, agreeing to forgo more than $2 million under his contract with the Getty and to reimburse the non-profit $250,000 to resolve "continuing disputes."

However, it's now almost August and still nothing has been heard from Lockyer's investigation of Munitz. So, the LA Times started nosing around and asking questions and, earlier this week, Lockyer responded to the Times by admitting that he and Munitz had met in mid-January for lunch (at LA's Rocket Pizza, which has very good crust), smack dab in the middle of Lockyer's investigation of Munitz and a month before Munitz bailed out from the Getty.

Lockyer, who is now running for California state treasurer (can't this guy get a real job?), is in full retreat over the disclosure. He actually told the Times that the get-together did not violate his unwritten policy of not meeting alone with targets of an investigation because the probe was not discussed.

"This was, in my mind, lunch with a personal friend that I've known for a long time and it didn't have anything to do with the case," he said. . . "I was being a good listener, kind of consoling him as he leaves a job that he loves," said Lockyer, characterizing the discussion, which eventually shifted to books and movies, as "therapy with a friend."

I bet the pizza was good, too.

Posted by Tom at 4:57 AM | Comments (0) | TrackBack (0)

July 27, 2006

So that's what's on the grill of my car

Texas has its share of insect problems.

First, it was the invasion of the killer bees.

Then, it was the onslaught of those nasty fire ants.

Now, it's the invasion of the Libytheana bachmanii larvata.

Or, as they put it in South Texas, "Looks like you ran into some snouts."

Posted by Tom at 7:36 AM | Comments (1) | TrackBack (0)

Islam's real struggle

The current escalation of fighting between Israel and Hezbollah is currenly getting most of the attention on the world stage, but NYU Islamic Studies professor Bernard Haykel reminds us in this NY times op-ed that an even knottier problem than Islamic hatred of Israel is the conflict within Islam between Sunni and the Shiite ideologies.

Sunni ideology regards Shiites as heretics and Sunni groups such as Al Qaeda profoundly distrust Shiite groups such as Hezbollah (Al Qaeda reportedly gave the green light months ago to Sunni extremists in Iraq to attack Shiite civilians and holy sites). But if Hezbollah is successful in its current attack on Israel -- and "success" may only necessitate survival -- Haykel sees ominous signs for the West:

What will such a victory [by Hezbollah over Israel] mean? Perhaps Hezbollah’s ascendancy among Sunnis will make it possible for Shiites and Sunnis to stop the bloodletting in Iraq — and to focus instead on their “real” enemies, namely the United States and Israel. Rumblings against Israeli actions in Lebanon from both Shiites and Sunnis in Iraq already suggest such an outcome.

That may be good news for Iraqis, but it marks a dangerous turn for the West. And there are darker implications still. Al Qaeda, after all, is unlikely to take a loss of status lying down. Indeed, the rise of Hezbollah makes it all the more likely that Al Qaeda will soon seek to reassert itself through increased attacks on Shiites in Iraq and on Westerners all over the world — whatever it needs to do in order to regain the title of true defender of Islam.

Read the entire piece. And don't miss Dan Senor's Opinion Journal op-ed that explains how the militant Shiite forces in Iraq are shaping domestic and foreign policy there.

Posted by Tom at 6:37 AM | Comments (0) | TrackBack (0)

Lance Berkman is a funny guy

Amidst the Stros disappointing season, slugger Lance Berkman (42 RCAA/28 HR's/.403 OBA/.617 SLG/1.020 OPS) is having another outstanding season, slugging his way to production that is second only to the Cardinals' Albert Pujols in the National League.

In last night's Stros win over the Reds, Berkman whacked another two yaks, one of which was a 452 foot bomb that landed in the restaurant that overlooks centerfield at Minute Maid Park. Berkman, a happy-go-lucky, life-long Texan who is a genuinely nice fellow, commented after the game on his mighty home run:

"I think the waiter made a nice play."

Berkman's career stats are below. In the history of the Stros franchise, only Jeff Bagwell (stats below, also) has had better hitting statistics than Berkman at the same stage of his career. Berkman, who is 30, currently has 331 RCAA for his career and is about ready to overtake Craig Biggio (currently at 352 RCAA for his career) for second place on the Stros career RCAA list. At the completion of the season (1998) that coincided with his 30th birthday, Bags' RCAA was 431, and Bags tops the Stros career RCAA list at 680.

It's sometimes easy to overlook, but we have been blessed to have been able to watch in Bidg, Bags and Berkman the three best non-pitcher players in the history of the Houston Astros Baseball Club.

The abbreviations for the hitting stats are defined here.

Posted by Tom at 5:54 AM | Comments (2) | TrackBack (0)

The Yates verdict

It took awhile, but the Texas criminal justice finally got it right yesterday in the sad case of Andrea Yates, thanks to an honest and dispassionate jury.

Of course, as noted here earlier, this is a prosecution that never should have been tried once, much less twice. Yates and her attorneys were always willing to cut a deal in which the obviously insane Yates would spend the rest of her life in a tightly-controlled state mental hospital, yet the Harris County District Attorneys office stubbornly refused to provide any meaningful prosecutorial discretion in the case. The result has been a four year saga in which untold millions of dollars of has been spent so that the prosecutors could prove what? That this obviously insane woman just was lucid enough when she killed her children that she should spend the rest of her life in a maximum-security prison rather than a state mental institution?

Yates initially will be sent to a maximum-security hospital, probably North Texas State Hospital in Vernon, and then if doctors determine she is not a danger to herself or others, she later will probably be moved to a medium-security state mental health facility, such as the Rusk State Hospital where she lived for several months pending her retrial. Oh yeah, where she lived before prosecutors insisted that she be detained in the Harris County Jail during her retrial.

Although the Yates defense was successful this time around, there is no real victory here. Yates will spend the rest of her life in a heavily-guarded mental institution and any time she regains even a little bit of lucidity, she will descend back into a deep depression with psychotic features and schizophrenia when she realizes what she did to the children that no one involved in the case disputed that she adored.

One aspect of the case that I've not seen reported much in the media is that this trial only involved the deaths of three of the five children that Yates killed, so the Harris County District Attorneys office clearly hedged its bets that it could lose this case when it elected not to prosecute the deaths of the other two Yates children. Thus, it's possible that the DA's office could mount another murder case against Yates, although even their bad judgment in pursuing the first case against Yates through two trials does not seem to make that a likely scenario.

The bottom line on this case is that good people afflicted with terrible mental illness are capable of committing horrendous acts during a period of harrowing madness. That's the reason why insanity is a defense to a murder charge under our criminal justice system, and there is simply no reason to have that defense at all if the state insists upon using its overwhelming prosecutorial power to place obviously insane people such as Andrea Yates in prison -- rather than a more humane mental health facility -- for the rest of their lives.

Posted by Tom at 4:53 AM | Comments (0) | TrackBack (1)

July 26, 2006

Air France competitors, listen up!

Air France is right on the law in this recent Fifth Circuit decision (written by Judge Fortunato P. Benavides), but woefully wrong on the public relations front. In not settling the case, Air France has given an enterprising advertising firm for one of Air France's competitors the basis for an effective "we'd never do this to you" advertising campaign against the airline.

Here's what happened. Air France charged Edo Mbaba a $520 excess baggage fee for the four extra bags he took on his trip from Houston to Lagos. That was no problem, but when Mbaba flew through Paris, the flight was delayed and he missed his scheduled connection. As a result, he had to spend the night in the terminal and reclaim his baggage.

The next day, when Mbaba went to check his bags with Air France again for his flight to Lagos, Air France inexplicably advised him that he would have to pay another $4,000 in excess baggage fees. Thinking much as I would if confronted with such a demand, Mbaba requested that Air France simply return his luggage to Houston, which prompted the Air France personnel to inform Mbaba that if he didn't quit griping and pay the four grand fee, they would take his luggage outside and barbecue it. Mbaba paid the fee, but then sued Air France in Texas for breach of contract and other state law claims.

Alas, the U.S. District Court and the Fifth Circuit concluded that Mbaba’s claims are preempted by the Warsaw Convention. Nevertheless, here's hoping that some of Air France's competitors pick up on the decision and use it in the advertising wars so that the few bucks that Air France saved by stiffing Mbaba becomes an expensive lesson on how not to treat customers. Hat tip to Robert Loblaw for the link to the Fifth Circuit decision.

Posted by Tom at 8:19 AM | Comments (1) | TrackBack (0)

Harvey Miller takes one on the chin

As noted in this previous post, former Weil, Gotshal & Manges bankruptcy partner and current Greenhill & Co. investment banker Harvey Miller is arguably the most leader of the movement over the past 30 years to elevate the compensation of corporate reorganization lawyers to levels commensurate with that of other corporate and securities lawyers. In so doing, Miller was not accustomed to losing many disputes over his firm's fees in big reorganization cases, but -- as the Wall Street Journal's ($) Nathan Koppel reports here -- Miller absorbed a hit on his fees as an investment banker earlier this month that could be the largest in the history of US corporate reorganizations.

Based on a July 21 ruling of New York Bankruptcy Judge Robert Drain, Miller's employer -- New York investment bank Greenhill & Co. -- must return $4.6 million of the more than $11 million the firm was paid as an adviser to Loral Space & Communications Ltd. in the satellite company's chapter 11 case. Judge Drain concluded that Greenhill had improperly claimed a bonus for advising Loral in its 2003 bankruptcy and that Greenhill's retention agreement did not authorize such a bonus. Greenhill was allowed to retain the $7 million balance of its compensation.

As noted in the previous post, my sense is that Miller and attorneys at the Akin, Gump law firm are not going to be exchanging holiday greeting cards any time soon.

Posted by Tom at 6:46 AM | Comments (0) | TrackBack (0)

The spokesman for the NatWest Three

What do you do when you can't hang out and chat with your blokes?

Well, in the case of David Bermingham -- one of the three former London-based National Westminster Bank PLC bankers dubbed the "NatWest Three" in the lexicon of Enron criminal cases -- he sits for this interesting interview with the Chronicle's Tom Fowler. Although he does not reveal how he and his co-defendants intend to defend against the prosecution, Bermingham tells the story of how he and his NatWest colleagues -- Gary Mulgrew and Giles Darby -- voluntarily went to the UK equivalent of the SEC in November 2001 upon learning through news reports that a transaction in which they and NatWest Bank were involved had become part of the fraud investigation of former Enron CFO Andrew Fastow and his right-hand man, Michael Kopper.

Subsequently, the UK authorities passed along the information provided to them by Bermingham and his mates to the SEC and, the next thing you know, Bermingham, Mulgrew and Darby are the subject of a criminal complaint in Houston. No US investigator contacted Bermingham, Mulgrew or Darby to get their side of the story before firing off the criminal complaint against them, but -- as Bermingham notes -- the Enron Task Force probably viewed the three bankers as pawns in their effort to put pressure on Fastow. After Fastow copped a plea, the Task Force was stuck with its dubious decision to prosecute the three UK citizens.

Although not well-reported in the press yet, the case against the NatWest Three is fairly straightforward, at least as Enron-related criminal cases go. The Task Force alleges that the three defrauded their former employer by conspiring with Fastow and Kopper to underpay NatWest for its interest in an entity named Swap Sub, an affiliate of LJM1, the Fastow/Kopper-managed special purpose entity that was created in 1999 to hedge Enron's valuable but highly volatile interest in a technology company called Rhythms.

Fastow arranged to have an entity called Southhampton that was owned by his family, Kopper and several other Fastow underlings at Enron (including Ben Glisan) buy NatWest's interest in Swap Sub in March, 2000 for $1 million, which was substantially more than NatWest had that interest valued at the time. After NatWest sold out, Fastow sold a portion of the old NatWest interest in Swap Sub through Southhampton to the three bankers personally for $250,000. About a month and a half later, Fastow and Kopper arranged to have Enron and Swap Sub unwind the hedge on the Rhythms stock, which resulted in Enron purchasing a large chunk of Enron stock from Swap Sub. The NatWest Three's net share of the Enron stock sales proceeds was $7.3 million.

In short, the Task Force alleges that the NatWest Three's making $7.3 million on an investment of $250,000 a month and a half earlier violates the "too good to be true" rule. Presumably, Fastow and Kopper are prepared to testify that the NatWest Three knew that Fastow and Kopper had arranged with Enron to unwind the hedge on Rhythms stock with Swap Sub, knew that such unwinding would make Swap Sub worth much more than NatWest had it valued at the time, and that neither Fastow nor the NatWest Three disclosed the situation to NatWest before the bank sold its interest in Swap Sub to Southhampton for a measly $1 million.

For their part, Bermingham, Mulgrew and Darby contend that they knew nothing about Fastow and Kopper's plan to unwind the Rhythms hedge with Enron, that the $1 million price that Southhampton paid for NatWest's interest in Swap Sub was substantially more than it was worth at the time, that the $250,000 price they paid for an interest in Swap Sub was similarly reasonable given the risk of the investment, and that they were as pleasantly surprised as anyone on the big return on their investment when Enron and Swap Sub unwound the hedge a month and a half later (remember, all this took place before the bursting of the stock market bubble on tech stocks). Interestingly, despite the fact that all of the foregoing information has been well-known to NatWest for several years now, the bank did not pursue either a civil case or criminal prosecution of the NatWest Three in the UK.

By the way, colorful Houston-based criminal defense attorney Dan Cogdell, who successfully defended former Enron in-house accountant Sheila Kahanek in the Nigerian Barge case, is defending Bermingham. Cogdell's involvement ratchets up the entertainment value of any case, so stay tuned.

Posted by Tom at 4:40 AM | Comments (4) | TrackBack (0)

July 25, 2006

Colbert strikes again

How on earth did Florida Democratic Congressman Robert Wexler's staff allow him to do an interview with Stephen Colbert without first advising him what he was getting into?

Posted by Tom at 7:53 AM | Comments (1) | TrackBack (0)

Thinking about progress in health care

This NY Times article tells the fascinating story about the assassination of President James A Garfield back in 1881 while noting an exhibit commemorating the 125th anniversary of Garfield’s assassination at the National Museum of Health and Medicine on the campus of the Walter Reed Army Medical Center.

President Garfield was shot on July 2, 1881 in Washington by a disgruntled federal job-seeker, Charles J. Guiteau, who made his move while Garfield was waiting for a train. What is not as well-known is that neither of the shots that hit Garfield should have fatal even by the more primitive medical standards of the 1880's. As my late father once observed to me while discussing Presidential assassinations, "Garfield's assassin just shot him. Garfield's doctors killed him."

The Times article reminds me of another interesting medical case that Dr. Donald J. DiPette, chair of the Department of Internal Medicine at Texas A&M University Medical School, presented earlier this year during the Walter M. Kirkendall Lecture that the University of Texas Medical School conducts annually in honor of my father.

Dr. DiPette's subject was how advances in clinical research on hypertension had contributed to our understanding and knowledge of related medical problems that are related to high blood pressure, and he used a case study of a man in his mid-50's in the late 1930's who was showing signs of acute hypertension as an example of how that understanding can change the world.

The negative impact of hypertension on an individual's health was not well-understood in the late 1930's and 40's, and Dr. DiPette showed how the patient's health in the case study deteriorated at an accelerated rate as his blood pressure readings increased markedly from 1937 to 1945. One evening in early 1940, he collapsed unconscious at the dinner table. The patient's doctors at the time were unsure why.

By 1945, the patient -- who was still working in an important and high-pressure job -- had blood pressure that was off the charts and was experiencing a combination of associated medical problems that would have landed him in a hospital these days. Nevertheless, the patient continued to work and, about a month after a particularly important work-related meeting, the patient died of a massive stroke.

Only at the end of his lecture did Dr. DiPette reveal the name of the patient in his case study -- President Franklin D. Roosevelt.

Dr. DiPette's point was that President Roosevelt's acute hypertension clearly affected his performance at the Yalta Conference, and his doctors would likely have never allowed FDR to participate in that history-changing event had they known what we know now about the effects of hypertension. Thus, lack of knowledge about hypertension -- which finally began to be understood less than a decade after FDR's death -- literally changed the course of the 20th century.

Remember that as you contemplate the negative impact on clinical research of this, this and this.

Posted by Tom at 6:33 AM | Comments (2) | TrackBack (0)

Where Tiger stands

The NY Times Damon Hack, who is writing some of the best articles on golf in the mainstream media, weighs in on Tiger Woods' British Open victory with this article that summarizes where Tiger stands in relation to the greatest golfers in history.

Woods, who is 30, won his 11th professional major championship (14th if you include his three straight US Amateur championships), which tied him with Walter Hagen and places him seven professional major victories behind Jack Nicklaus' record of 18 majors. No one else stands between Woods and Nicklaus, and Nicklaus did not win his 11th professional major until he was 32.

After Nicklaus won seven professional majors by 1967, he had his biggest lull in his prime when he went the next 12 majors without a win, from the last two of '67 through the first two of 1970. Nicklaus came back to win 10 more by the end of 1980, and then added on his sixth Masters in 1986 for his 18th.

In the best stretch of his professional career, Woods won seven majors in less than three years from the 1999 P.G.A. Championship at Medinah Country Club to the 2002 United States Open at Bethpage Black. Then, Woods went 10 majors without a victory between 2002 and 2005 as he went through an extensive swing change that flattened his swing plane, but with the victory over this past weekend, Woods has now won three of the last seven majors and will enter the final major of the year -- the P.G.A. at Medinah in August -- as the odd's-on favorite again.

Posted by Tom at 5:58 AM | Comments (0) | TrackBack (0)

July 24, 2006

The New Spirit of Aggieland?

Given the recent downturn in Texas A&M football fortunes, rumor has it that Coach Fran is going to replace the Aggies' traditional pre-game ritual "Spirit of Aggieland" with the New Zealand National Rugby team's traditional pre-game HAKU.

Just kidding.

Posted by Tom at 8:13 AM | Comments (0) | TrackBack (0)

Something to think about before you grab the big stick

Tiger Woods' dominating performance (and here is a video of the swing that he used) in winning this year's British Open gives us hackers something to think about next time we tee it up on our home course.

Woods averaged 291 yards off the tee at Royal Liverpool, which stretches over 7,200 yards. He led the field by hitting 48 of 56 fairways while making three eagles, 19 birdies, 43 pars and seven bogeys. And nothing worse than that.

By the way, Woods accomplished this mostly by not using his driver, which he used precisely once during the entire tournament. His club of choice off most par 4's and 5's was his steady 2-iron.

Now, links golf is different from American golf in that the ball rolls farther and the need for forced carries is not as great on links courses. However, count the number of fairways you are hitting with your driver the next time you play. If it's less than 75%, then try a round without using it at all. My bet is that your score will not be much different and, if it is, it will probably be lower.

By the way, I wonder if Phil Mickelson noticed what Tiger was hitting off the tee?

Posted by Tom at 6:27 AM | Comments (1) | TrackBack (0)

More rumblings at Dell, Inc.

Following on this previous post from about a month ago, Round Rock-based Dell, Inc. announced late last week that -- as Jeff Matthews aptly notes -- it had "puked the quarter."

Dell's announcement sent its shares sliding almost 10% for the day on Friday to the lowest close in about five years (Dell's stock was down $2.19 to $19.91 a share, its lowest since October, 2001). This type of announcement is getting a tad monotonous for Dell, which missed forecasts for its fiscal first-quarter revenue and earnings earlier this year, and missed sales projections last year for its fiscal second and third quarters. Dell's basic problem is that the computer market is shifting away from Dell's core strength in providing computers to business toward consumer PC's, which is a smaller part of Dell's business. To make matters worse, Dell's cost-structure is such that it doesn't have any room left to undercut competitors on the cost of PC's.

Meanwhile, Dell competitor Hewlett-Packard is taking advantage of the situation. HP has restructured its operations to focus on sales growth in consumer PC's, where its wide footprint in retail stores across the US gives it an advantage over Dell's focus on web-based and mail order sales. HP's PC shipments in the U.S. jumped more than 15% in the second quarter.

Finally, Matthews is not convinced that the slide in Dell's stock price is over, either:

[Dell] has used options extensively as a key component of its employee compensation. . . Dell spent more than $15 billion in the last four fiscal years buying back stock—yet fully diluted shares declined a mere 200 million shares over that time, thanks to the company’s willingness to dilute its shareholder base with large option grants. This is all perfectly legal, of course, but as options lose their place in the hearts and minds of investors, Dell may have to figure out a better way to keep costs down.

Posted by Tom at 5:53 AM | Comments (0) | TrackBack (0)

Thinking about foreign policy

Inasmuch as foreign affairs issues are simmering all over the place right now, I pass along the following items that I've come across recently:

In this Investor’s Business Daily article, Claremont Institute President Brian Kennedy evaluates the US missle defense capabilities and explains why it is wholly indequate. Most interestingly, Kennedy describes an admittedly "fanciful" scenario under which North Korea would hit Seattle with a nuclear missle and an aftermath that is foreboding. The Claremont Institute is also maintaining this site that updates America's vulnerability to ballistic missile attack as the proliferation of ballistic missile technology increases.

We haven't checked in with Victor Davis Hanson in awhile, so this National Review op-ed provides a welcome contrary view to the gloom and doom of most media reports regarding the current Israeli-Hezbollah conflict.

For up-to-the-minute updates on the situation in the Middle East, the Truth Laid Bare provides this useful page of bloggers categorized by region and this NY Times article passes along several online diaries from the front of the Israeli-Hezbollah conflict.

Finally, Foreign Affairs magazine is providing this excellent online forum on the question of "What to Do in Iraq." Take a few minutes to review the give-and-take from the various experts particpating in the forum.

Posted by Tom at 5:14 AM | Comments (0) | TrackBack (0)

July 23, 2006

Sending bad messages

It's hard to imagine that the federal government could have sent worse signals to foreign investors in US markets and businesses than the ones that it sent over the past week.

First, there was the latest news about the NatWest Three, the three UK bankers who had the misfortune of making an investment in one of Enron's special purpose entities controlled by former Enron CFO Andrew Fastow and his right-hand man in crime, Michael Kopper. Remarkably, the only reason that the NatWest Three were spared from the Enron Task Force demanding their incarceration in Houston's downtown Federal Detention Center pending their trial was the intervention of UK Prime Minister Tony Blair, who assured an angered British Parliament a week ago that the bankers would be released on bail.

Nevertheless, even Blair's intervention didn't stop the Task Force from demanding that the bankers remain in the US pending their trial (despite the fact that the three offered to waive extradition for trial) and that the three friends live apart and not talk to each other about their case unless their counsel is present. Unbelievably, the federal magistrate who adjudicated the bankers' bail motion accepted the Task Force's ludicrous "live seperately" and "no-talk" demands, which means that three UK friends in a foreign land must live alone and cannot talk freely with each other while preparing their joint defense in an extraordinarily unfriendly venue. In the meantime, their only known accusers -- admitted felons and liars Fastow and Kopper -- have no such restriction in hobnobbing with each other and continue to live comfortably in their expensive Houston homes.

Meanwhile, UK business executive David Carruthers remains in an orange jumpsuit and is being moved from Dallas to St. Louis in chains and handcuffs after his arrest by federal authorities earlier in the week while changing planes. This Times Online article puts the situation in perspective for UK investors:

The US authorities seem to have abused an anti-terrorist deal, allowing them to vet passenger lists in advance, as objectors to the arrangement had feared. Misuse of the laws on federal racketeering, money laundering and extradition is a sadly routine feature of the US justice system. It is no consolation to holders of BetonSports shares, which have been suspended, that Mr Carruthers believes that the company was acting legally. Nor will blaming US practice help investors in larger rivals in the fast-expanding internet gambling sector. But it should make us more aware of catastrophic risk.

Finally, the masterful Larry Ribstein takes stock of the Justice Department's decision to go Enron on Brocade's former CEO and human resources VP over the overhyped problem of backdating stock options:

[T]his is about criminalizing agency costs. By all reports, backdating was a very widespread practice, potentially affecting a significant percentage of all public companies. While some smaller firms were doing it ad hoc, other bigger ones probably had advice of big accounting firms and at least in house counsel, at least some of whom were not gaining personally from the options. For example, the WSJ's scorecard of companies under scrutiny includes, among others, Apple, Barnes & Noble, Home Depot, Intuit, Microsoft, Monster. [. . .]

Are we nevertheless going to indict executives in all of these companies? And if you're going to indict the HR director at Brocade, how far down in the other companies? If the Brocade CFO knew about this and furthered the fraud, as the SEC charges, why not indict him, too, instead of just a civil complaint? Then why not all the other CFO's at all the companies in such a position. What about all the non-executive employees who got the options and knew about the accounting/disclosure problems?[. . .]

. . . [C]riminalizing this business practice is not the answer. There is little doubt that the combination of regulation, civil liability and markets can solve -- indeed, probably already has solved -- any problems here. In fact, criminal charges are so patently not the answer that I suspect that one big effect of this scandal will be a reexamination of the whole issue of criminalizing agency costs.

See here for Steve Bainbridge's contrary view in regard to the Brocade indictment. I hope that Larry is correct on that last point about reexamining the federal government's dubious policy of criminalizing agency costs, but his weekly disassembling of NY Times columnist Gretchen Morgenson identifies one knawing problem that needs to be overcome if that reexamination is to take place:

It would be nice if [Morgenson] gave us a little more analysis and a lot less overheated rhetoric. Of course that assumes Morgenson is interested in informing her readers and contributing positively to the executive compensation debate. On the other hand, if she is interested in ratcheting up the hysteria of readers who want their daily fix of anger and resentment at executive greed, she's doing a fine job.

And don't forget what is likely to result from relying on resentment and scapegoating rather than dispassionate and objective analysis.

Posted by Tom at 11:31 AM | Comments (0) | TrackBack (0)

July 22, 2006

Stros 2006 Review, Part Six

After the Stros were blown out by the Mets on Friday night and fell to a season-worst 46-51 record, it's looking clearer by the day that the magic of the Stros' past two second-half playoff runs has worn off completely.

Now through 60% of the season (7-9 in the last 10% of the season; prior periodic reviews here), the Stros have not won more games than they have lost in any of the five 10% segments of the season after the first one. The club's hitting overall remains almost precisely National League average (team RCAA is -2 -- 10th among the 16 NL teams) and the pitching staff continues to toil at well below National League-average level (RSAA of -20 -- 13th in the NL). As noted in previous posts, the Stros' trend of average or below National League-average hitting over the past half-dozen seasons means that the Stros need extraordinary pitching to contend for a playoff spot, and the club received just that in the past two seasons. Unfortunately, this season, the Stros pitching staff is a bit below National League average and, thus, the Stros are currently just that -- a slightly-below National League-average club.

The club's hitting and pitching statistics to date are set forth below, and pdf's of the current hitting stats are here and the current pitching stats are here, courtesy of Lee Sinins' sabermetric Complete Baseball Encyclopedia. The abbreviations for the hitting stats are defined here and the same for the pitching stats are here:

So, is there any hope for the Stros' playoff chances? I'd put them at under 10% now as the Stros would have to go 44-21 over the rest of the season to finish 90-72, which is probably the minimum it will take to win the NL wildcard playoff spot. Although 1B/RF Lance Berkman (37 RCAA/.403 OBA/.595 SLG/.998 OPS) continues to be the hitting star of the team, and the club has gotten solid contributions from CF/2B Chris Burke (10/.377/488/.859) and 1B Mike Lamb (10/.371/.516/.887), there are simply not enough other indications that this club has what it takes to put together the winning streaks necessary to pull off that type of finish.

In fact, the Stros' biggest problem remains the same one that I've been harping about for three seasons now -- an unbalanced hitting attack. Berkman is one of the best hitters in MLB, but outside of Lamb, Burke, the injured 3B Morgan Ensberg (17/.390/.500/.890), and new acquisition Aubrey Huff (0/.367/.440/.807), the rest of the Stros' hitters are rather pathetic. No other Stros hitter is even above-National League average and several of them -- SS Everett (-16/.293/.321/.614), CF Taveras (-14/.309/.310/.620) and C Ausmus (-17/.303/.308/.612) -- are among the least productive hitters in the National League. Taveras, in particular, needs to replace Jason Lane (-5/.722/.393/.330) as soon as possible at AAA Round Rock until he can learn to generate at least a National League-average on-base percentage, which is essential for Taveras if he is ever to become a productive MLB player.

To make matters worse, Stros' manager Phil Garner seems to have a case of Jimy Williamitis as he insists upon trotting out the quietly unproductive LF Preston "Double-Play" Wilson (-10/.315/.415/.730) in the starting lineup each day. Faced with those hitting problems, Stros GM Tim Purpura acquired Huff a week or so ago, but Huff is no Carlos Beltran, so even when he hits his stride, Huff will likely be only a marginal upgrade who will not elevate the Stros' hitting enough to vault the club into this season's wildcard race.

Meanwhile, the pitching staff overall continues to muddle along, but there are signs that a surge could take place during the second half of the season. Roy O (3.22 ERA/16 RSAA) and Clemens (2.43 ERA/7 RSAA) are rock-solid and will likely continue to be through the remainder of the season. Pettitte (5.50 ERA/-12 RSAA) and rookie starter Buchholz (5.36 ERA/ -11 RSAA) continue to be inconsistent and problematic, but Brandon Backe (2.25 ERA/2 RSAA) will come off the disabled list this weekend, and he is likely to provide some better service than either Pettitte or Buchholz. Finally, the bullpen has actually showed some signs of hope recently, so a reasonable case continues to exist that the Stros' pitching staff could turn things around during the second half of the season and return to above National League-average status. Just not enough to propel the Stros into the playoff race.

So, what to do over the remainder of the season? Actually, there is much to be optimistic about with regard to the Stros. Owner Drayton McLane has shown that he will pay among the highest payrolls in MLB to give the Stros a chance to succeed, and the club will free up over $50 million (almost half the club's current payroll) after this season as Bagwell, Pettitte and Clemens' contracts end. Attempting to extend Oswalt's contract before he reaches free agency after the 2007 season should be a first priority (MLB.com reporter Alyson Footer speculated earlier this week that Oswalt was planning on testing free agency after the 2007 season), while declining to exercise the option on Wilson's contract is a no-brainer. Berkman, Ensberg, Huff and Burke constitute a decent hitting nucleus, Lane and Lamb are capable of being solid contributors, and even the weak-hitting Everett is an extraordinary talent in the field. With money to spend and several good pitching prospects on the MLB roster and in the upper minor league pipeline, the Stros appear to be in a good position -- with sound personnel decisions -- to pick up a couple of productive hitters in the upcoming off-season who could vault the club back into a playoff contention.

After completing the series with the Mets over this weekend, the Stros play 15 of their next 21 games at Minute Maid, beginning with the Reds and the Diamondbacks next week. So, if the Stros are going to begin a run this season, this would be the time to do it. Just don't bet on it happening.

Posted by Tom at 10:32 AM | Comments (4) | TrackBack (0)

July 21, 2006

Good swing thoughts

As I write this, Tiger Woods is leading by 3 strokes in the second round of the the Open Championship.

For one of the main reasons why Woods is the favorite to win the Open at the relatively defenseless Royal Liverpool Golf Club, check this out.

Sweet!

Posted by Tom at 7:11 AM | Comments (0) | TrackBack (0)

Do we really need this?

This NY Times article reports on the latest international reaction to the US Justice Department's over-the-top crackdown on internet gambling:

The World Trade Organization set up a panel on Wednesday to investigate whether United States restrictions on Internet gambling comply with international trade rules.

The Caribbean country of Antigua and Barbuda asked the W.T.O. to set up the panel after consultations with the United States failed to yield a solution to a dispute over whether Washington should drop prohibitions on Americans placing bets in online casinos.

A previous W.T.O. ruling said that some United States laws were in line with international commerce rules, but others were not. “The United States has been busy passing legislation that is directly and unequivocally contrary to the ruling,” Antigua told a meeting of the W.T.O.’s dispute settlement body.

The nation contends that the United States has taken no measures to comply with the recommendations and rulings of the dispute settlement body, Antigua said.

Let me get this straight. A supposedly free-trade and business-friendly GOP administration is risking World Trade Organization sanctions over criminalization -- as opposed to regulation -- of internet gambling?

Posted by Tom at 6:33 AM | Comments (2) | TrackBack (0)

What's that criminal charge again?

One big problem with the federal government's criminal case against the defendants in the KPMG tax shelter case is that neither the defendants nor any of their clients engaged in any affirmative act of evasion, such as keeping false accounting books or literally hiding income so that the IRS could not find it. Rather, each taxpayer claimed losses on the taxpayer's return in accordance with a literal application of the tax law and then, as often happens, the IRS challenged the claims. KPMG's clients needed KPMG's opinion regarding the validity of the tax shelters to protect themselves against civil penalties the IRS might try to impose as a result of a challenge to the tax returns, but they did not need the KPMG opinions to file the tax returns claiming the losses. Thus, the KPMG opinion had not bearing on the propriety of filing a tax return and is irrelevant to the crime of tax evasion.

To get around that problem, federal prosecutors came up with the second crime of so-called tax perjury, which involves a demonstrable lie asserted in a tax return or some other document that is submitted to the IRS under penalty of perjury. However, the tax perjury case against the accountants is flimsy at best. During the audit of the KPMG clients' returns, the KPMG clients contended that they had a business purpose sufficient to meet the IRS standard for avoiding civil penalties and then produced KPMG opinion, which is not submitted under penalty of perjury. Thus, best case for the prosecution is that the taxpayers and KPMG may have been disingenous, but that hardly renders perjurious the submission of a tax return that was factually correct.

Now, it appears that at least some of those tax returns were not even misleading. According to this NY Times article, US District Judge T. John Ward of the Eastern District of Texas ruled earlier this week in a civil case that one of the KPMG tax shelters that is at the center of the KPMG tax shelter case is essentially legitimate.

What is the Justice Department's justification for criminalizing such conduct? According to the article, "prosecutors in the KPMG case have indicated that they will argue that the shelter itself was technically valid, but that the way the defendants carried it out was not."

As this Wall Street Journal ($) editorial opines today, there is a serious shortage of adult supervision in the US Department of Justice these days.

Posted by Tom at 5:29 AM | Comments (0) | TrackBack (0)

July 20, 2006

The doctor at the center of the Hurricane Katrina wrongful death prosecution

Dr. Anna Pou, the New Orleans doctor who heroically served severely-ill patients during the chaotic aftermath of Hurricane Katrina last summer, is at the center of the highly-publicized and controversial decision of Louisiana criminal authorities earlier this week to arrest Dr. Pou and two assisting nurses and charge them with second-degree murder in the deaths of four patients who died during that horrible time. She is also a former Houston-area resident, having served on the faculty of the University of Texas Medical Branch in Galveston from 1997-2004, where she was the Director of the Division of Head and Neck Surgery from 1999 to 2004.

Today, this excellent NY Times article places in perspective the arrest and prosecution of this outstanding physician, who is a diplomate of the American Board of Otolaryngology, Fellow of the American College of Surgeons, and a member of the American Head and Neck Society. Dr. Pou has authored more than forty publications, has also served on multiple committees of the American Academy of Otolaryngology, and has lectured in national and international forums on topics in otolaryngology, head and neck oncology, and microvascular reconstructive surgery.

In short, Dr. Pou is no murderer. This prosecution has all the earmarks of yet another lynch mob that is more interested in myths than reality, so watch it closely.

Posted by Tom at 7:34 AM | Comments (9) | TrackBack (0)

John Daly storms the Beatles hometown

The 135th edition of the British Open begins today, and the venerable tournament has returned to Liverpool -- the gritty hometown of the Beatles -- for the first time in 40 years. As you might expect, 1995 British Open champ John Daly is having quite a time (see also here) this week. The overweight, chain-smoking, beer-guzzling and problem-laden Daly turned philosophical while visiting the Cavern Club, the Liverpool pub in which the Beatles legend began:

“Music is my therapy,” Daly said. “I think for all of us it is therapy, whatever style of music you are into. If I am driving my bus, I can’t do it with no sound. The world can’t exist without music.”

The Scotsman's Alan Patullo has more here. Meanwhile, wouldn't you like to be the caddy for a day for one of the members of this twosome?

By the way, in the morning rounds, 4-under par is leading the tournament and Houstonian Steve Elkington -- who had an easier time getting into the British Open than the US Open -- had an opening round 71 (one under part). K.J. Choi of The Woodlands had an opening round 72 and Jeff Maggert -- who also lives in The Woodlands -- has not yet teed off in the first round.

Posted by Tom at 6:02 AM | Comments (0) | TrackBack (0)

Say what?

Chronicle reporter Megan Manfull opens her article on the latest development in Texanville with the following paragraph:

Spencer, an offensive tackle out of Pittsburgh, will receive a $610,000 signing bonus on a four-year contract that voids to three years. He is slated to make $275,000 this season, $360,000 in 2007 and $440,000 in 2008. The deal is expected to be finalized today.

I have my limitations as a lawyer, so can someone explain to me what "a four-year contract that voids to three years" means? By the way, my understanding is that Spencer has not yet dispensed formally with his first name, which is Charles.

Manfull also reports that the Texans -- who begin their pre-season camp next week -- have signed all of their draft choices except University of Miami offensive tackle Eric Winston (3rd round, 66th player chosen in 2006 NFL draft). Winston's agent is Drew Rosenhaus, which may explain why the once highly-touted Winston was still available for the Texans to pick up in the 3rd round of the draft.

Update: Ted Frank, who knows a bad regulation when he sees it, writes to explain the "four voiding to three" jibberish: "A four-year contract that voids to three years is a four-year contract where the fourth year can (and almost certainly will) be unilaterally voided by the player. The effect is to fool the salary cap by allowing the team to divvy the signing bonus over four years, rather than the three years that is the economic reality of the contract."

Posted by Tom at 5:33 AM | Comments (2) | TrackBack (0)

The Abbeville Institute's tribute to Dr. Ross M. Lence

The late Dr. Ross M. Lence of the University of Houston was a founding member of board of directors of the Abbeville Institute in Atlanta, which is an association of scholars devoted to the critical study of philosophical nature of the Southern tradition in the United States. Upon his death last week, the Abbeville Institute issued this endearing tribute to Dr. Lence, which -- as is always the case in discussing the indomitable Good Doctor -- provides several amusing anecdotes, including this classic:

Once at a seminar with other academics, Ross was challenged by an especially obnoxious participant who, rather than confront his arguments, hoped to end the argument by saying that Ross had not read Locke carefully. Ross calmly replied (he was always calm) with that wry smile of his that if the gentlemen would tell us the paragraph number of the Second Treatise that interested him, he would quote it from memory and then attend to what the gentleman thought he had failed to understand in it.

The entire Abbeville Institute tribute is below.

Dear Colleagues, Students, and Friends,

It is with sadness that I inform you that Professor Ross M. Lence died on July 11th, 2006. Ross was a founder of the Abbeville Institute and a member of its Board of Directors. Much of what we stand for was exemplified by his teaching and character.

Ross studied at the University of Chicago, Georgetown University, and the British Museum before completing his Ph.D. at Indiana University under Professor Charles Hyneman. He greatly admired Hyneman who became his mentor and friend. Ross often quoted him and had a portrait of him prominently displayed in his office at the University of Houston over a table set with bottles of whiskey and sherry for the refreshment of his visitors.

Ross tells the story of how, as a raw graduate student, he first met Hyneman. Ross appeared in his office, confronting the abrupt question, what do you want? Ross replied, to study American political science. Hyneman asked, have you seen it? Ross answered, seen what? America, Hyneman replied. If you want to see it, meet me tomorrow morning. They spent the next few summers traveling around America observing its life in small and large towns, villages, and out of the way farming communities.

This story expresses a truth Ross learned from Hyneman and which he embodied in his own work; that theorizing about political things must be rooted in a connoisseur's understanding of practice. Unhappily this essentially Aristotelian wisdom is missing from much of American political science which has not freed itself from an ideological style of theorizing.

Ross also thought one had to have a detailed knowledge of classical political texts. He could quote Locke's Second Treatise and The Federalist from memory. Once at a seminar with other academics, Ross was challenged by an especially obnoxious participant who, rather than confront his arguments, hoped to end the argument by saying that Ross had not read Locke carefully. Ross calmly replied (he was always calm) with that wry smile of his that if the gentlemen would tell us the paragraph number of the Second Treatise that interested him, he would quote it from memory and then attend to what the gentleman thought he had failed to understand in it.

His knowledge of political theory and of political things was broad and deep. But he wore his learning lightly. It never intruded pedantically in conversation. It was there as a cultural inheritance which he had worked hard to make his own and from which flowed his disarming Socratic questions; his refusal to accept facile answers even when they favored his own position; his insistence on clarity; and all of this carried on with a wit that was both piercing and lovable.

These qualities made him a great teacher. It is no exaggeration to say that he must be included in a handful of the greatest teachers in the America of our time. He joined the Department of Political Science at the University of Houston in 1971. Over the years he won many teaching awards within and outside the University. In the late 1990's hundreds of students established an endowment for a chair in his honor. In 2001 Ross was appointed to the Ross M. Lence Distinguished University Teaching Chair. For over twenty years he regularly taught at the Women's Institute of Houston. Ross was one of the earliest, and a frequent participant in Liberty Fund Colloquia, a private foundation devoted to exploring the ideal of a society of free and responsible individuals. He was devoted to "Liberty," the ideal of an older federative America which today has largely been replaced with talk of "democracy," and "freedom" both of which typically reduce to "equality." By liberty he meant the right of individuals and communities of human scale to govern themselves. He lectured at the first Abbeville Institute summer school, 2003, which was recorded on video. So we are fortunate to have a film of his lectures.

Ross was a leading scholar on the philosophy of John C. Calhoun whom he saw as embodying much of what he loved in the ideal of liberty. He edited the Liberty Fund collection of Calhoun's writings Union and Liberty in 1992. He never published much. Learning for him was inseparable from character, and was a way of life best communicated through face to face knowledge. He not only gave of his time freely to students, he in time acquired an informal reputation at Houston as one to whom students could turn for counsel.

His last year was an ordeal of serious illness and suffering, made more bearable by the great numbers of current and former students and friends who gave their love, respect, and gratitude, and assistance. Few people will leave the world more loved than Ross. And so the Abbeville Institute salutes for the last time our never to be forgotten friend, mentor, and colleague with the words he always used in parting: Gaudeamus!

Posted by Tom at 4:52 AM | Comments (0) | TrackBack (0)

July 19, 2006

More on the latest prosecutorial abuse

Following on the latest example of out-of-control federal prosecutors, Cato Institute's Radley Balko has the best line of the day in responding to one of the vapid rationalizations for Congress' jihad against online betting -- "we have to protect our chidren from such evils:"

"The people who are pushing this ban in Congress . . . try to argue these sites prey on children, which is totally ridiculous," [Balko] said. "If your kid has access to your checking account or credit card and is making transfers to off-shore accounts across the world, Internet gambling is the least of your worries."

Balko has more on the absurdity of all this here.

Posted by Tom at 6:40 AM | Comments (0) | TrackBack (1)

What's driving the latest business scandal?

As noted in this previous post, the mining of claims in regard to the widespread corporate practice of backdating options as a method of executive compensation is in full gear despite the relatively straightforward nature of the legal issues related to the practice. So, what's driving this litigation freight train?

In this lucid post regarding the allegedly dastardly practice of granting options after the stock market dropped on the heels of the 9/11 attacks, Larry Ribstein observes that the scandal reflects a journalistic cooking of the books:

The whole backdating/springloading story has had the aspect of the mutual fund "scandal" -- leveraging a bunch of tangentially related stories involving quite disparate practices into one big scandal that keeps the readers coming back and buying newspapers. The last thing the journalists want is the sort of analytical clarity that we need for useful public policymaking. Rather, they want to obfuscate differences to enlarge the apparent, though not actual, size of the story. With respect to the 9/11 "scandal," the reporters can add to the usual book-cooking large dollops of greed-and-resentment-mongering curried in sanctimony.

But now, the WSJ's Peter Lattman -- author of the popular Law Blog -- weighs in with this WSJ ($) article that reports on another powerful driver of the latest business scandal de jure -- big law firms:

For public companies, investigations of possible stock-option backdating have become a huge headache. But for big law firms, they're the latest full employment act, generating hour after billable hour of work across practice areas, from tax and executive compensation to securities and white-collar defense.[. . .]

Because cases of backdating can require restating earnings, there is tremendous pressure on companies to address any problems immediately. And even as backdating touches myriad legal disciplines, individual players -- from the company itself to a board committee to individuals -- often require their own separate counsel. [. . .]

Some law firms are marketing themselves aggressively in the area. Earlier this month, [law firm] Proskauer [Rose] issued a press release saying it had formed a "Stock Options Task Force," bringing together more than 20 lawyers across practice areas. Mr. Cleary says that when he and his partners began to work on options-timing matters they asked themselves, "Why are we doing this all discretely? We can be much more efficient, much more nimble and much more effective in handling these issues collaboratively."

Ah, the synergistic power of the media and big law firms! ;^)

Posted by Tom at 5:27 AM | Comments (0) | TrackBack (0)

Michael Shelby, R.I.P.

Michael Shelby -- former U.S. Attorney for the Southern District of Texas from 2001-2005 and more recently a partner at Houston's Fulbright & Jaworski (previous posts here and here) -- died at his home in northwest Houston on Tuesday from what authorities described as a self-inflicted gunshot wound. Shelby, who was 47, had been suffering from cancer that had rendered him unable to work in recent weeks. The Chronicle story on Shelby's life is here.

Posted by Tom at 4:45 AM | Comments (0) | TrackBack (0)

Ted Estess eulogizes Ross M. Lence

As noted in this post from last week on the funeral services for one of Houston's finest teachers, Dr. Ross M. Lence of the University of Houston, Dr. Ted Estess -- Dean of the University of Houston Honors College and one of Ross' closest friends -- gave a superb eulogy during the Requiem Mass for Ross.

Ted has kindly allowed me to post the text of his eulogy (pdf here), the quality of which is surpassed only by Ted's moving delivery of the eulogy during the funeral mass. Take a moment to read this touching tribute from a dear friend to a teacher's teacher who has left an indelible mark on Houston:

Farewell to Our Teacher and Friend

I begin with the salutation that Ross himself used most often: Salutem in Domine.

Our teacher and friend Ross Lence was well known and loved for many things: certainly for the clarity and sharpness of his intellect; for the generosity and gaiety of his spirit; for his indefatigable dedication to his students.

In his early years, he was known for the briskness of his step across campus, such that admiring students hurried to keep up; throughout his years, we knew him for the garish colors and shocking patterns of his ties and suspenders.

But perhaps above all, our friend and brother Ross was known and loved for the quickness of his wit; for the merriment and laughter that he bestowed on any gathering, effortlessly, with grace, bite, and kindness. If his greeting was Salutem in Domine, his farewell was Gaudeamus — Rejoice! Take pleasure in life! Enjoy!

A spirit of hilaritas and felicitas — that’s what our friend gave us. That’s what we gladly remember, what we shall sorely miss.

So it is not surprising that every one of Ross’ students has some story to tell. One student received his first paper back from the Good Doctor, only to read this comment: “Young man, if we are going to communicate, we are going to have to settle on a common language. I prefer English.”

This morning, we have no difficulty finding a common language. And I am not speaking of English. What we hold in common — what holds us in common — is gratitude, respect, and affection for Ross himself.

For you see, Ross Lence had an extraordinary capacity to dispose persons in a common direction, and to constitute community. The means by which he did so was conversation; for conversation, practiced with Ross’ wit and generosity, binds persons together. It builds and manifests community.

Anyone who visited Ross in the hospital this past weekend, or anyone who saw him during the year of his illness, witnessed that community. Last evening and again this morning, that community gathered in abundance, present and palpable. Graybeards from the early 1970's are taking interest in current Honors students; graduates from the 1980's are interacting easily with Lencians from the 90's — all of them, students, faculty, and alumni from four decades, immediately connecting, telling their own stories about their outrageous and beloved teacher and friend.

One Lencian tells of the student who, having been late or absent from class a number of times in the semester, walked up to turn in her final exam. His back turned to her, the Good Doctor was writing something on the board, as she said: “Dr. Lence, you are a horrible teacher, and I want you to know that because of the way you teach, we haven’t learned a single thing this semester.” And without so much as turning around, Ross replied: “Yes, madam, and you are empirical proof of that.”

Circero helps us understand the charisma—the spirited gifts—of Ross Lence when he says, “The essence of friendship consists in the fact that many souls . . . become one.”

The collegial community of friends that arose around Ross Lence owed much, of course, to his own altogether distinctive qualities: his personality was as winsome and energetic and engaging as one is ever apt to find. Donald Lutz — Ross’ close colleague of thirty-five years and a master teacher himself — got it right when he told me earlier this week, “Every thing that Ross did had a little bit of magic about it. He was a chariot of fire, a visitor from another place, a gift of God.”

Ross was our chariot of fire, our celebrity teacher, the one we showed off, the one whom we sent out to the community, the one in whose radiating light we like to stand, as if to suggest, We are a bit like him ourselves. He was our high star (High Star was the street on which Ross lived in Houston for some thirty years), the one by whom we charted our course and calibrated our compass, pedagogically, intellectually, and morally.

But not always politically. Ross was sometimes — well, often — heard to complain about the state of political affairs in the country he so dearly loved. He would snort, “In America, anything is permitted between and among consenting adults except the shooting of firecrackers.”

Those of you who studied Greek philosophy with Ross certainly learned that we can measure every art, including the art of teaching, by its product. The monument to the artist is what he creates.

If we would see the monument to Ross Lence, we need only look around this morning at the community that he, as artist and midwife, brought into being.

Ross would of course want me to say that he had much help in his life and his work, most notably that of his mother, Nickie. “Big Momma,” he sometimes called her. One needs only to meet Nickie to see the source of many of her son’s gifts. Over the years, literally thousands of students came to her house to see her son and to eat her food. They also came for the beer.

Our friend Ross, of course, was a teacher of virtue, a philosopher, a lover of wisdom. But he was, as well, a lover of sights and sounds, and of all things beautiful. His offices at the University were appointed more stylishly than mine and other faculty’s offices. And I have to say it: he was an impulsive shopper. Once he told me, “Ted, the only things I regret are the things I didn’t buy.”

To be sure, not all students took to Ross — some were unhappy because he wouldn’t tell them what they should think. He wouldn’t even tell them what he thought.

Other students were unhappy because Ross was irreverent. He said things that would get any other faculty member fired. He talked about cannibalism and goats, and you were never quite sure why. He certainly was a trickster. Some students, and probably one or two colleagues and an occasional dean, suspected him of being a diabolical Machivel. This made him especially happy.

But in reality, the wellspring of Ross’ irrepressibility, of his merriment and generosity, the ground bass of the songs that he sang, was religious. To him, teaching itself was a religious vocation.

I am speaking of religious in the root sense of the word: re-ligio, a binding together again, as ligaments connect and bind. Ross was bound, first of all, to life itself; to reality and to the structure of the real; but also to country, family, and friends — and to the religious tradition that nurtured him from his mother’s arms to his dying day.

The inclination of Ross Lence toward the religious is evident in words that he wrote several years ago to the parents of an Honors student who had suddenly, and tragically, died. As was his custom when people were in trouble — and Ross did such things an untold number of times over the years — Ross reached out to those parents. He visited them in their home, attended the funeral service of their son, called them several times, and wrote a note, a portion of which I, in closing, want to share with you. As is often the case with what a teacher says, these words of Ross return now to their source:

“How I wish that some faint words of mine could erase the sorrow in your hearts. All of us wish for a little more time to reflect and to love life. But God will never abandon those who love him.”

“I am reminded of the immortal words of Catullus on the death of his own brother: atque in perpetuum, frater, ave atque vale — and so for all eternity, brother, hail and farewell.”

Posted by Tom at 4:36 AM | Comments (0) | TrackBack (0)

July 18, 2006

How not to treat friends

First, federal prosecutors heavy-handed tactics generated a political firestorm with one of America's closest allies over the NatWest Three case. Now this:

In a sharp escalation of their crackdown on Internet gambling, United States prosecutors said yesterday that they were pressing charges against the chief executive of BetOnSports, a prominent Internet gambling company that is publicly traded in Britain, and against several other current and former company officers.

Federal authorities arrested the chief executive, David Carruthers, late Sunday as he was on layover at Dallas-Fort Worth International Airport on his way from Britain to Costa Rica. In a hearing yesterday in Federal District Court in Fort Worth, he was charged with racketeering conspiracy for participating in an illegal gambling enterprise.

Let me get this straight. Carruthers is a UK citizen, legally runs a UK-based company with a UK-based website, and he gets arrested in the US because US citizens are gambling on his website?

Here's hoping that the UK raises hell with the Bush Administration over this latest incident as well as the handling of the NatWest Three case (which, by the way, has not generated even a civil case in the UK, much less a criminal one). As Larry Ribstein has pointed out on many occasions, the remedy of granting federal prosecutors broad latitude to criminalize business interests is generating a wave of prosecutorial abuse that is far more troubling than the original "problem" that the remedy is supposed to address. Christine Hurt has more.

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"A peep show of utter horror"

On of my favorite books of 2003 was Erik Larson's Devil in the White City (Crown 2003) (website here), the engaging tale of Chicago and the 1893 World's Fair, which has just finished an astounding 124th straight week on the NY Times Bestseller List. A movie is currently being planned for the book, so the Chicago Sun-Times interviewed Larson and several other experts on the "White City" to determine the source of the fascination over the 1893 Fair:

On the one hand, Larson says, the White City was designed and built by the Gilded Age elite "as a way of demonstrating that America could come up with this level of sophistication. They went for drama at a time when architecture had very little relevance for most of the country, paving the way for things to come by inserting into the American psyche an appreciation for architecture. The sheer beauty in that array of buildings in the Court of Honor, ingeniously using the backdrop of the lake to stage the whole thing, was enough to knock anybody flat."

But if the White City was a dream made real, much of the rest of Chicago was a nightmare.

"The fair gripped people," [Chicago Architecture Foundation lecturer Christopher] Multhauf says, "partly because it was a vision of beauty in a place that was so squalid." The streets were a quagmire of mud and manure, the air laced with soot and the rank aroma of stockyards and slaughterhouses. Poverty was widespread; labor unrest simmered and sometimes boiled. Prostitution flourished. Not far from the baronial mansions of Prairie Avenue, there were 31 brothels on Clark Street between Congress and Harrison, all of which were open at the time of the fair. The German writer Paul Lindau called Chicago "a peep show of utter horror, but extraordinarily to the point."

Read the entire article and, if you have not already done so, pick up this fine book.

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Innocence as a distraction

David Dow, a University Distinguished Professor of Law at the University of Houston, is one of nation's leading experts on the death penalty and the author of Executed on a Technicality: Lethal Injustice on America's Death Row (Beacon 2006) (previous death penalty posts here). Rick Garnett passes along this NY Times op-ed from several weeks ago in which Professor Dow makes the interesting point that "innocence is a distraction" in the political and legal debate over capital punishment:

For too many years now, though, death penalty opponents have seized on the nightmare of executing an innocent man as a tactic to erode support for capital punishment in America.

Innocence is a distraction. . . [M]ost people on death row did what the state said they did. But that does not mean they should be executed.

Focusing on innocence forces abolitionists into silence when a cause célèbre turns out to be guilty. When the DNA testing [proved that such a defendant] was a murderer, and a good liar besides, abolitionists wrung their hands about how to respond. They seemed sorry that he had been guilty after all.

I, too, am a death penalty opponent, but I was happy to learn that [the defendant] was a murderer. I was happy that the prosecutors would not have to live with the guilt of knowing that they sent an innocent man to death row. . . .

As Justice Scalia has said elsewhere, of course we are going to execute innocent people if we have the death penalty. The criminal justice system is made up of human beings, and fallible beings make mistakes.

But perhaps that is a price society is willing to pay. If the death penalty is worth having, it might still be worth having, despite the occasional loss of innocent life. . .

[We] ought to focus on the far more pervasive problem: that the machinery of death in America is lawless, and in carrying out death sentences, we violate our legal principles nearly all of the time.

Professor Dow nails the key issue in the death penalty debate. Proponents of the death penalty reason that it is not wrong for the state to kill a person as punishment for murder where that person was lawfully convicted in a fair and accurate criminal justice process. However, reasonable proponents of the death penalty must confront the reality that errors will occur in carrying out the death penalty in even a morally-justified criminal justice system. By making the above-stated moral justification the central issue in the debate, proponents of the death penalty are overlooking the glaring defects in the process that undermine the moral justification.

Posted by Tom at 5:08 AM | Comments (4) | TrackBack (0)

Dome redevelopment plan lurches forward

Has it really been almost two years since we began talking about what to do with the Astrodome? (previous posts here, here, here and here).

After floating a Gaylord Texan-type concept for the past year or so, Astrodome Redevelopment Corp. and Harris County are ready to enter into a letter of intent regarding ARC's $450 million plan to reinvent the Astrodome as a luxury convention hotel with a parking garage and new exit from Loop 610 South to keep the facility from interfering with Houston Texans games and the Houston Livestock Show and Rodeo. ARC is a consortium comprised of Oceaneering International Inc., a publicly traded firm working in engineering, science and technology; URS, an architectural and design firm; NBGS International, a theme park developer; and Falcon's Treehouse, a Florida-based design firm.

Although touted "as a major milestone," the letter of intent is not such a big deal. ARC needs it to be able to negotiate deals with the array of entities (Texans, Rodeo, Harris County, financiers, investors, etc.) that it will have to cut deals with in order to make a deal of this magnitude come together. The letter of intent requires ARC to have its financing arranged in six months and to have its final deal cut with the county in a year.

Although I'm surprised that this proposal has gotten this far, I give the chances of the Astrodome hotel actually coming together without public financing as roughly the same as the Texans making the Super Bowl this upcoming season.

Posted by Tom at 4:33 AM | Comments (1) | TrackBack (0)

July 17, 2006

Houston's most influential churches

The Church Report has released its annual list of America's 50 Most Influential (Protestant) Churches and, as with last year's list, several Houston megachurches made the list.

Lakewood Church and the ubiquitous Joel Osteen come in again as the highest-rated local church at fifth, while Kerry Shook's Fellowship of The Woodlands dropped from no. 17 last year to 41 this year, and KirbyJohn Caldwell's Windsor Village United Methodist dropped from no. 43 to 49. Surprisingly, Ed Young's Second Baptist Church -- one of Houston's original megachurches and arguably its most influential -- dropped out of the top 50 list altogether after being listed at no. 33 last year.

The list is interesting in that it includes churches from both ends of the current political debate that is raging among Protestants regarding the core nature of megachurches. Osteen, Shook and a number of others on the list preach what traditionalists criticize as a feel-good gospel that views God as sort of a cosmic bellhop who exists to meet desires of humans and to make them feel comfortable with material wealth. Dallas' T.D. Jakes (Potter's House - 8) even denies the orthodox doctrine of the Holy Trinity, although the rest of his message has a harder edge than that of either Osteen or Shook. On the other hand, the list also includes a number of church leaders -- including notably John MacArthur (Grace Community - 31), John Piper (Bethlehem Baptist - 42) and Dallas' Tony Evans (Oak Cliff - 44) -- who advocate the more traditional Christian theology that emphasizes Christ's divinity, justification by faith, sacrifice and stewardship.

Meanwhile, the Catholics just shake their heads and go off to Mass. ;^)

Posted by Tom at 6:31 AM | Comments (7) | TrackBack (0)

Is KPMG's tough stance helping its former partners in the tax shelter case?

In connection with negotiations over its non-prosecution agreement with the Justice Department in the KPMG tax shelter case, KPMG decided to give in to a DOJ "suggestion" and revoke in the tax shelter case its longstanding policy of paying defense costs of the firm's partners who were accused of wrongdoing in the course of firm's business. U.S. District Judge Lewis Kaplan issued a blistering decision condemning the DOJ's tactic, but stopped short of dismissing the case. Rather, he directed the former KPMG partners to sue KPMG to reimburse them for the defense costs.

As noted in this earlier post, I'm skeptical that attempting to force KPMG to pay the defense costs through another legal action is a sufficient remedy for the prosecutorial misconduct and, according to this Lynne Browning/NY Times article, it's looking as if my skepticism is warranted -- KPMG is contesting any obligation to pay its former partners' defense costs in the tax shelter case.

Frankly, despite Judge Kaplan's belief that KPMG should pay the defense costs, KPMG's position is a smart one. If the firm voluntarily paid the costs, then it faces the risk that the DOJ would view that action as a lack of cooperation, which could damage KPMG's prospects of avoiding a criminal prosecution in a future case. On the other hand, if the firm continues to stiff its former partners, then it does not run the risk of being perceived as being uncooperative by the DOJ and besides -- even if it loses the former partners' civil action for reimbursement of the defense costs -- the firm will only have to pay about the same amount that it would if it paid the defense costs voluntarily.

However, the more interesting question is whether KPMG's continued refusal to pay the defense costs will ultimately persuade Judge Kaplan that dismissal of the criminal case is the only effective remedy to the Justice Department's improper interference with the financing of the defendants' legal defense. Judge Kaplan is already perturbed with the prosecution's foot-dragging on other issues in the case, and the financial plight faced by the defendants as a result of KPMG's refusal to pay their defense costs may be enough to push Judge Kaplan toward dismissal of the charges against the former KPMG partners. If so, then KPMG's tough stance on refusing to pay its former partners' defense costs could turn out to be better for its former partners than if the firm had simply paid the defense costs after issuance of Judge Kaplan's earlier decision.

Posted by Tom at 5:43 AM | Comments (0) | TrackBack (0)

Can the NatWest Three receive a fair trial in Houston?

Barry Turner, lecturer in criminal law and criminal evidence at Leeds Law School, makes the following declaration in this Times Online blog post regarding the NatWest Three, who are presently awaiting a bond hearing in Houston in regard to the Enron-related criminal case against them:

"It is . . . absurd to suggest that the men will not get a fair trial in a country that uses exactly the same legal system as we do."

H'mm. Better check the facts, Mr. Turner. Kevin Howard and Ken Lay are stark reminders that the suggestion is not absurd at all.

By the way, a friend who is prominent in the media business was vacationing in England when Ken Lay died. He passes along the following observation regarding the British media coverage of Mr. Lay's death:

"The coverage [of Mr. Lay's death] on the domestic BBC service was interesting. Close to the top of the report, the journalist noted that Ken Lay continued to maintain that he had done nothing wrong. The report then went on to entertain the idea that this might actually be true.

The extensive coverage of the Natwest Three added to the sense that, in Britain at least, there is now as much questioning of the Department of Justice as there is of ex-Enron officers."

Posted by Tom at 5:08 AM | Comments (0) | TrackBack (0)

July 16, 2006

"On Teaching" by Ross M. Lence

This has been a weekend of reflection for me as I contemplate the life of one of Houston's finest teachers -- Professor Ross M. Lence (previous post here) of the University of Houston -- who died this past week.

Over a hundred former students, colleagues and friends gathered this past Thursday evening to laugh, cry and reminisce about Ross at the visitation, and then those friends and hundreds more gathered on Friday morning for the Requiem Mass for Ross at St. Anne Catholic Church. The mass was profoundly moving, with St. Anne's soloist Kay Kahl providing beautiful singing and UH Honors College Dean Ted Estess -- one of Ross' best friends and closest colleagues -- absolutely hitting the ball out of the park with a poignant eulogy that conveyed perfectly Ross' extraordinary combination of teaching brilliance, humor and humanity. The Chronicle here, the UH student newspaper here and UH Dean of Political Science Harrell Rodgers here chimed in with thoughtful tributes.

A particularly nice touch of the services for Ross was his family's decision to provide a copy of one of Ross' essays to everyone who attended. The essay -- entitled "On Teaching" -- was writted by Ross a decade or so ago while collecting his thoughts on teaching in connection with the effort of his former students and friends to raise the funds that eventually endowed the Ross M. Lence Distinguished Teaching Chair at the University of Houston. Ross never published "On Teaching," but by passing it along below (pdf here), I hope that each teacher who happens upon this special essay will take a moment to read and reflect on it, and then use it as inspiration to provide the type of warm, thoughtful and rich mentoring to their students that is Ross Lence's legacy to his:

I shall not shock anyone, but merely subject myself to good-natured ridicule, if I profess myself inclined to the old way of thinking that the primary concern of teaching and teachers is the student.

While such an observation may seem elementary, it should be noted that for those who define the function of a university as “the discovery, preservation, and transmission of knowledge,” the role of teaching (presumably the transmission of knowledge) is formulated in such a way as to avoid mentioning either the teacher or the student. Indeed, when confined to the transmission and preservation of knowledge alone, teaching would seem to be little more than the transmission of decaying sense, entombed in that graveyard of knowledge, the notes of the teacher’s students.

Teaching necessarily involves the highest forms of discovery, the awakening of the students’ minds and souls to the world of creativity and imagination. A good teacher challenges students to join in the continuous, meticulous, and solitary questions of the mind. I myself prefer important questions partially answered to unimportant questions fully answered.

Who could doubt that those students were blessed who witnessed the phenomenal mind of Enrico Fermi as he unleashed the power of the universe on that cold, winter day under the bleachers of Stagg Field at the University of Chicago? There, with only the assistance of a slide rule and his hands, Fermi managed to do what it now takes two computers to replicate: to produce man’s first nuclear reaction. There, a great teacher, who in the tongue of his native Italy and understood by hardly anyone present, managed to convey to his peers the desperate need to insert the carbon rods into the nuclear mass, thereby saving not only themselves, but the city of Chicago.

No doubt everyone remembers the teacher who most influenced his or her thoughts, person, and soul. No one is perhaps more aware of the best teachers than teachers themselves. That person who most influenced my own thinking was the Sage of Goose Creek, Charles S. Hyneman, Indiana University’s Distinguished Service Professor and President of the American Political Science Association. That man did for me something that few teachers have ever done for a student. In a desperate effort to teach this kid from the wilds of Montana about the American Regime, Charles Hyneman took me on a 15,000 mile, 5-year trip across America, where he introduced me to every site where an Indian had died, every sausage factory in American and even Alvin, Texas, home of Nolan Ryan.

Today I attempt to lead my students on such a journey of the mind. Some days are good; some days are not so good. But every day I remind myself that teaching is like missionary work, and that I am the messenger, not the message. I constantly strive to bring others to see the excitement, as well as the limits, offered by the life of the mind. I encourage all students to be bold in their thoughts, moderate in their actions, and courageous in their pursuit of truth—wherever it is and however it can be known.

As I now come to my own golden age, I often think of my teacher. Of his incredible kindness, his depth of soul, and the power of his imagination. My real hope is that I, too, will be remembered by those who come after me with the same fondness.

This, then, is my philosophy of teaching: teachers love their own teachers, and they are loved in turn.

Ross M. Lence
Houston, Texas

Update: Ted Estess eulogizes Ross and the Abbeville Institute provides a touching tribute.

Posted by Tom at 6:55 AM | Comments (1) | TrackBack (1)

July 15, 2006

Agency costs of big-time college football

College football is a big and competitive business, so it's no surprise that the issue of agency costs has reared its head with frequency over the past century of the sport. This NY Times article reports on the latest incident of apparent academic fraud -- an Auburn University sociology professor arranged to have 18 members of the 2004 Auburn football team, which went undefeated and finished No. 2 in the nation, take a combined 97 hours of the "directed-reading courses" which required no classroom instruction whatsoever. More than a quarter of the students in the professor's directed-reading courses were Auburn University athletes. The usual NCAA investigation is to follow while serious academics at Auburn must be shaking their heads over it all.

As noted in this previous post, big-time college football and basketball are caught in a vicious cycle of uneven growth, feckless leadership from many university presidents and obsolescent business models. As the previous post notes, it's an unfortunate situation because big-time college football and basketball would likely not suffer a bit from reform that required universities to compete with true student-athletes, as opposed to minor league professional players. Given the hyprocrisy of many state universities subsidizing minor league football and basketball at the same time as grappling with funding issues for core academic programs, one would think that expensive and mostly unprofitable system of big-time college football and basketball would be ripe for reform. However, powerful and wealthy special interests continue to support the current system despite the implications to the universities' academic responsibilities.

Is there any hope for true reform of intercollegiate athletics as well as minor league football and basketball? Or is the current system so entrenched in concentrated wealth and regulation that it is impervious to reform?

Posted by Tom at 9:36 AM | Comments (0) | TrackBack (0)

July 14, 2006

Not so fast, Mr. Eisenstat

As noted in a number of these previous posts, the Russian government's dismemberment and effective nationalization of the assets of OAO Yukos last year has dire implications generally for Western business interests hoping to engage in reasonably free commercial investment in Russia, the recent Rosneft IPO notwithstanding.

In this WSJ ($) op-ed, former Carter and Clinton admnistration official Stuart Eizenstat observes that the Yukos affair has had broad and negative implications to the world economy, and contends that the Bush Administration and other free-market governments' failure to call Russian Prime Minister Putin to task for his trashing of free-market business interests has contributed substantially to that negative impact. Eisenstat makes a number of good points, including the following:

Mr. Putin should also be put on notice that . . . the continued incarceration of Messrs. [former Yukos CEO Michael] Khodorkovsky and [Russian financier Platon] Lebedev, who is ill and suffering unnecessarily in a prison north of the Artic Circle, limits Russia's prospects of being viewed as a member in good standing of the world's group of leading nations.

Unfortunately, based on this and this, Mr. Putin could quite appropriately respond "say what?" to such a notice.

Posted by Tom at 5:53 AM | Comments (0) | TrackBack (0)

Nice gesture, but what about these folks?

This NY Times article reports on Utah Senator Orrin G. Hatch's intervention recently on behalf of Dallas Austin, a 35-year-old, black record producer who had been arrested, convicted and sentenced to four years in prison in Dubai for possession of about a gram of cocaine. Kudos to Senator Hatch for helping prevent a talented man from enduring an injustice over a victimless crime.

But as noted in this previous post, the American criminalization of drug possession is a costly nightmare on many fronts. Currently, over 350,000 people languish in American prisons for drug possession. Commenting on Senator Hatch's intervention on behalf of Austin, David Boaz over at the Cato @ Liberty blog observes:

Surely Hatch thinks regular old Americans are due the same consideration as a Grammy-winning singer. He’d advocate the release of any American convicted of possessing 1.26 grams of cocaine, right?

Or are politicians hypocrites? Could it be that they think average Americans like Richard Paey should go to jail for using large amounts of painkillers, but not celebrities like Rush Limbaugh? Could it be that they laugh about their own past drug use while supporting a policy that arrests 1.5 million Americans a year, as a classic John Stossel “Give Me a Break” segment showed? (Not online, unfortunately, but you can read a commentary here.)

Putting people in jail for using drugs is bad enough. Putting the little people in jail while politicians chortle over their own drug use and pull strings to get celebrities out of jail is hypocrisy on a grand scale.

Posted by Tom at 5:21 AM | Comments (0) | TrackBack (0)

Dolphins and Capers scam Texans

In this previous post, I speculated that former Houston Texans head coach and current Miami Dolphins defensive coordinator Dom Capers will be particularly incentivized to have his Dolphins defensive unit ready for the Dolphins' game with the Texans this coming October.

Well, the following blurb in this MiamiHerald.com article indicates that Texans owner Bob McNair has reason to have his troops reciprocate with some spirited play in the upcoming game:

Dom Capers won't have the defensive coordinator title, but that essentially is his job. ''Maybe some day he'll be that, but not this year,'' coach Nick Saban said. Miami is saving a bundle by withholding that title. Now Houston, which fired him as head coach, must pay Capers $2 million in 2006, and Miami only $300,000.

Posted by Tom at 5:02 AM | Comments (2) | TrackBack (0)

July 13, 2006

Rice Press revived online

Looks as if the Chronicle missed this local item of media news.

Houston's Rice University -- one of the nation's most prestigious universities -- is reviving its defunct academic press online in a bold move that will undoubtedly reignite the discussions over over who will ultimately profit from Web publishing. Rice University Press was a money-losing proposition when it went out of business about a decade ago. However, under its new all-digital format, the press will instead post works online at a new Web site where people can read a full copy of the book free. Customers will be able to order a regular, bound copy from an on-demand printer at a cost far less than picking up the book in a store.

Rice's bold move comes as many book publishers are struggling to figure out how to modify their business models to the new publishing world of the Worldwide Web. Although innovative, Rice's initiative faces challenges because some universities -- Stanford comes to mind -- have already experimented with the online format and found lackluster demand for online books, which has been a chronic problem for online books generally.

However, Rice's program is ambitious in that it will publish all of its books online through Connexions, which will absorb the press's editing and transmission costs. Readers can freely view the online works under a special online publishing license and will be charged only a small fee for downloading the works to a computer. Inasmuch as all the books will be in digital form, authors will be able to amend their works online, add links to other website materials and sources, and communicate with readers of the works. Books on the Rice site will never go out of print and Rice officials are even considering asking authors whether they want to allow "derivatives" of their works to be created online -- the Connexions site will operate under an "open-source" model that allows readers to update online course material.

Posted by Tom at 7:33 AM | Comments (1) | TrackBack (0)

Harmless error?

This previous post passed along the motion of former Enron Broadband executive Kevin Howard's motion for new trial based on serious allegations of juror misconduct and ex parte communications between the trial judge and the jury during deliberations (previous posts on the case are here).

In this reply filed earlier this week, the Enron Task Force takes the expected position that the allegations of juror misconduct were "internal" and not the product of "external forces" and, thus, do not justify a new trial. However, in response to Howard's allegations that U.S. District Judge Vanessa Gilmore had at least two sessions in which she improperly discussed the case with jurors outside the earshot of Howard and the attorneys involved in the trial, the Task Force contends only that such communications constitute "harmless error."

A trial judge discussing the case ex parte with jurors while the jury in a highly-publicized, related trial is delivering its verdict amidst a media firestorm is "harmless error?" Looks to me as if Mr. Howard has a pretty good shot at reversal if that's the best the Task Force can come up with on that issue.

Posted by Tom at 7:00 AM | Comments (0) | TrackBack (0)

The Huff deal and the state of the Stros

Does anyone else get the impression that there is some serious gripping going on over in the Stros management offices?

What prompted the latest evidence of discontent was the Stros announcement yesterday that they had traded a couple of marginal minor league prospects for Tampa Bay 1B/3B/OF Aubrey Huff and about $1.65 million in cash.

Huff had been on the Devil Rays' trading block for the past two seasons and it's reasonably clear that the Rays' management waited too long to pull the string on a trade. As a result, my sense is that the Stros got the better of this trade. Huff is a 29 year-old, six year player who had a mediocre rookie season in 2001, but then had three solid seasons from 2002-2004 (successive runs created against average [RCAA] of 20, 26, and 28). A lousy third baseman defensively, the left-handed hitting Huff was caught up in a logjam of Tampa Bay outfielders last season (-5 RCAA) and he has been mediocre this season (2 RCAA/.343 OBP/.477 SLG/.819 OPS). Nevertheless, at his age, Huff is a good bet to bounce back with a change of scenery and he certainly has the incentive to do so -- he is a free agent at the end of this season. Besides, even at his current level of production this season, he is the fourth most productive hitter on the Stros behind Berkman, Ensberg and Lamb. Huff's career stat line is 53/.343/.477/.819, which is nicely above the league average of 0/.335/.430/.765 for the time he has been in Major League Baseball.

Despite the good move in acquiring Huff, the thinking of Stros management appears to be increasingly muddled. The Stros made room for Huff on roster by optioning slumping OF Jason Lane (-7/.330/.393/.722) to AAA Round Rock to play centerfield while getting his hitting stroke back. That's not a bad decision, except that the Stros are still carrying an inferior player to Lane on the major league roster -- CF Willy Taveras (-16/.307/.308/.615) -- who needs the seasoning in AAA even more than Lane (although maybe this explains the reason the Stros are keeing Taveras around). And Stros management didn't even mention that the best place for Huff would currently be in leftfield replacing the odious Preston Wilson, who has quietly combined an extraordinarily bad first half of the season (-9/.322/.424/.746; league average is 0/.343/.435/.779) with a stunning propensity to ground into double plays (14 to date!).

Meanwhile, during the press conference announcing Huff's acquisition yesterday, Stros GM Tim Purpura made the point that Huff would cut into slumping 3B Morgan Ensberg's playing time. Now, much has been made of Ensberg's current slump -- his RCAA has been -5 since May 26th and his OBP/SLG/OPS have declined from .403/.627/1.030 to .390/.500/.890 since that date. But let's not overreact here. Assuming that his bruised shoulder is not preventing him from turning around his slump, Ensberg remains the club's second-best hitter behind Berkman and replacing him with Huff (who is a poor-fielding third baseman to boot) while keeping less-productive players such as Wilson or Taveras in the lineup makes no sense.

Finally, in yet another questionable move, the Stros canned hitting coach Garry Gaetti yesterday and hired AAA hitting coach Sean Berry to replace him. Now, Gaetti was not the best hitting coach around -- he continued a dubious trend among recent Stros hitting coaches of failing to emphasize to Stros hitters selective aggressiveness at the plate and the importance of taking a walk. As a result, the Stros over Gaetti's two seasons as hitting coach have had a below-league aveage OBP, which is one of the two key statistical components in generating runs (SLG is the other).

Nevertheless, the 2006 Stros club was hitting better at the All-Star break than either the 2004 or the 2005 clubs. Moreover, during his MLB career, Berry was the same type of hitter as Gaetti -- a free-swinger who rarely took a walk and thus, had a below-league average OBP. Accordingly, unless Berry has seen the error of his ways, Stros fans will continue to endure a hitting coach who accepts below-league average OBP from regular players such as Ausmus, Wilson, and Everett, which is one of the key reasons that the Stros have struggled to score runs over the past three seasons (the Stros are -12 RCAA as a team as of this All-Star break).

Whether the Stros are going to remain in the race for a playoff spot will likely be determined over the next two weeks. Coming off the All-Star break, the Stros hit the road for their second monster three-city road trip in less than a month as they play four in Florida, three in Chicago against the hapless Cubs and then three in New York against the mighty Mets. If the Stros can at least break even on the road trip, then the probable improvement in pitching during the second half combined (hopefully) with at least league-average hitting should be enough to keep the Stros competitive for the wild-card playoff spot in a National League comprised of mostly mediocre clubs.

Huff's career statistics are below.

Posted by Tom at 5:22 AM | Comments (1) | TrackBack (0)

Another strange turn in the NatWest Three case

Neil Coulbeck, former chief of North American financial markets for NatWest’s corporate bank who provided evidence to the F.B.I. and the Justice Department about Enron-related transactions involving three former NatWest Bank colleagues, was found dead in an East London park Tuesday less than two days before the politically-charged extradition of his former colleagues to Houston to stand trial. Although the death is still under investigation, early speculation is that Coulbeck committed suicide. Previous posts on the case of the NatWest Three are here.

Earlier today, American marshals took the NatWest Three — David Bermingham, Giles Darby and Gary Mulgrew — into custody in London in preparation for flying them to the Houston. The Enron Task Force indicted the three over a transaction involving the sale of NatWest’s stake in an Enron-related asset that prosecutors contend was structured by the former bankers to give NatWest less profit than it should have had while personally benefiting the bankers and several former Enron executives, principally former CFO Andrew Fastow. The three former bankers deny any criminal conduct and the successor to NatWest Bank — Royal Bank of Scotland — has not pressed either criminal or civil charges against the men.

The fate of the bankers has generated a political firestorm in the UK over the past year as British politicians and business executives have criticized their extraditon to the United States as the product of overzealous American prosecution of business interests after the bursting of the late 1990's stock market bubble. The political controversy centers on a treaty between the US and UK that was signed soon after the 9/11 attacks to facilitate the extradition of suspected terrorists. The treaty permits either country to extradite citizens of the other on more limited evidence than previously required, and US is now using the treaty to facilitate prosecutions against business interests rather than just suspected terrorists despite the fact that the US has not ratified the treaty (the UK ratified it 2004). On Tuesday, the House of Lords passed a resolution to overturn the treaty and the treaty was debated Wednesday in Parliament.

Interestingly, during the Wednesday debate in Parliament, British Prime Minister Tony Blair — who supports the extradition — stated that the three bankers would probably to be granted bail in Houston. Given the strict conditions for release on bail that has been required in previous Enron-related prosecutions, I wonder if Mr. Blair knows something that we don't?

Posted by Tom at 4:56 AM | Comments (1) | TrackBack (0)

July 12, 2006

"Could adversely effect public safety?"

The legal and political maneuvering in regard to former Houston Congressman and House Majority Leader Tom DeLay is hard to keep up with, so I rely on Kuff and others to keep me informed of what's going on in that ongoing saga. However, this Austin American-Statesman article on a seemingly innocuous aspect of the legal battle caught my eye.

Seems as if the Chronicle filed a request in March under Texas' open records law for vouchers, travel receipts, budget documents, memos and e-mails in regard to the expenses of Travis County DA Ronnie Earle's investigations of DeLay and related cases of DeLay's associates. Earle rejected the Chronicle request and appealed to Texas Attorney General Greg Abbott, who ruled that that the law requires disclosure of "information in an account, voucher, or contract" relating to the expenditure of public monies.

Rather than simply complying with what appears to be a straightforward open records request and ruling, Earle announced this past Monday that he had sued Abbott in an attempt to avoid public disclosure of the information, claiming that such a release "could adversely effect public safety."

Release of travel receipts "could adversely effect public safety"? (I think Earle meant "affect"). H'mm. Stayed tuned on this one. Kevin Whited has more here. Hat tip to Letter of Apology for the link to the article.

Posted by Tom at 6:59 AM | Comments (1) | TrackBack (0)

End of the line for Jordy Tollett?

According to this Chronicle article, it's looking as if the end of the line is near for Jordy Tollett as head of the Greater Houston Convention and Visitors Bureau. Everyone in Houston seems to know Tollett, who somehow managed to maintain a position in each of the past four mayoral administrations over more than a 20 year period. Without getting indicted, too!

The straw that appears ready to break the camel's back in regard to Tollett's current job is local television station KPRC's (Channel 2) news story this week in which the station caught Tollett on camera drinking over the noon hour on several occasions and then driving away from a Midtown restaurant. Apparently, the GHCVB board of directors is investigating the report and the tea leafs indicate that Tollett's contract with the bureau -- which expires in February 2007, anyway -- will either be bought out or not renewed.

Now, I do not know Tollett personally, but I know that he's taken his share of criticism and that it may be time for him to move on from public or quasi-public employment. However, do we really want to run someone off from the position of drumming up convention business for having a drink or two? I doubt that there are many teetotalers who excel in that line of work.

Posted by Tom at 4:52 AM | Comments (3) | TrackBack (1)

Ross M. Lence, R.I.P.

A grand and far too rare experience in life is learning from a great teacher. I have been blessed in my life to have been mentored by two wonderful men who were extraordinary teachers. The first was my father, Dr. Walter M. Kirkendall, who died around this time in 1991. The other was Dr. Ross Marlo Lence, who died on Tuesday morning, July 11 in Houston at the age of 62 after a year-long battle with pancreatic cancer (Chronicle obituary here). With Ross' death, Houston has lost one of its greatest treasures.

Ross was one of Houston's finest teachers of this generation. Over a phenomenal 30 plus-year teaching career at the University of Houston, Ross taught classic and American political philosophy to scores of eager students and citizens. Utilizing a marvelous intellect that was refined at the Universities of Chicago, Georgetown and Indiana, Ross was a master craftsman in the art of teaching and was an unparalleled expert in the Socratic method. Ross deployed a delightful mixture of insightful philosophy, passionate oratorical skill, and self-deprecating humor to ignite and stoke a passion for learning in his students ("Be bold in thought, precise in speech, moderate in action," he would continually urge). When I once asked Ross to confide his primary goal as a teacher, he replied with a wry smile:

“Tom, my goals are modest. All I want is to teach my students how to think, and the difference between right and wrong.”

As a result of Ross' outstanding talent and dedication to the University of Houston (he served on virtually every academic committee at the University over his career), a large group of his students over a decade ago raised funds to honor him by endowing a chair in his name in the political science department at the University of Houston. Accordingly, as of his death, Ross was the original holder of the Ross M. Lence Distinguished Teaching Chair at the University of Houston. How many professors have an endowed chair funded and named in their honor during their lifetimes? Such was the excellence of Ross Lence.

Ross was also a John and Rebecca Moores University Scholar at the University of Houston, where he was continually honored with numerous awards for his teaching, including the Minnie Stevens Piper Professor Award, which annually honors the most outstanding teacher in the state of Texas, (1987), and the Henri Stegemeier Award for the Outstanding Faculty Advisor in North America (1987).

In addition to his superlative teaching talent, Ross' selfless heart and humanism attracted students like a magnet. His office had the quintessential open door and always resembled a scene from a Robert Altman film with students and colleagues milling in and out carrying on multiple conversations with Ross and each other on the various subjects of the particular day. Inasmuch as he dedicated his life to teaching and his students, Ross never married, yet he has the largest family of anyone that I have ever known. To enter one of Ross' classes was literally to be drawn into Ross' huge family of students, former students, colleagues and friends. The devotion of Ross' family members was surpassed only by Ross' devotion to them and his wonderful mother, Nickie, for whom he cared lovingly over the past 25 years.

What was it that made Ross' life so fulfilling? An experience that I had several years ago with Ross provides some insight into the answer to that question. I had the privilege of helping Ross coordinate a strategy in regard to a legal matter that had a political component, the details of which are not particularly important. Suffice it to say that it was serious and could have adversely affected much of what Ross had worked for during his professional career. Due to the nature of the problem, we had to work quickly in devising and implementing our strategy.

With but a few phone calls, we were able to put together a legal team of over a half-dozen prominent Houston attorneys, each of whom had been a student of Ross and were instantly willing to provide their services on a pro bono basis (Ross took great pleasure in reminding his university colleagues of his personal legal team, the aggregate hourly billing rate of which was in excess of $2,000). As we devised and implemented our strategy to resolve the matter, Ross never exhibited even a moment of personal despair over the seriousness of the matter and instead relished the opportunity to engage his old students and friends in matters of legal and political intrigue. Even when we resolved the matter favorably for Ross after a couple of weeks of intense posturing and negotiation, Ross' main goal was to arrange the post-resolution party where he could dissect and analyze what had occurred, and revel in the success of his crack legal team.

You see, it was not the reward that he received from the successful resolution of the matter that drove Ross, although he certainly appreciated it. Rather, it was the reward of renewing and deepening the relationships with his former students and old friends -- even during one of the most threatening moments of his professional life -- that was most rewarding to Ross. What a special gift it was to have my old mentor and friend remind me of the true source of happiness in his richly-rewarded life.

Ross was diagnosed in August, 2005 with pancreatic cancer, which is particularly pernicious. So, the final 11 months of his life have been draining physically for Ross, although his mother's loving care undoubtedly extended his life by at least several months. Consistent with his remarkable nature, Ross used the experience of dealing with terminal illness to provide a remarkable lesson on faith, which he exhibited in a series of confidence-boosting email messages to his extended family over the past 11 months. I have accumulated those email messages in chronological order here -- they are an inspiring reflection of the true nature of this fine man, who was literally a conduit of God's grace.

As regular readers of this blog know, A Man for All Seasons -- the story of Sir Thomas More's conflict with King Henry VIII -- is one of my favorite movies, and it was one of Ross' favorites, too. Ross particularly enjoyed the scene early in the movie when Sir Thomas attempts unsuccessfully to persuade his student, Richard Rich, to eschew a desire for a political appointment and become a teacher. After rejecting Thomas' advice, Rich takes a political appointment from Henry's henchman Cromwell in return for agreeing to betray Thomas.

"Sir Thomas knew that Rich had a corrupt heart and would never be able to resist the temptations of politics," Ross observed to me once with a hearty laugh. "But is Thomas suggesting that a corrupt heart is not a problem for a teaching career?"

As I have talked and corresponded with hundreds of Ross' friends, colleagues and former students over the past several months leading up to his death, I was reminded continually that Ross Lence's life is proof of the truth of Sir Thomas' advice to Rich during their exchange that Ross so enjoyed:

Sir Thomas: Why not be a teacher? You'd be a fine teacher; perhaps a great one.

Richard Rich: If I was, who would know it?

Sir Thomas More: You; your pupils; your friends; God. Not a bad public, that.

Yes, my dear friend Ross, "not a bad public, that." Your job has been extraordinarily well done. Rest in peace, friend.

A visitation will be held for Ross at the the Settegast-Kopf Co. Funeral Home at 3320 Kirby Drive (77098) beginning at 5 p.m. on Thursday, July 13 to be followed by a Rosary service at 7 p.m. A funeral mass will be held for Ross at 10 a.m. on Friday, July 14 at St. Anne Catholic Church at the corner of Westheimer and Shepard. It is my understanding that the University of Houston is planning a memorial service for Ross later this year after the beginning of the fall semester.

Update: "On Teaching" by Ross M. Lence, Ted Estess eulogizes Ross, and the Abbeville Institute provides a moving tribute. Finally, the Chronicle's obituary on Ross includes this online guest book that includes dozens of tributes to Ross from his students, former students, collegues and friends.

Posted by Tom at 4:15 AM | Comments (2) | TrackBack (0)

July 11, 2006

The politics of prosecutorial misconduct

If you haven't followed the case of alleged would-be 9/11 bomber Zacarias Moussaoui closely, you probably have never heard of Carla J. Martin.

Well, Martin is the federal aviation attorney who almost undermined the Moussaoui prosecution when she violated a court order that is commonly entered in criminal and civil trials by allowing prosecution witnesses to read transcripts of trial testimony that they were not supposed to see or hear until after they had testified during the trial. According to this Jerry Markon/WaPo article, Martin's career is shot as a result of her transgression and she apparently is not holding up well:

The woman at the center of the storm is emotionally distraught, crying when she talks about the criminal investigation and feeling like a prisoner in her own apartment, Martin's mother said last week. "She's not doing very well. It's terrible, devastating for her," said Jean Martin Lay, who believes that her daughter did nothing wrong. "She doesn't do much of anything but stay at home, as far as I know."

According to the article, Martin remains subject to an array of federal and state investigations, all determining just how and to what extent she should be punished.

Too bad for Martin that she didn't engage in prosecutorial misconduct against business interests that she could have parleyed into a cushy job in private practice or a promising political career.

Posted by Tom at 7:26 AM | Comments (1) | TrackBack (0)

From UT Wishbone QB to HTU golf coach

Former Houston plaintiff's attorney Marty Akins -- who was the University of Texas' wishbone quarterback from 1973-75, has a rather interesting new job.

He's been named the golf coach at Huston-Tillotson University in Austin. Akins has also taken a position on the HTU faculty in the business school.

By the way, that's former UT Heisman Trophy winner and Houston Oiler great Earl Campbell taking the handoff from Akins in the accompanying photograph. Campbell was a wishbone fullback at UT before being converted to an I formation tailback in his senior season when UT ditched the wishbone formation in 1977 under then new coach Fred Akers. The rest is history.

Posted by Tom at 6:57 AM | Comments (0) | TrackBack (0)

L.A.'s urban boondoggles

Houston's metropolitan area shares many characteristics with Southern California, so it's always interesting to review assessments of Los Angeles' urban boondoggles for guidance on how to avoid the same mistakes here.

In this L.A. Times op-ed, urban economics expert Joel Kotkin (previous posts here) explores the latest initiative to allow L.A.'s white elephant -- the downtown convention center -- to feed at the public trough. Despite the fact that the center has been a chronic money-pit despite a $500 million city expansion investment 17 years ago, the city is now proposing $300 million in loans, tax breaks and fee waivers for a $750-million, 54-story complex — including a 876-room Marriott Marquis, a posh 124-room Ritz-Carlton and 216 luxury condos — across from the Convention Center (sound familiar?). Despite the huge public outlay of public funds for the downtown convention center, Kotkin reports the following:

L.A. is still not on the list of the nation's top 10 convention cities and has little prospect of competing successfully against Las Vegas, New York and Orlando, which have far more attractions. According to one trade publication, L.A. hosted fewer major conventions last year than Indianapolis and Rosemont, Ill. But there's a bigger problem here.

The simple truth is that convention centers are rarely a good public investment. A definitive national study by the Brookings Institution, released last year, found that they frequently operate at a loss, including the recently expanded centers in Washington and St. Louis. In most cases, their much-ballyhooed effect on the local economy — new private investment, more jobs and increased levels of tourism — "has simply not occurred," reported Heywood Sanders, the study's author.

One problem is the convention business itself, Sanders noted. Overall attendance at the 200 largest trade shows — the critical market for large convention centers — has not grown measurably since 1993. Yet 44 cities — including Boston, Houston, Atlanta, Phoenix, Philadelphia, Washington and San Diego — were building or expanding convention centers, some by subsidizing the construction of a convention hotel, a development Sanders compared to an "arms race" among cities.

Stagnant trade-show business coupled with a convention center glut translates into more white elephants subsidized by taxpayers. Some cities such as Washington are already offering deep discounts to conventioneers to keep their buildings occupied. The L.A. Convention Center faces ever more cutthroat competition in such an environment. Unfortunately, the evidence suggests that a flashy hotel nearby may not increase the center's allure, especially because other cities, including Denver and Phoenix, are planning similar investments.

So, if the investment of public funds doesn't generate jobs and other economic benefits for a city's core, then who is benefitting from the public largesse?:

So if the hotel subsidy doesn't make economic sense, who benefits from the largesse? The biggest winner from the new public investment stands to be billionaire Phil Anschutz, whose $2.5-billion, 27-acre L.A. Live project — billed as "Times Square West" — is slated to be built adjacent to Staples Center. The refracted prestige of a new Ritz Carlton and luxury condos in the neighborhood would add luster to Anschutz's project, the proposed home of the West Coast headquarters of ESPN and a Grammy Award museum.

Meanwhile, urban economics expert Robert Bruegmann (previous post here) authors this LA Times op-ed in which he explains that L.A.'s urban sprawl is a reflection of its economic success and that its mobility problems largely stem from expectations generated from that success. Bruegmann suggests that it's time to think outside the box:

Unhappily, the fixation on sprawl has also detracted attention from the scenarios that might, over the long run, help build effective new public transportation systems. It is quite likely that this will need to involve the replacement of both the train and the gasoline-fueled automobile in the years ahead. Both are, after all, 19th century means of transportation, and very inefficient ones at that.

There is no technical reason that we couldn't have, not too far in the future, personal rapid transportation capsules running both on rails and rubber wheels, using alternative fuel sources and operating either on their own over short distances or linked together for longer distances on guideways that would allow speeds of hundreds of miles per hour. Such a system could vastly increase the capacity of existing right of way and go far toward reducing pollution.

Because cities are so dynamic, it is difficult to know whether our future urban areas will be lower or higher in density than today's. In either case, new modes of transportation that combine the adaptability and personal comfort of the auto with the efficiency of the train or bus are more likely, in the long run, to satisfy the needs of most Americans than forcing everyone back into high-density cities so they can ride trains.

We can do it, and we can enhance mobility for everyone. But only if we can put aside for a while the old and not-terribly-helpful battles over sprawl.

Hat tip for the links to Peter Gordon, who notes ruefully in his latest post:

Not to beat a dead horse, but today's LA Times includes a front-page feature, "Roads at Breaking Point" which begins this way: "California's highways, once the gold standard of the interstate system, are today some of the busiest, most dilapidated and under-financed roads in the country ..."

Nowhere does the article mention that the 30-year old crackpot idea (cheered by the Times at every turn) of diverting funds from roads to transit explains the mess.

Is Houston's Metropolitan Transit Authority listening?

Posted by Tom at 5:44 AM | Comments (0) | TrackBack (0)

July 10, 2006

Crashing the Ken Lay funeral?

Overall, the Houston Chronicle's coverage of the Enron case has at least been exhaustive, if not particulalry balanced. But in the interests of exhaustive coverage, was it really necessary for the hometown newspaper to have society columnist Shelby Hodge attempt to crash the funeral of Ken Lay in Aspen on Sunday?

Posted by Tom at 8:20 AM | Comments (2) | TrackBack (0)

Barbaro is struggling

It's beginning to look as if Barbaro may not make it (related, subsequent stories on Barbaro's increasing health problems are here, here, here and here).

The condition of the Kentucky Derby champion who broke down at the beginning of the Preakness took a turn for the worse late Saturday when veterinarians had to remove the plate and some of the screws from his injured right hind leg to stave off infection. Although Barbaro's leg appears to be healing reasonably well, the horse is having a hard time shaking off an elevated temperature, which is an indication that attempts to control infection are failing.

Posted by Tom at 6:54 AM | Comments (0) | TrackBack (0)

I Wanna Hold Your Royalty

In Cameron Crowe's Almost Famous, Phillip Seymour Hoffman does a fine job of playing disenchanted rock music critic Lester Bangs, who views the purity of Rock n' Roll as being corrupted by commercial interests. Of course, Rock n' Roll has never been all that pure in the first place, but that's another story.

At any rate, even as business-oriented a fellow as me never thought that I would see the day that the Beatles would be providing the background music for a Vegas casino stage show or the day that the Grateful Dead would be cozying up to lawyers and business-types while entering into management deals involving the group's intellectual property.

Does this mean it's only a matter of time before Bob Dylan plays Branson, Missouri?

Update: As my brother Joe points out, this may not be Branson for Dylan, but it's close.

Posted by Tom at 6:31 AM | Comments (1) | TrackBack (0)

The shrinking supply of disaster insurance

This Liam Pleven-Ian McDonald-Karen Richardson WSJ ($) article reports on an interesting market condition in the disaster insurance business that has been reverberating in business circles around Houston since the storms of last summer -- despite robust demand for disaster insurance and huge amounts of capital pouring into providing such insurance, there is nowhere near a sufficient supply of such products to meet the demand for disaster insurance.

As a result of seven costly hurricanes in two years, insurers are pulling back from the amount of risk that they will take in hurricane-prone areas such as the Gulf Coast. The shortage of supply is showing up primarily in the reinsurance market, where primary insurers buy coverage to hedge the risk of loss on the policies that they issue. Reinsurers covered over half of the estimated $40 billion in insured losses that occurred last year as a result of Hurricance Katrina. Consequently, the cost of property-catastrophe reinsurance has risen over 25% this year and, in hurricane-prone areas, the rates are increasing almost four times that amount. And all of this occurring despite the financial market's creation of new forms of investment vehicles to induce investment of capital at reduced-risk levels.

As noted in this earlier post on federally-subsidized flood insurance in hurricane-prone areas, this tight market condition for disaster insurance is actually having a beneficial impact. Businesses in hurricane-prone areas are considering alternatives to paying huge premiums for disaster insurance, such as self-insurance and re-evaluating investment decisions. This is precisely how markets efficiently allocate risk and resources, and reflects why that efficient allocation is undermined by the federal subsidy on flood insurance.

Posted by Tom at 5:54 AM | Comments (0) | TrackBack (0)

Thinking about those Saudi oil reserves

This Bhushan Bahree-Russell Gold/WSJ ($) article reports on Chevron Corp's pilot project in Saudi Arabia in which it is using its steam injection technique to to loosen up sludge-like heavy-oil reserves in Wafra, the huge field in the so-called neutral zone between Saudi Arabia and Kuwait.

Heavy oil is costlier to produce than light oils, typically contains more contaminants such as metals and sulfur, and is priced lower than light oil to boot. But because of the decreasing supply of easily-produceable light oil, a growing number of refineries around the world are acquiring the special equipment necessary to turn heavy oil into petroleum-based products such as gasoline, jet fuel and heating oil. Inasmuch as most heavy-oil fields in Saudi Arabia are not included in the country's current estimate of 260 billion barrels of recoverable reserves, a successful steam injection initiative in such heavy-oil fields would potentially add billions of barrels to Saudi reserves

Meanwhile, Clear Thinkers favorite James Hamilton explores the effect that a recent reduction in Saudi oil production may be having on speculation over oil prices. Interestingly, the drop in Saudi production has occurred at the same time as the Saudis are aggressively increasing their drilling efforts.

Posted by Tom at 5:03 AM | Comments (0) | TrackBack (0)

July 9, 2006

Key trader case is teed up

This Tom Fowler/Houston Chronicle article reports on the trial that begins Monday in U.S. District Judge Nancy Atlas' federal court in which former Dynegy trader Michelle Valencia and former El Paso trader Greg Singleton (previous posts here) face charges of conspiracy and fraud under the rarely-used Commodities Exchange Act for allegedly submitting false gas trading data and withholding data to trade publications between 2000 and 2002.

The criminal case against Valencia and Singleton is the highest profile case of over a dozen of such cases that the Justice Department has been pursuing in Houston and San Francisco against former natural gas traders over alleged manipulation of natural gas trading indexes, which the trading industry uses to used to value billions of dollars in gas contracts and derivatives. Industry publications such as Inside FERC use data from traders to calculate the index price of natural gas, which can affect the level of profits that traders can generate. However, one of the key issues in in each of these cases is in what context the allegedly false information was transmitted or whether the publication even used any the false information. The government's theory of criminal liability is that it needs only to prove that fake trades were reported to the publications and not that the trades were actually published or affected the markets. Most of the traders charged in these cases have pled guilty under cooperation agreements with the DOJ, but Valencia and Singleton have been fighting the charges from the beginning, so no last-minute plea deal is expected.

Posted by Tom at 8:37 AM | Comments (0) | TrackBack (0)

July 8, 2006

The magic of Prairie Dunes

The US Senior Open (for golfers 50 years and older) is being played this week at Prairie Dunes Country Club in Hutchinson, Kansas, just up the road from Wichita.

Prairie Dunes is a fascinating course that is a favorite of golf course-design experts. The course sits in the windy heartland of America, but it has many characteristics of a seaside links course. Its original designer -- Perry Maxwell -- was a banker who designed some of the best golf courses in the central United States, such as Tulsa's Southern Hills. Maxwell began construction of Prairie Dunes in 1937, but the masterpiece was not completed until almost 20 years later.

Despite its somewhat isolated location, Prairie Dunes is now regularly recognized as on one of the best golf courses in the U.S. Although only a modest 6,600 yards in length, the course is holding up well in the tournament and receiving rave reviews from the participants, most of whom have never played it until this tournament. The Prairie Dunes Country Club hosts this excellent virtual review of the course, and I highly recommend that you take a moment to admire this gem of America's heartland.

Posted by Tom at 10:00 AM | Comments (0) | TrackBack (0)

July 7, 2006

Judge Kaplan sticks to his guns

Federal judges and prosecutors often have a cozy relationship. So, it was not particularly surprising that Southern District of New York U.S. Attorney Michael Garcia requested that U.S. District Judge Lewis Kaplan delete the names of federal prosecutors and his sharp criticism of those prosecutors in his June 26 opinion in the KPMG tax shelter case, which found that prosecutors had improperly pressured KPMG to abrogate its long-standing policy of paying the defense costs of over a dozen KPMG former partners charged in the case. While Judge Kaplan responded professionally to US Attorney Garcia's request, he firmly denied it and included the following language in his ruling on the request:

[The Court] views the actions of the U.S. Attorney's office that evoked criticism more as a disappointment borne of the ordinarily exceptional performance of the office that this Court has come to expect than as anything else. The Department of Justice policy that the office dutifully carried out, on the other hand, is more than a disappointment -- it is unconstitutional.

Meanwhile, Larry Ribstein lucidly analyzes Judge Kaplan's decision in this TCS Daily op-ed and sums up the underlying importance of Judge Kaplan's decision:

This case isn't going to solve all of the problems of corporate criminal liability. The government retains considerable leverage in prosecuting corporations and their employees. This problem is inherent in cases involving common business practices such as the structuring and sale of tax shelters, where the very criminality of the conduct is an extremely complex issue. The problem is compounded in this case by the haziness of the line between merely wrong and criminal interpretations of the tax code. The court must determine whether the tax shelters in this case were illegal rather than simply aggressive and ultimately unsuccessful tax planning that was not sharply distinguishable from what tax advisers do everyday. [. . .]

Real relief from undue burdens of criminal prosecution will come only when courts face up to these underlying problems of corporate criminal liability. Judge Kaplan's opinion is important for its recognition that fundamental fairness in a criminal trial may turn on the parties' contract and property rights, as well as on business realities. It is to be hoped other courts will follow the principle Judge Kaplan has established to restore balance in white collar crime cases.

Interestingly, the importance of Judge Kaplan's opinion in the KPMG case is readily apparent in the Enron-related Nigerian Barge case. In the barge case, the government threatened Merrill Lynch with an indictment, ultimately resulting in a settlement in which Merrill tossed four of its executives to the wolves in return for a non-prosecution agreement for the firm. Inasmuch as that deal was cut relatively early in the current trend of federal corporate crime prosecutions, the government did not require as a part of the non-prosecution agreement that Merrill abrogate its policy of paying the defense costs of the four former executives. Although rumors circulated in legal circles after the executives were convicted that the government was "suggesting" to Merrill that the firm should not pay the legal cost of the executives' appeals, Merrill has continued to pay those costs, which are certainly in the several million dollar range by now.

As this earlier series of posts reflects, the Nigerian Barge case involves a particularly odious prosecution in which the Enron Task Force effectively prosecuted the four former Merrill executives for doing their jobs in connection with Enron's sale of an asset for which Enron may have improperly accounted, although even that issue was never proven at trial. Given the adverse climate in Houston for anyone that has had anything to do with the social pariah Enron, the Task Force was able to obtain convictions of the Merrill Four, although at least three out of the four convictions are now unraveling and will almost certainly be reversed (see here and here). But for Merrill's payment of the defense costs of its former executives, it is doubtful that these out-of-work executives and their families would have been able to afford the extraordinary cost of attempting to correct the stark injustice of their convictions on appeal.

Finally, if you want to see what happens when a company sacrifices a former executive in connection with cutting a deal with prosecutors and then does not pay that executive's legal defense costs, then read this.

Posted by Tom at 6:35 AM | Comments (1) | TrackBack (0)

The State of Securities Class Actions

Bruce Carton over at the Securities LItigation Watch has posted his annual State of the (Securities Litigation) Union analysis, which provides an excellent overview of the status of class action securities lawsuit sector. Interestingly, it does not appear that the Milberg Weiss troubles or attempts to constrain such lawsuits are having any meaningful effect on the growth of the sector:

Again, viewed in context, neither the number of cases in 2005 nor the NERA dismissal statistics support the argument that securities class actions have recently “dried up” in any meaningful way—the number of cases is roughly what it has been since 1997 and the dismissal rate is, according to NERA, the same as it has been since 1998. [. . .]

With respect to Milberg Weiss, it seems clearer by the day that even if the firm’s practice is diminished or destroyed altogether by the indictment, there will not be a significant impact on securities class actions generally. There are far too many competent plaintiffs’ law firms out there that will gladly fill any void that may be created. It also appears that to the extent Milberg Weiss is losing any lawyers, it is because these lawyers are being recruited away by competitors, where they will promptly resume their securities class action practices.

Read the entire post.

Posted by Tom at 5:41 AM | Comments (0) | TrackBack (0)

Mack Brown's dream role

When your team wins a national football championship in Texas, a vast array of interesting opportunities emerge. This Ed Bark/Dallas Morning News preview gives a hearty thumbs up to Friday Night Lights, a new television show that debuts this fall and includes a cameo role for University of Texas football coach Mack Brown. My sense is that Coach Brown is especially well-prepared to play this particular role:

"Friday Night Lights" (drama): A terrific continuation of the best-selling book and feature film, with Kyle Chandler the perfect choice to play under-the-gun new football coach Eric Taylor. Filmed in Austin, the pilot superbly sets a small-town West Texas stage in fictional Dillon, Texas. Football action is brilliantly choreographed, and the key players come off as far more than tackling dummies.

University of Texas coach Mack Brown has an effective cameo as a demanding booster who expects the Panthers to triumph at all costs.

Posted by Tom at 5:22 AM | Comments (0) | TrackBack (0)

July 6, 2006

Ken Lay and the Enron Myth

Former Enron chairman and CEO Ken Lay died yesterday of a heart attack and, given the stress that Mr. Lay had endured over the past five years, such a fate is certainly not surprising. However, my sense is that the heart attack was merely the physical manifestation of what really killed this proud, talented and flawed man -- his inability to overcome the Enron Myth and the societal implications of it.

By now, we all know the myth -- Enron was merely an elaborate financial house of cards hidden from innocent and unsuspecting investors and employees by a deceitful management team led by the greedy and lying Mr. Lay. The Enron Myth is so thoroughly accepted that otherwise intelligent people reject any notion of ambiguity or fair-minded analysis in addressing facts and issues that call the morality play into question. The primary dynamics by which the myth is perpetuated are scapegoating and resentment, which are exhibited everywhere:

The Houston Chronicle's business columnist ridiculing Mr. Lay and calling for his conviction on almost a daily basis throughout the trial;

The community outpouring of celebration over the guilty verdict against Mr. Lay and the self-righteous indignation over his continued claim that he committed no crimes;

A Houstonian interviewed on radio yesterday contending that she was unsatisfied because Mr. Lay's death had allowed him to escape appropriate punishment;

A prominent Houston-based blogger mocking Mr. Lay's death (here and here);

Without a smidgen of evidence, a Houston criminal defense attorney suggesting during an interview on MSNBC yesterday that Mr. Lay may have committed suicide to void his conviction.

These are but a few examples of the frequent eruptions from the cauldron of societal bitterness over Enron that are palpable reminders of the fragile nature of civil society. The Enron Myth conveniently serves to obscure that which most people do not want to confront. Loss, fear, and anger expose our essential human insecurity -- Christians sometimes refer to it as our "brokenness." The vulnerability that underlies such insecurity is scary to behold, so we use myths and the related dynamics of scapegoating and resentment to distract us. Therefore, a wealthy and powerful businessman who is easy to resent becomes a handy scapegoat. We rationalize that he did bad things that we would never do if placed in the same position and thus, he is deserving of our punishment. That the scapegoat is portrayed as greedy and arrogant -- just as we are -- makes the lynch mob even more bloodthirsty as it attempts to purge collectively that which is too sordid for its members to face individually.

As noted in this prior post, even the Task Force prosecutors have admitted that the legal case against Lay was extraordinarily weak. But the power of the Enron Myth and the real presumption in the criminal case against Mr. Lay are such that even presumably fair-minded jurors dispense with critical thinking skills when confronted with supposedly the biggest business conspiracy in the history of federal prosecutions. Rather than seeking the truth regarding that alleged mass conspiracy, the jurors were content with a prosecution that cast Mr. Lay as a liar about Photofete and his company line of credit, and ignored the paucity of evidence of any alleged massive conspiracy or even the true reasons why Enron collapsed. The myth is so pervasive and accepted -- why bother with the truth?

The carnage of the Enron Myth and similar myths is now stacked high -- the destruction of Arthur Andersen, the vapid Enron-related Congressional hearings, the shallow Enron documentary, Martha Stewart, Jamie Olis, Daniel Bayly, William Fuhs, Frank Quattrone, Hank Greenberg, Mr. Lay -- the list goes on and on. In the wake of such destruction of wealth and lives, the public is even less willing to confront the vacuity of the myth and the destructive dynamics by which it is perpetrated. In fact, any challenge to the myth is now commonly met with derision and appeals to even more resentment over the Enron failure.

Such syndromes are not only an abuse of our justice system, but a serious affront to civil society. Ken Lay was no criminal. Did he fudge the truth? Maybe. But even if so, did his lies justify public humiliation, a physically-draining criminal trial, and a life prison sentence? Not in a truly civil society. Ken Lay's death is a terrible tragedy for his family and friends, and my family's thoughts and prayers are with them. But the larger tragedy is that a myth has again played out as "justice" in our criminal justice system while distracting us from examining what really happened at Enron, understanding the benefits and risks of such a company, and educating ourselves on how to take advantage of such benefits while hedging those risks prudently. Such a sober undertaking is not as easy as rationalizing a financial failure by calling a rich man a crook and reveling in his demise, but it's far more likely to result in a better -- and far more honest -- understanding of investment and markets, as well as ourselves.

Posted by Tom at 5:35 AM | Comments (8) | TrackBack (4)

July 5, 2006

The death of Ken Lay

Former Enron chairman and CEO Ken Lay died early this morning in Colorado, reportedly of a heart attack. He was 64 at the time of his death.

I have a day's worth of meetings that prevent me from collecting and conveying my thoughts immediately on Mr. Lay's death, but I wanted to pass along a couple of recent posts (here and here) about Mr. Lay and the weakness of the criminal case against him, one of which includes this excerpt about the man that Mr. Lay was:

Lay is clearly a proud man who desperately wants to tell his side of the story, and it is quite a story. Born and raised in a family with little money, Lay worked his way through college and graduate school, landed his first job with Houston-based Humble Oil (the predecessor to ExxonMobil), and then served his country admirably as a Naval officer and Deputy Undersecretary of Interior for Energy for six years during the Vietnam War. After his governmental service, Lay rose quickly through the executive ranks of a couple of gas pipeline companies before assuming the chairman and CEO position of the company that eventually became Enron in 1985. From that perch, Lay accumulated a personal net worth of about $350 million as of 2000 as he oversaw the growth of Enron into one of the largest publicly-owned companies in the U.S., and then saw that net worth evaporate over the past four-plus years since Enron's collapse into bankruptcy.

But as difficult as that fall must have been, Lay does not appear to be the type of man who is bothered all that much by the loss of wealth, and certainly not nearly as much as he is aggravated by the Task Force and media’s ravaging of his reputation over the past five years. According to media reports, Lay and [defense counsel Mac] Secrest struggled somewhat during the early stages of Lay’s direct examination, and my sense is that their struggles were attributable largely to Lay’s frustration with not being able to explain to the jurors directly — without the limiting framework of a trial — the utter contradiction between his life story and the nature of the criminal charges against him.

And, as usual, Larry Ribstein has these insightful observations on Mr. Lay's death and Peter Henning passes along an interesting implication of Mr. Lay's death on the criminal case against him.

Posted by Tom at 9:32 AM | Comments (0) | TrackBack (0)

The big problem with Mexico

The presidential election in Mexico garners more interest in Texas than many places because of the increasing problems that the state faces in regard to the influx of immigrants and violence on the border. Calderon's apparent victory is almost certainly better economically for Mexico, and Opinion Journal's Mary Anastasia O'Grady observes that the handling of the election is a hopeful sign for Mexico's emerging multi-party political system. However, the Washington Post's Robert Samuelson identifies in this column the problem that continues to vex Mexico's economic development -- inefficient big businesses that are protected by the government and vibrant small businesses that are threatened by it:

[Mexico's] economy consists of two vast sectors, each slow to adopt better technology and business practices.

One sector involves large, modern firms in semi-protected markets that limit the pressure to improve efficiency or lower prices. "Mexico's business sector is risk-averse. It's never had to operate in a true competitive environment," says Pamela Starr, an analyst for the Eurasia Group, a consulting firm. "It's operated with monopolies and oligopolies encouraged by the government."...

The other part of the economy is usually called the "informal sector." It consists of thousands of small firms -- street vendors, stores, repair shops, tiny manufacturers -- that theoretically aren't legal, because they haven't registered with the government and often don't pay taxes or comply with regulations on wages and hiring and firing. Almost two-thirds of Mexico's workers may be employed in the informal sector, according to one rough estimate by the International Monetary Fund.

The sector's size might suggest great entrepreneurial vitality. The trouble is that these firms are virtually compelled to remain small and inefficient. Because they're technically illegal, they can't easily get bank loans and can't grow too large without being forced to pay taxes or comply with government regulations.

Read the entire column.

Posted by Tom at 7:19 AM | Comments (0) | TrackBack (0)

Kerkorian's deal for GM

Kirk Kerkorian's proposed deal to save General Motors came up just before the holiday weekend, so analysis of the proposal has been sparse to date (previous posts on GM's Enronesque experience are here). Last Friday, Kerkorian's Tracinda Corp. -- the largest individual shareholder in GM -- publicly proposed that GM become the third wheel in an automotive alliance with Nissan and Renault, both of which would buy substantial minority stakes in GM. Nissan and Renault are led by Carlos Ghosn, whose revival of Nissan six years ago has made him the most influential automotive CEO in the world. Interestingly, Kerkorian's salvo was deftly timed to coincide with the Big Three automaker's June sales reports, which were dismal.

As GM's stock rose nearly 10% after Kerkorian's announcement, GM's directors convened an emergency meeting while grumbling that they didn't appreciate negotiating in public, although they announced after the meeting that they would consider the proposal (imagine the lawsuits if they didn't?). Nissan and Renault's boards kept up the heat on Monday by announcing that they would entertain an alliance if GM agrees. Such an alliance would leave the weak and struggling Ford Motor Co. as the only independent American automaker.

The WSJ's Holman Jenkins ($) sizes up Kerkorian's strategy and suggests "the possibility that Mr. Kerkorian is simply lining up a lifesaver in the event of a sudden auto recession that some see looming. GM likely would not survive a sharp drop in SUV and pickup sales right now." Regardless of whether that's the underlying reason for Kerkorian's proposal, Jenkins observes that Kervokian's message is clearly "there's not enough change going on around here. Give me more change."

Kerkorian's concerns about GM's management have merit. Although GM posted a small profit in the first quarter of 2006 on the heels of its gargantuan $10.6 billion loss last year, the profit was primarily the result of an accounting change. Cash flow remains negative and the company's debt remains in the deep junk category. This lackluster performance comes amidst a larger backdrop of GM's poor performance over the past six years. Since earning a record $5.7 billion in 1999 and having its stock top out at $70 a share in June 2000, GM's stock has declined by over 70% since then to below $19 per share at the end of last year, although it has recovered to $29 per share on the early success of current GM CEO Rick Wagoner's reorganization plan and now Kerkorian's proposal. Perhaps most importantly, however, GM's U.S. market share has plummeted to 24.4% from almost 30% in 1999. Twenty years ago, GM's share was 41%.

Looking at all this, Jeff Matthews has the most entertaining analysis of Kerkorian's strategy to date, analogizing GM's choice to the one faced by Sonny Corleone in The Godfather if it turned out that Don Corleone did not survive after being severely injured in Sollozo's assassination attempt. As Matthews notes, brother Michael's plan ended up being a better alternative for Sonny than making a deal with Sollozo, there is no Michael Corleone for GM.

Posted by Tom at 5:29 AM | Comments (0) | TrackBack (0)

Golf 101

Let's see now. Suppose you are a trustee of the Houston Community College system.

You are confronted with a chronically underfunded system that is operating in a region where golf courses are overbuilt and will do most anything to attract customers.

What would you do?

Well, I don't know about you, but I wouldn't be approving the construction of a three-hole, par 3 golf facility to provide "a new and unique opportunity for residents of northeast Houston to learn or improve skills in the age-old sport of golf."

The Houston Press' Richard Connelly has the story.

Posted by Tom at 4:52 AM | Comments (0) | TrackBack (0)

July 4, 2006

Is this a new A&M recruiting video?

I recognize that football recruiting at Texas A&M has not kept up with Big 12 competitors such as Texas and Oklahoma. The Coach Fran era has not gone as expected, and even the sacred 12th Man tradition is under attack. So, drastic measures are required to turn things around.

But a rap music video extolling the virtues of Bryan-College Station? Let's just say I'm still partial to the Aggie War Hymn.

Former A&M football coach Bear Bryant is turning over in his grave. Old Army will never be the same. Hat tip to the Burnt Orange Nation for the link.

Have a safe and happy 4th!

Posted by Tom at 8:54 AM | Comments (0) | TrackBack (0)

July 3, 2006

The random nature of movie success

This fascinating Leonard Mlodinow/LA Times special (registration req.) explains why I am utterly incapable of predicting which movies will be successful. In reality, nobody can:

The magic of Hollywood success—how can one account for it? Were the executives at Fox and Sony who gambled more than $300 million to create the hits "X-Men: The Last Stand" and "The Da Vinci Code" visionaries? Were their peers at Warner Bros. who green-lighted the flop "Poseidon," which cost $160 million to produce, just boneheads?

The 2006 summer blockbuster season is upon us, one of the two times each year (the other is Christmas) when a film studio's hopes for black ink are decided by the gods of movie fortune—namely, you and me. Americans may not scurry with enthusiasm to vote for our presidents, but come summer, we do vote early and often for the films we love, to the tune of about $200 million each weekend. For the people who make the movies, it's either champagne or Prozac as a river of green flows through Tinseltown, dragging careers with it, sometimes for a happy, wild ride, sometimes directly into a rock.

But are the rewards (and punishments) of the Hollywood game deserved, or does luck play a far more important role in box-office success (and failure) than people imagine?

We all understand that genius doesn't guarantee success, but it's seductive to assume that success must come from genius. As a former Hollywood scriptwriter, I understand the comfort in hiring by track record. Yet as a scientist who has taught the mathematics of randomness at Caltech, I also am aware that track records can deceive.

That no one can know whether a film will hit or miss has been an uncomfortable suspicion in Hollywood at least since novelist and screenwriter William Goldman enunciated it in his classic 1983 book "Adventures in the Screen Trade." If Goldman is right and a future film's performance is unpredictable, then there is no way studio executives or producers, despite all their swagger, can have a better track record at choosing projects than an ape throwing darts at a dartboard.

That's a bold statement, but these days it is hardly conjecture: With each passing year the unpredictability of film revenue is supported by more and more academic research.

Read the entire highly entertaining article. The money quote comes from Art DeVany, who really should have been an expert witness for the plaintiffs in Disney-Ovitz:

"Today's Hollywood executives all act like wimps," [DeVany] says. "They don't control their budgets. They give the actors anything they want. They rely on the easy answers, so they try to mimic past successes and cave in to the preposterous demands of stars. My research shows you don't have to do that. It's just an easy way out, an illusion."

"[A] careful study reveals that no strategy the studios devise is going to give them any kind of advantage at all. So any studio executive getting paid more than the salary of a comparable executive at your local dairy is getting paid too much."

Larry Ribstein, who knows a thing or two about the movie business and the way in which it portrays business, comments on the article here.

Posted by Tom at 7:21 AM | Comments (0) | TrackBack (0)

Playing high stakes poker at Refco's Bermuda unit

Wall Street Journal reporters Carrick Mollenkamp, Ian McDonald and Peter A. McKay have authored this article of the day ($) in updating the fascinating story on the bankrupt, New York-based brokerage firm. Refco, Inc. (prior posts here). This WSJ report focuses on Refco's unregulated Bermuda unit, which Refco allegedly used as sort of a piggy bank to make loans to customers on high-risk bets and to cover up losses on those bets. When Refco went into the tank after an Enronesque experience, the Bermuda unit -- called Refco Capital Markets -- was supposed to have at least $3.7 billion in customer account assets, but had only $1.9 billion in such assets. Now the customers who played such high-stakes poker with Refco are scrambling to pick up some scraps on their gambling losses in Refco's bankruptcy case.

As an "exempt" Bermuda company, Refco Capital Markets wasn't required to keep customers' money seperate from Refco's company funds, so customer and company money was routinely commingled in the Bermuda unit's accounts and commonly used by various Refco entities to pay bills, make loans and finance investments. Apparently, even other Refco units routinely sent funds to the Bermuda unit to invest. According to the article, some investors are contending in the bankruptcy court that they were surprised by the Bermuda unit's practices:

"That is not a business model of which I am familiar with," Mr. [Richard] Deitz, the Moscow-based hedge-fund manager, said at a bankruptcy-court hearing. "It's something that I think is more in common with three-card monte."

I would suggest that Mr. Dietz was playing the equivalent of three card monte with Refco and that he knew it.

Although beyond the scope of the WSJ article, one issue that continues to baffle me regarding Refco and former Refco CEO Phillip Bennett's criminal case is this -- presuming as true the allegation that Bennett and Refco were running a scam, why on earth did Bennett take Refco public?

Had the fraud been discovered while Refco was a private company, matters probably would have turned out much differently for both Refco and Bennett. Bennett probably would have been forced to resign, but there would have been no obligation to disclose the resignation publicly and, if it was disclosed at all, probably would have been described in the euphemistic manner of “pursuing other opportunities.”

As a private company, Refco would have no legal obligation to advise the market on why Bennett resigned and the financial press probably would not have connected it to fraud at Refco absent a leak from someone at Refco. Inasmuch as most folks would have never heard of Refco, Bennett's resignation would not have been particularly newsworthy outside of Wall Street. Indeed, unless Refco alerted the authorities about the fraud -- which it probably would not have done out of fear of triggering an Enronesque experience -- Bennett would not have been arrested.

Meanwhile, Refco's new management and board would have probably arranged an adjustment of the purchase price on the large investment that Thomas H. Lee Partners made in Refco in order to avoid a civil lawsuit that would have publicly disclosed the fraud. Perhaps the Refco board and management would have instituted some internal controls to lessen the risk of such a fraud occurring in the future. Most importantly, Refco probably would not have collapsed.

However, since the fraud was discovered after Refco had gone public, matters have played out quite differently. Refco went through an Enronesque experience and filed bankruptcy, Bennett was indicted, Thomas H. Lee Partners lost over $300 million on its Refco investment, and it is being sued for millions by Refco investors and creditors along with Refco’s board, Refco's auditors (Grant Thorton) and the underwriters of the Refco IPO.

Perhaps the answer to the question of why Bennett took Refco public is simply that Bennett was greedy, wanted to cash out on the IPO, and thought he could continue to cover-up the fraud. But such questions are rarely answered so simply. Stay tuned.

Posted by Tom at 4:45 AM | Comments (2) | TrackBack (0)

July 2, 2006

Stros 2006 Review, Part Five

Well, the Stros (39-42) are halfway through their 2006 season and the first half of the season reminds us again of just how much expectations shape our perception of how likely it is for the club to contend for another playoff run.

Remember this same time in 2004? Pessimism surrounded the club. The hitting was lousy and the pitching staff was reeling from the loss of Wade Miller and the sore elbow of Andy Pettitte. However, after reaching a season-worst 56-60 on Aug. 14, the 2004 Stros won an incredible 36 out of their next 46 games (including a 12 game winning streak and nine out of their last 10 to close out the regular season) to take the National League wildcard playoff spot and come within a game of the 2004 World Series.

And remember this time last season? After starting the 2005 season with an atrocious 15-30 record amidst the worst hitting in the club's history, that Stros club came to the halfway point of the season on a totally unexpected 29-13 run that had everyone brimming with cautious optimism. Of course, that club went on to post a 45-30 record for the remainder of the season to make the playoffs, won the National League Championship Series over the Cardinals and made it to the club's first World Series.

What about this year? Well, after getting hopes up by blowing out of the gate with a 19-9 record, the 2006 Stros have gone into a 20-33 tailspin that has exhibited not only chronic inconsistent hitting, but also pitching that has been far below the levels of the 2004 and 2005 Stros. As a result, no one seems to be particularly sanguine at this time about the prospects for the Stros making a third straight playoff run.

But you know what's interesting? The Stros 39-42 record to date this season is not materially different from the 44-43 record at the All-Star break for the 2004 Stros or the 44-44 All-Star break record of the 2005 club. And just like the Stros clubs of the past two seasons, the 2006 Stros have the ingredients to contend for a playoff spot in the second half of the season if certain players elevate their performance to past levels. See what I mean about expectations?

At any rate, this fifth of ten reviews of the Stros season (prior summaries are here) takes us to the halfway point (81 games) of the season (this summary covers 17 games, while each of the past four covered 16). The club's hitting and pitching statistics to date are set forth below, and pdf's of the current hitting stats are here and the current pitching stats are here, courtesy of Lee Sinins' sabermetric Complete Baseball Encyclopedia:

The abbreviations for the hitting stats are defined here and the same for the pitching stats are here.

Despite the Stros' recent road meltdowns against the White Sox and Tigers, the Stros hitters are actually hitting better than either of the past two playoff teams were at this point in the season and are seventh in runs created against average ("RCAA," explained here) among the 16 National League clubs. Lance Berkman (31 RCAA/.397 OBA/.609 SLG/1.006 OPS) continues to be one of the best hitters in Major League Baseball, and Chris Burke (8/.370/481/.850) and Mike Lamb (9/.372/.532/.905) have been solid contributers at the plate while working into the lineup as regular players over the past month or so. Although he has a -2 RCAA since May 26th, Morgan Ensberg (18/.388/514/.902) continues to be a far above-average National League hitter and is likely to break out of his slump soon. Even Jason Lane (-3/.336/.399/.735) and Preston Wilson (-3/.324/.429/.753) are showing signs of becoming at least average National League hitters for the season, although Wilson continues to hit into double plays (10) with irritating frequency.

Unfortunately, the rest of the Stros' hitters are pretty pathetic. Bidg (-4/.327/.413/.740) is showing signs of wearing down earlier than normal in the long season, and Everett (-14/.281/.325/.607) and Taveras (-11/.315/.319/.634) remain train wrecks. Meanwhile, fast-starting Ausmus (-13/.315/,311/.626) has descended to his usual depths of hitting incompetency that have made him one of the worst-hitting regular National League players over the past decade. Consequently, whenever Everett, Ausmus and Taveras are in the lineup, the Stros have four spots in the lineup (including the pitcher) that have far less than an average National League player's ability to generate runs. That's not good, so Manager Garner needs to limit as much as possible the games in which those three players are in the lineup together.

Meanwhile, the pitching staff had actually improved and risen to seventh in the National League in runs saved against average ("RSAA," explained here), but then the nightmare series against the White Sox and then the Tigers sent the staff's RSAA spiraling to 15th among the 16 National League clubs. Nevertheless, there are definite signs of hope.

First, Roy O (3.27 ERA/13 RSAA) and Clemens (2.38 ERA/2 RSAA) are studs and likely to remain strong starters throughout the second half of the season. Although Pettitte (5.58 ERA/-15 RSAA), rookie starter Buchholz (5.36 ERA/ -11 RSAA) and Lidge (5.30 ERA/-4 RSAA) have struggled mightily at times this season and are the main reasons for the staff's high RSAA, each of them has shown improvement in recent appearances (well, alright, except for that little problem Lidge had in Chicago). Rodriguez (4.79 ERA/-5 RSAA) has been a bit shaky of late, but the rest of the Stros pitchers have actually pitched at either an average National League pitcher level or slightly above-average level for the season. And, for good measure, Brandon Backe (2.25 ERA/2 RSAA) is currently on a rehab assignment and his successful return to the rotation would likely be an improvement over either Buchholz or Rodriguez. So, a reasonable scenario does exist for the Stros' pitching staff to turn things around during the second half of the season.

Finally, the other good news is that the National League is simply not very good this season. The 43-36 Cardinals have lost nine of ten games and are not running away with the National League Central as they did in the past two seasons (even at 39-42, the Stros are only five games out of first in the NL Central). Similarly, the Stros are currently just a few games out of leading the race for the National League wildcard playoff spot. In short, despite the Stros troubles over the past 30% of the season, the club has not played itself out of the playoff hunt by any means.

Thus, if the Stros can continue their hitting level at slightly above-National League average, and improve their pitching to the upper third of the National League (definitely possible based on the past two seasons performance), then the Stros will at least contend for the wildcard playoff spot and could even contend for the NL Central title. On the other hand, if the pitching does not improve significantly during the second half, then the Stros playoff goose is cooked because the club simply just does not have enough hitting to carry a pitching staff operating at anywhere near or below National League-average.

After Sunday's game against the Rangers (41-38), the Stros return home to play the Cubs (29-51) and Cards (43-36) leading up to the All-Star break. Good pitching traditionally tends to dominate hitters after the All-Star break and during the dog days of summer, so here's hoping that the Stros' strong pitching -- which carried the club far into the playoffs during the past two seasons -- revives and carries the 2006 club to a similar finish.

Posted by Tom at 9:16 AM | Comments (0) | TrackBack (0)

The amazing Roy Oswalt

Roger Clemens is one of the greatest pitchers in Major League Baseball history, so he rightly gets most of the publicity among Stros pitchers. However, Roy Oswalt is currently the best pitcher on the Stros' staff, one of the best pitchers in the National League and is well on his way to becoming the best Stros pitcher ever.

As noted in this recent post on Clemens, the statistic "runs saved against average" ("RSAA) is one of the best measures for evaluating a pitcher's true effectiveness because it is based on the two most important things for a pitcher in winning baseball games -- that is, not giving up runs and getting hitters out. RSAA measures the number of runs that a pitcher saves for his team relative to the number of runs that an average pitcher in the league would give up while obtaining an equivalent number of outs for his team. Inasmuch as the hypothetical average pitcher's RSAA is always zero, a player can have an RSAA that is either a positive number -- which indicates he is an above average pitcher (i.e., Clemens and Oswalt) -- or an RSAA that is a negative number, which means he is performing below average (i.e., remember Brandon Duckworth and Tim Redding?).

Moreover, RSAA is a the best measure for comparing pitchers who played during different eras. Inasmuch as RSAA measures a pitcher's ability against that of an average pitcher in the pitcher's league for each particular season, a pitcher's lifetime RSAA measures how that pitcher performed against the average pitcher of his era. That's really the best way to compare pitchers from different eras because comparing other pitching statistics -- such as earned run average, wins and hitting statistics against -- is often skewed between pitchers of hitter-friendly eras (i.e., the era in which Clemens and Oswalt have pitched) versus pitchers of pitcher-friendly eras (i.e., such as the late 1960's and early 70's).

In pitching a complete game the other day against the Tigers, Oswalt attained another milestone by reaching 150 RSAA for his career. Roy O is easily the Stros career leader in RSAA:

1 Roy Oswalt 150
2 Billy Wagner 99
3 Roger Clemens 87
4 Mike Hampton 76
5 Dave Smith 75
6 Octavio Dotel 67
7 Nolan Ryan 60
8 Wade Miller 56
9 Don Wilson 55
10 Joe Sambito 53

But what is not as well known is that Oswalt is getting close to being in the National League's top 10 list for career RSAA through the age of 28:

1 Christy Mathewson 279
2 Tom Seaver 234
3 Robin Roberts 229
4 Don Drysdale 219
5 Dizzy Dean 207
6 Ferguson Jenkins 196
7 Greg Maddux 189
8 Juan Marichal 177
9 Grover C Alexander 176
10 Jose Rijo 158
11 Roy Oswalt 150

Not bad company, eh? Barring injury, Oswalt is well on his way to a Hall of Fame career. He is signed through the 2007 season, but unless the Stros sign him to a long-term deal before the expiration of that deal, the best pitcher in Stros franchise history will become a free agent. Losing Roy O would be a serious blow to the Stros.

Oswalt's career pitching statistics are set forth below and the abbreviations for each of those stats is set forth in pdf here.

Posted by Tom at 6:00 AM | Comments (0) | TrackBack (0)

July 1, 2006

The Lay-Skilling forfeiture motion

In the least surprising post-verdict motion to date, the Washington Post's Carrie Johnson reports that the Enron Task Force filed its forfeiture motion yesterday against former key Enron executives Ken Lay and Jeff Skilling. A bookmarked pdf copy of the motion can be downloaded here.

As expected, the Task Force requests that the remaining net worth of both Skilling and Lay be forfeited to the government to satisfy the Task Force's contention that the two should pony up about $183 million as the undeserved fruit of the securities fraud for which the two were convicted. In addition to the defendants, the Task Force's forfeiture request will probably generate opposition from various parties in the civil litigation still swirling around the Enron case, which parties are also seeking compensation from Lay and Skilling on various business and securities fraud claims. Finally, both Lay and Skilling owe substantial amounts to their respective defense teams, so the claims of those firms will also need to be sorted out in connection with the Task Force's forfeiture claim. Lay and Skilling have requested that U.S. District Judge Sim Lake schedule a bench trial regarding forfeiture issues sometime this fall, but it remains unclear at this time just how Judge Lake will handle the Task Force's forfeiture request.

Posted by Tom at 7:58 AM | Comments (0) | TrackBack (0)