Houston's Clear Thinkers

? November 2006 | Main | January 2007 ?

December 31, 2006

Uncommon common sense to close out the year

Several items making uncommonly good sense in financial matters caught my eye on the final day of the year.

First, Don Boudreaux noticed the following letter to the Financial Times from Larry Ribstein's colleague at the University of Illinois College of Law, Andrew P. Morriss. Professor Morriss was responding to this earlier article:

Sir,

Bono is following up on his hug of German Prime Minister Angela Merkel at Davos last January and with a visit to Germany to launch “a series of debates with German thinkers on African development and the role of the west.” (“Geldof and Bono take G8 campaign to Germany,” Dec. 27). What is to debate? Only entertainers and politicians could be unaware of the straightforward starting points for solving Africa's many problems: free trade and governments that neither murder their citizens nor steal their property. The role of the west in implementing these solutions is equally clear: cut tariffs and other barriers to trade with Africa and eliminate official toleration (including foreign aid, official recognition, arms sales, etc.) of murderous regimes like Sudan's and kleptocratic ones like Zimbabwe’s.

Andrew P. Morriss
H. Ross & Helen Workman Professor of Law
University of Illinois, College of Law

Meanwhile, the Wall Street Journal editors provided this timely editorial in which they point out that it is no coincidence that the current growth and relative stability in financial markets has coincided with the enormous growth in the use of financial innovations such as securitizations and derivatives:

One of the things that has changed over the past 30 years is the extraordinary extent of financial innovation. When it comes to the decline of risk premiums and financial stability, securitization and the use of derivatives have both played an unsung role. [. . .]

The sum of a myriad of these transactions over the economy means that everything moves a little faster. Credit becomes marginally cheaper and more plentiful. Risk is dispersed to those who feel they can better afford it. Thus does the supposedly non-productive financial sector of the economy provide fuel for future growth. Seemingly obscure transactions lower the cost of capital to businesses and consumers and spread risk in a way that decreases the danger of catastrophic financial accidents.

None of which means financial accidents won't happen. Market players sometimes bet wrong--there are always two sides to a transaction, and one party can always miscalculate its ability to withstand an adverse event. . . [. . .]

But these are not reasons to fear derivatives and other financial innovations. Risk is still out there. But as we leave a successful financial year and enter a new one, take comfort in the fact that all that buying, selling, swapping, trading and securitization of risk has actually made the financial system less risky.

Good point, which makes the WSJ's support of the lynching of one of the men responsible for a substantial amount of that financial innovation all the more troubling.

Finally, not to be outdone, Professor Ribstein analyzes the latest ongoing media rationalizations regarding Steve Jobs' involvement in backdating options at Apple:

Apple’s internal investigators, including directors Al Gore and Jerome York, ignored the funny odor and expressed “complete confidence in Steve Jobs and the senior management team.”

But NYU’s David Yermack says: “They have pretty much admitted that [Jobs] was directly involved in a fraud. If he had directly participated in altering depreciation schedules, or booking revenue that wasn’t yet earned, would they have full confidence in him?”

Terrific question Professor Yermack. Suppose, for example, we’re talking about Bernie Ebbers or Jeff Skilling? At least, with Al Gore on the case, we won’t be hearing, as we did with Enron, about Steve Jobs’ Republican friends.

It looks like former GC Nancy Heinen, who may have participated in the improper documentation, might take the fall. Meanwhile, Gregory Reyes of Brocade, who did not receive any backdated options, is facing criminal charges. Apple’s story seems to be that Jobs, possibly unlike Reyes and Heinen, didn’t “appreciate the accounting implications.”

Just to summarize the emerging blackletter law: It's ok to commit “fraud” (which is what we are repeatedly told backdating is) if (1) you are a media darling who produces fancy products that everybody loves; (2) you can get Al Gore to sign off (I guess this particular truth isn't too inconvenient); and (3) you can get somebody else in your company to do the dirty work.

There's also an anecdote here about actual effect of backdating on companies: Apple’s stock sank 5% after it looked like Job's job might be on the line, but then rose the same amount when the board committee made it clear he wasn’t going to be fired. Does this mean that the market doesn’t care about the fraud, but just about the governance turmoil the media frenzy wreaks on companies?

Posted by Tom at 6:37 AM | Comments (1) | TrackBack (0)

December 30, 2006

Reacting to the DeBakey surgery story

The reactions to last weekend's fascinating story about the surgery to repair a dissecting aortic aneurysm in 97-year old Medical Center icon, Dr. Michael DeBakey, are as interesting as the story itself. The following are a few comments selected from letters to the NY Times regarding the story:

"Dr. Michael E. DeBakey’s surgery may have been a technical advance of heroic and dramatic proportions, but it was a setback for patients’ rights. Dr. DeBakey is the epitome of the informed patient, and a document evidently existed that said he did not want surgery for his disease.

Progressing into a coma as one dies is a normal part of the terminal stages of many illnesses. Directives exist to prevent such an incapacitated patient from becoming a victim of the grieving spouse or the frightened caregiver.

Because of Dr. DeBakey’s stature and publicity about his case, this surgery may decrease patients’ right to die in a manner they desire, an unfortunate result of a remarkable feat."

"Your article about Dr. Michael E. DeBakey’s aortic aneurysm operation was described as emblematic of the difficulties of end-of-life care, but it is as much or more emblematic of the difficulty patients encounter in having their wishes to forgo treatment respected. No one in the world had better capacity to refuse this operation than Dr. DeBakey, and he did.

. . .After the world’s best medical care, months in the hospital and a million dollars, Dr. DeBakey and his family had a happy outcome.

But for those thousands of ordinary patients who must struggle against family, church and state to refuse invasive, risky, experimental or simply unwanted care, it is not necessarily a happy ending."

"I wonder if Katrin DeBakey would have been so eager for her husband’s surgery if she had had to provide all the postoperative care herself as the rest of us have to do.

Almost any elderly patient with good insurance and an educated and younger spouse making decisions can get good high-tech surgery, but the system fails when the hospital dumps the patient back home on the spouse after only two days of postoperative hospital care.

In Mrs. DeBakey’s case, her husband received months of in-hospital intensive care, emergency care, more surgery, physical therapy and psychological support.

The rest of us caregivers would have long since passed the breaking point from dealing on our own with medical emergencies, unavailable doctors, no home nurses, no respite time and the psychiatric problems of many elderly male patients — rage and depression."

"The article about Dr. Michael E. DeBakey illustrates many central issues that arise in determining types of care for gravely ill patients and whether to perform a risky but potentially lifesaving procedure.

The case exposes the standards of patient autonomy and informed consent — foundational principles of ethical medicine — to be impossible ideals. Even Dr. DeBakey, likely the person most thoroughly informed about the procedure, regretted his prior decision to forgo the surgery.

Another problem exposed by this case is the persistent misuse of the do-not-resuscitate order, interpreting it to signify more general wishes about less aggressive care instead of its actual, more restricted meaning: not resuscitating in the event of cardiac arrest."

As one of the other letter-writers pointed out, the story also reflects that Dr. DeBakey is the consummate educator, using his experience to prompt consideration and discussion of important medical and ethical issues in caring for patients who are close to death. He is truly one of Houston's treasures.

Posted by Tom at 7:09 AM | Comments (0) | TrackBack (0)

December 29, 2006

My, how quickly things change

My light holiday posting was even lighter today as I've been dealing with some technical issues. But I would be remiss if I didn't point out that the glow of the Aggies' late November victory over the Longhorns is now officially gone after the Cal Bears thumped the Ags 45-10 in last night's Holiday Bowl.

Meanwhile, the best crack of the bowl season came at halftime of the Houston-South Carolina LIberty Bowl game. After a wild first half that ended with Houston leading 28-17, the sideline reporter asked South Carolina head coach Steve Spurrier as he headed to the locker room: "How do you defend the explosive Houston offense?" Coach Spurrier replied with a wry grin: "Obviously, not how we're doing it."

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

December 28, 2006

The Houston connection to "We Are Marshall"

Texas Longhorn uber-fan Matthew McConaughey is starring in the new movie, We Are Marshall, the story about the rebuilding of the Marshall University football program after the devastating 1971 plane crash that killed most of the university's players, coaches and support staff. But as noted in this Gene Frenette/Florida Times-Union article, the success of the Marshall rebuilding project owed much to legendary University of Houston football coach, Bill Yeoman, whose innovative Houston Veer offense allowed the undermanned Marshall program to spread the field and rely on deception and finesse in competing with its opposition. In the small world department, it was former West Virginia coach and legendary Florida State coach Bobby Bowden who introduced the Marshall coach at the time to Coach Yeoman's creative offensive scheme.

Coach Yeoman was the head football coach of the Houston Cougars from 1962-1986, and he remains a vital member of the University of Houston community to this day. Coach Yeoman and the Cougars quickly gained national prominence after he introduced the explosive Veer offense in 1964, but more importantly, Coach Yeoman that year also broke the color barrier for major Texas football programs when San Antonio’s Warren McVea accepted the University's offer of a scholarship to play football at UH.

During his 25 year coaching career, Coach Yeoman compiled a record of 160-108-8 and guided the Cougars to 11 bowl games appearances including Cotton Bowl victories over Maryland in 1977 and Nebraska in 1980. He also led the Cougars to four Southwest Conference titles (1976, 1978, 1979 & 1984), including the 1976 title that came during Houston’s first year as a member of that venerable conference. For that achievement, Coach Yeoman was named Texas Coach of the Year and runner-up for National Coach of the Year. On top of all that, Coach Yeoman is one of the nicest and most engaging people that I have ever met, and yet another one of the numerous people that make Houston such a fascinating place to live.

Posted by Tom at 6:47 AM | Comments (0) | TrackBack (0)

December 27, 2006

Culture War

The magnificent Fightin' Texas Aggie Marching Band is preparing to invade San Diego for Thursday night's Holiday Bowl game between the Aggies and the University of California-Berkeley, and this Brent Schrotenboer/San Diego Union Tribune article captures the culture war that will be one of the themes of this particular game. To put it mildly, College Station -- the home of Texas A&M -- will never be mistaken for Berkeley. A few of the other differences between the two institutions that the article notes:

School bosses:

Texas A&M: The school president, Robert Gates, was recently chosen by President Bush to supervise the war in Iraq as the new Secretary of Defense.

Cal: Chancellor Robert Birgeneau, a native of Toronto, lists on his curriculum vitae an editorial he once wrote for the Toronto Star entitled “Celebrating Sexual Diversity.”

Food:

Texas A&M: Several places serve well-cooked dead animals in College Station, especially C&J Barbecue, which serves jalapeño cheese sausage, pork loin and ribs.

Cal: The Free Speech Movement Cafe at the library boasts that its “coffee is Fair Trade and organic, and tea is organic and Fair Trade when possible. The menu is a manifestation of the ideals inherent in the Free Speech Movement ... through this philosophy, students become conscious that their choice for food is a political choice as well.”

Campus faces:

Texas A&M: Football games are attended by former President George H.W. Bush, whose presidential library is located on campus.

Cal: A student became known as “The Naked Guy” in the 1990s by attending classes nude.

Guns:

Texas A&M: The school boasts of its Metzger-Sanders gun collection, one of the state's largest, with more than 600 firearms and accessories. “The collection is host to thousands of visitors every year and serves as a point of discussion and study to gun enthusiasts,” according to the exhibit's Web site.

Cal: More than 88 percent of Berkeley freshmen agreed to a 2004 survey question that stated “the federal government should do more to control the sale of handguns.”

Girls:

Texas A&M: The school was all-male for several decades. It didn't open its doors to women students until 1963, on a limited basis. Full admission for women began in 1971, with the Corps of Cadets first allowing women to join in 1974.

Cal: The first female student enrolled in 1870. One its most famous former students is Betty Friedan, co-founder of the National Organization of Women, and author of the 1963 book “The Feminist Mystique.”

Curriculum:

Texas A&M: Students can take a class called “Amphibious Warfare.”

Cal: Students can enroll in “Introduction to Nonviolence.”

Military history:

Texas A&M: The school opened in 1876 as the Agricultural and Mechanical (A&M) College of Texas, with mandated military training. Its Corps of Cadets remains the largest uniformed body of students in the nation outside the U.S. service academies, according to its Web site.

Cal: Students formed the epicenter of the antiwar movement in the 1960s as the Vietnam War raged on. In 1965, hundreds tried to stop trains of troops by standing on the tracks in West Berkeley. More than 800 students were arrested at the school's administration building in 1964, ending their massive sit-in protest of the school's policies concerning academic freedom and free speech.

Politics:

Texas A&M: In Brazos County, home of A&M, Bush, the Republican, won 70 and 69 percent of the vote in the 2000 and 2004 elections, respectively.

Cal: In Alameda County, home of Cal, it was almost the mirror opposite. John Kerry, the Democrat, won 75 percent of the vote in Alameda County in 2004, up from the 69 percent won by Democrat Al Gore in 2000.

Posted by Tom at 7:25 AM | Comments (1) | TrackBack (0)

December 26, 2006

A patient of the surgery he created

This NY Sunday Times story by Lawrence K. Altman, MD reports that one of Houston's greatest surgeons continues to be on the cutting edge of surgical and related medical issues even as he approaches 100 years of age:

In late afternoon last Dec. 31, Dr. Michael E. DeBakey, then 97, was alone at home in Houston in his study preparing a lecture when a sharp pain ripped through his upper chest and between his shoulder blades, then moved into his neck.

Dr. DeBakey, one of the most influential heart surgeons in history, assumed his heart would stop in a few seconds. [. . .]

But when his heart kept beating, Dr. DeBakey suspected that he was not having a heart attack. As he sat alone, he decided that a ballooning had probably weakened the aorta, the main artery leading from the heart, and that the inner lining of the artery had torn, known as a dissecting aortic aneurysm.

No one in the world was more qualified to make that diagnosis than Dr. DeBakey because, as a younger man, he devised the operation to repair such torn aortas, a condition virtually always fatal. The operation has been performed at least 10,000 times around the world and is among the most demanding for surgeons and patients.

Over the past 60 years, Dr. DeBakey has changed the way heart surgery is performed. He was one of the first to perform coronary bypass operations. He trained generations of surgeons at the Baylor College of Medicine; operated on more than 60,000 patients; and in 1996 was summoned to Moscow by Boris Yeltsin, then the president of Russia, to aid in his quintuple heart bypass operation.

Now Dr. DeBakey is making history in a different way — as a patient. He was released from Methodist Hospital in Houston in September and is back at work. At 98, he is the oldest survivor of his own operation, proving that a healthy man of his age could endure it. [. . .]

But beyond the medical advances, Dr. DeBakey’s story is emblematic of the difficulties that often accompany care at the end of life. It is a story of debates over how far to go in treating someone so old, late-night disputes among specialists about what the patient would want, and risky decisions that, while still being argued over, clearly saved Dr. DeBakey’s life.

It is also a story of Dr. DeBakey himself, a strong-willed pioneer who at one point was willing to die, concedes he was at times in denial about how sick he was and is now plowing into life with as much zest and verve as ever.

But Dr. DeBakey’s rescue almost never happened.

Read the entire fascinating story, which includes Dr. DeBakey's frank admissions that death seemed like a reasonable alternative to the pain he was enduring, that he initially declined the surgery because he would rather die than risk becoming an invalid and that he went into denial as his condition deteriorated. It is a fascinating story about facing death by a man whose legacy is saving lives.

Posted by Tom at 4:20 AM | Comments (1) | TrackBack (0)

December 25, 2006

2006 Weekly local football review

Texans 27 Colts 24

There really is a Santa Claus after all.

Seemingly out of nowhere, the Texans (5-10) dug down and showed some pride as they exploited the Colts (11-4) poor run defense to control the clock and pull out a thrilling Christmas Eve victory at Reliant Stadium. After knocking off the Colts for the first time in ten games, the Texans now have an opportunity to fulfill my pre-season prediction of six wins for the team if they can knock off the Browns (4-11) next weekend at Reliant.

Troy 41 Rice 17

The Owls (7-6) storybook season came to a close with a trouncing at the hands of the Troy Trojans in the New Orleans Bowl. The loss was not really a surprise as I did not give the Owls much of a chance without their injured QB, Chase Clement. But the defeat did not take any of the luster off of the Owls great season, which vindicated my early season belief that the Owls were going to cause headaches for most opposing teams this season if they could survive a brutal early-season schedule. Things are definitely looking up on the gridiron over at Rice.

Posted by Tom at 8:52 AM | Comments (0) | TrackBack (0)

December 24, 2006

There is a football game in Houston today?

That was the question that one of my sons asked me incredulously yesterday. With the Texans generating no positive buzz in their hometown, not many folks really care much about watching or talking about the Texans. Thus, casual fans such as my son are surprised that the team is still playing.

The game today against the Colts will likely be one of the final chapters of the David Carr saga in Houston. The Texans made a mistake in using the franchise's first draft choice and the first overall draft pick in the 2002 NFL Draft on Carr at a time in which the team should have been stockpiling draft picks and players to build depth at all positions. The Texans compounded that mistake by not building a competent offensive line to protect Carr, which resulted in Carr being hit more than a punching bag by opposing defenses. As a result, Carr never developed the pocket presence or recognition skills in reading opposing defenses to succeed as an NFL quarterback. With his development in those areas stunted, he is no longer the Texans QB of the future and frankly, needs to go to a team that has a competent offensive line so that he can attempt to salvage his NFL career.

Carr's defenders often point out that his NFL passing rating is really not all that bad, currently 13th among the 32 starting NFL QB's. However, as with batting average in baseball, the NFL passing rating is a highly misleading standard to evaluate QB's. As noted several times earlier, the folks over at the Wages of Wins have developed a far superior statistical model for for evaluating QB's and, based on that standard, the bottom has really fallen out of Carr's season. After meandering around 20th among the 32 starting NFL QB's for most of the season, Carr has slid to 29th among the 32 starting NFL QB's for the season, including individual week rankings of 31st and 34th (a couple of backups also played that week) over two of the past three weeks.

As noted earlier, Carr is a fine young man, so it's too bad that it has not worked out for him in Houston. However, Saints QB Drew Brees is one of the top-ranked QB's in the NFL this season and he is essentially a contemporary of Carr (Brees is in his sixth season, Carr is in his fifth) who was placed in a similarly difficult position with his initial team as Carr was here. The bottom line is that Brees developed while Carr has not. In the dog-eat-dog world of the NFL, that lack of development will be what buys Carr a ticket out of Houston.

Posted by Tom at 7:11 AM | Comments (2) | TrackBack (0)

December 23, 2006

A couple of interesting Houston real estate entreprenuers

I've been meaning to pass along a couple of interesting recent New York Times articles on Houston real estate entreprenuers, including this one on former Houston Rocket star Hakeem Olajuwon's development of his Houston real estate empire, which one local observor notes was built by "buying high and selling higher."

The other article is this one on the Third Ward's Project Row House project, artist Rick Lowe's ambitous redevelopment effort that utilizes contributions of services from local architectural students and members of Houston's art and charity communities.

Unfortunately, the Times piece missed several less alluring parts of the Project Row story, which are filled in aptly by the always entertaining Slampo.

Houston has traditionally been an incubator for business entreprenuers, what with its relatively low cost of living, few barriers to entry and restrained regulatory environment. Olajuwon -- despite his occasional missteps -- and Lowe -- despite the seemier side to his project -- are actually couple of reasons why we should try to keep it that way. Progress is rarely achieved without risk. The best way to inhibit progress is to attempt to control risk-taking, which generally leads to perverse incentives. A much better policy is to encourage risk-taking and then allow the market to weed out the shysters. That some parts of that market must learn about the downside of risk the hard way is not a good reason to adopt policies that constrict creation of jobs and wealth.

Posted by Tom at 6:53 AM | Comments (0) | TrackBack (0)

December 22, 2006

Thoughts for a Christmas season

During this holiday season, I find myself thinking often of my friend and mentor, the late Ross M. Lence, who was the happiest and most fulfilled man who I have known in my life. A couple of weeks ago, as I was preparing my tribute to Ross, I listened to a remarkable sermon at my church in The Woodlands in which a visiting speaker, Craig Hill, a New Testament scholar at Wesley Theological Seminary in Washington, D.C., talked about his lifelong "project" to find fulfillment in his life:

Beyond mere survival, to what goal are we most directed? With what do we most concern ourselves during the course of our waking hours? Certainly, a variety of things require our attention: what we'll eat, what we'll wear, how we'll accomplish the tasks before us. These all concern us, but none of them dominates our lives in quite the way that something else does. That thing is so central that it has been called "The Project."

I started working on my project when I was quite small, smaller than I can consciously remember. That time that I bought my mother a present for no special occasion with my allowance, the times I mowed the lawn or did other jobs without being asked–little did I know that I was hard at work on my project. The criticisms and childhood taunts that stung, the disappointment at not being chosen a part of the group, little did I understand that the hurt I felt was that of a project threatening to fail.

People have variously described the project. It is called the quest for meaning, the desire for competence. the need for self-esteem and purpose. Behind it all is the question "Who am I?"--or, more particularly, "Do I matter?" [. . .]

It's the pervasiveness of the project that is so interesting. It lurks around every corner; it's in the very prejudices, intentions, and dreams that guide our lives. What impression will I give by my dress, my speech, my possessions, my job? Will the others in the office think that I'm a good employee; am I a good mother or father; was I "being myself" when I behaved that way last night? How am I doing?

Dr. Hill went on to describe how each one of us shares the struggle of "the project" and how an essential element of Christian theology is based upon Christ's teaching and example of how to conquer it. His sermon was so insightful that I came away from church that day wishing I had a copy of it.

Well, Asbury Theological Institute scholar Ben Witherington happened to be at my church that day, too, and he had the same thought as I did. Except that he counts Dr. Hill as a friend and was able to get a copy of the sermon, which he has posted here. Regardless of your religious persuasion or whether you believe in a religion at all, take a moment during this holiday season to read it. You will not be disappointed.

Posted by Tom at 4:29 AM | Comments (0) | TrackBack (0)

Might the Cowboys' stadium deal actually work out?

Mitch Schnurman, business columnist for the Ft. Worth Star-Telegraph, thinks that the Dallas Cowboys stadium project (prior posts here) is -- against all odds and economic sense -- is shaping up to be a reasonable deal for the city of Arlington.

I remain skeptical of the true economic benefit of the stadium for Arlington citizens. However, make no doubt about it, the new stadium has reinforced the Cowboys' position as Texas' favored professional football team and it's clear that the Texans remain light years away from challenging the Cowboys in that regard.

Posted by Tom at 4:22 AM | Comments (0) | TrackBack (0)

A remarkable Aggie resource

Despite Desmond Howard's gaffe earlier this week, Texas A&M University is a fascinating and indelible part of Texas culture. Recognizing that stature, Texas A&M's Cushing Library has undertaken a remarkable project entitled "The Historic Images Collection--Historic Images and Photographs of the Texas A&M Community."

The collection is a treasure trove of interesting photographs, such as this one of a pre-1900s baseball squad. Another early baseball team is here, while this 1923 picture includes in the back row, second from left, King Gill, the original A&M “12th Man,” and in the middle of the back row, Pat Olsen (the tallest one), a former major leaguer for whom the A&M baseball stadium is named. Finally, this picture of Aggie great Jacob Green from the 1970's shows the Emory Bellard-era striped shoulder football uniforms.

This is only a fraction of the photos in this remarkable collection, so take a few minutes to peruse the archive. Aggies take quite a bit of ribbing in Texas for their dogged adherence to tradition, but that respect for tradition is a big part of what produced this wonderful collection.

Posted by Tom at 4:10 AM | Comments (1) | TrackBack (0)

December 21, 2006

Desmond Howard rides to the rescue of Longhorn fans

It's been a tough month for Texas Longhorn faithful.

First, there was the demoralizing loss to Kansas State, which knocked the Horns out of any chance for a rematch with Ohio State in the BCS National Championship game. Then, the Horns laid an egg against arch-rival Texas A&M, allowing the Aggies to win their first game in that hallowed series in seven years. That bitter loss has prompted some good natured ribbing of Longhorn fans, who were due to descend a notch or two after last season's magic national championship run.

However, leave it to ESPN college football commentator Desmond Howard to make things right again in Longhorn country. Seems as if Desmond is a little confused about which team from Texas is playing in the Holiday Bowl this year. So, when in doubt, Howard falls back on the one team from Texas that everyone knows. ;^)

Posted by Tom at 4:55 AM | Comments (2) | TrackBack (0)

More ripples from Kelo

The economic and legal impact of the Supreme Court's controversial decision last year in Kelo v. New London has been a common topic on this blog, so this Institute for Justice press release on a property dispute that arose from a developer manipulating a local government's eminent domain power for his own benefit:

A federal court has now approved an extortion scheme using eminent domain under last year’s Kelo decision. Unless the U.S. Supreme Court overturns the rulings, developers may threaten property owners, “Your money or your land.”

Think this is an overstatement?

Consider what is happening right now in Port Chester, N.Y., to entrepreneur Bart Didden and his business partner, whose case will be considered for review by the U.S. Supreme Court on January 5, 2007.

With the blessing of officials from the Village of Port Chester, the Village’s chosen developer approached Didden and his partner with an offer they couldn’t refuse. Because Didden planned to build a CVS on his property—land the developer coveted for a Walgreens—the developer demanded $800,000 from Didden to make him “go away” or ordered Didden to give him an unearned 50 percent stake in the CVS development. If Didden refused, the developer would have the Village of Port Chester condemn the land for his private use. Didden rejected the bold-faced extortion. The very next day the Village of Port Chester condemned Didden’s property through eminent domain so it could hand it over to the developer who made the threat.

The 2nd U.S. Circuit Court of Appeals upheld this extortion under last year’s Kelo eminent domain decision. The court ruled that because this is taking place in a “redevelopment zone” they couldn’t stop what the Village is doing.

Read the entire piece. Is it any surprise that most property owners over on Richmond Avenue in Houston want no part of the new proposed Metro light rail line? Bad law makes for perverse incentives, particularly when the incentivized party can use the 800 pound gorilla of the state for private purposes.

Posted by Tom at 4:21 AM | Comments (0) | TrackBack (0)

The blog mob?

Wall Street Journal assistant editorial features editor Joseph Rago doesn't think much of blogs:

The blogs are not as significant as their self-endeared curators would like to think. Journalism requires journalists, who are at least fitfully confronting the digital age. The bloggers, for their part, produce minimal reportage. Instead, they ride along with the MSM like remora fish on the bellies of sharks, picking at the scraps.[. . .]

[Most blogs] are pretty awful. Many, even some with large followings, are downright appalling.

Every conceivable belief is on the scene, but the collective prose, by and large, is homogeneous: A tone of careless informality prevails; posts oscillate between the uselessly brief and the uselessly logorrheic; complexity and complication are eschewed; the humor is cringe-making, with irony present only in its conspicuous absence; arguments are solipsistic; writers traffic more in pronouncement than persuasion.

Larry Ribstein, who is on the cutting edge of writing on the impact of blogging, responds to Rago here and bores in on what is really going on here -- blogging's dilution of old media's impact on the distribution and shaping of information to the public. Does Rago really believe that the old media's approach to distributing and shaping information examined here, here and here is the best way to present reasonably complex issues to the public?

Moreover, another key utility of blogs is the linking to articles in newspapers, magazines and specialized journals that the reader probably would otherwise miss. For example, corporate law bloggers such as Professor Ribstein and Stephen Bainbridge have greatly facilitated the public and legal profession's understanding and discussion of often misunderstood business law principles that otherwise would have been relegated to rarely-read law review articles and an occasional backpage op-ed. The linking process increases the efficiency of the distribution of information and often refines that information. That such flow of information may be accompanied with a blogger's opinion of the information is really beside the point. Those opinions will be alternately illuminating, worthless or in-between, but the reader does not lose the ability to evaluate the information or the opinion.

Curiously, while a WSJ editor decries the proliferation of blogs, Peter Lattman's WSJ Law Blog is one of the best blogs to emerge during 2006. Go figure.

Posted by Tom at 4:06 AM | Comments (1) | TrackBack (0)

December 20, 2006

Navy Coach Johnson is not happy

This previous post introduced Navy head football coach Paul Johnson, who is a throwback to an earlier era before media relations reps and banal press releases. Coach Johnson took some questions the other day as he prepares the Midshipman to play Boston College in the Meineke Car Care Bowl in Charlotte on Dec. 30:

Q: You seem a little perturbed. Can I ask you why?

Johnson: Yeah, we didn't practice very well.

Q: You had told me originally that you would only go full pads the first couple of days, but it looks like you are going to do a little more full pad work.

Johnson: Yep. We will probably go full pads every day right up to the game.

Q: Why is that?

Johnson: We haven't exactly practiced the way I thought we should.

Q: Anything in particular you're seeing?

Johnson: We are lackadaisical and have no focus. Other than that it's been OK.

Q: Does hitting wake them up a little bit?

Johnson: I don't know. It hasn't yet, but it makes me feel better. I can't him them, but they can hit each other.[. . .]

A little more entertaining than the typical platitudes emanating from most head football coaches these days, don't you think? Considering how he has turned the Navy program around, I cannot understand what Alabama is waiting for -- Coach Johnson would be an instant hit at Bama.

Posted by Tom at 4:30 AM | Comments (2) | TrackBack (0)

The Brownback judicial litmus test fails

This previous post reported on the political posturing of Republican Senator Sam Brownback of Kansas, who was blocking a long-delayed judicial nomination by President Bush because the nominee had attended a commitment ceremony between a couple of gay friends. Well, Senator Brownback has finally backed off, but he still sounds demagogic even when he tries to do the right thing:

Senator Sam Brownback of Kansas, who blocked the confirmation of a woman to the federal bench because she attended a same-sex commitment ceremony for the daughter of her long-time neighbors, says he will now allow a vote on the nomination.

Mr. Brownback, a possible contender for the Republican presidential nomination in 2008, said in a recent interview that when the Senate returned in January, he would allow a vote on Janet Neff, a 61-year-old Michigan state judge, who was nominated to a Federal District Court seat.

Mr. Brownback, who has been criticized for blocking the nomination, said he would also no longer press a proposed solution he offered on Dec. 8 that garnered even more criticism: that he would remove his block if Judge Neff agreed to recuse herself from all cases involving same-sex unions.

In an interview last week, Mr. Brownback said that he still believed Judge Neff’s behavior raised serious questions about her impartiality and that he was likely to vote against her. But he said he did not realize his proposal — asking a nominee to agree in advance to remove herself from deciding a whole category of cases — was so unusual as to be possibly unprecedented. Legal scholars said it raised constitutional questions of separation of powers for a senator to demand that a judge commit to behavior on the bench in exchange for a vote.

Senator Brownback "did not realize" that his proposal violated the separation of powers upon which the federal government is based?

Posted by Tom at 4:13 AM | Comments (0) | TrackBack (0)

Epstein on Seton Hall's "ethics"

It all started a couple of weeks ago when Richard Epstein wrote the op-ed discussed in this post in which he decries the deferred prosecution racquet that coerced Bristol Myers into making a "contribution" to fund an ethics endowment at the prosecutor's law school, Seton Hall.

Professor Epstein's piece prompted a response from Seton Hall Law Dean Patrick Hobbs, who contends essentially that the ethics program is for such a good purpose that the school can overlook the serious breach of ethics that was involved in funding the program in the first place.

As you might expect, Professor Epstein has the last word in this WSJ ($) letter to the editor:

My Nov. 28 editorial-page commentary "The Deferred Prosecution Racket" brought forth a spirited but wholly unconvincing response by Patrick E. Hobbs, dean of the Seton Hall Law School ("Fighting the Infection of Unethical Behavior in Corporate Culture," Letters to the Editor, Dec. 8). Dean Hobbs defends his law school's decision to accept money for a business ethics program pursuant to the deferred prosecution agreement between the U.S. Attorney for New Jersey, Christopher J. Christie, and Bristol-Myers Squibb. It is sheer naiveté to assume that BMS and its attorneys signed on, as Dean Hobbs suggests, because of their deep belief that "the wrong corporate culture can become a breeding ground for unethical and criminal behavior." There's no way that BMS would have made that donation if freed from the risk of corporate prosecution. To avoid the taint, let Dean Hobbs raise money for a worthy project from one of thousands of New Jersey firms not faced with the threat of federal indictment.

If anything, his defense of the BMS-Seton Hall gift shows just how cancerous DPAs can be. Any good course in business ethics would stress the dangerous institutional incentives put in play if DPAs can direct payments to public charities. Let's posit that Seton Hall did nothing whatsoever to urge Mr. Christie to funnel money to it through the DPA. No matter: Once this precedent is set, it's open season for every public institution to lobby prosecutors for a piece of the action. Worse still, nothing prevents these organizations from quietly supporting criminal investigations to increase the likelihood of such windfalls. The public should not tolerate any arrangements that introduce these third-party influences into the prosecutor's office. Any excellence of Mr. Christie as a prosecutor or of Seton Hall in ethics reform are tainted by this gift, which the law school should return forthwith.

The systemic problems with DPAs, unfortunately, cannot be solved by Timothy Coleman's proposal (Letter, Dec. 8) to incorporate the various mitigating elements of DPA into the underlying criminal case. That approach will only clog criminal trials with matters wholly irrelevant to guilt or innocence. And it will fail to soften the present dire consequences from the threat of prosecution. Similarly, it is unwise (and futile) to seek congressional legislation to eliminate the harsh collateral consequences of a federal indictment in other federal agencies. Even if enacted, that legislation would not keep state regulators from pulling their licenses. The downward spiral of DPAs must be stopped at its source, by insulating corporations (but not their senior officers) from criminal prosecution. The recent McNulty memorandum doesn't shred the Thompson memorandum. But at least it is a start.

Game, set, match -- Epstein.

Posted by Tom at 4:05 AM | Comments (0) | TrackBack (0)

December 19, 2006

Tributes to a marvelous teacher

Today is the birthday of the late Ross M. Lence, one of Houston's finest teachers of the past generation. On Dec. 1st -- the final day of classes for the fall semester at the University of Houston -- I was privileged to be one of the speakers at the University's memorial service for Ross at the A.D. Bruce Religion Center on the University's central campus.

As with most anything that involved the reasonable Dr. Lence, the service was a joyous affair, alternately hilarious and moving. Bill Monroe, one of Ross' colleagues at The Honors College, had one of the best cracks of the day when he passed along another colleague's observation about the notoriously difficult-to-pin-down Dr. Lence:

"A colleague and mutual friend said that, for over a decade, he thought Lence was a liberal Jew from Chicago, Illinois, only to discover that he was a libertarian Catholic from White Fish, Montana."

After a festive reception at the UH Honors College, many of those who attended the memorial service walked across campus to Robertson Stadium to attend the Conference USA Championship game between the Houston Cougars and the Southern Mississippi, which the Coogs won in stirring style. All in all, a wonderful afternoon paying tribute to a dear friend and then an enjoyable evening of college football on a beautiful fall day in Houston.

The following are pdf's of the tributes to Ross delivered at the memorial service. Take a moment to read a bit about a great teacher and fine man who influenced the lives of thousands of Houstonians over the past 35 years:

The program for the memorial service is here;

Bill Monroe's opening and closing remarks are here;

Susan Collins, one of Ross' colleagues in the UH Political Science Department, gave this tribute and also passed along this tribute to Ross for PS Magazine that Susan wrote with former UH Political Science Professor Donald Lutz, who was instrumental in bringing Ross to the University of Houston;

Ed Willems, a UH Professor Emeritus of Psychology and a longtime teaching partner with Ross, gave this heartfelt tribute entitled "Ross Lence: He taught students and me."

Andy Little, one of Ross' longtime students and a student advisor in The Honors College, read Ross' moving essay "On Teaching;"

My tribute to Ross is here, Harris County Treasurer-elect Orlando Sanchez's tribute is here, and the tribute of Jeff Dodd, a partner at Andrews & Kurth who specializes in corporate securities law, is here; and

Finally, Honors College Dean Ted Estess was scheduled to reprise his moving eulogy that he originally delivered in July at Ross' funeral mass, but he chose instead to pass along extemporaneously several anecdotes and observations about Ross, a couple of which brought the house down with laughter.

Inasmuch as Ross often used to help needy and deserving students financially, The Honors College has established a scholarship fund in Ross' name. Donations to that fund may be sent to the Ross Lence Scholarship Fund, The Honors College, University of Houston, 212 M.D. Anderson Library, Houston, TX 77204-2001.

Posted by Tom at 4:49 AM | Comments (0) | TrackBack (0)

Progressive destruction

As noted in this post from earlier in the fall, the University of Texas began the next stage of its master redevelopment plan for D.K. Royal Memorial Stadium immediately after the Horns' final home game of the season against the Aggies.

This stage involves destroying the "horseshoe," the part of the stadium that wound around the north side. The horseshoe was built in 1926 for $125,000, but it is a remnant of the days when the stadium also served as a track stadium, so the seats in the horseshoe were far from the field and not a particularly good place to watch a football game. Thus, the horseshoe will be replaced with a new end zone facility that will be much closer to the field of play and, of course, include the ubiquitous ring of club boxes. The end zone seats will be finished in time for next season and the club boxes will be completed in time for the 2008 season.

By the way, once UT got crackin', it didn't take long to knock out the old horseshoe, as the time-lapse photo sequence below reflects:

Posted by Tom at 4:30 AM | Comments (0) | TrackBack (0)

An Aggie Rudy?

As this Brent Zwerneman/San Antonio Express-News article reports,Texas Aggie non-scholarship football player Ben Bitner walks to the beat of a different drummer:

Texas A&M football player Ben Bitner's long hair and serene manner earned him the nickname "Baby Jesus" from a teammate.

And in a tale of biblical proportions, two years ago Bitner found himself with no room at the inn.

After a dispute with a roommate over bills, Bitner, a nonscholarship junior defensive back for A&M, moved out of a house in College Station following the Aggies' appearance in the Jan. 1, 2005 Cotton Bowl.

For a year and a half, Bitner didn't have a place to stay. He lived under creek bridges on the A&M campus, in a fort he built in the woods near the school's golf driving range and anywhere he could stretch his hammock or lay his sleeping bag around Aggieland.

When he wasn't finding shadowy crannies to catch some shuteye — "Out of sight, out of mind," he said — Bitner was attending classes as a history major and excelling on the Aggies' scout team. The 5-foot-3, 160-pounder from Round Rock has played in two games this year as a member of the kickoff squad.

"I guess I'm not that smart of a guy," said Bitner, who's finally living in a house again. "But it was enjoyable. I slept better then than I sleep now. I didn't have to worry about cleaning up after myself or paying bills. It suited me just fine." [. . .]

Bitner owned a couple sets of clothes — "I'm not one of those guys who needs 10 different shirts," he said — and occasionally he simply would throw his duds in his laundry bag in the team's locker room by Kyle Field.

He would shower and clean up in the locker room or at the school's recreation center. At night, wherever he was curled up, campus security occasionally approached him and wondered what he was doing.

"I never tried to sleep in the same place on consecutive nights," Bitner said. "If they ran into me, they'd ask if I was student while I'd start packing my stuff. I'd tell them, 'Yeah, sorry, I'll get going,' and I'd just walk off."

Bitner said he never minded the cold days, because his parents kept their house cold when he was growing up.

"In December, January and February, that's when it was easiest for me to sleep outside," Bitner said. "It was hard to sleep in the summer." [. . .]

Starter Melvin Bullitt always drilled Bitner with one question, too, during his nomadic days.

"If you take a girl out," Bullitt would inquire, "do you ask her, 'Hey, want to come back to my place?'"

Explained Bitner: "Hopefully, the girl would invite me back to her place. If not, I needed to get to know her a little better before I broke the news that I was homeless. . ."

Posted by Tom at 4:12 AM | Comments (0) | TrackBack (0)

December 18, 2006

Is Tony Blair's Princess Di premonition coming true?

During a scene of Stephen Frears' clever film, The Queen, British Prime Minister Tony Blair's staff is relishing the public disdain for the Royal Family's restrained response to Princess Diana's death because it makes Blair -- who made a passionate public response -- look good in comparison. Blair -- played brilliantly by Michael Sheen -- grows frustrated with his staff's gloating because he knows that the same public venom that is being directed toward the Royal Family could just as easily be directed toward him.

Based on this Daily Telegraph article, Blair may be receiving precisely what he feared:

We have become like any other nation. No more can we tell ourselves that British corruption scandals are qualitatively different from those of hot countries, or that the peccadilloes that shake our polity would barely make the newspapers in Italy. In 1994, in his first major speech as Labour leader, Tony Blair promised that, under his leadership, Britain would never again be out of step with Europe. Now, in a grisly kind of way, his ambition has been fulfilled.

With so many sleaze stories in our news pages, it is easy to become confused. A prominent Labour donor has been profiting from the recommendations of his own task-force. Gordon Brown's supporters accuse Mr Blair of seeking to drag their man into the mire with him. Meanwhile, the Government has ordered an abrupt halt to the inquiry into allegations of hidden arms commissions, just as others begin to suspect corruption.

The sheer blizzard of allegations can leave us snow-blind. Perhaps, we tell ourselves, this is what all governments do. Perhaps Labour is no different from its predecessors. After all, wasn't John Major brought down after a series of sexual and financial scandals?

Yes, he was. But what is happening now is of a different order. The central accusation against this ministry – that it has sold favours, possibly even places in the legislature, to secret donors – is one that has not been seriously levelled at a British government since the introduction of the universal franchise. [. . .]

Tony Blair's belief in the superiority of his motives leads him to reason that, when the New Labour project is at stake, the ends justify the means.

We saw this within weeks of his accession when he sought to explain the Ecclestone affair – the first of many cash-for-favours scandals – on the basis that he was a pretty straight kinda guy. That, essentially, remains his attitude: he regards complaints about probity as petty next to what he is doing for Britain.

A decade later, parliament is cheapened, and the police have been called into Downing Street. That, more than the transformation of his party, more than Scottish devolution, more even than Iraq, will be his legacy.

Posted by Tom at 4:29 AM | Comments (0) | TrackBack (0)

The Smart Money

As Captain Renault -- Claude Rains' character in Casablanca -- might say, "I'm shocked, shocked that there is betting on sporting events!:"

The Brain Trust [is] a shadowy cabal of gamblers who wager enormous amounts of money on sports events, using a supercomputer and a SWAT team of injury and weather experts to take advantage of minor discrepancies in the point spreads set up by the Vegas linemakers. It’s a multimillion-dollar business — and legal — but there’s a wrinkle: they like to bet hundreds of thousands of dollars per game, and whenever the casinos sniff out betting syndicates like the Brain Trust, they show them the door in a heartbeat. That’s because in addition to risking huge losses each week, the bookmakers are forced to adjust their betting lines — sometimes by two or three points for a football game — whenever the “smart money” wades in, since they desperately need other customers to bet the other side to balance their action and stand a chance of making money.

The foregoing excerpt is from this NY Times book review of Michael Konik's new book, The Smart Money (Simon & Schuster 2006). As Konik notes, the Brain Trust attempts to manipulate the point spread on sporting events in the same way that hedge funds and currency speculators attempt to move the stock market on certain stocks and currencies. Capt. Renault would almost certainly be playing.

Posted by Tom at 4:10 AM | Comments (1) | TrackBack (0)

2006 Weekly local football review

Patriots 40 Texans 7

Just when you thought it was impossible for the Texans (4-10) to stoop any lower, the Texans' offense rolled over and played dead against the Patriots.

This one was over by Sunday morning brunch as the Texans were down 17-zip after the first quarter and 27-zip at half. Actually, the Texans' defense did not play badly, but the Texans offense continually placed the defense in untenable positions. QB David Carr continues to look like a basket case, going 16-28 for a net 93 yards with 4 interceptions, 4 sacks and, as usual, no TD passes. I have long had doubts about Carr, but it's becoming more certain with each passing game that Carr will not be an effective QB for the Texans. Whether it's the constant pounding that he has taken as a result of the lack of protection from the Texans' deficient offensive line, his poor recognition skills or his dubious leadership qualities, Carr has regressed to a point in Houston that Coach Gary Kubiak's sideline vibes decisively indicate that he has given up on Carr.

However, as bad as Carr has been, certainly Kubiak and Texans' owner Bob McNair have to share in the blame for the woeful state of this team. As noted earlier here, after giving up on the Casserly-Capers regime, McNair changed the management model of the Texans football operation from a strong GM model to a strong head coach model. There is nothing wrong with that, but rather than hiring an experienced head coach, McNair opted for local boy-made-good Kubiak, who had never been more than a top offensive assistant in a strong head coach model that was run by an offensive coach (Denver's Mike Shanahan). The transition from assistant to head coach has been anything but smooth for Kubiak -- the Texans' defense has improved somewhat from last season's disastrous unit, but the Texans' offense is actually worse than last season's, which was almost unimaginable before this season began. Add in the fact that Carr and the Texans' offense have actually regressed in development under Kubiak's tutelage, the luster of Kubiak's reputation as an up-and-coming offensive coach has certainly been dulled.

At any rate, the Texans have two home games left to end the season, against the Colts (10-3, playing tonight) and the Browns (4-10). It looks as if the Texans' offense has packed it in, so it's hard to imagine that the team could beat anyone these days. But stranger things have happened. Let's just hope that another win or two doesn't result in a dramatic downward change in the Texans' draft position for the 2007 NFL Draft. The Texans need all the help they can get.

Posted by Tom at 4:01 AM | Comments (0) | TrackBack (0)

December 17, 2006

The University of Houston Master Plan

The University of Houston has been making some big plans recently, and this Matt Tresaugue/Chronicle article reviews them:

UH leaders intend to transform the campus with more housing, more restaurants, more shops and other places to be outside the classroom.

The goal, campus leaders said, is to create an environment that attracts the best scholars and encourages them to stick around. [. . .]

The plan also calls for doubling the usable square footage of classroom and office space, replacing parking lots with garages and closing part of Cullen to create a tree-lined pedestrian walkway by 2020.

What's more, the campus would meld with the surrounding Third Ward while reducing blight and encouraging more retailers to move in. University officials already are talking with private developers about a "town center" with shops and restaurants on both sides of Scott between Holman and Alabama.

Campus leaders do not know how much everything would cost but estimate the first five-year phase at $300 million, and largely at the university's expense. The redevelopment plan will be a key piece of an upcoming fundraising campaign, officials said.[ . . .]

The new plan would establish five themed precincts on campus, reflecting the "smart growth" trend elsewhere, with dense housing, retail and office space in village configurations.

The interior of the campus would be almost untouched.

To the north, campus leaders envision an arts village with a sculpture garden, outdoor amphitheater, cafes, galleries and housing, including loft apartments, on what are now parking lots.

About 1.6 million square feet of academic buildings and housing for graduate students would be added to the so-called professional precinct, to the east of the campus core.

Another area, the Wheeler precinct, would be devoted to undergraduates, with plans calling for low-rise residence halls to blend with the nearby University Oaks neighborhood.

To the west would be a Robertson Stadium precinct with 1.9 million square feet in new academic buildings, housing and retail near two proposed Metro light rail lines.

The University's summary of its master plan -- with renditions and video -- is here.

Despite the story on the ambitious UH master plan, the Chronicle still ignores the more important story about UH. As noted in this this previous post, UH in many ways is the most remarkable major public university in Texas. Started in 1927 as a junior college, UH grew quickly during its infancy while being endowed entirely with philanthropic contributions from generous Houstonians, which was made all the more remarkable by the fact that, at the same time, Houstonians were also contributing substantial amounts to the Rice University endowment. Inasmuch as bustling UH did not even become a state university until 1963, UH has received only a fraction of the endowed capital that the state has provided to its two older public university systems, the University of Texas and Texas A&M University. As a result, UH provides a comparable contribution to Houston and the state as UT and A&M while operating with far less capital than those two institutions, which prompted my earlier observation that UH provides "more bang for the educational buck" than either UT or A&M.

With the recent expansion of the MD Anderson Library into the centerpiece of the central campus, along with the development of innovative programs such as the Honors College, UH has already become an increasingly attractive choice for Texas students. Implementation of the master plan is the next logical step in that evolution. It's good that the local newspaper is noticing that, but it makes one wonder how much more benefit UH could contribute to Houston and the state if its endowed capital were on par with that of UT or A&M? That's a story that needs to be examined, and here's hoping that the Chronicle eventually tackles it.

Posted by Tom at 4:57 AM | Comments (1) | TrackBack (0)

December 16, 2006

It's football time in Texas

It's the lull before the onslaught of the college football bowl games, but football still permeates the culture of Texas as the high school playoffs move toward conclusion, the Cowboys contend for an NFL playoff berth and the Texans prepare for the 2007 NFL draft. The following are a few interesting football-related items that I noticed over the past week:

Dallas native and longtime Kansas City Chiefs owner Lamar Hunt died after a long bout with cancer. Chronicle NFL columnist John McClain recalls a funny story about a meeting between Hunt, Bud Adams and legendarily crusty Chicago Bears owner George Halas at the time that Hunt and Adams were starting the old American Football League in the early 1960's.

Despite the Texans' problems, it's reassuring to know that owner Bob McNair does not panic.

Chronicle sportswriter Dale Robertson reports on the remarkable success story that is the Southlake Carroll Dragons football program (the cheerleading team is another matter, though).

In this interesting column ($), the Wall Street Journal's resident stathead, Allen St. John, makes a stab at objectively evaluating the pass protection of NFL teams. In so doing, he comes up with a stat that he calls the Sack Factor, which takes the sack yardage a team allows and divides it by the number of pass attempts. The lower the number, the better the protection. Although he finds a correlation between good teams and a low Sack Factor, the statistic needs some refinement -- the Texans pass protection, which is hideous, does not rate as one of the worst in the NFL, probably because the Texans' passing game is based on short, ineffectual pass routes that limit sacks as much as possible.

The lovable Ida Mae Crimpton pens her latest column from her porch in Elgin on her beloved Texas Longhorns' preparations for the Alamo Bowl against the Iowa Hawkeyes. As Ida Mae observes, "Boy, whoever said it isn't far from the castle to the outhouse sure knew what they were talking about."

And finally, don't miss Matt Damon's hilarious impersonation of Longhorn fan Matthew McConaughey on a recent Letterman show. As Clear Thinkers favorite Dan Jenkins might say, "Dead Solid Perfect!"

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

December 15, 2006

BlawgSearch

The blawgosphere -- that is, the world of law-related blogs -- has really come of age over the past couple of years as a research source, so it is becoming increasingly important to have a tool that facilitates research contained in blawgs.

BlawgSearch is a search engine that Tim Stanley and the folks at Justia.com have developed that focuses one's search on blawgs (Tim's blog post on BlawgSearch is here). It is in beta right now, but Tim and his crew are adding blawgs on a daily basis. While using it on a variety of issues over the past couple of days, I have found the coverage to be excellent already and far more focused than blawg searches on more generalized engines. Check it out and include it in your bookmarks. This looks like a winner.

Posted by Tom at 4:50 AM | Comments (0) | TrackBack (0)

Those darn "four-legged fire ants"

This earlier post reported on the emerging market for the meat of feral hogs, which are a fixture of rural (and, increasingly, suburban) Texas.

The Chronicle's Shannon Tompkins takes the discussion of earlier post several steps further and provides this excellent overview of the feral hog phenomenom in Texas. The battle between humans and hogs is a fascinating story involving a myriad of subjects -- including biology, ecology, farming, hunting and game policy -- and it appears that the hogs are winning that battle!

Posted by Tom at 4:30 AM | Comments (0) | TrackBack (0)

Phoenix's light rail boondoggle

The dubious economic nature of Houston's light rail system is a common topic on this blog, so I took interest in this insightful Warren Meyer post that ponders why a light rail system is being built in Warren's hometown of Phoenix, which is one of the few metro U.S. areas that may be even less conducive to such a system than Houston.

Given the inefficiency and inflexibility of such systems, Warren wonders who supports such boondoggles and suspects that a few powerful businesspeople are using the rail line in an effort to jumpstart the misguided goal of establishing a dominant downtown area in the decentralized Phoenix metro area. Add in a few high-minded environmentalists and many others who are simply ignorant of the enormous cost relative to the benefit of such systems and, as Peter Gordon wryly-noted awhile back:

"It adds up to a winning coalition."

Unfortunately, as another Phoenix-area resident -- Nobel Laureate Ed Prescott -- reminded us recently, once such coalitions are successful in establishing a governmental policy subsidizing such boondoggles, it is much more difficult to end the public subsidy of the boondoggle than to start it in the first place.

By the way, Houston Metro's subsidy of its light rail system has other perverse effects, such as the lack of security for one of the transit options that actually makes sense for the Houston area.

Posted by Tom at 4:04 AM | Comments (2) | TrackBack (0)

December 14, 2006

Ed Prescott's five macroeconomic myths

2004 Nobel Laureate Edward Prescott in this WSJ ($) op-ed lays out five macroeconomic myths and observes as follows:

The sky is not falling. No need to panic and start playing around with all sorts of policy responses. Despite the impression created by some economic pundits, the U.S. economy is not a delicate little machine that needs to be fine-tuned with exact precision by benevolent policymakers to keep from breaking down. Rather, it is large and complex, with millions of people making billions of decisions every day to improve their lives, the lives of their families and the health of their businesses.

On the one hand, it's difficult to screw up all these well-intentioned people by crafting bad policy, but, on the other hand, it is of course entirely possible to do so. And once things are broken, they are much harder to fix. For example, all those doomsayers predicting a recession will get their wish if taxes are suddenly raised, new productivity-strangling regulations are enacted, the U.S. turns against free trade, or some combination thereof. Otherwise, we should expect 3% real growth, based on 2% increases in productivity and 1% population growth. This economy is fundamentally sound.

So we have to be careful that we don't believe everything we read in the papers. Things are never as bad as the last data that was released, nor are they as good. Likewise, policy should not be revised at every turn, nor rules changed by political whim. Meaning, we should be careful about accepting conventional wisdom as, well, being wise. One of the great disciplines of economics is that it challenges us to question status quo thinking.

In other words, it's hard to screw up something as big and complex as the U.S. economy, but we're eminently capable of doing it with unnecessary and ill-advised policy moves. And it's much harder to correct the bad policy than to screw up in the first place. That's a good reason to support this.

Posted by Tom at 4:55 AM | Comments (0) | TrackBack (0)

The NFL Network's one week special

You have to hand it to the owners of the National Football League -- they recognize a public relations blunder when they see one coming.

As noted in earlier posts here and here, the NFL owners' attempt to drive a hard bargain with cable companies that service most of the nation's television viewers has backfired badly in regard to the owners' NFL Network venture. The viewing marketplace couldn't care less about the NFL Network's product and the NFL owners have come off looking like petty moneygrubbers by not making a deal that allows most football fans to watch the NFL Network's games. In the meantime, the NFL owners' refusal to cut a deal with the cable companies meant that two post-season bowl games to be televised by the NFL Network -- Houston's Texas Bowl between Rutgers and Kansas State and the Insight Bowl pitting Texas Tech against Minnesota -- would not be seen by most viewers in the nation.

Well, the huge collective yawn of viewers, combined with the growing crescendo from long-suffering Rutgers fans who were not going to be able to watch their team play in the Texas Bowl, has prompted the NFL owners to offer an olive branch -- one week of free access to the NFL Network in the New York area during the week of the two bowl games.

Now, the only problem with the offer is that Time Warner -- one of the largest cable companies in the country and the one that services most of Houston -- has not decided whether to accept the NFL owners' offer. Regadless, most football fans in Houston won't see the game because the NFL owners' offer is limited to the New York area.

Are you getting the same impression that I have that the NFL owners have overplayed their hand a bit on this one? ;^)

Posted by Tom at 4:41 AM | Comments (0) | TrackBack (0)

Krispy Kreme's new strategy

The mercurial rise and fall of Krispy Kreme used to be a common topic on this blog, so I took notice of an interesting observation about the company that the NY Times' business columnist Floyd Norris recently made on his blog:

Krispy Kreme came out with some more sort-of numbers today, and the market liked it. Its stock rose 17 cents, to $9.98.

The doughnut company said sales were down, and that it continued to lose money in the quarter ended in October. But it said it couldn’t get out a 10-Q report to the Securities and Exchange Commission, or calculate just how much it lost, because it was too busy working on older reports.

The company has not put out any reports for the current fiscal year, and is still missing one from the quarter than ended two years ago.

But the stock has done well. It is up 74 percent this year. Short-sellers still hate the company, with the last monthly report showing a short position of 19.3 million, more than 30 percent of the shares outstanding, but others think the glory days will return. Some of those shorts evidently cannot find shares to borrow, but hold on to their positions anyway. The company has been on the list of stocks with a large number of failures to deliver for 110 days.

When the New York Stock Exchange continues to list a company, and investors continue to embrace it despite long-delinquent filings, it is hard to see what incentive the company has to get the full numbers out. It promised the S.E.C. today that it “intends to file the Exchange Act Reports at the earliest practicable date,” but did not speculate on when that might be.

In other words, the company is doing so poorly that it has almost crossed the line to doing well. ;^)

Posted by Tom at 4:39 AM | Comments (0) | TrackBack (0)

December 13, 2006

Not another dime

Charles Kuffner, one of Houston's best political bloggers, notes a small sign of progress (also here) in the seemingly relentless and misguided campaign of local governments to build expensive and unnecessary fiefdoms in the guise of large jails:

State Sen. John Whitmire, D-Houston, said there is no need for [Harris County] to spend at least $267 million building two jails when it could cut the inmate population at the county jail by allowing non-dangerous offenders out on bail before trial.

"I am very suspect whether there is a need for jail space," said Whitmire, who chairs the Senate Criminal Justice Committee. "Harris County wouldn't have an overcrowding problem at all if it had an effective pretrial release program."

Whitmire said the Legislature, in the upcoming session, may look at ways to help reduce jail overcrowding, such as shorter sentences for some crimes.

Commissioners Court likely will ask voters next November to approve bonds for new jails that would add 4,600 beds.

County Judge Robert Eckels and other members of Commissioners Court said the jails are needed to reduce overcrowding now and in the coming decades.

As noted earlier here, the condition of the Harris County Jail has long been a civic embarrassment, but the solution is not simply to build more jails. As noted earlier here, Scott Henson has written this thorough and insightful analysis of the true problem with the Harris County Jails, which is overcrowding from sloppy and lazy processing of prisoners who do not need to be incarcerated pending their trial.

There are some powerful political forces -- county commissioners, contractors, police unions, etc. -- that benefit from and support this unending spiral of jail construction, while the constituencies supporting prisoners are not as powerful or well-funded. However, it is clear that the solution is not simply to build bigger and more expensive jails. Rather, building additional facilities should not even be a consideration unless or until Harris County adopts a sensible pre-trial release policy that frees up literally thousands of existing jail cells that are being wasted on folks who should not be in jail. Moreover, the county should also be required to fix the chronically deplorable condition of its existing jails before seeking to build more. This is a community issue -- and in other communities as well -- that should transcend party politics. But I doubt that it will.

Posted by Tom at 4:57 AM | Comments (1) | TrackBack (0)

Continental's big news

The big news story today in Houston is the announcement about Continental Airlines engaging in merger negotiations with Chicago-based United Airlines. Here are the stories from the Wall Street Journal ($), the NY Times, the Financial Times and the Houston Chronicle.

The bottom line on the proposed merger is that it's a longshot for a variety of reasons, not the least of which is that such mergers are traditionally complex and expensive. However, the fact that merger talks between the second-largest (United) and the fifth-largest airlines are taking place at all is a reflection that the airline industry is primed for a round of consolidations as the industry rebounds from the severe downturn that was inflamed by the effects of September 11, 2001 attacks on New York and Washington. United ended up in a long reorganization case under chapter 11 that it emerged from in early this year, but both Continental and United have absorbed higher fuel costs and added capacity, and are among the carriers that are expected to Improve financially in 2007. Mergers could help both airlines reduce overhead by eliminating overlapping routes.

One of the issues that mitigates against a merger between the two airlines is "golden share" that Northwest Airlines Corp. holds in Continental, which is a special voting series of Continental preferred stock Northwest holds in connection with a marketing alliance with Continental that does not expire until 2025. Thus, if a proposed merger requires shareholder approval of Continental, then Northwest could use those shares to block the merger. But Continental and United could simply structure around the golden share, such as having Continental buying another airline so long as such a transaction didn't require Continental shareholders' approval.

Also, United is clearly playing the field right now. The airline has recently approached Delta Airlines, which is currently wallowing in a chapter 11 case, regarding a merger through a chapter 11 plan of reorganization as an alternative to a hostile takeover bid that US Airways is currently pursuing.

Continental shares declined yesterday 5.6% to $42.88, but they continue to trade near the top of their past year range. The stock of UAL, United's parent, also is trading near its 52-week high after closing down 2.9% at $43.23. This is the type of deal that will either gain momentum quickly or fizzle out, so stay tuned.

Posted by Tom at 4:19 AM | Comments (2) | TrackBack (0)

Evaluating the Jennings deal

The Stros made their second big off-season acquisition on Tuesday as they acquired Denver Rockies ace and former Baylor star Jason Jennings and journeyman pitcher Miguel Asencio in trade for CF Willy Taveras, promising starter Jason Hirsh and mercurial starter Taylor Buchholz. A friend who was driving at the time called to alert me to the deal and to inform that the sports talk shows were bashing the trade. Although the Stros first deal was questionable, this one is not.

Giving up young pitchers such as Hirsh and Buchholz always risks depletion of pitching depth, but that is the Stros' strength right now, so they could afford to give up something in that area. Jennings is a 28 year-old, emerging star and an undervalued talent in Denver (he will make "only" $5.5 million next season) where his pitching stats suffered until the club started storing baseballs in a Coors Field humidor over the past couple of seasons. His career runs saved against average ("RSAA," explained here) is only 23 in five seasons, but he is coming off his best season in which he had a 25 RSAA and a 3.78 ERA. If the Stros can lock him up after the 2007 season, then Jennings and Roy O can anchor the starting pitching rotation for years to come. And if the Stros re-sign Roger Clemens for at least a portion of the upcoming season, then the Stros have a potentially league-leading rotation, particularly when you add in the recently-acquired Woody Williams.

Meanwhile, what the Stros gave up was mostly hat and little cattle at this point. Taveras' limitations are well-chronicled, so he will be replaced by a player -- either Chris Burke, Jason Lane or Hunter Pence -- who will generate more runs for the Stros than Taveras. The 25 year-old Buchholz has great stuff, but he mostly stunk when given an opportunity in the starting rotation last season (-17 RSAA; 5.89 ERA) and has never been able to pitch a full season of professional ball because of injury breakdown. The 24 year-old Hirsh is a potential star as he dominated the Texas League last season, but the fact of the matter is that Jennings was a better pitcher than Hirsh at his age and it is unlikely that Hirsh will develop into as good a pitcher as Jennings is right now. So, my sense is that the Stros were smart to overpay a bit with potential for an established frontline starter.

Think of Acensio, the throw-in on the deal, as sort of a right-handed Carlos Hernandez-type. He was a promising pitcher with the Royals as a 21 year-old back in 2001, but he broke down in 2004 and underwent Tommy John surgery on his right elbow. He hasn't pitched much in the majors since then, but still has mid-90's stuff and a wicked change up. He's one of the guys who we might never hear about it again, but he's young enough to take a flyer on to see whether he can develop into a middle reliever in a couple of years.

The bottom line -- the Stros gave up a potential solid starting pitcher in Hirsh for a proven starting pitcher in Jennings who is not much older. Ascencio and Buchholz are essentially a wash, and the Stros improved by subtraction in getting rid of Taveras, who cost the Stros 30 runs his two seasons with the club over what an average National League player (think Chris Burke) would have produced for the club. That's a good trade for the Stros in my book.

Williams' career stats are below and a pdf of the same is here. The abbreviations for the pitching stats are here.

Posted by Tom at 4:18 AM | Comments (1) | TrackBack (0)

December 12, 2006

The mob must wait awhile longer

As noted here last week, an angry mob lynched Jeff Skilling.

On Monday evening, the Fifth Circuit Court of Appeals postponed the final stage of the lynching while it considers his motion to remain free pending disposition of Skilling's appeal of the lynching.

Meanwhile, media members of the mob were already checking out the gallows when the Fifth Circuit issued its order postponing Skilling's report date. What a way to make a living.

By the way, the Chronicle article on the Fifth Circuit's postponement of Skilling's report date quotes as one of its legal "experts" the local lawyer who went on national television immediately after Ken Lay's death and suggested that Lay had killed himself so that his conviction could be voided.

I guess it's hard to find objective experts among members of a mob.

Update: Skilling's reprieve was short-lived as the Fifth Circuit issued this order earlier this evening lifting the postponement of the deadline to report. Although certainly disappointing for Skilling, the order's language indicates that the panel that considered Skilling's motion is clearly troubled by what occurred in Skilling's trial and signals that the panel believes that Skilling has a reasonable chance of success on at least a substantial portion of his appeal.

Posted by Tom at 4:16 AM | Comments (1) | TrackBack (0)

"Ethics" at Seton Hall

I swear, you can't make this stuff up.

This previous post reported on Richard Epstein's WSJ ($) op-ed that addressed a common topic of this blog -- that is, the improper use of deferred prosecution agreements by prosecutors to blackmail companies into agreeing to absurd fines and "corrective" measures to avoid being prosecuted out of business.

In the op-ed, Professor Epstein used as an example the recent conduct of the US Attorney for New Jersey. The US Attorney forced Bristol-Meyers to endow a chair of "ethics" at the US Attorney's alma mater, Seton Hall Law School, as a condition to granting a deferred prosecution agreement settlement to the company over criminal charges. Apparently, in the US Attorney's world view, the ends of endowing an ethics chair justifies the means of utilizing dubious ethics in arranging the endowment.

Normally, you would think that the publicity surrounding such an arrangement would at least raise some ethical concerns at Seton Hall. Instead, the Seton Hall Dean used this WSJ letter-to-the-editor ($) to respond to Epstein's disclosure of the questionable arrangement and brag about Seton Hall's ethics program. He doesn't even address the school's problematic ethics in accepting the endowment from a company that was coerced to pay it by a federal prosecutor!

H'mm. I wonder if the Seton Hall Dean would have had a problem if he knew that the alum's source of funding for his "ethics" program had come from a kickback or ransom paid to the alum? On second thought, his letter answers that question.

Posted by Tom at 4:05 AM | Comments (1) | TrackBack (0)

The golfing benefits of valium

It's not golf season, but this story is too good to pass up.

This John Coomber/Northern Territory article addresses the difficulties that professional athletes have in acknowledging depression and the beneficial role that antidepressants have played in the lives of professional golfers Brett Ogle, Stuart Appleby and Steven Bowditch. It's a serious issue and one that has often been swept under the rug by the folks who promote professional sports and the athletes themselves.

However, the article ends with a funny anecdote. Five-time British Open champion Peter Thomson is quoted as saying that he never noticed depression to be a much of a factor during his playing days, though he suspected that some of his colleagues self-medicated through use of alcohol. Thomson goes on to recall that the famously volatile American golfer Tommy Bolt once tried taking sedatives to control his anger on the course:

"In 1956 (the year Thomson won his third successive British Open) Tommy started taking a drug like a kind of valium to calm him down," he said.

"When I came back to America for the 1957 season I asked him if he was still taking the tablets and whether they were doing him any good.

"'Yeah,' he said. 'I'm still three-putting but now I don't give a shit.'"

Hat tip to Geoff Shackelford for the link.

Posted by Tom at 4:05 AM | Comments (0) | TrackBack (0)

December 11, 2006

The Houston bowl game that few will see

This NY Sunday Times article does a good job of reporting on Texans' owner Bob McNair's efforts to revive Houston's bowl game, renamed "the Texas Bowl" after being known over the years as the Bluebonnet Bowl, the Astro-Bluebonnet Bowl, the GalleryFurniture.com Bowl and, most recently, the EV1.net Bowl.

Now, if only McNair could persuade the other NFL owners to let most of us watch the game. Sort of silly to have a bowl game that is supposed to promote the city when most people can't watch it, don't you think?

Posted by Tom at 4:19 AM | Comments (0) | TrackBack (0)

A big cost of maintaining Auburn's minor league professional football program

This NY Times article reports on the latest developments in the Auburn University academic scandal involving the school's intercollegiate athletic program. The university's report on its internal probe indicates that at least one scholarship athlete had his grade changed from an incomplete to an "A" in a course without the professor knowing about it in order to allow the athlete to fulfill eligibility requirements. And it's not as if the course was even a real academic exercise -- it was something called a "self-study" course. Earlier posts on the scandal and the tension between academic institutions financing and operating minor league professional sports franchises are here, here and here.

Is there really any question at this point that minor league professional football is more important than academic integrity at Auburn?

Posted by Tom at 4:13 AM | Comments (2) | TrackBack (0)

2006 Weekly local football review

Titans 26 Texans 20

Unless you are a hardy soul, it would be a good idea to avoid sports talk radio this week in Houston.

It would have been bad enough given that jilted no. 1 draft choice Reggie Bush had another brilliant game in helping the Saints blast the Cowboys. However, Texas Longhorns hero Vince Young really turned the knife when he transformed a third and long situation in overtime into a 39 yard touchdown run to give the Titans their second win over the Texans this season. The Titans trailed 14-13 in the fourth quarter before Young led a 15-play, 88-yard drive that gave the Titans their first lead of the second half, 20-17. The Texans tied it up on a Kris Brown 36-yard field goal with a little under two minutes ago, and then Young's TD run occurred on the first possession of the overtime period.

Rookie Young clearly outplayed embattled fifth-year Texans QB David Carr, who could generate only 133 net passing yards on a 17-23 day. Young was 19-28 for a net 200 yards with one interception, but tacked on an additional 86 yards rushing on just 7 carries. Given how close-to-the-vest Texans coach Gary Kubiak played this one on offense, it's reasonably clear that Kubiak has little confidence in Carr and that the first draft choice in the Texans' history is probably playing his final few games with the franchise.

The Texans (4-9) now go on the road to face the Patriots (9-4) and then return home to finish the season against the Colts (10-3) and the Browns (4-9). There may be one more win in those three games, but my pre-season prediction of six wins for the Texans now appears to be a pipe dream.

Posted by Tom at 4:01 AM | Comments (2) | TrackBack (0)

December 10, 2006

The ordeal of Jamie Olis continues

As noted earlier here, former Enron CEO Jeff Skilling will report to a minimum-security prison in Waseca, Minnesota on Tuesday to begin serving the brutal 24 year sentence that he was assessed on October 23rd.

On January 2, former Enron accountant Richard Causey is scheduled to report to the federal prison in Bastrop near Austin to begin serving his five-and-a-half-year sentence that he received on November 15.

Former Enron CFO Andrew Fastow is serving his a six-year term in a federal prison at Oakdale, Louisiana that he received on September 26, and former Enron Energy Services CEO David Delainey is in a Lompac, California federal prison serving the two-and-a-half-year sentence that he received on September 19th.

But for some unknown reason, former Dynegy mid-level executive Jamie Olis -- who has endured a three year ordeal in having his absurd 24 year sentence reduced to six years on September 22nd -- remains in the marginally humane Federal Detention Center in downtown Houston awaiting reassignment to a federal prison.

Olis reported to federal prison on May 20, 2004 and was originally assigned to the Bastrop unit, about an hour and a half away from San Antonio where his wife and young daughter are living. However, in January 2005, Olis was inexplicably yanked out of the Bastrop unit and transferred to a much harsher medium-security unit in Oakdale, Louisiana, 400 miles away from his family.

Then, after the Fifth Circuit set aside Olis' original 24 year sentence on October 31, 2005, U.S. District Judge Sim Lake ordered Olis transferred to the Federal Detention Center in downtown Houston on December 20, 2005 to await his resentencing. The Detention Center is essentially an interim facility containing small jail cells that are most commonly used to hold prisoners before the Bureau of Prisons assigns them to a federal prison where they will serve their sentence. It has nominal inmate facilities (it doesn't even have a prison yard) and is ill-equipped to hold a prisoner for longer than a couple of weeks. Although closer to San Antonio than Oakdale, the Houston facility is still a four hour drive for the Olis family.

In transferring Olis to the Detention Center, Judge Lake probably thought that the resentencing would occur quickly and that it would be more expeditious to have Olis in Houston. However, the prosecution engaged in a series of delaying tactics over most of the past year that delayed Olis' resentencing until September 22, almost 11 full months after the Fifth Circuit ordered it.

To make matters even worse, Olis has now endured almost a year in his cramped Detention Center cell and still has not been assigned to a prison unit to serve the balance of his sentence. This despite the fact that he was resentenced three months ago and a number of federal criminal defendants sentenced after Olis -- including Skilling, Fastow and Causey -- have already been assigned to the prisons where they will serve their sentences.

The mainstream media has now moved on from the Olis case. But make no mistake about it, Olis' continuing ordeal is a stark reminder of the injustice that is instrinsic to the dubious governmental policy of using the state's overwhelming prosecutorial power to criminalize merely questionable business transactions. Maybe some folks insulate themselves from the brutality of Skilling's sentence because they simply can't relate to a top executive of a large U.S. corporation, but most of us could have been in the same position as Olis. As Sir Thomas reminds us, "do you really think that you could stand upright in the winds" of abusive governmental power that Jamie Olis is enduring?

Posted by Tom at 4:22 AM | Comments (0) | TrackBack (0)

December 9, 2006

Richard Justice, Andy Pettitte's press agent

It's hard to keep up with the sloppy and illogical analysis of Chronicle sportswriter Richard Justice, so usually I don't even try to do so. However, sometimes it spills over to such an extent that it simply can't be ignored.

In this column, Justice criticizes Stros owner Drayton McLane for not matching the New York Yankees' absurdly rich $32 million, two-year contract offer for former Stros pitcher Andy Pettitte. In gushing over Pettitte, Justice really lets loose with a doozy:

[Pettitte] was one of the National League's best pitchers last season. He was 10th in quality starts and 13th in innings while going 14-13. His won-loss record was unimpressive because the Astros had one of baseball's worst offenses.

Say what? One of the best pitchers in the National League last season? Pettitte was barely the fourth best pitcher on the Stros last season (behind Oswalt, Clemens, and Wheeler). As of August 1st, before pitching well down the home stretch, Pettitte was one of the worst starters in the National League. Based on the key statistic of runs saved against average, Pettitte finished tied for 46th among National League pitchers who pitched more than 100 innings last season, resulting in a C grade in my post-season evaluation of Stros players. Regardless of what you think about Pettitte generally, he clearly was not one of the best pitchers in the National League last season.

So, let's see here. The Stros agreed to pay Pettitte a then high-market contract price of $31.5 million in 2004 for three seasons of his considerable pitching talent. In return, the Stros received one season (2004) that was a complete bust when Pettitte was injured and underwent elbow surgery, one season (2005) that was one of the best of Pettitte's career (2005) and one season (2006) in which Pettitte was pedestrian.

Now, given that the Stros went to the World Series in 2005 and Pettitte contributed greatly to that, I am not going to say that the Stros ended up on the short end of the stick in their deal with Pettitte. However, it's far from clear that the Stros wouldn't have done even better over the past three seasons by allocating the money that they paid Pettitte elsewhere. Moreover, it's even less clear that it makes sense to take the Yankees' risk of allocating $32 million over the next two seasons to a pitcher who is 34 years old and is a high injury risk. And oh yeah, about Pettitte's oral commitment not to exercise his player option for the 2008 season if he is injured, you better get that in writing, Yankees. Along with a specific contractual definition of the word "injured."

The surprising super-heated free agent market in Major League Baseball this off-season proved me wrong in my post-season evaluation of Pettitte that he would not receive anywhere close to $16 million to pitch in 2007. However, that does not mean that the Stros were wrong in refusing to pay such a price. It's just baseball and not particularly important in the big scheme of things, but it's disappointing nonetheless that the Chronicle editors allow Justice's bias to trump objective analysis of the situation. Not surprisingly, the Chronicle editors allow the same thing to happen on far more important issues.

Update: Justice's colleague at the Chronicle, John Lopez, nails the truth about the Pettitte contract negotiations in this column in Monday's paper:

The Astros being smart shoppers clearly was something Pettitte and his representation did not expect. They're used to having the Astros over a barrel, making them wait, calling the shots.

The Astros made one offer here and compared it to the one over there. That's not just smart baseball, it's smart business.

Fans are smart, too, and should realize this was about good, old American greed, nothing more and nothing less.

Pettitte has every right to cash in, sure. Good for him. He had his reasons for wanting to stay, but in the end Pettitte was no different than, say, Terrell Owens.

There were 32 million reasons home is where he'll hang his Yankees cap.

Posted by Tom at 6:32 AM | Comments (2) | TrackBack (0)

December 8, 2006

The injustice of the Jeff Skilling case

In a few days, unless the Fifth Circuit grants his motion to remain free on bond pending appeal of his conviction, Jeff Skilling will report to prison to begin serving a 24-year prison sentence. The image of Skilling entering that Minnesota prison will be a powerful reminder of the utter failure of the American criminal justice system in the case against him and others caught up in the Enron maelstrom.

Given the societal bias against Skilling and nearly everything else related to Enron, it's not all that surprising how little most people know about the case against Skilling. "Wasn't he prosecuted for Enron's fraudulent accounting?" I am often asked. Well no, he was not. The government dropped those charges.

"Well then," they ask. "Wasn't he prosecuted for causing Enron to go bankrupt?" Again, no, I reply patiently, Enron Task Force prosecutors repeatedly declared throughout Skilling's case that they were not prosecuting him because Enron failed. Of course, those same prosecutors quickly dispensed with that myth during Skilling's sentencing hearing when they blamed him for Enron's failure so that they could heap a huge prison sentence on him. But that's another issue.

"But wait," they invariably say. "Didn't they go after him because of those shady partnerships that he did with that guy Fastow?" No, I point out, the prosecutors didn't even attempt to prove that any of those special purpose entities ('SPE's) were illegal.

"Well, shoot" most folks finally throw up their arms in exasperation. "He's rich and a bunch of people lost money when Enron went down the tubes. He must have done something criminal."

I have had literally hundreds of conversations similar to the foregoing. The ugly reality is the same one that we didn't want to confront when Ken Lay died and one that we resist confronting now -- Jeff Skilling was lynched by an angry mob.

The primary justification that the mob gives for the absurdly-long sentence for Skilling almost always is the plight of the innocent employees and investors who lost their nest eggs when Enron went bankrupt. But the main reason that those nest eggs ever had value in the first place was because Skilling had transformed Enron into the world's leading energy risk management company through the creative use of futures and options contracts to hedge price risk for natural gas producers and industrial consumers. Although there is nothing wrong with having compassion for folks who lose money on an investment, rarely is it mentioned in the Enron morality play that many of those investors who lost their nest egg when Enron melted down were imprudent in their investment strategy. They should have diversified their Enron holdings or bought a put on their Enron shares that would have allowed them to enjoy the rise in Enron's stock price while being protected by a floor in that share price if things did not go as planned.

Even though virtually all of those innocent Enron investors carry insurance on their homes and cars, one can only speculate why they didn't attempt to hedge the risk of their investment in Enron stock. Probably, most of them simply did not understand how Enron's risk management services created their wealth in the first place. Thus, when that wealth evaporated during Enron's meltdown, they didn't even try to understand what had occurred. They simply joined the unruly mob calling for Skilling's scalp.

The mainstream media -- always quick to embrace a simple morality play with innocent victims and dastardly villians, regardless of its validity -- was not about to complicate the story by pointing out that the investors could have hedged their risk of loss by buying insurance quite similar to that which Skilling developed in creating their wealth in the first place. Thus, instead of attempting to tell the entire story, much of the mainstream media simply became a part of the mob. Ambitious prosecutors, given wide latitude to obtain convictions of key Enron executives regardless of the evidence, gladly took advantage of the firestorm of anti-Enron public opinion to lead the mob to Skilling and others.

Although the Enron Task Force has succeeded in securing some convictions for the anti-Enron mob, the mob's work has not withstood scrutiny on appeal. After the mob had caused enormous wealth destruction and job loss by indicting and convicting Arthur Andersen, the Supreme Court unanimously reversed the conviction, concluding that the Task Force had obtained an improper mens rea instruction that allowed the jury to convict the firm for merely negligent or innocent conduct. Then, in the Nigerian Barge case (see also here), the Fifth Circuit reversed the Merrill Lynch defendants' convictions (but only after each of them had been forced to endure a year in prison) because the Task Force had pressed for an improper "honest services" theory of liability that stretched the wire fraud statute beyond any reasonable interpretation. Finally, after the spurious conviction of former Enron Broadband Services executive Kevin Howard, the Task Force recently conceded that the Fifth Circuit's decision in the Nigerian Barge appeal requires that all but one of the counts of conviction be vacated.

In fact, you won't read about it much in the mainstream media, but Skilling's appeal presents the same issues as Andersen and the Nigerian Barge case. As in Andersen, the Task Force in Skilling's case successfully argued at trial for an improper mens rea instruction on "deliberate ignorance" that invited the jury to convict Skilling based on a civil, "should have known" standard of liability. Similarly, the Task Force rested its core conspiracy count and the ensuing substantive charges against Skilling on the same "honest services" theory of criminal liability that the Fifth Circuit rejected in the Nigerian Barge case,

So, just what was it again that Skilling did that could possibly justify a 24-year prison sentence for a man who was not even accused of stealing a dime from his company? As our criminal justice system places this man in a prison cell for perhaps the rest of his life, take a few minutes to review the following summary analysis of what Skilling was accused of doing and the evidence that was presented at trial relating to those charges. It's a foreboding tale for those who understand the fragile nature of justice and the rule of law in even a civil society.

In February 2004, after three years highly-publicized investigation, the Enron Task Force filed a sweeping 35-count indictment against Skilling, alleging conspiracy to commit securities fraud, securities fraud, wire fraud, making false statements to Enron’s external auditors, and 10 counts of insider trading. The same indictment contained 11 counts against former Enron chairman and CEO Ken Lay and another 34 counts against former Enron chief accounting officer Richard Causey. Just days before the trial was scheduled to commence, Causey pled guilty to one count of securities fraud in exchange for a maximum seven-year sentence with the possibility of less time should he cooperate with the Task Force (he was eventually sentenced to a 5.5 year prison term).

At the outset, it should be noted that it is impossible to determine what specific fraudulent conduct the jury concluded that Skilling committed because the jury returned only a general verdict (Skilling's lawyers requested that a special verdict to the jury, but U.S. District Judge Sim Lake denied that request). As noted above, Skilling was not charged with causing Enron's bankruptcy and, unlike Enron's chief financial officer, Andrew Fastow, Skilling was not charged with self-dealing, stealing or other acts by which he directly profited from the company. Indeed, Fastow later conceded during his testimony that he had successfully concealed his fraud from Skilling and others at the company.

At trial, the Task Force's case against Skilling was based almost entirely on the testimony of cooperating witnesses, all of whom agreed to testify in exchange for leniency and favorable sentencing recommendations from the Task Force. Dozens of other witnesses who would have provided exculpatory testimony for Skilling were "iced" by the Task Force from testifying out of fear that they would be indicted if they did so. The Task Force's case relied on virtually no documentary proof -- in fact, there were no documents or other pieces of tangible evidence directly implicating Skilling in any crime.

Skilling's defense was simple and straightforward. He essentially contended the following:

Enron was a sound company that was enduring the transient post-bubble pressures that many public companies were facing during much of 2001;

There was no wide-ranging conspiracy to cook Enron's books or lie about the company;

The challenged statements made to the public were true and that the challenged financial transactions were proper; and

Most of the cooperating witnesses pled guilty because of fear and pressure, not because they had committed crimes.

The theory of Skilling's defense is particularly important because it did not rely on an "I didn't know" or "ostrich" defense. Nevertheless, the Task Force convinced the Judge Lake to give the jury a "deliberate ignorance" jury instruction and other instructions permitting the jury to convict Skilling for depriving Enron of his "honest services." As is now clear Fifth Circuit law, such a theory of liability applies only where the defendant looted from the company or engaged in self-dealing. Those faulty jury instructions are now at the core of Skilling's appeal of his conviction.

Despite the myriad of claims that the Task Force initially asserted in its indictment against the Skilling, the Task Force's case against Skilling at trial ultimately boiled down to only seven discrete areas:

1. Use of SPEs/LJM Partnership to misrepresent Enron's financial condition;

2. Use of Enron Wholesale reserve accounts to misrepresent Enron's financial condition;

3. Misrepresentation of Enron Energy Services' financial condition;

4. Misrepresentation of Enron Broadband Services financial condition;

5. Misrepresentation of Enron's third quarter 2001 earnings;

6. Involvement in filing false SEC Annual and Quarterly Reports; and

7. Skilling’s September 17, 2001 Enron stock sale.

The following is a summary of the evidence on each of the foregoing areas:

Use of SPEs/LJM Partnership. As with the Nigerian Barge case and the Kevin Howard case, the Task Force argued at trial that Enron's off-balance sheet accounting treatment for several transactions entered into with the LJM Partnership -- one of Fastow's infamous SPE's -- was rendered fraudulent by virtue of “secret side deals” between Skilling and Fastow. To prove the side deals, the government relied on the testimony of Fastow, former Enron treasurer Ben Glisan, and a former junior Enron finance division executive, Christopher Loehr.

With the exception of Fastow, no witness directly implicated Skilling in the alleged oral side deals. Loehr never mentioned Skilling in his direct testimony, stating only that he had heard from Fastow about an understanding “with Enron.” Glisan testified that he had no knowledge of Skilling giving an oral guarantee or verbal assurance on any deal. Indeed, with respect to the Nigerian Barge transaction, Glisan testified that he heard that an “oral assurance” came from Causey, not Skilling. Likewise, Glisan’s notes indicated no improper dealings involving Skilling. The Task Force elected not to call Causey as a witness. Even Fastow conceded that Skilling never used the word “guarantee” in their conversations and that Skilling's alleged “bear hug” in regard to the Cuiaba transaction was not legally enforceable. The Task Force produced no documents, emails, memos, or notes that corroborated Fastow’s testimony regarding the alleged side deals.

Skilling denied having made any oral side agreements or secret guarantees, or being aware of anyone else at Enron making them. He explained that Enron’s internal and external accountants and lawyers reviewed each of the transactions and signed off on the accounting treatment. Moreover, although accountants such as Glisan and former Arthur Andersen partner Tom Bauer testified that an “oral guarantee” would invalidate Enron’s accounting of the LJM transactions, the Task Force did not ask either one whether the words that Fastow alleged Skilling said to him —“you won't get hurt; you won’t lose any money”— constituted such a guarantee or would invalidate the accounting treatment.

Wholesale Reserve Accounts. The Task Force attempted to prove that Enron improperly manipulated its earnings by adjusting reserve accounts in the company's Wholesale business unit. Former Enron accountant Wesley Colwell and former Enron Wholesale executive David Delainey testified that they personally used reserve accounts to meet quarterly estimates, and Andersen accountant Bauer opined that such use of reserves violated accounting rules.

However, the Task Force introduced no evidence that Mr. Skilling authorized, directed or even knew about any improper use of reserves. Colwell’s interactions were solely with Causey. Colwell testified that Causey had told him that Skilling would "like an additional two pennies of earnings" in the second quarter of 2000 and later, in the fourth quarter of 2000, that Mr. Skilling would like to "land the quarter" on a specific number. But the Task Force introduced no direct evidence that Skilling’s alleged statements -- or even the statements of Causey, for that matter -- directed or even suggested to Colwell that he should improperly use reserves to meet earnings or revenue targets.

As with his testimony regarding the SPE's, Skilling testified that Enron’s experts on establishing reserves advised him that the reserve amounts were appropriate. Accounting expert Walter Rush, who appeared as an defense expert (the Task Force did not call an independent expert on this issue), testified about the accounting rules applicable to reserve accounts and concluded that the reserve amounts for both second and fourth quarters of 2000 were proper and lawful. Likewise, Andersen accountant Bauer confirmed that Arthur Andersen had independently reviewed the reserve amounts each quarter and determined them to be “the appropriate number.” Finally, the evidence at trial reflected that the second quarter reserve ended up being almost precisely equal to the value of the contingency for which it was originally established, and that the fourth quarter volatility reserve tracked almost exactly the volatility in the marketplace.

Enron Energy Services. The Task Force attempted to prove that Enron and Skilling lied about EES’s growth while simultaneously hiding mounting EES debts. Relying on the testimony of Delainey, Timothy Belden, and Wanda Curry, the Task Force asserted that EES first moved an uncollectible receivable to the Wholesale division in the fourth quarter of 2000 and then transferred the entire EES risk management book to Wholesale in the first quarter of 2001 ("the resegmentation issue"). According to the Task Force's theory, these events occurred solely to make EES look more profitable than it really was.

The various witnesses expressed different opinions as to the reasons for the moves with regard to EES, but not one of them stated that someone had told them that the reason for the moves was to bolster EES’ profitability. Likewise, not one of the witnesses attributed knowledge of that alleged motive to Skilling. With respect to the transfer of the fourth quarter 2000 receivable, the Task Force did not dispute that Arthur Andersen had analyzed the transfer and approved the accounting treatment. Defense witness Diann Huddleson testified that Enron management believed it could collect on the receivable and ultimately did collect the majority of the outstanding amount.

As for the resegmentation issue, Skilling testified that moving the risk book made sense from a business standpoint, and former Wholesale division executive Rogers Herndon confirmed Skilling's version by testifying that the Wholesale unit improved the efficiency and value of that risk book. Even Delainey, the government’s primary witness on this issue, conceded that he ultimately recommended to Skilling that the risk book be moved and accounting expert Rush testified that the transfer complied with applicable accounting rules.

Enron Broadband Services. The government attempted to prove that Enron lied about the health of EBS through the testimony of former Broadband executives Ken Rice and Kevin Hannon, and former Enron investor relations executives Mark Koenig and Paula Rieker. They testified that the floundering unit had no customer base and propped up its revenue numbers through the sale of dark fiber, investment returns, and monetizations, all of which constituted “non-core” activities. They also testified that Skilling told analysts that EBS was a strong division with sustainable high earnings power when, at the same time, the unit was starting to lay off employees.

The Skilling defense refuted all of that testimony. Documentary evidence showed that EBS experienced substantial growth during 2000 in volumes traded and number of counterparties, and that Enron repeatedly had disclosed sales of fiber through monetizations as part of EBS’s business. As to the allegations regarding layoffs, both government and defense witnesses refuted the Task Force's allegations. Marla Barnard, former head of human resources for EBS, testified that she developed the redeployment plan and it was a bona fide redeployment. Task Force witness Hannon also confirmed that the EBS employee reassignments were the result of a redeployment, not a layoff.

Third Quarter 2001. Skilling announced his resignation to Enron's Board early in the third quarter of 2001 and resigned on August 14, 2001. As a result, he could not have participated in the alleged third quarter frauds and misrepresentations. Nevertheless, the Task Force attempted to connect him to information discussed during an August 13, 2001 joint meeting of the Board, which the Task Force claimed should have been disclosed to the public.

Rieker, Koenig, Glisan, and Fastow testified about two parts of that meeting. The first was a liquidity presentation that previewed a series of events that could result in a bankruptcy of Enron and also showed that Enron had recorded several assets at a combined $5 billion dollars above their present value. The second was a discussion about several challenges facing the company, including EES and EBS income issues, Wholesale trading and the Raptor transactions, all of which had increased the company's financial risks.

Skilling explained in his testimony that there was nothing fraudulent or even particularlry unusual about the liquidity presentation. It had been prepared at his direction by the company's Risk Assessment and Control Department as part of established procedures to manage Enron’s risks. The presentation analyzed several extreme risk scenarios, including nuclear disaster, credit downgrade, recession and hurricane. Notably, the presentation concluded that, even under these highly unlikely worst-case scenarios, Enron would be able to survive.

Similarly, Skilling refuted the allegation that Enron’s asset portfolio was inflated. The asset valuation question had been referred to the accountants, who opined that an impairment was not necessary. In addition, documentary evidence indicated that the valuation was preliminary in nature and based on dated models. The lower estimate of value that Skilling provided was his best estimate as to what Enron could generate for the assets in a “fire sale” given unfavorable foreign currency markets. Finally, with respect to the business challenges that Enron faced, these were all issues that management and the board knew needed special attention, but they were not particularly unusual for a company of the size and complexity of Enron and did not present revenue concerns. On the contrary, the Skilling defense presented evidence that corroborated Skilling's view that Enron was “in great shape” when he resigned.

SEC Annual and Quarterly Reports. The Task Force argued that Skilling, along with Causey, was responsible for the preparation, drafting, and accuracy of Enron’s financial statements. In the Task Force's view, any proven misrepresentation not disclosed in the financial statements was unlawful. Although Skilling was responsible for the accuracy of those statements, he did not prepare or draft them. Rather, he reviewed them at the very end of a lengthy preparation and review process, which involved scores of business unit personnel, accountants, and lawyers. Defense witness and former Enron general counsel Jim Derrick testified about this process and stated that Skilling had never once overruled a recommendation concerning preparation of Enron’s financial statements. Derrick's testimony was uncontroverted at trial.

September 17, 2001 Sale of Stock. Skilling was acquitted on all counts of insider trading except for his sale of 500,000 shares of Enron stock for approximately $31 dollars per share on September 17, 2001. The Task Force contended that Skilling knew about the alleged criminal conspiracy at Enron and chose to unload his stock before the fraud was disclosed. The Task Force further alleged that Skilling met with Lay and others at Enron after his resignation, and intimated that Skilling must have known about the Sherron Watkins memo and related investigation. That allegation was unsubstantiated by any testimony or evidence during the trial.

The actual evidence at trial showed that Mr. Skilling’s historical trading patterns were inconsistent with a scheme to “pump and dump” Enron stock. From January 1999 until he left Enron in August 2001, Skilling increased his stock holdings by 255%. Moreover, as Skilling explained, and contemporaneous tape recordings and the testimony of witness Glenn Ray corroborated, he received no inside information after his departure from Enron, did not trade on any inside information and did not have a “plan” to sell his Enron stock prior to September 11.

Shortly after resigning, Skilling shorted the stock of one of Enron’s competitors, AES Corp. As a result, Skilling was considering selling shares of Enron on September 6, 2001 to create what is known as a “bull hedge” to spread risk throughout his portfolio. However, Skilling's broker advised him that he could not execute the sale at that time because he had not yet received a letter from Enron confirming Skilling's resignation. After additional discussion with the broker, Skilling elected not to sell any Enron shares at that time. After September 11, Mr. Skilling (along with most investors) became concerned about the effect that the event would have on the market and sold a large portion of his Enron shares on the day the markets reopened. By then, Skilling and his broker had been advised by Enron general counsel Derrick and SEC lawyer Rex Rogers that he was free to sell Enron stock.

After Enron melted down, the SEC, toward the end of a lengthy examination of Skilling, asked him why he sold the 500,000 shares of Enron stock on September 17, 2001. Skilling replied that he feared the market reaction to the tragic events of September 11. The SEC then asked if there was any other reason why he sold the stock, and Skilling replied, “[t]here was no other reason other than September 11th that I sold the stock.” The SEC followed up, asking if Skilling had “a plan” to sell his Enron stock before September 11, and he replied “no.”

At trial, the Task Force argued that Skilling’s tape-recorded conversation with his broker on September 6 proves that he lied to the SEC and that his trial testimony that he had “forgotten” about the September 6 call was not credible. However, Skilling's September 6 broker call was hardly a part of any “plan” to liquidate his Enron position -- he was simply exploring whether to sell some stock as a part of a bull hedge. When he discovered that he could not do so at that time, he moved on to other matters with the broker and soon thereafter terminated the call. Inasmuch as Skilling sold 2.5 more shares of Enron stock on September 17 than he was contemplating selling on September 6, it is certainly reasonable that Skilling could have simply forgotten about his September 6 conversation with the broker, particularly given that he was asked about it during the SEC examination at the end of a long day.

So, there you have it. Is that a record that even comes close to being enough to throw a talented and tortured man behind bars for most of the rest of his life? Not in a truly civil society. The truth is that Enron was simply a highly-leveraged, trust-based business with a relatively low credit rating and a booming trading operation that got caught in a liquidity crunch when the markets became spooked by revelations about Fastow embezzling millions in the volatile months after September 11, 2001.

Fastow's embezzlement is a crime, but Enron's unfortunate demise is not, nor should it be. Beyond the shattered lives and families, the real tragedy here is that the angry anti-Enron mob convicted Jeff Skilling, trumping the rule of law and the dispassionate administration of justice along the way. The truth is that none of us would be able to survive "in the winds that blow" from the exercise of the government's overwhelming prosecutorial power in response to the demands of the mob. Here's hoping that Skilling's unjust conviction and sentence are reversed on appeal. Not only for his benefit, but for ours.

Posted by Tom at 4:49 AM | Comments (12) | TrackBack (0)

A silver lining in David Carr's cloud?

Let's just say it's been a bad week for Texans QB David Carr. First, he was horrible in the Texans' win over the Raiders last Sunday, registering -5 passing yards. The local media has been all over him. To make matters worse, former University of Texas National Championship hero Vince Young -- who thousands of UT fans thought the Texans should have drafted earlier this year -- is returning to Houston on Sunday with his professional team, the Tennessee Titans. There is little question that Young will be more warmly received by the fans at Reliant Stadium than Carr.

Amidst this stressful week, the folks over at Wages of Wins have updated their weekly NFL quarterback ratings covering last Sunday's games, which provides some solace for the beleaguered Texans' QB -- he wasn't the worst QB in the league last Sunday!:

The Worst Performance, Times Three

Back in week six Rex Grossman of the Chicago Bears posted a QB Score per play of -7.12. Up until week 13 this was the worst performance by an NFL quarterback in 2006. The Bears defense apparently wished to take Grossman off the record books, forcing Brad Johnson of the Vikings into a QB Score per play of -7.28 in week thirteen.

Johnson’s performance, though, was not the worst performance of the week. David Carr of the Houston Texans finished his game on Sunday with 32 yards passing, 5 yards rushing, and 37 yards lost from sacks. In sum, Carr had zero yards at the end of the game. With a QB Score per play of -7.55, Carr was ranked even lower than Johnson.

Grossman, though, was not going to relinquish his crown of worst quarterback so easily. Grossman accumulated only 15 yards. Coupled with three turnovers, Grossman had a QB Score per play of -8.63. So despite a determined effort by Carr and Johnson, Grossman finished week thirteen where he started. Grossman has still offered the worst performance by a signal caller in the league this year.

By the way, although Carr ranks 9th in the league under the NFL's antiquated QB ratings, the Wages of Win's more credible QB rating puts Carr as 21st in the league, which sounds about right.

Posted by Tom at 4:26 AM | Comments (0) | TrackBack (0)

Badger nonsense

This article is dispositive proof that the University of Wisconsin attorneys -- as with some Congressional investigators -- do not have enough to do. University lawyers have demanded that Waukee High School, just outside Des Moines, Iowa, to stop using the "motion W" on the side of the school's football helmets. The university claims a trademark for the "motion W" and, thus, the high school must cease and desist from infringing on the university's intellectual property.

Beyond the utter absurdity that anyone would confuse a Des Moines high school football team with the Wisconsin Badgers, the Sports Law Professor is not impressed with the legal basis of the university's demand.

By the way, I hope Arkansas kicks Wisconsin's ass in the Cap One Bowl on New Year's Day.

Posted by Tom at 4:06 AM | Comments (2) | TrackBack (0)

December 7, 2006

The Poston Congressional hearings?

This previous post reported on the strange case of Houston-based lawyer and former sports agent, Carl Poston, who is currently serving a two-year suspension levied by the National Football League Players' Association from representing any NFL players. I thought the suspension pretty much ended that story, at least until coming across this ESPN.com article:

New York Giants linebacker LaVar Arrington is tentatively scheduled to testify before Congress this week at a hearing involving his former agent. Arrington, a three-time Pro Bowl player; NFL Players Association general counsel Richard Berthelsen; and a law professor were on a "tentative witness list" e-mailed to The Associated Press on Tuesday by House Judiciary Committee press secretary Terry Shawn. [ . . .]

The Subcommittee on Commercial and Administrative Law has scheduled an oversight hearing for Thursday to examine the NFL Players Association's arbitration process. Lawmakers will be looking into the NFLPA's suspension of Arrington's former agent, Carl Poston, stemming from his handling of a contract the linebacker signed with the Washington Redskins near the end of the 2003 season.

Now, I recognize that a post-election Congress is the Washington, D.C.-equivalent of professional golf's "silly season," where members of a lame duck Congress are passing time until the new Congress is sworn in early next year. But still, can't our elected officials find something more noteworthy on which to hold a Congressional hearing than a relatively small, not-very-well handled contractual matter between two private parties?

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

Priceless!

These previous posts passed along that the Aggies are having quite a bit of fun over their recent victory over the Texas Longhorns, and now it appears that fans of the Horns' other primal rival -- the Oklahoma Sooners -- are getting in on the act.

During the Big 12 Championship game between the Sooners and Nebraska in Kansas City last weekend -- which the Sooners were playing in only because of the Aggies' upset win over the Horns -- several OU fans were spotted by the television cameras holding up three sequential signs that read as follows:

"Cost of tickets to the Big 12 championship football game . . . $350"

"Cost of hotel rooms to attend the Big 12 championship football game . . . $700"

"Cost of taking Texas' tickets and hotel rooms . . . PRICELESS!"

Posted by Tom at 4:22 AM | Comments (0) | TrackBack (0)

C.T.'s Time profile

I have to admit that it's not every day that an old buddy of mine is profiled in Time:

There are two paths to music immortality: the Prince route and the Patty and Mildred Hill route. In the Prince model, you write a piece of music that people love so much, they seek it out, download it and turn up the radio whenever it comes on. The Hill sisters model is trickier; they composed the melody for Happy Birthday to You. They achieved their fame by writing a tune that people don't listen to so much as sing.

Chris Tomlin belongs in the second camp. People sing his songs a lot, often repeatedly. Specifically, they sing them in church. According to Christian Copyright Licensing International (CCLI), an organization that licenses music to churches, Tomlin, 34, is the most often sung contemporary artist in U.S. congregations every week. Since glee clubs have fallen out of popularity, that might make Tomlin the most often sung artist anywhere.

Chris started his ministry at my family's church in The Woodlands when he was freshly graduated from Texas A&M University, and we hit it off immediately. He has sinced moved on to base his ministry in a church comprised of mostly students and young couples in Austin, but we stay in touch as his career continues to flourish. The success that Chris is experiencing could not happen to a nicer fellow and is a testament to his grace and humility. But he still does lose control on the golf course at times. I'm helping him work on that. ;^)

Posted by Tom at 4:13 AM | Comments (1) | TrackBack (0)

December 6, 2006

Executive compensation is actually too low?

Larry Ribstein has been waging a lonely fight (examples here and here) against the politicians and media pundits who think that executives make too much money because . . well, . let's see, . . because some of them make a lot of money. Or some logic similar to that.

At any rate, Dominic Basulto -- who is the editor of the Fortune Business Innovation Insider -- observes in this American.com op-ed that the conventional logic on executive pay actually has it backwards. Most executives are underpaid:

In fact, there’s strong evidence that, far from being paid too much, many CEOs are paid too little. Not only do the top managers of multibillion-dollar corporations earn less than basketball players (LeBron James of the Cleveland Cavaliers makes $26 million), they are also outpaced in compensation by financial impresarios at hedge funds, private equity firms, and investment banks. Should we care? Yes. If other positions pay far more, then the best and the brightest minds will be drawn away from running major businesses to pursuits that may not be as socially useful—if not to the basketball court, then to money management.

Read the entire piece. I wonder what Gretchen Morgenson will say?

Posted by Tom at 4:55 AM | Comments (3) | TrackBack (0)

Are you ready to rumble?

What's the old saying about hockey fans went to see a fight and a hockey match broke out?

Well, as Gary Gaffney reports, when the University of Iowa and Iowa State University wrestling squads got it on over the past weekend, 13,700 screaming Iowans showed up and the respective coaches -- including Iowa's legendary former head coach, Dan Gable -- almost got it on, too.

Even though the other coaches involved are quite a bit younger than Gable and -- like Gable -- former Olympic wrestlers, don't bet against Gable in a fracas.

Posted by Tom at 4:46 AM | Comments (1) | TrackBack (0)

The penultimate Oddsmakers Top 25

Previous posts here and here reported on the Oddsmakers Top 25 Football Poll, a poll developed by Las Vegas Sports Consultants based on the company's profit motive-driven incentive to provide their sports betting customers the most accurate rating of college football teams. The following is LVSC's final Oddsmaker's Top 25, with the BCS ranking in parenthesis:

1. Ohio State (1)
2. Michigan (3)
3. Florida (2)
4. Southern Cal (5)
5. LSU (4)
6. Louisville (6)
7. Oklahoma (10)
8. Texas (19)
9. Notre Dame (11)
10. Wisconsin (7)
11t. West Virginia (13)
11t. California (18)
13. BYU (20)
14. Virginia Tech (15)
15. Arkansas (12)
16t. Boise State (8)
16t. South Carolina (NR)
18. Tennessee (17)
19t. Nebraska (23)
19t. UCLA (25)
21. TCU (NR)
22. Rutgers (16)
23t. Oregon (NR)
23t. Clemson (NR)
23t. Arizona State (NR)

Unranked by Vegas: Auburn (ninth in BCS), Wake Forest (14th), Texas A&M (21st), Oregon State (22nd), Boston College (24th)

In addition to picking Michigan rather than Florida as the proper opponent for Ohio State in the BCS National Championship Game, the Oddsmakers Top 25 raises a couple of interesting issues.

First, the credibility of the Vegas-based poll versus the BCS poll will have a lot riding on the Oklahoma-Boise State matchup in the Fiesta Bowl. The Oddsmakers Poll has Oklahoma 7th and Boise State 16th, while the BCS has Boise 8th and Oklahoma 10th. The initial line has the Sooners favored by a touchdown. My sense is that the Oddsmakers Poll has these two teams more accurtely aligned -- Oklahoma and a bunch of other teams in the Top 25 would probably have gone unbeaten if they had played Boise's schedule.

Despite LSU's two early-season losses, the Oddsmakers Poll is looking prescient for not giving up on the Tigers. The first BCS Poll had LSU 18th while the Oddsmakers Poll had the Tigers fifth. This week, the Oddsmakers Poll still has LSU at fifth while the BCS has the Tigers fourth.

I say ditch the BCS rating system and let the purity of the profit-driven Oddsmakers Top 25 determine the rankings for the BCS bowl games. It's all about the money anyway, isn't it?

Posted by Tom at 4:23 AM | Comments (1) | TrackBack (0)

December 5, 2006

The Bobby Maxwell Lawsuit

This NY Sunday Times article reports on the lawsuit of former federal government oil and gas auditor Bobby L. Maxwell, who is suing Kerr-McGee Corporation in Denver federal court for underpayment of oil and gas royalties to the federal government on oil and gas wells producing on federal lands. Under an obscure federal statute that rewards private citizens who expose fraud against the government, Maxwell and his counsel stand to recover as much as $15 million if they ring the bell in the lawsuit, which is scheduled for trial on January 16.

Although I know nothing about the particulars of the Maxwell case other than what is reported in the article, underpayment of oil and gas royalties is not uncommon. Indeed, when I am retained by royalty owners in a reorganization case of an oil and gas company, my standard advice is for the royalty owners to hire an experienced oil and gas auditor to conduct at least a review of the debtor's royalty payments. When an oil and gas company starts having financial problems, scrimping on royalty payments is not an unusual occurrence.

Posted by Tom at 4:35 AM | Comments (1) | TrackBack (0)

Controversial Justice

Longtime Eastern District of Texas U.S. District Judge William Wayne Justice has long been one of most controversial federal judges and, thus, one of the best-known in Texas. The 86-year old Judge Justice was recently back in the news as the first honoree of the Morris Dees Justice Award, named for the famed Alabama civil rights lawyer, which prompted this profile from the Chronicle's Janet Elliott.

Judge Justice is the quintessential activist federal judge, so he is not the most popular fellow in all quarters. Maybe he should have been in the legislature, but it's hard not to admire a judge who at 86-years of age still handles a full court docket and chooses to be activist in cases that promote desegregation in education, equal educational opportunity and prison reform. The legislature has never done a particularly good job of dealing with those issues, anyway.

Posted by Tom at 4:16 AM | Comments (1) | TrackBack (0)

Keep those buses handy

Wendell Cox reports on a little problem that occurred in St. Louis recently that ought (but probably won't) give the Houston Metropolitan Transit Authority pause:

Buses Replace Light Rail in St. Louis

A large ice storm hit the St. Louis area last night and power is out to nearly one-half of the area. The area’s light rail line, Metrolink, has suspended service for much of its alignment and is providing substitute bus service.

Meanwhile, there appears to be no instance of light rail providing replacement for buses anywhere in the metropolitan area --- for that matter probably never in history, anywhere. Another demonstration of the flexibility of urban rail.

The enormous cost relative to usage and inflexibility of most rail systems reminds me of something that Peter Gordon observed awhile back about the political forces that support these boondoggles. Some are disingenous promoters seeking to profit from the rail lines, some pose as high-minded environmentalists and many are simply ignorant of the inefficiency and inflexibility of such systems. As Professor Gordon wryly points out:

"It adds up to a winning coalition."

By the way, Anne Linehan over at blogHouston.net continues to follow another cost of the Houston light rail system that Metro doesn't much like talking about.

Posted by Tom at 4:12 AM | Comments (0) | TrackBack (0)

December 4, 2006

What's going on at Ford?

While most of the auto industry news of late has been the hubbub over Kirk Kerkorkian bailing out on his investment in General Motors, my sense is that the more interesting (or pathetic) snippet is this one reporting that Ford Motor Company fell in November to fourth place in vehicle sales for the first time in history. Ford sold 10% fewer vehicles last month than it did a year earlier.

Meanwhile, Ford management is pursuing a restructuring plan in which the company is raising $18 billion secured by essentially all of the company's assets in order to spend about $17 billion in an effort to stem Ford's current annual revenue loss of close to $10 billion a year. About 38,000 employees -- over 10% of the company's work force -- have resigned and accepted a buyout offer from the company. Thus, the new creditors are placing a rather large bet that Ford will be able to service the new mountain of new debt with expected profits from new products generated by a knockoff strategy similar to the one that the Japanese automakers used to make inroads in the US market during the 1970's (Ford's new products are expected to emulate the Lexus brand).

My impression of all this is to question what these people are smoking.

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

The BCS muddle

The Washington Post's Sally Jenkins is the daughter of my all-time favorite sportswriter, Dan Jenkins, and an insightful sportswriter in her own right. In this column, she eviscerates the Bowl Championship Series and everything it stands for in classic Jenkins family style:

Try to find some legitimacy in the Bowl Championship Series. Go ahead, try. Exert all of your ability, industry and intelligence toward the task. You can't do it. The fact of the matter is that the treasure called the college football postseason has become buried beneath corporate scams. All you need to know is that the Fiesta Bowl has a CEO. His name is John Junker, and when he testified before the House Committee on Energy and Commerce last year in defense of the BCS, he actually called the bowl games "independent business units" and referred to universities as "customers."

When a sports organization is more concerned with revenue distribution than with fair competition, it is asking for problems.

The BCS system is the natural outgrowth of corrupt big-time college athletics, a subject examined in previous posts here, here, here, here and here. The good news is that the market forces of big-time college athletics are pushing the system toward change as the relative few universities that make money off of their football and basketball programs likely will likely gravitate in a few years into a collection of "super conferences" similar to the divisions of the National Football League and the National Basketball Association. The bad news is that many of the traditional rivalries of college football and basketball will be lost in the process.

Is the money worth that?

Posted by Tom at 4:21 AM | Comments (0) | TrackBack (0)

2006 Weekly local football review

Houston Cougars 34 Southern Miss 20

The Cougars (10-3, 8-1) won their first Conference USA football championship in ten years with a Friday night win over Southern Miss (8-5, 7-3) before a raucous crowd of 32,000 at Robertson Stadium on the UH campus (that's star RB/WR Anthony Alridge conducting the UH band during the post-game celebration). After a seesaw first half, the Coogs blew a chance of taking the halftime lead when time expired with UH at the Southern Miss two-yard line. But the Cougars regrouped and dominated the second half to pull out the win. The offensive stars were QB Kevin Kolb and WR Vincent Marshall, but the unsung heroes of the game were the UH defensive players, who limited Southern Miss to 122 yards total offense in the 2nd half. The Cougars will play Steve Spurrier's South Carolina (7-5,3-5) from the Southeastern Conference in the Liberty Bowl on Friday, December 29th at 3:30 pm on ESPN HD.

Texans 23 Raiders 14

In a game that set back offensive football to before the invention of the forward pass, the Texans (4-9) defense played well and forced five turnovers to pull out a win despite the fact that the Texans' offense managed only 122 yards total offense. The Raiders offense was horrifying, scoring just one TD while fumbling three times, missing three field goals, and allowing five sacks to go with two interceptions. Except for the turnovers, the Texans were worse as overwhelmed Texans QB David Carr finished 7-of-14 for 32 yards and did not complete a pass in the final 32 minutes. Inasmuch as Carr was sacked five times for 37 yards, the Texans finished the game -5 yards passing, which is not going to do much for Carr's QB rating.

Despite Carr's abysmal showing, the primary problem with passing game continues to be the complete breakdown of the Texans' pass protection. Neither of the Texans offensive tackles were even slowing down the Raiders' defensive ends as they rushed Carr, so the Texans QBr barely had time to drop back, much less survey the field and throw a competent pass. The Texans play the suddenly hot Titans (5-7) next Sunday at Reliant Stadium in Vince Young Bowl II, and then visit New England the next weekend before ending the season at home against the Colts (10-2) and the Browns (4-8). Getting one win in those final four games is possible, but certainly not likely for a team as bad as the Texans. So, my pre-season prediction of six wins for the Texans is looking like a loser.

Rice is bowl bound

Finally, congratulations to the Rice Owls (7-5,5-2) as they accepted an invitation to play in their first bowl game since 1961, the R&L Carriers New Orleans Bowl at the Louisiana Superdome on Friday, Dec. 22 at 7 p.m. The Owls opponent will be Sunbelt Conference champ Troy (7-5, 6-1), which was blown out only once this season (56-0 at Nebraska) and played tough (losing 24-17) at Florida State early in the season (the Seminoles beat the Owls 55-7 two weeks later). The bowl game will be televised on ESPN2 HD.

By the way, most Houstonians (and most of the nation, for that matter) will not be able to watch Rutgers play Kansas State in the Texas Bowl at Reliant Stadium on the evening of December 28th or Texas Tech play Minnesota in the Insight Bowl on the evening of December 29th. Both games are being televised by the NFL Network, which -- as noted in these prior posts -- the NFL owners are withholding from most viewers who receive their television through cable companies. What holiday spirit those NFL owners have!

Posted by Tom at 4:10 AM | Comments (1) | TrackBack (0)

December 3, 2006

Why don't you tell us what you really think?

The NRO Corner's John Podhoretz in this NY Daily News op-ed makes clear that he is not buying into that whole "elder statesman" thing that the NY Times reported last week regarding James Baker, III's co-chairmanship of the Iraq Study Group:

As Dana Milbank reports in The Washington Post, on Monday the [Iraq Study Group's] "co-chairmen, James Baker and Lee Hamilton, found time . . . to pose for an Annie Leibovitz photo shoot for Men's Vogue."[. . .]

Baker, Hamilton and their crew of old Washington hands (and I mean old, like Metheuselah-level old) are recommending a "gradual pullback" of American troops but without a timetable. That basically translates into a nice, long, slow defeat - the "graceful exit" of which the president spoke so harshly.[. . .]

This is the consensus view of the Iraq Study Group, which is very proud that it reached consensus.

Its members also reached a consensus view that Depends is a really fine brand of adult diaper, and that they love reruns of "Murder, She Wrote."

You perhaps note that I am writing with extreme disrespect toward the Iraq Study Group. That's because its report is a scandal and an embarrassment; it's flatly immoral to seek to make or guide policy in this fashion.

Look, if its members believe the war is lost, they should say so. They should bite the bullet and advocate a pullout of American forces sooner rather than later.

If its members could not actually achieve consensus on that point - if, in other words, some of its members still believe the war can be won while others believe there's no way to achieve victory - then it was simple vanity on the part of the Gang of 10 that led to the creation of a "consensus" document that split the difference.

There's no way to split the difference, unless you're hurrying off to have your mug immortalized by Annie Leibovitz and want to bang down the gavel so you can get plenty of time to get hair and makeup done.

America and its allies are either going to win this war or we're going to lose. We will either conclude our military actions in Iraq with terrorists and insurgents dead or fled and an imposition of civil order in the country by its elected government, or we will turn tail and leave the place in chaos and ruins.

What's even more appalling, if true, is the group's other key recommendation - which is that America should try to find answers to its problems through an international conference that would include Syria and Iran.

What do Syria and Iran want more than anything else in the world? To see an American defeat in Iraq. To see an America so crippled that they can work their will in the Middle East without fear of retribution. Syria could swallow up Lebanon whole once again. Iran could do whatever it chooses inside and outside its borders (develop and peddle nuclear weaponry, sponsor terrorism against Israeli and Western targets) with impunity.

They're going to be a great help. But then, that's Baker for you. Give him a problem and he'll tell you your best hope of solving it can be found in sucking up to an Arab dictator.

Read the entire op-ed. The Chronicle's Anne Belli chimes in with a more respectful profile of Baker here.

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

December 2, 2006

Divided over powerful government

The late Milton Friedman commented recently that he had concluded that the best political make-up for the federal government was one that had the greatest likelihood to develop gridlock because of the damaging policies that the government enacts when one party or the other controls both the legislative and executive branches. In this TCS Daily op-ed, Arnold Kling of EconLog channels that thought:

The conventional wisdom is that we would be better off if politically powerful leaders were less mediocre. Instead, my view is that we would be better off if mediocre political leaders were less powerful. [. . .]

We have to expect mediocrity from political leaders. They are selected by a very unreliable process. In general, I try to avoid contact with narcissists who spend their time pleading for money. Those are hardly the intellectual and emotional characteristics that make someone admirable, yet they are the traits of people who go into politics. [. . .]

The libertarian view is that private institutions, both for-profit and non-profit, are better at problem-solving than government institutions. Regardless of whether political leadership is wise or mediocre, our goal should be to limit the damage that public officials can do. Do not demand that they "solve" health care, "fix" education, or launch a "Manhattan project" for energy independence. Even for experts, those are impossible tasks. The harder we press our existing leaders to address these issues, the more trouble they are going to cause.

The belief that the problem with government is the particular individuals in power is dangerous. The myth is that somewhere out there we could find great leaders who could use government to solve all of our problems. Instead, we need to be vigilant against the enlargement of government, by either mediocre or expert leaders.

Do not look upon the electoral process as a search for great leaders. At best, it gives us an opportunity for damage control.

Posted by Tom at 7:40 AM | Comments (3) | TrackBack (0)

December 1, 2006

Benny Hinn has a deal for you

The last time we checked in on televangelist Benny Hinn, he was having a snit with the Nigerian hosts for one of his crusades and fighting with the IRS. Recently, Hinn has been in the news again as the subject of this NBC Dateline piece regarding Hinn's rather lavish lifestyle and tastes that are, might we say, a tad alien to Christ's message of sacrificial atonement upon which his business, . . uh, I mean, "ministry" is based.

A $10-million, 7,000 sq. ft. home, $112,000 per month for a private jet, a couple of $80,000 cars, luxury hotel rooms that are 5,400 sq. ft. at $10,800 per night for a "layover." At least Hinn is generous with his tips, which totaled over $4,500 during a recent three-day period. A salary of half a million to a million dollars per year--plus book royalties. Business, . . . er, I mean the ministry is good, eh?

At any rate, Hinn has now decided that the lease payments for his corporate jet are a tad steep, so he wants to acquire a corporate jet, which he has already named "Dove One." Hinn is ramping up his money-raising machinery to pay for his new toy, and for a mere $1,000 "donation," here's what Hinn promises:

You will receive a beautiful art-quality model of Dove One for your desk or mantle as a constant reminder that you are a vital part of this last-days harvest for souls.

Your name will be placed prominently in a special area of Dove One where I study and pray during my travels, where I will also pray for you and your family as I go around the world preaching the Gospel. Everywhere I fly, your name will travel with me, millions of miles and for years to come, reminding me that you have made it possible for me to go and preach as God has called me to do.

What a deal! ;^)

Posted by Tom at 4:49 AM | Comments (1) | TrackBack (0)

The Delta Center becomes the Melta Center

Naming rights deals on stadiums and arenas are notoriously speculative ventures, and sometimes the naming itself becomes rather odd. Inasmuch as debtors in bankruptcy such as Delta Airlines don't normally renew naming rights deals, a nuclear waste company has bought the naming rights for what was formerly known as the Utah Jazz's Delta Center, prompting local wags to propose nicknames such as Glow Bowl, the Isotope, the ChernoBowl, the Tox Box, and the Melta Center.

Of course, the Times story can't report on this development without reminding us of Houston's naming rights fiasco:

Radioactivity is quite new to naming rights, unless you count the brief time before Minute Maid replaced Enron as the name of the Houston Astros’ ballpark.

By the way, this Forbes slideshow (related article here) reviews the ten largest naming rights deals, which is led by another Houston deal.

Posted by Tom at 4:19 AM | Comments (0) | TrackBack (0)

Ida Mae consoles the Horns after the A&M loss

After you get done playing a game of Teasip Bingo, take a moment to read this report on the Texas Longhorns' tough loss to the Texas Aggies by longtime Horns fan Ida Mae Crimpton, who writes regular reports on her beloved Horns from her perch in Elgin just east of Austin. Here's a part of what Ida Mae had to say about the Horns' most recent tough loss:

With Colt coming back off of his injury and since we were just playing the Aggies, no one really seriously thought that there was a possibility that we could lose. But when the game was finally over and we'd lost, a funny thing happened; Mack didn't seem to be too bothered. He went to midfield, shook coach Frangipani's hand and then led the team back to the locker room. Coach Chizik told Earl what happened next. Mack gave the guys a post game talk like he usually did but this one was different because of what he talked about. He told the guys not to worry too much about losing because there were other things more important than winning, like God, family, the Gross National Product, the danger posed by international communism, and erosion (which, if you stop to think about it, really is a problem in some areas of south Texas). Well, needless to say, there were more than one set of eyes rolling around that room as everybody tried to figure out what the heck the coach was talking about. Then, Mack told the whole team that they were invited to his house for cherry cheesecake and Frescas, which sent Sally into a panic when she heard about it because they didn't have any cherry cheesecake in the house and if the team did come over they'd just have to settle for Nabisco Honey Grahams with canned cake frosting (one of Mack's favorite snacks). But after Mack left, coach Chizik spoke to the team and told them that it probably wouldn't be a good night to drop by Mack's house and that maybe they could take a rain check.

Read the entire hilarious piece, and also Ida Mae's other priceless reports on the Horns' season, particularly this priceless report on the Horns' recent loss to Kansas State.

You gotta love football in Texas.

Posted by Tom at 4:13 AM | Comments (0) | TrackBack (0)