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December 31, 2008

Check out A&M's new indoor track facility

Posted by Tom at 12:01 AM | Comments (0) |

December 30, 2008

Those pesky unexpected consequences

On the heels of this post from a couple of days ago that addressed Tyler Cowen's recent NY Times op-ed that speculated that expectations generated from the 1998 government bailout of Long Term Capital Management hedge fund were not such a good thing, this W$J article on the Lehman Brothers bankruptcy case bemoans the enormous cost attributable to lack of reorganization planning in connection with the Lehman Brothers case:

As much as $75 billion of Lehman Brothers Holdings Inc. value was destroyed by the unplanned and chaotic form of the firm's bankruptcy filing in September, according to an internal analysis by the company's restructuring advisers.

A less-hurried Chapter 11 bankruptcy filing likely would have preserved tens of billions of dollars of value, according to a three-month study by the advisory firm, Alvarez & Marsal. An orderly filing would have enabled Lehman to sell some assets outside of federal bankruptcy-court protection, and would have given it time to try to unwind its derivatives portfolio in a way that might have preserved value, the study says. [.  .  .]

"While I have no position on whether or not the federal government should have provided further assistance to Lehman, once the decision was made not to provide further assistance, an orderly wind-down plan should have been pursued. It was an unconscionable waste of value," said Bryan Marsal, co-chief executive of the advisory firm who now serves as Lehman's chief restructuring officer.

Mr. Marsal estimates that the total value destruction at Lehman will reach between $50 billion and $75 billion, once losses from derivatives trades and asset impairment are combined.

Losses are a natural part of the risk allocation that occurs in big reorganization cases. But anyone who has been involved in such cases knows that it takes at least a couple of months to prepare a big reorganization case properly.

Friends who are closely involved in the Lehman Brothers case have confided to me that Lehman CEO Richard Fuld never in his wildest imagination thought, after the precedent of Bear Stearns, that the Fed and the U.S. Treasury would fail to bail out Lehman Brothers. When that proved wrong, Lehman Brothers had to file its chapter 11 case on a relatively unplanned, emergency basis. That miscalculation cost creditors even more than they would have lost had Lehman's management taken the normal step of planning the case when they saw the writing on the wall. I've got my doubts that the additional losses are $50-75 billion as suggested by the consultant's report (could the Lehman-related parties be using that report as a liability shield?), but there is little question that an emergency bankruptcy filing generally costs creditors more than a properly planned one.

As John Carney notes, maybe the conventional wisdom is wrong that the Fed made matters worse by failing to bailout Lehman Brothers.

It's hard enough to evaluate the risk of insolvency in regard to a trust-based business under normal circumstances. It becomes a real crapshoot when there exists an expectation that the federal government will provide stop-gap financing for a big trust-based company's losses. And crapshoots generate some pretty bad risk-taking.

It really isn't rocket science.

Posted by Tom at 12:01 AM | Comments (1) |

December 29, 2008

2008 Weekly local football review

(AP Photo/Dave Einsel; previous weekly reviews are here)

Texans 31 Bears 24

Well, at least this time, the Texans (8-8) beat the Bears' (9-7) first-string rather than the Jags' junior varsity to achieve only the franchise's second non-losing season in seven NFL campaigns. The win also allowed the Texans to match my pre-season prediction for wins this season.

As usual, the Texans were led by their star WR Andre Johnson, who had 10 receptions for 148 yds and two TD's. QB Matt Schaub finished 27-36 for 328 yards, the two TD's to Johnson and, most importantly, no interceptions.

After the Bears jumped off to a 10-0 lead in a desultory first quarter, the Texans' offense pretty well had its way with the Bears' defense, rolling up 455 yds total offense. Surprisingly, after looking defenseless during the first quarter and losing stud DE Mario Williams to a pulled muscle for most of the second half, the Texans' defense rebounded from the first quarter to hold the Bears to under 300 yds total offense.

So, another season, another 8-8 record for the Texans. There are definitely two ways to look at the Texans at this point in time.

On one hand, with another non-winning season, the Texans continue to be one of the least-successful new franchises in the history of the National Football League. Inasmuch as the team had a 7-9 record after its third year, one can make the case that not much progress has been made over the past four seasons. Yes, the offense is better, but the defense is arguably worse than it was after Year Three. Have the deck chairs simply been rearranged on the Titanic?

On the other hand, several signs indicate that the Texans are headed in the right direction. The offensive line and the receiving corps are far-improved and have more depth than at any time in franchise history. Schaub appears to have the talent necessary to become a consistently above-average NFL signal-caller. Rookie RB Steve Slaton is an excellent back who will only get better if the Texans can bring in another running back to take some of the load off of him in coming seasons.

Meanwhile, although the defense has not improved statistically from last season to this one, the Texans have a nucleus of good, young defensive players who should be able to gel into a reasonably formidable unit over the next several seasons.

What changes do the Texans need to make during the off-season? As I've noted several times during this season, the defense has not improved as much as it should have over the past two seasons based on the number of draft picks that the Texans have used on that unit. So, a case can be made that changes in the defensive coaching staff are justified.

However, what is the market going to be for defensive coaches during this off-season? It doesn't make sense to make such a change and risk what could be gradual improvement in a young defensive unit that usually results from coaching staff continuity unless there is a reasonable probability that the new coaches will generate even more improvement.

Either way, as predicted before this season, the 2009 season is the one in which the Texans should emerge as a bona-fide playoff contender. If not, then owner Bob McNair will have harder decisions to make than merely whether to alter his defensive coaching staff.

Longhorns, Cougars and Owls

The Rice Owls (9-3) begin the local teams' bowls season with the Texas Bowl at Reliant Stadium on Tuesday night (7 p.m., NFL Network) against Western Michigan (9-3).

The Houston Cougars (7-5) follow up on Wednesday afternoon (11 a.m., ESPN) in the Ft. Worth Bowl against Air Force (8-4).

And then the Texas Longhorns (11-1) take on Ohio State (10-2) a week from tonight, January 5th (7 p.m., Fox) in the Tostitos Fiesta Bowl in Phoenix.

Posted by Tom at 12:01 AM | Comments (0) |

December 28, 2008

Lessons of LTCM

Marginal Revolution's Tyler Cowen makes a similar point in this NY Times op-ed about the 1998 federal bailout of the Long-Term Capital Management hedge fund that this earlier post made about Enron and the current Treasury bailout:

At the time, it may have seemed that regulators did the right thing [in bailing out LTM]. The bailout did not require upfront money from the government, and the world avoided an even bigger financial crisis. Today, however, that ad hoc intervention by the government no longer looks so wise. With the Long-Term Capital bailout as a precedent, creditors came to believe that their loans to unsound financial institutions would be made good by the Fed — as long as the collapse of those institutions would threaten the global credit system. Bolstered by this sense of security, bad loans mushroomed. [ .  .  .}

The major creditors of the fund included Bear Stearns, Merrill Lynch and Lehman Brothers, all of which went on to lend and invest recklessly and, to one degree or another, pay the consequences. But 1998 should have been the time to send a credible warning that bad loans to overleveraged institutions would mean losses, and that neither the Fed nor the Treasury would make these losses good.

Absent allocation of risk consequences to the parties who entered into transactions with financially-troubled companies, markets have a difficult time accurately pricing risk in regard to future investment and transactions. Such indecision plays a big part in delaying recovery in financial markets.

Similarly, without cleaning up the balance sheets of troubled companies (and putting the hopelessly insolvent ones out of their misery), extending additional credit to financially-strapped companies only makes them an even poorer risk for investment. That doesn't facilitate recovery in the financial markets, either.

Amidst many blunders, the Bush Administration's failure to tap corporate reorganization experts in connection with its policy-making regarding the financial crisis was one of the worst. Hopefully, Obama's advisors note the mistake and correct it in the next Administration.

Update: Barry Ritholtz agrees with Tyler and me.

Posted by Tom at 12:01 AM | Comments (0) |

December 27, 2008

Are you ready for some football?

The football rivalry between the Texas Longhorns and Oklahoma Sooners is one of the most passionate in college football. The intensity of that rivalry has led to some highly competitive recruiting battles between the two schools for the best football talent in Texas over the years.

With that backdrop, the NY Times' Thayer Evans ran this lengthy article on his bird's-eye view of the recruiting fight between UT and OU over the services of blue-chip Lufkin High School defensive tackle, Jamarkus McFarland, who orally committed to OU on Christmas day.

McFarland and his mother cooperated with Evans closely over the past several months in helping him chronicle the twists and turns of the recruiting battle. The article does not paint a pretty picture of the recruiting process, particularly of UT's efforts to land McFarland. NCAA investigations have been commenced over less.

However, the story doesn't stop there. Turns out that Evans is an Oklahoma native and apparently a long-time OU fan (he also used to write for Sooners Illustrated). Evans has written extensively about OU's football program over at the NY Times collegiate sports blog, the Quad, and almost always quite favorably. Neither Evans nor the Times disclosed any of this in connection with running the story on McFarland's recruitment.

Meanwhile, Longhorn supporters are already poking some big holes in Evans' story (see also here). And the NY Times continues to lose money hand-over-foot.

So it goes.

Posted by Tom at 12:01 AM | Comments (1) |

December 26, 2008

Hayes Carll is back

The Woodlands native Hayes Carll (earlier post here) is back in town for the holiday season, playing tonight in downtown Houston at Warehouse Live and on Tuesday the 30th at Dosey Doe in The Woodlands. If you have not had the pleasure of enjoying a live performance of this latest in a long-line of talented Texas singer-songwriters, then check out one of his shows this week. You will not be disappointed.

Posted by Tom at 12:01 AM | Comments (0) |

December 25, 2008

Merry Christmas from the Family

Back by popular demand is Texas singer-songwriter and Houston native Robert Earl Keen's classic Texas Christmas carol and video, Merry Christmas from the Family. Keen will be playing Houston's House of Blues on Sunday the 28th.

Happy holidays and thanks for reading HCT!

Posted by Tom at 12:01 AM | Comments (1) |

December 24, 2008

Playing fair

So, now Alaska Senator Ted Stevens is finding out that some federal prosecutors do not play fair (H/T Doug Berman). Of course, we've known that for quite some time down here in Houston.

Oh well, at least the mainstream media has strong incentives to expose such abuses in the case of a major political figure.

But do the same media incentives exist in the prosecution of a wealthy and unpopular businessperson?

What if the reporter most responsible for such a prosecution is, might we say, not particularly motivated to expose prosecutorial abuses? Or what if the reporter for the nation's most prominent business newspaper is so conflicted that he ignores the abuses even when they are playing out in front of him?

And the foregoing doesn't even consider what we should think when one of those reporters in another case actively attempts to help investors score on their positions at the expense of a company and its chief executives.

It's hard enough to maintain innocence against the overwhelming resources of the federal government when the prosecution plays fair. It's next to impossible to do so when it doesn't. What chance is there if the people responsible for exposing prosecutorial abuse have incentives that override that responsibility?

Ask Jeff Skilling.

Posted by Tom at 12:01 AM | Comments (0) |

December 23, 2008

Enduring Gladwell?

Charlie Rose interviews Malcolm Gladwell in the video below in regard to his new book Outliers, but it does not appear that the Financial Times' Clive Cook will be watching:

Since the first chapter of “Tipping Point” I have been enduring Gladwell out of an increasingly weary sense of professional obligation. This is what they pay me to do, I tell myself. The man has a nose for interesting tales, I grant you, but his unfailing combination of intellectual parasitism, credulity, false modesty, and self-importance repels me. In “Tipping Point”, “Blink” and those of his New Yorker pieces I have read, the formula is always the same: find a scholarly opinion; sanctify said opinion with Gladwellian approval (transforming it from a disputed theory to something “we now know”); season with Madison Avenue terms of art; then deluge with anecdotes of questionable, if any, relevance. And let there be colour. Always, the colour. Please tell me about that man’s wry smile, interesting foreign accent, and cluttered desk (often, as studies show, the sign of a creative mind). I need to know all that.

Posted by Tom at 12:01 AM | Comments (0) |

December 22, 2008

2008 Weekly local football review

(AP Photo/George Nikitin; previous weekly reviews are here)

Raiders 27 Texans 16

Amidst the Chronicle cheerleaders becoming enraptured again during the Texans' (7-8) first four-game winning streak, the local team reminded us today against the Raiders (4-11) why they have been among the worst-performing new franchises in the history of the National Football League.

Basically, the Texans stunk. The progress that had been exhibited by the Texans' defense over the past four games seemingly evaporated into thin air as the unit allowed the Raiders offense to do about anything it pleased. Minimal pressure on the passer combined with lax pass coverage and arm tackling is a pretty good prescription for a defeat in the NFL.

Meanwhile, the Texans' offense looked as if it had never seen a two-deep zone pass defense. QB Matt Schaub's poor passing statistics (19-36/234 yds/0 TD/1 INT) would have looked even worse but for WR David Anderson turning a short crossing route into a 65 yd reception late in the second quarter. Moreover, despite the Raiders loading up to stop the pass, the Texans' offense was incapable of running the ball consistently against one of the worst run defenses in the NFL.

And, to make the Texans' effort completely intolerable, the special teams allowed an 80-yard punt return for a TD late in the third quarter that -- given the way the Texans' offense was moving the ball -- essentially put the game away for the Raiders.

However, the worst part about the Texans' feeble effort against the Raiders is that -- after a month-long reprieve during the the four-game winning streak -- we'll have to endure another week of Chronicle sportswriter John McClain doing his absurd impression of a crusty, old football coach disappointed with his team.

The Texans attempt to salvage a .500 season next Sunday at Reliant in the season finale against the Bears (9-6), who are still vying for a playoff spot. Given the Texans' tepid improvement on defense over the past two seasons relative to the number of draft choices used on that unit over the past three drafts, my sense is that off-season changes will be made on the defensive coaching staff.

Posted by Tom at 12:01 AM | Comments (0) |

December 21, 2008

The Big Picture -- 2008

Don't miss Boston.com's Big Picture's collection of the best photos of 2008 here, here and here.

Posted by Tom at 12:01 AM | Comments (0) |

December 20, 2008

Any connection?

As Bill Henderson notes, many big law firms are going to have trouble surviving in these turbulent financial markets.

Financial markets aside, though, I wonder whether this type of news is an even larger part of big law's problem?

Posted by Tom at 12:01 AM | Comments (0) |

December 19, 2008

Wallstrip does Cramer on Wall Street

Posted by Tom at 12:01 AM |

December 18, 2008

Making sense of Madoff

Loren Steffy, the Houston Chronicle's business columnist, has been having a hard time lately.

You will recall that Steffy was one of the leaders of the mainstream media lynch mob that embraced the myth of the Greed Narrative in calling for harsh criminal prosecutions of former Enron executives, particularly the late Ken Lay and Jeff Skilling.

However, now that pretty much the same thing that happened to Enron has happened to Bear Stearns, Freddie and Fannie, Merrill Lynch, Lehman Brothers, AIG and any number of other trust-based businesses during the current financial crisis, Steffy has had difficulty making sense of it all. We can't just throw all of those executives in prison, can we?

Now to make things even more confusing for Steffy, Bernard Madoff's alleged Ponzi scheme has unraveled. Steffy's column from yesterday bemoans that Madoff, as with Enron, was at least in large part the result of lax regulation:

And so the era of lax regulation that began with Enron ends with the Madoff madness looming as a monument to the SEC’s ineptitude. Already under fire for smelling the flowers while Bear Stearns — to cite one example — charged toward collapse, the SEC’s days may be numbered. Treasury Secretary Henry Paulson introduced a sweeping reform plan earlier this year that would relieve it of much of its oversight role.

But wait a minute. The SEC had been continually warned about Madoff's company (see Henry Markopolos' 2005 notice to the SEC here). Moreover, the "lax regulation" that Steffy complains about came at a time of unparalleled growth in the SEC during the supposedly pro-business Bush Administration:

Since 2000 and especially after the fall of Enron, the SEC's annual budget has ballooned to more than $900 million from $377 million.  .  .  . Its full-time examination and enforcement staff has increased by more than a third, or nearly 500 people. The percentage of full-time staff devoted to enforcement -- 33.5% -- appears to be a modern record, and it is certainly the SEC's highest tooth-to-tail ratio since the 1980s. The press corps and Congress both were making stars of enforcers like Eliot Spitzer, so the SEC's watchdogs had every incentive to ferret out fraud.

Yet, the regulators couldn't put the pieces of the puzzle together (even Spitzer's family was a victim of Madoff!). So, Steffy's solution is the SEC "needs to be put out to pasture." In other words, rearrange the deck chairs on the Titanic.

Look, as J. Robert Brown and Larry Ribstein point out, there are understandable systemic reasons why Madoff was able to slip through the regulatory cracks for decades. Most of those flaws are not going to be fixed by simply creating a Super-SEC. Indeed, the suggestion that such regulatory remedies are the best protection against the next Madoff (and, rest assured, there will be many) actually is counter-productive to understanding the truly best protection from such schemes.

The primary justification for this regulatory retrofitting is the plight of the innocent investors (and it sure is an interesting bunch) who lost millions when Madoff's company went bust. Although nothing is wrong with compassion for folks who lose money in an investment fraud, it's important to remember that those investors who lost their nest egg in the Madoff implosion were imprudent in their investment strategy. They should have diversified their Madoff holdings or done some real due diligence into his operation if they were going to bet the farm on it. Even though every one of Madoff investors carry insurance on their homes and cars, one can only speculate why they didn't attempt to understand the risk of their investment in Madoff's company better than most did. Most likely, many of the investors simply did not care to truly understand how Madoff claimed to create wealth for them in the first place. Chidem Kurdas' speaks to this dynamic in his timely study on the demise of the Manhattan Capital hedge fund:

As the failure of the hedge-fund firm Manhattan Capital demonstrates, both government regulators and market players can make mistakes resulting from cognitive biases. Responding to such mistakes by strengthening government watchdogs, although often recommended, reduces both the watchdogs’ and the public’s incentive to learn, thereby creating a vicious spiral of regulation, regulatory failure, and even more regulation.

Thus, as Larry Ribstein has been advocating for years, no amount of increased regulation is likely ever to do a better job than the market in mitigating fraud loss. It's easy to throw Madoff in prison for the rest of his life, simply attribute the investment loss to him and pledge to do a better job of policing the crooks next time. It's a lot harder to understand how Madoff's investors could have hedged their risk of Madoff's fraud. As this WSJ editorial concludes, "expecting the SEC to prevent a determined and crafty con man from separating investors from their money is no more sensible than putting your life savings with a Bernard Madoff."

Posted by Tom at 12:01 AM | Comments (2) |

December 17, 2008

A tuna wins a small lottery prize

As a result of the Buffet Rule, the federal government decided to land a bunch of tuna rather than the barracuda in regard to an AIG-General Re finite risk insurance transaction that was not clearly illegal, much less criminal.

Subsequently, after convicting the business executives (sort of like shooting tuna in a barrel these days), the federal prosecutors proposed that the tuna get effective life sentences. For what?

Thankfully, a federal judge in Connecticut showed unusual restraint on Tuesday in rejecting the government's brutal behavior. He handed the first of the tuna to face sentencing a two-year prison term.

Meanwhile, former Enron executive Jeff Skilling continues serving an effective life prison sentence in Colorado pending his appeal after being convicted (although not fairly) for pretty much the same thing as the tuna above.

So, during a financial downturn when we need to be promoting our best and brightest to be engaging in the business risks that generate jobs and wealth, our federal government continues promoting its corporate criminal lottery.

Why would the best and brightest risk that?  Do any investors really feel safer now that Skilling is off the streets? And does anyone really think that keeping Skilling locked up for most of the rest of his life will deter the next Bernie Madoff?

A truly civil and wise society would find a better way.

Posted by Tom at 12:01 AM | Comments (0) |

December 16, 2008

Blago blogging

The criminal troubles of an Illinois governor would not normally be one of this blog's topics, but this Michael Barone op-ed on the Rod Blagojevich affair is just too good not to pass along.

Barone is well-versed in the complicated web of influences that define Chicago politics, so he is right in his element explaining Blagojevich to other pundits not so steeped in Chicagoland:

The answer, .   .   . is that [Blagojevich is] not crazy, but simply stupid, hugely stupid. I've long since come to the conclusion that Rod Blagojevich is clearly the stupidest governor in all of our 50 states, and he may be the stupidest governor I've had occasion to write about in the four decades when I've been co-author of The Almanac of American Politics. And a stupid man (or woman) in high political office can be very dangerous to all concerned. I have long said that as a political operative I would prefer a smart opponent to a stupid opponent. If you're pretty smart yourself, you should be able to figure out what another pretty smart person will do. But whether you're smart or stupid, it's hard to figure out what a stupid person will do. That's even more true when the stupid politician is your political ally. Stupid people do all sorts of things that are against their own interests. Like tell the press on Monday that you wouldn't mind being taped, even when (as we learned on Tuesday) that you've been saying all kinds of things that you should have known could easily send you to the slammer.

Meanwhile, Joe Queenan compares Blago to Nero, and then wonders what we have come to when a governor of a big state can shake down Bank of America and nobody really notices:

The idea that the governor of a state as prosperous and important and sophisticated and upscale as Illinois would make this kind of threat is terrifying. Even more terrifying is that Bank of America saw no alternative but to give in. Yet even more terrifying is that nobody outside Chicago seems to have gotten terribly worked up about the situation, riveted as they are on the governor's more theatrical transgressions. But peddling a Senate seat or using scare tactics to shake down a newspaper are nowhere near so serious a menace to society as letting the government arbitrarily intervene in financial transactions between banks and creditors. A crooked governor we can all handle. But a governor who capriciously decides which commercial enterprises a bank must finance and which it can ignore is a scary proposition indeed.

Rome wasn't built in a day. But get the wrong politician in office, and you can burn it in a day.

Meanwhile, Patrick Fitzgerald, a prosecutor who is quite capable of pursuing a weak case that nevertheless puts him in the center of the media spotlight, ought to shut up about the Blagojevich case, says Victoria Toensing:

In the Dec. 9 press conference regarding the federal corruption charges against Gov. Blagojevich and his chief of staff, Mr. Fitzgerald violated the ethical requirement of the Justice Department guidelines that prior to trial a "prosecutor shall refrain from making extrajudicial comments that pose a serious and imminent threat of heightening public condemnation of the accused." The prosecutor is permitted to "inform the public of the nature and extent" of the charges. In the vernacular of all of us who practice criminal law, that means the prosecutor may not go "beyond the four corners" -- the specific facts -- in the complaint or indictment. He may also provide any other public-record information, the status of the case, the names of investigators, and request assistance. But he is not permitted to make the kind of inflammatory statements Mr. Fitzgerald made during his media appearance. [.  .  .]

Throughout the press conference about Gov. Blagojevich, Mr. Fitzgerald talked beyond the four corners of the complaint. He repeatedly characterized the conduct as "appalling." He opined that the governor "has taken us to a new low," while going on a "political corruption crime spree."

Of course, we know all about federal prosecutors violating such ethical duties down here in Houston.

Finally, the always insightful Larry Ribstein puts the Blagojevich affair in proper perspective:

Let's keep that in mind before we hand over more regulatory power to politicians because we think we can trust them more than the market participants who would be regulated.

Posted by Tom at 12:01 AM | Comments (0) |

December 15, 2008

2008 Weekly local football review

(AP Photo/David J. Phillip; previous weekly reviews are here)

Texans 13 Titans 12

The Texans (7-7), who most everyone in these parts had left for dead a month ago, won their fourth straight game for the first time in franchise history by handing the division-leading Titans (12-2) only their second loss of the season.

The slugfest win certainly was not picturesque. It came about through an odd combination of stellar play from WR Andre Johnson (11 catches for 208 yds and a TD!) and rookie RB Steve Slaton, who slogged his way through the rugged Titans defense for 100 yds on 24 carries, an abysmal day by Titans QB Kerry Collins (15-33/181 yds/1 INT/0 TD's, another impressive performance for the most part by the Texans defense (holding the Titans to 281 total yds) and an odd go-for-it on 4th down call by Titans' coach Jeff Fisher in the fourth quarter when a 49 yard-field goal would have given the Titans the lead with two minutes to go. Collins overthrew the 4th down pass, as he pretty much overthrew everything all day, and that was the ball game.

So, will the Texans beat my pre-season over/under prediction of eight wins? Only the Raiders (3-11) next Sunday in Oakland and the Bears (8-6) at Reliant the following week stand in the way of the Texans first winning season.

I must say, these Texan players under Kubiak do not give up.

Posted by Tom at 12:01 AM | Comments (1) |

December 14, 2008

Project Barkley

Hank Haney has done some really good work in helping Tiger Woods modify his swing plane over the past several years. But what he has done in helping Charles Barkley fix his golf swing is nothing short of miraculous.

Posted by Tom at 12:01 AM | Comments (0) |

December 13, 2008

That's a solution?

As Congress and the mainstream media continue their muddle over the current downturn in financial markets, one of the ubiquitous "solutions" that Washington and the MSM have already decided is needed to prevent another such disruption is more and better governmental regulation of those markets.

Thus, it was with great interest that I read this W$J article today about the meltdown of Bernard Madoff's apparent Ponzi scheme:

Bernard Madoff is alleged to have pulled off one of the biggest frauds in Wall Street history. But there were multiple red flags along the way, including a series of accusations leveled against Mr. Madoff's operation. Now some are asking why regulators and investors didn't pick up on the alleged scheme long ago.

"There were multiple smoking guns of various calibers," says Harry Markopolos, an industry executive who in 1999 first contacted the Securities and Exchange Commission with his suspicions. "People were willfully blinded to the problems, because they wanted to believe in his returns." [.  .  .]

Mr. Markopolos, who years ago worked for a rival firm, researched the strategy and was convinced the results likely weren't real. "Madoff Securities is the world's largest Ponzi scheme," Mr. Markopolos wrote in a letter to the SEC. Mr. Markopolos pursued his accusations over the past nine years, dealing with both the New York and Boston bureaus of the agency, according to documents he sent to the SEC that were reviewed by The Wall Street Journal. An SEC spokesman declined to comment.

In short, the regulatory agency that is supposed to protect investors has been warned about Madoff's fund since 1999 and has done nothing.

Meanwhile, Marcia Vickers and Roddy Boyd write in this Fortune article about the troubles of Citadel Investment Group, the Chicago-based hedge fund that manages $15 billion and has 1,300 employees worldwide, which announced yesterday that it has frozen withdrawals through March:

The panic that swept through the capital markets after Lehman declared bankruptcy was one form of human frailty that Citadel’s sophisticated mathematical models could never have anticipated. The second and perhaps more devastating one occurred on Wednesday, Sept. 17, when news broke that the Securities and Exchange Commission was considering a temporary ban on short-selling 900 stocks - 799 of them financial stocks.

The proposed ban was good news for the banks and brokers. It meant that Morgan Stanley (MS, Fortune 500), Citigroup (C, Fortune 500), and others didn’t need to worry that hedge funds could drive them to the brink.

Yet the news was horrifying for hedge funds like Citadel. Scores of Citadel’s positions - particularly in convertible arbitrage, which requires shorting - would simply blow up if the ban went into effect.

According to sources, Griffin phoned Christopher Cox, the SEC’s chairman. Griffin pleaded with Cox, telling him the ban could mean certain death to many hedge funds - including Citadel. Cox, according to these sources, was unmoved and merely responded with the party line about how the country was going through a national financial crisis and the SEC needed to do what it had to.

There was nothing Griffin could do or say to sway him, and on Friday, Sept. 19, the ban was made official. (The SEC declined to comment for this story.)

Citadel was now hemorrhaging money. Over the weekend and throughout the following week, Griffin talked with his portfolio managers and told them to dump the dogs and keep the racehorses, meaning preserve the positions that they believed had long-term upside as they engaged in a selloff.

By the end of September, Citadel’s funds were down 20%. In early October, Griffin sent a letter to investors stating that September had been the “single worst month, by far, in the firm’s history. Our performance reflected extraordinary market conditions that I did not fully anticipate, combined with regulatory changes driven more by populism than policy.”

So, let me get this straight. The CEO of a huge hedge fund calls the SEC chairman to protest that responsible businesses that have hedged risk properly are going to suffer huge, unfair financial losses as a result of the SEC's dubious, knee-jerk temporary ban on short-selling. And the best that the SEC chairman can come up with is that "the SEC needed to do what it had to"?

Go ahead and toss Chairman Cox in with this group.

Finally, almost unnoticed amidst all this turmoil is this piece of news that the Federal Trade Commission is inexplicably continuing to fight Whole Foods' merger with natural food competitor, Wild Oats, despite the fact that it is now pretty darn clear that Whole Foods overpaid for Wild Oats, that Whole Foods isn't doing all that well right now, and that the grocery business generally continues to be brutally competitive.

So, in light of all this, even more regulation is the solution?

As Larry Ribstein points out, that "solution" could well make things worse.

Posted by Tom at 12:01 AM | Comments (0) |

December 12, 2008

Get inspired

Posted by Tom at 12:01 AM | Comments (0) |

December 11, 2008

Would you buy a car from Congress?

The W$J's Holman Jenkins continues what should be Pulitzer Prize-winning commentary on the problems of the U.S. auto industry:

None of [Congress' complicity in the auto industry's problem] was mentioned at four days of congressional bailout hearings, because Detroit knows better than to suggest Congress has a role in the industry's problem.   .   . 

.   .   . The tragedy of GM and Ford is that, inside each, are perfectly viable businesses, albeit that have been slowly murdered over 30 years by CAFE. Both have decent global operations. At home, both have successful, profitable businesses selling pickups, SUVs and other larger vehicles to willing consumers, despite having to pay high UAW wages.

All this is dragged down by federal fuel-economy mandates that require them to lose tens of billions making small cars Americans don't want in high-cost UAW factories. Understand something: Ford and GM in Europe successfully sell cars that are small but not cheap. Europeans are willing to pay top dollar for a refined small car that gets excellent mileage, because they face gasoline prices as high as $9. Americans are not Europeans. In the U.S., except during bouts of high gas prices or in the grip of a Prius fad, the small cars that American consumers buy aren't bought for high mileage, but for low sticker prices. And the Big Three, with their high labor costs, cannot deliver as much value in a cheap car as the transplants can.

Under a law of politics, such truths were unmentionable in last week's televised circus because legislators are unwilling to do anything about them. They won't repeal CAFE because they fear the greens. They won't repeal CAFE's "two fleets" rule (which effectively requires the Big Three to make small cars in domestic factories) because they fear the UAW. They won't hike gas prices because they fear voters. [.  .  .]

We hate to admit it, but the only good idea from the bailout debate is the proposal for a new "auto czar." Along with disposing of Chrysler and downsizing Ford and GM, his job should be to confront Congress with its own policy cowardice and failure. If saving gasoline and Detroit are both worthy goals, let's ditch CAFE and institute a gasoline tax to make consumers value the cars government is forcing auto makers to build. If Congress doesn't have the tummy for that, at least ditch the "two fleets" rule so Detroit can import small cars to meet the mandate.

Alas, Barack Obama's vaunted "change" apparently doesn't include spending the political capital to make Congress acknowledge the failure of CAFE. If he can't do better than throw taxpayer money at a dismal policy disaster like our fuel-economy regulations (and so far he seems to be joining Congress in pretending it's all Detroit's fault), we might as well give up on his presidency along with any hope of progress on the nation's other unresolved dilemmas.

His campaign never really answered the question of whether he was Chance the Gardener or Abraham Lincoln. We might as well find out now.

Posted by Tom at 12:01 AM | Comments (0) |

December 10, 2008

From waiting tables to the PGA Tour

There really is nothing quite like the PGA Qualifying Tournament (commonly know as "the Q School") for sheer sporting drama.

After six nerve-wracking rounds (108 holes), the 25 low scorers get the treasured fully-exempt status to play in PGA Tour events for the 2009 season.

Don't finish in the low 25? It's back to slogging around the mini-Tours.

The pressure is excruciating. Take, for example, PGA Tour veteran Joel Edwards' reaction after blowing the 2004 Q school. He was on the cut line until hitting his tee shot into the water on the 108th hole and taking double-bogey. Edwards went directly from the green to the parking lot, letting out guttural screams and pounding his bag along the way, paying his caddie and slamming his car door as he drove off.

John Strege sums up the drama well:

The emotional gamut ran its course all within a matter of moments on the 18th hole of the Nicklaus Tournament Course on Monday afternoon, the PGA Tour Qualifying Tournament delivering on its promise of compelling theater to the extremes.

Brian Vranesh, 31, was waiting tables a year ago. When he holed out to finish a round of seven under par 65, he had completed an improbable journey from working for tips to playing for millions, setting free a torrent of tears that qualifies as a gully washer in this bone-dry California desert.

Moments later, in the group directly behind Vranesh, a dispirited Josh Teater, 29, a veteran of mini tours who was on the verge of a promotion to the big leagues, completed a free fall finish -- triple-bogey, double-bogey, par, double-bogey -- that left the pieces of his shattered dream strewn across PGA West here.

It was, simultaneously blissfully and lamentably, a typical Q school finish. [.  .  .]

So while Vranesh is preparing to move onto the PGA Tour, Teater will attempt to regroup from the worst stretch of golf in his life, all things considered, and join the Nationwide Tour.

Teater was six under par on his round and 19 under par for the tournament [and in the top 25] when he came to the par-5 15th hole [his 105th of the tournament] on [his final round]. He hit his second there into the water, took a drop and hit his fourth into the water. After another drop, he hit his sixth onto the green and two-putted for eight.

He double-bogeyed two of the next three and fell to a tie for 62nd and on the wrong end of the extremes that make Q School what it so maddeningly is.

Jason Sobel provides short bios on each of 25 qualifiers. Former University of Texas golfer and PGA Tour veteran Harrison Frazar won the tournament by an impressive eight strokes (including one round of 59!). I wonder if he will get this sponsor back?

Finally, The Woodlands' Stacy Lewis won the LPGA Q School this past weekend and is fully-exempt on the LPGA Tour for the 2009 season. Keep an eye on her.

Posted by Tom at 12:01 AM | Comments (0) |

December 9, 2008

225 Miles High

Check out these magnificent Mail Online photos of the Endeavour astronauts completing the recent repairs on the International Space Station.

Posted by Tom at 12:01 AM | Comments (0) |

December 8, 2008

2008 Weekly local football review

(AP Photo/Morry Gash; previous weekly reviews are here)

Texans 24 Packers 21

Could the Texans actually be turning into a reasonably dangerous team so long as they hang on to the ball?

Despite four turnovers, the Texans (6-7) rallied late and beat the Packers (5-8) on a Kris Brown 40 yd field goal in the last minute.

But for the Texans' turnovers, this game would not have been close. The Texans rolled up 550 yds of total offense, including 414 through the air from returning-from-injury QB Matt Schaub (28-42/414 yds/2 TD's/1 INT). Schaub cooly engineered a 75 yard, nine-play drive in the last two minutes to set up Brown's game-winning field goal.

Meanwhile, Texans stellar rookie RB Steve Slaton rushed for 120 yards on 26 carries and caught three passes for 40 yards, cementing his place among the top five players selected in the 2008 NFL Draft.

And, although bearing no similarity to the Ravens or the Steelers, the Texans defense continued its improved play overall, including a key sack that set up the Texans' final drive.

So, the Texans are on somewhat of a roll as they prepare for next Sunday's game at Reliant Stadium against the Titans (12-1). They then travel to Oakland to play the Raiders (3-10) the following week before returning home to close out the season against the Bears (7-6), who may still be in the playoff hunt at that point.

Win two out of those three games and the Texans will finish with the same 8-8 record that they finished with last season. Few people (including me) were predicting that just three weeks ago.

Moving on to the college game, with Oklahoma's (12-1) expected demolition of Missouri in the Big 12 Championship Game, the Texas Longhorns (11-1)  lost out on playing in the BCS Championship Game. So, the Horns will face Big Ten co-champ Ohio State (10-2) in the Fiesta Bowl in Phoenix on January 5.

Rice (9-3) will play Western Michigan (9-3) in the Texas Bowl at Reliant Stadium on December 30 at 7 p.m., while the  Houston Cougars (7-5) will take on Air Force (8-4) in the Armed Forces Bowl in Ft. Worth on New Year's Eve afternoon.

And the Texas Aggies stay home during bowl season once again.

Posted by Tom at 12:01 AM | Comments (0) |

December 7, 2008

What is this blithering 90-degree rule?

When it comes to playing golf, I'm decidedly old school. Weather permitting, I prefer to walk while playing, which puts me in a decided minority among American golfers, most of whom prefer to ride in a motorized cart.

Golfweek's British columnist Alistar Tait also prefers to walk, as do most golfers in the United Kingdom, where motorized carts are a rarity. Tait has just returned to the U.K. from his annual golfing trip to the U.S. and he weighs in with this clever article (entitled "Annoyed with America") in which he lists the "peculiarities" of playing golf in the U.S.

He includes one of my favorite cart-riding absurdities -- the 90-degree rule -- which requires that you drive on the cart path until you are 90 degrees from your ball, then drive to your ball from the cart path, hit your shot, and then return on your 90 degree path to the cart path, where you proceed to 90 degrees from your shot landed. Tait notes:

The 90-degree rule – Tell a British golfer that the 90-degree rule is in effect and you’ll get a blank look. Since we don’t have carts and paths, there’s no need for a rule that says you drive on the cart path adjacent to your ball and then turn 90 degrees to your ball.

Posted by Tom at 12:01 AM | Comments (0) |

December 6, 2008

Frost/Nixon looks interesting

Rick Perlstein, author of Nixonland: The Rise of a President and the Fracturing of America (Scribner 2008), provides more insight into Nixon's fascinating relationship with television.

Posted by Tom at 12:01 AM | Comments (0) |

December 5, 2008

But what about that case in which the threat worked?

This Wall Street Journal editorial from earlier in the week rightly notes that the "Department of Justice finally got something right" by electing not to appeal the Second Circuit's decision earlier this year upholding U.S. District Judge Lewis Kaplan's dismissal of tax fraud indictments against 13 former KPMG partners.

In the KPMG case, the DOJ made KPMG an offer that it couldn't refuse -- either ignore the firm's long-standing policy of paying the criminal defense costs of its indicted partners or be prosecuted out-of-business ala Arthur Andersen.

Judge Kaplan concluded that dismissal of the indictments was the only reasonable remedy in the face of the DOJ's deck stacking. I'm happy for the former KPMG partners, who at least get their lives back (but probably not their careers) from the threat of long imprisonment.

But what about Jamie Olis?

Unlike the KPMG case, the DOJ actually got away with undermining Olis' criminal defense by threatening Dynegy with indictment unless it quit paying Olis' criminal defense costs. Dynegy cratered to the DOJ's threat and a cash-strapped Olis was unable to mount an effective defense at his trial. The result was a conviction and a barbaric 24 year sentence, later reduced to a merely unconscionable six year term.

Olis is currently scheduled to be released from prison in mid-2009. This man and his family have already been tortured for over five years in one of the most egregious examples of prosecutorial abuse and excess of the misguided post-Enron governmental crusade to punish businesspeople.

Isn't it about time that the DOJ finally got something right in the sad case of Jamie Olis?

Posted by Tom at 12:01 AM | Comments (0) |

December 4, 2008

Reflections on Mumbai

Jonathan Ehrlich is a Vancouver businessman who was in one of the hotels that was attacked last week in Mumbai. Take a few minutes to listen to his harrowing story and to read the email (under the fold below) that he sent to his family members and friends during his trip home after the attack. A good example of the fighting spirit that is needed to win this battle.

And don't miss this spot-on analysis of the Mumbai attacks by John Stewart and John Oliver:

Hey guys.

       Got all your notes. Thank you. I'm ok. A little shaky to be honest but really just happy to be here. I can't thank you enough for your notes.

       You have no idea what the mean to me. Hope to see and speak to you all soon.

       I wrote the following on the plane.

       It's 3.33 am Thursday Nov 27th. And I am writing this from Jet Airways flight 0227, First leg of the Mumbai – Brussels - Toronto – Vancouver journey . It is a stream of "adrenaline" piece. I apologize in advance for the grammatical errors. But I wanted it raw and unedited.

       First, some context.

       I have always been truly blessed. Lucky to be born to the most love a child could ever wish for. Luck to be born into a family that prided itself on teaching me how to be a man. Lucky to have been protected and sheltered by three strong, decent brothers. Lucky to have found and married the kindest heart on the face of the earth. Lucky to be blessed beyond blessed with four healthy, beautiful children.  Lucky to have wonderful friends who tolerate my idiosyncrasies.

       Tonight, these blessings, these gifts of love and life bestowed upon me, this incredible good fortune, saved my life. And I honestly don't know why.

       The details.

       I am in Mumbai on business. I'm staying at the Trident hotel. It's sister hotel, the Oberai, is right next-door and attached by a small walkway.

       I had dinner by myself in the Oberai lobby after some late meetings.

       I retired upstairs to my room. About 10min later my colleague, Alex Chamerlin, text-ed asking me to join him and his friend in the Oberai lounge for a drink. I started to make my way out the door but decided that I was really too tired.  I had a 7am flight, and needed to be up at 5. Rest beckoned. I closed the light, got into bed and quickly fell asleep. Lucky life-saving decision number 1.

       About 1hree minutes later there was knock at my door. A few seconds later, the doorbell rang (they have doorbells for hotel rooms here – who'da thunk?). I thought – who the hell is knocking at my door?  Turn down service? This late? Forget it. So I just lay there and hoped they would go away. Lucky life-saving decision number 2.

       Five minutes later I heard and felt a huge bang. I got up and went to look out the window. A huge cloud of grey smoke billowed up from the road below.  I thought.  Fireworks? I didn't see anyone milling about so knew something wasn't right. I started to walk to the light switch when -  BANG – another huge explosion shook the entire hotel.

       Oh fuck, I thought. Is that what I think this is? I opened the door to the hallway. A few people were already outside.

       I heard the word "bomb".

       Oh shit. Oh shit I thought.

       I'd like to tell you that I calmly collected my myself and my things and proceeded to the exits.

       I didn't.  An adrenaline explosion erupted inside me and almost lifted me off the floor. And I began to move. Really move.

       I went back inside, quickly packed my stuff and went back into the hall.

       I ran to the emergency exit and started making my way down the stairs (I was on the 18th floor).

       There were a few people in the stairwell. I was flying by them. I swear I could have run a marathon in 2hrs. I felt like pure energy.

       About halfway down, I called my friend Mark, told him what had happened and asked him to get me a flight – any flight – the hell out of Mumbai.

       I got to the lobby level. There was a crowd of people in the corridor.

       No one moving. No one doing anything. No hotel staff. No security people.

       Shit. I thought. We are sitting ducks.

       I decided to get out of there. First, into the lobby.

       I stepped through the door into the silent lobby. My first sight was a blood soaked plastic bag and bloody footsteps leading into the reception area.  I proceeded forward.  The windows were shattered and glass was everywhere. There wasn't a soul around.

       Bad decision, I thought. I quickly retreated to the corridor. The crowd of people had grown.

       We've got to get out of here I yelled.  Let's go.

       I looked around for the emergency exit and started running towards it.

       I made my way through the bowels of the hotel and out into a dark alley. It was empty and silent. I looked to my left and about 100m away saw a few security guards milling about.

       Run they screamed. I began to move toward them.

       I reached the main street and was immediately swept up into the Indian throngs (for those who have been to Mumbai, you know what I mean).

       People everywhere. But they were all eerily quiet. No one was talking.

       No car horns. Nothing.

       I started yelling "airport airport".

       Some one  (a hotel cook I believe) grabbed me and my bag and threw me in a rusty mini-cab.

       As I sped away, I didn't see a single police car nor hear a single siren. Just the sound of this shit-box car speeding down the deserted road.

       Traffic was stop and go. I made it to the airport in about 1hr, cleared customs and buried myself in a corner of a packed departure lounge, called my wife, called my parents and brothers and started emailing those friends who knew I was in Mumbai.

       Sadly, Alex - my colleague who texted me for a drink – and his friend were not so lucky. The terrorists stormed into the lobby bar and killed several people. They took Alex and his friend hostage and started to march them up to the roof of the hotel.

       About half way up, Alex managed to escape (he ducked through an open door and hid) but his friend was caught. And as I write this, that poor man is still on the roof of the Oberai.

       Alex is safe but as expected, extremely worried about his friend.

       I'm telling you right now. If I decided to meet Alex for that drink tonight I'd either be dead, a hostage on the roof of a building 30 hours away from everyone I love or - if I had the balls of Alex – a stupid-but-lucky-to-be-alive jerk.

       And remember that knock/ring at my door? Well, I subsequently learned that the first thing the terrorists did was get the names and room numbers of western guests. They then went to the rooms to find them.

       Ehrlich, with an E, room 1820.

       I'll bet my entire life savings that they were the knock at my door.

       Thank god for jet lag.

       Thank god for "cranky tired Jonny" (as many of my friends and family know so well) that compelled to get into and stay in bed.

       Thank god for being on the 18th floor.

       Thank god for the kind kind people of Mumbai of helped me tonight. The wonderfully kind hotel staff. That cook. My cab driver who constantly said "relaxation" "relaxation" "I help" and who kept me in the cab when we hit a particularly gnarly traffic jam and i wanted to get out and walk. And for other people in traffic who, upon hearing from my own cab driver that I was at the Oberai, literally risked life and limb to stop traffic to let us get by (as again, only those who have been to Mumbai can truly appreciate).

       Mumbai is a tragically beautiful place. Incredibly sad. But I am convinced that its inhabitants are definitely children of some troubled but immensely soulfully god.

       I'm sitting on plane (upgraded to first class….see, told you I'm lucky ?). Just had the best tasting bowl of corn flakes I've ever had in my life. Hennessey coursing through my veins. Concentration starting to loosen and sleep beginning to creep onto my horizon.

       I still feel a bit numb. But mostly I feel like I've just watched a really really bad movie staring me.  Because right now, it all doesn't feel real. Maybe a few hours of CNN will knock me into reality. But the truth is numb is fine with me for a while.  If I do end up thinking about the what if's, I don't really want to do that until I'm much much closer to home. And I have 30 more hours of travel time to go.

       But before I sign off, let me say this.

       The people who did this have no souls. They have no hearts. They are simply the living manifestation of evil and they only know killing and murder.  We – all of us - need to understand that.  Their target tonight was first and foremost Americans. Why? Because they fear everything that America stands for. They fear hope and change and freedom and peace.  Let's make no mistake; they would have shot me and my children point blank tonight with out a moment's hesitation. Most of us sorta know that but sometimes we equivocate.  We can't equivocate. Not ever.

       I know that I want to go back. Lay some flowers. Wrap my arms around these people. Say thank you. Spend some money on overpriced hotel gifts and tip well. And generally give the bastards who did this the big fuck you and
show them that I am not – I  repeat not – afraid of them.

       But first I need to go squeeze my wife. Dry her tears. Then have her dry mine as I hold my beautiful beautiful babies who will be (thankfully) oblivious to all of this. Because isn't that what life is really about?

       I appreciate you taking the time to listen.

       With much much love.

       Jonathan

Posted by Tom at 12:01 AM | Comments (1) |

December 3, 2008

"That's just not us"

While General Motors is making its case in Congress for an $18 billion bailout (didn't GM need "just" $12 billion last week?), it's trying to cut corners in other areas, such as its endorsement deal with Tiger Woods that paid Woods $7 million annually over the past nine years.

As one sage headline writer put it -- "GM lays off Tiger Woods."

But Conan O'Brien had an even better crack about GM's termination of its relationship with Woods during one of his monologues last week:

"General Motors announced that they are ending their endorsement deal with Tiger Woods. When asked why, a spokesperson for General Motors said: 'Tiger Woods is successful, competitive, and popular. And that’s just not us.'”

Posted by Tom at 12:01 AM | Comments (0) |

December 2, 2008

Checking in on the NBA

Did you realize that 20% of the 2008-09 NBA season is already completed?

Most of the local mainstream media is locked into the Rockets narrative -- i.e., "Tracy McGrady is a superstar and the Rockets can't win in the playoffs without him, but he's not the type of clutch superstar who can win in the playoffs, blah, blah blah." Thus, don't expect to learn much from those sources about what really is going on in the NBA this season.

As noted last season, McGrady is long past being a bona fide NBA superstar and really is not much more than an average NBA player at this point except on those increasingly rare occasions when his injury-riddled body allows him to feel a bit like his formerly-dominant self.

Interestingly, however, even with McGrady sitting out several games and otherwise playing on a gimpy knee, the Rockets have muddled around well enough to lead their division through the first 20% of the season.

So, do the Rockets really have a chance to make waves in playoffs this season?

Thankfully, David Berri over at the Wages of Wins continues to provide insight into such questions with some of the best and most objective analysis of the NBA that you can find anywhere. In this post, he notes that the main NBA story so far this season is that the Spurs haven't been very good, mainly because both Tony Parker and Manu Ginobili haven't played much. But he goes on to summarize what has been happening in the rest of the league and it does not bode well for the Rockets:

The Lakers are the best team in the NBA. And if their efficiency differential holds up (not saying it will, just saying if), the Lakers in 2008-09 will be the best team in NBA history.

The Cleveland Cavaliers have improved the most since last season. As I noted a few days ago, this is primarily because Ben Wallace, Anderson Varejao, and Delonte West have returned to form.

The Celtics have slipped. Yes, they are still very good. But the team is not what it was last year. And after a quick glance at the numbers, I think we can blame the aforementioned Garnett. KG’s WP48 [Wins Produced per 48 minutes] is only 0.200 this season. This is still far above average, but not nearly the level of productivity Garnett offered in the past.

The Pistons have really slipped and are on pace to suffer the biggest decline. I am afraid this change can be tied to the loss of Chauncey Billups and the acquisition of Allen Iverson. Yes, once again, “the Answer” is really not the answer.

The Houston Rockets and Toronto Raptors both made major acquisitions in the off-season. In both cases, these moves were made so that these franchises could seriously contend in their respective conferences. So far, though, both teams are posting an efficiency differential that is less than the differential observed last season. So it appears that Ron Artest (in Houston) and Jermaine O’Neal (in Toronto) have something in common with Iverson. None of these players appear to be the answer.

The three best teams in the NBA are the Lakers, Cavaliers, and Celtics. At number four we have the Orlando Magic. Dwight Howard is having an amazing season, and the return of Tony Battie has also helped.

And the fifth best team is the Portland Trail Blazers.  .   .   .

Frankly, looks to me as if the Rockets would be better off at this point working on their "Life-After-McGrady" plan.

By the way, I have come to feel the same way as Dennis Coates about NBA regular season games.

Posted by Tom at 12:01 AM | Comments (0) |

December 1, 2008

2008 Weekly local football review

(AP Photo/Harry Cabluck; previous weekly reviews are here)

Texas Longhorns 49 Texas Aggies 9

As predicted in the previous weekly review, the Longhorns (11-1/7-1 Big 12) hammered the Aggies (4-8/2-6 Big 12), but still ended up behind Oklahoma (11-1/7-1 Big 12) in the Bowl Championship Series standings, so the Sooners will represent the Big 12 South in the Big 12 Championship Game next Saturday against Missouri (9-3/5-3 Big 12) in Kansas City. That gives OU the inside track to the BCS Championship Game.

if OU beats Missouri expected, then the Horns will have to settle for another BCS bowl game, probably the Fiesta Bowl in Tempe against Ohio State (10-2) on January 5th.

However, if Mizzou pulls off the upset, which is certainly possible given OU's tough stretch of big games and last Saturday night's injury to star OU QB Sam Bradford (he will play with a cast on his left hand against Mizzou), then the Horns would be a virtual lock for the BCS Championship Game against the winner of the Alabama-Florida SEC Championship Game.

As usual, QB Colt McCoy (23-28/311 yds/2 TD's/0 INT/11 carries/49 yds/2 TD) was the star for the Horns, but what was most interesting about this game was how uncompetitive the Aggies were. First-year Aggie coach Mike Sherman certainly did not distinguish himself this season and his dubious decision-making in this game raises questions as to whether he has what it takes to rebuild the Aggie program.

For example, Sherman's decision to have the Aggies kick a 2nd quarter field goal was close to coaching malpractice. Faced with a 4th down and less than 1 yard with under 2 minutes left in the half, Sherman had what seemed to be an easy decision.

One one hand, he could have had the Ags go for it. If they made the first down, then the Aggies would have continued the drive, which would have ended in a FG attempt, a TD or a turnover. Regardless of the outcome, if the Ags had made the 4th down, then Texas probably would not have gotten the ball back with enough time to do much of anything. Thus, a successful 4th down attempt meant, at worst, the Aggies would have gone into the locker room down 14- 7, 14 - 3, or 14 - 0.

On the other hand, by kicking the field goal, Sherman gave the Longhorns enough time to drive for another TD before halftime, which is precisely what they did, putting the Aggies down 21 - 3 and placing the momentum squarely with the Longhorns.

Inasmuch as A&M already has the poorest-performing football program in major college football relative to the size of the football budget, the Aggies don't need poor coaching decisions piled on top of their other problems.

Rice 56 Houston Cougars 42

Again, as predicted in the previous weekly review, the Owls (9-3/7-1 C-USA) had too much offensive firepower for the Cougars (7-5/6-2 C-USA).

Neither team's defense could stop the other's potent offense, so the game was essentially determined by turnovers. The Coogs lost a fumble and an interception on a tipped ball, plus had a short TD pass dropped on a 4th down play. On the other hand, the Owls recovered all three of their fumbles (all of which were inside the Rice 20 yard line), so the Owls prevailed.

Despite the lack of defense, the game was certainly entertaining. Houston and Rice combined for 1,225 yards, 98 points and 57 first downs. Three different players combined for 11 touchdown passes and four different receivers went over 100 yards. The Owls' James Casey and the Cougars' L.J. Castille caught three touchdown passes apiece, and Casey also had a TD pass and a rushing TD. He is truly a man playing among boys.

Despite the Owls victory and fine season, my sense is that the Cougars are in a better position for continued success going forward. Rice loses the amazingly productive QB Chase Clement (28-41/381 yds/5 TD's/0 INT/13 carries/58 yds/1 TD) and All-American WR Jarrett Dillard, who will be very difficult to replace.

On the other hand, the Cougars' potent offense remains largely intact. If first-year Cougars coach Kevin Sumlin can correct UH's deficient recruiting of defensive players over the past several years, then the Cougars appear to be in a position to continue contending for the C-USA title.

Although bowl arrangements will not be finalized for a couple of days, Rice appears headed to the Armed Forces Bowl in Ft. Worth on New Year's Eve against Air Force (8-4), while the Cougars will probably play either Fresno State (7-5) or Western Michigan (9-3) in the Texas Bowl at Reliant Stadium on December 30th.

The Texans (4-7) host the Jaguars (4-7) tonight in Monday Night Football at Reliant Stadium before going on the road to the frozen tundra of Green Bay to face the Packers (5-7) next Sunday.

Posted by Tom at 12:01 AM | Comments (0) |

November 30, 2008

Deep Impact Video

Check out NASA's Deep Impact spacecraft's video of the Moon transiting the Earth from 31 million miles away!

Posted by Tom at 12:01 PM | Comments (0) |

November 29, 2008

100 Movie Spoilers in 5 Minutes

Posted by Tom at 12:01 AM | Comments (0) |

November 28, 2008

Thoughts on the attacks in Mumbai

Remember -- overcoming fascists of all stripes takes a fighting spirit.

Posted by Tom at 12:01 AM | Comments (0) |

November 27, 2008

Turkey lessons

One of the most popular videos that I posted on this blog last year was the one of New York butcher Ray Venezia giving instructions on how to carve a turkey. All you fellow turkey carvers will find it highly informative and entertaining.

Also, check out Mark Bittman's video on how to roast a turkey in 45 minutes, although I'm not sure I'd try that for the first time on Thanksgiving.

Have a joyous Thanksgiving!

Posted by Tom at 12:01 AM | Comments (1) |

November 26, 2008

Problems, problems everywhere

Even in Santa Monica.

Posted by Tom at 12:01 AM | Comments (0) |

November 25, 2008

He should know

You just never know what those former Enron Task Force prosecutors are going to say.

Last week, one of them was incongruously advocating limitation of corporate criminal liability.

This week, David Westheimer points out that former Task Force prosecutor John Hueston is opining that the Securities and Exchange Commission's insider trading case against Mark Cuban is so weak that it should not be pursued.

A weak case that shouldn't be pursued?

Hueston sure ought to know.

Posted by Tom at 12:01 AM | Comments (0) |

November 24, 2008

2008 Weekly local football review

(AP Photo/Tony Dejak; previous weekly reviews are here)

Texans 16 Browns 6

A win is a win, right?

Well, maybe. But the reality is that the Texans (4-7) finally found a team in the Browns (4-7) that is more inept than them. The Browns served up five turnovers to the Texans, which allowed the bumbling Texans to win the turnover battle by +3.

Toss in a fairly balanced attack (383 total offense/271 yds passing/112 yds rushing) and a absolutely horrid Browns passing attack (13-32/143 yds/3 INT) and you have the Texans' first road victory in over a year.

The Texans have an extra day to prepare this week for their first Monday Night game, the Monday after Thanksgiving at Reliant Stadium against the under-performing Jaguars (4-7).

Houston Cougars 42 UTEP 37

The Cougars (7-4/6-1 C-USA) are an endearing team this season.

They've had to overcome an undermanned defense that is the product of former coach Art Briles' tendency to emphasize offense over defense in recruiting. They likely lost two games (Air Force and Colorado State) because of outrageously bad decisions by their athletic director at the time of Hurricane Ike. Finally, the Coogs had to endure a demoralizing and unnecessary injury to one of their best players.

Nevertheless, after beating UTEP (5-6/4-3 C-USA) in their third miraculous come-from-behind victory of the season, the Coogs are now poised to win a berth in the Conference USA Championship Game if they can figure out a way to slow down cross-town rival Rice (8-3/6-1 C-USA) next Saturday at Rice Stadium.

My sense is that Rice's potent offense is too much for the Cougars' defense to handle. But I won't be surprised if this plucky Cougar team somehow pulls it out. And make no doubt about it, they will definitely make a game of it.

As usual, Cougar QB Case Keenum led the frantic 26 point 4th quarter comeback, finishing with 480 passing yards and connecting on 23 of 24 passes in the second half, including all three of his TD passes. Keenum's second pass of the half was incomplete, then he completed his last 22 while going 16-for-16 during the fourth quarter. Cougar freshman RB Bryce Beall also had a huge day, rushing for 167 yards (including a key 71 yd TD dash in the 4th quarter) and 96 more receiving as the Cougars rolled up over 700 yds total offense.

Rice 35 Marshall 10

O.K., so Marshall (4-7/3-4) slowed down the Owls (8-3/6-1 C-USA) for the first half.

But QB Chase Clement (25-41/315 yds/4 TD's/1 INT/10 carries for 58 yds and 1 TD) sorted things out at halftime and then proceeded to lead the Owls to four second-half TD's and a decisive win over the Thundering Herd.

In Clement and Houston QB Chase Keenum, two of the best QB's in major college football (who few folks outside of Houston know about) will square off at Rice Stadium next Saturday to determine the Conference USA West Division representative in the conference championship game.

But in a bittersweet twist, a Rice victory over the Cougars will result in a tie between the Owls and Tulsa for the C-USA West Division title, which will send the Golden Hurricanes and their coach to the C-USA title game because of Tulsa's win over the Owls earlier in the season.

Damn!

The Texas Longhorns (10-1/6-1 Big 12) and the Texas Aggies (4-7/2-5 Big 12) were off this past Saturday as they prepare for their annual rivalry game on Thanksgiving night in Austin.

Although the Horns almost certainly will hammer the Aggies (the Horns are favored by 34!), it's probably not going to make much difference with regard to the Horns' flagging National Championship aspirations.

Inasmuch as Oklahoma's (10-1/6-1 Big 12) decisive victory over Texas Tech (10-1/6-1) vaulted them into a virtual tie with Texas for second in the Bowl Championship Series standings, it's almost certain that OU will be rated higher than the Longhorns next week if the Sooners beat 12th-ranked Oklahoma State. If OU goes on to win the Big 12 Conference Championship game against Missouri the following week, the Sooners will be the Big 12's representative in the BCS Championship Game.

Posted by Tom at 12:01 AM | Comments (0) |

November 23, 2008

Didn't you always want to say this . . .

to Matthew McConaughey?

Posted by Tom at 12:01 AM | Comments (0) |

November 22, 2008

Do as I say, not as I do

Andrew Weissmann is a rather odd advocate (see here and here) for limiting corporate criminal liability, don't you think?

Let's take a look back on Weissmann's business prosecution scorecard. A unanimous U.S. Supreme Court overturned Weissmann's dubious prosecution of Arthur Andersen, which was the final blow in putting that hallowed institution of American accounting out of business.

And the Fifth Circuit has largely eviscerated the notorious Nigerian Barge prosecution in which Merrill Lynch served up four executives to Weissmann to avoid an indictment of the firm.

But now, in United States v. Ionia Management, S.A., Weissmann is attempting to persuade the Second Circuit Court of Appeals to limit prosecutors from doing precisely what he did to Arthur Andersen and Merrill Lynch

In view of all this, I wonder whether any of the Second Circuit judges thought to ask Weissmann why he used his stint as a prosecutor to cause tens of thousands of job losses and enormous wealth destruction?

Or why Weissmann used criminal prosecutions to cause destruction of numerous good business careers of Arthur Andersen partners and Merrill Lynch executives where the only thing that they did wrong was to do business with what became a social pariah, Enron.

Had Weissmann been asked such questions, would he have attempted to defend his conduct at the expense of his current clients?

If so, that would not have been a winning appellate argument.

Posted by Tom at 12:01 AM | Comments (1) |

November 21, 2008

A typical budget meeting these days

Posted by Tom at 12:01 AM | Comments (0) |

November 20, 2008

Talking football in Texas

Football is an integral part of Texas culture. So, when a big game is around the corner, it seems as if everyone around here is talking about it. And some of the talk can get pretty entertaining.

The big game this Saturday pits the undefeated and 2nd-ranked Texas Tech Red Raiders (10-1) taking on the 5th-ranked Oklahoma Sooners (9-1) in Norman, Oklahoma.

The game has generated added interest in these parts because the 3rd-ranked Texas Longhorns (10-1), who lost to Tech a couple of weeks ago on a last second TD, could bolt back into the BCS Championship Game picture if the Sooners beat Tech.

And frankly, many Texans are pulling for Tech to beat the Sooners and remain in contention for the BCS Championship Game because Tech has never reached such heights before.

But that support doesn't immunize the Red Raiders from some good-natured razzing, such as the following OU message board comment about the above Tech promotional picture for the game:

"Why is Yosemite Sam attacking Guymon?"

Meanwhile, on the opposite end of the college football spectrum, perennial cellar-dwelling Baylor's decisive win last Saturday over the Texas A&M Aggies has also generated a fair amount of conversation in Texas football circles this week.

As has been noted many times on this blog, the devotion of many Texas A&M University alumni to the A&M football program is an endearing part of Texas culture that has generated some rather awkward moments over the years.

The A&M fan base overwhelmingly considers losing to Baylor in football as another such awkward moment. To make matters worse, the A&M football program has fallen on such hard times over the past several years that, relative to the size of the football budget, the A&M program is currently among the poorest-performing in major college football.

So, with that backdrop, check out the following post that a Baylor fan posted on an Aggie message board earlier this week (the post was quickly taken down by the owners of the Aggie board; thank goodness for Google Cache). On the heels of Baylor's big win over the Aggies, the Baylor fan's post passes along some key tips to the Aggies from the "hit" book, How to Handle Being The Worst Team in the Big XII South:

I wanted to share some thoughts from the hit book "How to Handle Being The Worst Team in the Big XII South". This book, originally authored by fans of Baylor University, with foreword by Oklahoma State, has been a work in progress for 25 something years now.

Now that we have handed that prestigious torch off to your school, and it looks like it will stay that way for quite some time, you and your Aggie friends may want to really get into this material. Here are some highlights:

Chapter 1 - Bring up past records when discussing your program with friends. The best way to do this is to start from the present and go back through the past until you can find where you have more wins than "x" team. Inconsistencies in time frame does not matter - it can be 5 years for one team and 45 for another.

Chapter 3 - Find other parts of your athletic program that you can be proud of and meticulously learn and promote their accomplishments, no matter how embarrassing the sport. Baylor has done this recently with women's basketball, tennis, and most notably, track and field (Olympic gold medalist anyone?). Rumor has it that your men's club lacrosse team is pretty awesome. Just throwing that out there.

Chapter 5 - Find a couple of solid scapegoats and complain tirelessly about them. Your fan base has already advanced far in this area, with "Shermione" and "$Bill" taking the brunt of this effective relaxation technique.

Chapter 10 - Pick a team to hate and root for their failure. For Baylor fans, this has been you, and look how well it's worked! It's like The Secret - the power of positive thinking. It's very refreshing to change the channel from a frustrating loss and watch your sworn enemy fail. You may have to really dig deep here - you want a team that is average to pretty bad. You losing and them winning is a double whammy, so don't set your sites too high (UT/Tech). Arkansas is a good start, they're down this year.

Chapter 11 (THIS IS A BIG ONE) - Focus on moral victories. This chapter has a lot of content, so really pay attention to it. Within the umbrella of the moral victories chapter you'll find subsections such as: a) Don't pin your hopes on winning the game, pin your hopes on covering the spread. The spread is key, and beating the spread will bring you years and years of joy. b) Get excited about first downs. These may be harder to come by than you think, so really cherish them. c) Find remote stats that can highlight your improvement. Really dig into improvement. This should be a buzzword to use in the coming years.

Chapter 12 - Talk about the other redeeming qualities of your school. This is tricky, because it's actually really dorky to engage in academic smack talk, but, if done correctly, can deflect the focus of a conversation away from your school's crappy football program and onto other areas where the playing field is more level. Now, I'm tailor making this to A&M a little here, but I would recommend you focus on your strong engineering and business school reputation, and don't forget to bring up your various traditions! People never get tired of hearing about this.

Chapter 14** - Find another school to support on the side. This chapter is very controversial and was only added in later editions. I myself never went down this road, but several of my friends found a great deal of relaxation and comfort in finding a side school. While immediate family connections are the best (father graduated from Penn State or mom and dad met at Florida), it is also valid to dig deep into your family's history to find that great aunt that went to Alabama or that second cousin who got a masters at USC. The further away the school, the better. Claim that you have been watching them for years, especially as a little kid growing up. This helps ward off eye rolls and front-runner accusations from your friends. **Note: though highly successful, this chapter can be very dangerous, and is probably the only method that will incur hatred from fellow alumni and students. Use Chapter 14 at your own risk. Advanced students only. I'd say you'll be there en mass around 2013, although seeing how your fan base is bailing after 3 losing seasons out of the past 24, you may be there as early as 2010. Talk about advanced students!

That's it folks. I'll send you a copy for free - we're so excited to share this with a team not named Baylor. And you may read this and think: "Wow, Baylor is pathetic. This is really sad stuff." No, no! This is you! This WAS Baylor and now IS your school! I'm talking about what you and your fan base will be and have already started saying and doing.

I want to leave you with this. This can be your chance to practice, right now. Skim some of the material above, and go ahead and start using it on me. I would say the record route is the obvious way to go, but don't be afraid to be creative. Angry phrases like "F off" and total dismissal of my thread also work. Have fun, and I'll critique some of your responses as we go .  .   .

Football in Texas -- you gotta love it!

Posted by Tom at 12:01 AM | Comments (2) |

November 19, 2008

Progress on the bailout front?

So, less than two months after this previous post noted that chapter 11 reorganizations with possible government financing of reorganization plans were the best tools to shake out the current financial crisis, even the NY Times (here and here) is promoting that approach for restructuring the Big Three automobile companies.

I guess that's a sign of real progress.

Funny how the way we typically handle such things in the civil justice system usually is the most efficient solution to the problems.

It sure beats having this bunch fumble around looking for an alternative solution.

By the way, I've mentioned this before, but it merits passing along again. One of the best ways to keep up on developments in regard to the current financial crisis is to check in frequently on the following sites: Clusterstock, Dealbreaker, and Felix Salmon.

The blogosphere rules!

Posted by Tom at 12:01 AM | Comments (0) |

November 18, 2008

Thinking about markets

Now that folks have had at least a bit of time to reflect on the financial crisis on Wall Street, some good historical perspectives are starting to pop up, such as this Niall Ferguson Vanity Fair piece (previous posts on other Ferguson works are here). Toward the end, Ferguson makes an excellent point about market economies that is not widely understood:

The modern financial system is the product of centuries of economic evolution. Banks transformed money from metal coins into accounts, allowing ever larger aggregations of borrowing and lending. From the Renaissance on, government bonds introduced the securitization of streams of interest payments. From the 17th century on, equity in corporations could be bought and sold in public stock markets. From the 18th century on, central banks slowly learned how to moderate or exacerbate the business cycle. From the 19th century on, insurance was supplemented by futures, the first derivatives. And from the 20th century on, households were encouraged by government to skew their portfolios in favor of real estate.

Economies that combined all these institutional innovations performed better over the long run than those that did not, because financial intermediation generally permits a more efficient allocation of resources than, say, feudalism or central planning. For this reason, it is not wholly surprising that the Western financial model tended to spread around the world, first in the guise of imperialism, then in the guise of globalization.

Yet money’s ascent has not been, and can never be, a smooth one. On the contrary, financial history is a roller-coaster ride of ups and downs, bubbles and busts, manias and panics, shocks and crashes. The excesses of the Age of Leverage—the deluge of paper money, the asset-price inflation, the explosion of consumer and bank debt, and the hypertrophic growth of derivatives—were bound sooner or later to produce a really big crisis.

In short, markets are imperfect and sometimes quite messy. But they have stood the test of time in proving more efficient than the alternatives. Don't give up on them just yet.

Posted by Tom at 12:01 AM | Comments (0) |

November 17, 2008

2008 Weekly local football review

(AP Photo/Michael Conroy; previous weekly reviews are here)

Colts 33 Texans 27

Texans (3-7) backup QB Sage Rosenfels (13-18/192 yds/0 TD/1 INT) had another "Sage moment" (i.e., "what the hell was that?") when he threw his only interception of the game as the Texans were attempting to drive for a game-winning TD in the last minute. However, this loss was squarely on the shoulders of the Texans' defense, which gave up almost 500 yards total offense and basically had no hope of stopping the Colts (6-4) after their receivers stopped dropping passes (they dropped at least a half-dozen in the first half, after which the Texans led 13-9). All Texans defensive coaches should have their résumés updated.

The Texans travel to Cleveland next Sunday to play the Browns (3-6) before returning home to play the Jaguars (4-6) on Monday Night Football the Monday after Thanksgiving.

Houston Cougars 70 Tulsa 30

In one of the biggest upsets of the weekend, the Cougars (6-4/5-1 C-USA) vaulted back into contention for the Conference USA Championship with a stunningly easy 70-30 romp over 25th-ranked Tulsa (8-2/5-1 C-USA).

Cougar QB Case Keenum (24-37/402 yds/6 TD's/0 INT/43 yds on 4 carries and 1 rushing TD in 3 quarters!) continued his record-setting season, but the real story of this game for the Cougars was Olympic Trials sprinter Tyron Carrier going Donnie Avery on the Golden Hurricane, scoring 3 TD's (2 receiving plus another on a 95 yd kickoff return) and generating almost 300 yds total offense (127 yds on 6 receptions/142 yds on 4 kickoff returns/23 yds on 4 carries).

By the way, there is almost universal joy around Houston that current Tulsa coach and former Rice coach Todd Graham got his rear-end handed to him by the Cougars. After his less-than-statesmanlike departure from Rice, Graham is not a particularly popular fellow in Houston football circles. The post-game handshake at midfield between Graham and Cougar coach Kevin Sumlin lasted about a split second.

The Cougars host UTEP next (5-5/4-2 C-USA) next Saturday afternoon before taking on Rice (7-3/5-1 C-USA) at Rice Stadium the Saturday after Thanksgiving in what is shaping up to be the game that determines the C-USA West division representative in the C-USA Conference Championship game.

Texas Longhorns 35 Kansas 7

The Longhorns (10-1/6-1 Big 12) did an impressive job in taking care of business under difficult conditions in Lawrence against dangerous Kansas (6-5/3-4 Big 12). Now, the Horns get to sit back and watch the outcome of next Saturday's big game between 2nd-ranked Texas Tech (10-0/6-0 Big 12) and Oklahoma (9-1/5-1) in Norman and then prepare for what is shaping up to be a butchering of undermanned Texas A&M (4-7/2-5 Big 12) in Austin on Thanksgiving night.

Baylor 41 Texas Aggies 21

I'm not sure what's worse for the A&M (4-7/2-5 Big 12) faithful. That the Aggies were over a touchdown underdog to perennial Big 12 doormat Baylor (4-7/2-5 Big 12)? Or that the Aggies are so bad that they couldn't come close to beating the spread against the Bears?  Rest assured that the spread will be in substantial double-digits when the Aggies travel to Austin to face the Longhorns on Thanksgiving night. The Mike Sherman firing watch has already begun in College Station.

The Rice Owls (7-3/5-1 C-USA) were off this weekend. The Owls host Marshall (4-6/3-3 C-USA) next Saturday before ending the regular season in the annual big game against their cross-town rival, the Houston Cougars.

Posted by Tom at 12:01 AM | Comments (0) |

November 16, 2008

PGA Tour by the numbers

PGA Tour.com's Kin Lo posts this first-rate statistical breakdown for the 2008 PGA Tour season (H/T Geoff Shackelford). Although the entire statistical analysis is interesting (scroll down the intro page to the hyperlinks at the bottom), the following chart provides a fascinating snapshot of the progression of the Tour over the past 28 years. Check out the difference between 1980 and 2008 in the average annual earnings of the top 30 players!:

Posted by Tom at 12:01 AM | Comments (0) |

November 15, 2008

The Obama choices

Jan Greenburg sizes up the most likely chances that Obama will have to nominate justices to the U.S. Supreme Court.

The bottom line -- despite the advanced age of several of the justices, perhaps not as many as one would think.

Posted by Tom at 12:01 AM | Comments (0) |

November 14, 2008

Ghosts of Enron

Ken Lay was prosecuted to death for promoting Enron even though he had a reasonable basis for believing that what he was saying about his company was true.

Fast forward a couple of years. Yesterday,  the W$J reported (NYTimes here) that General Motors may not be able to avoid bankruptcy because of political problems involved in obtaining a bailout loan package from the federal government. GM is "rapidly burning through cash reserves as car sales plummet and their access to credit tightens. GM has warned it may run out of money within months without outside help."

From what I can tell, no one is calling for the scalp of GM CEO Rick Wagoner because of confident public statements that he made just a few months ago about his company.

So, the corporate crime lottery continues. A truly civilized society would find a better way.

Posted by Tom at 12:01 AM | Comments (0) |

November 13, 2008

Can you spare $350 million?

And you think the Texans' season is going badly?

Get a load of what Dallas Cowboys owner Jerry Jones is facing, and I'm not talking about whether to fire head coach Wade Phillips (H/T Brad Humphreys):

Industry watches as Cowboys look for loan

The Dallas Cowboys are seeking to borrow $350 million by Dec. 1, according to numerous finance sources, in one of the worst credit environments in the nation’s history.

The club’s proposed deal would refinance $126 million the team borrowed last year through the now-imploded auction-rate securities market, as well as add new debt to cover cost overruns at the team’s $1.2 billion stadium that is set to open next year, the sources said. [.  .  .]

For the Cowboys, getting out from underneath the auction-rate debt is a pressing concern. They are one of four NFL teams to have borrowed from the auction-rate securities (ARS) market, a market that allowed companies to borrow cheaply and continue to reset the interest rate with auctions of the debt weekly and monthly.

In February, the ARS market seized up, and debt auctions failed, which automatically triggered significant interest rate hikes. [.  .  .]

The Cowboys estimated the stadium would cost $650 million when they announced the project in 2004. With $350 million of public funding and $76 million from the NFL, it looked like a choice deal for the team.

The club arranged to borrow at least $450 million through Banc of America Securities for its portion, with the first $126 million through the ARS market. But Jones agreed to cover cost overruns as part of the team’s share, and like many stadiums in this period, the price has spiraled.

H'mm. I wonder whether the Cowboys will apply for a portion of the TARP fund, too?

Posted by Tom at 12:32 AM | Comments (0) |

November 12, 2008

Watch out for the Bears

As noted here earlier, years of mediocre football at Texas A&M has mellowed the formerly hard-knuckled 12th Man a bit. This week, A&M football team is a decided underdog to the fearsome the Baylor Bears (H/T Jay Christensen):

Meanwhile, watch out for the Houston Rockets' mascot, Clutch the Bear:

Posted by Tom at 12:01 AM | Comments (0) |

November 11, 2008

A stubbornly bad system

So, now that the Democrats have swept in a slate of judges to replace many longstanding GOP state district judges in Houston, the Chronicle runs an article about how some Republicans are calling for an alternative system for appointing judges.

Not surprisingly, the Democrats are not as enthusiastic, at least right now.

Of course, while the Republican judges have been controlling the courthouse over most of the past two decades, they weren't interested in rocking the boat to change the system, either.

However, the problem remains that, partisanship aside, doing nothing about the current Texas system of electing judges simply perpetuates a very bad system.

Thankfully, as Don Cruse reports, Chief Justice Wallace Jefferson of the Texas Supreme Court is showing leadership on the issue, just as the late John Hill and Tom Phillips did before him during their stints as Chief Justice.

But the potential for corruption in the Texas judicial election system perhaps best summed up by the following joke:

Taking his seat in his chambers, the judge faced the opposing lawyers.

"So," said the judge. "Each of you has presented me with a bribe."

Both lawyers squirmed uncomfortably.

"You, attorney Mohanty, gave me $50,000," observed the judge. "And you, attorney Venkat, gave
me $60,000."

The judge reached into his pocket, pulled out $10,000, and handed it to attorney Venkat.

"Now that I've returned $10,000 to attorney Venkat," exclaimed the judge proudly, "I'm going to
decide this case solely on its merits!"

Posted by Tom at 12:01 AM | Comments (0) |

November 10, 2008

2008 Weekly local football review

(AP Photo/David Einsel; previous weekly reviews are here)

Ravens 41 Texans 13

Oh my. It's going to be a long week for Houston sports talk show hosts this week.

The Ravens (6-3) manhandled the Texans (3-6) in the 4th quarter Sunday afternoon to put away the victory. The Texans had pulled to within 19-13 by the end of the 3rd quarter and really should have been leading by a point but for a bonehead Sage Rosenfels (23-38/294 yds/1 TD/4 int) in the first half.

But then the chronically shaky Texans defense allowed the Ravens to drive 78 yards on nine plays to go up by 14 and then Rosenfels set up the final two Ravens scores by throwing interceptions deep in Texans' territory.

So, where do the Texans stand midway through Year Seven of their existence?

Unlike the Chronicle cheerleaders (at least one of whom is now leaving the booster club), I've always thought that the decision of Texans owner Bob McNair to hire Gary Kubiak was a questionable one under the circumstances. Now, over two and a half years into the Kubiak era, the defense still stinks, the QB play remains inconsistent and the Texans are staring straight at the probability that they will win only 4-6 games this season.

But who knows? The Texans looked dead in the water after 12 games last season before winning three of their last four to finish 8-8.

My sense is that Kubiak survives for at least another season, but that McNair will require assistant coaching changes on the defensive side. The Texans now go on the road the next two Sundays at the Colts (5-4) and the Browns (3-6) before returning home to face the Jaguars (4-5).

Oklahoma 66 Texas Aggies 28

First, the good news -- 5th-ranked Oklahoma (9-1/5-1 Big 12) showed A&M (4-6/2-4 Big 12) the type of talent that the Aggies are going to have to attract to College Station in order to contend in the Big 12 South.

Now, the bad news -- OU may be only the third best team in the Big 12 South!

The Aggies travel to Waco next Saturday in the battle against Baylor (3-6/1-5 Big 12) to avoid the Big 12 South basement. The Aggies opened as an 8 point underdog.

Texas 45 Baylor 21

After a brutal four-week run against high-ranked teams, the 3rd-ranked Longhorns (9-1/5-1 Big 12) put together a workmanlike effort to put away the feisty Bears (3-6/1-5 Big 12). The Horns have another reasonably tough game next Saturday against explosive Kansas (6-4/3-3 Big 12) in Lawrence before resting a week for their annual Thanksgiving Day rivalry game against the Aggies.

Rice 38 Army 31

Note to the Owls (7-3/5-1 C-USA) -- unlike some other teams, Army (3-7) does not quit when they are behind by 24 points. Owls QB Chase Clement (21-38/377 yds/3 TD's/0 Int/10 carries for 84 yds) remains the best QB in the country that no one outside of Houston knows about. After an off week next Saturday, the Owls face Marshall (4-5/3-2) at home the following Saturday before hosting Houston (5-4/4-1 C-USA) on the Saturday after Thanksgiving to close out the regular season.

Amazingly, Rice could win 10 games this season.

Houston 45 Tulane 14

The Coogs (5-4/4-1 C-USA) began their final stretch of four games in Houston to close the season by generating almost 700 yards total offense (and 143 yards in penalties!) in pounding hapless Tulane (2-7/1-4 C-USA).

Cougar QB Case Keenum extended a University of Houston record with his 10th straight game passing for more than 300 yards (29-40/384 yds/4 TD's/1 Int). That's quite an achievement given the prolific passers that have played at UH over the years (Ware, Klingler, Clements, Kolb, etc).

The Coogs take on high-flying, 23rd-ranked Tulsa (8-1/5-0 C-USA) next Saturday in what may be the highest over/under number of the season.

Posted by Tom at 12:01 AM | Comments (0) |

November 9, 2008

Checking up on Krispy Kreme

The folks over at WallStrip update us on the mercurial Krispy Kreme.

Posted by Tom at 12:01 AM | Comments (0) |

November 8, 2008

Video fun

The unedited Saturday Night Live Economic Bailout News Conference Skit. Absolutely brutal, but quite funny.

The Onion News Network reports on the impact of Obama's victory on his obsessive supporters:

Posted by Tom at 12:01 AM | Comments (3) |

November 7, 2008

The NatWest Three are finally going home

The NatWest Three -- the three U.K. bankers who were dragged through the Enron mud for the past five years -- are finally going home after serving about six months of their sentences in U.S. prisons.

After a hearing in New York yesterday, the three men have completed the prolonged transfer process from the U.S. prison system to the U.K. system. Accordingly, they will fly to England next week to serve the remainder of their three-year sentences there. Hopefully, they will be paroled in short order under the U.K.'s more humane sentencing laws pertaining to white-collar crimes.

Although the treatment of these men by U.S. criminal justice authorities has been mostly scandalous, the mainstream media continues to misrepresent their story (see this earlier example). More recently, see this London Telegraph article that gets just about everything wrong about the case and the plea bargain that the three men struck.

Read this if you want to know what really happened with regard to the NatWest Three. It's a nuanced and far more interesting story than the mainstream media's morality play.

Posted by Tom at 12:01 AM | Comments (0) |

November 6, 2008

Remember that hotel deal you invested in?

This post from over a year ago reviewed the absurdly highly-leveraged deal that Blackstone Group LP was proposing to make for Hilton Hotels. That deal was a head-scratcher even during the heady days of easy money.

As this W$J article from yesterday notes, the deal ended being structured with "only" $20 billion in bank debt rather than $25 billion (with Blackstone pitching in $6 million in equity), but that really didn't change the fundamental of the deal much. Hilton is projected to generate $2 billion in before-tax cash flow this year, which is enough to cover the $1.3 billion in interest expense on the bank debt. But cash flow is probably going to decline next year because of depressed demand for hotel rooms and Hilton will probably be forced to use its liquidity reserves to make up for any cash-flow short-fall.

Blackstone paid for Hilton at about 13 times estimated 2008 pretax cash flow. Similar public hotel companies are currently trading at about seven times their projected before-tax cash flow for 2008. The WSJ article quotes an analyst on the situation: "It's very difficult to assume any equity if you have to mark to market those assets. But they may argue it's a long-term investment for them." Make that a very long-term investment.

But as bad as this deal looks for Blackstone, it looks even worse for the seven banks that put up the $20 billion in financing. They are, as the WSJ puts it tactfully, "struggling" to sell pieces of the debt package in the current strained credit markets.

Gee, I'm sure glad we steered clear of that investment debacle, huh? Except that we apparently didn't:

[I]t now looks like U.S. taxpayers are on the hook to Hilton's fortunes, too. That's because when J.P. Morgan Chase & Co. in March took over Bear Stearns, the Federal Reserve assumed $30 billion of Bear's illiquid assets. Part of those loans and securities is Bear's $4 billion unsold portion of the $20 billion Hilton financing package, according to people familiar with the matter.

Posted by Tom at 12:01 AM | Comments (0) |

November 5, 2008

A prayer for the new administration

Heather Headly and Andrea Bocelli sing a stirring rendition of The Prayer. Enjoy.

Posted by Tom at 12:01 AM | Comments (2) |

November 4, 2008

Tom Alexander, R.I.P.

I lost an old friend and Houston lost one of its most colorful characters on this past Sunday morning -- legendary trial attorney Tom Alexander died of a heart attack at the age of 78 (the Chronicle story on Alexander's death is here and Richard Connelly of the Houston Press chimes in here). The memorial service will be held at 11 a.m. tomorrow morning at St. Paul's United Methodist Church, 5501 Fannin in the Museum District of Houston.

Alexander was one of Houston's most accomplished trial lawyers, the kind of rare quick-read who could prepare for a trial by reading the case file on his way to the courthouse. Inasmuch as he had such an engaging personality, articulate delivery and quick wit, judges and jurors naturally gravitated toward him.

But Alexander was one of those larger-than-life characters who was much more than just a fine trial lawyer. He was a loving husband, father and grandfather. He was a true sportsman who loved and supported intercollegiate and professional sports of all kinds. He loved to golf and was an original member of Champions Golf Club, where he owned a weekend cottage that allowed him to keep up with his good friend, Champions owner Jack Burke. Born and raised in Kentucky, Alexander was also an avid horseman who could handicap thoroughbreds with the best of them.

Moreover, it wasn't all trial tactics and sports with Alexander. Whether the subject was opera, politics, philosophy, poker, theology (he gave a lay sermon at church once entitled "Can You Fistfight and Still Be a Christian?") or simply the latest gossip in Houston's professional community, Tom Alexander would engage and stimulate you. Perhaps not always the way you wanted, but always in a way that would make you think about the basis of your beliefs.

Alexander's vivacious wit and personality is perhaps best summed up by one of the funniest Houston courthouse stories that I've ever heard.

Years ago, Alexander was hired by the rich husband in an ugly divorce. The vengeful wife hired another veteran of the Houston legal community, the late Robert Scardino, Sr., the father of noted Houston criminal defense attorney, Robert Scardino, Jr.

Inasmuch as there were no children of the marriage and the value of the community estate was well-established, there was really nothing for Alexander and Scardino to fight about in the divorce. However, the husband and wife hated each other, so they directed Alexander and Scardino to be nasty with each other for as long as possible. And these two old warhorses were happy to oblige.

After about a year or so of bickering, the Family Court finally set the case for trial. Realizing that there was really no reason to use precious court time to split a well-defined community estate, the Family Court Judge called Alexander and Scardino into his chambers before the trial was scheduled to begin and hammered out a property settlement in an acrimonious two-hour session.

Exhausted from dealing with the squabbling between Alexander and Scardino, the Family Court Judge addressed the final issue in the case at the conclusion of the session:

"Mr. Alexander and Mr. Scardino, thank you for working with me in settling this case and saving the court time for other cases."

"Now, the final issue is the amount of Mr. Scardino's fee for representing the wife in this case. Mr. Scardino, what do you think is fair?"

"Well, Judge," replied Scardino. "This has been a hard-fought case and I don't want the amount of my fee to be the final problem in the case. So, I tell you what I'm willing to do."

"I don't know what the amount of Mr. Alexander's fee has been for representing the husband in this case," Scardino observed. "But I trust Mr. Alexander."

"So, to put this all behind us," concluded Scardino. "Whatever Mr. Alexander's fee has been for representing the husband in this case, I'm willing to take the same amount for representing the wife. Whatever amount Mr. Alexander has accepted as a fee is acceptable to me."

"Why, Mr. Scardino," gushed the judge. "Thank you for that creative and statesmanlike approach to resolving this final issue. I really appreciate that."

Turning toward Alexander, the judge asked: "Mr. Alexander, what do you think about Mr. Scardino's eminently reasonable proposal?"

Alexander sat in deep thought for a moment. Then, he leaned toward Scardino, got right up in his face and -- undoubtedly with a twinkle in his eye -- declared:

"You greedy sonuvabitch!"

Posted by Tom at 12:01 AM | Comments (0) |

November 3, 2008

2008 Weekly local football review

(AP Photo/LM Otero; previous weekly reviews are here)

Texas Tech 39 Texas Longhorns 33

As predicted, the top-ranked Horns (8-1/4-1 Big 12) were not able to run the table through four straight games against top-10 ranked teams.

The loss dropped Texas to fourth in the BCS rankings, behind Alabama, Tech, and Penn State. Florida and Oklahoma are close behind the Horns.

The Horns remain in the hunt for the BCS Championship Game, but by a thread at this point. Alabama will probably lose to either LSU next weekend or to Florida in the SEC Championship Game, and Tech and OU must both play each other as well as Oklahoma State.

However, Penn State has a much easier schedules the rest of the way and is not likely to lose another game. So, the Horns will need help from other teams and probably a victory in the Big 12 Championship Game to attain a BCS Championship Game berth.

Now, to the game. Normally, when the Horns' defensive unit gives up almost 600 yards, 30 points (the Horns' offense gave up the other 9) and the game-winning TD pass with one second left, you would be inclined to blame the defeat on them. However, playing Texas Tech (9-0/5-0 Big 12) is anything but normal.

Truth be known, the Horns' defensive unit played well enough for the Horns to outscore Tech and win the game. However, Texas' offensive unit was completely flummoxed by Tech's defense for almost the first three quarters of the game, and that lack of productivity ended up being the difference in the game.

Tech's defense played a soft zone pass defense with two safeties deep and either five or six defenders playing between 5-7 yards off the line of scrimmage. Then, Tech would run a series of stunts with the three or four defensive lineman who were essentially pass-rushing on every play.

The strategy effectively took away Texas' mid-range passing game. Moreover, through almost three quarters, Texas inexplicably played into Tech's hands by failing to force the Red Raiders to defend the running game, which was there for the taking with so many Tech defenders running around in the defensive backfield. As a result, the Horns fell behind 22-3 and 29-13 before closing to within 10 at the end of the third quarter.

After finally forcing Tech to defend the running game toward the end of the third quarter, the Horns moved the ball at will against Tech's defensive unit in the fourth quarter and almost pulled the game out. However, it's simply unreasonable to expect a defensive unit to do much better than hold Tech's explosive offense to 10 points in a half, which is precisely what the Texas defensive unit did in the second half on Saturday night. The Horns' failure to score double-digit points in the first half cost them this game.

The Horns play resurgent Baylor (3-6/1-4 Big 12) next Saturday in Austin before traveling the following weekend to Lawrence to face a dangerous Kansas (6-3/3-2 Big 12) squad.

Vikings 28 Texans 21

The Texans (3-5) modest three-game winning streak ended with a resounding thud in Minneapolis as the Vikings (4-4) cruised to a 21-7 halftime lead and then easily repelled a late Texan comeback. The Texans are now 12-40 all-time in games played away from Reliant Stadium, 4-24 since the 2005 season, and 4-16 in 2.5 seasons under Head Coach Gary Kubiak.

If it's not one thing with the Texans, then it's another. In this game, the Vikings' DE Jared Allen dominated off the left edge where he ran past rookie LT Duane Brown and veteran LT Ephraim Salaam as if they were statutes. The result was that Texans QB's were sacked five times and pounded at least another half-dozen times.

Starting QB Matt Schaub was hurt in the first half and didn't play in the second, and backup QB Sage Rosenfels was running from Allen for much of the second half. Such harassment elevates the risk that the Texans' inconsistent QB's would make bonehead errors, which occurred on three occasions -- a costly fumble by Schaub and bad interceptions in the red zone by both Schaub and Rosenfels. Former Texans QB David Carr would have felt right at home.

Meanwhile, the Texans defense, although pretty bad in the first half, played reasonably well in the second half. Vikings RB Adrian Peterson still had no problem running for 140 yards on 25 carries (5.1 yards per carry), though.

The Texans return home next Sunday to meet another stout defensive unit in the Ravens (5-3) before going back on the road to meet the Colts (4-4) and the Browns (3-5). Without better QB and defensive play, it's getting harder by the week for me to see how the Texans are going to win more than five games this season.

Texas Aggies 24 Colorado 17

Despite being out-gained by a considerable margin, the plucky Aggies (4-5/2-3 Big 12) won the turnover battle decisively (A&M freshman safety Trent Hunter had two interceptions in the second half) and put away another Big 12 win that looked unlikely just a few weeks ago.

The Aggies offense is actually rounding into decent shape behind QB Jerrod Johnson. freshmen WR's Ryan Tannehill and Jeff Fuller, and freshman RB Cyrus Gray. However, the Ags face Oklahoma (8-1/4-1 Big 12) on Saturday and Texas in two of their final three games. They have a winnable game against Baylor in between those two.

Thus, either a 5-7 or 4-8 record is the likely result of Coach Mike Sherman's first Aggie team. That's not what the Aggie faithful had in mind when A&M hired Sherman.

Rice 49 UTEP 44

The Owls (6-3/5-1 C-USA) continued their remarkable season with another comeback victory, this time over UTEP (3-5/3-2 C-USA) in El Paso. Rice QB Chase Clement, WR Jarett Dillard and H-Back James Casey are three of the best college football players in the country, but nobody outside of Houston seems to realize it.

The Owls now return home for their final three games of the season against Army (3-6), Marshall (4-4/3-1 C-USA) and Houston (4-4/3-1 C-USA), which are all winnable. How does a 9-3 record for the Owls sound?

Marshall 37 Houston Cougars 23

The Cougars (4-4/3/1) predisposition to start slow and finish fast finally caught up with them last Tuesday evening in Huntington, W.Va. as the Thundering Herd rolled to a 30-3 third quarter lead and cruised to an easy victory.

The loss should come with a footnote, however, With the Coogs closing in on a third quarter TD that would have closed the score to 23-10, the Cougar players had to endure watching their teammate Patrick Edwards be carted off the field with a grisly compound leg fracture resulting from an awful collision with an inexplicably-placed metal cart just outside the end zone at the Marshall Stadium.

The Cougar QB who had thrown the incomplete pass on the play in which Edwards was injurred promptly fumbled a handoff while going in for the TD, Marshall recovered and marched quickly to another TD to make the score 30-3. Game, set, match. At least Edwards has a good chance of winning the personal injury-negligence  lawsuit against Marshall.

The Coogs now return home for their final four games beginning with Tulane (2-6/1/3) a week from Saturday.

Posted by Tom at 12:01 AM | Comments (0) |

November 2, 2008

Phillip G. Hoffman, R.I.P.

Phil Hoffman, inarguably one of the most important university presidents in the history of the University of Houston, died Wednesday at the age of 93. The Chron's Lynwood Abram penned a nice article on Dr. Hoffman here.

When Dr. Hoffman took over the presidency of the University of Houston in 1961, UH was a sleepy, segregated city college of about 12,000 students. By the time Dr. Hoffman retired 16 years later, UH had become a fully-integrated university system of four campuses with an enrollment of over 30,000 students. Two years after taking over at UH, Dr. Hoffman led the legislative effort to have the university accepted into the Texas state university system.

Although the Chron's article on Dr. Hoffman's death notes the foregoing, the fact that UH is a far younger institution than the other two main Texas university systems -- the University of Texas and Texas A&M University -- is largely ignored by the Chronicle and the rest of the mainstream media. Given the far inferior resources that UH receives from the state relative to UT and A&M, UH is currently providing the best bang-for-the-higher-education-buck of the three systems. That is an impressive part of Dr. Hoffman's formidable legacy.

A memorial service is scheduled for Dr. Hoffman at 10:30 a.m. Monday at the First Presbyterian Church in the Museum District, 5300 Main.

Posted by Tom at 12:01 AM | Comments (0) |

November 1, 2008

Lacking appreciation for capitalism

Comedian Louis CK sums it pretty well:

Posted by Tom at 12:01 AM | Comments (0) |

October 31, 2008

The Prince of Regulation

Get a load of the letter that New York Attorney General Andrew Cuomo, the new Prince of Regulation, sent to about ten Wall Street firms the other day:

We believe that the Board of Directors is most appropriately positioned to respond to our requests as the firm's top management likely has a significant interest in the size of the bonus pools. In this new era of corporate responsibility we are entering, boards of directors must step up to the plate and prevent wasteful expenditures of corporate funds on outsized executive bonuses and other unjustified compensation.

As my Office has told AIG, now that the American taxpayer has provided substantial funds to your firm, the preservation of those funds is a vital obligation of your company. Taxpayers are, in many ways, now like shareholders of your company, and your firm has a responsibility to them.

Accordingly, we also ask that the Board inform us of the policies, procedures, and protections the Board has instituted that will ensure Board review of all such company expenditures going forward. Please provide this Office with an accounting of the actions the Board plans to take that will protect taxpayer funds.

So, Cuomo charts the same political course as Eliot Spitzer before him and Rudy Giuliani before Spitzer. Embrace the Greed Narrative and then sit back and let the mainstream media do the rest. Before you know it, even both major presidential candidates tout the myth that business failure is always about dastardly villains and innocent victims.

My question for Cuomo and his mainstream media minions is quite simple: What is the likely quality of the management and board members who are willing to stick around and put up with Cuomo's grandstanding?

My bet is that you won't see many Hank Greenbergs.

Meanwhile, those less-than-stellar management teams all have tickets to feed at the Fed's money trough.

Ah, the webs we weave.

Posted by Tom at 12:01 AM | Comments (0) |

October 30, 2008

A good idea, but . . .

The Chron's top-notch Medical Center reporter Todd Ackerman reported yesterday that two venerable Houston academic -- Baylor College of Medicine and Rice University -- are in preliminary discussions regarding a possible merger (the Chron's excellent Science reporter Eric Berger also comments here).

This makes sense on many levels. Baylor and Rice are located near each other in the Medical Center area, so sharing faculty members between the two institutions would be a snap from a logistics standpoint. Indeed, the attraction of being able to teach and research at both institutions would be a valuable perk for both schools to attract talented teachers and students. Both schools have excellent academic reputations, so it's a good match from that standpoint, too.

But Ackerman zeroes in on the main problem with the merger. As usual, it involves money:

Rice is the more affluent of the two institutions. As of June 30, its endowment was $4.6 billion. As of Sept. 30, Baylor's was $954 million. [.  .  .]

One Rice professor said the key issue from the university's perspective will be making sure there's a firewall between Rice's endowment and Baylor's.

A "firewall" between the two institutions endowments? Come on, one of the main reasons why the merger makes sense is that Baylor would have access to Rice's superior capital. The benefit from Rice's standpoint is the association with a fine medical school that, with access to a better-capitalized endowment, may well propel itself into the best medical school in the country. That is precisely the type of academic excellence that Rice should be pursuing.

Which reminds me of a conversation that I had years ago with a member of the University of Houston Board of Regents. Given the need of Houston and Texas for more Tier 1 research institutions, I observed to this UH regent that I thought it was a good idea for the UH system to merge with the Texas A&M University System.

One one hand, the merger makes sense from UH's standpoint because it would provide the chronically-undercapitalized UH (endowment about $750 million or so) with access to capital (A&M's endowment is between $6-7 billion) that is the biggest obstacle in UH's path to Tier 1 status.

On the other hand, the merger makes sense from A&M's standpoint because UH would provide A&M with the urban presence that it has always lacked and UH's central campus in Houston that A&M could use as a carrot for attracting better teachers and students. Moreover, A&M for years has desired a law school and UH would deliver a very good one.

So, I asked the UH regent, such a merger makes sense, doesn't it?

The UH regent proceeded to give me a half-dozen reasons why the proposed merger would never work, most of which were tied to the fact that he would no longer be a member of an independent university system board if such a merger were consummated.

That is precisely the attitude that has placed Texas behind states such as California and New York in the development of Tier 1 research institutions and all the benefits that such universities provide to the state and its communities. Here's hoping that similar attitudes don't scuttle what appears to be a very good idea for Rice, Baylor and Houston.

Posted by Tom at 12:01 AM | Comments (0) |

October 29, 2008

What's worse?

Although not many people care much, the 2008 World Series has turned into a first rate mess.

Game Five is currently suspended while the Phillies and Rays players sit around Philadelphia waiting for the inclement weather to end. This after they nearly injured themselves while inexplicably being forced to play 5.5 innings during a driving rainstorm on Monday night. The remainder of the Game Five might be played tonight.

Moreover, Game Four began at 10 p.m. EDT because of rain most of the day on Saturday. That game finished sometime after 2 a.m. Sunday on the east coast. Not exactly the way to keep the young fans interested in the game.

Meanwhile, the umpiring in the series has been atrocious, with multiple of MLB's supposedly best umpires blowing easy calls and routinely calling strikes on pitches that are clearly out of the strike zone.

And just to make matters utterly unbearable, Fox Sports imposes senseless announcers Joe Buck and Tim McCarver on the few folks watching on television. These two babble on endlessly describing the utterly obvious without ever saying anything remotely insightful. Often, they say things that are simply flat wrong.

But as bad as the World Series has been, it's nothing compared to legendary Baylor and Chicago Bears linebacker Mike Singletary's first game this past Sunday as interim coach of the San Francisco 49'ers. Coach Singletary's post-game performance has already become an overnight YouTube sensation and is being touted as one of the all-time great coach tirades.

AP sportswriter Greg Beacham summed up Coach Singletary's bad first day at the office well:

Mike Singletary ended his head coaching debut by apologizing to 49ers fans above the locker room tunnel. Tight end Vernon Davis got sent to the showers like a petulant teenager, QB J.T. O’Sullivan was benched after his 11th fumble of the season, and the San Francisco defense let a 242-pound fullback catch two long touchdown passes.

Posted by Tom at 12:01 AM | Comments (0) |

October 28, 2008

Placebo Nation

In light of this NY Times article reporting that half of American doctors responding to a nationwide survey regularly prescribe placebos to their patients, I pass along the following business opportunity, courtesy of the ever-clever Dr. Boli:

Posted by Tom at 12:01 AM | Comments (1) |

October 27, 2008

2008 Weekly local football review

(AP Photo/Dave Einsel; previous weekly reviews are here)

Texans 35 Bengals 6

The Texans (3-4) won their third game in a row for the first time in franchise history by drubbing the Bengals (0-8), who are truly dreadful. The Texans still have not beaten a good team this season, so it's not time to start printing playoff tickets just yet.

However, one thing struck me about this game and almost every other one that the Texans have played during the 2+ years of the Kubiak era -- the Texan players appear to play hard, if not particularly well all the time, for Kubiak. That effort reflects that at least the players think that he is the man to lead them to greater success. In contrast, it is clear that a number of Bengal players have packed it in on Bengal Coach Marvin Lewis. The Texans attempt to even their record next Sunday against the Vikings (3-4) in Minneapolis.

Texas Longhorns 28 Oklahoma State 24

The top-ranked Longhorns (8-0/4-0 Big 12) survived a rough-and-tumble offensive shoot-out with the rugged, ninth-ranked Cowboys (7-1/3-1 Big 12), who should be moving up in the BCS rankings as a result of their stellar performance rather than down. Texas continues a murderous stretch of games next Saturday night against undefeated and sixth-ranked Texas Tech (8-0/4-0 Big 12) in Lubbock, which makes it four straight weeks that the Horns will be playing in one of college football's elite games of the weekend.

By the way, there has to be a great deal of concern in Longhorn coaching circles this week on how Oklahoma State's offense carved up the Longhorn defense and special teams (217 yds rushing/200 yds passing/137 yds on returns). Tech's offense is OSU's on steroids.

Texas Aggies 49 Iowa State 35 

The Aggies (3-5/1-3 Big 12) won their first Big 12 game of the Mike Sherman era over Iowa State (2-6/0-4) in a performance by both teams that set back the concept of football defense by several decades. At this juncture, the Aggie defense could not stop a hard-chargin' marching band. However, the Aggie unit is still better than Iowa State's absolutely atrocious defensive unit, so that's essentially why A&M won the game.

At least the Ags' offense continues to develop and appears to have enough firepower to give A&M a legitimate chance of beating Colorado (4-4/1-3 Big 12) and Baylor (3-5/1-3 Big 12) in College Station down the home stretch of the season. Meanwhile, can anyone explain to me again why Iowa State did this?

Rice 42 Tulane 17

The Owls (5-3/4-1 C-USA) continue to make my pre-season prediction look good as they dominated the Green Wave (2-5/1-3 C-USA) in the first half and then cruised home for an easy victory.

The bottom line is that any team that plays Rice better be prepared to score a ton of points because the Owls' offense behind QB Chase Clement is a good bet to score at least 35 points in most games. The Owls go to El Paso for a Saturday night game this week against UTEP (3-4/4-1 C-USA) before returning home to play their three final games of the season (against Army, Marshall and Houston) in Houston.

The Houston Cougars (4-3/3-0 C-USA) play Tuesday night in Huntington, W. Va. against Marshall (3-4/2-1 C-USA) before returning home to play their final four games (Tulane, Tulsa, UTEP and Rice) beginning a week from Saturday in Houston.

Posted by Tom at 12:01 AM | Comments (0) |

October 26, 2008

Moneyball for American health care finance

Billy Beane, Newt Gingrich and John Kerry ask why not?

Posted by Tom at 12:01 AM | Comments (0) |

October 25, 2008

Different directions

Newspapers are under siege. This Henry Blodget post reports on the continuing financial deterioration of the New York Times, which looks to be in real trouble.

Meanwhile, the blogosphere continues to thrive. For example, this Stephanie Stradley post about the chronically under-performing Houston Texans defense is far more insightful than anything that I've read in years from the cheerleaders, er, I mean, reporters who cover the Texans for the Houston Chronicle, which continues to layoff employees by the droves.

And to think that one of those Chronicle cheerleaders -- whose most recent piece is this fawning salute to the manager who was mainly responsible for blowing the 2003 NL Central pennant for the Stros -- had the audacity to defame Stradley recently.

Any wonder why newspapers and the blogosphere are going in different directions?

Posted by Tom at 12:01 AM | Comments (1) |

October 24, 2008

My Beijing Birthday

Take a couple of minutes to watch the trailer for what may be one of the most important movies of our time, My Beijing Birthday (H/T James Fallows).

Posted by Tom at 12:01 AM | Comments (0) |

October 23, 2008

Stossel's Politically Incorrect Guide to Politics

If you didn't have the opportunity to watch or record it last Friday, then watch the following six YouTube segments of John Stossel's Politically Incorrect Guide to Politics when you have the time (the other five segments are below the break). The program is television at its best presenting and analyzing key issues involving government regulation of business and the impact of that regulation on the creation of jobs and wealth. Enjoy:

Posted by Tom at 12:01 AM | Comments (1) |

October 22, 2008

The Rays' Houston connection

In 2005, Forbes named the Tampa Bay Rays as the "most horrific" sports franchise of the modern era and the "worst-managed organization" in Major League Baseball.

A little over three years later, the Rays are in the World Series, which begins tonight in Tampa. This Tim Marchman article explains how the Rays did it, including how several Houstonians made key contributions to turning the club into a winner.

Rays General Manager Andrew Friedman, who orchestrated the turnaround over the past several seasons, is a native Houstonian and the son of long-time Houston attorney Kent Friedman. Rays' P Scott Kazmir and LF Carl Crawford played their high school baseball in Houston, while P Dan Wheeler was a stalwart reliever on the Stros playoff teams in 2004-05. Finally, a couple of years ago, Friedman had the good sense to hire as an assistant GM Gerry Hunsicker, who remains the best general manager that the Stros have ever had.

Interestingly, it was the Rays' years of futility that actually fueled their success this season. All those last-place finishes provided the Rays with numerous high draft choices and the club eventually started selecting good prospects.

Inasmuch as most of their key players are young and homegrown, the Rays are playing with Major League Baseball's second lowest payroll and have given long-term contracts given to their core of talented young players. The deals will allow the team to keep its top players for several more seasons so that the Rays are quite likely to become a dominant force in the American League for years to come.

Finally, what is most remarkable about all this is that the Rays have been able to achieve all this while operating under the worst financial circumstances in MLB.

So, what are the Rays' chances in the World Series against the Phillies?

Well, the Rays' pitching staff had a salty runs-saved-against-average ("RSAA") of 89 for the 2008 season, which was 3rd in the American League, but behind the Red Sox RSAA of 92. Similarly, the Rays' decent runs-created-against-average ("RCAA") of 37 for the season paled in comparison to the Red Sox 103 RCAA. How on earth did the Rays beat the Red Sox in the American League Championship Series?

Answer: A red hot pitching staff. Remember, in a relatively small series of games, good pitching is often enough for a club to win a series over an opponent that likely would be superior over a larger segment of games. Thus, don't be surprised if the Rays ride that hot pitching staff to what would be the most improbable World Series championship of this generation.

Posted by Tom at 12:01 AM | Comments (2) |

October 21, 2008

Security theater

While considering the abject vacuity of the presidential candidates' positions on the major issues this election season, I started thinking about some minor issues that might make a difference in my vote.

For example, if either major candidate came out in favor of dismantling the "security" apparatus that the federal government has foisted upon us to make airline travel an aggravation, at best, and an ordeal most of the time, then that candidate would probably get my vote.

Alas, neither candidate has proposed such a dismantling.

Nevertheless, don't miss this clever-but-serious Jeffrey Goldberg/Atlantic.com article on the utter uselessness of the Transportation Safety Administration's airport security procedures (prior post here).

Inasmuch as the only two airport-security measures that really matter -- fortified cockpit doors and the awareness of the flying public as to what a hijacking can mean -- have been in place virtually since the attacks of September 11, 2001, Goldberg zeroes in on the wasteful airport security process that we have allowed the TSA to impose on us at a substantial direct cost and an even greater indirect one.

Moreover, that process does virtually nothing to discourage serious terrorist threats. Rather, the inspection process is "security theater" that simply makes a few naive travelers feel safer about airline travel.

Finally, if all that weren't bad enough, the worst news is that once a governmental "safeguard" such as the TSA apparatus is adopted, few politicians are interested in dismantling it even when it's clear that process is ineffective, expensive and obtrusive.

That's food for thought as we get ready to endure implementation of the next round of governmental regulation of business.

Posted by Tom at 12:01 AM | Comments (2) |

October 20, 2008

2008 Weekly local football review

(AP Photo/Dave Einsel; previous weekly reviews are here)

Texans 28 Lions 21

Texans (2-4) continue to be a work-in-progress. They hammered the atrocious Lions (0-6) for three quarters and looked to be on their way to an easy win.

But then Houston's chronically inconsistent defense gave up a 96 yard TD play while the offense went into a 4th quarter phone booth so as not to reprise the Colts debacle. Before you knew it, the Lions had pulled within a TD and the Texans were working the clock, which is not one of their strong points.

At any rate, the Texans pulled it out without too much trouble. Despite the lack of a killer instinct, the Texans now can win their third in a row for the first time in franchise history next week at Reliant Stadium against the hapless Bengals (0-7).

Texas Longhorns 56 Missouri 31

So much for the theory that the top-ranked Longhorns (7-0/3-0 Big 12) were primed for a letdown after their big win against Oklahoma last week. This one was basically over midway through the 2nd quarter as the Horns cruised to a 35-0 lead against a pretty darn good, 15th-ranked Missouri (5-2/1-2 Big 12) squad.

Texas generated 591 yards on the Mizzou defense, averaging 8.1 yards a play, while converting 10 of 12 third-down chances and scoring on six of seven chances in the red zone. The Horns really didn't play any significant competition over their first four games, so we'll dispense with stats from those games. But in the three subsequent games against solid Big 12 competition, Horns QB Colt McCoy (29-32, 377 yds, 3 TD's) has been extraordinary, connecting on 80 of 97 passes (82%) for 876 yards, 5 TD's and only 2 interceptions.

Meanwhile, the Texas defensive line continues to dominate the line of scrimmage and put heavy pressure on the opponent's QB, which gives Texas the luxury of dropping seven defenders into coverage on most pass plays. That is the main reason the Horns have improved so dramatically this season against the spread passing offenses that have bedeviled Texas over the past couple of seasons.

The Horns still have three very difficult games over the next month -- 6th-ranked Oklahoma State (7-0/3-0 Big 12), @ 8th-ranked Texas Tech (7-0/3-0 Big 12), and 23rd-ranked Kansas (5-2/2-1 Big 12). I still don't think Texas will come through those games undefeated, but I'm not so confident that I would bet on that hunch. This Texas squad is a very good college football team.

Texas Tech 43 Texas Aggies 25

The Aggies (2-5/0-3 Big 12) played their best game of the season in giving the 8th-ranked Red Raiders (7-0/3-0) a genuine scare. Although they led at half 23-20, the Aggies left at least 12 points on the field in that half by kicking short field goals rather than making TD's. Those points would have likely made a big difference in the outcome.

Despite the better-quality loss, the Aggies continue to be the worst-performing college football program in the country relative to the size of the athletic budget. Based on Jeff Sagarin's ratings of all U.S. college football programs, the Aggies are ranked better than only two BCS-conference schools — No. 117 Washington and No. 120 Syracuse — and are ranked below 12 Division I-AA (now called Football Championship Subdivision -- "FCS") teams. Wofford (5-1) is rated three spots higher than the Ags and Rice (4-3) is rated 36 slots higher.

The Ags now try to build on this effort next Saturday at Ames against fellow cellar-dweller Iowa State (2-5/0-3 Big 12). If the Aggies can win that one, then five wins this season might be attainable. That would be a moral victory the way things have been going in College Station this season.

Houston Cougars 44 SMU 38

As predicted last week, the Cougars (4-3/3-0 C-USA) had trouble with rapidly-improving SMU (1-7/0-5) because of another slow start, but a 21-3 4th quarter surge pulled it out.

The good news is that QB Case Keenum (28-36, 404 yds, 2 TD's, 1 INT) continues to be spectacular as the potent Houston offense again rolled up over 500 yards. The bad news is that the Houston defense gave up over 560 yds! The Coogs travel to West Virginia a week from Tuesday to play Marshall (3-4/2-1 C-USA) and then return home to play their final four games of the season in Houston.

Rice 45 Southern Miss 40

The Owls (4-3/3-1 C-USA) continue to impress with their prolific offense and a defense that slows the opposition just enough to allow the offense to pull out victories. This game was particularly noteworthy because the Owls' All-American WR Jarett Dillard had 7 receptions for 141 yds and 3 TD's, yet he wasn't even the best receiver in the game -- Southern Miss' DeAndre Brown caught 12 passes for 221 yds and 4 TD's! Rice has key road games over the next two Saturdays at Tulane 2-4/1-2 C-USA) and then UTEP (3-4/3-1 C-USA).

Posted by Tom at 12:01 AM | Comments (0) |

October 19, 2008

Why some people should not vote

Posted by Tom at 12:01 PM | Comments (0) |

October 18, 2008

The shame!

You know things are really getting bad in the financial markets when FT.com's always-lively Dear Lucy column (previous post here) receives the following letter from an investment banker:

"At a dinner party last Saturday I was asked by a fellow guest what I did and I said I was an investment banker. I might as well have said I was a paedophile. Suddenly the whole table – all friends of my wife from the art world – turned on me with such venom I was really taken aback. I tried to defend myself by saying that I had nothing to be ashamed of in the work that I do in M&A, but the more I argued the more hostile the other guests became."

"Next time this happens – and I fear there will be a next time – should I accept guilt for what isn’t my fault, or should I lie and say I’m a librarian?"

Investment banker, male, 42

Among the many entertaining reader comments to the letter were the following:

"Bit surprised you were invited to dinner in the first place."

"Confess and beg for another glass of wine."

"A sensitive investment banker……….. whatever next?"

Posted by Tom at 12:01 AM | Comments (3) |

October 17, 2008

The maturation of A&M football

One of the many endearing cultural characteristics of Texas is the devotion of most Texas A&M University alumni to the A&M football program.

Although the intensity of that interest has generated some rather awkward moments over the years, the A&M game-day atmosphere is one of the best in college football and an essential experience to gaining a thorough understanding of Texas culture.

Alas, the A&M football program has fallen on hard times over the past several years. Relative to the size of the football budget, the A&M program is currently among the poorest-performing in major college football.

Given that, the prospect of high-scoring Texas Tech invading College Station tomorrow probably to put up a record opponent's score at Kyle Field would normally generate enormous trepidation among the Aggie faithful. However, as the video below reflects (H/T Jay Christensen), the Aggies are now fighting back as best they can -- holding auditions to play the role of iconoclastic Tech coach, Mike Leach.

College football in Texas -- you gotta love it!

Posted by Tom at 12:01 AM | Comments (0) |

October 16, 2008

Playing the Jimmy Carter card

You know it's desperation time for McCain when Victor Davis Hanson plays the Jimmy Carter card against Obama:

A great many moderates and conservatives are worn out and tired of Bush and Bush hatred, the European furor, serial charges of racism and illiberalism, and finally, in their weariness, think that Obama will, in a variety of ways, just make all the ickiness go away-as if he will make all of us be liked abroad and end racial and red/blue fighting at home. They should ask themselves whether Jimmy Carter restored American popularity with his human rights campaigns, praise of left-wing dictators, dialogue during the hostage crisis (cf. "The Great Satan"), boasts of no more inordinate fear of communism, etc., or whether Obama, in his Trinity/Acorn/Pfleger years, brought racial healing and understanding to Chicago.

This post from four years ago surveys the disastrous effect that the Carter Presidency had on the Democratic Party, and here is an earlier Hanson broadside on Carter.

The playing of the Jimmy Carter card reminded me of the following portrait of Carter penned by his first Treasury Secretary, W. Michael Blumenthal. The description is included on page 338 of Robert D. Novak's The Prince of Darkness: 50 Years Reporting in Washington (Crown 2007), which is a rollicking good read:

I saw [Carter] in 1977 and 1978 with outside groups in various settings, and I always felt that he made a very good impression because he would ask questions and listen. But I realized after a while that it was a PR operation because he paid absolutely no attention to what they said. He wrote it down, but nothing would happen with it. After a while, you get a sense of it. This was his way of trying to impress people.  .   .

He has a deep sense of inferiority, a very deep sense of inferiority. I discovered it when I began to realize that he confided in no one. Charlie [Chief Economic Adviser Charles Schultze] would have a weekly meeting with him, and he would come out and say to me that he had never worked for a man like that before. He never reacts. Occasionally, he would ask a question. He never debates. He never disagrees.  .  .  .

He doesn't want strong people. He ruled out [John] Dunlop [for Secretary of Labor] and he ruled out George Ball [for Secretary of State]. He ruled out when he knew the people were strong, aggressive, confrontational personalities. He didn't know me from Adam. Had he known me, he would never have invited me in .  .  .

He dislikes people who are very strong and successful. That is why he doesn't like major businessmen, bankers or people who run big labor unions. You have to watch him, and he is very uncomfortable with them. He has this outward sort of politeness and gives his little spiel, but his eyes glaze over and later on he frequently makes derogatory comments about them. He feels very put upon by these people, and it is essentially that he is afraid that they know more than he does .   .  .  .

The danger of isolation is great, and flattery is a commodity in abundance. We had a few Cabinet meetings, and people were kissing his ass. I asked if he recognized it when it was subtle and indirect, and he responded that he could tell. I could see increasingly that flattery went very far with him -- a person who does not recognize when he is being shamelessly flattered and who enjoys it.  .  .  .

He briefs very quickly with sort of a veneer of knowledge and he can give back in an orderly fashion, but he doesn't retain it for very long.  .   .   . I think the President when he came into office was a very inexperienced and poorly informed man.

Posted by Tom at 12:01 AM | Comments (0) |

October 15, 2008

Hedging the Enron trial penalty

On the heels of this news, and given the mainstream media's ubiquitous characterization of Enron as the harbinger of the current Wall Street financial crisis, it's really not surprising that former Enron Broadband co-CEO Joe Hirko opted to cop a plea on Tuesday rather than face a draining re-trial of the notorious Enron Broadband case. A copy of the plea deal is here.

Although Hirko and his co-defendants overcame enormous odds to win acquittals and a hung jury in the initial Broadband trial, Hirko and his family have already endured over five years of uncertainty as the Damoclean Sword of a relentless federal prosecution hung over their heads. Inasmuch as Hirko could have easily been looking at a decade behind bars if he were to be convicted in the re-trial, a probable sentence of 12-16 months in a plea deal is a reasonable hedge of what has become the draconian trial penalty for business executives.

Posted by Tom at 12:01 AM | Comments (2) |

October 14, 2008

Refracting Enron myopia

One of the more entertaining aspects of the current Wall Street financial crisis has been reading how some of the business columnists have been interpreting it.

Take, for example, Houston Chronicle business columnist, Loren Steffy. You may remember him from his acerbic coverage of the trial of former Enron executives, Jeff Skilling and the late Ken Lay, or his perpetuation of the Enron Myth regardless of the circumstances.

Dismissing me as an Enron apologist, Steffy regularly disputed my long-held theory that the run-on-the-bank that felled Enron could well happen to any trust-based business.

Apparently confused by the fact that what happened to Enron has now happened to Bear Stearns, Freddie and Fannie, Merrill Lynch, Lehman Brothers, AIG and any number of other trust-based businesses impacted by the current credit crunch, Steffy reaches for insight from one of the fellows who set the stage for this mess:

Investigators are poring over the failed firms, looking for signs that executives misled shareholders. Some evidence may be found, but Sam Buell, the former prosecutor who led the effort to indict Enron's Jeff Skilling, doesn't think we'll see widespread prosecutions.

"It's not a conspiracy if everybody's in on it," said Buell, who's now a law professor at Washington University in St. Louis. "In order to have a fraud conspiracy, you've got to have some effort by one group to deceive another group."

In this case, individual investors may not have understood what Wall Street bankers were doing with complex debt securities, but those charged with safeguarding the marketplace were certainly aware.

Regulators knew and approved. So did credit rating agencies. And auditors, both internal and external. With a mouse click, investors could find public documents that described the debt instruments with hundreds of pages of detail. [.   .   .]

"If everybody's in a bubble mentality, if they're betting the price of real estate will keep going up, disclosure doesn't address the problem of what happens when all those assumptions turn out to be wrong," Buell said. "Everybody knows what they're doing. They're just making bad decisions."

Yes, you read that correctly. Buell implies that Skilling was guilty of criminal conspiracy because not "everybody" was "in on it" at the time Enron was making its supposedly opaque disclosures. However, since "everybody's in on it" now, Buell doesn't think there will be widespread prosecutions because "[i]t's not a conspiracy if everybody's in on it."

With such reasoning, is there any doubt now why this outfit generated this record?

For the record, I actually hope Buell is right this time that few businesspeople are prosecuted for misjudging business risk. But for a more rational explanation of how financial regulation fits into the current crisis, check out these Larry Ribstein posts here, here and here and this masterful one by Arnold Kling.

Posted by Tom at 12:01 AM | Comments (1) |

October 13, 2008

2008 Weekly local football review

(Previous weekly reviews are here)

Texas Longhorns 45 Oklahoma 35

In the most entertaining college football game of the season to date, the Longhorns (6-0/2-0 Big !2) vaulted to No. 1 in the AP, Harris and Coaches Top 25 polls with their win over the Sooners (5-1/1-1 Big 12).

Texas prevented OU's prolific passing offense from getting too far ahead for three quarters of the game and then eventually wore down the Sooners to pull the game out in the fourth quarter. Although QB Colt McCoy (28-35-0/277 yds/1 TD) and his receivers get most of the publicity, I thought that the Longhorns' offensive and defensive line play in the second half -- particularly in the fourth quarter -- was the difference in this one.

The Horns better not rest on their laurels, however, as they face a killer schedule down the stretch -- 11th-ranked Missouri (5-1/1-1 Big 12), 8th-ranked Oklahoma State (6-0/2-0 Big 12), 7th-ranked Texas Tech (6-0/2-0 Big 12), and 16th-ranked Kansas (5-1/2-0 Big 12) in four of the next five weeks. The Horns are solid, but I don't see them going undefeated through that stretch.

Texans 29 Dolphins 28

In an entertaining but not particularly well-played game, the Texans (1-4) finally won their first game of the season by beating the Dolphins (2-3) on QB Matt Schaub's draw play with 3 seconds remaining.

With a bit of luck, the Texans could be 3-2 and in position to contend for the playoffs. However, the reality is that they aren't ready for that yet -- Schaub is still a relatively inexperienced QB and the defense, although improving over the past three games, still has too many lapses to produce a consistent winner. The fact is that the Texans are in the vast expanse of NFL teams that are below the elite teams and above the truly hideous ones. That means that the Texans will probably win about as many as they lose against teams of their caliber and may pull off an upset of an elite team every once in awhile. They simply aren't consistent enough yet to be a viable playoff contender.

The Texans have eminently winnable games the next two Sundays at home against the winless Lions (0-5) and Bengals (0-6).

Houston Cougars 45 UAB 20 

Geez, think how bad this would have been had the Cougars (3-3/2-0 C-USA) had shown up for the first half against UAB (1-6/0-3)? If the Coogs pull that sort of performance next week at SMU (1-6/0-4), the Ponies -- who just gave conference leader Tulsa (6-0/3-0) its first scare of the season on this past Saturday night -- might just feast on the Cougars for their first conference win of the season.

Kansas State 44 Texas Aggies 30

The woeful Aggies (2-4/0-2 Big 12) basically allowed Kansas State (4-2/1/1 Big !2) to score at will. At least the Ags showed something on offense as they rolled up almost 550 yards of total offense on the Wildcats.

There is simply no telling how many points 7th-ranked Texas Tech (6-0/2-0 Big 12) will put up on the Aggies next Saturday in College Station. Suffice it to say that it will likely be a record score against the Ags in Kyle Field. The Aggies will be lucky to win two more games this season.

Rice (3-3/2-1 C-USA) were off this weekend. The Owls play Southern Miss (2-4/0-2) at Rice Stadium on Saturday afternoon.

Posted by Tom at 12:01 AM | Comments (2) |

October 12, 2008

Stone and the capitalist roaders

Don't miss Larry Ribstein's post on Oliver Stone's financing philosophy in regard to his new movie about George W. Bush -- W -- the trailer of which is below:

Posted by Tom at 12:01 AM | Comments (0) |

October 11, 2008

230 years?

So, the Justice Department is seeking a sentence of 230 years for former General Re senior counsel Robert Graham, a 60-year old man who has never been involved in any wrongdoing in his life.

Mercifully, the pre-sentencing report recommends a sentence of "only" 12-17 years.

Graham was convicted earlier this year of securities fraud in connection with his involvement in a finite risk transaction between General Re and AIG that was one of the transactions that led to the downfall of former AIG CEO, Hank Greenberg (prior posts here).

Ironically, AIG is now fighting for its life -- even after receiving loans from the Fed in amounts approaching $150 billion -- as a result of thousands of transaction decisions that were far more questionable than the one Graham made.

230 years. For involvement in a transaction that was not even clearly improper, much less criminal in nature.

230 years. As a result of a prosecution that required application of the Buffett rule.

230 years. What does that portend for the AIG executives who engaged in this bit of bad judgment? Or those who were involved in this? Did they commit a crime because they breached an obligation to throw in the towel?

This is our government doing such things, folks. It is a reflection of us. And that reflection is not particularly attractive these days.

Posted by Tom at 12:01 AM | Comments (1) |

October 10, 2008

Almost a month after Hurricane Ike

A friend of mine who is a homebuilder in The Woodlands passes along the following regarding his experience in overseeing a crew rebuilding the neighborhood of his weekend home in Hurricane Ike-ravaged Galveston:

Just back from Galveston after 3 weeks.  We suffered ancillary damage, but nothing structurally damaging. I went down with 80 rds of .40 cal and came back with a clip and a half. 

Snakes have taken over the dunes for now. Devastation is everywhere and we are helping some 61 homes get their lives back together. I have simply never seen such damage.

When you drive over the Galveston Causeway Bridge, you are confronted with hundreds of boats of all sizes lining the road, the median and the bay. Most homes inside the seawall suffered 10 feet of flooding, especially in the historic Strand District.  Downtown Beirut in the 1980’s looked better.

Moving to the seawall, the historic Balinese Room is gone. The Flagship Hotel lost its entry way and appears to be a total loss. Power and water are spotty -- I went 2 weeks without either. Traveling to our West End home is like driving through the Northeast after a winter storm -- sand is piled 10 feet high along both lanes and you sense you are in a fantasy winter wonderland.

Many properties immediately off the seawall are totally destroyed, sitting in the Gulf. You can literally walk under their foundations.  Stench and foul orders are everywhere -- even the stoutest are easily overcome. It will be years, if ever, before Galveston will be restored or hopefully rebuilt to a higher standard. The homes built in the last 5 years according to the 160 mph wind standard suffered little damage, but most others were severely damaged or lost completely. Our crews have worked 16 hrs./day for 3 weeks to restore our neighborhood and are moving to help others at this time. The bright spot is that I have come to know my fellow homeowners in our neighborhood quite well.

The old site of the SeaArama Marineworld is now a landfill with three mounds that could easily fill the Astrodome. I have no idea what they will do with this matter as cranes are working 60’ above street level at this time. We have brought in heavy equipment and crews from The Woodlands to Junction, Texas.  The cowboys from Junction say they have never seen rattlers so big.

We completely lost our dunes, which were over 15’ high. It now looks like we are seaside in Malibu.

Reporting from an R and R encampment, I remain .  .  . 

And as bad as the damage is in Galveston, the devastation in Bolivar Peninsula to the northeast is even worse.

Posted by Tom at 12:01 AM | Comments (0) |

October 9, 2008

Say what?

As noted earlier here and here, the lack of leadership involved in the current credit crisis and related Treasury bailout really has been appalling. You don't think so? Check this out:

Posted by Tom at 12:01 AM | Comments (1) |

October 8, 2008

Campaigning in 2008

Although things aren't going so well for the McCain-Palin campaign, it looks as if they have at least locked up The Villages, the golf-course retirement community in Florida that runs those cheesy commercials during PGA Tour golf tournament telecasts:

With thousands of supporters packing the streets and sidewalks of this massive retirement community, Alaska Gov. Sarah Palin took the safe route Sunday and said she and John McCain would reform Washington, put America on the path to energy independence and nurse a struggling economy back to health. [ .  .  . ]

At one point while signing autographs for the sweltering crowd, a surprised Palin laughed when a supporter reached over and handed her a giant, plastic lipstick replica -- an obvious reference to a joke delivered by Palin at the Republican National Convention. Palin's comment about the only difference between a pit bull and a hockey mom being lipstick has since inspired a volley of campaign rhetoric. As the crowd cheered, a smiling Palin autographed the novelty before moving on for more autographs and handshakes.

Meanwhile, it appears that the Obama-Biden campaign has conceded The Villages to McCain-Palin. At least that's what Senator Biden seems to indicate in the video below:

Posted by Tom at 12:01 AM | Comments (0) |

October 7, 2008

Stros 2008 Season Review, Part Five: Season Recap and Report Card

The Stros 2008 season has been over for over a week now, so it's time for my final review of the 2008 season (prior 2008 season reviews are here) and my grading of the Stros players for the 2008 seaons (my grading of the Stros from the 2007 season is here and from the 2006 season is here).

Although the Stros (86-75) played surprisingly well over the final 40% of the season (42-24, including a stellar 22-11 mark over the final 20% of the seaons), the club failed to qualify for the playoffs for the third straight season since their only World Series appearance in 2005. However, the Stros did handily beat my pre-season over/under prediction of 75 wins, so there is little question that the club out-performed most expectations for the season.

The Stros started out the final fifth of the season with a 16-3 run that pulled the club to within 2.5 games on September 13th of tying the Brewers for the lead in the National League Wild-Card playoff spot.

However, we in Houston recall all too vividly what happened during the morning of Saturday, September 13th --  Hurricane Ike roared through the Houston metro area, leaving in its wake multi-billions of dollars in damages and millions of people without power.

The Stros were supposed to be playing a series against the Cubs at Minute Maid Park over that weekend, but the games simply were not playable in Houston under the circumstances. Frankly, the entire Cubs series should have been postponed and the Stros should have been told to prepare for their next series starting the following Tuesday against the Marlins in Miami.

However, despite the catastrophic damage to the Houston area from Hurricane Ike, MLB Commissioner Bud Selig insisted that as many of the Stros-Cub games be played as soon as possible.

That was a bad decision, but it was made even worse when Selig inexplicably rejected the use of perfectly acceptable baseball stadiums in close-by Round Rock, Corpus Christi and Arlington to play the games.

To compound that poor judgment, Selig then yanked the Stros players and coaches out of Houston on the afternoon of Sunday, September 14th -- at a time when virtually all of their families were adjusting to living without power -- to play the first of two of those games in that postponed Cubs series that night in Milwaukee, of all places.

Not surprisingly, the exhausted Stros were no-hit that night and could muster just one hit in the following night's game.

With their concentration shattered by understandable concern for their families back in Houston, the Stros proceeded to get swept by the Marlins in the following series, which pretty well ended any chance that the Stros had to make a final push for the Wild-Card playoff spot.

And that raises a point that much of the local mainstream media misinterpreted throughout the latter part of the Stros' 2008 season -- despite their good play over the final 40% of the season, the Stros never really had much of a shot at making the playoffs.

Even on that fateful September 13th, when they pulled within 2.5 games of a tie for the lead in the race for the Wild-Card spot, the Stros had only a 12% chance of making the playoffs and that was the best odds for making the playoffs that they attained over the final 40% of the season.

The reason that the Stros' odds were so low was because of the number of teams with whom they were competing.

The Brewers, the Mets and the Phillies all had better records than the Stros at that point, so the chances were always relatively remote that both the Brewers and either the Mets or Phillies (whichever of them did not win the NL East) would crater enough down the stretch to allow the Stros to eke into the Wild Card spot.

Nevertheless, how did the Stros win so many games during the final 40% of the season after basically stinking it up through the first 60% (44-51)?

As noted earlier, 1B Lance Berkman (58 RCAA/.420 OBA/.567 SLG/.986) carried the club from a hitting standpoint throughout the first 50% of the season, then LF Carlos Lee (30 RCAA/.368 OBA/.569 SLG/.937 OPS) had the best run of his career just before and after the All-Star break until his season-ending injury at the 115 game mark.

Then, seemingly out of nowhere, 3B Ty Wigginton (10 RCAA/.350 OBA/.526 SLG/.876 OPS) picked up the slack after Lee's injury and had the best hitting streak of his career until he too went on the shelf with a leg injury during the first part of the final month of the season.

At that point, under-performing RF Hunter Pence (-7  RCAA/.318  OBA/.466 SLG/.783 OPS) finally got untracked and had his best run of the season (10 RCAA in the final 33 games of the season), which allowed his season-ending numbers to improve from among the worst in the league for regular players through 80% of the season.

Moreover, oft-injured 2B Kaz Matsui (6 RCAA/.354 OBA/.427 SLG/.781 OPS) was generally productive when when not on the disabled list and Berkman remained solid down the stretch, although he never caught the same fire during the final 40% of the season that he displayed through the first 60% of the season.

Put these performances together and they were enough to push a poor-hitting Stros club overall (-46 RCAA, 12th among the 16 National League teams) to generate enough offense to win almost two-thirds of their final 66 games played.

But as was the case all season, the real story of this Stros' 2008 season was the performance of the pitching staff.

Viewed before the season as one of the weakest pitching staffs in Stros history, the Stros staff this season ended up being precisely National League average (0 RSAA), which was 7th among the 16 National League teams. Although Brandon Backe (-31 RSAA/6.05 ERA) was arguably the worst starting pitcher in the National League this season, no other Stros pitcher who remained on the staff at the end of the season was worse than slightly below National League-average.

Moreover, staff ace Roy Oswalt (20 RSAA/-- who struggled at a merely National League-average performance level through the first 40% of the season, came back to pitch as well as any National League pitcher over the final 60% of the season (27 RSAA from June 10th forward).

Add in a career-best performance by Wandy Rodriguez (13 RSAA/3.54 ERA) and excellent performances by pick-ups Randy Wolf ( ) and LaTroy Hawkins ( ) over the final 40% of the season, as well as a consistently solid bullpen performance throughout the season, and the Stros staff improved dramatically over the 2007 staff's abysmal performance (-79 RSAA) and provided the foundation of the Stros' better-than-expected record this season.

In retrospect, apart from the losing streak after Hurricane Ike, the Stros really blew their chance for a playoff spot this season during the period from May 27th through June 22nd when the club sandwiched disastrous 9 and 6-game road trips around a poor 9-game homestand, going 6-18 over that period. Other than that stretch, this Stros club was a pretty darn consistent club. The following chart breaks down the Stros season by homestands and road trips:

Despite that consistency, the Stros' better-than-expected record masked the fact that the Stros were the weakest of the teams in the National League that finished with more wins than losses.

As I've noted many times in my review on the Stros, aggregate RCAA and RSAA numbers of each club provide a simple but revealing reflection of whether a team is likely to be able to contend for a playoff spot over the course of the long MLB season.

A club's RCAA reflects how many more (or fewer) runs that a club's hitters generate than a National League-average club and RSAA measures how many more (or fewer) runs that a club's pitching staff saves than a National League-average club (an exactly National League-average club's score is zero). Accordingly, a club's combined RCAA/RSAA number shows how many more (or fewer) runs the club's hitters have generated and the club's pitchers have saved in comparison to a National League-average club.

The following are the aggregate RCAA/RSAA of the National League clubs that won more games than they lost during the 2008 season:

Team       W    L   RCAA  RSAA  RCAA/RSAA

Cubs         97   64    81       98         179

Phillies     92    70    46       87         133

Brewers    90   72     33       57           90

Mets         89   73     79       41          120

Stros         86   75    -46        0           -46

Cardinals   86   76    113       -4          109

Marlins      84   77      62       -45          17

Dodgers    84   78      46         41          87

Dbacks      82   80     -71        95           24

Thus, the Stros were the only team in the National League that won more games than they lost in 2008 that had a negative RCAA/RSAA. Indeed, several teams with losing records -- including the 72-90 Braves -- had an RCAA/RSAA (-16) that was considerably better than the Stros.

Now, as the above chart reflects, RCAA/RSAA is not a dispositive indicator of how a club will finish in the standings or even how many wins and losses that a club will have. But it's unusual for a club with a negative RCAA/RSAA to win more games than it loses, and it's even more unusual when such a club wins 11 more games than it loses. That indicates that more than a bit of good luck was involved in the Stros' record this season. And good luck is not the main element around which good MLB teams are built.

One of the main problems with the Stros are that they are getting old. The Stros have only two players under 30 in their regular lineup— Pence in right field, and the platoon of Michael Bourn and Reggie Abercrombie in center. By the team-age calculations of Baseball-Reference, the Stros' hitters are a collective 31.1 years old, which is almost a full year older than any other National League club. That is not particularly comforting when you consider that the Stros' RCAA of -46 ranked 12th among the 16 National League teams.

Likewise, the Stros are not much younger on the pitching side. The pitchers average 30.7 years, which is tied with the Phillies for the NL's oldest staff. Inasmuch as the Stros are currently rebuilding one of the worst farm systems in the National League, a 2009 team built essentially on an aging 2008 roster is not likely to generate more wins than the 2008 unit.

Thus, it would be a mistake to think that the Stros performance this season means that they are legitimate playoff contenders for the 2009 season. The club has huge holes at three positions (catcher, shortstop and centerfield), a question mark at another (second base) and a pitching staff that is still only National League-average despite its better-than-expected performance this past season.

So, Stros management has a lot of work to do this off-season to put the club in a position to contend in 2009 and it's not at all clear at this point that management is inclined to make the moves necessary to accomplish that goal. If the Stros make only minor moves this off-season, I do not think it's likely that they will be able to improve on this season's performance and contend for a playoff spot in 2009.

The following is my report card for each of the Stros this season. Full season statistics follow the report card and the Stros’ 40-man roster is here with a hyperlink to each player’s statistics and other information:

The A's

Lance Berkman -- A+ (58 RCAA/.420 OBA/.567 SLG/.986): Berkman's 2008 season was one of the best in Stros history.

Berkman's 58 RCAA was the 3rd highest in the National League this season and tenth best in Stros history:

Berkman now has four of the top ten RCAA seasons in Stros history, second only to Jeff Bagwell's five:

Berkman trails only Bagwell in career RCAA among Stros players and no one else is even close to those two:

In fact, Berkman is now 7th in career RCAA among active National League players and is a good bet to move up to 3rd within a season or two:

In addition, Berkman was rated the 4th best defensive first baseman in Major League Baseball according to John Dewan’s The Fielding Bible. And he stole 18 bases in 22 tries, to boot.

With another five or so solid seasons, Berkman will join Bagwell and Craig Biggio, and Roy Oswalt as one of only four homegrown Stros players who have a legitimate shot at being voted into the Baseball Hall of Fame. Berkman is the best current Stros field position player by far.

Carlos Lee -- A  30 RCAA/.368 OBA/.569 SLG/.937 OPS): Lee was on his way to the best season of his career when an errant pitch broke a bone in his hand during the 115th game of the season and ended his season prematurely. He started slowly, but really caught fire after the All-Star break and was carrying the club offensively when he was injured. Moreover, Dewan's Fielding Bible scored Lee's usually poor defense as the best of his career (16th best in MLB, just a tad below MLB-average). If only Lee could learn how to take a walk, he would have the potential to put together a 50+ RCAA season. Unfortunately, it's not likely that he will develop that ability this late in his career.

Geoff Geary -- A (13 RSAA/2.53 ERA): Originally thought to be a throw-in in regard to the Brad Lidge for Michael Bourn trade, Geary ended up preventing that trade from being a disaster.

Geary battled through a series of nagging injuries to be the Stros most consistent pitcher this season. Geary's stat line for the season (13 RSAA/2.53 ERA/64 IP/45 H/28 BB/45 K/3 HR's) is not far off Lidge's (19 RSAA/1.95 ERA/69.1 IP/50 H/35 BB/92 K/2 HR's), who is the NL's Comeback Player of the Year.

The Phillies are committed to pay Lidge $37.5 million over the next three seasons with a $12.5 million club option in 2012. The Stros paid Geary $1.125 million in 2008 and will only have to offer him arbitration in order to keep him around for 2009. Remember that when you hear the mainstream media pundits describing the Lidge-for-Bourn deal as a disaster for the Stros.

Roy Oswalt -- A- (20 RSAA/3/54 ERA):  It says much about Roy O's excellence that this was his worst MLB season and he still generated an A- for the season.

As mentioned above, he struggled with nagging injuries through the first 40% of the season, but then kicked it into gear in the final 60% to be one of the most effective pitchers in the National League. He finished with over 200 innings for the fifth straight season and for the sixth time in his eight-year MLB career.

As with Berkman, Roy O's excellence is often taken for granted. Even in this worst season of his masterful career, Roy O tied for 11th in RSAA in the National League:

Roy O is now 6th in career RSAA among active NL players:

Moreover, Oswalt is tied for 6th in the history of Major League Baseball in career RSAA generated in the NL by the age of 30:

Not bad company, eh? Finally, Roy O has saved more runs than any pitcher in the history of the Stros franchise:

As with Berkman, with another five or so solid seasons, Roy O is a legitimate homegrown Hall of Fame candidate. He is one the few Stros who is truly special to watch compete.

The B's

Ty Wigginton -- B+ (10 RCAA/.350 OBA/.526 SLG/.876 OPS):  The 30-year old Wigginton had the best season of his career and might have scored an "A" if injuries hadn't caused him to miss about 45 games (on the other hand, I guess he could have a "C" or a "D", too). Inasmuch as Wig is not stellar in the field (Dewar rates him 23rd in fielding among MLB third basemen), the question is whether his performance this season is indicative that his next few seasons will produce more than his career numbers (0 RCAA/.330 OBA/.460 SLG/.790 OBP)? If not, then Wig should be considered prime trade bait.

Wandy Rodriguez -- B+ (13 RSAA/3.54 ERA): Rodriguez keeps improving with age as this is his second straight season of notable improvement over his first two seasons in which he was one of the worst starters in the National League. However, Rodriguez will be 30 years old next season, only pitched 137 innings because of injuries this season and still has never pitched over 184 innings during a season in his career. He probably will never be better than a back-end rotation guy, although he may develop into a decent third option in a rotation. That would appear to be his ceiling, though.

LaTroy Hawkins -- B+ (9 RSAA/0.43 ERA): After looking washed-up with the Yankees during the first two-thirds of the season, the Stros picked up Hawkins off the scrap heap and he proceeded to allow just 1 earned run in 24 innings while striking out 25 and walking only 5. He will be offered a contract for 2009, but he will be 36, so it will become harder for him to maintain the lightning the Stros found in his bottle during the last third of 2008.

Randy Wolf -- B+ (7 RSAA/3.57  ERA): Another of Stros GM Ed Wade's salvage projects, Wolf pitched well above National League-average in the 70 innings that he gave the Stros after coming over from the Padres, where he basically stunk up the joint (-11 RSAA/4.74 ERA in 120 innings). As with Hawkins, Wolf's performance means that the Stros will pursue a contract with him in the off-season, but is a barely above National League-average starter worth the $15 million or so over three seasons that will likely be required to sign him? I have my doubts.

Mark  Loretta -- B (-4 RCAA/.350 OBA/.383 SLG/.733): Loretta improved from a D last season primarily because the Stros used him better -- i.e., as a true utilityman rather than as a replacement starter. As a result, in 250 AB's, Loretta had just 10 fewer extra-base hits this season than he had in over 460 AB's last season. Loretta played well defensively at all of the infield positions, scoring at least MLB-average at each position except for 2B, where he was slightly below-average.

Jose Valverde -- B (8 RSAA/3.38 ERA): Interestingly, Valverde's season stats were almost the same as Brad Lidge's for the 2007 season with the Stros that got Lidge run out of town. Valverde is currently a lot cheaper than Lidge, but probably not for long. Beware of overpaying for closers.

Brian Moehler -- B (-3 RSAA/4.56 ERA): The 36 year-old journeyman was little short of remarkable for the Stros in 2008, swallowing 150 innings at just a tad below National League-average performance level. A consummate pro, he will compete for a back-end rotation or long relief job next season. Just don't be surprised if he is nowhere near as effective as he was this season.

Chris Sampson -- B (6 RSAA/4.12 ERA): Sampson had an interesting season. Through 56 innings of being starter, he was pretty bad (-6 RCAA/5.56 ERA). Then, he pitched 61 innings out of the bullpen and was quite good (12 RSAA). Alas, he had elbow surgery after the season and is iffy to be ready by spring training.

Tim Byrdak -- B (3 RSAA/3.90 ERA): Another of the pleasant surprises in the Stros 2008 bullpen, the 34-year old veteran pitched just above National League-average over 55 innings this season. Brydak has effectively replaced Trevor Miller as the prime LOOGY on the Stros staff ("LOOGY" means Lefty One Out GuY - a left handed reliever specializing in getting one out, often in game critical situations).

Doug Brocail -- B (4 RSAA/3.93 ERA): Brocail, who is the quintessential battler, pitched reasonably well until Manager Cecil Cooper inexplicably overworked the 41 year-old, at which point he developed shoulder problems that limited his effectiveness. The Stros declined an option on Brocail for the 2009 season because of injury concerns, but are talking with him about coming back next season, anyway.

The C's

Kaz Matsui -- C (6 RCAA/.354 OBA/.427 SLG/.781): Matsui was the Stros best leadoff man when he was playing. The problem was that he wasn't playing enough (only 96 games due to assorted injuries). Also, Dewar's Fielding Bible rated his defense as dramatically worse than the previous season at Colorado (from 6th best in MLB to 28th). He is signed for two more seasons at $5 mi per season, so he isn't going anywhere. Perhaps Stros management should invest in a better masseuse?

Wesley Wright -- C (-4 RSAA/5.01 ERA): A Rule 5 pickup from the Dodgers, the 23 year-old Wright acquitted himself reasonably well as sort of a backup LOOGY (55 IP). Wright needs more seasoning and it will be interesting to see how the Stros go about getting it for him. It's not as if the club has an over-abundance of pitchers of this age with Major League potential.

Hunter Pence -- C- (-7 RCAA/.318 OBA/.466 SLG/.783 OPS): Pence was on course for a D or even an F through 80% of the season when his season-to-date stats were among the worst of any regular National League players (-17 RCAA/.300 OBA/.435 SLG/.735).

But Pence redeemed himself somewhat during the final 20% of the season when he carried the club for about 20 games after Wigginton's injury and improved his season statistics to just below National League-average.

Pence's defense in RF was only average -- The Fielding Bible rates him 16th in MLB, primarily because of his good arm. However, Pence's defense in centerfield during 2007 was not rated materially worse than his defense in right field this season. Moreover, Pence's defensive rating in both seasons were about the same as CF Michael Bourn's fielding rating this season.

So, why again are the Stros enduring Bourn in centerfield?

The D's

Geoff Blum -- D (-13 RCAA/.287 OBA/.418 SLG/.705 OPS): Blum was useful in spots (14 HR's), but it's hard to be an average utilityman with an on-base average of .287 (National League-average is .340). He generally did a good job defensively -- The Fielding Bible rated his defense at 3B to be 11th best in MLB.

Darin Erstad -- D (-12 RCAA/.309 OBA/.363 SLG/.672 OPS): As with Blum, it's hard to be an average utilityman with a .672 OPS (National League-average is .771). Erstad performed at a slightly above MLB-average level defensively at the outfield positions and first base.

The F's

Brad Ausmus -- F (-14 /RCAA/.303 OBA/.296 SLG/.600 OPS): Mercifully for everyone except for his adoring female fans, the Brad Ausmus era is over in Houston.

Ausmus and his masterful agent have pulled one of the greatest con jobs in MLB history in persuading MLB teams to pay him to play baseball for 15 seasons. His career stat line (-277 RCAA/.325 OBA/.344 SLG/.669 OPS) reflects that he was not close to being an average National League hitter (0 RCAA/.342 OBA/432 SLG/.774 OPS).

Moreover, although he has always blocked pitches well, his ability to throw out baserunners at an effective rate was essentially gone by the 2004 season. The Stros inexplicably paid him to hang around for another four seasons anyway.

RCAA is an excellent measure of the awfulness of Ausmus. His career -250 RCAA -- which means that Ausmus generated 250 fewer runs than a merely average National League hitter would have created using the same number of outs over 15 seasons as Ausmus -- is second worst among active National League players:

Moreover, Ausmus holds the Stros record for the worst RCAA in any one season and has four of the worst ten such seasons in Stros history:

Not surprisingly, Ausmus has a firm hold on the worst career RCAA of any Stros player:

Given the subjective blather that the mainstream media served up around the time that Ausmus played his last game for the Stros, it's questionable whether the utter ineffectiveness of Ausmus' long tenure with the club will ever be properly analyzed in those annals. But part of his legacy in Houston is certainly that Stros fans do not have the expectation of even an average player at the catcher position. I guess that makes management's job a bit easier.

J.R. Towles -- F (-12 RCAA/.250 OBA/.253 SLG/.503 OPS): That's a tough grade for Towles, who should not have been jumped from AA to MLB after a small sample size of success in MLB at the end of the 2007 season. He actually played reasonably well in AAA, where he should have been at the start of the season. But when Ausmus is your alternative at catcher, the Stros were dreaming that Towles might work out. Dreams rarely become reality in MLB.

Humberto Quintero -- F (-14 RCAA/.271 OBA/.304 SLG/.575 OPS): Quintero, Ausmus and Towles caught all of the Stros games this season. If you aggregate their negative RCAA (-14 + -14 + -12 = -40), the Stros catching position generated the worst RCAA of any regular position in the National League this season. In fact, the Stros have four of the top 10 worst RCAA's for the 2008 season (the catching position, Tejada, Bourn and Jose Castillo, although Castillo generated most of his negative RCAA with the Giants before coming to the Stros late in the season):

Miguel Tejeda -- F (-26 RCAA/.314 OBA/.415 SLG/.729 OBA). Tejada was one of the worst hitting National League regular players during the 2008 season. I don't think that's what Drayton McLane and GM Wade had in mind when they agreed to pay Tejada $26 million over the final two years of his contract, the final of which is next season. Tejada did improve his defense markedly, going from the 23rd-ranked MLB shortstop in 2007 to 9th-ranked in 2008.

Michael Bourn -- F (-29/.299 OBA/.313 SLG/.613 OPS): Bourn was terrible this season, arguably the worst-hitting regular player in the National League (only the Stros' decision to platoon Abercrombie with Bourn in CF saved Bourn from being the outright leader in worst RCAA). Moreover, Bourn's defense -- which was supposedly his strength -- turned out to be rather pedestrian (15th ranking among MLB centerfielders). Thus, as noted above, there is a real question as to whether the Stros shouldn't just can the Bourn experiment, put Pence back in CF and go out an get a true run producer to play right-field. It looks as if Bourn is Willy Taveras-lite, which is a scary thought.

Brandon Backe -- F (-31 RSAA/6.05 ERA): Backe had the worst RSAA of any starting pitcher in the National League in 2008:

In my 2007 preview of the Stros season, I wrote the following about Backe:

A fiery personality and a couple of good playoff performances three years ago misleads some addled observers to believe that Backe is a legitimate number two starter. However, he has made just 13 starts over the past two seasons while recovering from Tommy John surgery. In those 13 starts, he struck out 30 and walked 29. Backe's career -15 RSAA is not the stuff of a frontline National League starting pitcher.

Backe may get one more chance with the Stros solely because this was his first season back from Tommy John surgery. However, after 166 innings of ineffectual pitching this season, it's becoming increasingly clear that Backe is not a good enough pitcher to start regularly in MLB. He may still find a Chris Sampson-type relief role somewhere, but it won't be as a starter.

The 2008 season statistics for the Stros are below, courtesy of Lee Sinins' sabermetric Complete Baseball Encyclopedia. The abbreviations for the hitting stats are defined here and the same for the pitching stats are here. The Stros' 40 man roster is here with links to each individual player's statistics:

Posted by Tom at 12:01 AM | Comments (4) |

October 6, 2008

2008 Weekly local football review

(AP Photo/David J. Phillip; previous weekly reviews are here).

Colts 31 Texans 27

The following was a conversation that I had with another long-suffering fan of Houston sports teams after the Texans (0-4) became the first team in NFL history to blow a lead of at least 17 points in the final five minutes of regulation:

"Well, this loss wasn't as bad as the University of Houston's last-second loss to Joe Montana and Notre Dame in the 1979 Cotton Bowl."

"That's right. It wasn't even as bad as the deciding Game Five of the 1980 National League Championship Series when the Stros tied the score in the sixth, took a 5-2 lead in the seventh, fell behind 7-5 in the top of the eighth, tied the game again in the bottom of the eighth, and finally fell when the eventual World Series champion Phillies scored on two doubles in the 10th."

"And at least it was not nearly as devastating as the University of Houston's Phi Slamma Jamma losing to Jim Valvano and North Carolina State on a tip-in at the buzzer in the 1983 NCAA Basketball Tournament National Championship Game."

"Well, come to think of it, it wasn't nearly as bad as the Oilers' 1991 NFL playoff loss to the Broncos on John Elway's last minute 98 yard drive."

"And don't even suggest that this was even close to being as bad as the Oilers' 41-38 overtime loss to Buffalo the 1993 NFL playoffs after leading at halftime 35-3."

"Really, this wasn't even as bad as the Houston Rockets' 1997 Game Six Western Conference Final playoff loss to the Jazz on John Stockton's last-second 3 pointer."

"Actually, this doesn't even come close to being as bad as when Brad Lidge served up that gopher ball to Albert Pujols in the 2005 National League Championship Series when the Stros were one out away from the World Series."

But then my friend concluded before hanging up:

"However, this loss was right up there with those other ones."

Although there will undoubtedly be much gnashing of teeth around Houston this week because of the way in the Texans lost the game, remember that the game was lost primarily because a backup QB was trying too hard to win rather than not taking the risks necessary to win. I take some solace in that. The Texans host the revived Dolphins (2-2) next Sunday at Reliant Stadium.

Texas Longhorns 38 Colorado 14

The Longhorns (5-0/1-0 Big 12) were impressive in dismantling the Buffaloes in Boulder. About the only blemish in the Horns' performance was that high-performing QB Colt McCoy was picked off twice despite going 23-30 for 262 yds and 2 TD's. The price of poker now goes up dramatically as the 5th-ranked Horns turn their attention to the game of the 2008 college football season to date next Saturday afternoon in Dallas against No. 1 Oklahoma (5-0/1-0 Big 12).

Oklahoma State 56 Texas A&M 28

The woeful Aggies (2-3/0-1 Big 12) must be satisfied with moral victories these days, such as holding the 21st-ranked Cowboys (5-0/1-0 Big 12) to less than 60 points and scoring 28 themselves (tying a season high). The Aggies host Kansas State (3-2/0-1 Big 12) next Saturday in one of the relatively few games in Big 12 conference play that A&M has a decent chance at winning. This could get much worse for the Ags before it gets better.

Tulsa 63 Rice 28

The Owls (3-3/2-1 C-USA) hung with Tulsa (5-0) for a half, but then the four turnovers and the high-powered Golden Hurricane offense buried Rice in the second half. Tulsa is the type of team that is Rice's Achilles Heel -- a team with a good enough defense to slow down the Owls' potent offense a bit with an offense that can overwhelm Rice's undermanned defensive unit. After an off-week next Saturday, the Owls host Southern Mississippi (2-3/0-2) the following Saturday (October 18th) at Rice Stadium.

The University of Houston had a well-deserved day off on Saturday and hosts UAB (1-5/0-2 C-USA) in a Thursday night game this week at Robertson Stadium.

Posted by Tom at 12:01 AM | Comments (1) |

October 5, 2008

Did McCain choose the wrong Palin?

Posted by Tom at 12:01 AM | Comments (0) |

October 4, 2008

Therapy, Jack Donagy-style

Whew! After the past couple of weeks, we all could use a little levity.

The creator and star of NBC's clever sitcom 30 Rock -- Tina Fey -- has been getting quite a bit of publicity lately because of her spot-on impersonation of GOP VP candidate Sarah Palin. But the real star of 30 Rock is Alec Baldwin, who plays Jack Donaghy, the  self-important television executive who oversees the fictional television show that 30 Rock revolves around.

In the clip below, Baldwin's Donagy helps counsel Tracy Morgan’s character (who is the star of the fictional TV show) through a therapeutic role-playing session that a psychologist has arranged at Donagy's request to bring Morgan out of a personal crisis. In just over two minutes, Baldwin resolves the root cause of Morgan's crisis (estrangement from his family) by assuming the roles of Morgan’s father (a black man from "funky North Philly" with a droopy lip), Morgan’s mother, the white boyfriend of Morgan's mother, Morgan himself and a Hispanic neighbor of the family, Mrs. Rodriguez.

Television these days doesn't get any better than this.

Posted by Tom at 12:01 AM | Comments (0) |

October 3, 2008

Following up on my concierge health care experience

This post from about a year ago explored the reasons why my friend and personal physician -- internist Bill Lent, MD -- decided to convert his internal medicine practice to a concierge practice in which he limited his practice to 600 patients who pay $1,500 per year to retain his services. Inasmuch as I am blessed with good health, the only time I see Bill in most years is for my annual physical, which was this past week. As always, it was good to catch up with him and hear his thoughts about the first year of a concierge practice.

In short, Bill's experience has been overwhelmingly positive. The funds generated through his patients' retainer payments have relieved Bill of the financial pressure that had been mounting over the past decade to increase patient visits as Medicare and private medical insurers systematically reduced the amount paid to doctors for such visits. Released from that pressure, Bill is now able to spend more time with each patient, which Bill believes provides the patient with better quality service. The response from Bill's patients has been uniformly positive.

Although Bill's workload has been reduced from the standpoint that he no longer feels compelled to see more and more patients to maintain revenue levels in the face of reduced insurance payments, Bill has had to spend quite a bit of time over the past year in the process of computerizing his patients records. Part of the deal for patients in signing up for the concierge service is that their records are digitized so that the patient, Bill or any other doctor who the patient retains can review the records from anywhere via the Web. That perk has required a considerable expenditure of effort over the past year in digitizing those records, but now that the process is largely complete, Bill will spend far less time in future years as he simply amends a patient's computerized record with each visit.

There have been a number of pleasant surprises in Bill's first year of the concierge practice. For example, Bill was initially concerned that a number of his less affluent patients would opt not to participate because of the retainer payment. Surprisingly, however, his patient base has remained quite diverse from a socioeconomic standpoint -- even a large number of his elderly patients on Medicare elected to participate despite the fact that Medicare doesn't cover any of the retainer payment.

One of those is a long-time patient who is a retired bus driver with a host of medical problems that Bill has helped control for years. Rather than taking the risk of moving on to another physician, the retired bus driver's five children decided to split payment of the retainer between themselves so that their father could remain one of Bill's patients.

But the most pleasant aspect of the concierge practice is that Bill is back to doing what he loves to do -- taking the requisite amount of time to visit with patients about their symptoms and then diagnosing the nature of the problem. He no longer feels rushed to complete a patient visit so that he can move on to the next patient in an effort to fill his quota for the day.

Bill did have one foreboding experience in the transition to a concierge practice. Being the kind of fellow that he is, Bill offered at no cost to his former patients who opted out of the concierge practice to help them find another internist to replace him as their personal physician. Many of Bill's former patients took him up on his offer and he accommodated each of them. However, in so doing, Bill discovered that a growing number of internists and family practitioners in the Houston area are no longer accepting patients on Medicare because of the economic constraints of taking on such patients. As the number of primary care physicians continues to decline across the country, where are patients on Medicare going to find a primary care physician if this trend continues?

So, one of Houston's best internists was successful in saving his practice from the perverse impact of America's Byzantine health care finance system. As I noted in the previous post, if such entrepreneurial spirit can succeed in reviving a doctor's practice in the current highly-regulated health care finance system, then imagine what might happen if we unleashed the power of the marketplace to reform the health care finance system and the delivery of health care, as well?

Posted by Tom at 12:01 AM | Comments (3) |

October 2, 2008

Another cost of the bailout

As reconsideration of the proposed Treasury Bailout of Wall Street takes center stage in Washington, other pressing and arguably more important problems continue to be ignored.

Take the chronically dysfunctional American health care finance system. This Boston Globe article reports that Massachusetts' supposedly innovative 2006 health insurance mandate has caused such a shortage of primary care physicians in the state that the wait to see such a doctor has grown to as long as 100 days. In addition, almost half a million citizens are having a difficult time finding a doctor at all:

"There were so many people waiting to get in, it was like opening the floodgates," [Dr. Kate] Atkinson said. "Most of these patients hadn't seen the doctor in a long time so they had a lot of complicated problems." She closed her practice to new patients again six weeks later. "We literally have 10 calls a day from patients crying and begging," she said.

On the other hand, maybe its better that Congress is distracted from such problems. As a friend of Don Broudreaux observes:

"The one good thing that came out of this whole credit debacle, I now have the perfect pithy response to all the lefties who tell me that the government should take over health care and make it affordable to everyone.  You mean the way they made home ownership affordable to all through Fannie and Freddie?  How did that work out for you?"

Posted by Tom at 12:01 AM | Comments (1) |

October 1, 2008

Awkward Loan Interview

The proposed Treasury bailout leads to an awkward loan interview:

Posted by Tom at 12:01 AM | Comments (0) |

September 30, 2008

This is leadership?

I've already said my piece on the proposed Treasury Bailout of Wall Street, so I won't belabor that view.

In the meantime, there are much better places to keep up with the minute-by-minute political developments on the proposed bailout -- for example, check out Clusterstock, DealBreaker and Felix Salmon for astute and up-to-the-minute analysis.

However, one point from my previous post deserves further review -- that is, circumstances such as this provide us with a revealing view of our political leaders. Do they inspire positive and collaborative action in difficult times for the better good of society? Or do they attempt to generate support for their political position through fear-mongering and demagoguery?

In my view, President Bush's handling of the negotiations over the proposed bailout has been abysmal. As Jeff Matthews points out:

The President’s unfortunate choice of words—"this sucker could go down"—carry the same deer-in-headlights quality as his televised speech to the American people last week, in which he used the word “panic,” as we recall. At a minimum, it makes you nervous; at a maximum, it makes you want to throw up first and sell everything second.

What happened to the heroic, forward-looking rhetoric great leaders are supposed to provide in times of crisis?

FDR gave us “We have nothing to fear but fear itself.”

Churchill gave us “We shall fight on the beaches.”

George Bush cruises in with “This sucker could go down.”

We wonder: has a more irresponsible sentence been uttered, by anyone, during this entire crisis?

John Carney reports that President Bush wasn't any better today in responding to the House's rejection of the proposed bailout:

"We put forth a plan that was big because we got a big problem," Bush just said, sitting in a chair placed before a fireplace in the White House. He's meeting with advisers, he said. "I'm disappointed with the vote in Congress," the president said.

Was that his version of FDR's famous fireside chats? Bush looked annoyed he was being bothered with this stuff.

This from a President who failed to persuade more than a third of his own party members in the House for his position in response to a financial emergency?

Meanwhile, proving that dubious leadership is bipartisan, Democratic House Speaker Nancy Pelosi provided us with a lesson on how not to win support for a position:

Finally, Tina Fey didn't even need to change any of Sarah Palin's words to drive home the point that John McCain certainly didn't bolster his lack of financial and economic acumen with his running mate selection:

Update: More "leadership."

Posted by Tom at 12:01 AM | Comments (6) |

September 29, 2008

2008 Weekly local football review

(AP Photo/Phil Coale; previous weekly reviews are here).

Jaguars 30 Texans 27 (OT)

If it isn't one thing, it's another for the Texans (0-3).

After pretty much stinking it up in the Texans' first two games, QB Matt Schaub was outstanding in this one, leading the Texans to scores on their five consecutive possessions (three TD's and two FG's, including Kris Brown's 51 yarder with a second left that sent the game into overtime). Schaub was 29-40 for 307 yds with 3 TD's and no INT's. WR Kevin Walter had two TD's reception and rookie RB Steve Slaton caught 8 passes for 83 yds and a TD. Can't ask for much more than that.

On the other hand, after playing a decent first half, the Texans' defense was horrible in the second half and overtime. For the first three quarters of the game, the Texans' defense inexplicably allowed the Jags to complete slant passes at will. Then, when the Texans' defense finally took away the slant pass in the fourth quarter, they forgot to maintain containment on Jags' QB David Garrard, who proceeded to make three key runs out of the pocket on the final TD drive in regulation. The poor defensive performance was punctuated by poor tackling in OT, which allowed the Jags to set up a chip shot field goal to win the game.

About the only good thing that can be said about the defense is that it may have been better than the Texans' coverage teams, which were absolutely awful. They provided the Jags with good field position throughout the game.

Finally, how is it that the Texans' coaching staff and players were the only ones watching the game who did not realize that the Jags had kept their offense on the field in their initial punting situation of the game? The gift-wrapped TD that the Texans' punt-return team gave the Jags might have made a difference in the final score, don't you think?

The Texans finally return to Houston for their first home game of the season next week against the well-rested Colts (1-2) and QB Peyton Manning, who carved the Texans' defense up like a holiday turkey the last time the teams played. Ay, yi, yi.

Houston Cougars 41 East Carolina 24

The feel-good story of the weekend was the Cougars (2-3 overall/1-0 C-USA), who lost a couple of close games over the past two weeks after being jacked around by their own AD during Hurricane Ike and its aftermath. Although they were double-digit underdogs to 23rd-ranked East Carolina (3-2; 1-1), the Coogs manhandled the Pirates and would have won the game by an even larger margin but for four turnovers and two missed field goals. The Cougars offense rolled up 625 yds of total offense and literally had the ECU defense gasping for air by midway through the second half. Houston has a well-deserved day off this Saturday before hosting Alabama-Birmingham (1-4/0-1) on Oct. 9 in a Thursday night game.

Texas Longhorns 52 Arkansas 10

Back when the fifth-ranked Horns (4-0) scheduled Arkansas (2-2) several years ago, they figured that the game was going to be a competitive tune-up for Big 12 play. Alas, it was not, so the Longhorns remain largely untested as they prepare for their Big 12 opener next week at Boulder against Colorado (3-1). Nevertheless, QB Colt McCoy is playing at a consistently high-level and the Horns revamped defense appears to be flying around the field pretty well. They will need to be next week as Colorado is pretty good and it would be easy for the Horns to be peeping ahead a week for their big game against No. 1 Oklahoma.

Rice 77 North Texas 20

The most amazing thing about this game is that there was no scoring in the fourth quarter! As I've been saying all season, Rice's (3-2 overall/2-0 C-USA) offense is the real deal and gives the Owls a legitimate chance to win in any game in which the Owls' defense can slow down the opposition. Rice now prepares for their annual Revenge Bowl next Saturday against their former one-year coach, Todd Graham and the Tulsa Hurricane (4-0/1-0). Here's hoping that the Marching Owl Band makes the road trip to Tulsa.

Texas A&M 21 Army 17

After the Aggies (2-2) were not able to generate 300 yds total offense at home against a very bad Army (0-4) team, a commentator on one of the Aggie message boards described the five stages of coming to terms with the Aggies' current status as a football doormat:

Denial: "Give Fran Time."
Anger: "Fire Fran!"
Bargaining: "A different coach will make the difference."
Depression: "Why even bother to post on TexAgs."
Acceptance: "We are terrible."

The Aggies might not win another game this season. Oklahoma State (4-0) is a decent bet to put 60 points on the Aggies next Saturday night in Stillwater.

Posted by Tom at 12:01 AM | Comments (0) |

September 28, 2008

Paul Newman, R.I.P.

The NY Times' Manohla Dargis reviews Newman's film career.

Posted by Tom at 12:01 AM | Comments (0) |

September 27, 2008

The Rothko Chapel

It was the 105th anniversary of Mark Rothko's birth earlier this week, so it's a good time to learn a bit more about the artist whose paintings hang in one of Houston's most remarkable places, the Rothko Chapel on the campus of the University of St. Thomas (earlier post here).

Posted by Tom at 12:01 AM | Comments (0) |

September 26, 2008

Lord, help us!

Posted by Tom at 12:01 AM | Comments (1) |

September 25, 2008

Tough day at the office

Clear Thinkers reader Charles Satterfield passes along these pictures of a trading office on the sixth floor of JP Morgan Chase Center, looking out toward the blown-out windows on the east side of JP Morgan Chase Tower (the tallest building in downtown Houston), taken shortly after Hurricane Ike blew out dozens of windows on the building's east side during the early morning of Saturday, Sept 13th. Going on two weeks after the storm, over half a million Houston area residents remain without power and about 250,000 have no running water.

Posted by Tom at 12:01 AM | Comments (3) |

September 24, 2008

The Treasury Bailout is not rocket science

The debate over the proposed Treasury bailout of Wall Street firms is coming at a fortuitous time -- the election season. Be wary of any candidates who, after looking appropriately concerned about the dire predictions of the plan's promoters, throw up their hands and vote in favor of the bailout because "we just have to do something" even if they don't understand what they are doing.

The fear mongering that the promoters are using to sell the bailout is laughable. This is not rocket science.

For example, when Enron tanked in late 2001, it was the seventh largest public company in the U.S. Enron traded derivatives and other financial instruments with counterparties that were among Wall Street's biggest commercial and investment banks, which were heavily exposed to its losses. To make matters worse, these investments were concentrated in the energy sector, which is at least as important to the nation's economy as the housing sector that is at the center of the current crisis.

In short, at the time of its bankruptcy, Enron was one of the nation's largest publicly-owned companies, a vitally-important market-maker in the natural gas trading industry and a leader in hedging corporate risk through structured finance transactions.

Despite the huge wealth destruction that would result from Enron's insolvency, not one government or Wall Street leader proposed a bailout of Enron in order to preserve the huge value to the public of the natural gas trading industry and the market for structured finance transactions.

Enron's bankruptcy proceeded to cause enormous tremors through various industries -- particularly the energy industry -- because valuable resources for hedging risk of loss had evaporated seemingly overnight. The natural gas trading industry nearly fell apart completely, costing companies and their customers untold billions of dollars that they otherwise could have saved through hedging risk of loss. Similarly, the market for many structured finance transactions dried up, also costing companies another valuable avenue for hedging risk.

However, the nation's financial system did not break down. Companies adjusted to the changed circumstances and endured their additional costs as best they could. Markets also adjusted. Slowly but surely, both the natural gas trading industry and the market for structured finance transactions rebounded so that both are again providing companies with valuable alternatives for hedging risk and saving money.

Now, the tables are turned on Wall Street. Rather than facing the consequences of their risk-taking decisions in chapter 11, Wall Street's politically well-connected leaders are weaving their tales of doom for the overall economy to compliant governmental leaders who are only too willing to do their bidding.

In reality, each of these Wall Street firms should be required to endure the same thing that Enron and its creditors did -- a chapter 11 reorganization where equity gets wiped out and creditors either take a haircut on payment of their debts or convert their debt to equity in a reorganized firm that emerges from bankruptcy with a cleaned-up balance sheet.

That process ensures that investors and creditors who undertook the risk of investing or dealing with the bankrupt firms share the losses of their risk-taking. Moreover, it allows the firms that really are worth saving (as opposed to simply liquidating) to emerge from bankruptcy with an improved financial condition that should provide the firm with an enhanced opportunity to create wealth again.

What the bailout plan proposes to do is insulate investors and creditors from risk of loss by having the government -- funded by taxpayers such as you and me -- undertake that risk. There is simply no moral justification for foisting that risk on taxpayers and the only possible practical justification is that sorting all of these firms' problems out in chapter 11 might take awhile.

But even if the government saw fit to accelerate the Wall Street reorganizations to hedge the risk of a prolonged economic downturn, there is simply no reason for the government to overpay for assets from financially-troubled firms. Rather, the government should simply propose a plan that implements the going-concern liquidation and debt-for-equity reorganization features of chapter 11 on an accelerated basis in return for some reasonable financial contribution to the process. And you can bet that contribution doesn't need to be close to $700 billion.

Luigi Zingales, the Robert C. Mc Cormack Professor of Entrepreneurship and Finance at the University of Chicago, has written the most cogent piece I've seen to date on why the bailout is a bad idea. Even though it was wrong for the government to contribute to the massive amounts of wealth destruction that resulted from the demonization of Enron, the government was right not to bail out Enron. The circumstances are different now, so perhaps a different approach is more prudent than simply allowing all of these Wall Street companies to be sorted out in chapter 11.

But throwing $700 billion at investors and creditors who should be sharing the losses of their risk-taking is not even close to the best way of doing it.

Update: I couldn't help but laugh out loud this morning as Warren Buffett and the promoters of the Treasury bailout plan point to Buffett's sweet $5 billion investment in Goldman Sachs as an endorsement of the plan.

I prefer to look at what Buffett is doing rather than what he is saying.

What he is not doing is what Paulson and Bernanke want the U.S. Treasury to do -- buy investment banks' toxic assets. Rather, Buffett is buying preferred shares in Goldman with a big yield and warrants to buy Goldman stock at $115 (its trading at over $130) so that he can recover the profit his investment helps foster while Goldman transitions from an investment bank to a bank holding company over the next couple of years.

Meanwhile, Paulson and Bernanke keep promoting their plan to throw $700 billion at whatever trashy assets that Wall Street serves up to them.

It does not engender much confidence that Buffett can cut a far better deal with Wall Street's best-run investment bank than Paulson and Bernanke propose to cut with the worst-run ones.

Posted by Tom at 12:01 AM | Comments (5) |

September 23, 2008

The "Rookies and Rednecks" come through

What with a hurricane hitting the upper Texas coast and a financial hurricane hammering Wall Street, the U.S. team's improbably stirring victory over the European team in last weekend's Ryder Cup matches has been somewhat overlooked.

As usual, Geoff Shackelford has chronicled all the reviews of the U.S. team's victory, including this interesting Mike Adamson article in which he notes the esprit de corps of the "Tigerless" U.S. team:

Woods's below-par record for the US team - combining the Ryder Cup and Presidents Cup, he has lost more of his 50 matches than he has won - remains something of a mystery. He has won the WGC Match Play on three occasions, including this year, his competitive streak thriving in mano-a-mano combat. But pair him with another and he cannot stop losing.

Woods has had a remarkable 11 partners in the Ryder Cup, three of whom were in this US team. All three, Jim Furyk, Justin Leonard and particularly Phil Mickelson, have played with spirit, unburdened by the great man's presence. Likewise it is hard, albeit not impossible, to imagine the debutants Anthony Kim and Boo Weekley playing with such uninhibited personality were they in Woods's shadow. Although Azinger lost the world's best player, it is not too much of a stretch to suggest that his uplifting captaincy has also benefited from the absence of such an intimidating figure in the team room.

Also, don't miss this fine Doug Ferguson article on the tense third day match between the cocky U.S. rookie, Anthony Kim, and Euro Ryder Cup stalwart, Sergio Garcia. Kim stared Garcia down on the first green and then proceeded to whip him, 5 and 4.

The Ryder Cup is finally competitive again!

Posted by Tom at 12:01 AM | Comments (0) |

September 22, 2008

2008 Weekly local football review

(AP Photo/John Russell)

After a week off in deference to Hurricane Ike, the weekly local football review is back (previous weekly reviews are here).

Titans 31 Texans 12

OK, it wasn't as bad as the Week One loss to the Steelers, but that's faint praise. The Texans (0-2) defense was actually better against the Titans (3-0), but the offense continues to hit on far fewer than all cylinders. Rookie RB Steve Slaton looked promising(18 car/115 yds/1 TD), but QB Matt Schaub (17-37/ 188 yds/ 3 INT's) and Pro Bowl WR Andre Johnson (2 receptions for 29 yds and two dropped passes in the end zone) looked awful. The road to a first 2008 victory doesn't get any easier for the Texans next week as they travel to Jacksonville to play the Jaguars (1-2), who handed the Colts (1-2) their second loss in three 2008 games on Sunday. And guess who the Texans get after the Jags? The Colts at Reliant Stadium. The Chron's Lance Zerlein sums up the state of the Texans after two games here.

Miami 41 Texas Aggies 23 

Aggie RB Michael Goodson started the game off with an electrifying 62 yard TD catch and run, but then Miami tied the game four plays later and never looked back. The score was 41-10 by late in the third quarter, so this game was a blowout well before the Aggies scored two meaningless scores late. The Aggies (1-2) better get a win next Saturday at College Station against Army (0-3) because their next legitimate chance for a victory after that game is a month later against Big 12 doormat, Iowa State (2-2), and that's by no means a sure thing. My, how low can it go in Aggieland?

Texas 52 Rice 10

As the Owls (2-2) served up their annual sacrificial lamb offering to the Longhorns (3-0), does anyone else think the Horns' soft schedule may make them prime meat for an upset at Boulder by Colorado (3-0) two weeks from now? The Horns play a bad Arkansas (2-1) team next Saturday in Austin, while the Owls will have a scoreboard-burning free-for-all against North Texas (0-3) at Rice Stadium.

Colorado State 28 Houston Cougars 25

Given that UH players and coaches were inexplicably forced to play last week while many of their families were enduring peril from Hurricane Ike, and then spent most of last week trying to get back to a largely power-deprived city in the aftermath of the hurricane, I am almost inclined to give the Cougars (1-3) a pass on this loss. That is until I discovered that Colorado State (2-1) struggled to beat Sacramento State (!) two weeks ago. The Coogs better get their mojo back quickly because they travel next Saturday to Greenville, North Carolina to play East Carolina (3-1), which was the 15th-ranked team in the country before they were upset in overtime by North Carolina State on Saturday. A 1-4 start is not what new Cougar coach Kevin Sumlin had in mind as his introduction to the Houston sports community.

Posted by Tom at 12:01 AM | Comments (0) |

September 21, 2008

This is too easy

Posted by Tom at 12:01 AM | Comments (0) |

September 20, 2008

Youth coaching tips

This earlier post generated an email from a reader soliciting my thoughts on coaching youth sports, which I want to pass along to other readers who are coaching youth sports or considering doing so in the future.

When my children were younger, I coached youth baseball and basketball (both boys and girls) for eight years, so I developed some definite thoughts on that rewarding experience. The following points relate to coaching youth basketball (basically, 12 years of age and under), but the principles can be applied to any youth sport:

1. Get a whistle for practice. I could never understand how my fellow coaches could run an effective practice without a whistle. Most of them simply didn’t. It usually showed when my teams played them.

2. Never criticize physical mistakes by your players. I never understood why other many youth coaches did so. I always wanted my kids taking risks to try to make good plays. If the kids are worried about getting criticized for making physical mistakes, then they would be less inclined to take the physical risks necessary to make good plays.

3. Limit practice time to no more than an hour. The attention span of children is limited, so, after an hour, you reach the point of diminishing returns that make practices drudgery for the kids. I always emphasized making practices fun. It's always better to stop practice a bit too early than too late.

4. Organize your practices tightly. Kids actually enjoy the regimentation of a well-organized practice.

5. Emphasize playing the game during practices. I always emphasized playing the game over drills during practice. For example, the majority of time in my practices involved the kids running the 3-on-2-on-1 drill, which allows the kids to play the game while allowing me to teach all the kids after a specific good or bad play is made during the drill. The kids uniformly love this drill because it allows them to play the game.

6. When correcting a player’s physical mistake during the 3-on-2-on-1 drill, always start with a compliment of the player, then provide the instruction for correcting the mistake, and then follow it with another compliment. Pretty basic stuff, but it’s amazing how many youth coaches fail to follow it.

7. The only time that I would raise my voice with a youth player is when they were doing something dangerous or not listening during practice. There is a difference between not listening -- which a kid needs to be jolted out of -- and a failure of concentration, which is more common. The latter is really the same as a physical mistake and should be dealt with in the same manner.

8. Teach the kids a special under-the-basket in-bounds play. You would not believe how many easy points your team can score by having the players learn and execute a good in-bounds play under the basket. I used the stack play where the four players not in-bounding the ball line up on the side of the lane where the ball is being in-bounded. Upon the in-bounding player slapping the ball, the first two players in the stack take off for each corner of the court, the fourth player in the stack takes off backward, and the third player fakes a quick turn away from the basket and then simply turns around toward the basket and moves toward the player passing the ball in from out-of-bounds under the basket. The play almost always resulted in an easy layup.

9. I would teach the kids to run the in-bounds play under the chaos and pressure of game situations by periodically blowing my whistle during the 3-on-2-on-1 drill during practice and yelling “Run ItI The players were taught immediately to stop the drill and line up in the stack under the basket as if they were in a game situation. I would play the ref and hand the in-bounding player the ball promptly regardless of whether the other players were ready. This taught the kids to react quickly and get ready during a game by yelling “Run It” whenever there was an in-bounds play under our basket.

10. Finally, have fun yourself. The kids reflect the attitude of their coach. If you are having fun, then it’s likely they will, too.

Posted by Tom at 12:01 AM | Comments (1) |

September 19, 2008

Interesting golf fact of the day

What with Hurricane Ike and the meltdown on Wall Street -- as well as my general pessimism about the U.S. team's chances -- I haven't blogged much about this weekend's Ryder Cup matches at Valhalla in Louisville. But Clear Thinkers favorite Dan Jenkins passes along the following interesting offshoot of Euro team member Padraig Harrington's recent victories in the 2008 British Open and the PGA Championship:

With his British Open title in July [and PGA Championship in August}, Harrington now becomes the first cross-handed putter to win two majors in one year.

If there is hope for us cross-handed putters, then perhaps there is also hope for the U.S. team, after all!

Just don't bet on it.

Posted by Tom at 12:01 AM | Comments (0) |

September 18, 2008

Absolutely AIGesque

Do you recall what we were thinking about three and a half years ago?

Posted by Tom at 12:05 AM | Comments (0) |

Progress in the aftermath of Ike

Wednesday was a good day. Large areas of Houston -- including the area that includes my family's home -- had power restored. Our land phone lines were also restored on Wednesday after they had survived Hurricane Ike only to be knocked out during the severe thunderstorms that swept through Houston the night after the hurricane hammered the area. So, we're celebrating a bit tonight.

There are still large parts of Houston that have not had power restored, but my sense is that most areas other than the devastated coastal communities will have power restored by the end of the weekend. That will go a long ways toward getting life back to a semblance of normalcy in this neck of the woods.

Which leads to a point about the difference between hurricanes in Houston, on one hand, and areas such as New Orleans and Galveston, on the other. Most of Houston is at least 50 miles inland from the coast, so except for the southeast side of Houston that is close to Galveston Bay, the main risk of damage from hurricanes for most of Houston is from the wind.

In contrast, communities such as New Orleans and Galveston have to deal not only with damage from hurricane winds, but the even more devastating effects of flooding from the hurricane's storm surge.

Believe me, it's not pleasant living without power for the better part of a week. But my family and I had a livable home, natural gas for cooking, cell phones for communication, plenty of food and water, and autos for mobility and powering laptops and other equipment. I was able to work with little disruption between my home office and my "car office" whenever I needed Web access (because of spotty cell network coverage, I couldn't get Web access on my laptop air card from my home office -- I had to travel to a nearby part of town where the cell network signal was strong).

In the big scheme of things, that's not much inconvenience. And it's nothing compared to what many residents of the Louisiana-Mississippi Gulf Coast are still facing after Hurricane Katrina or what residents of Galveston and the other Houston coastal communities are facing for the foreseeable future.

Posted by Tom at 12:01 AM | Comments (1) |

September 17, 2008

A day in a life after Ike

Just jotting down a few observations throughout the day of living in an area that just experienced a major natural disaster.

FEMA, take note

Although The Woodlands did not suffer as much damage as many other parts of the Houston metropolitan area, it's interesting in my travels around town over the past several days that I have seen no evidence whatsoever of any federal relief.

For example, it seems to me that there are a couple of basic things that the federal government could do to facilitate recovery efforts. First, move as many portable generators to selected service stations throughout the region so that citizens can become somewhat mobile again. The primary problem at this point is not lack of gasoline. Rather, it's lack of power to operate the pumps to get the available gas into cars.

Even though large swaths of Houston remain without power, many areas are getting power back by the hour. Folks in areas without power can be much more productive if they can travel to areas that have it and work. Unfortunately, as it stands, there is no gas to get to those areas and then return home.

Another irritation is that no one in an official capacity attempts to do anything to facilitate communications for the citizens directly affected by a natural disaster such as Ike. Ever since the storm, cell phone usage has been spotty in most residential areas, and serviceable in only a few commercial areas. Perhaps damage to the cell network equipment is the cause of the poor service, but I haven't heard anyone contend that such is the case.

Galveston

Just as the deadly hurricane of 1900 changed the nature of Galveston, my sense is that Hurricane Ike has done the same thing in 2008.

Prior to the 1900 hurricane, Galveston was Texas' largest city, port and commercial center. The devastation from that storm put into the motion the changes in Texas' development that resulted in Houston becoming the major port and cities such as Houston and Dallas-Ft. Worth becoming the major commercial centers. As Houston grew into this region's major center of commerce, Galveston evolved into a tourist center and a weekend beach getaway for folks in Houston.

Despite that tourism development, the City of Galveston has been slowly dying for years. Jobs and commercial activity largely revolve around the tourism industry (even the port is now owned by the Port of Houston Authority). Most young people now move away from the city after high school, so older folks constitute an unusually high percentage of the "town folk."

My sense is that Galveston will come back as a weekender community and a modest tourist vista, but that commerce not related to the tourism industry will continue to decline at an accelerated rate. My sense is that what we might see in 20 years is a community comprised of a few high-rise condos and resorts along the seawall, the ubiquitous weekender homes on the West Beach and not much else.

It will certainly be easier to evacuate such a community.

Radio anchor people

As a general rule, I do not listen to much radio. Maybe an occasional traffic report or Charlie Pallilo's sports talk show in the rare event that I am driving somewhere during it.

But I've been shocked at how bad the radio anchor reporters have been on KTRH, the main station providing disaster information to the public. Although a number of the KTRH field reporters are OK, the anchors often sound as if they are blithering idiots. It seems as if they aren't asking inane and non-challenging questions to "experts" or public officials, they laughing and making bad jokes at inappropriate times or in regard to serious issues.

Walter Cronkite, where are you when we need you?

Houston sports teams

I noted in this earlier post in the run-up to Hurricane Ike that the high number of variables that become involved in reacting to hurricanes often generates some abysmal decisions in reaction to the storm. That observation was certainly validated by a couple of decisions that were made with regard to Houston sports teams.

From University of Houston Athletic Director Dave Maggard's absurd decision to have the University's football team play in Dallas while the storm was still hammering Houston (!) to Major League Commissioner Bud Selig's equally preposterous decision to haul the Houston Astros players and coaches away from their families (to Milwaukee of all places) the day after a terrible natural disaster left the players and coaches' families without power in a devastated city, it's hard to imagine the fractured thought process that went into either of those boneheaded decisions.

Sports competition at the major-college and professional level requires a high level of concentration. Given the circumstances under which these games were played, it is not surprising in the least that the Houston teams lost each one of them. How could the players and coaches be concentrating on a damn game?

It's only God's grace to both Maggard and Selig that no family member of either a UH or Stros player or coach was hurt or killed in the aftermath of the storm. Why do either of these fellows still have their respective jobs?

Posted by Tom at 12:01 AM | Comments (7) |

September 16, 2008

That other hurricane

So, while the Houston area was enduring a hurricane, the financial markets were enduring one, too.

As with Enron and Bear Stearns, the demise of Lehman Brothers reinforces the inherently fragile nature of a trust-based business (related posts here). 

Larry Ribstein has been insightfully pointing out for years that more regulation of those businesses will not prevent the next meltdown, just as the more stringent regulations added after Enron's collapse did not prevent Bear Stearns or Lehman Brothers from failing. More responsive forms of business ownership certainly are a hedge to the inherent risk of investment in a trust-based business. Better investor understanding of the wisdom of hedging that risk would help, too.

But as Warren Meyer eloquently wonders, what must Jeff Skilling be thinking about all this? Is Skilling's inhumane sentence -- as well as the barbaric handling of the criminal case against him and other Enron executives -- the sacrifice that American society needs to quench its blood thirst to do the same to the leaders of trust-based businesses that suffer the same fate as Enron? I hope not, but  .   .   .

The truth is that Enron -- as with Bear and Lehman Brothers -- 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 Andrew Fastow embezzling millions in the volatile months after September 11, 2001.

Fastow's embezzlement is a crime, but Enron's demise is not, nor should it be. Beyond the shattered lives and families, the real tragedy here is that an angry  mob convicted Skilling, trumping the rule of law and the dispassionate administration of justice along the way. 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.

I continue to hope that Skilling's unjust conviction and sentence are reversed on appeal. Not only for his benefit, but for ours.

Posted by Tom at 12:01 AM | Comments (2) |

September 15, 2008

The aftermath of Ike

An estimated 5 million customers along the upper Texas Gulf Coast lost power as a resuit of Hurricane Ike. Only about 5% of those have been restored as I write this post. Current estimates are that it will be 2-3 weeks before even most of those customers will have their power restored.

To give you an idea of the enormity of this damage, the last hurricane to make a direct hit on the Houston metro area -- Hurricane Alicia in 1983 -- left 750,000 customers without power.  Two-thirds of those customers had their power restored within five days, and it took between 2-4 weeks to restore the rest.

Although The Woodlands (where my family lives, 30 miles north of downtown Houston) did not suffer catastrophic damage from Ike, the part of the grid from which it receives power did. Entergy, the power company here, estimates that it will be between 2-3 weeks before The Woodlands power is restored. No one in The Woodlands currently has any power (I am writing this from my battery-powered laptop with an air card).

With that backdrop, i was curious to discover this notice from the local public school system:

Conroe Independent School District announced schools will be closed Monday and Tuesday and the Tuesday board meeting is cancelled. Residents are asked to check the Web site or call after 4 p.m. Monday for updates on the rest of the week.

Uh, one question there, school district: how are residents with no power supposed to check a Web site for updates?

Better re-think that approach, folks.

 

Posted by Tom at 12:01 AM | Comments (1) |

September 14, 2008

Surviving Ike

Yes, although you haven't heard from me for awhile, I'm still here.

My family and I survived Hurricane Ike just fine. Although not an intense hurricane (it came ashore as a category 2), the enormity of the storm was something to behold. In The Woodlands, which is about 30 miles north of downtown Houston, we were buffeted by hurricane and tropical storm winds and torrential rain for over 12 hours. Such a lengthy period of high winds and heavy rain is extremely unusual for even a strong hurricane.

The damage in The Woodlands is not as bad as most of the rest of the Houston area -- mostly just downed trees, some of which damaged houses. However, as many of you outside of the Houston area have seen on television (virtually no one in the Houston area has power, so no television here), the devastation around the Houston area -- particularly those areas close to the coast -- is devastating. My sense is that at least a quarter million people in the metro area do not have a livable home to return to.

Almost every area of Houston has no power. Cell phone networks are overloaded, so cell phone access via either telephone or computer is spotty, at best. No one has a clue of when power will be restored, but the initial estimates are not particularly encouraging.

Inasmuch as I have quite a few arrangements to make over the next several days for my family members and clients, blogging will probably be light or non-existent until some sense of normalcy returns. I very much appreciate everyone who has emailed and phoned to check in on me today. Please understand if it takes awhile for me to get back to you.

Houstonians reacted remarkably in the face of the devastation of Hurricane Katrina back in 2005. Now, it is time for a re-run of that effort. For all of you around country and the world who check in from time to time on this little corner of the blogosphere, any help and prayer that you can provide will be much appreciated.

Posted by Tom at 12:01 AM | Comments (3) |

September 13, 2008

The Galveston Seawall

You probably have heard much over the past couple of days about the Galveston Seawall. It was constructed in the early 20th century after Galveston was destroyed by the storm surge of the Hurricane of 1900. The purpose of the seawall is to protect the east side of Galveston Island from similar storm surges. Here is a picture of the seawall:

As you can see, the ocean usually laps up on the beach 75 yards or so away from the seawall. On most days, the ocean rarely gets close to the seawall, even during high tide.

The picture below shows the seawall on Friday morning as Hurricane Ike was still over 100 miles from Galveston in the Gulf of Mexico:

(picture by David J. Phillip/Associated Press)

 

 

 

 

As you can see, the storm surge from Ike was beginning to breach the seawall over 12 hours before the eye of Ike was scheduled to make landfall.

Weather analysts estimate the the highest point of the surge will occur around midnight on Friday as the Ike's eye makes landfall just west of the seawall during high tide. By that time, the seawall will be little more than a concrete sandbar under the waters of the Gulf of Mexico that are inundating Galveston.

Posted by Tom at 12:01 AM | Comments (1) |

September 12, 2008

A developing disaster

The extreme storm surge of Hurricane Ike is causing a disaster in Galveston, Texas, which is about 50 miles southeast of Houston. The Coast Guard announced earlier today that the authorities believe that Galveston Island will be completely submerged for at least 12 hours.

The Galveston City Manager and Mayor were just interviewed on local television at 3 p.m. They estimated that between 25-40% of Galveston's residents (10-20,000 people) did not heed the mandatory evacuation order and have remained on the now-almost completely flooded island. It is now too late to evacuate the island.

Ball High School and the San Luis high-rise resort facility on Seawall Blvd have been opened as relief centers for Galveston residents who stayed. However, widespread flooding on the island makes getting to the centers risky, to say the least.

It is currently estimated that over 1 million residents of the Houston metropolitan area near the coast evacuated over the past several days. Many of those residents will likely have neither a livable home nor power when they return.

This is looking very, very bad.

Posted by Tom at 3:58 PM | Comments (0) |

Waiting on Ike

When I started this blog back in early 2004, it never occurred to me that hurricanes would end up being a frequent topic.

Then, on August 27, 2005, many folks discovered this little corner of the blogosphere when this post was one of the first to predict the potential for disaster in New Orleans from an approaching Hurricane Katrina. The extraordinary exodus of Gulf Coast residents to Houston followed, along with the impact of that hurricane and others on the U.S. oil and gas industry, and -- presto! -- before you could blink, hurricane-related issues had become the subject of over 90 posts on this blog.

A few more hurricane-related posts may be on their way over the next several days as Hurricane Ike bears down on the Houston metropolitan area late today and through the morning tomorrow. Houston has not taken a direct hit from a hurricane since Hurricane Alicia ravaged the area in 1983 (the eye of that storm went over my house at the time), so many current residents of the city have not experienced a hurricane. That lack of experience, along with the large number of variables that are in play with regard to any hurricane, leads inevitably to some very poor decision-making.

The reality is that the best course of action for the vast majority of Houstonians is to stay put and ride out a storm of the size and intensity of Hurricane Ike (probably a category 2, maybe a 3). Most of the Houston area is different from New Orleans in that it is farther from the coast and of higher elevation so that the threat of flooding is not as big an issue. Thus, outside of the areas of Houston that are close to the coast and are subject to flooding from the storm surge (primarily Galveston Island, the coastal area of Brazoria County and the areas adjacent to the Houston Ship Channel and Galveston Bay), Houston is mainly subject to damage from the wind during hurricanes.

Although hurricane-force winds over a prolonged period are certainly disconcerting, most reasonably-well constructed houses will endure those winds just fine without much damage. Yes, power may be lost for awhile (some parts of Houston were without power for over a month after Alicia) and there is always the risk of tornadoes cropping up as the hurricane passes through. But staying put allows homeowners to take immediate action to mitigate damage to their homes if damage occurs and avoids the not insubstantial risk of injury involved in getting on the road with hundreds of thousands of mandatory evacuees making their way through Houston to a place where they can ride out the storm.

One thing that everyone should do regardless of whether they stay or evacuate is to make sure that, before the storm hits, all loose items on the outside of the house are secured or placed in a secure location inside the garage or house. In hurricane-force winds, those loose items can become projectiles that can break windows and cause other property damage. That -- along with downed trees -- is among the most common cause of property damage and injury during hurricanes outside the areas that are subject to coastal flooding.

As noted earlier here, the best information source for hurricanes these days is the Web and the blogosphere. Most of the local TV weather analysts are quite good (I prefer Frank Billingsley at KPRC), although the local television and radio coverage overall is often atrocious. The anchor people and news reporters often do not have enough to talk about and, thus, end up saying and doing absurd things just to generate attention. It is rather entertaining watching some of these folks make fools of themselves.

By the way, speaking of poor decisions, what on earth is the University of Houston doing playing Air Force in Dallas on Saturday afternoon (they were scheduled to play Saturday afternoon on the UH campus)? Not only is it irresponsible for UH officials to suggest that students and other supporters of the program clog one of the main evacuation routes out of Houston to attend the game, the game itself is likely to be played in driving rain and tropical storm-force winds as Ike passes through the Dallas area on Saturday afternoon. I know this is Texas and all, but Is it really that important to play a non-conference football game?

As long as I have access to power, I will be providing Twitter updates from the north suburban side of Houston during the storm. So, feel free to follow my updates by clicking on the hyperlink on the right side of this page.

Posted by Tom at 12:01 AM | Comments (0) |

September 11, 2008

Hank's Thank-You Note

Mr. Juggles over at Long or Short Capital passes along this fictional thank-you note from Treasury Secretary Hank Paulson to American taxpayers after this week's seemingly inevitable federal bailout of Freddie Mac and Fannie Mae (prior posts here):

Dear US Taxpayer,

I would like to congratulate you on your recent purchase. I am glad I was able to convince you that now is the ideal time to offer an uncapped backstop on a $5.2 trillion book of mortgages. We here at the Treasury Dept (along with our sisters over at the Fed), appreciate your repeat business. I am confident that this acquisition will be a profitable one; perhaps even more profitable than your recent purchase of JPMorgan’s Bear Stearns’ liabilities!

Please know that we are actively seeking more deals on which we can work together. I am confident we will find more interesting opportunities before the end of the year.

Yours Truly,
Hank Paulson

Herbert Spencer got it right long ago (H/T Bryan Caplan):

"The ultimate effect of shielding men from the effects of folly, is to fill the world with fools."

Posted by Tom at 12:01 AM | Comments (1) |

September 10, 2008

Movies in five words each

What with Hurricane Ike scheduled to bear down on the upper Texas Gulf coast over the weekend and the Texans looking as pathetic as ever, we could use a bit of levity around here.

So, check out The AFI Top 100 Movies... In 5 Words Each (H/T Craig Newmark). Several good ones include:

2) Casablanca (1942): Great love story. Plus: Nazis!

32) The Godfather Part II (1974): Advice: stop after this one.

42) Rear Window (1954): Watch a guy watch guys.

Following on the movies theme, if you have a spare ten minutes, check out this incredible YouTube video entitled "100 Movies, 100 Quotes, 100 Numbers."

Posted by Tom at 12:01 AM | Comments (0) |

September 9, 2008

Not a good start

The Chronicle's Mary Flood reports that visiting U.S. District Judge Roger Vinson of Pensacola, Florida is not off to an auspicious start in handling the criminal prosecution of U.S. District Judge Sam Kent:

The Florida judge who will oversee the criminal trial of U.S. District Judge Samuel Kent issued a gag order in the case to prevent public discussion by parties or court personnel that could interfere with the trial.

Senior U.S. District Judge Roger Vinson of Pensacola late Friday issued the order that also allows him to hold arguments and hearings in chambers and outside of the presence of the public and forbids courthouse personnel from relating information from those hearings to the public.

Vinson said he found it necessary to gag the attorneys and courthouse personnel on his own, without a request from prosecutors or Kent, "to preserve a fair trial by an impartial jury by shielding jurors and potential jurors from prejudicial statements." He said he found a "substantial likelihood" that comments made outside court would "taint the jury pool and will undermine a fair trial to which both the accused and the public are entitled." [.  .  .]

The order specifically forbids "divulgence of information concerning arguments and hearings held in chambers or otherwise outside the presence of the public."

A copy of the order is here.

The Fifth Circuit Judicial Council's confidential investigation and resulting sanction of Judge Kent has already been the subject of substantial criticism. Now, in his first action in the case, Judge Vinson enters a dubious gag order and raises the specter that he will conduct frequent non-public hearings. This is not the way to instill confidence that Judge Kent's case will be handled in a manner similar to other criminal cases of prominent defendants. Like these.

Posted by Tom at 12:01 AM | Comments (1) |

September 8, 2008

2008 Weekly local football review

(AP Photo/Gene J. Puskar; previous weekly review is here).

Steelers 38 Texans 17

Geez, that Texans' performance certainly didn't make this preview look very good.

Getting one's ass kicked in the first game of the season is never pleasant, but the most troubling thing about this debacle is its similarity to the season opener from the Texans' disastrous Year Four in which the team lost 14 of 16 games. This Texans team appears to have much better personnel than that Texans team, but it's still not clear that this one is any better coached, particularly on defense where that unit appears incapable of stopping a hard-chargin' marching band. Lance Zerlein breaks down what went wrong.

The Texans face another dominating defense next Sunday at Reliant Stadium against the Ravens (1-0), so Kubiak & Co. have their work cut out for them. Rookie OLT Duane Brown better grow up fast or QB Matt Schaub will find himself on the injured list this season even quicker than last season.

Rice 42 Memphis 35

The plucky Owls (2-0/2-0) were dominated by the Tigers for a half, but QB Chase Clement got warmed up in the 2nd half as Rice closed with 29 4th quarter points to pull out the victory (Memphis went from 15-up with 8:33 left to 7-down at the end -- Ouch!). The game winner was a thrilling 66 yard interception return for a TD by Rice DB Chris Jammer with 11 seconds left.

After starting the season with two C-USA games, the Owls now have three straight non-conference road games, next week against Vanderbilt (2-0/1-0) in Nashville, then against the Longhorns (2-0) in Austin and then against North Texas (0-2) at Denton. The Owls' offense is so potent that, if they can avoid injuries to key players such as Clement, WR Jarett Dilliard and RB-WR James Casey, Rice has a chance to be one of the surprise teams of the season.

Oklahoma State 56 Houston 37

The Cougars (1-1) actually led this one 16-14 at halftime, but then the Cowboys (2-0) took advantage of several Houston mistakes to roll up 28 points in the 3rd quarter and turn the game into a rout. Houston QB Case Keenum continues to shine (35-61, 397 yds, 4 TD, 0 INT, 81 yds rushing), but there is not much to say complimentary about a defensive unit that gave up almost 700 yards of total offense. And it sounds as if there might be some competition in the Cougar camp this week for the long snapping job. The Cougars play a couple of Colorado opponents over the next two weeks -- first against Air Force (2-0) at Robertson Stadium and then against Colorado State (1-1) at Fort Collings -- before opening C-USA play against nationally-ranked East Carolina (2-0) in Greenville, N.C.

Texas Longhorns 42 UTEP 13

The Longhorn caravan rolled into El Paso for the first time in 75 years and pounded the hometown Miners (0-2) in what amounted to a controlled scrimmage for Texas (2-0). The Horns now return to Austin next Saturday afternoon to face Arkansas (2-0), which has struggled to beat Western Illinois and Louisiana-Monroe in its first two games under new coach Bobby Petrino. By the way, over the next month, the Razorbacks face Texas, Alabama, Florida and Auburn in succession. Welcome back to big-time college football, Coach Petrino.

Texas Aggies 28 New Mexico 22

First, the good news -- Texas A&M (1-1) won its first game under new coach Mike Sherman.

But now, the bad news -- the woeful Lobos (0-2) out-gained the Aggies by 371 total yards to 235, had more first downs and a better 3rd-down conversion rate. In fact, about the only statistical category in which the Aggies out-performed the Lobos was turnovers -- the Lobos shot themselves in the foot with four, including an interception that Aggie DB Jordan Peterson returned for the first TD of the game. If A&M's performance in its first two games of the season is any indication, It appears that it's going to be a long season in Aggieland.

The Aggies  have a week off before taking on Miami (1-1) in College Station in a nationally-televised Saturday night game on September 20th. Having watched Miami's formidable defense do a pretty good job of containing Florida's very-good offense yesterday, the punchless Aggie offense will have difficulty generating 200 yards of total offense against the extremely quick and talented Hurricanes.

Posted by Tom at 12:01 AM | Comments (0) |

September 7, 2008

Here comes Ike

Looks like we're going to be dealing with another powerful hurricane (Ike) in the Gulf of Mexico late next week. Ay, yi, yi, yi, yi!

This earlier post in regard to Hurricane Gustav noted a number of excellent sources of Gulf hurricane-related information. Here is another one -- Stormpulse. Check out the very well-done site.

Posted by Tom at 12:01 AM | Comments (0) |

September 6, 2008

The difficulty of making it in the NFL

Although I normally eschew the NFL pre-season, this year's pre-season has captured my interest more than usual because of a friend's effort to make the roster of one of the NFL's best teams. Monitoring his efforts has reminded me of just how incredibly talented the athletes are in the NFL.

Danny Amendola, a former star receiver at The Woodlands High School and for the Texas Tech Red Raiders, has been a rookie free-agent trying to make the Dallas Cowboys 53-man roster during this pre-season. He has had a good camp (including making a nice reception in the pre-season game against the Texans), but he was released this past week in the Cowboys' final cut down to 53 players.

However, after cutting Amendola, the Cowboys re-signed him a day later to their practice squad after no other NFL team elected to assume his free-agent contract. Inasmuch as a couple of the Cowboys' receivers who made the final roster are dealing with minor injuries, Amendola has a good chance of being activated off of the practice squad for the Cowboys opener this week against this Browns at Cleveland.

For several years, I coached Amendola in both youth baseball and basketball here in The Woodlands. I used to kid Danny's father, who is a long-time Houston area high school football coach, that at least I didn't screw up his son's football career.

Amendola was the best athlete that I coached in youth sports -- strong, fast, quick, graceful, relentless and extremely coachable. There is no doubt in my mind that he could have also played both baseball and basketball at the major college level if he had chosen to develop his skills in those sports, and I believe that he could have played baseball professionally, too.

Yet, this extraordinary athlete is not yet good enough to make a final 53-man NFL roster. Frankly, it's mind-boggling to me that there are roughly 150 or so WR's in the NFL who are better than Danny Amendola.

Amendola's story in attempting to make the Cowboys this pre-season has been a big part of the HBO series Hard Knocks, so he has become somewhat of a television star in addition to being a local sports celebrity. Here is the part of the final segment in which Amendola elects to accept the Cowboys' offer to play on their practice squad. His good fortune couldn't happen to a nicer fellow.

Posted by Tom at 12:01 AM | Comments (2) |

September 5, 2008

Houston Texans, Year Seven

Year Seven of the Houston Texans begins this Sunday with a road game against the Steelers, so it's time for my fifth annual preview of the team (previous annual previews are here).

Largely ignored amidst the ubiquitous mainstream media optimism about the Texans is the harsh reality that the local franchise has the worst record of any expansion franchise in the modern history of the National Football League. As with most things in football, there are many reasons for the poor record, not all of which are even the fault of the Texans' management and players. Nevertheless, Texans' management bears a substantial responsibility for the relative futility of the team over its first six years, so it's helpful to review the team's journey over that time span in evaluating whether the Texans are ready to improve.

The Texans were the toast of Houston for their first three seasons during which Texans management and the local mainstream media trumpeted the party line that Texans were building a playoff contender "the right way" -- that is through prudent drafting and development of young players while eschewing the temptation of short-term rewards provided by over-priced veterans who were on the downside of their careers. The progressively better won-loss records in the first three seasons (4-12, 5-11, and 7-9) -- plus the drafting of young stars such as WR Andre Johnson, RB Dominack Davis and CB Dunta Robinson -- seemed to indicate that the Texans' plan was working.

Unfortunately, those progressively better won-loss records distracted Texans management and the mainstream media from recognizing the fact that the Texans were not close to contending for an NFL playoff spot. The best evidence of that was that the Texans entered each of their first four seasons with the same two core problems -- the Texans' offensive line could not protect the quarterback and the Texans' defensive front could not pressure the opposing team's QB.

Former Texans GM Charlie Casserly never could solve the offensive line (remember LT's Tony Boselli and then Orlando Pace?) and defensive line (remember Jason Babin?) problems. Similarly, former Texans head coach Dom Capers' changes to the offensive and defensive systems between Years Three and Four proved disastrous as the Texans limped home with a desultory 2-14 record in Year Four.

After dispensing with Casserly and Capers, Texans owner Bob McNair blew up his original Texans management model and surprisingly hired Kubiak, who promptly made (acquiesced to?) a whopper of a blunder in his first major personnel decision as Texans' coach -- retaining QB David Carr even though it was reasonably clear as early as before Year Three that Carr was unlikely to develop into an above-average NFL QB.

Kubiak -- who is a quick study in evaluating talent -- promptly soured on Carr during the early stages of Year Five, which was part of the reason why the Texans had one of the worst offenses in the NFL that season. As a result of enduring that Year Five offense, Kubiak arguably overpaid for QB Matt Schaub and clearly overpaid for over-the-hill running back Ahman Green before Year Six. Not much had improved through 12 games of Year Six as the Texans' performance had been so inconsistent that even the local mainstream media cheerleaders were questioning whether Kubiak was the proper captain to right the Texans ship.

Then, the Texans showed some pluck and won three of their last four games (the loss was a real stinker to the Colts) to finish with an 8-8 record, the first non-losing record in franchise history. The Texans' offense -- even without Schaub and star WR Andre Johnson for five and seven games respectively -- improved to 12th in the NFL in yards gained and 14th in points scored, by far the best finish of any Texans offense. That was enough to give the starving local mainstream media and long-suffering Texans' fan base hope that things might finally turn around for the franchise in Year Seven.

But is that optimism truly warranted? My sense is that it finally is.

Although I'm still not completely sold that Kubiak is the coach to take the Texans to the playoffs, I am impressed by his willingness to recognize mistakes, cut losses and make changes. In so doing, he does not seem to be burdened with the stubbornness that often undermines NFL head coaches.

Moreover, continuity in coaching staffs and personnel are the most common elements of successful NFL teams, so my sense is that Kubiak has shown enough coaching acumen over his first two seasons that the eternally patient McNair will endure blunders such as the Green deal in the hope that maintaining coaching staff stability will ultimately reward him with a winner. McNair certainly deserves it given the excellent support that he has always provided to the Texans football operation.

Interestingly, despite the Texans continuing problems at running back, I expect the Texans offense to improve again this season. Part of the reason for this is that the nature of running the football has changed in the NFL. The old saw that a team "has to establish the run" to win in the NFL has been pretty well demolished by the success of the Patriots and the Colts, both of which use prolific passing attacks to build leads and then just run the ball well enough to work time off the clock in the latter stages of the game to preserve victory. Moreover, running backs in the NFL are so injury-prone that virtually every team in the league is now manning the position with a "running back by committee" approach.

Thus, the fact that the Texans do not have a dominant running back isn't as big a concern as the mainstream media makes it out to be, particularly given the improvement of the Texans' offensive line and the potential explosiveness of the Texans' passing game. Besides, rookie RB Steve Slaton played in a blocking scheme in college at West Virginia that is based upon the one that the Texans are using, so I would not be surprised if he is a productive back for the Texans right out of the chute.

Meanwhile, the bigger question mark revolves around the Texans' defensive unit, which is the key to the Texans becoming a bona fide playoff contender.

Somewhat frustratingly, the Texans have used a large number of high draft picks on defensive players over the past several NFL Drafts and have precious little to show for it. Football Prospectus has rated the Texans' defense 32nd, 31st and 30th in the NFL over the past three seasons.

Nevertheless, the Texans have accumulated a nucleus of talented young players -- DE Mario Williams, CB Dunta Robinson (currently injured), CB Fred Bennett, MLB DeMeco Ryans, and DT Amobi Okoye -- that points toward an improved defensive unit. Getting enough consistent pressure on the opposing team's passer to relieve a somewhat undermanned secondary (at least until Robinson's probable return at mid-season) is the biggest challenge that this defense still needs to overcome.

Inasmuch as improvement in NFL defensive units generally gestates over several seasons as young players gain needed experience, I expect the defense to make major improvement this season so that it becomes a unit capable of making Texans a viable playoff contender in the 2009 season. If that improvement does not occur this season, then Kubiak will likely replace defensive coordinator Richard Smith or, at very least, bring in an experienced assistant head coach to coordinate the defensive unit.

So, are the Texans ready to contend for a playoff spot this season? Probably not, given that the division-rivals Colts and Jaguars are still better teams on paper and the first third of the schedule is brutal. My sense is that the over/under on Texans wins this season is eight, which will not be enough to make the playoffs. A playoff push in 2009 is a better bet.

But given the high number of variables that play into a successful NFL season, picking NFL playoff teams is an extremely speculative endeavor. Almost all NFL playoff contenders are just a couple of key injuries away from the scrap heap. For the first time, it appears that the Texans have accumulated enough talented football players that they are in a position to seize the playoff opportunity if the variables tilt in their favor. Given where the Texans have been, that's real progress.

As the blogosphere continues to develop, there really is little reason to rely any longer on the mainstream media for Texans news and analysis. The Chronicle's coverage of the Texans is extensive but lacking in meaningful insight outside of Lance Zerlein's blog, which is updated only once or twice a week.
I will be providing the 2008 Weekly local football review again this season, but the following blogs also provide superior analysis of the Texans over what the Chronicle offers:

Stephanie Stradley's blog on the Texans over at AOL Fanhouse;

DGDB&D (for "Da Good, Da Bad & DeMeco");

Matt Loede's Texans Gab;

Battle Red Blog of the SB Nation family of blogs;

Keith Weiland's In the Bullseye.com;

Texans Tail Gate; and

Houston Diehards.

Posted by Tom at 12:01 AM | Comments (1) |

September 4, 2008

Election 2008

Inasmuch as the 2008 U.S. Presidential campaign resembles a high school student council race in terms of sophistication, it appears that Jon Stewart and Comedy Central are going to have a field day between now and Election Day. Below are a recent segments on the "substance" of Obama's campaign and McCain's VP selection:

Posted by Tom at 12:01 AM | Comments (2) |

September 3, 2008

Assessing priorities at TSU

This Jeannie Kever/Chronicle article follows up on new Texas Southern University President John Rudley's efforts to find a place for the institution within Houston's changing marketplace for university education (prior posts on TSU are here).

Beyond academic programs that remain on probation and terrible financial problems, TSU's core problem is that its former role as Houston's open admissions university has been superseded by the University of Houston-Downtown, which is a far superior to TSU at this point in time. Rudley has brought over a team of administrators from the University of Houston to straighten out TSU's thorny administrative and financial issues. But the even greater problem is that Houston may simply not need two open admissions universities, particularly in light of the growth of Houston Community College and various suburban community college systems over the past decade or so.

Although Rudley appears to be the type of administrator that TSU needs if it is going to survive, the following portion of this Ronnie Turner Chronicle blog interview with new TSU Athletic Director Charles McClelland reflects the entrenched mindset that Rudley will have to overcome if he is going to redefine TSU's place in the local education marketplace:

RT: At what stage are you in negotiations with the Dynamo on a partnership for a football stadium?

CM: Well, we're still in the same stage with the Dynamo. We have all of our talking points. We've brought in a consultant to help us close the deal with the Dynamo to ensure that we have all of our t's crossed and i's dotted. Once that's done, we'll have to get it to our board for approval. My understanding is that the Dynamo have moved forward on their end to help get the funding that's needed, and we're still extremely optimistic that the stadium will generate the type of notoriety, revenue and resources (needed) for us to take our football program to the next level. We're extremely excited about the opportunity with the Dynamo.

As noted earlier here, unless the terms of TSU's proposed deal for use of the soccer stadium are changed radically in TSU's favor, no responsible TSU administrator or trustee would ever approve the deal. However, rather than pursuing such a dubious deal, shouldn't TSU administrators and trustees really be asking themselves why a financially-strapped institution such as TSU is continuing to support notoriously unprofitable intercollegiate athletic programs at all?

Good luck, President Rudley. You're going to need it.

Posted by Tom at 12:01 AM | Comments (0) |

September 2, 2008

Richard Justice crosses the line

As regular readers of this blog know, I have often wondered why Chronicle sports columnist Richard Justice is writing about sports. He is highly subjective in his views, does not back them up with objective facts and doesn't reason well. Beyond that, he does just fine.

As a result of the foregoing, Justice is a controversial fellow among Houston sports fans. His blog is a rollicking place where mostly anonymous readers who comment on Justice's blog posts regularly engage in competing insults with Justice. Not my cup of tea, but different strokes for different folks.

At any rate, after the Texans' meaningless pre-season loss against Dallas a couple of weeks ago, Justice published this post in which he harshly criticized Texans offensive line coach Alex Gibbs -- who is widely-regarded as one of the best offensive line coaches in the NFL -- for yelling at his players. The post was odd, but nothing out of the ordinary for Justice, who had applauded the hiring of Gibbs this past January. Inasmuch as Justice noted that Gibbs has a policy of not talking to the media, many readers commenting on the post speculated that Justice's criticism of Gibbs was simply sour grapes for Gibbs' refusal to talk with Justice.

However, one particular reader who commented on Justice's post was not interested in engaging in the usual name-calling that is common on Justice's blog. Stephanie Stradley, who previously blogged on the Texans for the Chronicle and who now blogs on the Texans over at AOL Sports Fanhouse, posted a comment to Justice's post in which she challenged the factual basis of Justice's assertion that Gibbs' players were tuning him out because of his yelling. Stradley is a first-class blogger who analyzes the Texans much more objectively and effectively than Justice does.

In response to Stradley's comment, Justice responded with shrill comment (since deleted) in which he reiterated his point about yelling and then insulted Stradley. Despite Justice's insult, Stradley inquired in a subsequent comment about the basis of Justice's contention that Gibbs' players did not respond to him, to which Justice responded with another condescending comment. Tasteless, but again nothing out of the ordinary for the often childish nature of Justice's blog.

But what Justice did next may very well have crossed the line. Inasmuch as Justice's criticism of Gibbs was so poorly-reasoned, readers continued to mock Justice in the comments to his blog post, prompting Justice to post a follow-up post to defend his position. But in so doing, Justice made the following comment (scroll down to comment at 9:49 AM) in response to a reader who suggested that he owed Stradley an apology for his earlier tasteless comment:

I don't know what Stephanie's real name is, but she creeps me out. She writes a little too often, wants to discuss and debate. She has her own blog, so why is she so interested in mine? Ask yourself that question. Maybe I've watched Fatal Attraction too many times. If something happens to one of my rabbits, she's going to be in big trouble.--Richard

Incredibly, if that weren't bad enough, Justice followed up that libelous comment with this one in responding to another reader's comment (scroll down to comment at 10:13 PM):

Oh so you only use English when you feel like it? Be sure and put that on your resume. Listen, Cronkite, don't get into an insult contest with me. You'll end up in a fetal position whimpering and begging me to ease up. Find something you're good at and dedicate yourself to that. I don't know what that would be, but this ain't it. Go hang out with that Glenn Close woman. She'd probably find you fascinating. Speaking of Stephanie Stradley, I woke up this morning and saw our rabbit cage was empty. ''Stephanie!'' I screamed. Turns out, the little feller was sleeping beneath a chair.--Richard

In a patient and classy manner, Stradley recounts the entire bizarre episode here.

But beyond their utter tastelessness, both of Justice's comments associating Stradley with a homicidal maniac appear to meet the requirements of defamation per se. As a result, Stradley has viable damage claims against both Justice personally and the Chronicle.

Ironically, Justice's Monday blog post asserts that many Stros fans owe GM Ed Wade an apology. Absent the Chronicle and Justice heeding his advice and issuing an immediate public apology to Stradley, I hope she tees off on both of them.

The Chronicle has some very good reporters. But in these challenging times for newspapers, can the Chronicle survive the likes of Richard Justice?

Posted by Tom at 12:01 AM | Comments (5) |

September 1, 2008

2008 Weekly local football review

(Previous weekly reviews from the 2004-2007 seasons are here).

Rice 56 SMU 27

As noted earlier here, I think the Owls (1-0/1-0 CUSA) are a good bet to surprise this season. They have an excellent and experienced QB in Chase Clement and an All-American caliber senior WR Jarrett Dillard. The Owls' offense is explosive and difficult to defend. As usual, the defense is undermanned, but they executed reasonably well in defending SMU's new Run 'N Shoot-type offense and really just need to play well enough to give the Owls' offense an opportunity to outscore the opposition. The Owls travel next Saturday to play another CUSA opponent, Memphis (0-1). Don't be surprised if the Owls start out 2-0.

Houston Cougars 55 Southern 3

New Houston (1-0) coach Kevin Sumlin unleashed the Cougars' new spread offense on undermanned Div I-AA Southern and the result was over 600 yards of total offense and a convincing win. The Coogs have an experienced and talented QB in redshirt sophomore QB Chase Keenum (33-43/390 yds; 5 TD's) as well as a deep receiving corps (11 different receivers caught passes during the game). The Cougars defense also has some playmakers, to this team has the potential to contend for the CUSA title if it continues to develop. The price of poker goes up next week, though, as the Cougars travel to Stillwater to take on a talented Oklahoma State (1-0) team that dusted off Washington State in Seattle over the weekend.

Texas Longhorns 52 Florida Atlantic 10

Key tip to Florida Atlantic coach Howard Schnellenberger -- if you really think that the Horns are soft and can be intimidated if hit hard, keep it between you and your team. The Texas Longhorns (1-0) perfectly-named QB Colt McCoy completed his first 13 straight passes and finished 24-29 for 222 yds and 3 TD's, as well as 102 yds on 12 carries, in leading the Horns to an easy win over overmatched FA. The Horns soft spot -- a young and inexperienced defensive secondary -- gave up 226 yds passing in the first half, but settled down as the game wore on, giving up only 27 yds in the second half. The Horns have another scrimmage next Saturday in El Paso against UTEP (0-1) before returning home on September 13th for a widely-awaited game against former Southwest Conference rival, the Arkansas Razobacks and their new coach, Bobby Petrino.

Arkansas State 18 Texas Aggies 14

Oh my. I don't think think an opening loss to a mid-level Sun Belt Conference team is what the Aggies (0-1) had in mind as the start of the Mike Sherman era. However, the reality is that the Aggies have a young and inexperience offensive line, one of the worst QB's in the Big 12 conference, few proven receivers, an undermanned defense and an inconsistent placekicker. Beyond that, everything is just peachy in Aggieland. The Aggies travel to Albuquerque next Saturday to take on New Mexico (0-1) before facing Miami (1-0) on September 20. Inasmuch as the Hurricanes warm up for A&M by taking on Florida, the Aggies better get every win they can before taking on the likes of Miami and their Big 12 opponents. Five wins may be the best this Aggie team can do.

Posted by Tom at 12:01 AM | Comments (2) |

August 31, 2008

The best Gulf Coast hurricane information source

Hurricane Gustav is another powerful hurricane bearing down on the Gulf Coast, so I wanted to recommend Chron science reporter Eric Berger's SciGuy blog as the best source of hurricane information for the Gulf Coast region.

Eric and I got to know each other over the fateful weekend of August 27-28, 2005 when we each posted one of the first blog posts in the blogosphere noting the dreaded turn of Hurricane Katrina toward New Orleans during the early morning hours of Saturday, August 27. Although we both recommended that New Orleans residents seriously consider immediate evacuation, local governmental officials in New Orleans did not do so until much later. We now know the result of that misjudgment. With that disaster in mind, at least I doubt that such misjudgments will be a problem this go-around, as New Orleans lawyer Ernie Svenson explains.

Since that time, Eric has developed his blog into the go-to source in the blogosphere for information on hurricanes in the Gulf of Mexico. Bookmark it and check it regularly for updates on Gustav.

At this time, it looks as if Gustav will make landfall along the Louisiana coast just west of the New Orleans metropolitan area (check out this cool WSJ map that compares the projected path of Gustav with those of the deadly 2005 storms, Katrina and Rita, and this slick new MSNBC hurricane tracker). That track would put much of New Orleans in the storm's northeastern quandrant, which is the most damaging part of the storm.

If that path holds, then post-landfall rainfall next week will be the main problem for the Houston area. The storm is expected to slow down somewhat after making landfall and become a tropical storm or depression in northwestern Louisiana and then northeastern Texas. The Dallas-Ft. Worth Metroplex has been in the throes of a drought for the past several months (as was Houston until the past couple of weeks or so), but that should end next week if Gustav continues its current course.

Posted by Tom at 12:01 AM | Comments (0) |

August 30, 2008

"Darrell, I don't think we could go through that again"

With the beginning of the college football season this week, it just feels right to pass along this OU Insider interview of one of Texas' legendary college football coaches -- Emory Bellard, the inventor of the Wishbone offense.

Numerous National Championship teams from Texas, Alabama and Oklahoma used the Wishbone during the two decades after Bellard implemented the formation as an assistant coach with the Texas Longhorns during the 1968 season. Although Bellard went on to a mercurial tenure as the head coach at Texas A&M in the 1970's, he is best remembered for developing the Wishbone, which was a devastatingly effective triple-option offense (Paul Johnson at Navy and now at Georgia Tech runs a variation of the Wishbone today). OU Insider interview focuses on Bellard's memories and thoughts about the Wishbone, which include the following pearls:

On the criticism that the Wishbone was an ineffective passing offense:

".   .   . The biggest mistake I made in the passing game was assuming that we needed something short, but we didn’t. We just needed to throw deep. We did not need to throw short because everybody was coming up this way trying to stop the run. So as long as we kept out deep threats, post patterns and the streak patterns — that’s what we should have been placing the emphasis on."

On what happened after Bellard implemented the Wishbone at UT in 1968:

"So we put it in [1968] and we tied the first game and lost the second one and then we won the next 30."

On his misgivings about teaching UCLA's Pepper Rodgers the Wishbone:

"You can’t imagine the number of colleges that were at our spring practice. We conducted a darn coaching clinic every day; it was the biggest mess I ever messed with. I got so tired of talking to people."

"Pepper Rodgers, he came down from UCLA and they had had a bad year. Mark Harmon, the young actor, he was to be the quarterback and he was a good one, too. Ended up being a good one."

"But I spent about a week and I’d go back up to the office and talk with him at night and that jackass went back out and put the Wishbone in at UCLA and had a book published before Christmas. Boy, that takes a lot of gall there, now. I just, that really…"

And finally, on legendary UT head coach Darrell Royal's decision to teach the Wishbone to other programs, including arch-rival Oklahoma. OU  refined the formation during the late 1970's and 80's to win National Championships and to dominate Texas after UT abandoned the Wishbone when Royal retired in 1975:

"[E]verybody in the country was looking to run the Wishbone. And it became the winningest formation in the history of the game of football for quite a while there. We gave it to Alabama, we gave it to Oklahoma. I mean, their execution knowledge and so forth of the offense came from us; we gave it to Oklahoma."

"I just saw Barry [Switzer] the other day. He was offensive coordinator at Oklahoma and Chuck Fairbanks was the head coach and Darrell came into my office one day and we’d already just wore Oklahoma out a couple years and he said, “Chuck is in trouble, he’s gonna lose his job and they want to put in the Wishbone. Barry is gonna be calling you, help him all you can.”

I shook my head, I said, “Darrell, you got to be joking?” He said, “No, I wanna help him.”

I said, “Well, I can admire your wanting to help somebody but I said, gosh darn, not them.” That’s true, too, because they got to where they had so much speed it was hard for us to catch them.

He [Royal] called me about four or five months ago. He calls every now and then and I call him every now and then. But anyhow, he called and said, “You know, I was just sitting here thinking, I might not be as benevolent if I had it to do over (again).”

I said, “I hope not, Darrell. I don’t think we could go through that again.”

Posted by Tom at 12:01 AM | Comments (1) |

August 29, 2008

The shoe drops on Judge Kent

Here is the Chronicle article on the unusual federal aggravated sexual harassment abuse and contact indictment against U.S. District Judge Sam Kent. The previous posts on this matter are here. Here are the public statements of Judge Kent and his main accuser, and a related article (see also here) on Judge Kent.

Judge Kent will apparently defend himself by what amounts to confession and avoidance -- that is, conceding that sexual advances were made, but that they were consensual in nature. In my view, that will be an extremely difficult defense for a defendant-judge to sustain in front of a jury.

This one has the potential to be very ugly indeed.

Update: Serious questions (see also here) are already being raised about the Fifth Circuit Judicial Council's handling of the investigation and sanctioning of Judge Kent.

Posted by Tom at 12:01 AM | Comments (2) |

August 28, 2008

Justice fumbles again

Even when chronically-wrong Chronicle sports columnist Richard Justice gets something right, he immediately follows it with more poorly-reasoned blather.

In this blog post, Justice pays tribute to former Texas Tech football coach Spike Dykes, who is truly one of the nicest men ever to be a successful head coach in the big-time college football. But rather than leave well enough alone, Justice proceeds to engage in more myth-making about current Tech head coach, Mike Leach:

Not many Division I schools would have hired Mike Leach, either. Not many Division I coaches look or sound like him. He's funny, arrogant, off-the-wall and occasionally infuriating.

He's also a great coach. He wins games and graduates his players. His ninth season begins with high hopes on the South Plains. The Red Raiders are 12th in the AP poll, the highest they've been at the start of a season in 31 years. Tech has sold every season ticket for the first time in the 84-year history of the program.

The Red Raiders have 18 starters back, including WR Michael Crabtree and QB Graham Harrell. There's depth all over the place on offense, and if Ruffin McNeill's defense plays the way it did after he took over last season, Texas Tech could be in the BCS mix.

Where to begin? In his eight years at Tech, Leach has a 65-37-0 record, which works out to a 63.7% winning percentage. Although that is the best mark of any long-time coach at Tech over the past 70 years, a substantial component of Leach's success has been his 25-5 (83.3%) record against non-Big 12 opponents, which have been mostly sacrificial lambs.

In fact, of those 30 non-conference games, only five have been against other BCS-conference teams -- Ohio State (loss), Mississippi (2 wins) and North Carolina State (2 losses). Moreover, the last time that Tech even played a non-conference game against a BCS-conference opponent was five years ago in 2003.

Meanwhile, Tech under Leach has feasted on cupcakes such as Division 1-AA teams Stephen F. Austin, Sam Houston State, Indiana State, Southeastern Louisiana and Northwestern State and undermanned Division I outfits such as SMU and New Mexico. Heck, ten of Tech's non-conference games under Leach have been against SMU and New Mexico. That Tech wins over 80% of such games is certainly no feather in Leach's cap.

On the other hand, Tech's Big 12 conference record under Leach is another story -- 35-29 (a 54.6% winning percentage). Leach-coached Tech teams are only 3-13 against Texas and Oklahoma and his teams have had only a 4-4 Big 12 conference record in four of Leach's eight seasons at Tech, including the last two.

Finally, Leach has used extremely poor judgment in some of his public remarks about assistant coaches on his staff.

In short, objective evaluation of Leach's career at Tech reveals that his teams run up big numbers, but they don't often beat teams with comparable or better talent because those teams can control the ball enough to keep Tech's offense from scoring a winning number. And despite what Justice suggests, Tech's defense under Leach has never stopped any good offensive team.

Tech is rated highly this season in pre-season polls (14th in the USA Today Coaches Poll), but their non-conference schedule is again largely a joke -- two D-1AA teams (Eastern Washington and UMass) and a rebuilding SMU should again be easy wins for the Red Raiders.  In an unusual twist, Tech will have a reasonably difficult non-conference game this season when they travel to Reno on September 6 to play a well-seasoned Nevada Wolfpack team from the Western Athletic Conference.

But I'll wait to see how Tech fares in the Big 12 before conceding that the Red Raiders have reached a new level under Leach. So far, Leach's success at Tech looks more like good public relations to gullible sportswriters such as Justice than any major elevation of the program.

Posted by Tom at 12:01 AM | Comments (2) |

August 27, 2008

The genesis of a mortgage fraud hotspot

Dealbreaker's essential Opening Bell yesterday included the following note about the connection between the state of Florida and mortgage fraud:

Florida tops 1Q mortgage fraud list (AP)

This is not surprising... Florida is already a key location of the housing bubble. What's more, Florida tops every fraud list. Hello, Boca Raton? Clearwater? These cities are to fraud what Hungary is to Paprika. It's an industry. Plus, doesn't Florida have really lax mortgage/bankruptcy laws as it is?

However, what's most interesting about Florida is how relatively well the state has turned out given its checkered history. In his fine Throes of Democracy: The American Civil War Era 1829-1877 (HarperCollins 2008) (earlier blog post here), Walter A. McDougall provides the following colorful overview of Florida's evolution from the epitome of a backwater port:

From the day of the of the pirates to our day of offshore bank accounts, hedonistic resorts, and drug smuggling, Americans have found in the Caribbean an escape from their own laws and morals. The sand spit that Juan Ponce de Leon baptized La Florida was no exception.

In 1595, the Spaniards garrisoned Saint Augustine, the oldest European settlement on what became U.S. soil; and over a century Franciscans founded thirty-two missions to proselytize the Indians. But the province, which was 300 miles wide at the Panhandle and 400 miles long on the Atlantic coast, remained a derelict.

The whole Spanish navy could not have policed its 8,246 miles of tidal coastline, nor could the army police its 54,000 square miles of jungle and swamp. Nor could either defend the Indians from European infectious diseases or from the renegade Creeks they called cimarrones (whence “Seminoles”).

By the nineteenth century, the Native American Floridians were dead, the European population was measured in hundreds, and the whole peninsula from the Apalachicola River to Key West served as a refuge for Tampa Bay buccaneers, mutineers, deserters, fugitive slaves, Seminoles, and plunderers of shipwrecks (a frequent occurrence, especially during the hurricane season). 

John Quincy Adams cited the anarchy as justification for the treaty of 1819 ceding Florida to the United States. But he was pretentious to think Americanization would ensure law and order. The mostly poor, mostly Scots-Irish “crackers” who spilled into the Panhandle had no patience for government. Hot blood, hot sunshine, laws so variable that even judges could not parse them, no jails, no constables, and plenty of places to hide encouraged “ingenious rascality.” Florida was “a rogue’s paradise.” [ .  .   .]

.   .   . [V]irtue was in short supply, not only among the murderers, gamblers, slavers, squatters, and drunks who poured over the border from Georgia, but among the erstwhile elite. One feud over banking provoked two duels, a murder and a lynching that left all parties dead. In 1827, Ralph Waldo Emerson found Tallahassee “a grotesque place . . . settled by public officers, land speculators, and desperadoes.”  .   .   .  [. . .]

The Jacksonian hatred of banks likewise prevailed. So stringent were the state’s restrictions that no state banks were chartered until the legislature itself chartered one in 1855. Education? The same story. In 1851, the state founded “seminaries” to train teachers at Ocala (parent of the University of Florida) and Tallahassee (the future Florida State University), but as late as 1860 the state counted just ninety-seven schools with 8,494 pupils.

The government showed vigor only in the enforcement of slave codes and the repression of free Negroes. As the state’s population rose from 87,445 in 1850 to 140,424 by 1860, the percentage of slaves remained above 40 percent. Disciplining that underclass was everyone’s business. Policing white people’s behavior was pretty much left up to the women and the Baptist and Methodist clergy. [.  .  .]

.    .    . Today [Florida] is home to Disney World, the space program, South Beach and golf and retirement complexes. But the original Florida will never die out so long as "darkies" gather in jook joints to dance the jubilee (jitterbug), bumper stickers proclaim "Redneck and Proud of it," policeman cruise with alcoholic "roaders" in hand, and transplanted Yankees are taught that "blacks is blacks, but there ain't nothin' sorrier than po' white trash."

Mortgage fraud doesn't sound all that out of place there, now does it? ;^)

Posted by Tom at 12:01 AM | Comments (0) |

August 26, 2008

Glass houses

Dan Slater of the Wall Street Journal's Law Blog notes the Kremlin's recent refusal to grant parole to former OAO Yukos CEO Michael Khodorkovsky, who is serving an eight-year prison sentence in Siberia for tax evasion and fraud.

Khodorkovsky's conviction and prison sentence are widely viewed within the U.S. as evidence that the Russian business and judicial systems remain largely corrupt and not conducive to honest commercial investment.

Maybe so, but what does the same reasoning conclude about a system that produces barbaric injustices such as this, this, this and this, to name just a recent few?

People who live in glass houses .  .  .

Posted by Tom at 12:01 AM | Comments (0) |

August 25, 2008

Joe Cocker, captioned for the clear-headed

Come to think of it, I always have wondered what lyrics Joe Cocker was singing during his famous rendition of "With a Little Help from My Friends" at Woodstock in 1969 (H/T Craig Newmark).

Posted by Tom at 12:01 AM | Comments (0) |

August 24, 2008

The Quad reviews UT and LSU

The Quad -- the NY Times' excellent college sports blog that has been the subject of these previous posts -- continues its excellent review of each of the NCAA Division I Football Bowl Subdivision ("FBS") football programs by profiling the two best football programs in this neck of the woods, the 8th-ranked University of Texas Longhorns and the defending BCS National Champion, the Louisiana State University Bengal Tigers.

Posted by Tom at 12:01 AM | Comments (0) |

August 23, 2008

Stros 2008 Season Review, Part Four

After falling apart during the third fifth of the 2008 season, the Stros (64-64) made an unexpected rebound during the fourth fifth of the season, going 20-13 over that stretch.

Although the Stros' recent play was more fulfilling to watch than if the club had mailed it for the rest of the season, the risk is that the good result from a small sample size of games deludes Stros management into thinking that the Stros are close to regaining true contender status in the National League. They are not and here's is a simple reason whey they aren't.

Despite their relatively good play of late, the Stros remain 14 games behind the NL Central-leading Cubs (77-49) and 9.5 games behind the NL Wildcard-leading Brewers (73-55). Inasmuch as that is even further behind than the Stros stood after their worst stretch of play of the season during the third fifth of the season, the Stros actually lost ground in the race for a playoff spot while playing their best stretch of baseball of the season.

Aggregate RCAA and RSAA numbers provide a simple but revealing reflection of why the Stros cannot contend with the likes of the Cubs and Brewers over the course of a long season. Remember, a club's RCAA reflects how many more (or fewer) runs that a club's hitters generate than a National League-average club. Similarly, RSAA measures how many more (or fewer) runs that a club's pitching staff saves than a National League-average club. Accordingly, a club's combined RCAA/RSAA number shows how many more (or fewer) runs the club's hitters have generated and the club's pitchers have saved in comparison to a National League-average club.

Even with their uptick during the fourth fifth of the season, the Stros aggregate RCAA/RSAA score remains -45 (-24 RCAA/-21 RSAA, which is 12th and 10th respectively among the 16 National League clubs), meaning that the Stros have generated and saved 45 fewer runs this season than a National League-average club. That's not much worse than where the Stros stood after 60% of the season (-42 = -41 RCAA/-1 RSAA), but the fact remains that the decidedly below-average performance means that the Stros have actually been quite lucky to generate a record of as many wins as losses over the season to date.

On the other hand, the Cubs have a stout RCAA/RSAA of 176 (71 RCAA/105 RSAA) and the Brewers a respectable 77 (33 RCAA/44 RSAA), which means that the Cubs have created and saved a startling 221 more runs (and the Brewers 122 more runs) this season than the Stros. Although the Stros are lucky to be near a .500 record for the season, there is no amount of luck that would allow them to contend against the likes of the Cubs and Brewers given that RCAA/RSAA differential.

The theme of this season -- as with most Stros' seasons since 2003 -- has been well below-average hitting. That trend continued during the most recent fifth of the season with a couple of notable exceptions, which is the primary reason that the Stros rebounded a bit.

Although the Stros best hitter, 1B Lance Berkman, cooled off during the fourth fifth of the season (56 RCAA/.431 OBA/.597 SLG/1.028 OPS, but only 3 RCAA in the 34 games), but LF Carlos Lee (30 RCAA/.368 OBA/.569 SLG/.937 OPS and 16 RCAA in 22 games before his injury) and then 3B Ty Wigginton (16 RCAA/.373 OBA/.541 SLG/.914 OPS, including 13 RCAA in 33 games) really picked up the slack. 2B Kaz Matsui (4 RCAA/.348 OBA/.415 SLG/.763 OPS, including 7 RCAA in 26 games) also showed signs of life, but then he went back on the disabled list, where he spends way too much time to be a dependable MLB regular player.

Unfortunately, two Stros hitters upon whom club management was heavily relying -- SS Miguel Tejada (-17 RCAA/.319/.420/.739) and RF Hunter Pence (-17 RCAA/.300 OBA/.435 SLG/.735) -- continued to have nightmarish seasons and are two of the worst-performing regular players in the National League this season.

Moreover, if you combine the players who have manned the Stros' centerfield (Michael Bourn -24 RCAA and Darren Erstad -6 RCAA) and catcher (J.R. Towles -15 RCAA, Brad Ausmus -12 RCAA, and Humberto Quintero -10 RCAA), four of the Stros' eight positions are among the worst-performing positions in the Natonal League this season. That's a sure-fire prescription for a bad team.

Meanwhile, most of the Stros' pitchers in the most recent fifth of the season continued their season-long performance of around National League-average except for starters Brandon Backe and Wandy Rodriguez.

Backe (-19 RSAA/5.62 ERA) was one of the worst pitchers in the National League over his past 7 starts (-13 RSAA), which prompted Chronicle sports columnist Richard Justice to recommend that Backe be made a pillar of next season's Stros staff (again, why is Justice allowed to write about sports?).

Rodriguez (4 RCAA/4.11 ERA, but -6 RSAA over his last 8 starts) has not been as bad as Backe, but his declining performance as the season wears on confirms that he is, at best, a back-end rotation starter. Geoff Geary, considered a throw-in in the Brad Lidge-for-Bourn trade, has been the most effective Stros hurler through 80% of the season (13 RSAA/2.41 ERA).

By the way, Geary's performance this season has been quite comparable to that of Lidge (13 RSAA/2.06 ERA). Inasmuch as the Stros have not committed to Geary anywhere near the $37 million-plus that the Phillies recently committed to Lidge, it's not at all clear that the Lidge-for-Bourn deal was a bad one for the Stros despite Bourn's ineptitude this season.

As for Stros management, it's still too early to say whether they have charted a course for returning the Stros to a playoff contender. Management did a good job in signing the Stros' top draft picks this season, which is a good start in restocking a farm system that has been seriously depleted over the past decade. Also, management has continued to make patchwork moves, such as bringing in veteran pitchers Randy Wolf (-2 RSAA/5.13 ERA) and LaTroy Hawkins (3 RSAA/0.00 ERA), that at least show that the club wants to make the best of it despite the team's non-contender status.

On the other hand, why on earth does Stros management pick up the contract of Giants castoff, IF Jose Castillo (-24 RCAA/.290 OBA/.381 SLG/.671)?  Castillo is one of few National League infielders who actually makes Tejada look productive by comparison. It's moves such as these that make me scratch my head and wonder whether GM Ed Wade really has a plan for rebuilding the Stros or is simply casting about aimlessly?

Oh well. After finishing the series with the Mets (71-57) this weekend in New York, the Stros return home for three-game sets against the Reds (56-72) and then the Cardinals (71-58) before going back on the road to begin the final month of the season against the Cubs and the Rockies (59-70). Teams can expand their rosters in early September after completion of the minor league season, so here's hoping that Stros management allows the meager young talent on the club and in its farm system to get a taste of the Show over the final month rather than wasting that valuable playing time on veterans who will never pan out.

The 2008 season statistics for the Stros are below (through 127 games), courtesy of Lee Sinins' sabermetric Complete Baseball Encyclopedia. The abbreviations for the hitting stats are defined here and the same for the pitching stats are here. The Stros' 40 man roster is here with links to each individual player's statistics:

 

 

 

Posted by Tom at 12:01 AM | Comments (0) |

August 22, 2008

Metro's sleight-of-hand

Kevin Whited passes along this Bellaire Examiner article that reports on Metropolitan Transit Authority CEO Frank Wilson bragging to a couple of local Chambers of Commerce about the economic impact that Metro's new light rail projects will have on Houston:

The Metropolitan Transit Authority’s construction of nearly $2 billion in light rail projects will be an economic boon to the entire Houston area, Metro Executive Director Frank Wilson said recently.

The light rail projects will create 10,000 jobs in the next four years, in addition to having a “secondary and tertiary economic impact,” Wilson told members of the Greater Southwest and Asian Chambers of Commerce on Wednesday.

When Metro spends that much, there is a ripple effect of about $300 million that he said will end up in the hands of small businesses.

“Our effort is to spend it sooner, rather than later,” Wilson said. “By this time next year, all five (rail) lines — $2 billion — is going to be in play,” Wilson said.

The economic benefit will happen as 10,000 people go to work on Metro’s rail projects, he said.

“When 10,000 people go to work, what else do they need? They are going to spend whatever money we give them to spend, and spend it again,” Wilson said. “If you’re an economist, and you look at that — the economic impact is going to be immense.”

Wilson is engaging in a common political sleight-of-hand in which transfers of wealth are promoted (distorted?) as wealth creation. For example, building a new highway creates economic wealth only to the extent that it enhances economic productivity, not because of the jobs that are involved in building it. Creating jobs to construct the highway is really no such thing -- the state is simply transferring the jobs from other sectors of the economy.

Moreover, the government-created jobs aren't even as good in terms of wealth creation as the jobs they replace. That's because it costs taxpayers more when government agencies are spending the money. This Heritage Foundation report  recently made this point in response to a recent Department of Transportation assertion regarding the alleged "job creation" benefit of highway spending.

Thus, when you hear bureaucrats such as Wilson talk about "secondary and tertiary economic impact," hold on to your wallet. Unless productivity enhancement is substantial, these types of government investments are generally boondoggles. Inasmuch as taxpayers have to pay $1.50 (or more) for the government agency to spend a dollar, it's easy to understand why that is the case.

Posted by Tom at 12:01 AM | Comments (1) |

August 21, 2008

The NFL's next flagship stadium

Reliant Stadium in Houston is a nice and comfortable place to watch sporting events, but this Wired Magazine article reports that the new Dallas Cowboys stadium in Arlington looks to take the stadium experience to an entirely new level.

"The Dallas Cowboys are moving house — Texas style. When the team's new arena opens next year, it will be the largest, most tech-laden stadium in the NFL (and one of the biggest sports facilities of any kind on the planet). Its $1.1 billion price includes the most ginormous retractable roof ever built, massive end-zone doors, and the world's biggest hi-def LED screens." Not to mention locker rooms that include "power outlets, data ports, and televisions at each locker, plus ceiling-recessed projectors in the center of the changing rooms for reviewing plays." Or that "the giant arches holding up the stadium will measure 1,225 feet from end to end - roughly the length of the Empire State Building.”

Damn!

Posted by Tom at 12:01 AM | Comments (3) |

August 20, 2008

Martin Wolf on Capitalism

The new Creative Capitalism blog created by Bill Gates, Michael Kinsley and Conor Clarke is quickly making an interesting corner of the blogosphere. Today, Martin Wolf, the associate editor and chief economics commentator at the Financial Times, pens this remarkable blog post about what a company is, and what it is not, under different political systems. In so doing, Wolf provides a an engaging overview of the underlying forces that drive market economies. Read the entire post, but here here is a taste:

First, one has to distinguish the goal of the firm from its role. The role of companies is to provide valuable goods and services – that is to say, outputs worth more than their inputs. The great insight of market economics is that they will do this job best if they are subject to competition. Profit-maximization (or shareholder value maximization, its more sophisticated modern equivalent) is NOT the role of the firm. It is its goal. The goal of profit-maximization drives the firm to fulfill its role.

Second, by creating a competitive market for corporate control, we more or less force companies to maximize shareholder value, or at least behave in ways that the market believes will lead them to do so.   .    .

Third, a company is viewed in the Anglo-American world as a bundle of contracts. But companies are also social organisms created by a highly gregarious mammalian species with a unique capacity for large-scale co-operation over time and space. Companies have cultures and histories. For many of those most closely associated with them, they also have (and offer) a certain meaning. Committed workers in successful companies do not work in order to maximize shareholder value or even to earn the largest possible living. Indeed, it is impossible to direct most companies solely by the goal of profit-maximization. (Goldman Sachs may be an exception.)  They have to be aimed at the intermediate goal of producing and developing goods and services that people want to buy and are worth more in the market than they cost to produce.

Fourth, the idea that a company is an entity that can be freely bought and sold is culturally specific. It is the view, above all, of Anglo-Americans. It is not shared in most of the rest of the world.  .   .

Fifth, in this perspective, shareholders are not genuine owners. They contribute nothing of value to the competitive strengths of the firm, enjoy the benefits of limited liability and are well able to diversify the risks they run. They are merely an (ever-shifting) group of people with a claim to the residual incomes. Those with the biggest (undiversifiable) investment in the firm -- and thus the greatest exposure to firm-specific risks -- are not shareholders, but core workers. The interests of the latter are, therefore, paramount.

And as if the foregoing wasn't enough, Wolf follows that one up with this post on the issues involved in a company embracing social responsibility as a part of its role:

This is a point of considerable and, indeed, general importance. We live in a world of two fundamentally conflicting tendencies: between ever greater competition, as markets are liberalised and opened to the world, and greater demands on companies to bear social burdens of many kinds. But the latter is incompatible with the former. Extractive industries are in a relatively good position to meet such burdens, because they enjoy rent. In general, however, companies will be increasingly unable to bear them except to the extent that social obligations help them, rather than are costly to them.

That has an important consequence – positive and negative. The positive consequence is that many social goals can only be met through political action. That is also where they ought to be met. The negative consequences are two: first, where political systems are weak or defective, social goals will not be met; second, where companies feel forced by popular pressure to accept costly burdens – to pay higher than market wages, for example – they will feel obliged to lobby to spread those burdens onto all their competitors. The result could, at worst, be less efficiency and less economic growth than otherwise. In that case, therefore, social responsibility will become a machine for spreading anti-social outcomes. That is an end nobody should desire.

If you are involved or simply interested in business, my sense is that you should bookmark Creative Capitalism and check in often.

Posted by Tom at 12:01 AM | Comments (0) |

August 19, 2008

Say what, Doc?

Inasmuch as my family and social groups include a large number of medical doctors, I've noticed that the slang that the docs use when they are talking shop can be incomprehensible at times. That's why this comprehensive list of Doctor's Slang, Medical Slang and Medical Acronyms will come in handy. A few good ones:

"Blade" -- Surgeon: dashing, bold, arrogant and often wrong, but never in doubt (very much appreciated by the primary care doctors);

"Captain Kangaroo" -- chairman of the pediatrics department;

"DTMA" -- Stands for "Don't Transfer to Me Again";

"Fonzie" -- Unflappable medic;

"Improving His Claim" -- Victim of minor accident, needs no treatment but wants something to support his insurance/legal claim;

"Masochist" -- Trauma surgeon;

"Sadomasochist" - Neurosurgeon

"NOCTOR"-- A nurse who has done a 6 week training course and acts like she or he is a Doctor;

"Two beers" -- the number of beers every patient involved in an alcohol-related automobile accident claims to have drunk before the accident.

Check out the entire list. Those docs are a tough bunch.

Posted by Tom at 12:01 AM | Comments (0) |

August 18, 2008

Richard Justice's Kumbaya Weekend

Allow me to ask the following question again: Why is Richard Justice allowed to write about sports for a major metropolitan newspaper?

This weekend's Justice missives were particularly banal, which is saying something when it comes to his writings.

First, he led with this fawning blog post about Vince Young and the University of Texas. I guess one has to have attended UT to understand.

That one was followed by this one about Olympic swimmer Michael Phelps being some sort of cultural unifier. Yes, he's a really good swimmer, but .  .  .

Finally, Justice finished the weekend by heaping more hero worship on former Stros star, Craig Biggio, who is deserving of praise, but come on.

Frankly, it does not reflect well on the Chronicle that it dedicates more resources to accommodating Justice's blather than it provides in informing the public about one of Houston's true heroes of the past 30 years.  

Posted by Tom at 12:01 AM | Comments (2) |

August 17, 2008

Fashion trends

Check out Esquire's slideshow (on the left below) illustrating the evolution of men's fashion over the past 75 years. Then, take a look at this Time Magazine slideshow (on the right below) exhibiting the worst of golf fashion over the past century.

My sense is that there is a connection.

 

Posted by Tom at 12:01 AM | Comments (0) |

August 16, 2008

Dr. Ralph Feigen, R.I.P.

In this recent post on the death of Michael DeBakey, I noted that a substantial part of Dr. DeBakey's legacy was his involvement in the massive importation of talented medical professionals to Houston over the past 60 years. That talent transformed the Texas Medical Center from a sleepy regional medical center into one of the largest and most dynamic medical centers in the world.

Dr. Ralph Feigen, who died at the age of 70 on Thursday,epitomizes the doctors who have been at the center of that transformation.

Drawn to Texas Children's Hospital and Baylor College of Medicine at the age of 40 in 1977, Dr. Feigen spent the rest of his life in Houston cultivating a culture of excellence in research and patient care that turned Texas Children's into one of the largest and best pediatric hospitals in the world. Dr. Feigen was an excellent teacher, superb clinician and a highly-regarded researcher, but his personal warmth for his patients is what thousands of parents and their children will remember most about this fine man. A large part of Dr. Feigen's legacy is that Texas Children's -- despite its enormous growth over the past 30 years -- still reflects the comfortable warmth of its long-time leader.

Todd Ackerman, the Chronicle's fine medical reporter, summarizes Dr. Feigen's enormous impact well (the NY Times obituary is here):

Feigin, considered by many the most important pediatrician of the past 25 years, died Thursday. [.  .  .]

Feigin transformed Baylor pediatrics from a small, poorly funded department into the nation's biggest, made Texas Children's Hospital one of the nation's elite children's hospitals and trained an amazing roster of doctors, including almost half of Harris County's current population of pediatricians and many academic leaders nationally.

He also was known for research that contributed to the better understanding and treatment of pediatric disease, as the author of textbooks that changed the care of children worldwide and as a tireless advocate who never missed a chance to take up the cause of children's health.

Colleagues described him as unfailingly cheerful and energetic, even after the lung cancer struck. Diagnosed with the disease in late 2007, he continued as Baylor's chairman of pediatrics and Texas Children's physician-in-chief while in treatment. In May, he announced he would step down but attributed the decision to a plan he had made at 65 to stop his administrative duties at 70. [.  .  .]

In all, Feigin trained more than 2,000 pediatricians and pediatric specialists. Of those, two went on to become medical school deans, 22 became associate medical school deans, 10 became pediatric department chairmen and 180 became section heads of pediatrics.

Feigin came to Houston in 1977, a time when neither Baylor pediatrics nor Texas Children's were players of any significance. In 30 years, Baylor's pediatric faculty grew from less than 40 to more than 500, and pediatric's federal research funding became the most in the country, nearly $100 million. Texas Children's created and developed several of the nation's most respected clinical centers, and its patient load skyrocketed.

In addition to his pediatric administrative and clinical duties, Feigin served as president of Baylor from 1996 to 2003 and as interim CEO of Texas Children's from 1987 to 1989.

Despite the administrative roles, Feigin remained focused on children's health. He pushed for the state to extend the Children's Health Insurance Program to the maximum number of children and Medicaid to the maximum number of indigent mothers. He and his colleagues were at the forefront whenever there was an infectious disease outbreak, giving shots to kids and urging people to exercise caution.

He was considered such a great diagnostician that twice a week residents would gather to seek his help on their most baffling cases at "stump Feigin" sessions.

Without books or computers, Feigin would reel off myriad possible causes, then describe what he'd do to arrive at a diagnosis as quickly as possible. The performance left the residents awed.

We often get sidetracked as to what bells and whistles will supposedly make Houston better, but it's people such as Ralph Feigen who truly make Houston such a special place to live.

Posted by Tom at 12:01 AM | Comments (0) |

August 15, 2008

Mapping Olympic Medals

The New York Times has the best Olympics online coverage page that I've seen. Particularly well-done are the daily schedule and the Olympic Medals page, the latter of which maps the medals as they are won and provides a map of medals for each Olympiad since 1896. Check it out.

Posted by Tom at 12:01 AM | Comments (0) |

August 14, 2008

Cowboy business

The Texans are the toast of their local cheerleading team, but the unquestioned NFL team of Texas remains the Dallas Cowboys. This Glenn Hunter/D Magazine interview of Cowboys owner Jerry Jones confirms that the Cowboys business model is performing very, very well:

With the Cowboys, you’re said to lead the league in corporate sponsorships. Can you give me an idea how much those relationships are worth each year?

We’ve got significant, long-term relationships with Dr Pepper, Miller Lite, Pepsi, Bank of America. If you would aggregate those key, basic long-term sponsorships, that would exceed $50 million annually. We have smaller relationships through our broadcasting, radio and television.

And for merchandising, would $50 million be a good number?

The wholesale-merchandising area is a very, very proprietary number that has a lot involved with it. Let’s see, how to say this? Our wholesaling and retailing combined, as far as financial viability is concerned, is on par with what we do with sponsorships. They are equal in their contribution to the Cowboys.

For the team as a whole, what are you looking at for revenue this year? A few years ago, the figure was north of $200 million; are you going up every year?

Yes, we are. I think it’s fair to say that we will be north of $300 million.

And yes, Jones really is sorry for the way he handled the firing of longtime Cowboys coach, the late Tom Landry:

You really turned around the Cowboys franchise in the early 1990s, and to do it you had to shake up the status quo, including firing the longtime coach, Tom Landry. To this day we hear complaints from longtime Dallasites about that. If you could do things over, would you have handled that differently?

Yes. I understand the criticism; I actually understood it then. I didn’t have a sense of how significant the emotional attachment was to Coach Landry, and to some degree [Cowboys President and General Manager] Tex Schramm, but especially to Landry and the franchise. He had actually transcended the franchise. I actually had very prominent consulting people—not one but two firms, Hill & Knowlton, out of Washington D.C., and one firm from Dallas—that were advising me all during this time. And they advised me in many ways to do it the way I did it. Bum Bright—the individual I bought the team from—offered, to his credit, to make all these changes and to sell the Cowboys to me with no one here, a clean slate. But I was advised, and I concurred with it, that everybody knew the reason the changes were coming was because of me, so I should be a man and directly do it myself, as far as Coach Landry’s and Tex Schramm’s situations—in other words, do it face to face.

Having said that, it’s not something I would do that way again. I would have been more sensitive. I don’t know if I would have gone so far as having Coach Landry coach one more year, then having a transition period of a year. Or work longer with Tex; come in and let them kind of mentor you, show you the ropes, talk about their fundamental vision for the Cowboys. In hindsight, that’s what people say I should have done. But again, unfortunately, I’ve always tried to get there quicker and consequently, as I said earlier, taken more risk by getting on with things.

Finally, just what does Jones think about this whole QB Tony Romo-Jessica Simpson thing?:

Speaking of the quarterback position, does Tony Romo’s high-profile relationship with the entertainer Jessica Simpson bother you, like it does some Cowboys fans?

Tony’s relationship with Jessica Simpson doesn’t bother me at all. It’s good for the franchise—adding sizzle and show business and interest—and it doesn’t affect Tony’s performance in any way.

Maybe so, but I'm not taking a chance on Romo in my Fantasy Football League's draft. ;^)

Posted by Tom at 12:01 AM | Comments (0) |

August 13, 2008

The fall of a demagogue

I wasn't going to blog anything about John Edwards' recent public admission to an affair with Rielle Hunter. As has been noted many times previously on this blog, Edwards is a demagogue who represents the worst in American national politics. I would have much preferred that Edwards' demagoguery be the reason for the demise of his political career rather than a tawdry affair that is hurtful to Edwards' innocent family members, even if it was "oncologically correct," as Maureen Dowd put it.

But turning to Ms. Hunter, check out this Jonathan Darman/Newsweek article. What a piece of work. Once Hunter decided to pounce, Edwards never had a chance. It almost makes one feel sorry for him. Almost.

By the way, while considering matters political, don't miss Josh Green's Atlantic piece on the demise of the Hillary Clinton campaign (previous posts here).

Posted by Tom at 12:01 AM | Comments (1) |

August 12, 2008

Here we go again?

With the completion of the PGA Championship this past weekend, the eight automatic qualifiers for the 12-man 2008 U.S. Ryder Cup team were named for next month's matches at Valhalla Golf Club in Louisville (Sept. 16-21).  U.S. team captain Paul Azinger will complete the 12-member roster by announcing his four Captain's selections Tuesday, Sept. 2, at 10 a.m. at the Hotel Martinique on Broadway in New York City.

The automatic qualifiers are the following:

Player                 Points

Phil Mickelson    5,342.500

Stewart Cink      4,952.665

Kenny Perry       4,480.700

Jim Furyk           4,423.892

Anthony Kim     4,035.296

Justin Leonard  3,379.274

Ben Curtis         3,120.061

Boo Weekley     2,785.095

My sense is that this group isn't sending shivers up the spine of the European team, which has recently dominated the U.S. team, winning four of the past five matches. The U.S. team is younger than prior teams with three of the eight (Ben Curtis, Anthony Kim and Boo Weekley) participating in their first Ryder Cup. Phil Mickelson is the veteran of the U.S. team by virtue of making his seventh consecutive appearance in the matches, but he is coming off a pathetic 1-7-1 record in the past two matches.

At least Mickelson played reasonably well over the past two weeks, contending for both titles and tying for seventh at the PGA Championship. Likewise, Furyk (29th) and Weekley (20th) played decently at the PGA even though they were not in contention for the title, while Curtis played very well in tying for second place.

However, Kim and Justin Leonard disappeared during the weekend rounds, Stewart Cink didn't even make the cut and Kenny Perry withdrew after the first round after scratching his cornea with a wayward contact lense. Leonard and Perry have never won a Ryder Cup match, and Mickelson, Furyk and Cink have an aggregate Ryder Cup record of 18-29-10.

Meanwhile, Euro team members Padraig Harrington (first place), Sergio Garcia (second place tie with Curtis), Henrik Stenson (tied for fourth) and Justin Rose (tied for ninth) were stellar during the PGA Championship.

Is anyone else getting a bad feeling about this year's matches? At least the U.S. team won't have to deal with being the favorite going into the matches.

Posted by Tom at 12:01 AM | Comments (0) |

August 11, 2008

Barackroll

As political satire, the video below probably doesn't top this one, but it's close.

Posted by Tom at 12:01 AM | Comments (0) |

August 10, 2008

Elegant Elk

Clear Thinkers favorite and longtime Houstonian Steve Elkington (PGA Tour page here) is now 45 years old and past his prime on the PGA Tour, where he has won a major (the 1995 PGA at Riviera), is a ten time winner (the most recent was in 1999 at Doral). Nevertheless, Elk continues to have one of most elegant golf swings on the Tour and remains quite competitive, reflected by his tie for eighth place through two rounds of this week's PGA Championship at Oakland Hills outside Detroit.

Mirroring his swing, Elk has also established himself as one of the most fashionable dressers on the Tour. During this first round of the PGA Championship, Elk was resplendent in a white shirt with pink dots and a hard collar, high-rise brown trousers with a windowpane check and long pleats, and green, white and red patent-leather Foot Joy shoes. Elk is continuing the tradition of fellow Houstonians Doug Sanders and the late Jimmy Demaret, both of whom were the fashion plates on the Tour during their respective eras.

As he winds down his PGA Tour career and prepares for the Champions Tour, Elk has established his own website -- elksworld.com -- where he is displaying and selling the shirts and caps he wears and designs. Elk also provides this slick deck that summarizes the marketing opportunities that businesses can derive by associating with Elk. Rather than selling advertising space on himself or his golf bag, Elk is using his artistic talent and entrepreneurial spirit to start an interesting business. Here's hoping that he is as successful in that endeavor as he has been during his PGA Tour career.

Posted by Tom at 12:01 AM | Comments (0) |

August 9, 2008

Criminal justice?

The always-insightful Larry Ribstein points out that Jamie Olis would have been better off providing material support for Osama Bin Laden than working on the beneficial structured finance transaction that ultimately led to his criminal conviction.

The sad case of Jamie Olis remains one of the most egregious abuses of the government's prosecutorial power during the post-Enron criminalization of business. The relative lack of outrage over it reflects poorly on all freedom-loving Americans.

Posted by Tom at 12:01 AM | Comments (0) |

August 8, 2008

Is the problem really risk aversion?

Steve Waldman (H/T Felix Salmon) makes a spot-on observation regarding the conventional wisdom that the current downturn in the financial sector of the global economy is the result of too much risk:

One of the more depressing bits of emerging conventional wisdom is the notion that the financial system took on "too much risk" in recent years. I think it is equally accurate to suggest that the financial system took on too little risk. [.   .   .]

The big central banks, whose investment largely drove the credit boom, were (and still are) seeking safety, not risk. The banks and SIVs that bought up "super-senior AAA" tranches of CDOs were looking for safe assets, not risky assets. We had a housing boom, rather than a Pez dispenser bubble, because housing collateral is (well, was) the preferred raw material for fabricating safe paper. Investors were never enthusiastic about cul-de-sacs and McMansions. They wanted safe assets, never mind what backed 'em, and mortgages are what Wall Street knew how to lipstick into safe assets. The housing boom was born less from inordinate risk-taking than from the unwillingness of investors to take and bear considered risks. Agencies, asset-backed securities, it was all just AAA paper. It was "safe", so who cared what it was funding? [.  .  .]

.   .   . We've trained a generation of professionals to forget that investing is precisely the art of taking economic risks, then delivering the goods or eating the losses. The exotica of modern finance is fascinating, and I've nothing against any acronym that you care to name. But until owners of capital stop hiding behind cleverness and diversification and take responsibility for the resources they steward, finance will remain a shell game, a tournament in evading responsibility for poor outcomes.

Investors' childlike demand for safety has made the financial world terribly risky. As we rebuild our broken financial system, we must not pretend that risk can be regulated or innovated away. We must demand that investors choose risks and bear consequences. We need more, and more creative, risk-taking, not false promises of safety that taxpayers will inevitably be called upon to keep.

Read the entire piece here. As noted many times on this blog (most recently here), many powerful forces in our society -- the government and the mainstream media to name just two -- continue to embrace myths that distract from a mature understanding of the nature of risk.

Posted by Tom at 12:01 AM | Comments (1) |

August 7, 2008

A bad idea that just won't die

Isn't it amazing how long bad ideas will remain festering so long as local governmental officials have something to do with it?

After four years of dithering, this Bill Murphy/Chronicle article breathlessly reports that there may be hope for the Astrodome hotel project after all:

Despite their previous staunch opposition to the project, the Houston Livestock Show and Rodeo and the Texans signaled that they may be able to coexist with a convention hotel that would be built in the Astrodome.

Their more conciliatory attitude toward the 1,300-room project was evident in recently submitted reviews of the proposed convention hotel lease.  .  . 

And since the promoters of the project already have a financing commitment lined up, this deal is about ready to take off, right? Uh, well, maybe not:

Even if the Texans and the rodeo drop opposition to the project, Astrodome Redevelopment Co. still needs to obtain financing for the ambitious, $450 million effort to transform the building once known as the Eighth Wonder of the World into a convention hotel.

Astrodome Redevelopment president Scott Hanson said the company's efforts to obtain financing have been hampered by an inability to strike a lease with the sports corporation, which oversees Reliant Park operations, including the Astrodome.

"The (commercial lending) market is much tougher now. Quite frankly, we have been waiting on getting an approved lease before we go back out into the marketplace," he said.

So, what happened to that financing commitment for the project about which the Chronicle previously reported? What the heck, even in a tough lending market, half-a-billion or so in financing shouldn't be all that difficult to line up for a project that almost certainly will be a financial success, now could it? Well maybe, except that the parent company that owns the model for the Astrodome hotel project -- The Gaylord Texan -- is not exactly doing all that well:

The Star-Telegram has a story today about the Gaylord Texan’s parent company, Gaylord Entertainment, reporting a second quarter revenue increase of 36 percent over last year—but a net income drop of 91 percent. The company reported a net income of $106.8 million in Q2 ‘07; for Q2 ‘08, they’re looking at a net income of $8.78 million. That’s right, eight. They blame it on decreased attendance at conventions. Does this bode well for the convention center hotel business?

So, let's get this straight. After not being able to arrange financing for this boondoggle during the robust equity and credit markets that existed up to 2007, the promoters think they are going to be able to line up financing in the current tight financing market for a business that is not even doing particularly well?

Give it up folks.

Update: Kevin Whited suggests that the promoters' PF staff should retain the Chron's Murphy.

Posted by Tom at 12:01 AM | Comments (1) |

August 6, 2008

Cutting the Pai

Former Enron executive Lou Pai's recent settlement with the Securities and Exchange Commission confirmed that the Greed Narrative is still embraced by much of mainstream American society. Take, for example, Charles Kuffner's reaction:

Reading this story reminds me why I was bothered less than folks like Tom were about the criminal cases that were brought against the likes of Ken Lay, Jeff Skilling, and so on. Pai was (eventually) punished through the civil process, but the punishment he received doesn't come close to balancing the scales, in my view. He's still a millionaire many times over - assuming he hasn't blown it all, of course - while so many other people, employees and shareholders, got wiped out. I think the only way the civil justice system could really make these guys pay for their wrongdoings is if it left them in the same shape as the people who were affected by their actions - namely, in a situation where they'd have to work for the rest of their lives because they no longer had any accumulated wealth. Here's a bit I wrote from my review of "The Smartest Guys In The Room":

There's a really poignant scene in which Portland General Electric lineman Al Kaseweter matter-of-factly states that he sold his entire retirement portfolio, which was worth $348,000 at its peak, for $1200.

PGE had been bought by Enron before the crash; like most Enron employees were encouraged to do, Kaseweter put the bulk of his retirement funds into Enron stock. Put Lou Pai in Al Kaseweter's shoes, and I'd agree that justice had been served. Same with Skilling and the rest of that crowd. But that's not how it works, so despite the problems associated with the Enron prosecutions, I think they were necessary.

Stated simply, Charles' view is that "Pai got rich at Enron and a bunch of people lost money when Enron went down in flames, so he must have done something criminal and must be punished." Chron business reporter Loren Steffy, who really ought to know better, spews a similar view.

Frankly, given the societal bias against nearly everything related to Enron, such reactions are not particularly surprising. But it remains disappointing -- and, frankly, a reflection of our human instinct to demonize those in regard to whom we feel morally superior -- that reasonably intelligent people dismiss as a virtual white-collar criminal a man of considerable talent without even passing mention of what he supposedly did wrong.

In reality, Pai was a former SEC economist who became one of the commodities traders who helped Jeff Skilling transform Enron into a multi-billion dollar corporation with earnings that rose from a couple of hundred million dollars in 1990 to $1.6 billion in 1998, over half of which was generated by Enron's trading division. By 2000, Enron's revenue had risen to $100 billion and, on in late August of that year, Enron’s stock price peaked at $90 per share.

As virtually every mainstream media article about Pai's settlement reported, Pai had a legendary fondness for strippers and was a frequent patron of Houston's famous topless club near the Galleria, Rick's Cabaret. Pai met a woman at Rick's with whom he had a long affair, leading Pai and his wife to divorce in 2000 (Pai eventually married his mistress). Pai sold a large amount of his Enron stock in 2000 to fund the divorce settlement, so although he was a wealthy man before selling the stock, Pai was a wealthy and liquid man after doing so.

But the SEC charges against Pai did not involve any of that. Rather, the SEC alleged that between May 18, 2001 and June 7, 2001, Pai sold 338,897 shares of Enron stock and exercised stock options that resulted in the sale of 572,818 shares. According to the SEC, before making those sales, Pai -- who previously headed an Enron division called Enron Energy Services ("EES") -- learned from the successor EES management team that it had identified substantial contract-related losses in the division. The SEC theorized that, had Enron reported EES's contract-related losses in its retail energy services segment, that segment would have shown a quarterly loss of at least $60 million rather than the profit of $40 million that Enron reported in its Form 10-Q for the first quarter of 2001. By selling in May and June, the SEC alleged that Pai avoided the substantial losses that he would have suffered had he still been holding the stock when Enron's stock price collapsed in late 2001.

However, the SEC's allegations against Pai were anything but a slam dunk. Mirroring the SEC's theory of the case against Pai, the Enron Task Force attempted in the Lay-Skilling trial to prove that Enron and Skilling had lied about EES’s growth while simultaneously hiding mounting EES losses. Relying on the testimony of plea-bargainers David Delainey and Timothy Belden, the Task Force asserted that EES first moved an allegedly non-collectible account receivable to Enron's profitable 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"). According to the Task Force's theory against Skilling and the SEC's theory against Pai, these events occurred solely to make EES look more profitable than it really was.

Unfortunately for the Task Force and the SEC, that's not what the testimony reflected during the Lay-Skilling trial. The various witnesses expressed differing opinions as to the purpose for the moves with regard to EES, but not one of them stated that anyone 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 Pai (or Skilling, for that matter). With respect to the transfer of the fourth-quarter 2000 receivable, Enron auditor Arthur Andersen had analyzed the transfer and approved the accounting treatment. Indeed, Skilling defense witness Diann Huddleson testified that Enron management believed it could collect on the questionable receivable and ultimately did collect most of it.

As for the resegmentation, Skilling testified that moving the EES risk book to Wholesale 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 Task Force's main witness on this issue, conceded that he ultimately recommended to Skilling that the risk book be moved. Indeed, the only independent accounting expert who testified during the Lay-Skilling trial -- Walter Rush -- testified that the transfer of the risk book complied with applicable accounting rules.

Thus, the SEC's civil case against Pai was similar to what we've seen in most of the criminal cases against former Enron executives -- long on bombast, short on substance.

But the promoters of the Greed Narrative protest, what about the innocent victims who lost their nest eggs as a result of Enron's collapse?

Well, one of the main reasons that those victims' nest eggs ever had value in the first place was because Pai helped Skilling transform 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 feeling compassion for folks who lose money on an investment, rarely is it mentioned in the Greed Narrative with regard to Enron that many of those "victims" who lost their nest eggs 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 it fell below a certain value. Such is the risk of investing in the trust-based business model. 

Thus, while virtually all of those Enron "victims" hedged the risk of their investment in their homes by purchasing homeowner's insurance, few of them hedged the risk of their investment in Enron stock. More than likely, most of them simply did not understand how Enron's risk management services created their nest egg in the first place. Thus, when those nest eggs evaporated during the bank run on Enron, they didn't even try to understand what had occurred. They simply embraced the easy-to-understand Greed Narrative.

Sadly, apart from the its egregious human toll and the serious abuse of state power that its promoters ignore, the Greed Narrative's devastating impact is that it obscures the true nature of investment risk and fuels the myth that investment loss results primarily from someone else's misconduct. As Larry Ribstein has been asking for years, do we really want to be sending a message to investors that risk is bad when it often leads to valuable innovation and wealth creation? For example, self-settled derivative prepay transactions are not particularly intuitive (no product actually changes hands) and are not well-understood outside the trading business. Nevertheless, such transactions provide the valuable benefit of hedging risk for companies, who pass along that benefit to consumers in the form of lower prices for their products and services.

Do we really want to allow prosecutors and regulators to paint such beneficial transactions as frauds and then manipulate the public's ignorance to demonize innovative risk-takers who were attempting to create wealth? How does throwing creative and productive business executives such as Michael Milken and Jeff Skilling in prison do anything to educate investors about the true nature of risk and the importance of diversification and hedging?

A truly civil society would find a better way.

Posted by Tom at 12:01 AM | Comments (1) |

August 5, 2008

Enunciate!

Come to think of it, I had a difficult time understanding Batman at times, too.

Posted by Tom at 12:01 AM | Comments (0) |

August 4, 2008

Cool videos to start the week

Walmart opened its first store in Arkansas in 1962. Check out this remarkable Flowing Data video that shows the company stores growing like a wildfire over the ensuing 45 years.

Meanwhile, this BBC video takes a look from above, using satellite tracking and computer imaging, at the daily use of commercial passageways in the UK.

Posted by Tom at 12:01 AM | Comments (0) |

August 3, 2008

"It's all your fault"

Julie Alexandria of the always-clever WallStrip explains how speculators became the latest business villains of the moment. Enjoy.

Posted by Tom at 12:01 AM | Comments (0) |

August 2, 2008

The Waiting Game

Moira Hodgson's W$J review of waiter/blogger Steve Dublanica's new book -- Waiter Rant: Thanks for the Tip--Confessions of a Cynical Waiter -- is a rollicking good time. Check out Hodgson's analysis of the merits of Dublanica's background for waiting tables:

Considering some of the customers he has to deal with, Mr. Dublanica's background was the perfect training for his job: four years in a seminary studying to be a priest followed by work at rehab centers and homes for the mentally retarded. He says that 80% of the people he serves at The Bistro are perfectly nice; the rest are socially maladjusted psychopaths. He also has to contend with servers on drugs and an irritable, jumpy boss: "Like a soldier home from war, his eyes are always scanning the horizon for threats."

By the way, be careful about sending that food back to the kitchen:

The third time a woman sends back her de-caf coffee, saying it's not hot enough, he dumps regular coffee into her cup, places it in a 400-degree oven, takes it out with a pair of tongs and delivers it to her table. But that story pales beside Mr. Dublanica's account of a waiter who plays floor hockey in the kitchen with a returned hamburger patty before hosing it off and taking it back to the table.

 

Posted by Tom at 12:01 AM | Comments (0) |

August 1, 2008

Chasing rainbows

I enjoy watching football games, but I have never been able to understand the mainstream media's fascination with pre-season football practice.

I mean, really. Is there anything more boring than football practice? Well, maybe pre-season football games, but that's another issue. Yet, the local media cheerleaders are lined up each day to report breathlessly about the Texans' pre-season practices. The late night television news last night reported excitedly about the Texans' practice earlier in the evening in which the Texan players, without pads, ran through a series of drills that amounted to glorified touch football. Touch football!

At any rate, with all the media resources dedicated to covering pre-season training camp, an interesting piece of information does emerge every once in awhile. For example, this AP report notes that former Texans first-round draft pick and QB David Carr, now almost 30 years old, is trying to catch on as a backup QB with the Super Bowl champion New York Giants.

Despite being the Texans' first draft choice and the first player taken in the 2002 NFL draft, Carr turned out to be one of the worst QB's in NFL history, which is one of the many reasons that the Texans have been one of the worst teams in NFL history during their six year existence. It was reasonably clear even before the Texans third year (2004) that Carr was not the answer at QB, but the Texans cheerleaders at the Chronicle were still touting him as a potential top-tier talent deep into the Texans' disastrous 2-14 season in 2005. That same level of incompetence is generally displayed in almost all of the seemingly endless puff pieces that the Chron reporters (Chron blogger Lance Zerlein excepted) generate throughout Texans training camp.

Getting back to Carr, it sounds as if his performance to date in the Giants camp has been consistent with his performance in Houston:

Things have not started well for Carr. He hurt his foot working out a week before camp opened and missed some practice time. Since returning, he has thrown a couple of interceptions, fumbled two snaps and tossed a few questionable passes.

David Carr, first-round draft choice. A quintessential example of the NFL's mismatch problem?

Posted by Tom at 12:01 AM | Comments (1) |

July 31, 2008

Thoma v. Kling on health care finance

Mark Thoma started the discussion, then Arnold Kling took issue, then Thoma responded to Kling and then Kling responded to Thoma (Megan McArdle chimes in, too). Before you know it, the posts provide a very good overview and debate of the basic issues confronting health care finance reform in the U.S. Ah, the wonders of the blogosphere!

Several additional observations:

1. By and large, American consumers of health care are woefully ignorant regarding the true cost of health care. Call it the legacy of two generations that embraced employer-financed, third-party payment of health care costs. That legacy has largely insulated the consumer from shopping for the basic health care services that fits their particular budget and circumstances. Any health care finance reform that does not rely at least in part on the consumer market to control costs will likely be even costlier and less satisfying than the current system.

2. Due to the risk of loss inherent in the private health insurance market, a substantial government-finance component is always going to be necessary in even a health care finance system that relies on large amounts of private health insurance. Pre-existing conditions, costs beyond even catastrophic illness and injury, the need for mobility in labor markets and cost of private insurance for the elderly are just a few of the risks that are difficult (perhaps even impossible) for private insurers to hedge and still provide an affordable product. Government-financed insurance and reinsurance fills in these gaps.

3. Any reform of the health care finance system will not be successful in controlling costs unless or until a consensus is reached on a fundamental issue that most Americans do not even want to discuss -- i.e., the basic level of health care that every individual in the U.S. is entitled to receive regardless of cost. What level of care is an insolvent, uninsured, illegal immigrant entitled to receive? How much care should we be willing to subsidize to extend the life of a seriously-ill 90 year-old?  A terminally-ill 50 year-old? These are thorny issues, but they must be addressed if we are ever going to achieve a coherently-financed health care system.

You can rest assured that the questions addressed in subparagraph 3 above will not be topics in any Presidential debate this fall.

Posted by Tom at 12:01 AM | Comments (2) |

July 29, 2008

Gearing up for college football

The beginning of the college football season is just a month away, so it's time to pass along some excellent web resources to prepare for the season:

The no. 1 college football resource on the Web is the Web Resources page over at Jay Christensen's Wizard of Odds, which is the best one-stop information source for college football on the Web.

This college football schedule template from the Strangest Brew allows you to prepare a page of schedules that you can tailor for your favorite teams and conferences. Very slick indeed.

The Joe Cribbs Car Wash provides this handy Paperless Preview Project that provides convenient preview information from various publications for all 120 Division I teams. Read about your favorite teams and their opponents, all in one place.

Finally, the NY Times' fine college sports blog, the Quad, continues its pre-season countdown analysis of all 120 D-I teams with no. 35, the Texas A&M Aggies (earlier Quad previews profiled Rice and Houston). Not much is expected of the Aggie football team this fall, so the best entertainment this season at Kyle Field may well be new Aggie defensive coordinator, Joe Kines. The video below is a halftime interview of Kines while he was serving briefly as Alabama's interim head coach during a bowl game after the head coach had been fired. As they say in the coaching business, Kines is an "original" and appears to have what it takes to become a beloved figure in the special culture of Aggieland.

Posted by Tom at 12:01 AM | Comments (1) |

July 28, 2008

Glaeser on the State of the City

Harvard urban economist Ed Glaeser's NY Sun op-ed last week on Houston's success in maintaining an affordable standard of living generated a lively debate among the blogosphere's urban policy wonks, both for and against. So, Glaeser tees up the Houston debate again yesterday at the end of this Wall $treet Journal interview regarding the state of the city:

If you think about the lifestyle of ordinary Americans living on the fringe of Houston or Dallas, for example, compared to what their lifestyle would be in an older European city -- living in a walk-up apartment there compared to a 2,500-square-foot house here they bought for $130,000 with a 24-minute commute -- it's extraordinary in the low-cost areas of this country what a $60,000 family income gets you.

There's a reason Atlanta, Dallas, Houston and Phoenix are our four fastest-growing areas. They offer an astonishingly high standard of living for ordinary Americans.

New York City is a great place to be really rich and not a terrible place to be really poor, but it's a pretty hard place to live on $60,000 a year. You don't experience anywhere near the basic standard of living you would in Houston on the same income.

Ryan Avent is still not convinced.

Posted by Tom at 8:08 PM | Comments (0) |

Another innovative California industry

The New Yorker's David Samuels reports on how medical marijuana is changing a popular California industry:

Since 1996, when a referendum known as Proposition 215 was approved by California voters, it has been legal, under California state law, for authorized patients to possess or cultivate the drug. The proposition also allowed a grower to cultivate marijuana for a patient, as long as he had been designated a “primary caregiver” by that patient. Although much of the public discussion centered on the needs of patients with cancer, AIDS, and other diseases that are synonymous with extraordinary suffering, the language of the proposition was intentionally broad, covering any medical condition for which a licensed physician might judge marijuana to be an appropriate remedy—insomnia, say, or attention-deficit disorder. [.  .  .]

In 2003, the California State Legislature passed Senate Bill 420. The law was intended to clear up some of the confusion caused by Proposition 215, which had failed to specify how patients who could not grow their own pot were expected to obtain the drug, and how much pot could be cultivated for medical purposes. The law permitted any Californian with a doctor’s note to own up to six mature marijuana plants, or to possess up to half a pound of processed weed, which could be obtained from a patients’ collective or coöperative—terms that were not precisely defined in the statute. It also permitted a primary caregiver to be paid “reasonable compensation” for services provided to a qualified patient “to enable that person to use marijuana.” [.  .  .]

A drug-policy analyst named Jon Gettman recently estimated that in 2006 Californians grew more than twenty million pot plants. He reckoned that between 1981 and 2006 domestic marijuana production increased tenfold, making pot the leading cash crop in America, displacing corn. A 2005 State Department report put the country’s marijuana crop at twenty-two million pounds. The street value of California’s crop alone may be as high as fourteen billion dollars. [.  .  .]

I recently spent six months, off and on, with ["Captain"] Blue [a pot broker] — at his apartment, in private homes, on farms, in pot grow rooms, and in other places where “medical marijuana” is produced, traded, sold, and consumed in California. During that time, I saw thousands of Tibetan prayer flags. The flags identify their owners with serenity and the conscious path, rather than with the sinister world of urban dope dealers, who flaunt muscles and guns, and charge exorbitant prices for mediocre product. For Blue and tens of thousands of like-minded individuals, Proposition 215 presented an opportunity to participate in a legally sanctioned experiment in altered living. The people I met in the high-end ganja business had an affinity for higher modes of thinking and being, including vegetarianism and eating organic food, practicing yoga, avoiding prescription drugs in favor of holistic healing methods, traveling to Indonesia and Thailand, fasting, and experimenting with hallucinogenic drugs. Many were also financially savvy, working long hours and making six-figure incomes.

Read the entire article. Meanwhile, take a moment to read about one of the many costly reminders of the misguided nature of American drug prohibition policy.

Posted by Tom at 12:01 AM | Comments (0) |

July 27, 2008

Golf Prospectus 2008?

Regular readers know that I'm a big supporter of the annual Baseball Prospectus books that provide cutting-edge statistical analysis of Major League Baseball. So, this Bill Pennington/NY Times article about Mark Broadie, a professor at Columbia who conducts research for the PGA Tour, caught my eye.

Broadie is now taking a crack at doing similar statistical analysis for golf as what Baseball Prospectus does for baseball, except that he is analyzing the key differences between Tour players and amateur golfers. Broadie used the PGA Tour ShotLink database to analyze the pros' performance and he persuaded players at one of his local courses to log all of their shots for a period of time, resulting in a database of 43,000 amateur shots (probably about 500 rounds). He then combined the databases and broke down how scoring varied between pros and amateurs based on the shots involved.

For example, Broadie analyzed at what distance there is a 50% chance of sinking a putt. Tour players break even on 8-foot putts, but somewhat surprisingly to me, the best amateurs (amateurs with between a 0-9 handicap) break even on putts from 6 feet (I'm an 8 handicap, but doubt that I break even from 6 feet). On the other hand, Tour players average almost 280 yards off the tee, while amateurs with a 0-9 handicap average only 248 yards driving the ball. That's part of why some of Broadie's conclusions are counter-intuitive to the standard "you drive for show, but putt for dough" advice that golfers regularly receive from golf instructors:

It is the long game that proves to be the biggest factor when examining the difference in scores between pros and amateurs and even between low- and high-handicap amateurs. If, for example, a PGA Tour player were available to hit shots for an amateur from 100 yards and in, or available to hit all the shots leading to the 100-yard mark, Broadie says the amateur would benefit the most from having the PGA player hit the long shots, not the short ones.

Despite the belief that shorter hitters are more accurate off the tee than longer hitters, Broadie discovered the opposite: longer hitters also tend to be straighter hitters. “Better players are more skilled over all,” Broadie said. “They hit it farther and they have more consistent swings, so they’re more accurate, too.”

It is often said that 60 to 65 percent of all shots are struck within 100 yards of the hole. Broadie agreed but noted that if you take out “gimme” putts of two and a half feet, the statistic has less meaning. Remove very short putts that are rarely missed, and shots from 100 yards or less account for only 45 to 50 percent of all shots. Eliminate putts from three and a half feet or less, and the figure drops to 41 to 47 percent. [.  .  .]

Broadie also said that a putting statistic golfers often keep (the number of putts per round) was not as valuable at predicting one’s score as another stat, the percentage of greens hit in regulation, which will more likely tell you how well a golfer is scoring.

Of particular interest is Broadie's findings regarding shots hit from between 150 to 100 yards from the green. He computed the average distance remaining to the hole after the golfers hit that particular approach shot. Tour players had 5.6% of the distance remaining, while the top amateurs had 8.7% of the distance remaining. As a result, Broadie recommends that a good way to determine whether your short game needs more help than your long game is to compute your own percentage and then compare it to the amateur group you fall into based on your handicap.

For example, inasmuch as my handicap is 8, if the distance remaining to the hole after my shots from 100-150 yards is higher than 8.7% of the distance of the shots, then my short game is probably worse than other golfers of comparable handicaps. On the other hand, that also means that my driving and related long shots are probably a bit better than my peers.

There are other interesting tidbits, so check out the entire article. As Broadie observed: "It's great cocktail-party conversation."

Posted by Tom at 12:01 AM | Comments (0) |

July 26, 2008

Remembering Sam Kinison

The late Sam Kinison is a comedy legend who was part of a group of comedians nicknamed the Comedy Outlaws (Ron Shock and Bill Hicks were two other prominent members) that got their start in Houston during the early 1980's, most often at the LaughStop on West Gray. Here is a hilarious video of Kinison on the Tonight Show, which includes Kinison's under-appreciated singing voice and a lively discussion between Kinison and Johnny Carson on the subject of divorce. Enjoy!

Posted by Tom at 12:01 AM | Comments (1) |

July 25, 2008

Houston-based God, Inc.

Karl Taro Greenfeld of Portfolio.com examines the money-making machine that is Houston's Joel Osteen and Lakewood Church (prior posts here):

Last year, Lakewood generated $76 million in revenue, which amounts to just over $1,600 for every member of its congregation. Its take includes $44 million donated directly by congregants, who are asked to give 10 percent of their gross income; $10 million in product sales and sermon tapes; and $13 million brought in through direct-mail solicitations, up from about $6 million two years ago. The church’s greatest expense is the TV airtime it buys: $22 million last year to broadcast the show in more than 100 markets, a 10 percent annual increase in spending that is easy to justify. “Cutting back on airtime would be like saying we won’t be sending any trucks to deliver our product,” [Osteen brother-in-law Kevin] Comes says [Comes is Lakewood's chief operating officer]. An additional $13 million goes to administrative costs and salaries, and $9 million a year is spent on facilities and maintenance. [.  .  .]

Being backstage at a Joel Osteen worship event is remarkably similar to being at an N.B.A. game or a rock concert. Beefy security guards tell you where you can and can’t go. Crew members chow down on a buffet laid out by a local caterer and bark into walkie-talkies between bites. At some point, black Town Cars head down the long, curving driveway into the belly of the arena and drop off the pastors and performers, who retreat into private suites.

The night is a celebration of music, state-of-the-art visual effects, and, of course, Christ. Lakewood spends a great deal of money attracting top gospel and Christian talent, and music minister Cindy Cruse-Ratcliff leads a team of Grammy Award winners, including gospel singer Israel Houghton. It’s a thumping occasion, with people dancing in the aisles and even the security guards singing along to “Come Just as You Are” and “We Have Overcome.” Osteen’s entire family is in the act. His mother, wife, and children often play parts in the service.

But it’s Osteen himself we have come to see. He wins the crowd over with wholesome jokes and inspires with his sweet-voiced message. The sermon today is based on the notion of “hitting the DELETE button when you have those negative thoughts.” He urges us to banish that voice telling us, “I’ll never get that great job. I’ll never meet that special someone. I’ll never get married.” Hit the delete button, he urges, and reprogram your mind. “Just one inferior thought can keep you off balance and away from your God-given destiny.”

Read the entire article here. But hit the DELETE button to rid yourself of any negative thoughts first.

Posted by Tom at 12:01 AM | Comments (1) |

July 23, 2008

Fannie and Freddie fallout

Gosh, I thought the political coalition that supports inefficient light rail systems was formidable. But that coalition can't hold a candle to the one that the W$J's Paul Gigot says (non-gated version here) protected the dubious quasi-public structure of Freddie Mac and Fannie Mae:

The abiding lesson here is what happens when you combine private profit with government power. You create political monsters that are protected both by journalists on the left and pseudo-capitalists on Wall Street, by liberal Democrats and country-club Republicans. Even now, after all of their dishonesty and failure, Fannie and Freddie could emerge from this taxpayer rescue more powerful than ever. Campaigning to spare taxpayers from that result would represent genuine "change," not that either presidential candidate seems interested.

Meanwhile, Cato's Gerald O'Donnell points out that the proposed bailout represents "casino capitalism" for taxpayers:

Treasury Secretary Henry Paulson's bailout plan for mortgage giants Fannie Mae and Freddie Mac .  .  .  prompted Sen. Jim Bunning (R-Ky.) to remark that he thought he'd woken up in France. Yes, socialism is alive and well in America - thanks to a Republican Treasury secretary.

Absent from Paulson's plan is any protection for taxpayers. They'll fund the downside if losses mount at the two mortgage giants. But if Fannie and Freddie recover, stockholders and management gain. Call it "casino capitalism" - taxpayers bankrolling management high rollers.

The plan doesn't ask stockholders or management to suffer for their financial indiscretions. The players who put their companies in jeopardy get to stay in charge - Paulson says he isn't looking for "scapegoats." Someone should remind him that capitalism without failure is like religion without sin.

Posted by Tom at 7:14 PM | Comments (0) |

Take a tour of the Pac-10

Check out this cool Google Earth tour of each stadium in the Pac-10 Football Conference.

Posted by Tom at 12:01 AM | Comments (0) |

July 22, 2008

Checking in on the battle for last place

I'm not making this up. During the early stages of the last night's first game of the series between the Stros (46-53) and the Pirates (45-54) to determine last place in the National League Central, the following advertisement appeared on one of the Minute Maid Park screens:

Mini-Season Ticket Packages Still Available!

Playoff Ticket Option Included!

Uh, I think that playoff ticket option is of dubious value.

As the Pirates were putting up a 7-spot on the Stros in the top of the 9th on their way to a 9-3 win, I noticed something that pretty well sums up the sorry state of the Stros these days. Although they do not have a hitter the caliber of the Stros Lance Berkman (51 RCAA/.438 OBA/.638 SLG/1.075 OPS), the Pirates -- who are heading toward their 16th straight losing season -- have four hitters who are at least as productive this season as the Stros' second-best hitter, Carlos Lee (18 RCAA/.353 OBA/.550 SLG/.903 OPS).

The four Pirates are Jason Bay (29 RCAA/.379 OBA/.514 SLG/.893 OPS); Nate McClouth (24 RCAA/.350 OBA/.527 SLG/.878 OPS); Xavier Nady (22 RCAA/.377 OBA/.526 SLG/.903 OPS); and Ryan Doumit (20 RCAA/.380 OBA/.560 SLG/.939 OPS). As a result, the Pirates overall (+38 RCAA) are vastly superior to the Stros (-44 RCAA) in hitting. Only their abysmal pitching (-138 RSAA!) keeps the Pirates in the fight for the cellar with the Stros.

At any rate, guess the total amount the Pirates are paying all four of those hitters?: $10,187,000, or more than $2 million less than the $12.5 million that the Stros are paying this season to Lee alone. And Lee's salary goes up to $18.5 million for each of the 2009-2012 seasons.

As I suspected when the Stros signed Lee to that contract, that is the kind of contract that can turn a contender into an also-ran very quickly. Unfortunately, the value of the contract relative to Lee's above-average (but not spectacular) productivity, combined with a no-trade clause, makes it virtually certain that the Stros will not be able to unload it.

By the way, did anyone else notice who has climbed into second place today?

Posted by Tom at 12:01 AM | Comments (0) |

July 21, 2008

Update on the Judge Kent investigation

It looks as if the heat is being turned up again on embattled U.S. District Judge Sam Kent. Here is the latest by Chron reporter Lise Olsen:

Justice Department broadening investigation of Kent
Sale of home and gift reporting being examined

A Justice Department investigation into the sexual conduct of U.S. District Judge Samuel Kent has expanded to include allegations that he accepted but failed to report gifts and also sold his home in a deal arranged by a lawyer with dozens of cases in his court, Kent's own attorney and other lawyers have confirmed.

The ongoing investigation was launched last year after Kent's former case manager complained that the judge sexually molested her. Since then, several prominent attorneys have been subpoenaed by federal prosecutors to appear before a Houston grand jury involving other allegations of judicial misconduct, according to documents and interviews obtained by the Chronicle.

Months ago, investigators began asking about parties, a 2001 trip to London and meals attorneys had bought for Kent at Galveston restaurants — often on days they did business in his court, lawyers and former co-workers said.

According to Kent's attorney, Dick DeGuerin, they also requested records about a real estate deal in which one of those attorneys, Kurt Arnold, helped persuade his mother to buy Kent's home in the city of Galveston.

[.  .  .]

The 2006 sale price was $339,500 for the 64-year-old house in the Denver Court neighborhood a few blocks inland from the seawall. The property is valued at $224,090 by the Galveston County Appraisal District. However, appraisals obtained by the buyer and seller were closer to the sale price,  .   .  .

Arnold is a former law clerk of Judge Kent who had cases pending in Judge Kent's court, so the implication of the article is that Arnold arranged for his mother to make a favorable purchase of Judge Kent's house. Nevertheless, it appears that the sale was for fair market value, although Judge Kent was able to negotiate a reduced commission on the deal because Arnold's mother didn't use a realtor. The article suggests that the reduced commission was an effective gift to Judge Kent from Arnold, which is a stretch.

The grand jury is also investigating possible gifts that Judge Kent received from attorneys practicing in his court, including a 2001 trip to London and lunches at various Galveston restaurants. The Chron reports that "at least" 10 attorneys have been subpoenaed to testify before the grand jury, although several have given sworn statements in lieu of testifying. Judge Kent has already given a statement to the FBI and has offered to cooperate with prosecutors, but has not yet been requested to do so, according to his defense counsel, Dick DeGuerin.

It's still too early to say what all this means for Judge Kent, but the extent of the grand jury investigation is not good news for him. Stay tuned.

Posted by Tom at 12:01 AM | Comments (0) |

July 20, 2008

Can he do it?

I don't think so, but I sure will be pulling for him. We mid-50 year olds have to stick together.

If Norman can pull it off, his victory should put to rest one of the cruelest golf jokes of recent lore:

Q: What is the English pronunciation of Jean Van de Velde, the Frenchman who blew the 1999 British Open at Carnoustie by taking a triple-bogey 7 on the final hole and then losing in a playoff?

A: Greg Norman

Daniel Wexler passes along the following analysis of Norman's remarkable career from The Book of Golfers:

Among the most striking and exciting golfers ever to play the game, Queensland’s Gregory John Norman (b.Mt Isa 2/10/1955) may not rank as highly as Tom Watson, Seve Ballesteros or Nick Faldo on most all-time lists, yet he was arguably golf’s most captivating figure between the reigns of Jack Nicklaus and Tiger Woods.  A typically sports-oriented Australian youth, Norman only took up golf after caddying for his low-handicap mother at age 16, then worked his way down to scratch within two years.  Pondering a career in the Australian air force, Norman instead turned professional after winning the Queensland Junior title, working briefly in Sydney, then for a longer stint at the Royal Queensland GC where he apprenticed for the man who would be his primary teacher, the well-known Charlie Earp.

By 1976 Norman was ready to compete around Australia – so ready, in fact, that he won his fourth start, Adelaide’s West Lakes Classic, over a strong professional field.  Like many an ambitious Aussie before him, Norman spent the next three years playing largely abroad, taking five titles in Europe and Asia as well as four more in his homeland.  By 1979 he was beginning to approach the game’s highest levels when a missed putt of 4’ at the 72nd cost him the Australian Open.  But with a work ethic to match his raw talent, Norman continued his steady improvement and took the national title for the first time the following year, by one over Brian Jones at The Lakes GC in Sydney.  The victory led to an invitation to the Masters and it was at Augusta in 1981 that America got its first look at a player whose attacking style, charisma and white-blond hair made for ideal golf television.  Norman would finish fourth in this Masters debut, entertaining the media with tales of shark hunting which, inevitably, spawned his famous “Great White Shark” nickname.  Three months later he added joint fourth at the PGA Championship in Atlanta, and a new international star was born.

Generally considered the longest straight driver in history, Norman soon began playing regularly in America where his aggressiveness and larger-than-life personality ticketed him as the logical heir apparent to Palmer, Nicklaus and Watson.  Frequently he seemed capable of living up to the hype, such as the summer of 1984 when, within a five-week span, he won twice (at the Kemper and Canadian Opens), lost to Tom Watson in a playoff for the Western Open, then endured an 18-hole playoff loss to Fuzzy Zoeller in the U.S. Open at Winged Foot.  This, of course, was one of the modern era’s most memorable Opens with Norman blowing his approach to the 72nd into a grandstand before ultimately holing a 50’ putt for par.  Back in the fairway, thinking that Norman had made birdie, Zoeller waved the white towel of surrender – but on Monday it would be Norman who yielded when Fuzzy took the playoff with a sparking 67.

The loss at Winged Foot led to some talk – at that time largely misplaced – of Norman as a choker, and his unique “Saturday Slam” of 1986 hardly helped.  For in that remarkable season, Norman indeed led all four Majors after 54 holes, yet won only the Open Championship, his most crushing defeat coming at the PGA where Bob Tway holed a famous bunker shot at 72nd for victory.  Such a loss can only happen once a lifetime, one might assume, but at the 1987 Masters Norman endured another notorious lightning bolt when Larry Mize drained a 45-yard pitch to snatch victory on the second hole of sudden death.  Three years later David Frost would hole a bunker shot at the last to edge Norman in New Orleans, and then, barely a month later, Robert Gamez would beat him at Bay Hill by actually holing a full 176-yard 7 iron at the last!

The gods, then, were not always with him, but Norman often generated his own misery, including a badly blocked 4 iron at the 72nd which cost him a playoff with Nicklaus at the 1986 Masters, a disappointing 76 in a much-anticipated third-round duel with Nick Faldo at the 1990 Open Championship and the saddest of them all, the final-round 78 that eviscerated a seemingly insurmountable six-shot lead, allowing Faldo to win the 1996 Masters with a closing 67.

But if Norman is to be vilified for these losses, he must also be credited with some of modern golf’s greatest work.  In 1990, for example, he closed the Doral Open with a scorching 62, then won in a playoff by eagling the first extra hole – a 12-under-par total for 19 holes.  Even more impressive, however, were rounds played during his two Major titles, the 1986 and ’93 Open Championships.  In 1986, after opening with a weather-induced 74, Norman uncorked an almost unbelievable second-round 63 in dismal conditions, a round which stood only three putts at both the 17th and 18th away from perhaps being the greatest ever played.  Then in 1993, he stormed home at Royal St George’s with a near-perfect closing 64 to beat Nick Faldo by two, a round described by Gene Sarazen as “the most awesome display of golf I have ever seen.”

A fitness devotee, Norman retained his world-class skills well into his 40s, winning twice in 1997 at age 42, then taking his own homeland event, the Greg Norman Holden Invitational, a year later.  Today he rides herd over Great White Shark Enterprises, a highly successful international business conglomerate, while receding slowly from the competitive scene.  But whatever critics may say regarding his career, two Open Championships, more than 80 wins worldwide, 29 top-10 finishes in Major championships and a record 331 total weeks ranked as the number one player in the world adds up to a large and impressive legacy, particularly when judged against the field as opposed to a generalized sense of expectations.  Further, no player between Nicklaus and Woods has loomed larger over the game, or brought more excitement – and epic struggle – to its playing fields.

Posted by Tom at 12:01 AM | Comments (0) |

July 19, 2008

New Movie Time

My boys are dragging me to the The Dark Knight this weekend and, based on early reviews, I'm reasonably sure that it will be quite good. But truthfully, I'm looking forward more to the new Coen Brothers movie, Burn After Reading:

Posted by Tom at 12:01 AM | Comments (0) |

July 18, 2008

The Usual Suspects

Given the recent turmoil in the financial markets, it's a bit hard to keep up with the morality plays and the villains.

After the Enronesque fall of Bear Stearns, the villains of the moment were the two Bear Stearns executives who were indicted for not throwing in the towel timely.

Then, over the past several weeks, speculators who facilitate markets to hedge energy costs became targets of the demagogues.

And now this week, with the demise of Fannie Mae and Freddie Mac, SEC Chairman Christopher Cox issued an emergency order attempting to curtail naked short-sellers of the stock of the embattled government sponsored entities and also the stocks of Lehman Brothers, Goldman Sachs, Merrill Lynch and Morgan Stanley.

What on earth is Christopher Cox, a supposedly sophisticated securities lawyer, doing issuing orders that hinder the efficient functioning of markets?

Folks, the problem is not that stock prices of the GSE's and the investment banks are low because some nasty market manipulators have been targeting them. Larry Summers has a much more rational explanation for the GSE's demise. Instead of rethinking those misguided policies that led to the bubble in the GSE's stock price, Cox is engaging in a classic case of shooting the messenger by attempting to limit a price-setting mechanism for shares of stock.

Short selling -- the act of betting against a stock by borrowing it, selling it and then purchasing the stock later at a lower price to repay the loan -- plays an important role in well-functioning markets. If short selling is repressed, then optimists will dominate in the marketplace, which generally results in stocks becoming overpriced. Stated simply, persecuting the short-sellers contributes to stock bubbles. Larry Ribstein summed up the absurdity of the Cox's action well:

“[I]n our wacky world of regulation, as we step up liability to get out the truth about securities, we stomp down an important mechanism for getting the truth out about securities.”

And in addressing the above question about Cox, Craig Pirrong had an interesting 1993 encounter with the SEC chaiman regarding short-selling (and with Hillary and Bill Clinton, too, but that's a sideshow) that prompts him to make the following observation about Cox:

Given my 1993 experience with Chris Cox, I have my suspicions that the new short selling restrictions aren’t based on any empirical evidence or deep economic reasoning -– instead they are a reflection of Cox’s anti-shorting prejudices (and the prejudices of like-minded folks at the SEC) -– prejudices that he displayed in 1993.

When are we going to learn that knee-jerk regulatory responses such as Cox's latest often do more economic harm than good, not the least of which is the perpetuation of myths that distract investors from prudent risk allocation?

Update: Chron business columnist Loren Steffy agrees with me. And Don Boudreaux today identifies the underlying human dynamic behind such witch hunts:

We humans have a long and embarrassing history of blaming devils for distressing aspects of reality that we don't understand.   Droughts, floods, plagues, and erupting volcanoes have all been ascribed to the machinations of unseen super-powerful entities – as ill-defined as they are ill-intentioned – who manipulate a reality to which they are immune but to which we mortals must inevitably bend.

Today's witch hunt for speculators who allegedly are driving oil prices to heights unconnected with the realities of supply and demand is just the latest entry in this pageant of ignorance.

This post from two years ago addressed the same dynamic in connection with the death of Ken Lay. And Arnold Kling chimes in with an absolutely spot-on analysis about the folly of attempting to limit the pricing mechanism of markets:

In the mortgage market, people saw risk-takers outperforming prudent lenders. So they took more risks. There is no simple fix for that. For the foreseeable future, we can count on investors sticking to prudence when it comes to mortgage lending. We don't need any regulations to close that barn door.

But somewhere, some time, in some other market, there will be another outbreak of excessive risk-taking. You can't make the system idiot-proof. They'll just build a better idiot.

Update II: The SEC is already retrenching from its "emergency" order (W$J article here).

Posted by Tom at 12:01 AM | Comments (0) |

July 17, 2008

Beijing = "People's Republic of Houston"?

"Beijing is flat and sprawling and smoggy and jammed with traffic and nearly all new, which is why an American friend who’s been working there for the last couple of years calls it 'the People’s Republic of Houston.'"

That's the opening of From Mao to Wow! by Kurt Anderson of Vanity Fair. He goes on to say that a more accurate comparison is Beijing now with New York City of a century ago.

Posted by Tom at 12:01 AM | Comments (0) |

July 16, 2008

Southwest Airlines' legacy of good news

Gosh, it's such a drag reading about business and the economy lately. So, what the heck, let's take a quick look at a perennial source of good news, Clear Thinkers favorite Southwest Airlines.

Southwest's discount model of operation has kept it profitable in the notoriously unprofitable airline business for 35 straight years. Even during these turbulent times, Southwest's aggressive hedging program for its fuel costs and efficient operations have allowed the company to accumulate $3.7 billion of cash and generate a market capitalization of $9.9 billion. That market cap is now greater than the combined market value of the six largest legacy U.S. airlines. WallStrip's Julie Alexandria provides a clever overview on one of Texas' true treasures:

Posted by Tom at 12:01 AM | Comments (0) |

July 15, 2008

Stros 2008 Season Review, Part Three

Inasmuch as Major League Baseball is taking a break for the All-Star break, I decided to post the third part of five periodic reviews of the Stros' 2008 season a game or so early (previous parts for the 2008 season are here). Although they were able to keep it together a bit longer than the 2007 club, the 2008 Stros (44-51) fell apart during the third 20% segment of the 2008 season.

The Stros went 12-19 during the third segment and spiced that effort by being trounced 10-0 on this past Friday evening by the team with the worst record in MLB, the Washington Nationals (36-50). That's a far worse record than the club had during either the first fifth or second fifth of the season, but consistent with my pre-season forecast that this Stros club looked like a 75-win outfit. The Stros are in in last place in the National League Central, 13 games behind the Cubs (57-38) and 8.5 games out of the National League Wildcard Playoff berth. Given that the Cubs net RCAA/RSAA total is 113 (43 RCAA/70 RSAA) and the Stros is -42 (-41 RCAA/-1 RSAA), it's surprising that the Stros aren't even further behind.

Nevertheless, the first 60% of the season has been an instructive lesson in how risky it is to make conclusions about baseball based on small sample sizes. The Stros stumbled out of the gate with 12 losses in their first 18 games and looked completely lost. Then, stellar 1B Lance Berkman (52 RCAA/.443 OBA/.653 SLG/ 1.097 OPS) warmed up and the club bounced back with a 23-10 stretch that put them seven games above .500 at 30-23 and just one game behind the Cubs on May 27, prompting the mostly clueless Chronicle sports reporters (Zac Levine excepted) to babble about a possible playoff berth. However, since then, the Stros have lost 29 of 43 games to drop into the NL Central cellar and decisively expunge any theoretical playoff aspirations. The Stros now have to win 31 of their final 67 games just to equal my 75 win pre-season prediction. That is by no means a sure thing.

The Stros' main problem continues to be absolutely atrocious hitting outside of Berkman, LF Carlos Lee (16 RCAA/.351 OPS/.547 SLG/.898 OPS) and 3B Ty Wigginton (4 RCAA/.368 OBA/.470 SLG/.839 OPS). Inasmuch as Berkman, Lee and Wigginton have together generated 72 more runs (mostly due to Berkman) than three National League-average hitters would have produced using the same number of outs, the rest of the Stros hitters have generated an astounding 116 fewer runs than the same number of merely National League-average hitters would have produced using the same number of outs.

The Stros resulting -44 RCAA ranks 13th among the 16 National League clubs and is better than only the truly pathetic Giants, Diamondbacks and Nationals. But for Berkman having one of the best seasons of any hitter in Stros history (he has a legitimate chance of breaking into Jeff Bagwell's top four Stros all-time seasons -- 1994, 96, 97 & 99), this Stros club would be competing for the distinction of the worst hitting team in the club's history. As it is, the 2008 club will likely end up being one of the five worst hitting teams in franchise history.

Meanwhile, the pitching that had been overachieving through the first 40% of the season came back down to earth during the third segment of the season. The Stros staff remains a barely above National League-average staff, saving 7 more runs through 95 games than a National League-average staff would have given up in the same number of innings. That is 7th among the 16 National League clubs.

Although staff ace Roy Oswalt started to rebound (1 RSAA/ 4.56 ERA), he strained a hip muscle a couple of weeks ago and appears headed to the disabled list after lasting only one inning in the aforementioned 10-0 debacle against the Nationals. Also, staff ace-to-date Wandy Rodriguez is trending back to his career numbers (9 RSAA/3.23 ERA), while primary relievers Jose Valverde (4 RSAA/3.89 ERA) and Doug Brocail (4 RSAA/3.86 ERA) are merely slightly above National League-average in their performance. Thus, unlike the 2005 Stros pitching staff, this staff simply does not have the talent to string together a run of high-quality pitching that is necessary to put together a long winning streak that could vault the Stros back into playoff contention.

Nevetheless, this club's main problem is not the pitching staff, which is far improved over the 2007 club and does not have a member whose RSAA is anywhere near the horrid RCAA's posted by "hitters" such as CF Michael Bourn (-24 -- worst in the NL among regular players), RF Hunter Pence (-14), C J.R. Towles (-15) and the always-awful Brad Ausmus (-14). With the exception of Berkman, Lee, Wigginton and possibly Pence, I'd bet that P Brandon Backe (1 RCAA/.406 OBA/.517/.918 OPS) would hit better over a course of a full season than any of the other Stros hitters. That's a sad reflection of the deterioration in hitting that has bedeviled the Stros throughout the latter stages of the Biggio-Bagwell era.

In part two, I reviewed what the Stros should do for the rest of this season to salvage it, so I won't repeat that here. However, what is more distressing than the club's performance this season is the apparent cluelessness of the club's management on what to do about it. Both owner Drayton McLane and General Manager Ed Wade have been quoted in the mainstream media in recent days saying that the club "has not given up" and that they believe that the team "has what it takes" to make a playoff drive in the final 67 games.

Now, such statements are regularly made in MLB for public relations purposes and shouldn't be taken seriously. Neither McLane nor Wade really thinks that this team has any meaningful chance to contend for a playoff spot. However, the management of the team is still odd. Apart from the questionable handling of the Chacon affair, CF Bourn ought to be playing either on the big league club or in AAA learning how to hit line drives and hard grounders. Sitting him on the Stros bench makes absolutely no sense while allowing a washed up Darin Erstad to take valuable playing time away from a younger and potentially better player. Similarly, why on earth are the Stros wasting innings on the hopeless Ausmus while Towles wastes away on the bench? If the club is not going to play Towles regularly, then send him back to Round Rock where he can develop his skills.

Finally, the club's handling of Oswalt's recent injury reflects desperation. Oswalt has battled the hip muscle injury for several seasons. The reoccurrence of the injury a couple of weeks before the All-Star break clearly called for the club to put its most valuable pitching asset on the shelf through the break to allow him three solid weeks of recovery time. Instead, the club inexplicably pushed Oswalt to pitch last Friday night's meaningless debacle, which resulted in a not surprising aggravation of the injury. Thus, not only did management eviscerate Oswalt's trade value, they also contributed to the risk that Oswalt's injury will become seriously chronic in nature. What on earth was Stros management thinking?

Oh well. At least the club appears to be doing a good job of signing its picks from this year's draft, which is what the Stros need to do to start the long process of restocking its fallow farm system. But at some point, the club's management needs to level with its fan base about it's commitment to development of players in the club's system rather than attempting to patch something together from season to season. It's going to take awhile, but it's a heck of a lot more fulfilling than trying to sell snake oil.

The Stros take on their NL Central opponents after the All-Star break, first the Cubs and Pirates (44-50) at home, then on the road at the Brewers (52-43) and then back home to play the Reds (46-50) to close out the month. That will take the Stros up to the trade deadline, where they should be sellers despite a paucity of attractive offerings. Oswalt is damaged goods right now, while Lee's over-priced contract undermines any trade for him. Berkman is a valuable asset, but the Stros would likely face a public relations disaster if they tried to move him. Still, pitchers Rodriguez, Valverde and Brocail and SS Miguel Tejada each might bring a decent prospect from a contender in trade. But will this seemingly directionless Stros management team be selling?

The 2008 season statistics for the Stros are below (through 93 games; I'll update through 95 games later), courtesy of Lee Sinins' sabermetric Complete Baseball Encyclopedia. The abbreviations for the hitting stats are defined here and the same for the pitching stats are here. The Stros' 40 man roster is here with links to each individual player's statistics:

 

 

Posted by Tom at 12:01 AM | Comments (0) |

July 14, 2008

Be careful, Mr. Wagoner

General Motors CEO Rick Wagoner made some interesting public comments this past week in Dallas regarding the besieged automaker's bankruptcy prospects:

"Under any scenario we can imagine, our financial position, or cash position, will remain robust through the rest of this year," Mr. Wagoner said Thursday while in Dallas to speak to a business organization. He said the company has plenty of options to shore up its finances beyond 2008, although he declined to outline them.

The comments failed to boost investor sentiment as GM shares fell 6.2% to $9.69 in 4 p.m. New York Stock Exchange composite trading Thursday. The stock has been trading at its lowest levels in more than 50 years as concerns mount about the company's financial position amid a steep decline in U.S. sales.

GM and other U.S. auto makers are reeling as the slow U.S. economy depresses sales and as high gasoline prices push many would-be buyers to small, more-fuel-efficient vehicles and away from the higher-margin SUVs and trucks. Through June, for instance, GM's U.S. sales slipped 16%, more than offsetting strength in overseas markets.

GM has about $24 billion in cash but is burning an estimated $3 billion a quarter, prompting talk that it will need a significant cash influx to get to 2010.

"We have no thought of [bankruptcy] whatsoever," Mr. Wagoner said in response to an audience question during the Dallas event.

Now, I am not involved with GM, but I have been involved over the past 30 years in my share of big company reorganizations. Contrary to Wagoner's statements, GM has almost certainly "thought" of bankruptcy and GM management probably continues to examine whether a reorganization under chapter 11 of the Bankruptcy Code makes sense for the company, which it just might. Frankly, not to examine such alternatives would be egregious mismanagement. Any seasoned investor knows this and the market is clearly pricing that risk by lowering the company's stock price.

So, despite all that, if GM ends up in bankruptcy, is Wagoner at risk of being indicted for misleading investors regarding the company's ongoing bankruptcy analysis? Stated another way, will Wagoner be indicted for breaching the obligation to throw in the towel?

Posted by Tom at 12:01 AM | Comments (0) |

July 13, 2008

Dr. Michael DeBakey, R.I.P.

Dr. Michael DeBakey (previous posts here) died late Friday at the age of 99. One of the most influential men in Houston's history, Dr. DeBakey was the world-famous cardiovascular surgeon who researched, developed and initially implemented not only a variety of devices that help heart patients, but also such now-common surgical procedures as heart-bypass surgery. Two of the Chronicle's finest reporters -- Science reporter Eric Berger and Texas Medical Center reporter Todd Ackerman -- provide this outstanding article on Dr. DeBakey's remarkable life, and Eric provides an audio file of his 2005 interview of Dr. DeBakey here. The New York Times' article on Dr. DeBakey's death is here.

As with my late father, Dr. DeBakey was one of the leaders of a talented generation of post-World War II doctors who embraced the optimistic view of therapeutic intervention in the practice of medicine, which was a fundamental change from the sense of therapeutic powerlessness that was widely taught to doctors by their pre-WWII professors. As noted earlier here and here, that seismic shift in medicine has changed the course of human history.

But the tremendous impact that Dr. DeBakey had on medicine is exceeded by the massive effect that he had on Houston. When Dr. DeBakey accepted the president's position at Baylor College of Medicine a few years after the end of World War II, the Texas Medical Center was a sleepy regional medical center. Over the next two decades, Dr. DeBakey was one of the key leaders who transformed the Medical Center into one of the largest and best medical centers in the world. Dr. DeBakey was the catalyst who established the culture within the Texas Medical Center of cutting-edge research, productive competition but also widespread collaboration, quality care for patients and good, old-fashioned hard work that attracted the best and brightest physicians, teachers and students from around the world to the Medical Center.

This massive importation of intellectual capital over the last 60 years of Dr. DeBakey's life generated enormous wealth and benefits for Houston. Today, the medical facilities of the Texas Medical Center are the largest aggregate provider of jobs in the Houston area, even greater than the local jobs provided by the energy industry.

That's quite a legacy in my book.

Posted by Tom at 12:01 AM | Comments (0) |

July 12, 2008

Incompetence masquerading as demagoguery

University of Houston finance professor Craig Pirrong (blog here) does a nice job in this Wall $treet Journal op-ed on Friday of explaining how speculation in oil and gas markets helps all of us deal with rising energy prices:

Restricting these speculators won't reduce the price of oil -- but they are likely to make consumers and investors worse off. Futures and swap markets facilitate the efficient management of price risks, and speculators are an important part of that process. For instance, a producer of oil may want to lock in the price at which he sells his oil in the coming months in order to hedge against fluctuations in its price. He can do so by selling a futures contract at the prevailing market price. Similarly, an airline can protect itself against price increases next summer by buying today a futures contract that locks in a purchase price for next July.

Producers and consumers who want to "hedge" in this fashion cannot wave a magic wand to make the price risks they face disappear. The oil producer has to find somebody to sell to, and the airline must find somebody to buy from -- and that somebody is often a speculator. Restricting speculation would increase the costs that producers, consumers (such as airlines), and marketers (such as heating-oil dealers) pay to manage their price risks by reducing the number of traders able to absorb the risks they want to shed.

These higher risk management costs would result in higher prices at the pump or the airline ticket counter for consumers, and less investment in new productive capacity -- which would keep prices high into the future.

Participation in these oil markets by pension funds and other investors .  .  . is also not a problem. By adding commodity futures to their portfolios, i.e., by diversifying, these investors can reduce their risks without sacrificing returns, and without impacting physical inventories (or prices). Consumers are the ultimate winners when risks are borne as efficiently as possible in these markets.

The unprecedented run-up in oil prices is painful for consumers around the world. But the focus on speculation is misguided, and represents a convenient distraction from an understanding of the real, underlying causes of high oil prices -- most notably continuing demand growth in the face of stagnant production, supply disruptions and the weakening dollar.

More restrictions and regulations of energy markets, in the vain belief that such actions will bring price relief, are counterproductive. They will make the energy markets less efficient, rather than more so.

As noted awhile back here, one really need look no further than the most profitable U.S. airline to understand how robust speculation in energy markets benefits a company's employees, its investors and its customers.

However, apparently the CEO of a far less profitable airline -- Craig Steenland of chronically unprofitable Northwest Airlines -- has not noticed how beneficial futures markets can be for his company and its customers. He is busy lobbying Congress to enact strict regulations against precisely the type of markets that Southwest Airlines has used to beat Northwest's performance like a drum over the past five years:

The battered airline industry took its concerns about rising fuel costs to Capitol Hill Monday, urging Congress to address widespread speculation in the energy markets.

Making the case for the industry was Northwest Airlines CEO Doug Steenland, who argued that energy market speculators have pushed oil prices to unprecedented levels and harmed the airlines that saw some recovery in 2007. [.  .  .]

"I cannot overstate the importance to my company and the entire U.S. airline industry of immediate congressional action to halt excessive speculation in oil futures markets," Steenland said.

Specifically, Steenland sought more regulatory power for the Commodity Futures Trading Commission (CFTC), a prohibition on pension funds from investing in energy commodities and law changes that would remove loopholes and increase oversight of speculators.

Jeff Matthews sums up the absurdity of Steenland's witch hunt on the energy speculators perfectly:

Remember what I said about Mr. Steenland being named CEO of Northwest in October, 2004? Northwest Airlines did not start hedging its jet fuel needs until 2008.

That’s right.

Unlike, say, Southwest, which hedged most of its jet fuel needs when prices were low, Northwest didn’t bother until oil had spiked to $100 a barrel. [.  .  .]

Of course, when a big corporate CEO like Mr. Steenland makes a gross error of judgment like not hedging his single biggest cost of doing business, he naturally takes full responsibility and ask shareholders and customers for forgiveness.

We’re kidding!

He blames speculators instead .  .  .

Northwest emerged from Chapter 11 in May 2007. Northwest equity holders got nothing. Mr. Steenland got a package worth $26.6 million at the time.

Too bad Northwest didn’t use some of that $26.6 million to hedge itself.

I guess the only thing to do now that it's too late to do anything useful is...blame speculators.

Yep, that's the ticket...for an airline that doesn't know much about hedging, anyway.

I rest my case.

Posted by Tom at 12:01 AM | Comments (0) |

July 11, 2008

An Enron "hero" is looking for work?

This JoAnn Greco/Portfolio.com article bemoans that "famed Enron whistleblower" Sherron Watkins is having a hard time finding a job. Those dastardly employers just don't trust honest employees such as Watkins, now do they?

On the other hand, perhaps the reason that Watkins can't find a job is that prospective employers do more research than Ms. Greco bothered to do for her article and discover that Watkins wasn't really a whistleblower even though she disingenuously presented herself to Congress, the mainstream media and the public as one.

Posted by Tom at 12:01 AM | Comments (1) |

July 10, 2008

Which Starbucks stores are closing?

When Starbucks announced last week that it is closing 600 stores and laying off 12,000 employees, the company did not disclose which stores would be shuttered (got to get those lease buyouts finalized). However, that hasn't stopped word from filtering out into the Web on the location of the shuttered stores. The Seattle Times has already generated this Google map containing a large number of the anticipated store closings.

View Larger Map

However, the question that is on most Houstonians' minds has not been answered. Will Lewis Black's "End of the Universe" cease to exist after Starbucks is finished closing stores?

This clip includes video of the two stores as Black comments on the end of the universe on The Daily Show (H/T Life is a Thrill):

Update: Here is the full list of the stores that will be closing.

Posted by Tom at 12:01 AM | Comments (2) |

July 9, 2008

The NFL confronts the Mismatch Problem

The pathological way in which National Football League teams annually evaluate college football players has been a common topic on this blog. So, I thoroughly enjoyed this New Yorker video (H/T Guy Kawasaki) of a recent talk by Clear Thinkers favorite Malcolm Gladwell in which he uses the NFL's new-player evaluation process as an example of a hiring practice that is undermined by the "mismatch problem" -- that is, the tendency of an employer to cling to outmoded employee evaluation variables despite the fast-changing nature of the employer's jobs.

Gladwell's point is that the nature and demands of jobs in American society are becoming increasingly complex. That complexity, in turn, drives employers to desire more certainty in making the right employment decision. However, in striving for that certainty, many employers continue to measure the wrong variables in evaluating prospects and finalizing their employment decisions. Gladwell is currently studying the mismatch problem and has some initial observations on how employers can minimize its effects. Check out his talk.

Posted by Tom at 12:01 AM | Comments (0) |

July 8, 2008

The latest Enron book

Harvard Business School issued this press release and interview yesterday of Malcolm S. Salter, the Harvard professor who has written the latest book -- Innovation Corrupted: The Origins and Legacy of Enron's Collapse (Harvard University Press) -- in what seems to be a continuing stream on the demise of Enron. From the looks of it, Professor Salter has figured out that the recent collapse of Bear Stearns is a good hook for his book:

Q: Can an Enron-type calamity happen again? Why or why not?

A: Perverse incentives are legion throughout our system today. For example, perverse incentives for both mortgage brokers and investment bankers helped create the subprime crisis that we are now living through. Many boards are also still struggling to improve their oversight. Preventing future Enron-type disasters will require the kind of attention to board oversight, financial incentives, and ethical discipline that I address in Innovation Corrupted.

You don't say?

Interestingly, Professor Salter notes that Enron's collapse was triggered by its third-quarter 2001 charge against earnings and equity write-down, which were relatively small in comparison to the losses, charges and write-downs that Wall Street firms have endured over the past year during the sub-prime meltdown:

In the third week of October 2001, Arthur Andersen, Enron's highly compromised outside auditor, "discovered" several large accounting irregularities related to the off-balance-sheet partnerships. This forced Lay—who returned as CEO after Skilling resigned that August—to announce a $544 million charge against earnings, and a $1.2 billion write-down in shareholders' equity, largely related to the impending closure of Enron's Raptor partnerships. Within weeks, Enron collapsed into bankruptcy as its trading partners quickly lost faith—proving, once again, that even a hint of negligence or misconduct can be devastating to a company.

Ah, yes. That pesky trust-based business model.

Posted by Tom at 12:01 AM | Comments (0) |

July 7, 2008

American ingenuity

It's not all bad news out there on the business front.

Over this past holiday weekend, Cirrus Design Corporation successfully completed the first 45-minute flight of the company's innovative "The-Jet" (H/T James Fallows), which is a five-plus-two seat aircraft that many in the aviation industry believe is destined to ignite a revolution in general aviation. Aimed at the market of owner-pilots, The-Jet is simple to fly and includes an efficient single-jet operation in an aircraft that is more flexible than larger and far more expensive aircraft. AVWeb has more pictures of The-Jet's first flight here.

Ready to hail that air taxi yet?

Posted by Tom at 12:01 AM | Comments (0) |

July 6, 2008

An excellent primer for the political season

The Heritage Foundation provides this outstanding series of charts (example to the left) reflecting various issues relating to federal revenue and spending.

Recommended reading before listening to any candidate during the upcoming political campaigns.

Posted by Tom at 12:01 AM | Comments (0) |

July 5, 2008

CNET visits the JSC

CNET's Road Trip 2008 blog visits the Johnson Space Center in the Clear Lake area of Houston (photos here). The article and accompanying photos are a good primer for the always interesting visit to the JSC.

Posted by Tom at 12:01 AM | Comments (0) |

July 4, 2008

Nice job, but what about that other case?

This Wall Street Journal editorial pats itself on the back justifiably for swimming against the mainstream media tide in opposing from the outset former New York Attorney General Eliot's Spitzer's popular but dubious litigation and propaganda campaign against former New York Stock Exchange chief executive officer, Richard Grasso. The Spitzer-inspired case against Grasso fell apart earlier this week under the weight of multiple negative appellate decisions.

The Journal deserves much credit for standing up to Spitzer's bullying tactics when few others in the mainstream media were willing to do so. But what does the Journal say about turning a relative blind eye toward this even worse prosecutorial abuse?

Posted by Tom at 12:01 AM | Comments (0) |

July 3, 2008

Public financing of a private boondoggle

The WSJ's Holman Jenkins splashes some cold water on the suggestion that General Motors' Volt automobile will have much of a positive impact either environmentally or on GM's bottom line:

At best, the Volt will be an affluent family's third car. It will have to be plugged in for six hours a day – i.e., it will be a car for a suburbanite with a sizeable garage wired for power. It won't be a car for a city dweller who parks on the street or in a public lot. It will travel 40 miles on a six-hour charge. After that, a small gas motor will kick in to recharge the battery while you drive. Some reports claim the Volt will get 50 mpg in this mode, but that's hallucinatory: If using a gasoline engine to power an electric motor were so efficient, the streets would be full of such vehicles. (Our guess: The car will be lucky to get 15 mpg under gasoline power.)

Notice that, even today, some people continue to buy SUVs capable of hauling eight passengers, the dog and groceries, though they spend most of their time in the car driving alone. Customers value flexibility in their vehicles. For a car with the Volt's narrow usability to sell would require an unlikely revolution in consumer behavior, especially if gasoline prices aren't going to $10 a gallon.

So why is GM placing so much emphasis on development of an auto that is not particularly competitive in the marketplace? The answer: government financing:

GM executives are not nuts. They justify the costs and risks of the Volt as a way of changing GM's image in the minds of consumers and politicians. To commit a pun, the Volt is GM's vehicle for making a bailout of GM politically acceptable.

The company has already started signaling it expects Washington to provide a whopping $7,000 tax credit to Volt purchasers. In Europe and the U.S., under whatever fuel economy and emissions regulations prevail, GM also expects special favoritism for the Volt. The goal is to re-enact the flex-fuel hoax, in which GM receives extra credit for making cars that can burn 85% ethanol, even if they never see a drop of such fuel.

CEO Rick Wagoner last week laid out the case to Barack Obama personally for turning GM into a ward of the state, by way of direct and indirect subsidies to support a transition to "alternative" fuel vehicles. GM has done yeoman's work getting its structural costs (i.e., labor) in line, but shareholders should note that a big part of the company's turnaround gamble consists also of eliciting favor once again from Washington after a period in which the domestic auto makers were nothing but whipping boys on Capitol Hill.

.  .  . [GM is] betting the Volt will trigger a change in Washington's taste for bailing out a domestic car maker.

Finally, Jeff Matthews channels Hamlet in expressing his skepticism about GM's strategy:

The least helpful call you will get today is so unhelpful that, young as the day might be, we think there is no chance it will be superseded by anything even less helpful as the morning wears on.

This particularly unhelpful call comes from the alma mater of the proprietor of this blog, Merrill Lynch, and it is a downgrade of General Motors stock, from “Buy” to “Underperform.”

The analyst has also lowered his price target on the stock from, and we are not making this up, $28 to $7. Last trade: $11.75.

The reasoning behind the change is not particularly important. Like Hamlet’s recounting of Claudius’ commission for the killing of Hamlet, these things are always “larded with many several sorts of reasons” which all avoid the essential issue: the analyst has been wrong; his clients and his sales force all know he’s been wrong; he can’t take it anymore; and he’s throwing in the towel.

We know: been there, done that.

Posted by Tom at 6:26 AM | Comments (1) |

July 2, 2008

Tiger's tournament enters the Tiger Chasm

  The Tiger Chasm -- the widening netherworld of golf tournaments that don't attract much attention because Tiger Woods doesn't play in them -- has now swallowed even Tiger's own tournament, this weekend's AT&T National at Congressional Country Club in Washington, D.C.

Last year, most of the best PGA Tour players -- including Woods, Phil Mickelson, Adam Scott, Vijay Singh, Geoff Ogilvy, and Justin Rose -- played in the AT&T National.  With Tiger resting after recent knee surgery, none of those players are competing this year and only two top-10 player in the World Rankings -- Steve Stricker and K.J. Choi -- are bothering to show up, and only Jim Furyk (13), Trevor Immelman (14), Anthony Kim (20), Aaron Baddeley(22) and Andres Romero (24) among the top 25 are in the field.

To make matters worse, tournament title sponsor AT&T cannot be particularly happy about forking over the big bucks only to have USA Today run the headline above in its article on the tournament. (H/T Geoff Shackelford).

Welcome to the Tiger Chasm.

By the way, this Bloomberg.com article analyzes the probable technique used to repair Woods' ACL during the surgery. Definitely worth a read.

7/08/08 Update: Thomas Bonk of the LA Times reports that the ratings for the Tiger-less AT&T National confirmed its entry into the Tiger Chasm:

In a word: bad. The overnight ratings for Sunday's fourth round of the AT&T National on CBS were down 48%, from a 2.9 to a 1.5. The third-round overnight ratings were down 35%, from a 2.0 to a 1.3.

Posted by Tom at 12:01 AM | Comments (0) |

July 1, 2008

Tyson who?

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

The American Family Association apparently has a policy over at its new outlet, OneNewsNow, never to use the word "gay" in an article. Instead, the AFA always replaces "gay" with the supposedly more proper "homosexual."

Unfortunately for the AFA, someone forgot to check the automated changing of the word "gay" to "homosexual" when the subject of the article was Tyson Gay, who on Sunday nearly set a world record in the 100 meter sprint.

Ed Brayton has the hilarious story, and here is the Google Cache of the article before the AFA caught their blunder and changed it.

Update: By midday today, even the mainstream media was all over the gaffe.

Posted by Tom at 12:01 AM | Comments (0) |

June 30, 2008

Continuing to suspend reality on financing the soccer stadium

 This earlier post addressed the economic absurdity of having financially-strapped Texas Southern University make an investment in the long-proposed Houston Dynamo downtown soccer stadium.

However, why is it that common sense seems to evaporate into thin air whenever either TSU or the soccer stadium is mentioned? Buried in this Chronicle article about TSU's failure to prepare its students adequately to pass state licensing examinations is the following gem of analysis on TSU's proposed investment in the Dynamo stadium:

TSU President John Rudley and athletic director Charles McClelland also gave an early report on negotiations to share a new stadium with the Dynamo, Houston's professional soccer team.

McClelland said the proposed $105 million stadium would seat 21,000. In exchange for a $2.5 million investment, TSU would get a 20-year lease, a locker room, 50 percent of concession sales and 100 percent of the profit on TSU merchandise sold there, he said.

The deal is preliminary, and regents won't vote for a while. The stadium won't be completed until 2010 or 2011, he said.

McClelland, on the job just a few months, said the deal would be a good investment for the university, whose football team plays mostly at the University of Houston's Robertson Stadium, at a cost of $40,000 a game.

The Tigers occasionally rent Reliant Stadium, which costs $115,000 a game, he said.

Investing in a new stadium would be cheaper in the long term, he said.

TSU has a stadium, but it seats only 4,500 — too small for the competitive football program McClelland has promised to build — and lacks the amenities people expect.

Let's see now. In return for pre-paid rent of $2.5 million (which TSU really doesn't have to throw around right now), TSU gets a 20-year lease, 50% of concession sales (on only its games or on all events of any type?), a locker room, 100% of TSU merchandise sales and a pink slip at the end of the 20-year lease term. I hope that locker room is really nice.

Meanwhile, without paying a dime up front, TSU can continue to lease Robertson Stadium on the University of Houston campus for about $200,000 per year (5 home games x $40,000) or $4 million over a 20-year term. While playing at Robertson, TSU could invest the $2.5 million that it wouldn't have to pay the Dynamo and easily generate at least another $2.5 million off that investment over the 20-year lease term. At the end of 20 years of playing at Robertson, TSU would have a net surplus of at least $1 million to play with.

So, in view of the foregoing, my question is this: How could any reasonably responsible TSU leader even consider using the scant existing financial resources of that institution to invest in the Dynamo soccer stadium?

Perhaps the answer is revealed in the last paragraph of the Chron article:

Regents cautioned Rudley and McClelland to make sure TSU has good representation in the negotiations. "They're sharks," Javier Loya said of the Dynamo's leadership.

Update: Some folks actually think this is a good deal for TSU!

Posted by Tom at 12:01 AM | Comments (2) |

June 29, 2008

On the driving range in The Woodlands

Several years ago, during the early part of the final round of the U.S. Women's Open, I was hitting balls at the driving range of the Player Course here in The Woodlands. I figured that I would hit balls for awhile and then catch the final part of the Women's Open on television.

It was quite hot that day and so the only other person hitting balls that day on the range was a young woman and her father. In between hitting balls, I watched the young woman hit some shots. Her swing was impeccable and frankly much better than most of the professional golfers who I had seen during the earlier rounds of the Women's Open. As I left the range that day, I complimented the young woman on her swing and observed that, with that swing, she really ought to be playing that afternoon in the final round of the U.S. Women's Open. The young woman and her father thanked me graciously for my compliment.

Well, what do you know. That young woman -- Stacy Lewis -- is now playing in her first tournament as a professional and leads the 2008 U.S. Women's Open going into the final round. Read about Stacy's remarkable story here.

Update: Lewis faded to a 78 in the final round and finished third behind Inbee Park.

Posted by Tom at 8:57 AM | Comments (0) |

The Quad previews the Coogs

In its countdown of the 120 Division I-A football programs, The Quad previews the 2008 Houston Cougar football team at no. 64.

Posted by Tom at 12:01 AM | Comments (0) |

June 28, 2008

U.S. Energy Policy

Via Tom McMahon.

Posted by Tom at 12:01 AM | Comments (0) |

June 27, 2008

The stress of selling snake oil

In my annual preview of the Stros' season, I made the following observation about the then newly-acquired Stros pitcher, Shawn Chacon:

"Chacon was an inconsistent starter for six seasons before washing out with the Yankees and Pirates in 2006 (-24 RSAA -- ouch!). He revived his career last season with the Pirates as a setup man, so what do the Stros do? Insert him back into the starting rotation. This is unlikely to turn out well."

You can say that again.

Boys will be boys. Chacon was not a happy camper after being banished fromthe starting rotation to the Stros' bullpen last week, so his outburst is not all that surprising. It's not as if Chacon (-3 RSAA; 5.04 ERA) has pitched appreciably worse over the course of the season than Brandon Backe (-1 RSAA/4.82 ERA), who inexplicably enjoys a secure spot in the rotation with nary a hint of a demotion. Indeed, Backe and Chacon's career numbers are not much different -- they are both below National League-average pitchers. Backe has pitched a tad better lately, but beware of small sample sizes. Sure, the Stros demoted Chris Sampson from the rotation earlier in the season, so there was precedent for demoting Chacon. But Sampson had pitched appreciably worse as a starter than Chacon, and without any demonstrably better starters on the pitching staff or in the farm system, I can understand how Chacon thought that his demotion was at least premature under the circumstances.

It's not particularly surprising that first-year Stros GM Ed Wade flew off the handle, either. His attempt to retool the Stros into a playoff contender on the fly is looking more like an unmitigated disaster by the day. Wade made four major off-season acquisitions and none of them have panned out. CF Michael Bourn (18 RCAA/.305 OBA/.331 SLG/.636 OPS) has been one of the worst hitters in the National League among regular players this season.  Expensive 2B Kaz Matsui (-6 RCAA/.336 OBA/.342 SLG/.678 OPS) is continuing his legacy of never playing more than 114 games in any one of his five seasons in Major League Baseball, while SS Miguel Tejada (-4 RCAA/.329 OBA/.459 SLG/.789 OPS) has continued the decline in production that began three seasons ago in Baltimore. Even the barely above-average performance of closer Jose Valverde (2 RSAA/4.34 ERA) has paled in comparison to that of the closer that Wade ran off, Brad Lidge (12 RSAA/0.87 ERA). Add in the fact that the Stros' hitters -- other than slugger Lance Berkman -- have generated an astounding 93 fewer runs this season than an average National League team would have created using the same number of outs as the Stros' hitters have used and it's easy to understand how Wade is feeling the heat these days.

Ironically, acquiring Chacon was not one of Wade's particularly bad deals from this past off-season. Inasmuch as Chacon accepted a below-average MLB salary ($2 million) for a shot at earning a spot in the Stros' rotation and performed at just below National League-average for the season to date, Wade certainly didn't overpay for that performance.

But the reality is that Wade and the Stros have been selling snake oil this season, and the suckers are starting to thin out. This Stros club is a seriously bad baseball team and it doesn't have the Craig Biggio Farewell Tour to distract the paying public from the club's glaring inadequacies. As noted in this most recent season review, it's well past time for Stros management to quit attempting to patch together a winner from year-to-year. Now is the time to focus on development of a rebuilding plan that has a better chance of re-creating the sustained success that the club enjoyed during the Biggio-Bagwell era.

Rebuilding is not as snazzy as selling snake oil, but it's honest and much less likely to provoke the frustrations that boiled over in the Stros clubhouse on Wednesday.

Posted by Tom at 12:01 AM | Comments (4) |

June 26, 2008

Colbert on Hannity

Stephen Colbert channels Jessica Hagy in analyzing conservative talk-show host Sean Hannity.

Posted by Tom at 12:01 AM | Comments (0) |

June 25, 2008

The Future of Law Firm Advertising?

Clear Lake-area plaintiff's lawyers Ron and Scott Krist use the YouTube video below to explain why helicopter crash victims should hire their firm. Not exactly To Kill A Mockingbird, but pretty darn effective nonetheless. By the way, I wonder who the defense attorney was that Scott got fired?

Posted by Tom at 12:01 AM | Comments (1) |

June 24, 2008

Browse while finding a pickup game

Proving that there is a market in almost everything, Infinite Hoops allows you to find or schedule pickup basketball games. About 15 years and a blown out Achilles' Tendon late for me, though.

Meanwhile, Zoomii is a slick virtual bookstore for Amazon books. Zoomii is a real world bookstore that allows you to browse through Amazon books just as if you were wandering through Border's or Barnes & Noble. Zoomii - Virtual Bookstore for Amazon Books.

The Web is truly amazing.

Posted by Tom at 12:01 AM | Comments (0) |

June 23, 2008

Clear thinking to begin the week

 

Posted by Tom at 12:01 AM | Comments (0) |

June 22, 2008

Expanding DKR Memorial

A couple of years ago, while attending the Texas-Iowa State football game (blog post here), I took the photo on the left of the horseshoe section on the north end of the University of Texas' Darrell K. Royal Memorial Stadium. After the 2006 season, UT began the process of replacing the horseshoe section with a more modern end zone section that is closer to the field and contains the now-ubiquitous luxury suites and club section that are a part of most big-time college football stadiums these days. The new section is now complete and ready for the 2008 season, so check out this cool time lapse video of the construction of the section. We get things done fast down here in Texas. ;^)

Posted by Tom at 12:01 AM | Comments (0) |

June 21, 2008

Comparing boondoggles

Warren Meyer has some fun commenting on the latest Phoenix-area urban boondoggle -- a three-quarter of a billion dollar state subsidy for an amusement park in the Arizona desert!

Of course, that subsidy is peanuts in comparison to the subsidy that Houston is gearing up to pay in connection with this local boondoggle (see also here and here). Why invest billions in an inflexible light rail system in a region that is not densely-populated, contains numerous and dispersed employment centers and possesses an excellent freeway system that would facilitate a far cheaper and more effective bus system?

In this recent post about the Miami transit system, Randal O'Toole sums up the common characteristics of light rail systems in areas without the density of population to generate the ridership necessary to make them economically viable:

1. Transit agencies might run excellent bus systems. But when they start building rail, they quickly get in over their heads by optimistic forecasts, unforeseen costs, and the sheer humongous expense of building dedicated transit lines.

2. Though all rail systems require periodic expensive maintenance, few transit agencies set aside any money for this because it is easier to spend the money now and let future managers worry about the future.

3. Though the rail systems are usually built to serve downtown white-collar workers, in the end it is the transit-dependent people who rely on buses who pay the cost.

4. There is only one thing rails can do that buses can’t do better, faster, and more flexibly, and that is spend a lot of your money.

The enormous cost relative to usage and inflexibility of most light rail systems reminds me of something that USC urban economist Peter Gordon observed a couple of years ago about the political forces that support these boondoggles. Some are disingenuous promoters seeking to profit from the rail lines, others pose as high-minded environmentalists and many are simply ignorant of the inefficiency and inflexibility of such systems. Professor Gordon wryly points out:

"It adds up to a winning coalition."

Professor Gordon provides more recent perspective here.

Posted by Tom at 12:01 AM | Comments (3) |

June 20, 2008

The obligation to throw in the towel

So, the shoe finally dropped on the two Bear Stearns executives who managed the two Bear hedge funds that imploded in mid-2007. A copy of the indictment is here.

As I read the indictment, the government is contending that Messrs. Cioffi and Tannin were required to disclose to investors immediately in February and March, 2007 that the two of them feared that the two funds might be "toast" even as Cioffi and other Bear executives were fighting market pessimism toward the funds and urging investors to maintain trust in their ultimate financial merit. So, with their careers riding on whether the funds would survive, Cioffi and Tannin were supposed to throw in the towel and light a match to the funds by disclosing to the market their concerns about the heightened risk of a meltdown.

Stated simply, according to the Feds, about the time you think your trust-based business might be toast, it's already too late. Inasmuch as you are required to disclose to the markets that you think the business might be toast, that disclosure will understandably prompt the market to lose trust in your business, which means that your company is kaput. So, the smart thing to do is never to voice (and sure as heck don't write any emails!) your concern to anyone regarding the downside risk of your business. That lack of communication might dampen internal company analysis regarding risk of loss, but what the hell -- at least you won't get indicted for misleading investors when your company fails.

Just another chapter in the twisted policy implications that result from regulating business through criminalizing businesspeople's risk-taking. Larry Ribstein has typically insightful observations along the same lines, while Bess Levin muses over the Feds' suggestion that investors didn't know exactly what they were buying when investing in Bear's funds.

Posted by Tom at 12:01 AM | Comments (16) |

June 19, 2008

Tiger's bittersweet victory

Just off one of the most remarkable performances of his amazing career, Tiger Woods is going on the shelf for the rest of this golf season and probably for a good chunk of next season rehabilitating from surgery to repair a torn anterior cruciate ligament in his left knee. This will be Woods' second surgery on his left knee in two months and his fourth since 1994.

But first, a few comments on last week's U.S. Open. Frankly, it's been difficult this close to the thrilling tournament to provide any decent perspective of the event. Unquestionably, the tournament will go down as one of the most entertaining U.S. Opens of the modern era. Torrey Pines is a great muny golf course, but it's not considered an architectural gem on the level of many other U.S. Open venues, so there really was not much anticipation going into the tournament that the course would produce a particularly memorable event. Nevertheless, to the surprise of most golf fans, the USGA wisely moved away from its draconian past course set-ups and arranged Torrey Pines in a first-class manner that facilitated the competition rather than restricting it.

That set the stage for 45-year-old journeyman Rocco Mediate -- ranked 158th in the World Rankings coming into the tournament and without a win on the Tour since 2002 -- to somehow find a rhythm over the week that allowed him to take the best player in the history of the game to the brink of a crushing loss on two different occasions.  One of the friendliest players on the Tour, Mediate looked all weekend as if he was just as surprised as everyone else that he was battling Woods toe-to-toe. Amazingly, had he been able to hit a decent wedge shot on either Sunday or Monday to set up a birdie on the relatively easy par-5 18th hole, Rocco Mediate -- not Tiger Woods -- would be the 2008 U.S. Open champion.

Meanwhile, playing on what we now know is a torn ACL a couple of stress fractures in his left tibia (an injury apparently suffered during rehab from his recent knee surgery), Woods was certainly not at his best during the tournament, perhaps best reflected by the fact that he double-bogeyed the par-4 first hole three times in the first four rounds. But those missteps were offset by Woods' extraordinary play at other times, such as his three eagles on the par-5's and holing more clutch putts than any player in the field. Stated simply, Woods and Mediate put on a great show that will rank as one of the best U.S. Opens ever.

Sadly, however, Woods' once-in-a-lifetime talent will not be on display for a good while now. And, as noted here a couple of months ago, what is perhaps most baffling about Woods' injury is that it is largely self-inflicted. He has unwisely for years included a frequent long-distance running regimen in his intense exercise protocol, which has at least contributed to the injury in his left knee. Woods' running program reflects a common and destructive misconception within America society that "more is better" when it comes to exercise. In fact, allowing the body to recover adequately after intensive periods of exercise is at least as important to good health as the exercise itself. Although we will almost certainly read stories over the coming days on how Woods will come back even stronger and better after the surgery, my sense is that he is facing almost certain chronic arthritis in his left knee and total knee replacement surgery within 10 years or so. I sincerely hope that Woods' stubborn adherence to a physically-damaging exercise regimen does not end up taking from us the enjoyment of watching one of the most gifted athletes of our time compete at the highest level of his ability.

Posted by Tom at 12:01 AM | Comments (0) |

June 18, 2008

Futures trading 101

As noted many times over the years on this blog (recently here and here), the instinct of most politicians and much of the mainstream media is to embrace simple "villain and victim" morality plays when attempting to explain investment loss. The more nuanced story about the financial decisions that underlie the failed investment strategy doesn't garner enough votes or sell enough newspapers to generate much interest from the pols or muckrakers. That's why we are currently enduring demagoguery regarding speculators and why it's so important that citizens who are not familiar with the function of speculation in markets take a moment to read  Mark Perry's primer on the economics of future trading:

In fact, speculators don't determine market forces, they respond to market forces of supply and demand.

Therefore, speculators can't be blamed for high oil prices, because high oil prices are ultimately caused by factors beyond the control of any speculator: rising global demand in places like India and China, and global supply in places like Saudi Arabia, Nigeria and Venezuela. No individual speculator, or any group of speculators has an iota of influence over the demand for gas or oil in Brazil, nor do they have one iota of influence over the amount of oil in Canada or ANWR, or any control over OPEC quotas. Think about it - Exxon Mobil, one of the largest oil producers and private oil companies in the world, has NO control over the world spot price of oil, so how could a small group of speculators?

Read the entire post. Part II is here and an additional post on the same topic is here.

Posted by Tom at 12:01 AM | Comments (0) |

June 17, 2008

Criminalizing Failure

As Larry Ribstein reports, the Enron prosecutorial veterans are already picking up the usual suspects in regard to the Bear Stearns meltdown.

Meanwhile, John Carney wonders whether any investors really feel safer as a result of these criminal probes?

And although Bear struck out, do we really want to deter potentially beneficial risk-taking by criminalizing it when it fails?

Finally, wouldn't it make more sense to allocate the resources spent on criminalizing such risk-taking toward educating investors in trust-based businesses on how to hedge their risk of loss?

Posted by Tom at 12:01 AM | Comments (0) |

June 16, 2008

Bill King's story

As Republican presidential nominee John McCain is doing his best to stoke public prejudice against job-creators and wealth builders, longtime Houston lawyer and businessman Bill King is promoting his new book, Saving Face (Somerset 2008), which is King's personal history of the savings & loan crisis of the late 1980's and early 1990's. Ironically, McCain knows quite a bit about the back story to King's book. McCain was one of the Keating Five, the Congressional supporters of former Lincoln Savings & Loan chairman and CEO Charles Keating, who was convicted of various corporate fraud crimes and served four years in prison as a result of highly-stoked but substantively-thin prosecutions that were ultimately overturned on appeal. Keating eventually pled guilty to a single count of bankruptcy fraud to limit further prison time and insulate a family member from prosecution. For a thorough review of the mendacity of the Keating prosecutions, pick up a copy of Dan Fischel's book, Payback: The Conspiracy to Destroy Michael Milken and his Financial Revolution (HarperCollins 1995).

King's story is the Houston version of Keating's and a precursor of the prosecutorial abuse that the post-Enron criminal prosecutions in Houston generated a decade later. Not only does King do an excellent job of explaining the financial, economic, regulatory and political underpinnings of the S&L crisis, he explores how the government wielded its prosecutorial power indiscriminately to serve up scapegoats to a salivating mainstream media and an ill-informed public. King is thinking about running for Houston mayor in 2009 and, based on the depth and perspective that he exhibits in Saving Face, King would probably be a fine mayor. The following is King's overview of Saving Face, which I recommend highly:

These days I find myself cringing when I hear media accounts that fraudulent and greedy mortgage brokers are responsible for all of the woes of the current housing bubble and the sub-prime defaults. I do so because the recriminations are an all too familiar echo of an earlier debacle. One to which I had a ring-side seat.

Many of you who have known me for some years know that shortly after law school I made the somewhat less-than-fortuitous career decision of joining a law firm that specialized in representing savings and loans. At the time it did not seem like a bad decision. The Houston real estate market was enjoying an unprecedented boom and the savings and loan industry had just been deregulated. Investors were clamoring to get into the business.

Within a few years of joining the law firm, I began investing in savings and loans and related businesses. By 1986, notwithstanding that I had started with barely two nickels to rub together after working my way through law school, I had built a small, but respectable, business empire consisting of savings and loan holdings, title companies, and real estate investments. However, within a couple of years, everything I had built evaporated into thin air.

The Houston market collapsed when the price of oil fell from over $34 per barrel in 1984 to $9 the next year. It did not recover to above $20 until 2002. Manufacturing jobs in the region fell by nearly 50% and for the first time in history Texans' personal income declined.

Bankruptcies in Houston tripled between 1983 and 1987. All but one of Texas' major banking holding companies failed. Harris County's population actually declined from 1985 to 1989. It was the first and only time in Houston's history that it has lost population. If you did not live through these times, the magnitude of melt down is hard to imagine.

It is certainly difficult to lose everything that you have worked for, but the environment that existed in the late 1980s and early 1990s had an even more ominous aspect. As the public became increasingly aware that the savings and loan crisis was going to take a major taxpayer bailout, there were ever more strident cries to hold someone responsible.

The complexity of confluence of interest rates, regulatory policy, oil prices, the Tax Reform Act of 1986, and the collapse of large portions of the real estate market that actually explained the collapse was too great to be reduced to sound bites. Politicians and bureaucrats began pointing the finger at those in the industry, and soon, the "S&L crook" was born. And there were enough egregious cases for the politicians and bureaucrats to hold up as "proof" of their argument that the "S&L crooks" caused the crisis.

The proposition that fraud and insider abuse had sunk the savings and loan industry was eventually discredited. In 1993, a National Commission concluded that fraud had caused less than 15% of the total problem. But in the heat of the moment, there was little interest in cool, scholarly reflection on the problems of the industry.

As the 1980s came to a close I watched as many friends, associates and former clients in the S&L industry were swept up in a maelstrom of civil and criminal litigation. Naively, it never occurred to me that I might be caught up in such a dispute as well. But I was.

Eventually, I prevailed in my battle with the regulators, but as you might imagine, it was an experience that left an indelible mark and from which it took me many years to recover. For some time I have been jotting down notes for a book about these experiences. For a couple of reasons, I recently decided to finalize such a book.

First, as many of you know, I am considering a candidacy for mayor of Houston in 2009. We all know too well that "negative campaigning" has become the standard today. Certainly going bankrupt in the savings and loan business will provide potential opponents ready ammunition. So first and foremost, I want to put the issue squarely on the table. If I decide to become a candidate, there will undoubtedly be some voters who will be troubled by these experiences. Some will believe difficult times such as the ones I went through are a crucible that better prepares a person for leadership. Most, I expect, will simply want to be advised of the facts so that they can be weighed with other issues bearing on their decision.

But beyond the potential political implications, the troubling similarities between what I saw in the S&L collapse of the 1980s and the sub-prime crisis playing out before us now demands some consideration. It is a well worn adage, but nonetheless true, that if we do not learn from our history, we are doomed to repeat our mistakes. Perhaps relating what I saw during the saving and loan industry collapse will provide some perspective on the current financial crises.

So for these reasons I have written Saving Face: An Alternative and Personal Account of the Savings and Loan Debacle. I have attempted in the book to tell the story of what I experienced during these times, but at the same time, to place my experiences in a larger, national context. I believe my story has some relevance to anyone experiencing trying times generally, and certainly to those in the Houston real estate industry, many of whom lived through these times as I did.

Posted by Tom at 12:01 AM | Comments (0) |

June 15, 2008

The Refco Question

Ellen Podgor has the sentencing memos in regard to former Refco CEO Phil Bennett's plea deal. They are interesting reading, but what they do not answer is the most intriguing question that remains unanswered from the entire Refco affair:

Why did Bennett risk taking Refco public in the first place?

Posted by Tom at 12:01 AM | Comments (1) |

June 14, 2008

The best city for a job

BusinessWeek knows.

Posted by Tom at 12:01 AM | Comments (0) |

June 13, 2008

Cool Graph Friday

H/T Craig Depken

 

 

 

 

 

 

 

 

 

H/T W$J/Josee Valcourt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H/T Russell Roberts

 

 

 

 

 

H/T James Hamilton

Posted by Tom at 12:01 AM | Comments (2) |

June 12, 2008

An odd spokesman for limiting corporate criminal liability

The always-alert Ellen Podgor notes that former Enron Task Force chief Andrew Weissmann (see also here and here) recently wrote an amicus brief on behalf of various business and defense-oriented organizations in the United States v. Ionia Management, S.A. case currently pending at the Second Circuit. In the brief, Weissmann advocates that the appellate court "adopt a standard for vicarious corporate criminal liability" . . . that limits "the application of respondeat superior."

As you may recall, Weissmann promoted precisely the opposite standard while engineering the destruction of enormous wealth and tens of thousands of jobs in prosecuting Arthur Andersen out of business.

It's better late than never that Weissmann apparently now understands the error of his prior ways. I wonder whether he will admit that to the Second Circuit panel?

Posted by Tom at 12:01 AM | Comments (1) |

June 11, 2008

Gearing up for the U.S. Open

Golf course author and blogger Geoff Shackelford is blogging the U.S. Open this week at Torrey Pines in San Diego in the same manner as he blogged The Masters earlier this year, and he kicks off the U.S. Open week with this email interview of the best golf writer of the past generation, Dan Jenkins. As usual, Jenkins is in mid-season form:

GS: Are you excited about visiting California, where we treat smokers like lepers?

DJ: I would be more excited about going to California if I was 20 years younger and sitting in the Polo Lounge.

Read the entire interview here. Also, check out this interesting map of Torrey Pines and the slick USGA course overview while perusing Jay Flemma's and Daniel Wexler's reviews of the course.

Posted by Tom at 12:01 AM | Comments (0) |

June 10, 2008

Stros 2008 Season Review, Part Two

Through 40% of the season, the Stros' record is precisely what you would expect from a club that struggles to maintain National League average performance -- 32-32, including 15-16 in the second fifth of the season. That's about the same as the first fifth of the season and a bit better than my pre-season forecast. The Stros are in 4th place in the National League Central, 8 games behind the Cubs (40-24) and only 1.5 games out of last place in the division. Any early-season hope that this club could contend for a playoff spot is now a pipe dream.

Frankly, there is little reason to be optimistic about the Stros' prospects for the remainder of the season. While the pitching staff has performed better than expected and is a dramatic improvement over last season's staff at a comparable stage of the season, the club's overall hitting -- outside of Lance Berkman's Bonds-like performance (47 RCAA/.458 OBA/.723 SLG/1.181 OPS) -- has been abysmal. The Stros' hitters rank 12th out of the 16 National League clubs in runs created against average (-23 RCAA) and only one hitter other than Berkman is creating more runs than an average National League-hitter would produce using the same number of outs. Moreover, two regular Stros players -- CF Michael Bourn (-16 RCAA/.281 OBA/.309 SLG/.590 OPS) and recently-demoted C JR Towles (-13 RCAA/.270 OBA/.282 SLG/.552 OPS) -- are among the least productive hitters in the National League. LF Carlos Lee (-5 RCAA/.301 OBA/.469 SLG/.770 OPS) is showing why he is one of the most overpaid players in Major League Baseball, while the declining SS Miguel Tejada (-1 RCAA/.335 OBA/.466 SLG/.801 OPS) has cooled considerably after a hot start. As noted in the first season review, Bourn, Towles and Hunter Pence (-2 RCAA/.339 OBA/.478 SLG/.817 OPS) have all showed signs of their lack of Triple-A seasoning, while neither 3B Ty Wigginton (2 RCAA/.368 OBA/.448 SLG/.817 OPS) nor 2B Kaz Matsui (-3 RCAA/.353 OBA/.352 SLG/.705 OPS) are difference makers. Where would this bunch be without Berkman?

It's too bad that the hitters other than Berkman have tanked because the pitching has actually been pretty good. The staff's RSAA is +13, which is 5th among the 16 National League clubs, and Brian Moehler (4 RSAA/3.76), Wandy Rodriguez (12 RSAA/1.99 ERA), Doug Brocail (8 RSAA/2.53 ERA), Geoff Geary (6 RSAA/1.77 ERA), and Tim Byrdak (8 RSAA/0.52 ERA) have all been pleasant surprises. Furthermore, there is decent chance that the staff's overall RSAA will not decline dramatically as some of the staff members regress to career-average performance because staff ace Roy Oswalt (-7 RSAA/5.38 ERA) is likely to increase his performance-level as he gets back on track after a shaky season to date. Had the Stros' hitters performed on merely a National League-average level so far this season, the pitching has been good enough that the Stros would be challenging the Cardinals (38-27) for second-place in the division. However, neither the Cards nor the Stros have enough horsepower to compete with the Cubs (+30 RCAA/+56 RSAA) for the division lead.

Meanwhile, Stros manager Cecil Cooper appears to be oblivious about the nature of his club's mediocrity. Here is a quote from Cooper from this article in today's Chronicle:

"I'm not really worried about hitting," Cooper said. "We have to play better — pitch better and play defense better. We haven't done it consistently like we should be doing. That's not to say we're not going to get there, but so far we haven't."

Oh well, at least Cooper's not as clueless as Jimy Williams.

Interestingly, the Stros' reshuffling of their bullpen over the past off-season is not the reason for the pitching staff's improved performance. In fact, if you back out new arrivals Geary and Jose Valverde (4 RSAA/3.88 ERA) and add back in Chad Qualls (6 RSAA/2.79 ERA at Arizona) and Brad Lidge (10 RSAA/0.96 ERA at Philly), the pitching staff's performance would be even stronger than it has been been. Add in other pitchers who the Stros have traded over the past couple of seasons -- Dan Wheeler (5 RSAA/2.22 ERA at Tampa Bay), Taylor Buchholz (9 RSAA/1.67 ERA at Colorado) and Matt Albers (8 RSAA/2.74 ERA at Baltimore) -- and the Stros would have one of the most formidable bullpens in Major League Baseball. This just goes to show that a club rarely receives in return equal or better pitching performance than the proven performance of veterans or the reasonably-expected performance of top prospects that the club trades. The reality is that even above-average pitchers have a bad season from time to time.

In contrast, former Stros' hitters who have been traded away recently have generally continued their Stros' legacy of poor hitting. OF Luke Scott has been solid (7 RCAA/.354 OBA/.492 SLG/.846 OPS) at Baltimore, but CF Willy Taveras continues to struggle against MLB pitching at Colorado (-10 RCAA/.292 OBA/.275 SLG/.566 OPS), 3B Mike Lamb is having one of his periodic bad seasons at Minnesota (-9 RCAA/.267 OBA/.310 SLG/.577 OPS), 2B Chris Burke is flailing away in Arizona (-9 RCAA/.298 OBA/.218 SLG/.516 OPS) and 3B Morgan Ensberg was DFA'ed after posting an awful line (-8 RCAA/.263 OBA/.243 SLG/.506 OPS) with the Yankees. Meanwhile, SS Adam Everett has been mostly injured since leaving the Stros and LF Jason Lane is fulfilling his AAAA legacy in the Yankees farm system.

Thus, the Stros didn't lose much by giving up any of those players, and the addition of league-average hitters Tejada, Matsui and Wigginton has at least made the Stros a less-bad hitting team than they otherwise would have been. However, it's far from clear that the Stros' personnel moves over the past year have done much of anything in terms of improving the overall performance of the club from what it would have been had the club stood pat. That's why it's usually far more productive to invest in scouting and development of players over the long term than to attempt to cobble together a contender from year-to-year by overhauling the roster through trades and free-agent acquisitions.

So, what should the Stros do for the rest of the season? First, the club should dispense with any pretension that it is a playoff contender. That ruse distracts the club from making the type of personnel decisions that are more likely to propel the club back into playoff contention. Development of young players such as Bourn and Towles, as well as several relatively untested pitchers, should be the highest priority. Bourn and Towles have both shown flashes of MLB-level ability, but both are going to need sustained playing time at the MLB-level before it can be determined whether they are have the skills necessary to be regular MLB players. Similarly, pitchers such as Fernando Nieve, Wesley Wright and AA-pitchers Brad James, Chance Douglass and Polin Trinidad should be allowed to pitch some MLB-innings during the remainder of the season to give Stros management a feel for their ceiling. As most recently noted here and in numerous other posts over the past several years, the Stros' steady decline since their improbable 2005 World Series run is the result of a decade of poor drafting and development of young players in the Stros' minor league system. Given that the Stros' decline is unlikely to change unless the organization does a better job of developing young players, it makes absolutely no sense in a lost season from a playoff-contention standpoint to take developmental at-bats away from players such as Bourn and Towles and give them to older and clearly below National League-average players such as Darrin Erstad (-2 RCAA/.322 OBA/.452 SLG/.774 OPS), Reggie Abercrombie and Brad Ausmus (-11 RCAA/.327 OBA/.300 SLG/.537 OPS).

The remainder of June is going to be tough sledding for the Stros as they face the Brewers (33-30) and the Yankees (30-32) at home before going on the road against the Orioles (31-31) and the Rays (37-26), and then return home to face the Rangers (32-33), the Red Sox (40-26) and the Dodgers (30-32) to close out the month.  It's doubtful that the Stros will be able to maintain their .500 pace against that competition, so I'm expecting the Stros' record to be several games under .500 by the time of the next season review installment after completion of 60% of the season in mid-July. At this point, my pre-season over/under prediction of 75 wins still looks to be a pretty solid estimate of this club's probable number of wins for the season.

The 2008 season statistics for the Stros are below (through 64 games), courtesy of Lee Sinins' sabermetric Complete Baseball Encyclopedia. The abbreviations for the hitting stats are defined here and the same for the pitching stats are here. The Stros' 40 man roster is here with links to each individual player's statistics:

Posted by Tom at 12:01 AM | Comments (0) |

June 9, 2008

Aging well

Steve Winwood sounded good back in the 1960's and 70's during his days with the Spencer Davis Group and Traffic. I'll be darned if he doesn't sound even better now.

Posted by Tom at 12:01 AM | Comments (1) |

June 8, 2008

Colbert v. Will

Clear Thinkers favorite Stephen Colbert finally meets his match -- syndicated columnist George Will:

By the way, check out Will's latest on Obama and McCain:

On Obama: "Obama's words mesmerize a nation accustomed to leaders who routinely use words with antic indifference to their accuracy."

On McCain: "If he really opposes torture, he will take pity on the public and master the use of a teleprompter."

Posted by Tom at 12:01 AM | Comments (0) |

June 7, 2008

Take a ride on Google Earth

Check the following out on Google Earth. Go to "Tools" in the top navigation bar, click "Options" and then the "Touring" tab. Down below, you will see "Driving Directions Tour Options. " Input the following settings:

• Camera Title: 80 degrees
• Camera Range: 150 degrees
• Speed: 50 to 75

Click "Apply" and then "OK" to close out that box, then hit the "Directions" tab in the "Search" box on the upper left side of the Google Earth screen. Input a couple of addresses in your community and then allow Google Earth to prepare the directions for the route between those addresses. After Google Earth prepares the directions, hit the play button just below the directions. Then, sit back and enjoy the ride! (H/T GoogleEarthHacks.com).

Posted by Tom at 12:01 AM | Comments (0) |

June 6, 2008

Hillary's flaw

The strangely obsolescent presidential campaign of Hillary Clinton is one of the most intriguing stories of this political season. The Financial Times' Clive Cook provides a spot on foreigner's perspective:

[Clinton's] performance last night was stunningly ill-judged, and speaks volumes about her fitness to lead—or lack of it. Under the circumstances, one can understand, maybe, a reluctance to concede. But to declare moral victory; to insist, knowing that she had lost, that she remains the stronger candidate; to start positioning herself to demand the VP slot as of right: all this was not just remarkably ungracious, it was also patently counter-productive from a strictly selfish point of view. Can’t she see that she has made it easier, not harder, for Obama to keep her off the ticket?

One of the CNN analysts debating Hillary’s non-concession speech mentioned emails coming in which said that Tuesday “needed to be her night.” At this one of the others spluttered, “It had to be her night? Obama just won!”… before, in a valuable moment of reckless honesty, referring to “the Clintons’ deranged narcissism”. Yes, I thought (recalling, incidentally, Alistair Campbell’s comment that Gordon Brown was “psychologically flawed”). Read her speech, and compare it with Obama’s. His extravagant (and tactically shrewd) praise of her; a speech addressed not just to the whole Democratic party but to the whole country; calculated, of course, calibrated—with nothing in it that was smug or self-regarding or sectarian. Contrast that with her perfunctory acknowledgement of him, followed by a recitation of her achievements and the obstacles that had been put in her way: Enough about our nominee, this is my night and I want to talk about me.

Something tells me that she is not cut out to be Obama’s deputy. If he puts her on the ticket, I think he will be making a big mistake.

Clinton's inability to compete with Obama's charismatic articulation of a vision for the country definitely worked against her in the campaign. But my sense is that the genesis of her downfall was voters' distrust of her inner Tracy Flick.

Posted by Tom at 12:01 AM | Comments (0) |

June 5, 2008

Counting down with the Quad

It's less than three months until the kick-off of the 2008 college football season, so in anticipation of the upcoming season, the New York Times' quite good college sports blog -- the Quad -- is providing an excellent summary each day of the 110 or so Division I-A teams. The Quad rates the Rice Owls at no. 104, which seems far too pessimistic to me given the Owls' returning offensive firepower. But the summaries are generally thorough and provide a decent perspective of each program, so they are a good primer for the college football season. In these parts, it's never too early to get ready for some football!

Posted by Tom at 12:01 AM | Comments (0) |

June 4, 2008

Slugging Metro?

I'd bet that a program such as this (H/T Craig Newmark) would rival (if not exceed) the ridership on Houston Metro's light rail line.

Slugging is a term used to describe a unique form of commuting found in the Washington, DC area sometimes referred to as "Instant Carpooling" or "Casual Carpooling".   It's unique because people commuting into the city stop to pickup other passengers even though they are total strangers! However, slugging is a very organized system with its own set of rules, proper etiquette, and specific pickup and drop-off locations.  It has thousands of vehicles at its disposal, moves thousands of commuters daily, and the best part, it’s FREE! Not only is it free, but it gets people to and from work faster than the typical bus, metro, or train.  I think you'll find that it is the most efficient, cost-effective form of commuting in the nation.

Here is the etiquette and rules of the process. Being a "slug" doesn't sound all that bad! ;^)

Posted by Tom at 12:01 AM | Comments (2) |

June 3, 2008

So, what's the difference?

 Mel Weiss was sentenced to 2.5 years in prison yesterday for making undisclosed payments to class representatives in class action lawsuits that his firm handled. As noted here about a year ago, Weiss didn't have much of a choice given the trial penalty that he was facing.

Meanwhile, in return for being the key witness against former Enron CEO Jeff Skilling, Enron Task Force prosecutors "paid" Andy Fastow with a lighter prison sentence than the one the prosecutors disclosed to the jury and the judge during Skilling's trial. Those same prosecutors also withheld from Skilling's defense team exculpatory statements about Skilling that Fastow made before he elected to accept the prosecutors "payment" of a lighter sentence and testify against him. The lead prosecutors involved in arranging Fastow's testimony have gone on to presumably lucrative careers in private practice. Skilling is serving an effective life prison sentence.

As Larry Ribstein has long contended, paying kickbacks should not be condoned. However, the hyprocrisy reflected by the above-described state of affairs is not going to be solved by demonizing Mel Weiss.

Posted by Tom at 12:01 AM | Comments (0) |

June 2, 2008

Ron Paul, we hardly knew ye

This post from last June noted Houston-area Congressman Ron Paul's deft media touch on Comedy Central's Daily Show. Now, a year later, Jim Henley sums up the utter failure that Paul's presidential campaign became:

This fellow can’t spell "candidate," but by being willing to come out and say that Ron Paul Lost, he’s closer to wisdom than the entire staff of Takimag. The full measure of Paul’s failure isn’t even that he’s not going to be the Republican nominee. It’s that, even since everyone else dropped out of the race but Paul and McCain, he’s still been losing to Mike Huckabee in every state where the Huckster was on the ballot except Pennsyvlania (Paul was born in Pennsylvania.) Idaho is the only other primary state where he broke 10%. (He hit low double-digits in a few caucus states.) He has 35 delegates by CNN’s reckoning. Huckabee has 275 and Romney 255. With his $30 million in donations, he’s barely breaking the million-bucks-a-delegate mark. That’s ten times the much-ridiculed rate of Mitt Romney.

Paul failed to win any states, to move the GOP debate in his direction, to accrue significant delegates or to leverage his fund-raising into a third-party run. And word is he’s staying quiet about endorsing an independent because he doesn’t want the Congressional GOP leadership to strip him of committee assignments come the fall. Paul accomplished the one thing he’s always been good at: using political appeals to get people to send money. I don’t feel freer.

Posted by Tom at 12:01 AM | Comments (0) |

June 1, 2008

The price of soccer keeps going up

Based on what's going on in Washington, D.C., my prediction on the eventual public subsidy of the proposed Dynamo soccer stadium in Houston may be a tad low. With D.C.'s proposed $150 million public subsidy for about 25,000 seats, that works out to $6,000 per seat for what amounts to minor league soccer. Is there any rational argument that such an outlay could possibly be worth it for D.C. citizens?

By the way, Dennis Coates, the professor of economics at the University of Maryland-Baltimore County whose recent op-ed on public subsidies for stadiums was featured here,  narrates the short Reason.TV video below on the same subject, focusing on the Washington Nationals new stadium (H/T Skip Sauer) :

Posted by Tom at 12:01 AM | Comments (0) |

May 31, 2008

I would have never guessed

That, according to this handy database, this person would have given the most commencement speeches during this current season of university graduation ceremonies.

Similarly, I would not have guessed the city in the world that is home to the most billionaires.

Posted by Tom at 12:01 AM | Comments (0) |

May 30, 2008

The Bear Stearns lesson

Yesterday brought the final installment of Kate Kelly's extraordinary three-part W$J series on the fall of Bear Stearns (Kelly also contributed to today's story on Bear's final shareholders meeting). My goodness, was Kelly a fly on the wall over at Bear's office during all of this? Dear John Thain has an interesting critical analysis of the series here, here and here, while Larry Ribstein and John Carney point out that Kelly apparently fell for what has become known as "the loophole legend" in regard to JP Morgan's buyout of Bear.

Although all the articles in the series are fun reading, Kelly's most insightful observation comes from the second installment:

It was the beginning of a frantic 72 hours that would bring the Wall Street firm to its knees and threaten the stability of the global financial system.  .  .  . The brokerage's sudden fall was a stark reminder of the fragility and ferocity of a financial system built to a remarkable degree on trust. Billions of dollars in securities are traded each day with nothing more than an implicit agreement that trading partners will pay up when asked. When investors became concerned that Bear Stearns wouldn't be able to settle its trades with clients, that confidence evaporated in a flash. Trading partners, eager to avoid losses, began to disappear almost as quickly. That further fueled rumors of trouble. Some partners, spotting a chance to profit, made bets against Bear Stearns, helping accelerate its demise.  .  .  .

Even after the Bear Stearns lesson, our understanding of the pesky trust-based business model is still not what it should be. Improving the investing public's understanding of how best to hedge the risk of investing in trust-based businesses is a far more productive response to Bear Stearns-type business failures than this. 

Posted by Tom at 12:01 AM | Comments (0) |

May 29, 2008

The instinct against the money-makers

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

As Larry Ribstein cogently explains, Southwest Airlines has taken advantage of futures markets over the past several years to hedge its fuel costs (previous posts on Southwest's hedging program are here). That hedging program has been one of the major factors in allowing Southwest to remain one of the only profitable U.S. airlines. Along the same lines, Bloomberg's Matthew Lynn explains how such markets provide an essential function in re-directing resources in the overall economy.

Meanwhile, Congress is trying to hamstring the very markets (see also here) that provided Southwest and many other businesses with the platform on which they hedged fuel-cost and other business risk. The wealth and lower prices generated from those hedges is not inconsequential.

Finally, the Justice Department continues its advocacy of an effective life sentence for one of the men primarily responsible for developing the robust markets that facilitate Southwest and others' wealth creation for shareholders and lower costs for customers.

And these folks in Congress and the Justice Department are supposed to be representing our interests?

Posted by Tom at 12:01 AM | Comments (0) |

May 28, 2008

Hope on the horizon

Following up on this post from awhile back, don't tell the folks at MIT that the prospects for mankind are gloomy. Check out this MIT News article that resulted from the institute's news office asking a collection of MIT faculty and researchers for their thoughts on the potentially life-altering technologies that are just around the corner.

Despite what the presidential candidates say, it's not all that bleak out there, folks!

Posted by Tom at 12:01 AM | Comments (0) |

May 27, 2008

Checking out Houston on the tour bus

Randal O'Toole went on a bus tours of different parts of Houston while he was in town for the Preserving the American Dream Conference a couple of weeks ago and he chronicles his impressions with observations here (neighborhoods between downtown and the Galleria area) and here (one of the Houston area's several master-planned communities, Sienna Plantation). Upon finishing the tour of Sienna, O'Toole commented on the trip back to his downtown hotel:

After finishing up our tour of Sienna, we took the Fort Bend Parkway, one of the region’s many toll roads, back to Houston. This 6.2-mile, four-lane highway required just over a year to build and opened in 2004 at a cost of $60 million. That’s less than $2.5 million per lane mile, including on- and off-ramps, over- and underpasses, and toll facilities. By comparison, $60 million would barely get you one mile of light rail and less than a mile of heavy rail. The toll for the 6.2 miles was $2, even for our full-sized buses.

And compare that to this!

Posted by Tom at 12:01 AM | Comments (1) |

May 26, 2008

Dragged into the mud

The collateral damage of Roger Clemens' questionable approach to disputing his use of steroids or other performance-enhancing drugs is already extensive. It now appears that the best player in Stros history may get pulled into the public fray. As this post from a couple of years ago noted, the rumors about Bags and other Stros using PED's have been around for years.

Regardless of the foregoing, I can sure think of more productive things to do in regard to understanding the perverse Major League Baseball PED culture than dragging decent men such as Jeff Bagwell through the mud.

Posted by Tom at 12:01 AM | Comments (0) |

May 25, 2008

Flying high

 Check out what Michel Fournier is doing for fun today.

Posted by Tom at 12:01 AM | Comments (0) |

May 24, 2008

Opting out with meaning

Earlier this week, the owners of the National Football League elected to opt out of the final two years of the league's Collective Bargaining Agreement with its Players Association. The Mile High Report and Stacey Brook do good jobs of analyzing the impact of the owners' election and neither believe that a lockout or strike is likely before a new deal is struck. My sense is that they are probably right, but I did chuckle when I saw this AmLaw Daily blog post on the owners' decision in regard to hiring counsel for the upcoming labor negotiations:

.   .   . [The NFL owners] hired L. Robert Batterman of Proskauer Rose. Batterman is well known in labor circles for his National Hockey League work. It was Batterman who presided over the NHL labor negotiations that scuttled the league's 2004-05 season, making it the first North American pro sports league to lose a full year to labor strife. "Batterman bullied [the union] into submission," says one sports labor lawyer who requested anonymity. "If one accepts the conspiracy theory of collective bargaining, this means the NFL must be looking for trouble," says another. [.  .  .]

No official negotiations have been held. But the hiring of Batterman sent a clear signal to the union. Gene Upshaw, president of the NFL Players Association, told SportsBusiness Journal in April that his "concerns were heightened" when he heard Batterman had been retained, noting that NHL players crumbled before Batterman's hard line. The NFLPA's outside counsel, James Quinn of Weil, Gotshal & Manges, says that the owners "have this bizarre notion that they want to get tough, so they go get Bob Batterman." (Jeffrey Kessler of Dewey & LeBoeuf is also counsel to the NFLPA.)

Doesn't sound exactly as if the NFL owners are preparing to play nice, now does it? ;^)

Posted by Tom at 12:01 AM | Comments (0) |

May 23, 2008

Reflecting on the raid

The Third Court of Appeals' decision yesterday ruling that the State of Texas had illegally seized over 450 children from their homes at a polygamist West Texas ranch threw a large monkey wrench into the largest custody case in (at least) recent American history (the court's decision is here). However, the decision is almost certainly the correct one. As Scott Henson has diligently reported over the past two months, the state's case for taking such pervasive action was shaky, at best, and has clearly deprived many parents and children of their due process rights.

The appellate court concluded the state had offered no evidence that all of the children were in danger other than an investigator's vague opinion that the church's "belief system" encouraged teenage pregnancies. State investigators have identified 20 females at the ranch who had become pregnant before age 18, but most of them are now adults. "Even if one views the FLDS belief system as creating a danger of sexual abuse, there is no evidence that this danger is 'immediate' or 'urgent' .  .  . with respect to every child in the community, " the court observed.

As Henson has noted, Texas authorities' handling of the case has been dubious from the get-go. The state raided the compound last month after a sobbing woman called a family-violence hotline and identified herself as a 16-year-old girl who had been forced into marriage at the compound. Authorities never found the girl and now believe the call may have been a hoax. Then, at a mass custody hearing in mid-April that can only be described as a gross miscarriage of justice, one of the state's chief witnesses testified that he did not really know whether the young girls and boys removed from the ranch truly had been in danger. Given that context, the appellate court's decision is not surprising.

Notwithstanding the foregoing, it is difficult not to feel a profound sense of sadness over the many women and children who are subjected to a stifling existence at the Eldorado compound by a relatively small number of sexual tyrants who hold sway over them. Anthropologist Lionel Tiger addressed the genesis of the cruelty recently in this Wall $treet Journal op-ed:

The fact is that, despite all the blather about faith and freedom of religion, the men operating the various compounds in question are behaving in virtually the same manner as countless dominant males in countless primate troops observed over the years.

The essence of the case is that the men who control the politics of the group (as well as the hapless women and children who live there) have used junk theology about heaven, hell, paradise and salvation to maintain their unquestioned access to all females of reproductive age (or younger).

That's the reproductive fantasy of any adult male primate.

In this blow to simple decency, the Texas polygamists are not pathfinders. Multiple wives are of course permitted in the Islamic religion, and co-wives are a feature of dozens of human groups in which powerful men control sufficient resources to be able to support more than one woman.

This is usually because the societies in which they live are sharply unequal. Sex and offspring flow to those with resources.

One of the triumphs of Western arrangements is the institution of monogamy, which has in principle made it possible for each male and female to enjoy a plausible shot at the reproductive outcome which all the apparatus of nature demands. Even Karl Marx did not fully appreciate the immense radicalism of this form of equity.

The Texans' faith-flaunting is morally disgraceful and crudely cynical. It also raises bewildering questions about human gullibility on one hand and the efficacy of the Big Lie on the other.

Can anyone really believe that the notorious communal bed to which senior men command 16-year-old girls is part of some holy temple apparatus? Apparently some people do, and the few escapees from the fetid zoo have testified to the power the ridiculous theory wields.

The victims are not only young women but young men too. They are reproductively and productively disenfranchised, and are in effect forced to leave the communities to become hopeless, ill-schooled misfits in the towns of normal life. No dignified lives as celibate monks with colorful costumes for them.

Again, the issue is cross-cultural. Osama bin Laden has at least five wives, which means that four young men of his tribe have no date on Saturday night and forever. They may become willing jihadists, or desperate suicides eager to soothe their god by killing infidels and Americans.

Elsewhere, preference for sons has meant a sharp shortage of women in China. It is known that raiding parties from there cross into bordering countries with more regular sex ratios to steal women.

The deranged cults have been operating in plain sight for years in Texan communities whose police forces have been earnestly writing parking tickets while ignoring what is obvious major criminality. Some 400 young children have been drastically separated from their mothers – who among other derogations of civil life are allegedly part of longstanding welfare fraud engineered by their sexual tyrants.

And now what? It will be intensely depressing but probably useful to acknowledge this is at bottom a natural matter, a product of our inner behavioral nature. Understanding the shadowy sources of this nightmare may help our community cope with its victims.

John Calvin would say that the Eldorado compound is a reflection of the depravity of man. A nation of laws that protect the individual from the overwhelming power of the state may prove inadequate to deter the men who perpetrate such cruelty. But a special place in hell awaits them.

Posted by Tom at 12:01 AM | Comments (0) |

May 22, 2008

Houston's solid housing market

One of the under-appreciated benefits of living in the Houston metropolitan area is its varied and reasonably priced housing market, which is the subject of this Federal Reserve Bank of Dallas report. The report notes that Houston's housing market has resisted the boom-and-bust syndrome that has been experienced in many other U.S. housing markets recently:

Given that Houstonians had access to the same new types of mortgages as the rest of the country and that Houston has had greater population growth than other large metros, we might expect price appreciation to be stronger in Houston than elsewhere. However, the opposite has been true.

Houston’s large supply of land means that demand growth primarily results in more construction, not higher prices. Construction levels are limited by the availability of two kinds of developable land: the previously undeveloped, generally found on a metro’s outskirts, and the redeveloping, usually in a city’s interior. In both cases, Houston’s policies are relatively permissive, making the metro friendly toward development.

The most fundamental difference between Houston and other cities lies in how they provide (or in Houston’s case, do not provide) water, sewer and drainage to developments on the urban fringe. In Houston, developers can create a municipal utility district, or MUD, to provide these services on their properties and can finance these with tax-free bonds. Houston requires developers to build MUDs in such a way that they eventually could be connected to the city’s corresponding infrastructure, but they begin as self-sufficient enterprises.

In other cities, developments must be connected to the city’s water and sewer lines, confining new projects to nearby or adjacent land since the cost of building lengthy lines is prohibitive. In metro Houston, by contrast, virtually any large parcel of land can become a new suburb, especially given the metro’s expansive highway system. Experience bears out this conceptual framework, with significant Houston suburbs like Katy and Spring developing and prospering before many closer-in areas.

But Houston does not just have a larger supply of available land on its outskirts. Unlike all other large U.S. cities, Houston lacks zoning laws restricting industrial, commercial and residential construction to specific neighborhoods. Many inner-city Houston neighborhoods protect property values through deed restrictions diligently enforced by private neighborhood associations, and the large, planned suburban communities operate similarly. But much of the land in metro Houston is not assigned a specific use.

So much land is available in Houston that the cost of each incremental unit rises slowly and keeps the average cost below that of more restrictive metros. Even in the face of significant population growth, this large supply keeps land prices in Houston stable, which over time contributes to lower home prices.  .  .  .

Indeed, Houston and other metros such as Dallas and Atlanta that have relatively more permissive development policies have lower housing prices than more restrictive places do.

At $155,800, Houston’s median house price is the third lowest among the 12 largest U.S. metropolitan areas and is less than half the average for these cities. Houston’s median price is lower than even the national average, which includes inexpensive rural areas.

By comparison, the median house price in metropolitan San Francisco, where zoning laws and building codes are very strict, is $825,400.

This result—more zoning bringing higher prices—is a robust one. Economists Edward Glaeser and Joseph Gyourko find that house prices across the country are positively related to the degree of zoning and regulation. Even in Houston, there is evidence that houses in deed-restricted neighborhoods or in zoned cities within the metro area are more expensive than comparable ones outside these areas. But with plenty of unzoned neighborhoods remaining, Houston house prices, on the whole, are restrained near construction costs.

In summary, Houston’s low-and-slow home prices have made real estate a relatively accessible and safe investment for the area’s residents even as other cities’ markets have become expensive and volatile. The early phases of the current housing downturn—the boom and bust in prices—were barely felt in Houston.

The article goes on to point out that the crisis in the sub-prime mortgage markets has reduced the pool of available homeowners in the Houston market, which is contributing to a downturn in the local housing market. However, the report also notes that that Houston's housing policies and local economy place it in a strong position to weather the downturn.

Posted by Tom at 12:01 AM | Comments (0) |

May 21, 2008

Overrated

While this Golf.com article surveys the most overrated professional golfers, this Dave Berri post analyzes the most overpaid NBA players.

Guess who made the latter list?

Posted by Tom at 12:01 AM | Comments (0) |

May 20, 2008

And you thought the Mitchell Report was ugly?

So, the controversy over the Mitchell Commission Report has pretty much died down, right? Well, it looks as if another potential public relations nightmare is brewing for Major League Baseball:

Tucked away inside the United States attorney’s office in the Northern District of California are documents that link more than 100 major league baseball players to positive tests for steroids conducted in 2003.

The test results were meant to be anonymous, and a battle over access to them has wound its way through the federal court system. The players union has tried to protect its members by arguing that the government illegally obtained the information.

But now, more than four years after federal agents seized the test results as part of the investigation into the drug-distribution activities of the Bay Area Laboratory Co-operative, the government appears close to prevailing in the legal battle, which could set off another round of federal drug investigations.

According to a lawyer who spoke on condition of anonymity because the government’s plans are supposed to remain confidential, federal authorities will seek to question each of the 104 players about where and how they obtained the substance detected in their urine samples.

The authorities then intend to distribute the information they receive to federal prosecutors around the country.

Distributors, not users, have been the focus of the government’s investigations into performance-enhancing drugs ever since the authorities began seriously looking into the issue in 2002. But the 104 players would be asked to provide testimony — to federal agents or before grand juries — to lead investigators to the distributors. The players’ identities could become public if their testimony is used in government documents to obtain search warrants or to charge individuals. The players could also be called as witnesses at trials.

Regardless of how many of the 104 names eventually become public, the notion of simultaneous drug investigations being conducted by various federal attorney’s offices around the country would be a significant setback to Major League Baseball, which has struggled to get control of the issues related to performance-enhancing drugs. [.  .  .]

Read the entire article. The MLB Players Association has to be kicking itself for not insisting on the destruction of the "anonymous" drug tests, which were conducted during the 2003 season. Under public pressure to agree to some regulation of performance-enhancing drugs, the Players Association had agreed to the 2003 testing as a "survey" under which all players would be tested one time and 240 players would be randomly tested a second time with neither group being under any threat of punishment. Subsequently, discovery in connection with the investigation into the Balco case in Northern California transcended the deal between Major League Baseball and the Players Association, so now it appears that there is a good chance that a master list of all players who tested positive during the 2003 testing may well become public information. The list won't be released tomorrow or even next week, so most of the mainstream media will continue to focus on such sideshows as the Mindy McCready affair. But you can bet that Major League Baseball and the Players Association can hear the clock ticking on this one.

Posted by Tom at 12:01 AM | Comments (0) |

May 19, 2008

The cost of Spitzerism

On Friday, February 11, 2005, shares of American International Group closed at $73.12 per share.

Last Friday, after Eliot Spitzer and the meltdown in the subprime mortgage markets, AIG's shares closed at $39.34 per share.

James Freeman of the Wall $treet Journal, one of the only mainstream media outlets to expose Spitzer's extortion of AIG for what it truly was, reports here on the massive reduction of wealth to which Spitzer's unbridled regulation of AIG contributed greatly. Larry Ribstein, who was one of the first bloggers to shed light on this injustice, surveys the economic carnage here.

My question: Where is the rest of the mainstream media in reporting on this enormous destruction of wealth to AIG shareholders?

Posted by Tom at 5:04 PM | Comments (1) |

May 18, 2008

Nice comeback

Legendary defense lawyer Gerry Spence is defending Geoffrey Fieger on campaign finance charges in Detroit. Former Spence student Norm Pattis flew into the Motor City and took in a day of the trial last week. He passes along the following exchange that occurred while Spence was cross-examining a government witness:

Spence:  "Can you tell me a case in the history of the world in which ..."

Prosecutor:  "Objection."

Spence:  "Okay, the United States."

Pattis' collected posts on the Fieger trial are here. Very interesting, to say the least.

Posted by Tom at 12:01 AM | Comments (0) |

May 17, 2008

Look at what Mary Flood has been reading

Chronicle legal reporter Mary Flood covered many of the Enron-related criminal trials, so it was only natural for her to pick up a copy of former Enron Task Force prosecutor, law professor and current Oregon attorney general candidate John Kroger's new book, which includes several chapters on his work in several Enron-related criminal cases.

You may remember Kroger. He is the fellow who tried early on to broker his experience on the Task Force to make a name for himself in academic circles. He was involved in preparing some of the worst carnage that the Task Force generated -- the Arthur Andersen debacle, the Enron Broadband disaster, and the Nigerian Barge abomination.

Ms. Flood reports on her blog that the Enron-related chapters of Kroger's book are downright bizarre:

[Kroger's book] is a self-congratulatory look at Kroger's years as a federal prosecutor. The four somewhat conflicted chapters on Enron talk alternately about his prowess, his lack of knowledge, how careful prosecutors were, how ruthless prosecutors were, how terrific his case against the Enron broadband executives was and how it hasn't been successful in court. [.  .  .]

What may be most surprising about the book is Kroger's admission of a lack of knowledge about how to go about these cases, an admission that the DOJ was out for quick scalps, and an admission that they threatened many witnesses. These are especially odd to see in print given that one of the allegations the defense made was prosecutorial misconduct in this case -- too much threatening and coercing of witnesses. One witness in the 2005 case even testified a member of the task force tried coerce him out of testifying for the defense.

Kroger frequently brags about his own prowess as an interrogator and lawyer, even guessing the broadband cases might be over now if he'd tried them. And he casts doubt on just about everyone else in the process.

Despite talking about the pressure the task force was under to get scalps and how aggressive they were, he creates a hypothetical conversation to illustrate how a defense attorney might try to trick a witness into saying no crimes were committed.

Amid the sometimes stunning hubris seems to be much angst about the decision of others to charge Lea Fastow in order to get to her husband and thus get to Jeff Skilling and Ken Lay.

He questions his colleagues, not just over the Lea Fastow charging decision (even including a mean-spirited comment a fellow prosecutor made about the Fastow children possibly winding up in foster care) but in general saying, in his career as a prosecutor he learned:

". . . that even well-intentioned prosecutors can present false testimony at trial, that a just process and a just result cannot always be obtained at the same time, that informants are both necessary and deceitful, that a certain small percentage of agents are corrupt, that our law enforcement policies often encourage crime rather than prevent it, and that successful interrogation requires the ethically questionable manipulation of other human beings.''

Just another chapter in the increasingly dubious legacy of the Enron Task Force.

Posted by Tom at 12:01 AM | Comments (1) |

May 16, 2008

Friday Musings

So, did you know that Taxi Driver is the greatest wealth-creating movie of all-time?

Speaking of movies, actor Mickey Rourke has been down on his luck for the past several years, but he sure had a good run of movies in the 1980's.

Finally, singer-songwriter Hayes Carll, fresh off the release of his new CD, returns home to The Woodlands for a Friday night show at Dosey-Doe. I'll be there, so come by and say hello!

Posted by Tom at 12:01 AM | Comments (0) |

May 15, 2008

Houston's best 19th hole

Although Jack Burke's venerable Champions Cypress Creek Golf Course may arguably be a bit overrated, this Ron Kapriske/Golf Digest article rates the Champions Men's Locker Room Bar as one of the 50 best 19th holes in the country:

Sit back and listen to Jackie Burke tell stories, especially the one about Jimmy Demaret at the bar in his birthday suit; the bar inside the locker room is three-sided to allow for "cross-counter shouting matches"; wood paneling is a "throwback to the country-club days of the 1960s."

I can attest that having the opportunity to listen to a couple of Burke stories is certainly worth a trip to the Champions Men's Locker Room. A close second to the Champions Men's Locker Room Bar among the best of Houston's 19th holes -- Lochinvar Golf Club's Clubhouse.

Posted by Tom at 12:01 AM | Comments (0) |

May 14, 2008

The Chron's continuing soccer stadium drumbeat

In this post from last week on the proposed downtown soccer stadium, I observed that the Chronicle should simply declare that it supports the public financing of the stadium and quit attempting to rationalize that such financing makes economic sense.

Well, based on this Glenn Davis/Chronicle column, it looks as if the Chronicle took me up on my suggestion.

Actually, Davis' column is about as good a rationalization for the public financing of the soccer stadium as you will come across. He eschews the economic-benefit ruse and instead contends that it's worth spending public money on the Dynamo because the club represents the city well internationally, particularly in Mexico and Central America. On the other hand, Davis stretches by suggesting that "the team deserves its own stadium [because it] would elevate the sport and city even more in the eyes of the world."

Just to be clear -- there is nothing inherently wrong with public financing of sports stadiums. Davis might even have a valid point that it's worth using public funds to invest in the Dynamo to bolster Houston's image internationally, although it would seem that at least some consideration should be given to alternative investments before coming to the conclusion that financing a soccer stadium is the best way to achieve that goal. But let's at least have truth in advertising during the remaining public discussion on this issue -- the marginal economic benefit of a soccer stadium to the community is simply not a good reason to finance it publicly.

Posted by Tom at 12:01 AM | Comments (1) |

May 13, 2008

Ignoring the noise from next door

The problems that the obsolescent U.S. drug prohibition policy exacerbate along the Texas-Mexico border are a frequent topic on this blog, so this Mary Anastasia O'Grady/W$J article on the latest developments in the drug war just south of the border caught my eye:

American nonchalance about drug use stands in sharp contrast to what is happening across the border in Mexico. There lawmen are taking heavy casualties in a showdown with drug-running crime syndicates. On Thursday the chief of the Mexican federal police, Edgar Millán Gómez, was assassinated by men waiting for him when he came home, becoming the latest and most prominent victim of the syndicates. [.  .  .]

It's no secret that the narcotics trade is like a roach infestation. If you see one shipment or dealer, you can be sure that there are many others that go undetected. That's why such brazen behavior at [San Diego State University] should be disturbing to America's drug warriors. The signs of an infestation are everywhere, making a joke of their 40-year claim that any day now they will wipe out American drug use. [.  .  .]

The upshot: Americans underwrite Mexico's vicious organized crime syndicates. The gringos get their drugs and the Mexican mafia gets weapons, technology and the means to buy off or intimidate anyone who gets in their way. Caught in the middle is a poor country striving to develop sound institutions for law enforcement.

The trouble for Mexico is that, even if it understands that U.S. demand is not going away, it cannot afford to cede large swaths of the country to the drug cartels. Thus Mexican President Felipe Calderón has made confronting organized crime a priority since taking office in December 2006. His attorney general, Eduardo Medina Mora, told me in February that the goal is to reclaim the state's authority where it has been lost to the mafias.

But after 17 months of engagement, while San Diego students party on, victory remains elusive and the Mexican death toll is mounting. Most of the drug-related killings since Mr. Calderón took office seem to be a result of battles between rival cartels. Still, the escalating violence is troubling. The official death toll attributable to organized crime since the Calderón crackdown began now stands at 3,995. Of that, 1,170 have died this year.

Especially alarming are the number of assassinations among military personnel and municipal, state and federal police officers. The total is 439 for the 17 months and 109 so far this year. Many of these victims have been ordinary police officers whose refusal to be bought off or back off cost them their lives.

But as the murder of police chief Millan makes clear, high rank offers no safety. Two weeks before he was gunned down, Roberto Velasco, the head of the organized crime division of the federal police, was shot in the head. The assailants took his car, which leaves open the possibility that it was a random event, but most Mexicans are not buying that theory. Eleven federal law enforcement agents have been killed in ambushes and executions in the last four weeks alone.

If U.S. law enforcement agencies were losing their finest at such a rate, you can bet Americans would give greater thought to the violence generated by high demand and prohibition. Our friends in Mexico deserve equal consideration.

The most troubling aspect of all this is that spillover violence toward U.S. authorities would probably just be met with beefed-up prohibition efforts. Are the vested interests who benefit from the outmoded-but-lucrative prohibition policy simply too entrenched for there to be serious Congressional consideration given to a more humane and cost-effective drug policy?

Posted by Tom at 12:01 AM | Comments (2) |

May 12, 2008

The Players trumps the Masters

Well, he didn't do it with a belly putter, but Sergio Garcia fulfilled my prediction after last year's British Open that it was just a matter of time before he won a big-time tournament.

On Sunday afternoon, the 28 year-old Garcia won The Players in a one-hole playoff against journeyman Paul Goydos (169th in the World Golf Rankings) as he shook off -- for the most part, at least -- the putting woes that have bedeviled the former prodigy over the past several years. The victory is Garcia’s first on the PGA Tour since 2005 and easily the most important championship in his career to date, reflected by the fact that his World Golf Ranking went from 18th to 10th with the win. For the record, Garcia burst on the scene as a 19 year-old when he went toe-to-toe with Tiger Woods before taking second place at the 1999 PGA Championship at Medinah. Few who saw him play in that tournament would have predicted at the time that it would take him nine years to win a tournament of the The Players' stature.

By the way, fourth-place finisher Briny Baird summed up as well as anybody the final day of The Players, which saw contenders such as Phil Mickelson (78) and Kenny Perry (81) flame out: "I don't care who wins the tournament," Baird said. "The wind won. It kicked everybody's butts."

Although Garcia's unexpected victory and Goydos' stirring play were compelling story lines, the big winner this week was the tournament itself, which provided a much more entertaining product than the Masters for the second straight year. Dean Barnett notes the main reason why:

Particularly when paired against the Masters, The Players shows some strength. The field of competitors is stronger at The Players; indeed, it’s the strongest field in golf on an annual basis.

The Masters’ history also has to give The Players some encouragement. The Masters is a relatively new tournament, ostentatiously and boldly designed to achieve major status some 70 years ago. And the plan worked. The Players has the same sort of dynamic, plus the additional benefit that the venue and the tournament belong to the PGA Tour. In other words, The Players truly is the players' tournament. In a manner of speaking, they own it.

Where The Players actually belongs to the players, the Masters and Augusta National belong to a bunch of weird guys who are prone to despotism. Additionally, the Masters has looked a bit long in the tooth in recent years. In a misguided effort to modernize the course, Augusta National unleashed a supremely mediocre architect to modify one of the best and most original golf designs ever.

The changes to the course have been horrendous on a number of levels. The most damaging has been the fact that the changes sucked the drama out of the tournament in the name of “defending par.” Augusta is now so long and difficult, there are few birdie opportunities and the players take over five hours to make their way around the course in twosomes. If the lords of Augusta National were capable of embarrassment (which they almost surely are not), this last fact would shame them no end. The course is now harder (and more boring), but is it a better and fairer test of golf? Does it effectively identify the world’s best golfers? Leader boards the last couple of years populated almost exclusively by no-names and an angry Tiger Woods suggest otherwise.

Meanwhile, The Players takes place at the Tournament Players Club (TPC), a course that is also very difficult, but still manages to identify the best golfers and be fun. The trademark short 17th hole with its island green is pure fun and excitement. (Journalistic integrity compels me to confess to playing the Tournament Players Club this winter and effortlessly parring the 17th by hitting a nice easy nine iron to the center to the green. I’m not sure why the pros have so much trouble with the hole. Maybe it has something to do with having hundreds of thousands of dollars on the line.)

Although a beautiful venue, Augusta National is currently so long and difficult that it provides a disincentive for the players to take risks, similar to the type of golf that has long been played in the usually boring U.S. Open. The Stadium Course at TPC Sawgrass, on the other hand, is much shorter than Augusta National and most U.S. Open venues, and the course continues to encourage creative risk-taking. A course that encourages risk-taking will usually produce a more entertaining tournament than one that does not.

Posted by Tom at 12:01 AM | Comments (0) |

May 11, 2008

Nixonland

George Will gives Rick Perlstein, author of Nixonland (Scribner 2008), a history lesson.

Posted by Tom at 12:01 AM | Comments (0) |

May 10, 2008

Worth a watch

For those of you interested in the vexing issues involved in application of the death penalty and child predator laws, the scene below from Boston Legal is worth ten minutes of your time (H/T David Feige). I don't agree with everything that Alan Shore says in his argument to the U.S. Supreme Court, and the scene is certainly far-fetched, but it's a thought-provoking performance nonetheless:

 

Posted by Tom at 12:01 AM | Comments (0) |

May 9, 2008

Suspending reality on financing the soccer stadium

Look, I realize that the reasoning in support of public financing for the proposed Houston Dynamo soccer stadium has not been particularly rational. But this Chronicle article takes the cake in terms of suspending reality. Chron reporters Bernando Fallas and Bill Murphy breathlessly suggest that financially-troubled Texas Southern University -- which is currently seeking $40 million in emergency legislative funding simply to keep the lights on -- is a serious player to make up at least a portion of the gap between the private and public financing on the deal:

Forget soccer-specific. The Dynamo would be thrilled to call their proposed stadium football-specific or even fútbol-specific.

Either way would be accurate — soccer is known as football almost everywhere else in the world — if the Dynamo can get Texas Southern University to join negotiations with the city of Houston toward the construction of a $105 million facility just east of downtown that would be home to the two-time defending MLS champions and TSU athletics, primarily the Tigers' football team.

By the looks of things, TSU is prepared to do just that.

Two weeks after he first expressed interest in the project and a couple of meetings and phone conversations later, newly appointed TSU athletic director Charles McClelland said the school is willing to invest in the construction of the 22,000-capacity stadium in exchange for the rights to use it. [.  .  .]

Of course, the article is utterly devoid of details, such as how TSU is going to find any money to throw at this deal, much less make a multi-million dollar investment in it. Heck, the TSU athletic director and the Dynamo's president haven't even met yet, so it doesn't even appear that Dynamo management takes TSU's involvement seriously. Why don't the Chronicle editors just come out and say that they really want the city to finance the downtown soccer stadium and spare us such vapid articles as this one? Gosh, it's gotten so bad that even normally common sense bloggers are giving in to this silliness.

Meanwhile, J.R. Taylor over at PoliSci@UST runs circles around the Chronicle's reporting on the soccer stadium financing with this well-reasoned post that actually addresses facts regarding public financing of stadiums. Yet another example of how the blogosphere is trumping the mainstream media in terms of providing coherent analysis of important issues.

Posted by Tom at 12:01 AM | Comments (1) |

May 8, 2008

My favorite tournament

It's not one of the four majors (despite the PGA Tour's constant drumbeat to make it the fifth), but The Players Championship at TPC Sawgrass in Ponte Vedra Beach just south of Jacksonville, Florida is my favorite golf tournament of the year. This year's edition starts today.

This is the 35th Players Championship, which bounced around for its first eight years before settling at Pete Dye’s legendary Stadium Course at TPC Sawgrass in 1982. Not only is the Stadium Course a great modern layout (Jay Flemma's excellent review is here), the Tour has continually renovated and improved the course over the years so that it has matured into one of the best courses that the Tour plays each year. Adding to the fun is the fact that The Players usually has the best field of any tournament of the golf season and this year is no exception -- every one of the top 25 in the World Golf Rankings is playing with the exception of the Tiger Woods, who is convalescing from recent knee surgery. Not surprisingly, from the standpoint of most players, winning The Players is at least as prestigious as winning the PGA Championship, though still not as important as winning the other three majors.

So, a great field competing over one of modern golf design’s most interesting courses almost assures good entertainment -- that's why this is my favorite tournament. Add in that the 17th hole island par-3 is arguably the most creative (and highly controversial) hole in the backstretch of any Tour event is a virtual guarantee for high drama come Sunday afternoon. TV times for Thursday and Friday are noon-6 p.m. (CDT) on the Golf Channel, and 1-6 p.m. (CDT) Saturday and Sunday on NBC.

Posted by Tom at 12:00 AM | Comments (0) |

May 7, 2008

Stros 2008 Season Review, Part One

Despite a weekend sweep of the division-rival Brewers (16-16) and another stirring comeback victory over the Nationals (14-19), the Stros' record (17-16) reflects their performance through the first fifth of the 2008 season -- an average National League ballclub.

Collectively, the Stros are generating one less run through 33 games than a National League-average club would have generated in the same number of games (RCAA -- that's 9th among the 16 National League clubs) and the Stros' pitching staff has collectively given up nine more runs than a National League-average pitching staff would have given up (RSAA -- that's 10th in the National League). Thus, the 2008 Stros have essentially the same record and collective statistics as the disastrous 2007 club had at roughly the same stage of the season.

Nevertheless, there is a reasonable basis for thinking that the 2008 club will turn out somewhat better over the course of the season than the 2007 edition (73-89). SS Miguel Tejada (12 RCAA/.379 OBA/.565 SLG/.944 OPS) appears to be revived by his new surroundings and has been much better than predicted, both offensively and defensively. Although still below National League-average, the Stros' pitching staff can look forward to ace Roy Oswalt (-7 RSAA/5.57 ERA) improving steadily over the balance of the season after an uncharacteristically bad start (after going 0-3 with a 9.00 ERA in his first three starts, Oswalt is 3-0 with a 3.46 ERA in his last four starts), that second-best starter Wandy Rodriguez (5 RSAA/2.31 ERA) will eventually return from a stint on the disabled list, and that the relief corps will continue its recent improvement after a horrid start that was primarily responsible for the club's atrocious 6-14 record after the first 20 games of the season. Likewise, an increase in offensive productivity is likely as RF Hunter Pence (-5/.288/.432/.720) and LF Carlos Lee (5/.333/.541/.874) rebound from slow starts and regular 3B Ty Wigginton (-2/.275/.333/.608) returns after missing 22 games with a broken thumb. Finally, the Stros' prospects this season are buoyed by 1B Lance Berkman's (22/.428/.731/1.159) strong rebound from a so-so 2007 season (at least by his standards) as he returns to his customary status as one of the top sluggers in the National League. Berkman went nuts at the plate again on Tuesday night against the Nationals, going 5 for 5 for the first time in his career and stealing two more bases, making him 6 for 7 on steal attempts this season.

However, that's not to suggest that there aren't warning signs that could lead this club to swoon in the same manner as the 2007 club did (26 losses in 40 games) during the second quarter of last season. Contrary to the mainstream media's suggestion that the Stros are a good hitting team, no Stros hitters are producing above National League-average except for Berkman, Tejeda and Lee, and Lee is not producing anywhere near the rate he needs to in order to make up for all the runs he gives away with his laggard defensive play. Meanwhile, young players Pence, CF Michael Bourn (-5/.275/.315/.590) and C J.R. Towles (-3/.318/.386/.703) are all showing signs of their lack of AAA seasoning. Bourn has yet to learn that his future as a Major Leaguer is in being a line drive/ground ball hitter, while Pence is having to deal for the first time with the reality that he will get few meaty fastballs from NL pitchers unless or until he learns to lay off breaking pitches thrown outside the strike zone. On the pitching side, the starting rotation is seemingly on the brink of disaster most of the time (Chris Sampson has a -11 RSAA/7.96 ERA so far this season!), which has led to Manager Cecil Cooper's quick hook and the resulting overuse of the relievers. Although they have been better over the past 20 or so games, those relievers are at high risk of reverting to their early season mediocrity as the innings pile up.

Consequently, through a fifth of the 2008 season, there still is not much evidence that the Stros can contend for a NL playoff spot. So long as they can avoid injuries to key players, the club might be able to achieve a .500 record, which would be 7 games better than my pre-season over/under prediction of 75 wins. However, the club's pitching is simply too inconsistent to generate a sustained period of generating more wins than losses, which is necessary at some point in any season to propel a club into playoff contention. Look for the Cubs (19-14; 31 RCAA/24 RSAA) to take control of the NL Central as the season wears on, although the Cardinals (22-12; 28 RCAA/13 RSAA) have been the surprise of the division so far. I just don't think the Cards will keep it up.

By the way, the 2008 season has brought us another solid source of information on the Stros. Zachary Levine -- who takes a refreshingly objective approach to baseball analysis -- has quickly become the most insightful Houston Chronicle reporter on the Stros. Along with Lisa Gray's insightful Stros blog and Alyson Footer's articles at Astros.com, Levine's reports on the Stros provide solid sources for keeping up with the Stros on daily basis.

After finishing up against the Nats this week, the Stros make a West Coast swing against the Dodgers (18-14) and the Giants (14-19) before returning to Texas to play the Rangers (13-20) in the first inter-league games of the season. Then, it's back home later this month to play the Cubs and Phillies (19-14) before going back on the road to finish May against the Cardinals and Brewers.

The 2008 season statistics for the Stros are below (through 33 games), courtesy of Lee Sinins' sabermetric Complete Baseball Encyclopedia. The abbreviations for the hitting stats are defined here and the same for the pitching stats are here. The Stros 40 man roster is here with links to each individual player's statistics:

Posted by Tom at 12:01 PM | Comments (0) |

May 6, 2008

The subprime mortgage criminal lottery

Well, well, well. Look who is resurfacing in connection with the creation of the Justice Department's latest criminal Task Force to investigate whether crimes were committed when the subprime-mortgage market collapsed (just what we need -- another corporate crime lottery):

Federal prosecutors are stepping up their scrutiny of players in the subprime-mortgage crisis, with a focus on Wall Street firms and mortgage lenders.

Prosecutors in the Eastern District of New York in Brooklyn have formed a task force of federal, state and local agencies that will involve as many as 15 law-enforcement agents and investigators.

The U.S. attorney for the office, Benton J. Campbell, who supervises about 150 prosecutors, said the group will look into potential crimes ranging from mortgage fraud by brokers to securities fraud, insider trading and accounting fraud.

You may remember Campbell. He was the lead prosecutor on the Enron-related criminal trial known in these parts as the first Enron Broadband trial, which ended in an embarrassing loss for Enron Task Force after the prosecution was caught threatening defense witnesses (see also here) and propounding false testimony from one of its key witnesses during the trial. Sort of what you would expect from a trial in which the Task Force advocated an unwarranted expansion of a criminal law intended to punish kickbacks and bribes against business executives who did no such thing.

Interestingly, in the Wall Street investigation, Campbell thinks there actually may be a non-criminal explanation about the meltdown in the sub-prime market:

Mr. Campbell said the "jury is still out" on just how much criminal activity the office might find, particularly on Wall Street, which saw a sudden decline in the value of securities backed by pools of mortgages last year. "There are market forces in play in that area, and that doesn't necessarily mean there is fraud," said Mr. Campbell, 41 years old.

H'mm. How many damaged lives and careers would have been salvaged had Campbell and his fellow Enron Task Force prosecutors been so open-minded?

Posted by Tom at 12:01 AM | Comments (1) |

May 5, 2008

Chron: Sacrifice the local economy for the polar bears

Given the editorial slant of the Houston Chronicle over the past several years, it's not particularly surprising that the editors ran this editorial calling for polar bears to be declared an endangered species under the federal Endangered Species Act.

Unfortunately, it's also not surprising that the Chron editorial failed to mention that the oil and gas business -- a key source of jobs and wealth for Houston and the nation -- is likely to suffer considerable financial damage as a result of the polar bear listing push, which Hugh Hewitt notes "is not only an abuse of the ESA's original intent but also unsupported by the facts concerning the ice and the polar bears."

Posted by Tom at 12:01 AM | Comments (0) |

May 4, 2008

"Because you're not that guy. . ."

Beyond occasional gems such as John Adams or NBC's 30 Rock, I don't watch much television, so I'm pretty clueless on the latest TV ad campaigns. However, my wife and I laughed heartily last night when we saw this Helzberg Diamonds commercial below for the first time:

Much to my surprise, I discovered later that my amusement with the commercial apparently reflects my sexism to some folks. This post provides a bit more balanced perspective on the ad campaign.

Posted by Tom at 12:01 PM | Comments (0) |

May 3, 2008

The stench of injustice

Scott Henson reports on the 17th exoneration (see also here) of a citizen in Dallas who had previously been wrongly convicted. This time prosecutors withheld exculpatory evidence from the defendant's lawyers and police failed to investigate it. New Dallas District Attorney Craig Watkins continues to investigate what appears to be have been a culture of abject injustice within the Dallas County D.A.'s office. I will not be surprised if there are more exonerations.

By the way, the rest of the country is noticing this outrage.

Posted by Tom at 12:01 AM | Comments (1) |

May 2, 2008

The Rockets Narrative

As the Houston Rockets face the beginning of their straight decade of failing to get out of the first round of the NBA playoffs, the familiar mainstream media narrative regarding the team's probable playoff loss to Utah is all around us -- Superstar Tracy McGrady folds during crunch time at the end of close games and is simply not the type of true superstar who can carry his team to greater success.

However, reality is much different. Rather than underachievers, this season's Rockets overachieved, somehow winning 55 games during the regular season despite having only two players on the team who were in the top 15 of NBA players at their position in terms of wins-produced. And those two players -- injured center Yao Ming and relatively little-used power forward Chuck Hayes -- are only ranked 14th and 15th respectively at their position. Not only is McGrady no longer a superstar player, there are dozens of players in the NBA who produced more wins for their team this season than the just-above league average McGrady.

Given this quality of analysis in the local mainstream media, don't expect the familiar narrative regarding the Rockets to change any time soon. But the truth is that this Rockets team -- relative to their talent level -- had one of the best seasons of any team in the NBA this season. It's just that the club needs to find or develop a couple more above-league average players before it can get beyond the first round of the playoffs. 

 

Posted by Tom at 12:01 AM | Comments (0) |

May 1, 2008

Neuroscience and the Law

I am always on the lookout for creative and interesting Continuing Legal Education seminars. This one clearly fits the bill:

Baylor College of Medicine’s Initiative on Neuroscience and Law is proud to announce its 2008 Conference. This conference showcases talks from experts in several aspects of neurolaw. Topics include responsibility, punishment, prediction, rehabilitation, brain death, genetics, competence, intention, and ethics – all with an eye toward understanding how cutting edge neuroscience will touch the current practice of law.

The conference, which is worth 3.5 hours of CLE credit, will take place on Friday, May 23, 2008, from 1-5 p.m. at Baylor College of Medicine (Room M321) in the Texas Medical Center. One of the speakers for the conference is Daniel Goldberg, a local attorney and former Texas Supreme Court clerk who is currently working on his PhD at the University of Texas Medical Branch while serving as a Research Professor at Baylor's Initiative on Neuroscience and Law and as a Health Policy Fellow at Baylor's Chronic Disease Prevention & Control Research Center (Daniel is also a frequent commenter on health care and health care finance issues on this blog). The preliminary agenda for the conference is here. Check it out.

Posted by Tom at 12:01 AM | Comments (2) |

April 30, 2008

Examining stadium subsidies

As if on cue for the soccer stadium financing issues currently being discussed on the local scene, Dennis Coates provides this excellent op-ed in The American on the dubious nature of municipal stadium subsidies:

Clearly, stadiums built with public funds have evolved over time. No longer are they built to honor the sacrifices of American soldiers. No longer are they built to be flexible venues capable of hosting a great variety of events. And no longer does the public sector determine the appropriate price to charge private enterprise for use of this publicly supplied resource. Today, sports stadiums are largely the private domain of for-profit businesses that the public sector subsidizes, often with special taxes. [.  .  .]

Over time, both the purpose and the real cost of public support for stadiums and arenas have changed. It may be that the subsidies state and local governments provide for stadium and arena construction and operation are justified by the community benefits those facilities provide. But the evidence says otherwise. [.  .  .]

My own research, conducted with economist Brad Humphreys .  .  . finds that the professional sports environment—which includes the presence of franchises in multiple sports, the arrival or departure of teams, and stadium construction—may actually reduce local incomes. For example, we found that the overall sports environment reduced per capita personal income, a finding that was new in the economic literature at the time we published it (1999). We also found that, in many local economies, wages and employment in the retail and services sectors have dropped because of professional sports. [.  .  .]

Of course, even if the benefits of stadiums and arenas cover the subsidies, the subsidies still may not be sound policy. First, there may be enormous variation in the distribution of the consumption and public-good benefits. It is clear that not all citizens in a community benefit equally from the presence of professional sports franchises in their city. Indeed, because the tax revenues used for the subsidies are often generated from lotteries and sales taxes whose burden falls disproportionately on the poor, while the consumption benefits go mostly to relatively wealthy sports fans, the net benefits are distributed regressively. Second, we should consider the net benefits to the community of alternative uses of the funds spent subsidizing sports facilities. Good policy means using the money where the net benefit is greatest, not simply where the net benefit is positive. That’s something state and local governments should keep in mind before pledging millions of dollars to fund the next new stadium project. And it’s something Congress should remember when evaluating the future of U.S. tax policy.

Are you listening, Mayor White?

Posted by Tom at 12:01 AM | Comments (2) |

April 29, 2008

Fueling food riots

Peter Gordon observed the other day that "politicians are better at creating problems than addressing them. Schools, housing, health care, transportation and others suffer from too much political attention."

Echoing that idea, Clear Thinkers favorite James Hamilton writes about one of the underlying economic reasons for food riots that are occurring in developing nations in some parts of the world:

As a result of ethanol subsidies and mandates, the dollar value of what we ourselves throw away in order to produce fuel in this fashion could be 50% greater than the value of the fuel itself. In other words, we could have more food for the Haitians, more fuel for us, and still have something left over for your other favorite cause, if we were simply to use our existing resources more wisely.

We have adopted this policy not because we want to drive our cars, but because our elected officials perceive a greater reward from generating a windfall for American farmers.

But the food price increases are now biting ordinary Americans as well. That could make those political calculations change, and may present be an opportunity for a nimble politician to demonstrate a bit of real leadership. I notice, for example, that although Senator Barack Obama (D-IL) was among those who voted in favor of the monstrous 2005 Energy Bill that began these mandates, Hillary Clinton (D-NY) and John McCain (R-AZ) were among the 26 senators who bravely voted against it.

Wouldn't it be refreshing if one of them actually tried to make this a campaign issue?

Sigh. Read the entire post.

Posted by Tom at 12:01 AM | Comments (0) |

April 28, 2008

What to do about airline service?

Putting aside for the moment airline industry's seemingly intractable financial problems, lousy airline service has become such an issue that even Judge Posner and Gary Becker are trying to figure out what to do about it. At least painful airline service provides the fodder for this amusing segment of Brian Regan's stand-up comedy show:

Posted by Tom at 12:01 AM | Comments (0) |

April 27, 2008

Thoughts for a Sunday

The NY Times' Adam Liptak has penned a couple of interesting articles recently (here and here) on a frequent topic of this blog (here, here, here, here, here, here, here, here, here, and here) -- the troubling incarceration rate in the United States.

With only 5% of the world's population, the U.S. now houses almost a quarter (2.3 million!) of the world's prisoners. One in 100 adults in the U.S. is now behind bars and 751 people are in U.S. prisons or jails for every 100,000 in population. The only other major industrialized nation that even comes close to that rate of incarceration is Russia with 627 prisoners for every 100,000 people. England’s rate is 151, Germany’s is 88 and Japan’s is 63. Attempting to keep all of this in perspective, Pepperdine University's James Q. Wilson provides this recent op-ed that puts the U.S. incarceration rate in a more favorable light with regard to reducing serious crime.

Among other things, these incarceration numbers certainly makes one wonder why on earth we are sending folks like Jeff Skilling, the NatWest Three, the Merrill Four and Jamie Olis to prison?

Meanwhile, in this five-part LA Times debate, Reason's Jacob Sullum takes on the Heritage Foundation’s Charles Stimson over one of the main reasons for the high U.S. incarceration rate -- drug prohibition. At least in this first installment, Sullum makes a much more compelling case than Stimson. And Peter Gordon has this sage observation about the genesis of drug prohibition.

Posted by Tom at 12:01 AM | Comments (1) |

April 26, 2008

Conited Airlines, finally?

The NY Times is reporting that the on-again, off-again merger negotiations between Houston-based Continental Airlines and Chicago-based United Airlines are coming to a conclusion and that a definitive merger deal is likely to be announced by the end of next week.

Continental, the nation's fourth-largest carrier based on traffic, has long been the natural merger partner for United, which is the No. 2 airline. If they strike a deal, the merger would produce the world's largest airline, bigger even than the combined Delta-Northwest and significantly outdistancing American, which is currently No. 1.

Speaking of the Delta-Northwest deal, those partners this week reported an astounding, combined first quarter loss of $10.5 billion, reflecting that the two airlines are now worth far less than when they emerged from bankruptcy a year ago.

Two drunks holding each other up is rarely a good idea. ;^)

Update: The Chron is reporting that Continental's board has decided to reject any merger proposals "at least for now." The NY Times reports that Continental backed off because of United's worse-than-expected first quarter losses.

Posted by Tom at 12:01 AM | Comments (0) |

April 25, 2008

How the mighty have fallen

Some folks thought I was too hard (see also here) on the Stros and Craig Biggio for turning the Stros' 2007 season into a death march to Bidg's 3,000th hit.

However, my criticism of the Stros and Bidg was child's play in comparison to this LA Times broadside on fading Hollywood leading men, Robert De Niro and Al Pacino. The following will give you a taste:

Pacino has made a string of bad films lately, including the famously awful "Gigli," "The Recruit" and "Two for the Money," where he hams it up as an unscrupulous football oddsmaker. If anyone has made more movies for the money than Pacino, it would be De Niro, who has largely abandoned serious dramatic work for a spate of forgettable horror and crime thrillers (try sitting through "Hide and Seek" or "Godsend") and lowbrow comedy high jinks like "Meet the Fockers" and "Analyze That."

De Niro's most recent film, "What Just Happened?," an inside-the-movie-biz comedy, got such an abysmal reception at Sundance that it limped out of the festival without a sale (it's expected to close the Cannes Film Festival this year). De Niro cut his longtime ties with CAA last week, defecting to Endeavor, inspiring a venomous response purportedly from one CAA agent that was e-mailed all over town. Claiming that De Niro asks for a $1-million production fee on his pictures to help fund his Tribeca empire in New York, it minces few words, saying, "Bobby held us responsible for his own greed, his own avarice and his own megalomania. And it's just like the studios now ask us: Why should we pay this guy -- who doesn't open a movie -- the payoff to his production company, just so he can add his name as a producer?"

Also check out this Variety review and related blog post on Pacino's latest movie "88 Minutes," which is already being included in some "worst ever" lists.

Tough place, that Hollywood.

Posted by Tom at 12:01 AM | Comments (0) |

April 24, 2008

UH Law Center gets it right

Ray Nimmer is truly one of Houston's treasures. The Leonard Childs Professor of Law at the University of Houston Law Center, Ray is one of the nation's leading authorities on business and bankruptcy law, computer information licensing, e-commerce, and related intellectual property issues, all of which he has addressed in the 20 or so books and numerous articles that he has written over his superlative 30+ year teaching career.

However, even more importantly, Ray is a gifted teacher who has taught a remarkably broad variety of courses at the UH Law Center over the past 30 years, including Contracts, Contract Drafting, Evidence, Bankruptcy, Corporate Reorganization Law, Internet Law, Electronic Commerce, Secured Financing Law, Negotiable Instruments, Copyright Law, Information Law, Sales, and Licensing Law. Somehow, Ray has even found the time to maintain a blog. 

For the past couple of years, Ray has been serving as the Interim Dean at the law school, where he has done an excellent job of patching things up after the divisive resignation of the previous dean, Nancy Rapaport. As noted in this post from when Ray was appointed Interim Dean, I couldn't think of a better choice for the new permanent dean than Ray. Thus, I was happy to see this UH press release Wednesday confirming Ray's appointment to that position (Mary Flood's Chron article on the announcement is here). Ray released the following statement to friends, alumni and students:

As many of you know, in 2006 I agreed to serve as interim dean of the Law Center while a nationwide search for a permanent dean was conducted. That search has now been completed – and today I have accepted the position of Law Center Dean offered to me by Dr. Donald Foss, the provost of the University of Houston, subject to the approval of the UH Board of Regents.

In many ways, it remains business as usual at our school. Two years ago, this is what I told my team when I stepped in as interim dean:

Here’s what you can expect from me. I am pragmatic, oriented to understanding and explicating the role of law and lawyers in society, and I am committed to leading a team that will distinguish our Law Center as being among the best in academia and a major factor in the practical practice of law. I believe in action and achievement. I applaud people who target goals—and invest the necessary work to achieve them. And I am determined to give our highly skilled faculty, administrators and students the support they need to maneuver and achieve.

That’s been my approach over the past two years as we energized the Law Center and continued the “pursuit of excellence” in everything we do. Our momentum is reflected in our 15-point improvement in national rankings, two “Top 10” specialty programs, and record-high LSAT scores for our newest class.

I took the job of interim dean for a simple reason: because I believed the Law Center was on the cusp of great achievement, and I wanted to help my school reach that goal. Today, I am accepting the position of permanent dean for the same reason, and I am 100% committed to pushing us higher into the top echelon of Tier 1 law schools.

It is an honor following the seven men and women who previously served as permanent dean and contributed to the greatness of our school. With help from the entire Law Center community, there is no limit to what we can accomplish.

Congratulations to Ray for the much-deserved appointment and to the UH administration for making the right decision.

Posted by Tom at 12:01 AM | Comments (1) |

April 23, 2008

Getting to 120/80

Jane Brody, the NY Times' excellent reporter on health and fitness issues, provides this good overview of the current treatment options for high blood pressure, including this summary of the current drugs that are most commonly prescribed. My late father was one of the pioneers in the development of the first drugs and treatment protocols for hypertension.

As this earlier post noted, if FDR's physicians had known in 1945 what doctors know today about the damaging effects of high blood pressure, those physicians would not have recommended that the seriously ailing FDR be allowed to go toe-to-toe with an avaricious Stalin at Yalta. Even a relatively short delay in the insight gained from scientific research can have a major impact on the course of mankind.

Posted by Tom at 12:01 AM | Comments (1) |

April 22, 2008

Mayor White's management

Help me out here. I'm really trying to understand the basis of the perception among a large number of Houstonians that Mayor Bill White is an effective manager.

For example, this earlier post summarized Mayor White's dubious decision-making in regard to having the city buy expensive and not particularly well-located downtown land for the new Houston Dynamo soccer stadium. Not only did the city already own nearby property that is a better location for the stadium, Mayor White pushed through the land acquisition despite not having a binding commitment from the soccer club owners on the amount of their contribution to the cost of the stadium's construction.

Given the foregoing, who except Mayor White was surprised last week when Major League Soccer (which is really just a minor soccer league) sent a letter to the Dynamo owners that was (again, surprise!) passed along to Mayor White that threatens to relocate the Dynamo if a satisfactory stadium deal isn't reached? For good measure, MLS and Dynamo officials informed the city that the estimated price of the stadium has increased from $90 million to $105 million and that some MLS cities have contributed as much as 90% of the cost of similar stadiums.

So, what was Mayor White's reaction? Tell these minor leaguers to take a hike to Corpus Christi or Beaumont? Apologize to the citizens for having the city lay out $15-20 million for property that it doesn't need? Promise that he won't get taken to the cleaners again in negotiations with minor league sports club owners? No, Mayor White did his best tough guy imitation:

"I've gotten a little bit of a reputation, probably deserved, that I don't respond well to threats," he said. "I smiled."

If Mayor White is smiling, then imagine what the MLS and Dynamo officials are doing after the way in which those minor leaguers have had their way with Mayor Bill in these negotiations?

The only good news about all this is that the $50-75 million that the city will probably end up dropping over this soccer stadium boondoggle represents only about a couple of months of losses of this much larger boondoggle, which -- you guessed it -- Mayor White strongly supports. And those aren't the only questionable management decisions that the Mayor has made during his tenure (for example, see here, here, here and here).

How much longer can Houston afford Bill White?

Posted by Tom at 12:01 AM | Comments (2) |

April 21, 2008

Remember Refco?

Amidst the current turmoil in the financial markets, the recent conviction on criminal fraud charges of a former Refco Inc executive barely registered on the radar screen. The details from the meltdowns from years past are just old news now.

However, the criminal conviction and plea deals arising from the Refco affair still leave a troubling question unanswered -- why did Refco's owners take it public in the first place?

Posted by Tom at 12:01 AM | Comments (0) |

April 20, 2008

The latest big oil discovery

As oil futures hit $115 per barrel late this past week, The Economist ran this article on the questions surrounding the recent announcement regarding the discovery of Brazil's Carioca-Sugar Loaf Field, which could be one of the largest oil discoveries in history. Given the time, expense and risk involved in extracting the oil, the announcement of the discovery didn't affect oil markets much, but The Economist article nevertheless concludes as follows:

The discoveries do suggest that the gloomiest pundits are wrong to predict that the world will soon run out of oil. It is not that there are still lots of huge oil fields out there: the number of mammoth discoveries is declining, Tupi (and perhaps Carioca-Sugar Loaf and Jupiter) notwithstanding. But the new finds do illustrate how the technology with which oil firms hunt for, extract and process fossil fuels is constantly improving. Petrobras’s recent success is only possible thanks to recent advancements in seismic surveys, drilling, and offshore platforms. Other technological developments are allowing a greater proportion of the oil found around the world to be recovered and are even expanding the definition of oil, as firms conjure liquid fuel from the solid tar-sands of Canada, for example, or from coal and natural gas.

As noted recently here, the recent increases in oil prices are making alternative energy sources economically viable. Thus, take note of what former ExxonMobil CEO Lee Raymond noted years ago in response to a question on oil prices:

Interviewer: "Some people think prices will keep going up?"

Raymond: "Maybe. I'll bet they'll be lower at some point."

Posted by Tom at 12:01 AM | Comments (0) |

April 19, 2008

Valuing the Stros

The Stros are not worth squat on the playing field this season, but the club continues to be among the dozen most valuable franchises in Major League Baseball.

Forbes' annual valuation of MLB franchises is out and the Stros come in at a respectable 12th among the 30 MLB franchises, down one slot from last year. Forbes thinks that the Stros ($463 million valuation) are doing about as well financially as they can do in this market. A list of the values and operating income for all 30 franchises is here.

Interestingly, although the Yankees have by far the most valuable franchise in MLB, they were dead last among the 30 MLB franchises in operating income at a negative $47 million. The World Champion Boston Red Sox were 29th in operating income at a negative $19 million, although the club's valuation of $816 million is behind only the Yankees ($1.306 billion) and the Mets ($824 million).

This post from last fall noted Forbes' most recent valuation of the National League Football franchise, which continue to be much more valuable than the MLB franchises. The least valuable of the 32 NFL franchises (the Vikings at $782 million) would be the fourth most valuable MLB club.

Posted by Tom at 12:01 AM | Comments (0) |

April 18, 2008

Providing good doughnuts in health care

A frequent topic on this blog over the years has been the increasingly dysfunctional nature of the third-party payor health care finance system in the United States. This post from last year examined how my primary care physician changed his medical practice to a concierge model because of the financial risks involved in continuing to rely primarily on health insurance for his revenue stream, and this subsequent post touched on the developing crisis that is occurring in the financing of primary care practices around the country.

Albert Fuchs, a Beverly Hills internist, understands the problem quite well and has a straightforward solution: primary care physicians should require payments from their patients and not third party insurers:

For more than a year, I haven't received a single dollar from any insurance company. I work for my patients. A few hundred doctors across the country are working the same way, some in blue-collar towns. Routine care should be affordable to the middle class, and as more doctors and more patients form relationships that exclude insurance companies, prices will drop. Insurance doesn't make routine care affordable; it makes it more expensive by adding a middleman. I know that some patients can afford nothing, so two afternoons a month I volunteer at a clinic that cares for indigent patients, which I could not have done with the huge patient volume I was seeing a few years ago.

When doctors break free from the shackles of insurance companies, they can practice medicine the way they always hoped they could. And they can get back to the customer service model in which the paramount incentive is providing the best care. Only then can doctors reclaim the simple dignity of any businessman: These are my doughnuts; only I and my customers can determine their worth. (At the end of each week, I will donate some to the needy, but I will not let a third party set the price.)

Read the entire op-ed. Medical insurance should be true insurance from a catastrophic ailment or injury, not financial insulation from the routine costs of health care. Jonathan Kellerman, a clinical professor of pediatrics and psychology at USC's Keck School of Medicine, advances the same idea in this recent W$J op-ed:

Physicians and other providers need to liberate themselves from the Faustian bargain they've cut with the Mephistophelian suits who now run their professional lives. Because many doctors are loath to talk about money, they allowed themselves to perpetuate the fantasy that "insurance is paying." It isn't. There is no free lunch and no free physical exam.

If substantial numbers of health-care providers shook off the insurance monkey on their back, en masse, and the supply of providers was substantially increased by opening more medical schools, the result would be a more honest, cost-effective system benefiting everyone. Except the insurance companies.

Posted by Tom at 12:01 AM | Comments (0) |

April 17, 2008

What is Tiger thinking and has The Masters become a bore?

So, Tiger Woods is being forced to take a month off from the PGA Tour as he rehabs from knee surgery. I know that Woods' workout routine is considered cutting edge, particularly for a professional golfer, but what on earth is he running seven miles per workout with a bad knee? Don't his trainers know that long-distance running is not a particularly healthy form of exercise?

Long-distance running is a fine form of recreation for folks who enjoy it. But as a method of exercise, I am hard-pressed to think of one that is more physically damaging. Woods would be smart to re-think his workout to delete long-distance running and concentrate on short sprints for the aerobic part of his workout.

The knee operation will prevent Woods from defending his title at the Wachovia Championship in two weeks or competing in The Players Championship at TPC Sawgrass a week after that.

By the way, Geoff Shackelford (see this Daniel Wexler post, too) is leading a discussion over at his blog on whether the design changes at Augusta National -- which have clearly prompted players to play more defensively and less aggressively during the Masters Tournament -- have undermined the excitement of the tournament for spectators. Geoff passes along the following interesting stat from Brett Avery's Golf World stat package:

Posted by Tom at 12:01 AM | Comments (0) |

April 16, 2008

Ripples of the Delta-Northwest deal

The merger agreement between Delta Air Lines and Northwest Airlines (they were meant for each other) announced yesterday not only would create the world’s largest carrier if approved, but it has renewed talk (see this W$J article, too) in Houston over the fate of one of the city's largest employers, Continental Airlines.

Continental's future has been the subject of conjecture over the years. This post from a couple of months ago summed up the current situation in anticipation of the Delta-Northwest merger. Unfortunately, Continental's most likely merger candidates -- United Airlines and American Airlines -- are not particularly attractive partners at this point. As airline consultant Adam Pilarski noted in this Scott McCartney/W$J column, "There's no history of anything good that happens in [airline] mergers. Two drunks holding each other up is not a good idea." The W$J's Holman Jenkins speculates as to why this is the case in the chronically-profitless airline industry, which Richard Anderson and Doug Steenland, CEOs of Delta and Northwest, argue the contrary position.

The proposed Delta-Northwest merger would create a behemoth company with more than $35 billion in annual revenues, a mainline fleet of almost 800 planes and a combined workforce of 75,000 people. Interestingly, the most successful US airline is the polar opposite of that structure.

 

Posted by Tom at 12:01 AM | Comments (0) |

April 15, 2008

An eternal optimist

Don't tell Ray Kurzweil that we ought to be all gloomy about the prospects for mankind. This WaPo op-ed reflects that he is downright bullish:

MIT was so advanced in 1965 (the year I entered as a freshman) that it actually had a computer. Housed in its own building, it cost $11 million (in today's dollars) and was shared by all students and faculty. Four decades later, the computer in your cellphone is a million times smaller, a million times less expensive and a thousand times more powerful. That's a billion-fold increase in the amount of computation you can buy per dollar.

Yet as powerful as information technology is today, we will make another billion-fold increase in capability (for the same cost) over the next 25 years. That's because information technology builds on itself -- we are continually using the latest tools to create the next so they grow in capability at an exponential rate. This doesn't just mean snazzier cellphones. It means that change will rock every aspect of our world. The exponential growth in computing speed will unlock a solution to global warming, unmask the secret to longer life and solve myriad other worldly conundrums. [.  .  .]

Take energy. Today, 70 percent of it comes from fossil fuels, a 19th-century technology. But if we could capture just one ten-thousandth of the sunlight that falls on Earth, we could meet 100 percent of the world's energy needs using this renewable and environmentally friendly source. We can't do that now because solar panels rely on old technology, making them expensive, inefficient, heavy and hard to install. But a new generation of panels based on nanotechnology (which manipulates matter at the level of molecules) is starting to overcome these obstacles. The tipping point at which energy from solar panels will actually be less expensive than fossil fuels is only a few years away. The power we are generating from solar is doubling every two years; at that rate, it will be able to meet all our energy needs within 20 years.

I just thought I'd toss in that third paragraph for those in the oil and gas industry that believe that a period like the mid-to-late 1980's can't happen again. Meanwhile, light, sweet crude oil futures for May delivery settled yesterday at $111.76, a new record, on the New York Mercantile Exchange.

Posted by Tom at 12:01 AM | Comments (0) |

April 14, 2008

Another one-planer wins The Masters

Last year it was Zach Johnson (see also here). This year, it's Trevor Immelman. What's the deal with all these one-plane swingers dominating the Masters Tournament? Could it have something to do with the fact that neither Johnson last year nor Immelman this year ever seemed to miss a fairway? Immelman hit 48 out of 56 fairways on Augusta's 4's and 5's during the tournament; Johnson hit 45 last year.

By the way, Immelman tuned up for his Masters victory by shooting 73-72 and missing the cut last week at the Shell Houston Open.

Geoff Shackelford's collection of links on the final day of the Masters is here and the link to his previous daily reports from the week is here.

Finally, Tiger Woods finished second for the second straight year after a relatively poor week of putting on Augusta National's slick greens (interestingly, the dominant Woods has won only one of the last six Masters Tournaments). I know Tiger is popular and all, but the following excerpt from this Martin Johnson/Daily Telegraph article reflects that some Tiger admirers have gone completely over the top:

The Woods mystique is such that he can even cause a riot, or close to it, by eating a banana. When Woods peeled one on Saturday and threw away the skin, there was a mad stampede to grab it as a souvenir.

Posted by Tom at 12:01 AM | Comments (0) |

April 13, 2008

The block of the chip passes away

Arnold Kling of EconLog has long been a Clear Thinkers favorite, particularly in the area of health care finance. That was the subject of this recent post regarding Arnold's coordination of health care for his elderly father, Merle Kling, who passed away on Tuesday.

Take a moment to read Arnold's touching post on his father, who was quite a remarkable fellow. Arnold is a chip off a very solid old block.

Posted by Tom at 12:01 AM | Comments (0) |

April 12, 2008

America's slipping grip on golf

First, PGA Tour events had to worry about the Tiger Chasm. Now, this W$J article reports that they also need to worry about competition from tournaments in foreign venues:

The U.S. has, for decades, held sway over the international golf calendar. Three of the four most-prestigious tournaments happen in the U.S. (in tennis, no nation has more than one of the four Grand Slams). The PGA Tour also has long been the world's most-lucrative circuit, with an estimated $278 million in prize money this year.

As golf explodes in popularity throughout the world, especially in developing nations, an increasing number of tournaments are popping up in places such as Dubai, Qatar, Shanghai and Singapore. On the subcontinent, the Masters and the Johnnie Walker Classic -- two recent events sanctioned by the European Tour -- attracted several top stars, including South African Ernie Els, Fijian Vijay Singh and Australian Adam Scott.

As these events draw richer and more-aggressive backers, they have been offering more prize money. In November 2009, Dubai will host the Dubai World Championship, which will feature a prize purse of $10 million, making it the most-lucrative golf tournament ever for players.

Meanwhile, the declining dollar has lowered the relative value of purses at U.S. tournaments, making these Asian, Middle Eastern and European gigs harder for players to ignore. When asked during his stay in New Delhi whether he expected more top players to play outside the U.S., Mr. Els quipped, "The way the dollar is going, I'm sure."

On top of that, many newer Asian and European tournaments are paying large appearance fees to some top pros to guarantee that the field will be competitive (such fees are banned in the U.S.). That means marquee names can make big sums even when they blow their chances of winning -- as Mr. Els did at the Indian Masters with a nine on the final hole of the first round. Tiger Woods reportedly received $3 million to play in the Dubai Desert Classic in February. (Mr. Woods's agent declined to comment.)

The top flight of golfers is itself becoming more international. In 1999, 33 of the top 50 players in the world came from the U.S. Today 34 of the top 50 players come from outside America. The Qatar Masters, a European Tour event in January, attracted nine of the world's top 25, the same number that the U.S. tour's Buick Invitational in San Diego drew the same week. Spain's Sergio Garcia, America's Scott Verplank and Mr. Scott, the world's No. 5 player, all chose Qatar over California.

"I think the majority of players look on the world as a global competition," said South African golfer Gary Player. Within five years, Mr. Player predicted, international events will be just as important as the PGA Tour.

With such heightened foreign competition, the Shell Houston Open's decision to accept being scheduled the week before The Masters looks like a stroke of genius. Few of the best players who like to prepare for The Masters by playing in a tournament the week before will want to play in a tournament overseas because of the long travel that would be required immediately before playing in The Masters.

Posted by Tom at 12:01 AM | Comments (0) |

April 11, 2008

Remember Kelo?

Check out this recent Second Circuit decision (H/T to Robert Loblaw) as an example of how the appellate courts are applying the U.S. Supreme Court's controversial 2006 decision in Kelo v. New London. Kelo allows the state to seize private property to facilitate private re-development as a legitimate form of "public use" under the U.S. Constitution.

Kelo has been widely criticized for creating perverse incentives for politically well-connected real estate developers to exercise their political clout where negotiation with private property owners didn't generate the developers' desired result. The Second Circuit case involves the huge redevelopment plan in downtown Brooklyn that will primarily benefit Bruce Ratner, a wealthy New York real estate developer. In addition to the ubiquitous office buildings and high-rise condos involved in such deals, the redevelopment will include a new arena for the New Jersey (soon to be Brooklyn) Nets NBA basketball club. Although most of the property to be contributed to the development is public land, the redevelopment plan also requires the state to seize several tracts of private property through exercise of its eminent domain power.

The private property owners sued and argued that the state's claim of public benefit is a facade, as the Second Circuit puts it, "to benefit Bruce Ratner, the man whose company first proposed it and who serves as the Project’s primary developer. Ratner is also the principal owner of the New Jersey Nets. In short, the plaintiffs argue that all of the 'public uses' the defendants have advanced for the Project are pretexts for a private taking that violates the Fifth Amendment."

The Second Circuit upheld U.S. District Court dismissal of the property owners' claims, explaining that the massive private benefits to Ratner do not trump the state's judgment that the project will also benefit the public. Moreover, even though the costs to the property owners may far outweigh the public benefits, the Second Circuit concludes that type of cost/benefit analysis is irrelevant under Kelo:

At the end of the day, we are left with the distinct impression that the lawsuit is animated by concerns about the wisdom of the Atlantic Yards Project and its effect on the community. While we can well understand why the affected property owners would take this opportunity to air their complaints, such matters of policy are the province of the elected branches, not this Court.

Given such dubious "public" ventures as this, the implications of the foregoing interpretation of Kelo are downright frightening.

Posted by Tom at 12:01 AM | Comments (0) |

April 10, 2008

It's time for The Masters

It's the week of The Masters golf tournament, so I'm passing along a copy of the Augusta National scorecard that my late father used when he shot a cool 99 at the course back in the mid-1970's. The weather forecast for the tournament is looking a bit dicey on Saturday and Sunday.

Golf course design consultant and golf blogger extraordinaire Geoff Shackelford is doing an outstanding job at GolfWorld of organizing the media pieces and blog posts about the tournament -- here are his Monday, Tuesday, Wednesday, Thursday, Friday and the weekend reports. And he is even finding time to blog a bit as this post decries what has become of the Masters par-3 tournament. Check back each day of the week as Geoff will provide the most comprehensive launching pad of links relating to the tournament. The Wall Street Journal's very good golf writer, John Paul Newport, is also blogging the tournament here.

Meanwhile, golf author and blogger Daniel Wexler provides this entertaining post on the ten best golfers who never won the Masters and this interesting hole-by-hole analysis of how the changes to Augusta National's back nine have altered  the shot-making options that course architects Bobby Jones and Alister McKenzie emphasized in designing the venerable layout. He concludes:

So in the end, is this present incarnation a better nine than existed in the beginning?  From the perspective of keeping modern golfers from going low, absolutely – plus the 11th, 12th, 13th and 15th remain, altered or not, among the most exciting holes in the history of the game.  The problem is that the addition of rough and trees does not add (or even complement existing) strategy; it simply makes it harder for the golfer to post a good score.  This may salve the egos of present-day club leaders, but re-reading this column’s opening quote, and considering that it was final-nine drama – the rapid-fire eagles, bogeys and “others” – that used to make the Masters so utterly unique, I keep finding myself wondering:

What’s wrong with great scores?

Finally, the Masters has been a frequent topic on this blog, so the following are a few Masters-related posts from over the years:

Ken Venturi and Arnold Palmer's little snit over that embedded ball at the 1958 Masters.

Phil Mickelson wins his first Masters in 2004 and Masters' expert Dan Jenkins puts it all in perspective.

Remember Martha Burk?

Read about some of Dan Jenkins' favorite Masters moments and how he "birdied his bypass." Also, don't miss this post in which Jenkins describes Chris DiMarco's putting grip and what Mickelson and Tiger Woods were saying to each other as Mickelson helped Woods into his fourth green jacket during the 2005 awards ceremony.

Culture shock -- John Daly on the Augusta National driving range.

A golfing Zimbabwe (see also here) and a salute to the King.

A fellow Iowa native makes good at The Masters.

Posted by Tom at 12:01 AM | Comments (0) |

April 9, 2008

Good Travis Street Eats

Look at what street is number two in Good Magazine's seven Tastiest American Streets for good restaurants.

Posted by Tom at 12:01 AM | Comments (1) |

April 8, 2008

Enjoying John Adams

My son Cody and I have been thoroughly enjoying each Sunday night episode of the HBO mini-series John Adams, which is based upon David McCullough's brilliant biography of Adams. Given the extraordinary talents, troubling contradictions and fascinating relationships among the pivotal leaders of the American revolutionary era -- Adams, Washington, Jefferson, Hamilton, Madison, Franklin and Burr, among others -- I have always wondered why some enterprising filmmaker hadn't made a first-rate movie about the era. John Adams producer Tom Hanks should be commended for pulling it off in a splendid manner. Rebecca Cusey's favorable review of the mini-series is here.

My vote for the book upon which the next movie of this era should be based -- Ron Chernow's Alexander Hamilton (Penguin Press 2004). Two other excellent recent books on this era are Jay Winik's The Great Upheaval (Harper 2007) and Joseph Ellis' American Creation: Triumphs and Tragedies at the Founding of the Republic (Knopf 2007).

Posted by Tom at 12:01 AM | Comments (1) |

April 7, 2008

Acupuncture or fake acupuncture?

This Respectful Insolence blog post reports on yet another in an increasingly long line of medical studies that demonstrate that acupuncture is nothing more than an elaborate and fancy placebo. In this particular study involving patients in "true" acupuncture and "fake" acupuncture protocols, patients in the sham acupuncture group improved more than patients in the "true" acupuncture group.

My conclusion? On one hand, if you stick pins in people who are complaining about something, then some of them will eventually quit complaining. On the other hand, if you take pins out of some people who were previously complaining, then some of them will also stop complaining.

Posted by Tom at 12:01 AM | Comments (6) |

April 6, 2008

A brief encounter at the SHO driving range

After spending a delightful Friday morning watching Phil Mickelson navigate the back nine during the second round of the Shell Houston Open, my entourage and I grabbed a quick lunch and then headed out to the Redstone Golf Club driving range to watch the players with afternoon tee times prepare for their rounds.

A few minutes after we arrived, 2007 PGA Teacher of the Year and Houston resident Jim Hardy appeared on the range to watch his longtime student, Scott McCarron, warm up for his round. Hardy helped McCarron revive his professional golf career in the mid-1990's after he had completely lost confidence in his swing. Hardy has helped resurrect the careers of several other PGA Tour pros in a similar manner.

Meanwhile, a few spots down the range from Hardy and McCarron, the mercurial John Daly -- who was playing the SHO on a sponsor's exemption because he has become a shadow (see also here) of the world class golfer that he used to be -- began warming up for his round. In between drags on an ever-present cigarette as well as friendly chatter with caddies and other practicing players, Daly somewhat listlessly hit a few wedges and then a few long irons before wailing away with his driver. The man can still hit the ball out of sight.

As Daly began hitting his driver, McCarron finished his practice session and Hardy had a few final words with him. McCarron then left for his tee time and Hardy strolled down the range, stopping 20 yards or so behind Daly. With arms folded, Hardy silently stood watching Daly hit practice drives. I'm not sure that Daly even noticed Hardy watching.

A few minutes later, Daly tossed his driver to his caddy and trudged toward the golf cart that would take him to the 10th tee for his tee time. Hardy walked to the putting green and began working with another player on his putting.

After seven holes of his round, Daly withdrew from the tournament with a balky back that I'm sure wasn't helped by the chilly rain and 20 degree temperature drop that occurred Friday afternoon. However, in nine tournaments this season, Daly has now missed four cuts, pulled out of another tournament with a rib injury and was disqualified from the Arnold Palmer Invitational because he blew his pro-am tee time. This on top of Daly's unofficial PGA Tour record of six withdrawals in 2007 and his 581st World Golf ranking coming into the SHO.

The sad reality is that probably even Jim Hardy can't help John Daly now.

Posted by Tom at 12:01 AM | Comments (0) |

April 4, 2008

The NY Times discovers that Houston

is a pretty darn diverse place.

Posted by Tom at 12:01 AM | Comments (1) |

April 3, 2008

Catching up with Bill James

The beginning of the Major League Baseball season is a good time to check in with Clear Thinkers favorite, Bill James, the father of sabermetric analysis of baseball. Steve Dubner over at the Freakonomics blog recently provided James with this question-and-answer forum and, as usual, James' observations on baseball are insightful and entertaining. For example:

Q: Using various statistics over a player’s lifetime, and comparing them to “league norms,” is it possible to determine which players may have used steroids?

A: Absolutely not, no. The problem is that many different causes can have the same effects. If a player used steroids, this could cause his home run total to explode at an advanced age — but so could weight training, Lasix surgery, better bats, playing in a different park, a great hitting coach, or a good divorce. It is almost always impossible to infer specific causes from general effects.

Q: Can you tell us about a time when you thought numbers were misleading and why?

A: I would say generally that baseball statistics are always trying to mislead you, and that it is a constant battle not to be misled by them. If you want something specific — pitchers’ won-lost records. And if you want a specific pitcher, Storm Davis, 1989.

For the record, Davis posted a 19-7 record with the Oakland A's in 1989 while posting a pedestrian 4.36 ERA and giving up 8 more runs that season than a National League-average pitcher would have given up pitching in the same number of innings. Needless to say, a National League-average pitcher in 1989 did not have a 19-7 record. Here's another of James' interesting observations:

Q: Generally, who should have a larger role in evaluating college and minor league players: scouts or stat guys?

A: Ninety-five percent scouts, five percent stats. The thing is that — with the exception of a very few players like Ryan Braun — college players are so far away from the major leagues that even the best of them will have to improve tremendously in order to survive as major league players — thus, the knowledge of who will improve is vastly more important than the knowledge of who is good. Stats can tell you who is good, but they’re almost 100 percent useless when it comes to who will improve.

Read the entire post.

Posted by Tom at 12:01 AM | Comments (0) |

April 2, 2008

It's 2008 Shell Houston Open Week

Following on this post from a couple of weeks ago, this week's Shell Houston Open at Redstone Golf Club has its best field in years (previous posts here), which includes the following top 25 players in the World Golf Rankings: Phil Mickelson (2), Steve Stricker (4), defending champion Adam Scott (5), The Woodlands' K.J. Choi (7), Geoff Ogilvy (11), Padraig Harrington (12), Angel Cabrera (17), Aaron Baddeley (18), Trevor Immelman (25). Other popular notables in the field include 2003 champ Fred Couples, Houston's Steve Elkington, Texans Chad Campbell and Justin Leonard, Davis Love III, Jose Maria Olazabal, The Woodlands' Jeff Maggert and Argentinean hot-shot Andres Romero. For a non-major and non-Tiger event, 10 of the top 25 in the World Golf Rankings and three of the top five provides a very sporty field.

Started in 1922, the Houston Open is tied with the Texas Open as the third oldest non-major championship on the PGA Tour behind only only the Western Open (1899) and the Canadian Open (1904). This is the third Houston Open to be played on the Tournament Course at Redstone Golf Club and the sixth event overall at Redstone, which hosted its first three Houston Opens on the club's Jacobson-Hardy Course while the Tournament Course was being built. This is the SHO's second year of being played the week before The Masters and, despite the tradition of some of golf's all-time greats not to play the week before major championships, the strong SHO field this year is an encouraging boost for a tournament that has struggled generating quality fields ever since leaving The Woodlands' TPC Course after the 2002 tournament. Although the Houston Golf Association promotes the tournament with players by grooming Redstone's Tournament Course in a manner similar to Augusta National, the Tournament Course is actually a flat-land course that bears little resemblance to the hilly venues of Augusta.

The following are several posts from over the years that will give you a flavor for the SHO:

• Visiting the SHO in 2007;

• The folly of the "resemble Augusta" approach;

• Initial player views of the Tournament Course at Redstone;

• My round at the Tournament Players Course (with pictures); and

• The story of how the SHO left its successful home in The Woodlands for Redstone.

Posted by Tom at 12:01 AM | Comments (0) |

April 1, 2008

The Wall Street Journal's Enron embarrassment

In anticipation of the oral argument on Wednesday in New Orleans on former Enron CEO Jeff Skilling's appeal of his criminal conviction, don't miss this Larry Ribstein post on Wall Street Journal Enron reporter John Emshwiller's tardy realization that Skilling may just have legitimate grounds for reversal of his conviction and that the Enron Task Force's record is not what its sycophants crack it up to be. This comes from Emshwiller after his newspaper last year characterized the Enron Task Force as having "a good record overall."

I can't improve upon Professor Ribstein's post regarding the irony of the nation's leading business newspaper just now realizing that the corporate criminal case of the decade was badly mishandled. However, even before the Lay-Skilling trial, it was clear that the WSJ's coverage of Enron was open to serious questions (see also here). That the newspaper continues to soft pedal coverage of wide-ranging evidence of serious prosecutorial misconduct in the Enron-related criminal cases reflects a troubling blind spot. Even in the current article, Emshwiller is less than forthright in assessing what is truly going on in the Skilling appeal regarding the Fastow interview notes:

Normally, defense attorneys aren't allowed to see the raw notes of Federal Bureau of Investigation interviews with government witnesses. But Mr. Skilling's defense team, led by Daniel Petrocelli, sought them anyway, and the Fifth Circuit agreed to order the federal government to turn over the notes.

Emshwiller fails to explain that the Fifth Circuit granted the Skilling team's motion to obtain the raw notes because the Enron Task Force took the highly unusual step of providing the Lay-Skilling defense team a "composite summary" of the Form 302 ("302s") interview reports that federal agents prepared in connection with their interviews of former Enron CFO and chief Skilling accuser, Andrew Fastow. Those composites claimed that the Fastow interviews provided no exculpatory information for the Lay-Skilling defense, even though Fastow's later testimony at trial indicated all sorts of inconsistencies.

In point of fact, the process of taking all the Fastow interview notes or draft 302s and creating a composite is offensive in that it allowed the prosecution to mask inconsistencies and changing stories that Fastow told investigators as he negotiated a better plea deal from the prosecutors over time. Likewise, the Task Force's apparent destruction of all drafts of the individual 302s of the Fastow interviews in connection with preparing the final composite is equally troubling. Traditionally, federal agents maintain their rough notes and destroy draft 302s. However, in regard to the Fastow interviews, what turned out to be the draft 302s were probably not "drafts" in the traditional sense. They were probably finished 302s that were deemed “drafts” when the Task Force prosecutors decided to prepare their highly unusual composite summary of the 302s.

Meanwhile, while manipulating Fastow's story, Task Force prosecutors were also preventing other exculpatory evidence from being introduced at trial on behalf of Skilling and Lay by taking the unprecedented step of fingering over 100 unindicted co-conspirators in the Lay-Skilling case (see also here) and implicitly threatening those co-conspirators with indictment if they testified on behalf of Skilling and Lay at trial. 

None of the foregoing is explained in Emshwiller's article. Regardless of what happens in the Skilling appeal, the WSJ has some deep soul-searching to do regarding its coverage of the aftermath of Enron's demise. Engaging in media myths and morality plays regarding business interests is bad enough. Ignoring the abuse of the government's overwhelming prosecutorial power to levy a life sentence on an executive who created enormous wealth elevates poor judgment in business reporting to a much more troubling level. 

Update: Larry Ribstein comments further here, while Ellen Podgor has a pre-appellete argument post for the Skilling appeal here. The Chronicle's Kristen Hays, who has done the best job in the mainstream media of covering the latest developments in the Skilling appeal, previews the oral argument here.

Posted by Tom at 12:01 AM | Comments (0) |

March 31, 2008

Batter up! Stros 2008 Season Preview

The Stros are on the road for the first week of the 2008 Major League Baseball season, but that's not a bad thing considering that the optimism usually associated with Opening Day during the Biggio-Bagwell era of the Stros is largely absent around Houston baseball circles these days (previous Opening Day posts since 2004 are here).

As noted in the concluding post on the Stros' disastrous 2007 campaign, the Stros have been a team in decline for a long time even though generally superior pitching during the 2002-2006 seasons masked that downturn. Unfortunately, after cleaning house toward the end of the 2007 season, not much of what owner Drayton McLane did over the off-season indicates that he understands what the club needs to do to turnaround the downward spiral of the past two seasons. Inasmuch as McLane apparently remains under the delusion that the Stros can contend for a National League playoff spot, the club continues in a syndrome where it tends to take two steps back even after making an occasional good move. For example:

The Good: The Stros finally acquired Orioles star Miguel Tejada for Luke Scott, an injured Troy Patton and a couple of other minor leaguers.

The Bad: The Stros largely blew the benefit of deal by releasing their excellent defensive shortstop, Adam Everett, and placing Tejada at SS rather than 3B where he would be a better fit defensively and offensively. As a result, rather than having a very good defense with Tejada at 3B and Everett at SS, and an improved offense with Tejada's bat, the Stros will field a terrible left-side of the infield defense and only a marginally-better offense than last season's National League-average unit.

The Bad: By getting rid of Everett, the Stros appear locked in with 3B Ty Wigginton, who is not likely to be as good either offensively or defensively as former Stros 3B, Morgan Ensberg. Moreover, the Stros reacquired the Ausmusian Geoff Blum, who -- along with Jimy Williams -- probably cost the Stros a spot in the 2003 National League playoffs.

The Good: The Stros traded basket-case closer Brad Lidge for promising CF Michael Bourn, who will improve the Stros outfield defense, and signed 2B Kaz Matsui, who is a much better defensive 2B at this stage of his career than Craig Biggio was last season.

The Bad: The Stros traded 2B Chris Burke, who was never given a fair chance at his natural position, and paid an absurd $16.5 million over three years for Matsui, who has never played more than 114 games in any one of his four MLB seasons. To underscore this point, Matsui is beginning this season on the disabled list. Matsui's career hitting stats are .325 OBA/.387 SLG/.712 OPS compared to Burke's .304/.357/.662. Burke would have cost the Stros a fraction of the salary that they have committed to Matsui over the next three seasons and probably would have produced about the same once he was given an opportunity to settle into the 2B position. Go figure.

The Bad: The Stros traded solid MLB players Lidge, Chad Qualls and Luke Scott without receiving in return any above-average prospects to re-stock their farm system, which is rated by experts to be among the worst in MLB.

The Good: The Stros finally gave up on Woody Williams, who was a dubious acquisition from the start. Without both Williams and Jason Jennings, this season's pitching staff should be better than last season's, which gave up 79 more runs than a National League-average pitching staff would have given up in an equivalent number of innings (RSAA).

The Bad: After one of the best starting pitchers in MLB, Roy Oswalt, the following is the Stros' rotation to begin the 2008 season:

• Wandy Rodriguez: Rodriguez went from being one of the worst starting pitchers in MLB in 2005-06 to being merely a below-average starter (-7 RCAA/4.58 ERA/182? IP) in 2007. It’s conceivable that he could continue to improve and be a reasonable 4th or 5th starter. Of course, it’s just as likely that he could regress to what he was in 2005-06. That’s the hit-or-miss nature of pitching at the non-elite levels of MLB.
• Brandon Backe: A fiery personality and a couple of good playoff performances three years ago misleads some addled observers to believe that Backe is a legitimate number two starter. However, he has made just 13 starts over the past two seasons while recovering from Tommy John surgery. In those 13 starts, he struck out 30 and walked 29. Backe's career -15 RSAA is not the stuff of a frontline National League starting pitcher.
• Shawn Chacon: Chacon was an inconsistent starter for six seasons before washing out with the Yankees and Pirates in 2006 (-24 RSAA -- ouch!). He revived his career last season with the Pirates as a setup man, so what do the Stros do? Insert him back into the starting rotation. This is unlikely to turn out well.
• Chris Sampson: Given Sampson's story (revived his career as a pitcher after washing out as a minor league shortstop and coaching for several years at a Dallas community college), everyone is pulling for him. But his story is better than his stats. He is a control specialist who doesn't strike many batters out playing with a left-side infield defense that will struggle to field ground balls. Sampson was going downhill at the time of his injury last season (6.86 ERA over his last seven starts), so don't expect miracles this season.

The bottom line on all of this is that the Stros' addition of Tejada's bat probably will not be what the club's promoters are cranking it up to be in the pre-season (Baseball Prospectus' PECOTA prediction model projects Tejada's 2008 statistics at a rather pedestrian .340 OBA/.428 SLG/.768 OPS with 14 dingers). The subtraction of Biggio, Everett and Brad Ausmus from the everyday starting lineup will probably result in a marginally better hitting club over the National League-average 2007 unit, but the defense and the pitching will likely remain decidedly below-National League average. Accordingly, it is unlikely that the Stros will improve much, if at all, on their 73 wins from last season. I'm putting the over/under on Stros wins this season at 75 and, absent career seasons from about half-a-dozen players, competing for a playoff spot is a pipe dream.

Over the past couple of seasons, I have reviewed the Stros during the season after each 10th (2006) and each 8th of the season (2007). Consistent with my lighter blogging schedule this season, I'm going to post my "Stros 2008 Season Review, Part __" this season after each 5th of the season, which works out to be after each 32 game segment of the season (I will do 33 game segments for the first and last segments). So look for my first season review this season after the first week in May, give or take a few days in the event of postponed games. Given the vacuum of baseball analysis at the Chronicle, check out Lisa Gray's insightful Stros blog and Alyson Footer's articles at Astros.com for daily reports on the Stros throughout the season.

Posted by Tom at 12:01 AM | Comments (0) |

March 30, 2008

Icahn on settling Pennzoil-Texaco with Jamail

This blog is mostly about business and law, so Carl Icahn's activities have been a frequent topic. Likewise, this blog also centers on Houston, where the Pennzoil v. Texaco case from the mid-1980's is a part of the city's storied legal lore. Consequently, the video below of Icahn doing his equivalent of a standup comedy routine describing how he settled the Pennzoil-Texaco case with famed Houston plaintiff's lawyer Joe Jamail is an absolute classic for this blog. A very big hat tip to John Carney at Dealbreaker for the link to the Icahn video.

Posted by Tom at 12:01 PM | Comments (2) |

March 29, 2008

Thoughts about basketball at Reliant

My friend John Stevenson graciously hosted a couple of friends and me at last night's NCAA South Regional semi-final basketball games at Reliant Stadium.  Although the company and conversation was a solid A+, my grade for Reliant Stadium's performance in hosting its first big-time basketball tournament is a rather pedestrian C- (the Chronicle's David Barron has a more favorable review here). Here are my observations:

1.  First, the good. The configuration of the stadium into a 43,000 seat basketball arena is not bad, at least for a football stadium hosting basketball games. We sat in the first row of the club section and the sight lines were fine, although we all used our opera binoculars from time to time. I do think that it would be possible to arrange more seats closer to the floor, particularly on the ends, without giving up much from the nose-bleed seats.

2.  But now for the bad. As has been the tradition at Reliant Park since the opening of the Astrodome over 50 years ago, parking was Byzantine. Although Reliant Park is blessed with plenty of on-site parking, the facility's parking areas were originally designed with narrow entry points that funnel autos to relatively few parking ticket agents that take a parking fee from the driver of each auto entering the facility. This has always been a horrible idea and it's incomprehensible that Reliant Park officials have not changed it after decades of fan frustration. With tens of thousands of autos descending upon the facility within an hour or so of a big game, traffic around the facility slows to a crawl as autos line up for miles at the most popular entry points waiting for drivers to stop, pay the parking charge and then move on to park. To make matters worse, the narrow entry points are converted to too-narrow exit points after the game, so traffic also stacks up in the parking lots after the game.

What should be done is simple. All of the entry points should be widened to facilitate traffic flow and, at least for big events, there should be no parking charge taken at the facility (the parking charge should be included in the price of the ticket -- with tickets already priced at $156 for the South Regional, charging an additional $20 to park at Reliant is outrageous). With widened entry points and no stoppage for payment of a parking fee, parking lot attendants could then concentrate on moving drivers quickly into the parking areas. Traffic backups would be greatly reduced.

Being old-timers in attending events at Reliant Park, our group avoided the traffic bottleneck by entering Reliant Park off of  little-used Stadium Drive on the north end. However, when we entered an hour before game time, automobiles were already backed up for miles on Kirby and the other west-side entry points. That bottleneck caused many fans to miss a good part of the first half of the opening game between Texas and Stanford.

3.  How on earth could Reliant Stadium not have sufficient concession workers and supplies available for an event as prestigious as an NCAA Regional? In the club section, there were so few concession areas available that the lines required a half hour wait throughout and after the Texas-Stanford game. There were no individual concession vendors. By the time that the lines had dwindled midway through the second game between Memphis and Michigan State, many of the concession areas had run out of bottled water. Finally, although it's not a big deal with me, isn't it a bit odd that a fan can't buy a beer while attending a basketball event that lasts over five hours?

4.  The Reliant Park overhead video screens were nice, but provided sophomoric information about the players and showed too few replays of exciting and controversial plays. The folks at Reliant Park need to check out how the Toyota Center operates its overhead video screens, which provide much better information and more replays.

5.  Pricing of the tickets is definitely an issue. It's my understanding that Reliant Park and the NCAA priced the tickets for the three South Regional games at a total of $156 on the thought that the basketball configuration would be limited to about 25,000 seats. When hometown favorite Texas was given the second seed in the South Regional and then won a spot in the South Regional semi-finals, Reliant Park and the NCAA modified the configuration to its present 43,000 seat configuration to accommodate the increased demand for tickets from Texas fans (they also sold tickets at $78 for only the two Friday night semi-final games). Although almost 33,000 attended last night's games, my sense is that even more would have done so if the nose-bleed tickets had been priced at more reasonable levels.

By the way, I've got Memphis in my bracket winning the South Regional final tomorrow against Texas. Although the Horns are solid, nothing that I saw in the two Friday night games has changed my opinion that Memphis will prevail.

Posted by Tom at 9:04 AM | Comments (2) |

March 27, 2008

Thinking about Bear Stearns

Michael Lewis -- author of Moneyball and The Blind Side: Evolution of a Game (previous post here) provides this particularly lucid Bloomberg.com op-ed regarding the implications of the Bear Stearns affair to investors generally:

All of this raises an obvious question: If the market got the value of Bear Stearns so wrong, how can it possibly believe it knows even the approximate value of any Wall Street firm? And if it doesn't, how can any responsible investor buy shares in a big Wall Street firm?

At what point does the purchase of such shares cease to be intelligent investing, and become the crudest sort of gambling? [.  .  .]

To both their investors and their bosses, Wall Street firms have become shockingly opaque. But the problem isn't new. It dates back at least to the early 1980s when one firm, Salomon Brothers, suddenly began to make more money than all the other firms combined. (Go look at the numbers: They're incredible.)

The profits came from financial innovation -- mainly in mortgage securities and interest-rate arbitrage. But its CEO, John Gutfreund, had only a vague idea what the bright young things dreaming up clever new securities were doing. Some of it was very smart, some of it was not so smart, but all of it was beyond his capacity to understand.

Ever since then, when extremely smart people have found extremely complicated ways to make huge sums of money, the typical Wall Street boss has seldom bothered to fully understand the matter, to challenge and question and argue.

This isn't because Wall Street CEOs are lazy, or stupid. It's because they are trapped. The Wall Street CEO can't interfere with the new new thing on Wall Street because the new new thing is the profit center, and the people who create it are mobile.

Anything he does to slow them down increases the risk that his most lucrative employees will quit and join another big firm, or start their own hedge fund. He isn't a boss in the conventional sense. He's a hostage of his cleverest employees.

As noted in this earlier post, nothing is wrong with having compassion for Bear Stearns employees who lost much of their net worth as a result of the firm's demise. But the reality is that the ones who suffered large losses in their nest egg when Bear Stearns failed were imprudent in their investment strategy. They should have diversified their holdings or bought a put on their shares that would have allowed them to enjoy the rise in the company's stock price while being protected by a floor in that share price if things did not go as planned. Even though most of those Bear Stearns investors carry insurance on their homes and cars, relatively few of them elected to hedge the risk of their more speculative Bear Stearns investment. Most likely, many of these investors simply did not understand how Bear Stearns created their wealth in the first place. Absent a better understanding of investment risk and how to hedge it, such investment losses will continue in the future, regardless of whatever ill-advised regulations are devised in an attempt to prevent them.

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

March 26, 2008

Throes of Democracy

One of the best books that I have read over the past several years is Walter A. McDougall's Freedom Just Around the Corner: A New American History 1585-1828 (HarperCollins 2004), the first book in McDougall's planned trilogy on American history (Gordon Wood's 2004 review of Freedom Just Around the Corner is here).

For anyone interested in the development of the market economy in American society, Freedom Just Around the Corner is essential reading. One of McDougall's central theses is that most of American society's dynamic successes (and also many of its failures) are attributable to the creative entrepreneurial spirit of its citizens, and that the source of a considerable amount of tension within American society are the forces that attempt to contain this spirit. McDougall sums up his viewpoint in the preface to his widely-anticipated and just-published sequel to Freedom Just Around the Corner, Throes of Democracy: The American Civil War Era 1829-1877 (HarperCollins 2008):

I believe the United States (so far) is the greatest success story in history. I believe Americans (on balance) are experts at self-deception. And I believe the "creative corruption" born of their pretense goes far to explain their success. The upshot of is that American history is chock-full of cruelty and love, hypocrisy and faith, cowardice and courage, plus not small measure of tongue-in-cheek humor. American history is a tale of human nature set free. So how you, the reader, respond to this book will depend in good part on how you yourself (all pretense aside!) regard human nature.

McDougall has a wonderfully engaging style, which is reflected in the following Freedom Just Around the Corner excerpt about the tragic death of Alexander Hamilton in his duel with Vice-President, Aaron Burr. After the Federalist-but-statesman-first Hamilton undermined the rudderless Burr's Federalist campaign for New York Governor by supporting Burr's Republican opponent, McDougall described what happened next (pp, 395-96):

When in April 1804 Burr gleaned just 40 percent of the tally, he invoked the code duello and called Hamilton to pistols on the green at Weehawken, New Jersey. Hamilton's son had been killed in such an affair just a year before and he was well aware of Burr's marksmanship. But Hamilton consented in July 1804 to perform one last service for his country. He killed Burr's career by permitting Burr to kill him.

I've just started Throes of Democracy, but I have read enough to know that it is going to be a rollicking good ride. Michael Kazin's somewhat indifferent NY Times review of Throes of Democracy is here.

Posted by Tom at 7:50 PM | Comments (0) |

March 25, 2008

Reliant Stadium, South Regional-style

Check out the Chronicle's nifty rendering of the new basketball configuration that will be used this weekend at Houston's Reliant Stadium for the NCAA Basketball Tournament South Regional. The Reliant Park ticket seating chart for the basketball configuration is here.

This particular configuration provides about 40,000 seats for the South Regional. A different configuration that will seat 72,000 will be used when Reliant Stadium hosts the NCAA Final Four in 2011.

Posted by Tom at 6:17 PM | Comments (0) |

March 24, 2008

The Enron Task Force laid bare

In this previous post on former Enron CEO Jeff Skilling's Supplemental Brief regarding prosecutorial misconduct in connection with covering up exculpatory evidence contained former Enron CFO Andrew Fastow's interview notes, I noted that the Skilling brief would likely have a ripple effect on the re-trial of three former Merrill Lynch executives in connection with the Enron-related criminal case known as the Nigerian Barge case.

Well, based on this extraordinary motion filed on behalf of former Merrill executive James Brown, that ripple effect has turned into a tsunami of evidence that includes, but is not limited to, the Fastow interview notes. I have bookmarked the sections of the above-linked motion in Adobe Acrobat to facilitate ease of review.

As with the Lay-Skilling case, the Nigerian Barge case has long represented much of what is wrong with the Department of Justice's regulation of business-through-criminalization approach in the post-Enron era. After prosecuting Arthur Andersen out of business in the intensely anti-business, post-Enron climate, the Enron Task Force threatened to do the same to Merrill Lynch unless the firm served up some sacrificial lambs, which it did with Mr. Brown, Daniel Bayly, Robert Furst and William Fuhs.

Through a deferred prosecution agreement with Merrill, the Task Force then proceeded to hamstring the defendants' defense by limiting access to other Merrill Lynch executives involved in the barge transaction. Moreover, the Task Force intimidated other potentially exculpatory witnesses by threatening to indict them if they cooperated with the defense. After bludgeoning a couple of plea deals from former key witnesses Ben Glisan and Michael Kopper, the Task Force proceeded to put on a paper-thin case against the defendants, which was good enough to obtain convictions in the hyper-anti-Enron climate of Houston in 2004.

Of course, most of the convictions were vacated on appeal (and in Fuhs' case, reversed and rendered), but not before each of the former Merrill defendants and their families had incurred the incalculable human cost of these misguided prosecutions. Now, Brown's motion provides a specific and detailed case that the Enron Task Force engaged in not only a wide-ranging cover-up of evidence that was exculpatory to the Merrill defendants, but also offered testimony at trial that the Task Force lawyers knew was contradicted by evidence and testimony that they had in their possession.

The lives and careers that have been damaged in the Nigerian Barge case are the inevitable carnage that results from giving incentivized prosecutors the overwhelming power of government to paint transactions as frauds and manipulate ignorance about them as a means to regulate merely questionable business transactions. A truly civil society would find a better way.

Update: As usual, Ellen Podgor asks the key question -- why are the Fastow notes so late in coming?

Update 2: The Chronicle's Kristen Hays has an article on the Brown motion here.

Posted by Tom at 1:16 PM | Comments (3) |

March 21, 2008

Is this the key year for the SHO?

The Shell Houston Open has been a frequent topic on this blog, particularly the tournament's troubled recent history (see here, here and here). This year's tournament is coming up during the week of March 31-April 6 and, for the first time in years, the SHO's projected field contains several top 10 players in the World Golf Rankings. In fact, the SHO's field looks as if it will be about as good as any of the PGA Tour's tournaments that currently exist in the Tiger Chasm:

Steve Stricker, No. 4 in the world golf rankings, is the latest PGA TOUR player among the Top 10 to commit to tee it up in the Shell Houston Open the week of March 31-April 6 at Redstone Golf Club – Tournament Course.

Stricker joins No. 2 Phil Mickelson, No. 3 Ernie Els, No. 5 Adam Scott (defending champion) and No. 6 K.J. Choi in the field. No. 11-ranked Padraig Harrington of Ireland, the current British Open champion, and No. 16-ranked Angel Cabrera of Argentina, the current U.S. Open champion, are also in the fold.

Of the above-described players, only Scott has been a regular participant in the SHO. Thus, this is a key year for the tournament. If the top players give the Tournament Course at Redstone (see also here) good reviews, then that will bode well for the SHO going forward, particularly if the tournament can maintain its warm-up date the week immediately before The Masters. On the other hand, if the key players pan the new course, then the SHO will probably fall further into the Tiger Chasm and have a very difficult time climbing out.

Posted by Tom at 7:07 PM | Comments (0) |

March 20, 2008

The ignorance of costs

I don't particularly like the distraction of talking on a cell phone while driving, so I avoid it as much as possible. It's also not enjoyable avoiding other drivers who are not paying full attention while chatting on the cell phone.

However, I also recognize that cell phone usage while driving has facilitated beneficial communication exponentially. Thus, whenever I see creeping paternalism such as this, it gets my attention:

West U. eyes ban on calls while driving
Cell phones in school zone lead to 'near misses'

Houston-area officials are watching West University Place as elected officials there consider banning cell phones in the school zone near the community's lone elementary campus.

The move would put the affluent suburb on the map as the first Houston-area municipality to take a stand against drivers talking on their phones as children travel to and from school. The community is following in the footsteps of Dallas and several North Texas suburbs that have recently approved bans. [.  .  .]

West University proposed the ban earlier this month after conducting a study to determine how often drivers were spotted chatting on their cell phones in active school zones. Over three weeks in February, police counted 297 drivers on their phones.

Six of the drivers violated traffic laws by creeping into intersections while children and crossing guards were present, West University police Lt. Thad Olive said.

Although neither Olive nor HISD police officials could recount an incident when a child was seriously injured in a school zone because of a driver on a cell phone, they said this type of ordinance could prevent tragedy.

"There's been a lot of near misses," Olive said. "It definitely has distracting effects. If I can take one element of risk away from the children in that school zone, then it's a good thing." [.  .  .]

Kenneth Jones, who oversees HISD's crossing guard department, said he'd love to see the ban enacted citywide.

"If you've got that phone in your hand, I don't think you have your mind 100 percent on driving," he said.

Kelli Durham, an assistant superintendent in the Cypress-Fairbanks school district, was one of several educators to suggest widening the ban to include all drivers, regardless of whether they're in school zones.

"If cell phones shouldn't be used for safety reasons in school zones, should they be used anytime on our streets and highways?" Durham asked.  .  .  .

So, if "one element of risk" can be taken away from children in a school zone, then that's sufficient justification for regulation of a hugely beneficial communication device? Does this mean that the next initiative will be to ban conversation between a driver of a car and a passenger while in a school zone? That's also distracting, perhaps even more distracting than talking on a cell phone. Should we also ban distracting billboards, signs, automobiles and lights while we're at it?

What is most disturbing about all this is the utter ignorance of the bureaucrats proposing these regulations of the cost of the regulation relative to the benefit. Wouldn't it be prudent at least to perform a meaningful cost-benefit analysis of the probable impact of outlawing a valuable improvement in communications before foisting yet another regulation on the public?

Posted by Tom at 7:44 PM | Comments (2) |

March 19, 2008

T-Mac for MVP?

The incongruity of Chronicle sportswriter Richard Justice writing about sports has been a frequent topic on this blog, so I don't much bother anymore keeping up with his often baseless observations about the local sporting scene. However, on the heels of the Houston Rockets' recent 22-game winning streak, I did a double-take when Justice jumped on the bandwagon and started promoting the Rockets' Tracy McGrady for the NBA's Most Valuable Player Award this season.

As noted in this earlier post, as of December 30, McGrady was barely better than a league-average NBA player. There were dozens of players in the Western Conference alone who were having demonstrably better seasons than McGrady. So, at least as of that date, there was simply no objective basis for McGrady being considered the MVP of the NBA this season.

But perhaps McGrady elevated his performance tremendously during the Rockets' subsequent 22-game winning streak? Maybe that improved performance justifies Justice's advocacy of an MVP award for McGrady?

Sorry. As this Dave Berri post points out, McGrady’s production in the second half of the season is essentially the same as it was in the first half. Thus, McGrady is not the reason the Rockets went on their 22-game winning streak. Rather, the primary reason for the Rockets' transformation was the improved play of Carl Landry, Rafer Alston, Shane Battier, Luther Head, Luis Scola and Dikembe Mutumbo, not McGrady.

Berri backs up his position with objective statistical analysis. Justice backs his up with subjective blather. Is that what the Chronicle prefers?

Posted by Tom at 8:55 PM | Comments (1) |

March 18, 2008

The Economist gets it

Following on recent posts here and here, The Economist produces the best mainstream media article that I've seen to date placing the prosecutorial misconduct of the Enron Task Force toward former Enron executives Jeff Skilling and Ken Lay in the context of the most recent demise of a trust-based business, Bear Stearns:

For many people, the mere fact of Enron’s collapse is evidence that Mr Skilling and his old mentor and boss, Ken Lay, who died between his conviction and sentencing, presided over a fraudulent house of cards. Yet Mr Skilling has always argued that Enron’s collapse largely resulted from a loss of trust in the firm by its financial-market counterparties, who engaged in the equivalent of a bank run. Certainly, the amounts of money involved in the specific frauds identified at Enron were small compared to the amount of shareholder value that was ultimately destroyed when it plunged into bankruptcy.

Yet recent events in the financial markets add some weight to Mr Skilling’s story—though nobody is (yet) alleging the sort of fraudulent behaviour on Wall Street that apparently took place at Enron. The hastily arranged purchase of Bear Stearns by JP Morgan Chase is the result of exactly such a bank run on the bank, as Bear’s counterparties lost faith in it. This has seen the destruction of most of its roughly $20-billion market capitalisation since January 2007. By comparison, $65 billion was wiped out at Enron, and $190 billion at Citigroup since May 2007, as the credit crunch turned into a crisis in capitalism.

The Economist article goes on to compare the similarity of certain of Ken Lay's public comments regarding Enron's liquidity in the turbulent post 9/11 markets (for which he was eventually prosecuted) with those of Bear Stearns and Lehman Brothers executives during the current turmoil in the financial markets. As this post from almost two years ago notes, the source of the information upon which Lay based his positive statements is the same fellow (former Enron CFO Andrew Fastow) whose exculpatory statements regarding Skilling and Lay the Enron Task Force improperly withheld in connection with their criminal trial. And the revelations of this latest round of prosecutorial misconduct with regard to Fastow comes on top of the Task Force's blatant misrepresentation (see also here) of Fastow's plea deal to the Lay-Skilling jury during the trial.

As usual, Larry Ribstein places all of this in context:

I'm constructing a "narrative" for the prosecutorial misconduct case: Prosecutors desperate for a conviction, their careers turning on the outcome, have a key witness, Andy Fastow. The problem is, the guy has, in [Enron Task Force prosecutor John] Hueston's words, a "heartstopping history of self-dealing." Obviously the government couldn't afford any additional shadow on Fastow's credibility. Yet in the government interviews it seems his story got more negative on the defendants over time. Could be a big problem for Fastow on the witness stand, as the defense sought on cross to show he was changing his story to suit his jailers. Could the prosecutors afford to give these notes to the defense? Why not just turn over a summary?  By the time the truth came out (if it ever did) they could do a dance about how the differences were inconsequential.

The government is saying the differences are inconsequential. So why, then, didn't they produce the notes as repeatedly requested, rather than summarizing them?  I think those prosecutors have some explaining to do.

Update: Warren Meyer also notes the similarities between Bear Stearns' demise and that of Enron.

Posted by Tom at 6:55 PM | Comments (4) |

March 17, 2008

The Nacchio debacle

I'm shocked, absolutely shocked, that a former Enron Task Force member would have ever been involved in improperly suppressing exculpatory testimony at trial that would ultimately lead to the Tenth Circuit's reversal of the conviction of former Qwest CEO, Joseph Nacchio.

Larry Ribstein and Ellen Podgor break down and comment on the Tenth Circuit decision. As an aside, the expert witness who was improperly excluded in the Nacchio trial -- Daniel Fischel -- was the author of the book that exposed the true nature of, and motive behind, Rudolph Giuliani's prosecution of Michael Milken.

Posted by Tom at 9:21 PM | Comments (1) |

"America’s booming opportunity city"

Each time local politicians in Houston engage in bad policy initiatives such as the ones noted here, my wish is that they would be required to read this fine Joel Kotkin/The American op-ed entitled Lone Star Rising -- How a combination of ambition, entrepreneurship, trade, and tolerance made Houston America’s booming opportunity city. Kotkin has been studying Houston over the past several years and he provides a perceptive outsider's view on why Houston grew into such a vibrant place:

First appearances—then and even now—often didn’t help. Early visitors were struck by the settlement’s largely shack-like housing. And in those days, long before air conditioning, there was the Houston weather, which often combined scalding temperatures with soupy humidity.  .  .  . Yet the Allen brothers had not really chosen so badly. Houston possessed powerful assets. It sat on an enormous fresh-water aquifer, which today guarantees a water supply in a way that other growing cities, such as Phoenix and Las Vegas, can only dream about. The area also abounded in natural resources such as timber and rich soil that was ideal for growing cotton. And when oil drillers hit a gusher in Spindletop, about 90 miles from Houston in East Texas, in 1901, Houston suddenly found itself positioned as the nearest city to some of North America’s richest oil and gas reserves.

None of this, however, adequately explains Houston’s ascendancy. Other cities enjoy better locations for shipping, richer agricultural resources, or similar proximity to oil fields. The answer, I have come to understand as I have worked in Houston as a reporter and consultant, echoes something that the late Soichiro Honda once told me: “More important than gold and diamonds are people.” This critical resource, more than anything, accounts for Houston’s headlong drive toward becoming not only the leading city of Texas and the South, but also a player on the global scene: it is emerging as one of the world’s great cities.

Read the entire op-ed and learn a lot about what makes Houston such a special place to live.

Posted by Tom at 6:46 PM | Comments (1) |

March 16, 2008

That pesky trust-based business model

Over the weekend, we learned that the Fed had bailed out New York-based investment bank Bear Stearns during this unsettled time in the financial markets.

Almost seven years ago, a much larger company that shared many characteristics with Bear Stearns -- Houston-based Enron -- did not even generate serious consideration for a Fed bailout before it went under in the turbulent post-9/11 financial markets.

In between those two events, one of the world's wealthiest insurers and another company that is similar in many respects to Bear Stearns and Enron --  American Insurance Group -- barely escaped a similar fate by cutting a deal with the now-disgraced former Governor and Attorney General of New York to cut loose the executive primarily responsible for creating AIG's vast wealth.

The fact of the matter is that Enron was -- and Bear Stearns and AIG are -- trust-based businesses that fundamentally depend on the trust of the markets to sustain their value. Once that trust is lost, such companies lose value quickly and dramatically (a case in point -- JP Morgan Chase's proposed $236 million purchase price for Bear Stearns comes just hours after Bear's market cap was $3.5 billion this past Friday and $20 billion as of January, 2007). Although unfortunate for the owners of such companies, such a dramatic loss of wealth does not necessarily mean that any criminal conduct caused or was even involved in the loss. Rather, such loss is simply one of the risks of investing in a company based on a trust-based business model. The sooner we all recognize and understand this risk -- and avoid the mainstream media's promotion of myths about them -- the quicker we can put a stop to injustices such as this while advancing the discussion of how best to hedge the risk of such potential losses.

Posted by Tom at 6:52 PM | Comments (7) |

March 14, 2008

The stench of prosecutorial abuse

The stench of prosecutorial abuse has long hung over the Enron-related criminal cases. But the extent of that abuse became crystal clear this afternoon when the Fifth Circuit Court of Appeals granted former Enron CEO Jeff Skilling's motion to unseal his supplemental brief relating to the government's interview notes of former Enron CFO and chief Skilling accuser, Andrew Fastow. I bookmarked the supplemental brief in Adobe Acrobat to facilitate ease of review.

The brief reveals suppression of exculpatory evidence by the Enron Task Force on a massive scale. The entire brief is devastating to the Task Force's prosecution of Skilling and the late Enron chairman, Ken Lay. But if you do not have time to read the entire brief, read the excellent 11-page introduction, which includes the following passage:

The raw notes are shocking. The 420 pages of contemporaneous notes, which we have spent the last many weeks comparing to the thousands of pages of trial record and the Task Force’s pretrial disclosures, confirm our worst fears. On the most crucial issues in Skilling’s case—especially where it was only Fastow’s word against Skilling’s—the Task Force suppressed vital exculpatory evidence from its “composite” FBI Form 302s for Fastow and all other disclosures given to Skilling. The Task Force then proceeded to present critical testimony and argument at trial it knew was contradicted by the evidence withheld from Skilling.

Much of the suppressed evidence directly relates to—and refutes—the Task Force’s pivotal contention that Skilling orally agreed to “secret side deals” to manipulate Enron’s financial statements. This “side deal” theory underlies every count of conviction against Skilling. By depriving Skilling of key exculpatory evidence that Fastow conveyed in his interviews, the Task Force was able to skew the proof and convince the jury to accept Fastow’s word over Skilling’s. As the Task Force later told Fastow’s sentencing judge and recounted in a law review article, Fastow’s testimony and credibility were the cornerstones to convicting Skilling.  .   .  . Enron Task Force Prosecutor John C. Hueston, Behind the Scenes of the Enron Trial: Creating the Decisive Moments (“Hueston”), 44 AM. CRIM. L. REV. 197, 197-99 (2007). The substantial evidence the Task Force kept from Skilling all shares one chatacteristic—it was harmful to the Task Force’s case against Skilling.  .    .    .

The implications of this brief reach far beyond the Skilling appeal. For example, the already-reeling re-prosecution of the three former Merrill Lynch bankers in the Enron-related Nigerian Barge case would appear to be over -- the Enron Task Force in the first trial of that case not only withheld exculpatory evidence, but put on incriminating testimony from former Enron treasurer and Fastow confidant Ben Glisan that directly contradicted the exculpatory evidence that Fastow provided to Task Force prosecutors during his interviews. Other Enron-related criminal cases -- as well as plea bargains -- could well be affected.

I've often noted on this blog that fair-minded people can disagree over whether the government's prosecutorial power is an appropriate tool to regulate business. However, my fervent hope is that even those who favor using the state's awesome power to criminalize merely questionable business transactions will be appalled by what the prosecution did in the criminal case against Skilling and Lay, as well as the other Enron-related criminal cases. In truth, none of us would be able to survive, as Thomas More reminds us, "in the winds that blow" from the unjust exercise of the government's overwhelming prosecutorial power. I continue to hope that Jeff Skilling's unjust conviction and sentence are reversed on appeal, not only for his and his family's benefit, but also for ours.

Update: The Chronicle's Kristen Hays, who is the only mainstream media reporter who I know of following this story, has an article on the Skilling brief here (the Chronicle story links to the copy of the Skilling supplemental brief that I bookmarked in Adobe Acrobat to facilitate ease of review; the Skilling supplemental brief on file with the Fifth Circuit is not bookmarked).

Probably in response to an off-the-record response from the DOJ, Hays writes that the Skilling supplemental brief contends that "some of [Fastow's] initial statements to authorities were not as damning as those in his testimony." That's a stark understatement of what the Skilling supplemental brief describes.

The initial Fastow statements set out in the Skillling brief were not only not as damning as Fastow's trial testimony, they were irreconcilable with that trial testimony and described completely legal activity, even by Fastow.  Consequently, had the Enron Task Force not been able to to pry Fastow off his original story, the core of the Task Force's case against Skilling and Lay would have have contradicted by Fastow, who was Skilling's main accuser at trial. And the fact that the DOJ did not disclose to the Skilling defense team how Fastow's incriminating testimony evolved over time from his exculpatory initial statements while Fastow and the Task Force were negotiating a dubious plea deal is beyond reprehensible. What is the DOJ going to say now, that they didn't disclose the exculpatory earlier statements to Skilling's defense team because Fastow was protecting Skilling in these initial meetings? Yeah, right.

Update 2: The blogosphere is picking up the story quickly, as Larry Ribstein, Ellen Podgor (see also here) and Warren Meyer have already commented. Curious, isn't it, that the mainstream media is lagging well behind. Could it be that the story simply does not comport with the media's pre-conceived notions of the Enron saga?

Update 3: The WSJ's John Emshwiller, who covered the Lay-Skilling trial for the WSJ despite legitimate questions about his objectivity, reports on the latest developments here.

Update 4: John Hueston, the former Enron Task Force prosecutor who is quite proud of his work in nailing Skilling and Lay on an admittedly weak case (see here, here, here and here), is mentioned often in the Skilling supplemental brief because of the law review article he authored that is cited in the passage above. Hueston's law firm bio used to link to a copy of the article, but the firm took the link down some time ago. However, Cara Ellison, who has followed the Enron-related criminal cases closely, provides this handy link to Hueston's article.

Update 5: A bookmarked copy of the DOJ's reply to the Skilling Supplemental Brief can be downloaded here. The DOJ argues essentially that, put in what the DOJ considers to be the proper context, each portion of the Fastow interview notes on which Skilling relies to establish Brady violations contains information that Skilling already had prior to trial or is evidence that would have had "minimal" value in impeaching Fastow. Frankly, the DOJ's analysis stands Brady on its head. The essence of Brady is that the prosecution does not retain the power to make such determinations regarding exculpatory evidence unilaterally -- that information is a part of the mix that the jury and the Court sort out in determining facts and in applying the law. If what the Enron Task Force withheld here is truly harmless error, then the DOJ's need of 70+ pages to explain why that is the case belies that contention. Ellen Podgor passes along similar thoughts regarding the DOJ's brief here.

Posted by Tom at 6:47 PM | Comments (5) |

March 12, 2008

More rumblings in the Skilling appeal

This post from last week noted some interesting docket entries in former Enron CEO Jeff Skilling's Fifth Circuit appeal of his conviction on criminal charges in connection with the demise of Enron.

Now, it looks as if the mainstream media is picking up on the issue. The Houston Chronicle's Kristen Hays, who is one of the only mainstream media reporters continuing to follow-up on the Enron-related criminal cases, reports here on a couple of the pleadings referenced in the docket entries from last week that apparently were not placed under seal when filed. Although a copy of the pleadings that Hays was able to review are not included in the article, it appears clear that the government is scrambling in an attempt to contain public disclosure of exculpatory evidence that is contained in the interview notes of former Enron CFO and chief Skilling accuser, Andrew Fastow:

[Skilling attorney Daniel] Petrocelli and his team have since examined the notes. They want to file an additional brief arguing that the notes contain much information that is favorable to Skilling, and prosecutors and Lake wrongly denied him access to the notes before the trial.

He said the notes reveal evidence that is "a sledgehammer that destroys Fastow's testimony" against Skilling, "infecting virtually every facet" of the government's case.

Petrocelli also asked the 5th Circuit to accept his new brief as a public document, which he said quotes liberally from the Fastow notes.

The controversy regarding what Fastow told prosecutors and FBI agents who were investigating Enron became a big issue in the Lay-Skilling prosecution when the prosecution took the unusual step of providing the Lay-Skilling defense team a "composite summary" of the Form 302 ("302's") interview reports that federal agents prepared in connection with their interviews of Fastow. Those composites claimed that the Fastow interviews provided no exculpatory information for the Lay-Skilling defense, even though Fastow's later testimony at trial indicated all sorts of inconsistencies.

However, I have spoken with several former federal prosecutors about this issue and all believe that the government has a big problem in the Skilling case on the way in which the information from the Fastow interviews was provided to the Lay-Skilling defense team. None of these former prosecutors ever prepared a composite 302 in one of their cases or ever used such a composite in one of their cases. The process of taking all the Fastow interview notes or draft 302's and creating a composite is offensive in that it allowed the prosecution to mask inconsistencies and changing stories that Fastow told investigators as he negotiated a better plea deal from the prosecutors.

Similarly, the Enron Task Force's apparent destruction of all drafts of the individual 302s of the Fastow interviews in connection with preparing the final composite is equally troubling. Traditionally, federal agents maintain their rough notes and destroy draft 302s. However, in regard to the Fastow interviews, my sense is that the draft 302s were not drafts in the traditional sense. They were probably finished 302's that were deemed “drafts” when the Enron Task Force decided to prepare a composite summary of the 302's.

I will try and obtain copies of the pleadings referenced in Hays' article and add them later to this post. Stay tuned.

Update: A copy of the respective prosecution and Skilling pleadings that are the basis of the Hays/Chronicle story are here and here.

Update2: Larry Ribstein comments on the implications that criminalizing the actions of Skilling and Lay has on their prosecutors in light of their actions.

Posted by Tom at 7:55 AM | Comments (4) |

March 11, 2008

The Spitzer Lesson

The mainstream media and the blogosphere have been buzzing over the past 24 hours regarding the fall from grace of New York's governor and former Lord of Regulation, Eliot Spitzer. As noted in this previous post, there is an under-appreciated human element in such dubious criminal problems as Spitzer fell into. So, I have a great deal of compassion for the members of Spitzer's family, although Spitzer's many victims would certainly attest that he showed none for them. Larry Ribstein has related and typically insightful thoughts regarding why the revelers in Spitzer's fate should be concerned about the way in which he was brought down.

But I hope that the most important lesson that Spitzer's political career teaches us is not lost amidst the glare of a tawdry sex scandal. As with Rudy Giuliani before him, Spitzer rose to political power through the misuse of the state's overwhelming prosecutorial power to regulate business interests. In so doing, Spitzer manipulated an all-too-accommodating mainstream media, which never misses an opportunity to take down an easy target such as a wealthy businessperson. Spitzer is now learning that the same media dynamic applies to powerful politicians, as well.

However, as noted earlier here, where was the mainstream media's scrutiny when Spitzer was destroying wealth, jobs and careers while threatening to go Arthur Andersen on American Insurance Group and other companies? Where was the healthy skepticism of the unrestrained use of the state's prosecutorial power to regulate business where business had no available regulatory procedure with which to contest Spitzer's actions? As Dealbreaker's John Carney noted at the time of that earlier post:

Why didn’t [the mainstream media covering Spitzer's investigation of Grasso] reveal the slimy tactics of the Spitzer squad? We suspect part of the problem was the fear of being “cut off” of access. Reporters compete for scoops, and often those scoops depend on sources who will leak information to them. In the NYSE case, reporters assigned to the story were largely at the mercy of the investigators, who could cut-off uncooperative reporters, leaving them without copy to bring to their editors while their competitors filed stories with the newest dirt. They probably felt—not unrealistically—that their very jobs were on the line.

This reveals an unfortunate state of affairs. Playing bugle boy while government officials call the tunes from behind a veil of anonymity is not investigative journalism—it’s hardly journalism at all. It’s closer to propaganda. It would have been far better had the journalists turned their backs on the Spitzer squad, or even revealed these tactics to the public. Sure they may have lost some “good” stories but they could have painted a truer picture of what was going on. But that’s probably too much to hope for.

And, as noted here, the same prosecution manipulation of the mainstream media contributed to the utter lack of balance in the media's reporting on the Enron criminal prosecutions.

Alas, change does not come easily to the mainstream media. Late last week, this post reported on developments that could well expose an egregious abuse of prosecutorial power in connection with the prosecution for former Enron CEO, Jeff Skilling. Why has no mainstream media outlet intervened in that case and demanded that the information about potentially serious governmental misconduct be made public?

The Spitzer lesson is not easily embraced.

Update: Following on the theme of this post, the W$J's Kimberly Strassel reviews the mainstream media's complicity in portraying Spitzer as something that he is not, and Charlie Gasporino -- who wrote the book about Spitzer that foreshadowed these issues -- comments along the same lines here.

Posted by Tom at 7:20 AM | Comments (2) |

March 7, 2008

What's going on in the Skilling appeal?

First, thank you to all of the many readers who have communicated their concerns and prayers for the family crisis that is precluding me from daily blogging for now. Your kind thoughts and words are comforting and much appreciated.

But now for a quick blog post. While working this week, I was checking the docket of an appeal in which I am involved at the Fifth Circuit Court of Appeals. While there, I ambled over to the docket of the appeal of former Enron CEO Jeff Skilling just to see if there was anything interesting happening. Check out the following recent entries:

3/4/08 Motion filed by Appellant Jeffrey K Skilling to file
       supplemental briefs. [5976818-1]  Supplemental brief
       included? (Y/N): Y, to unseal A's suppl. brief brief
       [5976818-2]    Date of COS: 3/3/08  Sufficient [Y/N]: Y
       [06-20885] (jmw)
 
 3/5/08 Motion filed by Appellant Jeffrey K Skilling [5976825-1] to
        place supplemental brief under seal.    Date of COS: 3/4/08
        Sufficient [Y/N]: Y [06-20885] (jmw)
 
 3/5/08 Response/opposition filed by Appellee USA to motion to file
        supplemental briefs [5976818-1] by Appellant Jeffrey K
        Skilling. Reply to Resp/Opp due on 3/14/08.   Date of COS:
        3/4/08  Sufficient [Y/N]: y [5976831-1] [06-20885] (jmw)
 
 3/7/08 Reply filed by Appellant Jeffrey K Skilling to
        response/opposition [5976831-1], motion to file
        supplemental briefs [5976818-1] Reply to Resp/Opp due ddl
        satisfied., motion to unseal brief [5976818-2]  Sufficient
        [Y/N]: Y [5978302-1] [06-20885] (jmw)

Translated, the foregoing means that Skilling's appellate team filed a motion on Tuesday requesting that the Fifth Circuit grant permission to the parties to file supplemental briefs and, because of confidentiality concerns, requested that the supplemental brief be filed under seal (in other words, not for public consumption). The government must have been expecting the Skilling motion because they filed a response in opposition to it the following day (Wednesday). Not to be outdone in terms of alacrity, the Skilling team filed their response today to the government's opposition and, for good measure, requested that the Fifth Circuit unseal the Skilling supplemental brief and make if available for public review.

Anyone want to bet that these developments might have something to do with this (see also earlier posts here and here)?

Looks to me like a good opportunity for a mainstream media outlet to intervene and demand that the Fifth Circuit order the supplemental briefs be made available for public review, don't you think?

Posted by Tom at 4:47 PM | Comments (2) |

March 3, 2008

A change in blogging seasons

When I started this little blog a bit over four years ago, the blogosphere was a different place. The pioneers of blogs were well-established and had created a viable vehicle to enhance communication of information and ideas, but the blogosphere was a much smaller place. My initial goal was simply to communicate more effectively with an eclectic email group that I had maintained for about five years that was comprised of about 100 friends and family members, mostly businesspeople, clients and former clients, academicians, lawyers, and doctors.

I initially informed no one about the blog other than the members of that email list and figured that, at best, most of them would take a look at it every week or two. Much to my surprise, hundreds and then thousands more began reading it almost immediately. As one sage regular reader apprised me, "Kirk, the success of your blog is conclusive proof that a large number of people don't have enough to do."

As anyone reading this blog knows, the blogsophere has exploded over the past four years into a key information source and communication device that even few of the blog pioneers predicted. Specialized blogs in such diverse areas as law, business, economics, medicine, education and politics (among others) have fundamentally enhanced the distribution of information and the communication of ideas. As I mentioned in a presentation that I gave on blogs last year at the State Bar of Texas Bankruptcy Seminar, if a lawyer today is not at least periodically reading the specialized blawgs that are addressing the key issues, developments and ideas that are related to the matters on which he or she is providing service to clients, then that lawyer almost certainly is not providing the best quality of service to the clients that is currently available in the marketplace of legal services.

As with many things in life, my blogging over time fell into a rhythm of about 15-17 posts per week, usually three a day on weekdays and a single post on the weekend days. Inasmuch as I also maintain an active family life and a busy law practice, that output was sometimes challenging to maintain, but the benefits of doing so far outweighed the cost in time expended -- I have made dozens of new friends through blogging and gained a far richer understanding of many issues and ideas through the blogospheric discussion of them.

Now, however, the time has come for my blogging season to change. Over the past couple of days, my family and I have had to confront a most difficult crisis in our lives. Please don't be alarmed -- the crisis does not involve my health, which continues to be blessedly excellent. Moreover, I am blessed with a wonderful wife, great children and a loving, supportive family who make dealing with these inevitable occurrences in life much easier and more manageable. My family and I will come through this chapter of our lives just fine.

But in the end, my time is finite and the two most important customers for that time are my family and my clients. My family needs more of that time now, and my clients don't deserve any less, so I am gladly cutting down the time I previously used for blogging to accommodate my family. That's not a tough call.

I won't be leaving the blogosphere completely, though. I will continue to post on the topics that I have addressed over the past four years when I have the time and note an issue or idea that particularly stimulates my interest. My posts just won't be as frequent as they have been. Thank you for making this blog such a fulfilling experience for me and please continue to check in on my little corner of the blogosphere sandbox when you have a moment. Hopefully, there will always be room in your life for a little clear thinking.

Posted by Tom at 12:14 AM | Comments (14) |

March 2, 2008

Landry's is worth more because of what?

Did I read right what Steve Scheinthal, general counsel of Houston-based Landry's Restaurants, Inc., said in this Chronicle article?:

Landry's is .   .  . facing a handful of shareholder suits seeking class-action status in the wake of CEO Tilman Fertitta's bid to take the company private.

Fertitta made an offer on Jan. 27 to buy out the company at $23.50 for each unowned share. The $1.3 billion deal, including debt, is being reviewed by a special committee of the Landry's board. [.  .  .]

Scheinthal dismissed the shareholder suits as standard in a going-private transaction.

"Absent Mr. Fertitta's offer, the likelihood is that the company's stock would be trading well below the current market price," he said.

Landry's stock closed Friday at $17.73 a share, down 38 cents.

Fertitta's offer for Landry's was made without a financing commitment in a tough credit market. Yet, the company's general counsel is claiming publicly that such a speculative offer is all that is propping up the company's stock price?

I wonder what the boys over at Long or Short Capital will think about that?

Posted by Tom at 12:00 AM | Comments (0) |

March 1, 2008

Sanctionable softball parents

Robert Loblaw explains why parents of high school softball players who are upset with their daughters' coach should not vent their criticism in a federal civil rights lawsuit. At least not in the Seventh Circuit.

Meanwhile, lest you think that women's athletics is not serious business, take a moment to watch the video below (H/T Jay Christensen) University of Michigan women's basketball coach Kevin Borseth have a post-game meltdown after his team blew an 18-point lead Thursday night and lost to Wisconsin, 69-67.

Posted by Tom at 12:00 AM | Comments (0) |

February 29, 2008

The "leadership" of Bill White

Let me see if I've got this straight.

On one hand, private businessmen invest millions in buying a run-down property and following the city's existing laws and regulations in preparing to build the Ashby high-rise, a large-scale residential redevelopment similar to dozens of others that dot Houston's landscape. When neighbors of the development object to the scale of the development relative to the surrounding neighborhood, Mayor White orders one of the city's approvals relating to traffic ingress and egress to be revised to delay or undermine the development altogether.

On the other hand, Mayor White proposes that the city spend at least $15-20 million to buy six blocks of downtown Chinatown property at a premium price for a soccer stadium that will block more east-west thoroughfares in a part of downtown where Minute Maid Park, the George R. Brown Convention Center and the Toyota Center already block a large number of such thoroughfares. Moreover, Mayor White is pushing this deal through City Council even though the city already owns six blocks nearby that is a better location for the soccer stadium (it wouldn't block any additional east-west thoroughfares and wouldn't require a major modification to another boondoggle). Meanwhile, the city has no financial commitment from the local soccer team even to build the stadium.

This is making the Harris County Commissioners' dithering over the Astrodome hotel project look downright prudent in comparison.

 

Posted by Tom at 12:05 PM | Comments (1) |

They just don't make football players like that anymore

The Johnny Carson interview below of former Baltimore Colts defensive tackle Art Donovan had my late father and me (as well as Carson himself) in stitches when we first saw it together back in 1990. Donovan's description of his on-the-field spat with Norm Van Brocklin is a classic.

Posted by Tom at 12:02 AM | Comments (0) |

Indexed

Jessica Hagy has had a smart blog for awhile. Now, she has a smart book. Barry Ritholtz provides a taste of her work. She is a very insightful lady. Enjoy

Posted by Tom at 12:00 AM | Comments (0) |

February 28, 2008

I'm shocked, shocked! There is academic cheating in big-time college football!

The entertaining hypocrisy of big-time college athletics continues at Florida State University. (H/T Jay Christensen). Just like Rick's Cafe, everybody knows what's going on, too.

So, what level of embarrassment in regard to "academic integrity" is it going to take to prompt university presidents to reorganize big-time college football into the professional minor league business that is its true nature?

This imbroglio reminds me of an insight into academia that my late mentor, Ross Lence, passed along to me years ago. As regular readers of this blog know, A Man for All Seasons -- the story of Sir Thomas More's conflict with King Henry VIII -- is one of my favorite movies and it was one of Ross' favorites, too. Ross particularly enjoyed the scene early in the movie when Sir Thomas attempts unsuccessfully to persuade his student, Richard Rich, to eschew a political appointment for a teaching career. After rejecting Sir Thomas' advice, Rich takes a political appointment from Henry's henchman, Thomas Cromwell, in return for agreeing to betray Sir Thomas.

"Sir Thomas knew that Rich had a corrupt heart and would never be able to resist the corrupt temptations of politics," Ross observed to me once with a chuckle. "So he recommended that Rich become a teacher." Then, with a twinkle in his eye, Ross posited the question for discussion:

"But was Sir Thomas suggesting that a corrupt heart is not a problem for an academic?"

Posted by Tom at 12:10 AM | Comments (0) |

Baseball Prospectus 2008 is here

Baseball Prospectus 2008 is now shipping, so it's time to order your copy in plenty of time for the beginning of the MLB season. In terms of improving your understanding of baseball, it's the best $14 you can spend.

Given the direction of the Stros over the past two seasons, I was prepared for the BP experts to trash the local club's chances for this season. But it's really not all that bad. BP even kind of likes new Stros General Manager Ed Wade's "win-now strategy," which they characterize as "so crazy that it just might work" in the chronically mediocre National League Central Division.

But even though BP doesn't trash the Stros too badly, the same can't be said BP's treatment of Stros owner, Drayton McLane. Most of BP's overview of the Stros is critical of McLane, such as the following on McLane's revolving door policy with regard to General Managers and Managers:

This front-office turnover has contributed to a fundamental disconnect between the aspiration to contend and what appears to be the preferred means of doing so. Rather than focus on how to contend through improving the personnel in the lineup, the Astros have instead operated for years on the assumption that certain players were building blocks because they liked them, not because of what they actually contributed on the field. When the players in question are Biggio and Jeff Bagwell in their primes, that's fine; when they are Ausmus, Everett, or a completely cooked Biggio, the term "building block" is robbed of its meaning.

Given this mentality, it was really no surprise that the Astros turned 2007 into a supersized Viking funeral for legitimate franchise great Biggio, complete with a team-level self-immolation, and with little but the ashes left to show for it at the end.  .   .

I really can't recommend Baseball Prospectus 2008 too highly. For serious students of baseball, it's 600 pages of pure reading pleasure.

Posted by Tom at 12:08 AM | Comments (0) |

Justice for Perverted Justice?

Earlier posts here, here and here addressed NBC's To Catch a Predator series, in which a television crew cooperates with police and a vigilante justice group to create child predator crimes. Then, the television crew follows the police as they apprehend the suspects, which NBC broadcasts for all to see in a sort of modern version of a witch hunt. This dubious combination of law enforcement and "entertainment" resulted in the tragic case of Louis Conradt, Jr., the late North Texas prosecutor who committed suicide with the witch hunters were on his front doorstep.

Now, this Dan Slater/W$J Law Blog post reports that Condradt’s sister is suing NBC in New York for $100 million, claiming, among other things, intentional infliction of emotional distress. Slater reports that her case has already survived the preliminary motion to dismiss stage of the lawsuit.

I don't know about you, but I hope she rings the bell on NBC.

Posted by Tom at 12:00 AM | Comments (0) |

February 27, 2008

Dick Armey on immigration

I must admit, I never thought that former House Majority Leader Dick Armey would sound like a statesman to me. I was wrong. Watch the video to find out why.

Posted by Tom at 12:10 AM | Comments (0) |

The Hollywood Dome?

It is a reflection of how low my expectations have sunk for rational decisions from Harris County officials. I actually felt a sense of relief that officials do not appear to be taking this seriously:

Lights, camera, action: Dome needs a makeover

The Astrodome was a stage for baseball and football prima donnas to strut their stuff, but it could become a forum for Hollywood stars.

At least that's what would happen if the Houston Association of Entertainment Professionals gets its way.

The association, a new, non-profit group representing film industry workers, has heard that not all county officials support the Astrodome convention hotel plan and has come up with an alternate proposal -- turning the Dome into a film production studio.

"It would bring an entire new economy to Houston," said association president Elise Hendrix. "We should make a home for the film-making industry."

Astroturf and stadium seating would give way to studio space where sets could be built, a film-processing operation that could produce dailies, a 100,000-square-foot, underground sound stage and offices.

Hendrix pitched her idea to the Houston Film Commission, an arm of the Greater Houston Convention and Visitors Bureau, last week.

But she and other association members may appear light on the gravitas needed to have their plan taken seriously. Hendrix, 25, is a professional makeup artist who left the University of Louisiana at Lafayette before graduating. She was a fashion design and merchandising major.

The association doesn't have a web site, only a page on MySpace.

But Hendrix said the association is courting investors who would put up the estimated $50 million to $200 million needed to gut the Dome and turn it into Astrodome Production Facilities. She declined to name investment groups that she is courting.

Willie Loston, director of the Harris County Sports and Convention Corp., which oversees Reliant Park, said the association hasn't contacted him about the proposal.

"Great," he said after learning of it. "They got some money?" [.  .  .]

Given the speculative nature of the Astrodome Hotel boondoggle project, and assuming that the County powers have decided that razing the Dome is political suicide, why aren't County and Texas Medical Center officials figuring out a way to renovate the Dome into the premiere medical training and education facility in the world? Just a thought.

Posted by Tom at 12:05 AM | Comments (1) |

The diversity of Texas

Yes, Texas is a diverse place. It's a part of its charm. But following on this post from yesterday, that diversity does not make it an easy place to get one's arms around.

Posted by Tom at 12:00 AM | Comments (0) |

February 26, 2008

The importance of running a Presidential campaign

On the heels of the Frank Rich/NY Times column castigating the Hillary Clinton campaign team, one of the best business law professors in the U.S. explains why the ability to run a large political campaign is an important qualification of a President:

A virtue of our political system as it is operated today is that it ensures that no one can be elected president who cannot run a major organization. This may not be enough – Bush ran two smooth campaigns but has had more trouble running a war. But it should at least be the price of admission.

And candidates should keep all this in mind before they go bashing "big business." If the candidates can't achieve the same level of competence as the firms they bash in bringing order out of chaos, they should just stay in the Senate and let others do the more important jobs.

Read the entire post. As this Richard Murray post indicates, early voting trends in Texas do not look good for the Clinton campaign.

By the way, did you catch the following Jon Stewart crack during the Oscars?: "Away From Her is about a woman who forgets about her husband. Hillary Clinton called it the feel-good movie of the year."

Posted by Tom at 12:10 AM | Comments (0) |

"Re"-examination?

Kevin Whited over at BlogHouston.net notices a little news you can use from Houston's leading news source:

The Chronicle ran a correction that was notable for its length today:

An article in Feb. 18 editions repeated charges made by Republican candidate for Congress Dean Hrbacek that a law firm, Williams & Jensen, had ties to Jack Abramoff. The article also cited reports that the firm's managing partner, L. Steven Hart, traveled with a group of government officials and lobbyists to Scotland to play golf.

After being contacted by Williams & Jensen concerning the accuracy of the article, the Houston Chronicle's re-examination has revealed that Hart's correct name is J. Steven Hart, that there is no credible evidence that Hart traveled to Scotland with government officials on one of Abramoff's trips or otherwise, and, also, that there is no credible evidence that Williams and Jensen has any "ties" to Abramoff or his lobbying activities.

Gosh, given the results of the Chron's re-examination, where was the research for the original examination performed? Over a beer at the local icehouse?

Posted by Tom at 12:01 AM | Comments (0) |

Going for 13 in a row

It's quite rare that one of my predictions about the Rockets actually comes true. But after disposing of the Chicago Bulls on Sunday night, the hometown team is going for its 13th win in a row tonight (and their 17th in their last 18 games) against the Washington Wizards at the Toyota Center.

Dave Berri breaks down one of the main reasons for the Rockets' streak. Turns out that the best NBA rookie from Texas this season may very well not be former UT star Kevin Durant.

Update: As usual, I spoke too soon. The Rockets' surge just hit a very large speed bump this afternoon. All-Star center Yao Ming is out for the season with a stress fracture in his foot. Dave Berri already assesses the probable impact on the Rockets' season.

Posted by Tom at 12:00 AM | Comments (0) |

February 25, 2008

Thinking about schizophrenia

Two recent NY Times article regarding the vexing nature of schizophrenia, one sad, one hopeful. Let's all hope for more of the latter.

Posted by Tom at 12:01 AM | Comments (0) |

Re-defining TSU

Leave it to new Texas Southern University President, John Rudley. He's not wasting any time before trying to shake things up at the chronically-troubled public university (previous posts here):

Texas Southern University's new president wants to end the school's long-standing practice of accepting all applicants, no matter their academic background, saying the policy contributes to its alarmingly low graduation rate.

President John Rudley said the change is necessary to remake the state's largest historically black university, which has been on the ropes recently because of management missteps, sliding enrollment and bad press.

As noted in this recent post, Rudley has his worked cut out for him in re-defining TSU's mission. The University of Houston-Downtown Campus has far surpassed TSU as the favored open-enrollment institution in the Houston area. Consequently, TSU must redefine itself or face becoming irrelevant. It's not clear to me Rudley's plan is the best one for TSU, but I admire him for his vision. It's badly needed at TSU.

Posted by Tom at 12:00 AM | Comments (1) |

Rate Congress on free trade

Check out this excellent Cato Institute website that allows you to evaluate the voting record of each member of the past six sessions of Congress on free trade issues.

Posted by Tom at 12:00 AM | Comments (0) |

February 24, 2008

"The sand trap from hell"

Don't miss this entertaining José de Córdoba/W$J article on the dour legacy of golf in Communist Cuba and the attempt to revive the game to attract more tourism. Turns out that the game flagged in Cuba after Che' Guevara kicked Fidel Castro's ass in a big golf game shortly after Castro seized power:

In 1962, Mr. Castro lost a round of golf to Ernesto "Che" Guevara, who had been a caddy in his Argentine hometown before he became a guerrilla icon. Mr. Castro's defeat may have had disastrous consequences for the sport. He had one Havana golf course turned into a military school, another into an art school. A journalist who wrote about the defeat of Cuba's Maximum Leader, who was a notoriously bad loser, was fired the next day. [.  .  .]

The famous game between Messrs. Castro and Guevara took place shortly after the Cuban Missile Crisis, according to José Lorenzo Fuentes, Mr. Castro's former personal scribe, who covered the game. Mr. Lorenzo Fuentes says the match was supposed to send a friendly signal to President Kennedy. "Castro told me that the headline of the story the next day would be 'President Castro challenges President Kennedy to a friendly game of golf,'" he says.

But the game became a competitive affair between two men who did not like to lose, says Mr. Lorenzo Fuentes, who recalls that Mr. Guevara "played with a lot of passion." Mr. Lorenzo Fuentes says he felt he couldn't lie about the game's outcome, so he wrote a newspaper story saying Fidel had lost. Mr. Lorenzo Fuentes says he lost his job the next day, eventually fell afoul of the regime and now lives in Miami.

At any rate, Raul Castro has jumped started efforts to rebuild Cuba's golf infrastructure for tourism purposes. But it's not going to be easy. First, there is that whole "private property is a bad thing" problem:

To make golf tourism work, Cuba, which does not recognize the right to buy and sell property, will have to permit leases of as long as 75 years for foreigners, to entice them to invest in the villas and condos on which modern golf development depends. Some believe those leases are the tip of the spear that will, over time, reinstate full property rights. [.  .  .]

If history is any guide, bringing back golf won't be easy. "Cuba is the sand trap from hell," says John Kavulich, senior policy adviser at the U.S.-Cuba Trade and Economic Council, who has followed the travails of entrepreneurs trying to develop golf projects in Cuba.

On the other hand, given how the U.S. golf industry is going, maybe investing in the sand trap from hell is not looking all that bad.

Speaking of Cuba, don't miss this Michael Stasny post (with pictures) on his recent trip to Cuba. He notes at the end of the post:

Cubans don't have access to "world news" (no foreign newspapers, no internet, no satellite dishes), so the people I talked with were actually quite happy with their situation ("We don't earn much, but as opposed to other countries education and health care is for free!" (translation mine)) and couldn't see that people in developed countries who are considered as dirt poor have a way higher living standard (I didn't have the impression that they were afraid to speak openly).

The rest of the trip I stayed on the beach in Varadero, a tourist zone that is closed for Cubans (only those who work there can enter). The hotel was really nice (Iberostar Varadero) and the service was excellent. In case you like being on the beach and food and a fast and cheap internet connection isn't your highest priority, it's the place to be.

Posted by Tom at 12:01 AM | Comments (1) |

February 23, 2008

Thoughts on Rusty and Pettitte

This earlier post was one of the first to express reservations regarding Rusty Hardin's handling of Roger Clemens' defense to the allegations contained in the Mitchell Commission Report (previous posts here) and aftermath, but my reservations are nothing compared to those of Minneapolis attorney Ron Rosenbaum:

No one can really explain the strategy followed here," says Ron Rosenbaum, a local attorney and former talk-radio host on KSTP-AM, a station that still features him all too occasionally. "It strikes me as insane." [.  .  .]

"There's a difference of opinion in this town, but from the very beginning I thought this was a textbook case of how to not handle a legal situation like this," Rosenbaum says of his fellow lawyer, adding with incredulity that Hardin would allow Clemens to submit himself to a lie detector test, which the pitcher has said he would take. "At the end of the day, all you can do is recommend advice as an attorney. You can't tell your client directly what to do."

Rosenbaum is even harder on Clemens, who he characterizes as an ego-driven "buffoon."

I know Hardin, who is a first-rate trial attorney. Thus, unlike Rosenbaum, I'm certain that Hardin has fully advised Clemens in writing of the considerable risks of the strategy that Clemens has undertaken in attempting to defend himself against alleged PED use. Nevertheless, the disastrous Clemens defense strategy to date reminds me of the best advice I used to pass along to young attorneys who I trained: "One of the most difficult, yet important, responsibilities of a good lawyer is to tell a potentially lucrative client 'No'."

Meanwhile, Clemens' former teammate and friend, Andy Pettitte, was widely praised across most of the mainstream media (the Chronicle's Jerome Solomon was a notable exception) for his "honesty" in admitting during a press-conference earlier in the week to use of human growth hormone at several times in the past. Now, I'm not much of one for simplistic morality plays being applied to complex issues such as steroids or other PED use in professional sports and society. Moreover, I certainly don't approve of the way ballplayers such as Pettitte and Clemens have been filleted publicly while Major League Baseball owners have largely received a pass on their culpability for promoting an almost pathologically competitive MLB culture that promotes use of PED's and other drugs. Nevertheless, as this C.J. Mahaney post points out, Pettitte's supposed adherence to his avowed Christian faith during his "confession" leaves much to be desired. Sometimes those simple morality plays aren't quite as applicable as they first appear.

Posted by Tom at 12:00 AM | Comments (1) |

February 22, 2008

Hillary's redemption?

It's rare that I post on politics two days in a row (or even two times in a week, for that matter), but the meltdown of Hillary Clinton's presidential campaign has been one of those fascinating political developments that simply begs for analysis (yesterday's post is here).

David Berg, one of Houston's best trial lawyers and a longtime Democratic Party supporter, provides this insightful op-ed in the Chronicle yesterday explaining why he switched from supporting Clinton to Obama and why Clinton is suffering in comparison to Obama:

I guarantee you, as the oldest living man in America who has actually attended a Hannah Montana concert, my daughter is completely colorblind. From what I have seen of her generation, and that of my grown sons', that is the norm, not the exception. Racial politics simply won't work; not this time — and if all that good will seeps into the wider world — perhaps never again.

I wish, frankly, that the Clintons, who in many ways helped make Obama's candidacy possible, could hear firsthand how they let down so many people who cared about them and supported them through many tough years — how by their divisive tactics they have become the people and politics they deplore.

In short, I wish they could have been there Tuesday night to understand clearly how times and mores have changed and, perhaps, to understand how important it is that a new generation be given a chance.

By the way, on more mundane topics, it appears that Clinton's management ability is not what her supporters crack it up to be. $11,000 on pizza and $1,200 on Dunkin’ Donuts?

Meanwhile, NY Times columnist David Brooks examines the new political syndrome -- Obama Comedown Syndrome (a/k/a "OCS").

Posted by Tom at 12:10 AM | Comments (0) |

Compensation through resort privileges

Check out the renovated digs for the University of Texas baseball team at UFCU Disch-Falk Field in Austin.

Even the most defensible big-time intercollegiate sport is now funneling compensation to its players through "resort privileges." The renovated locker room at Disch-Falk looks better than most university faculty lounges that I've seen.

Posted by Tom at 12:05 AM | Comments (0) |

The oversupply of golf

The numbers of Americans playing tennis regularly has dwindled dramatically over the past two decades. Now, golf is showing signs of suffering a similar fate:

Over the past decade, the leisure activity most closely associated with corporate success in America has been in a kind of recession.

The total number of people who play has declined or remained flat each year since 2000, dropping to about 26 million from 30 million, according to the National Golf Foundation and the Sporting Goods Manufacturers Association.

More troubling to golf boosters, the number of people who play 25 times a year or more fell to 4.6 million in 2005 from 6.9 million in 2000, a loss of about a third.

The industry now counts its core players as those who golf eight or more times a year. That number, too, has fallen, but more slowly: to 15 million in 2006 from 17.7 million in 2000, according to the National Golf Foundation. [. . .]

Between 1990 and 2003, developers built more than 3,000 new golf courses in the United States, bringing the total to about 16,000. Several hundred have closed in the last few years, most of them in Arizona, Florida, Michigan and South Carolina, according to the foundation.

Over the past 20 years or so, many residential real estate developers have used golf courses as magnets to attract home buyers to their developments. The developer is willing to operate the golf club at a loss while developing the subdivision because the increased profit from lot sales easily compensates for the golf club operating loss. The problem develops when the developer finishes selling lots and is ready to turnover the club either to a professional golf club management company or the residents themselves. Without a legacy of profitable operations absent the developer's subsidy, the golf clubs often struggle financially. It's not an easy syndrome to break.

Posted by Tom at 12:00 AM | Comments (0) |

February 21, 2008

Bashing the capitalist roaders

Does it appear to anyone else that Hillary Clinton is getting a bit desperate in attempting to salvage her campaign for the Democratic nomination? Get a load of this:

Sen. Hillary Clinton took a swipe at [investment bankers], suggesting wealthy investment bankers and hedge fund managers on Wall Street aren't doing real 'work.' [. . .]

"We also have to reward work more," Clinton told a small group of Ohio residents today. "and by that, I mean, I have people in New York working on Wall Street as investment managers, as hedge fund executives. Under the tax code, they can pay a lower percentage of their income in taxes on $50 million dollars, than a teacher, or a nurse, or a truck driver in Parma pays on $50,000. That's very discouraging to people." [. . .]

The line about investment fund and hedge fund managers has been introduced into Clinton's talking points as she campaigns across the economically struggling state of Ohio.

Investment bankers are certainly an easy target, but Clinton's statement that they don't do "real work" is either disingenuous or appallingly ignorant. Would Clinton say such a thing about other financial intermediaries such as real estate brokers? Investment bankers working on multi-billion dollar mergers are not all that different from real estate brokers -- they are financial intermediaries who get paid a commission for helping to originate and close deals. In short, they are being paid a fee for arranging a transaction between a willing buyer and a willing seller.

And believe me, for anyone who has ever seen investment bankers work a deal, it's definitely hard work. Finding potential buyers and sellers, persuading them to become involved in a transaction, and making the deal happen amidst the myriad of risks that could undermine it is not a cakewalk. Long hours, the ability to deal with rejection, the uncertainty of the fee until the deal closes, grinding travel and pressurized work conditions are just a few of the hardships that investment bankers endure.

Inasmuch as such work is hard, it's not for everybody. Thus, with really good investment bankers in short supply, they can command high compensation. And the good ones are well worth it. Where else will a seller or buyer find someone with a comprehensive list of direct contacts among potential parties to a transaction and extensive experience getting difficult deals closed? A principal to a transaction is simply renting those contacts and experience and, although often expensive, the investment banker is worth every penny if he or she can pull a deal together for the principal.

The foregoing is pretty basic stuff, so it's alarming that a Senator from a state with more investment bankers than any other would engage in demagoguery over them. John Carney over at Dealbreaker sums up the irony quite well:

"Now being the First Lady for eight years and a Senator from a state in which you've never lived, that's real work."

And lest the Obama crowd get too over-confident with Clinton's increasingly bizarre statements, get a load of this performance by Austin lawyer, former Austin mayor and current Texas state senator Kirk Watson, who has endorsed Obama:

Posted by Tom at 12:10 AM | Comments (2) |

Hope for a hog solution?

Texas' feral hog problem has stymied many a smart scientist over the years, but it appears that the Aggies may have discovered a possible solution(H/T: Craig Malisow)

If you're a land owner and animals such as coyotes or wild pigs are driving you hog wild, help may soon be on the way to control their numbers in a humane way - in the form of a birth control pill for animals being developed at Texas A and M University's College of Veterinary Medicine and Biomedical Sciences. The concept would be to get it to wild animals through baited food, researchers say. [. . .]

n Texas, feral hogs have become a severe nuisance to farmers and ranchers, and the state has an estimated 3-4 million feral hogs, by far the most in the country.

Gig'em Ags!

Posted by Tom at 12:00 AM | Comments (0) |

Looking for other lines of work

So Professor Buser, what did you plan on doing as a side occupation after your expert witness career? Judge Posner wants to know:

Buser’s initial report proposed that if permitted by Allmerica to continue its market-timing trading, Emerald would have earned an annual rate of return on its investment of 34 percent for 20 years, for a discounted present value of $150 million. That was a preposterous estimate, properly excluded by the district judge under Fed. R. Evid. 702. . . .

Buser’s first report was so irresponsible as to justify the judge’s decision to exclude the second report summarily. Buser had demonstrated a willingness to abandon the norms of his profession in the interest of his client. Such a person cannot be trusted to continue as an expert witness in the case in which he has demonstrated that willingness, and perhaps not in other cases either.

Posted by Tom at 12:00 AM | Comments (0) |

February 20, 2008

Maintaining Enron myths

Ever wonder how the mainstream media maintains Enron-related myths?

In reporting on the sentencing hearing later this week in the Enron-related case of the three former UK bankers dubbed "the NatWest Three" (prior posts here), the Chronicle's Kristen Hays observes the following:

In their plea deals, the trio admitted they committed wire fraud in a scheme with Fastow and his top lieutenant, Michael Kopper, to cheat their former London employer, Greenwich NatWest. The bank, which is now part of the Royal Bank of Scotland, had a stake in a Fastow-created partnership and the three men advised their employer to sell that interest for $1 million when they knew its value had grown.

Fastow arranged for Enron to pay more than $19 million for Greenwich NatWest's stake and divided most of the cash among himself, Kopper, the British bankers and others.

Actually, as noted in this earlier analysis of the NatWest Three plea deal, the following is what the former bankers actually pled to:

So, after years of litigation, the NatWest Three pled guilty to a single count of wire fraud. The basis of the guilty plea is that the three bankers failed to disclose to NatWest the [$250,000] option that they had taken from Fastow to purchase a portion of NatWest's interest in Swap Sub at the time that NatWest sold that interest to Southampton [for $1 million]. Importantly, the basis of the plea deal is not that the NatWest Three knew and didn't tell NatWest that the value of the bank's Swap Sub interest was going to skyrocket soon after Southampton bought it as a result of Fastow completing the unwind transaction with Enron.

Read about the real NatWest Three deal.

Posted by Tom at 12:12 AM | Comments (6) |

Born Standing Up

Don't miss this Smithsonian.com excerpt from comedian Steve Martin's new autobiographical book, Born Standing Up: A Comic's Life (Scribner 2007). Take, for example, Martin's hilarious description of the implementation of his novel theory of comedy in one of his initial shows:

A skillful comedian could coax a laugh with tiny indicators such as a vocal tic (Bob Hope's "But I wanna tell ya") or even a slight body shift. Jack E. Leonard used to punctuate jokes by slapping his stomach with his hand. One night, watching him on "The Tonight Show," I noticed that several of his punch lines had been unintelligible, and the audience had actually laughed at nothing but the cue of his hand slap.

These notions stayed with me until they formed an idea that revolutionized my comic direction: What if there were no punch lines? What if there were no indicators? What if I created tension and never released it? What if I headed for a climax, but all I delivered was an anticlimax? What would the audience do with all that tension? Theoretically, it would have to come out sometime. But if I kept denying them the formality of a punch line, the audience would eventually pick their own place to laugh, essentially out of desperation. This type of laugh seemed stronger to me, as they would be laughing at something they chose, rather than being told exactly when to laugh.

To test my idea, I went onstage and began: "I'd like to open up with sort of a 'funny comedy bit.' This has really been a big one for me...it's the one that put me where I am today. I'm sure most of you will recognize the title when I mention it; it's the "Nose on Microphone" routine [pause for imagined applause]. And it's always funny, no matter how many times you see it."

I leaned in and placed my nose on the mike for a few long seconds. Then I stopped and took several bows, saying, "Thank you very much." "That's it?" they thought. Yes, that was it. The laugh came not then, but only after they realized I had already moved on to the next bit.

Now that I had assigned myself to an act without jokes, I gave myself a rule. Never let them know I was bombing: this is funny, you just haven't gotten it yet. If I wasn't offering punch lines, I'd never be standing there with egg on my face. It was essential that I never show doubt about what I was doing. I would move through my act without pausing for the laugh, as though everything were an aside. Eventually, I thought, the laughs would be playing catch-up to what I was doing. Everything would be either delivered in passing, or the opposite, an elaborate presentation that climaxed in pointlessness. Another rule was to make the audience believe that I thought I was fantastic, that my confidence could not be shattered. They had to believe that I didn't care if they laughed at all and that this act was going on with or without them.

I was having trouble ending my show. I thought, "Why not make a virtue of it?" I started closing with extended bowing, as though I heard heavy applause. I kept insisting that I needed to "beg off." No, nothing, not even this ovation I am imagining, can make me stay. My goal was to make the audience laugh but leave them unable to describe what it was that had made them laugh. In other words, like the helpless state of giddiness experienced by close friends tuned in to each other's sense of humor, you had to be there.

At least that was the theory. And for the next eight years, I rolled it up a hill like Sisyphus.

My first reviews came in. One said, "This so-called 'comedian' should be told that jokes are supposed to have punch lines." Another said I represented "the most serious booking error in the history of Los Angeles music."

"Wait," I thought, "let me explain my theory!"

Martin also passes along an interesting observation about longtime Tonight Show host, Johnny Carson. It took some time for Martin to earn Carson's professional respect:

I was able to maintain a personal relationship with Johnny over the next 30 years, at least as personal as he or I could make it, and I was flattered that he came to respect my comedy. . . Johnny once joked in his monologue: "I announced that I was going to write my autobiography, and 19 publishers went out and copyrighted the title Cold and Aloof." This was the common perception of him. But Johnny was not aloof; he was polite. He did not presume intimate relationships where there were none; he took time, and with time grew trust. He preserved his dignity by maintaining the personality that was appropriate for him.

The excerpt also includes Martin's chance encounter with Elvis. Classic.

Posted by Tom at 12:10 AM | Comments (0) |

The faux-analyst

One of the funniest things I read from this past weekend was this W$J article about the earnings conferences calls being crashed by a faux-analyst named Joe Herrick:

At least seven times just the past three weeks, a mystery caller has cleverly insinuated himself into the normally well-manicured ritual of the quarterly calls. As top executives of publicly traded companies respond to securities analysts' questions about their balance sheets, he impersonates a well-known analyst to get called upon. Then, usually declaring himself to be "Joe Herrick of Gutterman Research," he launches into his own version of analyst-speak.

"Congratulations on the solid numbers -- you always seem to come through in challenging times," he said to Leo Kiely, president and chief executive officer of Molson Coors Brewing Co., on Feb. 12, convincingly parroting the obsequious banter common to the calls. "Can you provide some more color as to what you are doing for your supply chain initiatives to reduce manufacturing costs per hectoliter, as you originally promised $150 million in synergy or savings to decrease working capital?"

Analysts say the caller's questions, though credibly phrased, are too off-target for a real analyst. It's more like "consultant-speak," says a disdainful Bryan Spillane, a Banc of America Securities analyst, a victim of one of Mr. Herrick's impersonations. Analysts deal with often-wonky financial details, but "savings per hectoliter" rarely comes up.

But many CEO's have had more trouble telling the difference. Most have gamely tried to answer the questions. Mr. Kiely and two other Molson executives stuck politely with the caller through three detailed follow-ups. Timothy Wolf, the company's global chief financial officer, closed by telling him, "We think we will have some more positive encouraging things to share with you next month in New York," according to a transcript of the call. A Molson spokesman said that to him the caller sounded legitimate at the time. [. . .]

[On the Coca-Cola earnings conference call], Banc of America's Mr. Spillane, the earlier impersonation victim, posed a detailed question about how much of the company's currency-neutral operating profit growth was organic rather than coming from acquisitions or cost savings. "We hesitated on you for a minute because as we take these questions we are just trying to make sure that in fact you are who you say you are," Coke's chief financial officer, Gary Fayard, said before launching into an answer. "I am the real deal," Mr. Spillane replied.

All of which prompted the following crack from Mr. Juggles over at Long or Short Capital:

. . . the best part is that Joe Herrick asked questions that many companies tried to answer because, well, they were the same kind of inane crap questions that they EXPECT from your typical sell-side analyst.

Posted by Tom at 12:05 AM | Comments (0) |

February 19, 2008

Importantitis

Theater critic Terry Teachout made an interesting point the other day in this W$J op-ed about one of the hazards of great achievement relatively early in one's career:

Leonard Bernstein set Broadway on fire in 1957 with "West Side Story," a jazzed-up version of "Romeo and Juliet" in which the Capulets and Montagues were turned into Puerto Rican Sharks and American Jets. It was the most significant musical of the postwar era -- and the last successful work that Bernstein wrote for the stage. His next show, 1976's "1600 Pennsylvania Avenue," closed after seven performances. For the rest of his life he floundered, unable to compose anything worth hearing.

What happened? Stephen Sondheim, Bernstein's collaborator on "West Side Story," told Meryle Secrest, who wrote biographies of both men, that he developed "a bad case of importantitis." That sums up Bernstein's later years with devastating finality. Time and again he dove head first into grandiose-sounding projects, then emerged from the depths clutching such pretentious pieces of musical costume jewelry as the "Kaddish" Symphony and "A Quiet Place." In the end he dried up almost completely, longing to make Great Big Musical Statements -- he actually wanted to write a Holocaust opera -- but incapable of producing so much as a single memorable song.

Teachout goes on to discuss the career of Orson Welles, another performer who peaked early with "Citizen Kane" and then spent the remainder of his career attempting to scale that peak again. Teachout compares Welles and novelist Ralph Ellison to choreographer, George Balanchine:

Contrast Ellison's creative paralysis with the lifelong fecundity of the great choreographer George Balanchine, who went about his business efficiently and unpretentiously, turning out a ballet or two every season. Most were brilliant, a few were duds, but no matter what the one he'd just finished was like, and no matter what the critics thought of it, he moved on to the next one with the utmost dispatch, never looking back. "In making ballets, you cannot sit and wait for the Muse," he said. "Union time hardly allows it, anyhow. You must be able to be inventive at any time." That was the way Balanchine saw himself: as an artistic craftsman whose job was to make ballets. Yet the 20th century never saw a more important artist, or one less prone to importantitis.

I've admired the trait that Teachout notes in Balachine in Texas novelist, Larry McMurtry, who churned out interesting novels and short stories for 25 years or so until he reached the pinnacle of his profession at the age of 50 with his 1985 Pulitizer Prize-winning novel, Lonesome Dove. Even after hitting a grand slam with Lonesome Dove, McMurtry didn't rest on his laurels; he went back to work producing a novel every several years or so. Although many of those novels and other works (the screenplay to Brokeback Mountain, for example) have been highly entertaining, he has not been able to produce a work on the level of Lonesome Dove. The odds are that McMurtry won't (he is 72 now), but my sense is that he is much more likely to do so pursuing his craft the way in which he is doing it rather than sitting around contemplating what the next great American novel should be.

Posted by Tom at 12:05 AM | Comments (0) |

An emerging risk of youth sports

As youth sports become increasingly specialized, a family from The Woodlands is the subject of this Gina Kolata/NY Times article on one of the big risks to children of that trend -- increased torn anterior cruciate ligaments ("ACL"), the main ligament that stabilizes the knee joint:

The standard and effective treatment for such an injury in adults is surgery. But the operation poses a greater risk for children and adolescents who have not finished growing because it involves drilling into a growth plate, an area of still-developing tissue at the end of the leg bone.

Although there are no complete or official numbers, orthopedists at leading medical centers estimate that several thousand children and young adolescents are getting A.C.L. tears each year, with the number being diagnosed soaring recently. Some centers that used to see only a few such cases a year are now seeing several each week.

A friend of mine and I were discussing last week how unfortunate it is that most children these days depend on their parents to organize athletic activities for them rather than simply playing sports informally with neighborhood friends. Increased specialization is the natural evolution of organized sports, which means more games, more practice and more pressure on growing muscles, joints and bones. Not a particularly healthy risk in my book.

Posted by Tom at 12:02 AM | Comments (0) |

Alltop, all the time

Have you checked out Guy Kawasaki's new venture, Alltop? If not, you should. Guy is adding categories and new links frequently, so Alltop is turning into a great launching pad for finding informative blogs on a wide range of topics. Check it out.

Posted by Tom at 12:00 AM | Comments (0) |

February 18, 2008

An interesting headline choice

Kevin Whited and Cory Crow continue to express amazement at the delusional nature of county officials and the Houston Chronicle over the proposed Astrodome hotel project that is now in its fourth year of being bandied about. The latest Chronicle effort to breath life into this boondoggle is this weekend article that carries the following headline:

"Dome plan could bring in millions"

"Report also says hotel would have 72 percent occupancy rate"

More realistically, the headline could have read as follows:

"Dome plan could cost County millions"

"Report says that hotel would have only 72 percent occupancy rate"

All depends on one's point of view, eh?

Given my extensive blogging on this boondoggle, I won't go into all the reasons why converting the Astrodome to a destination hotel is unlikely to happen without a large public subsidy. Suffice it to say that if private financing for Astrodome hotel could not be arranged over the past several years when the market for such financing was quite good, then it's not going to happen in the foreseeable future now that credit and equity markets have pulled back from such speculative investments. So, if this deal is going to proceed, then get ready to provide a bountiful public subsidy for it.

However, one name mentioned in the Chron story reminded me of an instructive legal matter I handled back in the mid-1980's. The matter involved an Astrodome-area hotel that had been promoted to investors and built immediately before the bottom fell out of the local commercial real estate market when the price of oil and gas tumbled to record lows at the end of 1985. I ended up representing the promoters, who had guaranteed a large portion of the construction financing on the hotel.

During the year or so that my clients owned the hotel, it never came close in any month to generating enough revenue to cover the operating expenses of the hotel, much less generating anything for my clients to use to pay debt service on the construction financing. Not surprisingly, the bank eventually foreclosed on the hotel. The promoters and investors lost their entire investment in the hotel.

Guess who the consultant was who prepared the glowing feasibility study that helped persuade my clients to promote and finance that boondoggle?

Yup. John Keeling.

Posted by Tom at 12:10 AM | Comments (0) |

BP's PECOTA projection for the 2008 Stros

The sabermetricians over at Baseball Prospectus have developed a statistical system for projecting baseball player performance called PECOTA, which is short for "Player Empirical Comparison and Optimization Test Algorithm." PECOTA player performance based on comparison with thousands of historical player-seasons and analyzes similarities with past player-seasons based not only on rate statistics, but also height, weight, age, and many other factors. It is a remarkably accurate predictor of player performance.

BP annually prepares PECOTA projections on each Major League and minor league ballplayer, so it is a simple process to aggregate those individual numbers and project how each MLB team will do. BP's projection for each MLB Division in the 2008 season is here ($), although you will have to subscribe to BP to review the entire PECOTA projections.

Not surprisingly, BP projects the Stros to finish 74-88 (or one game better than last season), good for fourth in the NL Central behind the Cubs, Brewers and Reds. PECOTA projects the Stros' hitting to continue to be league-average with no meaningful improvement in the abysmal pitching that the club endured last season.

Well, at least we'll have the Craig Biggio number retirement ceremony to look forward to. ;^)

By the way, Baseball Prospectus 2008, BP's annual book that is the best source of knowledge about baseball, is scheduled to be published in the next week or so. If you enjoy following baseball, then I highly recommend it.

Posted by Tom at 12:05 AM | Comments (0) |

Local college hoops update

Normally, when a team shoots 4-12 from the field on two-point goals in a college basketball game, that's a pretty good indication that they were thoroughly throttled by the other team.

Unless, that is, the team shoots 18-43 on three-point goals during the same game. Which is what the Houston Cougars did this past Saturday night in pummeling SMU by 22.

The Cougars are now 19-5 (8-2 in Conference USA) and, absent a bad streak at the end of the regular season, appear to be a good bet to make their first NCAA Tournament appearance since the 1991-92 season. The Coogs' RPI has settled at 50 for the time being, which should be good enough to qualify for the NCAA tournament so long as the team maintains that RPI for the remainder of the season. Remarkably, it has now been almost a quarter century since the storied University of Houston basketball program last won an NCAA Tournament game.

Meanwhile, down on South Main, Chronicle columnist Jerome Solomon agrees with me regarding Rice basketball coach Willis Wilson. As noted in my earlier post, if Rice fires Wilson before he has had an opportunity to recruit players to -- and have his teams compete in -- a reasonably modern facility, then Rice will make the hypocrisy of former Rice football coach Todd Graham look benign in comparison. Besides, does the Rice Administration really want the Marching Owl Band to have an opportunity to comment on such an unfair firing?

Posted by Tom at 12:00 AM | Comments (1) |

February 17, 2008

Letterman on body painting

David Letterman discusses body painting with Sports Illustrated cover girl Marisa Miller, who is a good sport about it all.

Posted by Tom at 12:00 AM | Comments (0) |

February 16, 2008

A lingering question about Refco

So, Refco's former CEO and chairman Phillip Bennett pled guilty late Friday in a Manhattan federal court to fraud and other charges stemming from the 2005 collapse of the company (previous posts here). Peter Henning analyzes the plea here.

Bennett's guilty plea appears to have been prompted by the plea deal last December of Santo C. Maggio, Refco's former executive vice president, who was expected to testify against Bennett and the other Refco-related criminal defendants, former Refco executives Robert C. Trosten and Tone N. Grant, and former Mayer Brown partner and primary Refco outside counsel, Joseph P. Collins. Trosten and Grant's case is scheduled to go to trial in March.

Although not entirely unexpected, Bennett's guilty plea nevertheless leaves hanging the most intriguing question about the entire Refco affair:

Why on earth did Bennett ever take Refco public?

Let's recall the story. Refco -- a well-known Wall Street commodities and futures trading broker -- filed a chapter 11 case in mid-October 2005 a week after the company announced that a $430 million debt owed to the company by a firm controlled by Bennett had been concealed and then repaid by Bennett. Refco's board placed Bennett on indefinite leave and he was arrested on federal securities fraud charges shortly thereafter.

The indictment against Bennett alleged that Refco suffered hundreds of millions of dollars in bad debts in the late 1990's as a result of customer trading losses. The customers were unable to make good on the losses, so Refco was left on the hook because it had extended credit to the customers. Rather than making Refco's financial condition look less healthy by writing off the losses, Bennett allegedly had the losses assumed by a company that he owned and controlled -- Refco Group Holdings, Inc. ("RGHI") -- and then hid that fact from auditors and investors on multiple occasions by arranging the following series of transactions.

First, a Refco subsidiary -- Refco Capital Markets, Ltd. -- would make a short term loan (usually, about a two week term) in various amounts ranging from $325 million to $720 million to a third party, Liberty Corner Capital Strategies.

Liberty Corner would simultaneously make a short term loan to Mr. Bennett's company (RGHI) in the same amount and with the same maturity of its borrowing from Refco Capital (but at a slightly higher interest rate), and Refco the parent would guarantee RGHI's payment of the loan to Liberty Corner.

RGHI would then use the loan proceeds from Liberty Corner to pay Refco the amount of its related party indebtedness at the time shortly before the end of an upcoming Refco reporting period. Inasmuch as the debt was paid prior to the end of the reporting period, Refco's auditors did not report the amount of RGHI's previous indebtedness to Refco as related party indebtedness.

Finally, upon maturity of the two short term loans (which was timed to occur after the end of Refco's reporting period), the loans were "unwound" (apparently without telling Refco's auditors) so that RGHI was put back in the position of owing the same amount of related party indebtedness to Refco that it owed before it borrowed the money from Liberty Corner.

This arrangement apparently continued each quarter even after Thomas H. Lee Partners paid $500 million for a 38% stake in Refco in 2004 and even while the company was preparing its IPO, which took place in August, 2005. Less than two months after going public, the above-described scheme was exposed publicly, Refco proceeded to plunge into bankruptcy and Thomas H. Lee Partners' investment in the company went up in flames.

But why did Bennett take the considerable risk of having the scheme exposed under the microscope of taking Refco public and operating it as a public company? Had the fraud been discovered while Refco was a private company, matters probably would have turned out much differently for both Refco and Bennett. Bennett almost certainly would have been forced to resign, but the company would have been under no obligation to disclose the resignation publicly and, if it was disclosed at all, probably would have been described in the euphemistic manner of “pursuing other opportunities.”

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

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

Now, compare what happened after Refco went public. The scheme was discovered almost immediately by the company's auditors, Refco's board was obligated to report what it concluded immediately to both the market and criminal authorities, Refco proceeded to go through an Enronesque experience and filed bankruptcy, Bennett was indicted, and Thomas H. Lee Partners lost over $300 million on its Refco investment. Meanwhile, Refco's creditors and investors are seeking hundreds of millions dollars in damages from Refco’s board, Refco's auditors (Grant Thornton) and the underwriters of the Refco IPO.

Did Bennett take Refco public simply because he was greedy, wanted to cash out on the IPO, and thought he could continue to cover-up the fraud? Maybe, but it doesn't seem likely. Did he lose control after taking in the Thomas H. Lee Partners investment and developments just overwhelmed him? Perhaps, but I'm still scratching my head on this one. Something doesn't add up. I am definitely staying tuned.

Posted by Tom at 12:00 AM | Comments (1) |

February 15, 2008

A solid endorsement

I've been enjoying the new local blog Life at the Harris County Criminal Justice Center, which, along with Mark Bennett's blog, provides an interesting daily glimpse of life around the Harris County criminal courthouse. Given the twists and turns of the recent Le Affaire Rosenthal, both blogs have had interesting observations about the players.

In this recent post, the HCCJC blog makes the following common sense endorsement that I hope all Harris County voters will embrace:

In the 176th [Criminal District Court] Judical Race, there is no issue in picking who I recommend.

The race is between Michele Saterelli Oncken and incumbent Brian Rains.

Judge Rains has been on the bench ever since I've been a lawyer. And ever since I've been a lawyer he has had the reputation of being one of the rudest and most unkind judges on the bench since . . . well, Pat Lykos.

He claims that Michele Oncken is running against him "because I made her husband mad."

If only it was that simple, Judge Rains. The fact is that you've upset everybody.

The rudeness from this bench has gone well beyond the boundaries of being a "tough judge", and into the range of just absurd vindictiveness. The fact that a person is a jerk to both sides of the bar doesn't make that person any less of a jerk.

Throughout the years, Rains has steadfastly refused to put people on probation. When probations were agreed to, he would passive-aggressively agree to the probation, but throw in 180 days in the Harris County Jail as a condition (thus nullifying the point of giving probation). He has sworn he considers the full range of punishment on any PSI hearing, but all attorneys know that it just isn't true.

Rains' refusal to consider the full range of punishment has led to more recusal hearings than any other judge that I'm personally aware of. One hearing even had the unlikely alliance of the District Attorney's Office and Dick DeGuerin.

His questionable bond decisions have led to at least two tragic murders committed by people out on bond in his court. His impatience with the pace of a trial has led to at least one capital murder conviction being reversed.

Michele Oncken was the Chief in his court for a year or two. Normally, the Chief/Judge relationship is one of some sort of fondness (or at least mutual respect). The fact that she is running against a Judge where she was previously a chief says a lot, in and of itself. She's been a Chief prosecutor for at least five years now, including stints in Capital Writs, District Court, and now in Juvenile. She certainly has the background for the job.

Sorry, Judge Rains, but its definitely time for you to go. Nobody deserves to be treated the way that you treat people.

Review this earlier post for more information on Judge Rains' dubious sentencing policies.

Posted by Tom at 12:10 AM | Comments (0) |

Cooling heads over the Ashby high-rise

So, Mayor White has figured out that his ostentatious initial position and statements regarding the proposed Ashby high-rise project weren't such a good idea, after all:

The city risks exposing itself to a "takings lawsuit" if it passes a new restrictive ordinance after the Ashby developers submit permit applications or site plans, Festa explained. The developer could argue that the city changed the rules after the fact, taking away value from their property.

White acknowledged that problem Wednesday.

"There are some legal doctrines that you can't change the rules in the middle of the game, once somebody has filed certain things," he said.

Well, better late than never that Mayor White has realized that it's not a good idea to change the rules in the middle of the game on businesspeople who are risking millions of dollars in developing real estate.

As noted earlier here, the key issue with regard to the Ashby high-rise is not increased traffic generated by the project, which is nominal. Rather, the key issue is the scale of the project in relation to the rest of the surrounding neighborhood. That's what should be the focus of the debate over the new ordinance. Clear Thinkers' favorite Houston urban policy wonk -- Tory Gattis -- agrees.

Posted by Tom at 12:05 AM | Comments (0) |

The Southwest Airlines culture

While Continental Airlines continues its speculative merger dance with United Airlines, Southwest Airlines continues to be the most profitable company in the U.S. airline industry. This Jeff Bailey/NY Times article reports on the unique culture of Southwest that makes it an unlikely merger partner within the current round of consolidations in the airline industry. On the other hand, that special culture may also explain why Southwest is routinely the most profitable U.S. airline.

Posted by Tom at 12:00 AM | Comments (0) |

February 14, 2008

The DOJ loses another Enron criminal case

As expected, the Fifth Circuit denied the government's appeal yesterday of U.S. District Judge Vanessa Gilmore's decision to vacate the final count of the government's odious five count conviction against former Enron Broadband CFO Kevin Howard. The Fifth Circuit's decision affirmed Judge Gilmore's decision to vacate the only remaining count of Howard's conviction on which the prosecution had not already tossed in the towel. Ellen Podgor provides her usual excellent analysis of the decision.

With the Fifth Circuit's decision, the stage is now set for the Department of Justice's decision as to whether to try Howard for the third time on the same charges. One would hope that prosecutors would leave well enough alone, but don't count on it. This is an Enron-related prosecution, after all.

Meanwhile, far from Houston in Hartford, the DOJ continues to assert essentially the same case against three former General Reinsurance executives and an AIG executive that has been thrown out against Howard and also the four former Merrill Lynch executives in the equally reprehensible Nigerian Barge case (see also here and here). The defendants represented their company in the negotiation of a legitimate business transaction that was evidenced by a written agreement that provides that all agreements or representations between the parties that are not contained in the written agreement are void and unenforceable. But that's not what really happened, says the prosecution. The defendants entered into "secret side deals" that changed the risk allocation of the written agreement and eviscerated the company's accounting treatment of the transaction. Pay a couple of witnesses to testify against the defendants by cutting favorable plea deals with them and "presto" -- we've got a criminal case against some wealthy executives. Shattered lives, families and careers be damned.

This process is not one that a truly civil society would embrace.

Posted by Tom at 12:10 AM | Comments (0) |

The aftermath of the Clemens hearing

Many folks have been asking me about my thoughts on the Roger Clemens saga, but I am so disappointed with the abysmal level of discourse regarding the Mitchell Commission Report and the issues involved with the use of steroids and other PED's in society that I find it hard to drum up much enthusiasm for addressing it. Compare the discussion of the issues from this earlier post with this live blog analysis of the questions and answers from Clemens hearing and you will see what I mean. Sort of makes you want to whipsaw the committee in the same manner as this Colman McCarthy/Washington Post op-ed, doesn't it? Art DeVany expresses similar sentiments.

Although I expressed reservations early on about the unconventional way in which Clemens' legal team has been defending the matter, I don't think the hearing measurably increased Clemens' risk of being charged criminally. In fact, in an odd way, the hearing may have actually mitigated that risk somewhat.

McNamee came across as such a manipulator that my sense is that it's doubtful that prosecutors would base a criminal case against Clemens primarily on McNamee's testimony. Thus, unless investigators come up with a conduit of the PED's who is willing to testify that the PED's were delivered to Clemens and McNamee, Clemens may avoid criminal charges. He is certainly not out of the woods yet, but the Congressional hearing probably hurt him more in the court of public opinion than it did with regard to a potential criminal case (Update: Peter Henning agrees with me).

Nevertheless, I'm not yet ready to bet on that prediction. At least without long odds in my favor.

Posted by Tom at 12:05 AM | Comments (1) |

The charming Bobby Knight

And Larry the Cable Guy's crack on Coach Knight is pretty good, too.

Posted by Tom at 12:00 AM | Comments (0) |

February 13, 2008

Criminalizing Capitalism

If I didn't know better, I'd say that Nicole Gelinas has been reading (H/T Professor Bainbridge) my blog over the past several years:

[I]n the end, Sarbanes-Oxley has just made it easier for ambitious government attorneys to criminalize bad business judgment and complex accounting in hindsight. Further, in their focus on strengthening legal enforcement, the feds have passed up opportunities to create commonsense protections for investors. Worse still, the government has instilled investors with false confidence by implying that they can rely on prosecutors, not prudence, to protect their market holdings. Now the housing and mortgage meltdown—which could hurt the economy far more than Enron did—is reminding investors that no law or regulation can protect them from economic disruption. [. . .]

As the economy heads into a possible downturn, calls will grow for someone to pay for the pain of another burst bubble—and for yet more onerous rules, regulations, and prosecutions of businesses to prevent future crises. But no government mandate or punishment, however harsh, will stop companies and markets from being imperfect collections of fallible human beings. At the end of a decade of financial surprises, that may be the most enduring lesson of all.

As I noted here almost three years ago and have reiterated many times, the truth about Enron is that no massive conspiracy existed, that Jeff Skilling and Ken Lay were not intending to mislead anyone and that the company was simply a highly-leveraged, trust-based business with a relatively low credit rating and a booming commodities trading operation. Although there is nothing inherently wrong with such a business model, it turned out it to be the wrong one to survive amidst the perilous post-tech bubble, post-9/11 market conditions. Thus, when the markets were spooked by revelations of the embezzlement of several millions by Enron's CFO and his relative few minions, the company failed.

However, Gelinas is spot on in observing that Enron's failure was not a market failure. That Jeff Skilling failed to predict that Enron would fail is not a crime. Unlike his main accusers Andy Fastow and Ben Glisan, Skilling didn't embezzle a dime from Enron. Did he tirelessly advocate on behalf of this innovative company? Sure, but since when is it a crime for a CEO to be optimistic -- even overly-optimistic -- about his company?

The primary justification for the absurdly-long sentence handed to Skilling 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 nothing is wrong with 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 failed 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. Most likely, many of the investors simply did not understand how Enron's risk management services created their wealth in the first place.

Beyond the shattered lives, families and careers, the real tragedy of the post-Enron demonization of business is that it has distracted us from examining the tougher issues of what really causes the demise of a company such as Enron and understanding how such a company can be structured to survive in even the worst market conditions. It's easy to throw a good and decent man such as Jeff Skilling in prison for most of the rest of his life, throw away the keys and simply attribute Enron's failure to him. It's a lot harder to try and understand what really happened.

Posted by Tom at 12:10 AM | Comments (3) |

On the DeGeurin-DeGuerin brothers and Houston's G-man

A couple of interesting stories have popped up over the past several days regarding Houston lawyers.

First, there was Mary Flood's profile of the DeGuerin (or was that DeGeurin?) brothers, Mike and Dick, two of the best in Houston's formidable criminal defense bar. The criminal defense bar in Houston has essentially branched out from two extraordinary criminal defense lawyers, the late Percy Foreman and Richard "Racehorse" Haynes. Mike and Dick are from the Foreman tree, while such excellent Houston criminal defense lawyers as Dan Cogdell and Jack Zimmermann stem from the Haynes tree. A good follow-up story for Flood would be to track the number of first-rate criminal defense lawyers in Houston who have been influenced by Foreman, Haynes and their many acolytes.

Meanwhile, not to be outdone, this ABA Journal article profiles Houston's $1,100-per-hour lawyer, Stephen Susman. As noted earlier here, Susman has long contended that that he charges in excess of a grand per hour "to discourage anyone hiring me" on an hourly basis. As they say in legal circles, Susman prefers cases with a bit more meat on the bone.

Posted by Tom at 12:05 AM | Comments (1) |

The psychotherapist-patient privilege

Gosh, as if Paul the psychotherapist, Gabe Byrne's character in the new HBO series, In Treatment, didn't have enough to worry about.

The Fifth Circuit Court of Appeals has just issued this interesting opinion on the psychotherapist-patient privilege in the case of former Austin police officer, John Auster (H/T Robert Loblaw).

Auster suffers from paranoia, anger, and depression, so the stress of the impending termination of his worker’s comp benefits was not exactly conducive to improvement of those conditions. Auster proceeded to tell two of his therapists that he was prepared to undertake a campaign of violence if his benefits were terminated. Inasmuch as the therapists had a duty under state law to report the threats, the U.S. Attorney's office indicted Auster for extortion.

On a defense motion to suppress Auster's threatening statements, the District Court threw out Auster’s threats on the grounds that they were protected by the psychotherapist-patient privilege and not admissible at trial. The government appealed and the Fifth Circuit reversed, reasoning that Auster knew that his therapists had to report the threats and so he had no expectation that the threats would remain confidential. Accordingly, the Fifth Circuit concluded that such threats are not privileged. As Loblaw points out, there is now a split among the circuit courts over the the psychotherapist-patient privilege, with the Fifth joining the Tenth Circuit in not recognizing the privilege, while the Sixth and Ninth Circuits recognize the privilege.

Posted by Tom at 12:00 AM | Comments (1) |

February 12, 2008

Lerach's sentence

Former plaintiff's class action securities lawyer Bill Lerach was sentenced yesterday to two years in prison, fined $250,000 and ordered to complete 1,000 hours of community service (Peter Lattman's W$J interview of Lerach is here and more W$J coverage of blawgosphere reaction is here). Lerach pled guilty last September to a felony count of conspiring to obstruct justice and to submit false testimony in federal judicial proceedings after being investigated by the Department of Justice for the better part of a decade.

My posts from over the years on Lerach and the investigation into his practice are here, and my latest posts summarizing my views on his plea deal are here and here. Along similar lines to the thoughts expressed in this post from yesterday, Larry Ribstein cautions those who take satisfaction in watching Lerach's fall from the pinnacle of the plaintiff's class action securities bar:

What many call their “greed” is what moves the market’s invisible hand and what has . . . generated so much public good for our financial markets. Both financial innovations and legal innovations may be taken too far, but this doesn’t negate their positive aspects and the need to encourage them.

That’s not an excuse for wrongdoing. If laws have been broken the violators should be sent away. But we should be aware that the excesses of prosecutors can cause at least as much, and possibly more, harm than the excesses of financial speculators.

Posted by Tom at 12:10 AM | Comments (0) |

Bill King's "Let'em ride free plan"

Longtime Houstonian Bill King is a common sense fellow who serves on the Transportation Council, a group of elected officials and agency staffers that sets priorities for transportation spending in the 13-county Gulf Coast region. In this Chronicle op-ed from over the weekend, he reviews the Metro light rail system's horrific ridership numbers (previous posts here) and concludes that -- given the massive sunk costs invested in the light rail system -- the ridership numbers are so bad that it makes economic sense to attempt to increase ridership by simply allowing riders to use the system free-of-charge:

Today, the Metropolitan Transit Authority reports slightly under 300,000 daily "boardings." Because of transfers, it is a little bit of guesswork to determine how many commuters are actually using transit. But it is probably something in the 120,000-130,000 range. For every commuter we can convince to take a train or bus to work, we get one car off our roads. That means less congestion and fewer emissions and collisions. Clearly a good thing.

Metro has developed a far-ranging, multibillion-dollar plan dubbed Metro Solutions that it hopes will increase transit ridership. Phase 2 of that plan consists of five light rail lines and will cost about $2.2 billion. The ultimate cost will undoubtedly be higher. Metro projects that its Phase 2 lines will have about 140,000 daily boardings. However, these lines will replace existing bus service along the same routes, so not all of the boardings will represent an increase in transit ridership. The net increase on the Main Street line from switching to light rail has been about 19 percent.

If this ratio holds on the Phase 2 lines, we should pick up an increase in daily boardings of about 20,000 to 30,000 or something like 10,000 to 12,000 new transit riders. This is a very small increase compared to well over 1 million daily commuters in Houston.

The traffic models indicate that this relatively small increase will be about offset by the lost street lanes the rail lines will use and the scores of new street level crossings. As a result, there will be no meaningful reduction in traffic congestion from the Phase 2 lines. [. . .]

. . . Metro recovers a very small percentage of its costs through fares. In fiscal year 2006, Metro only collected about $54 million in fares compared to $435 million in operating expenses, or only about 12 percent. That is because Metro gets the overwhelming majority of its funds from a 1 percent sales tax. And Metro is currently enjoying a boom in its sales tax revenues. In the past two years, sale tax receipts have increased by approximately $84 million and are on track this year to increase almost another $40 million. Metro currently is sitting on nearly $400 million in cash, receivables and short term investments.

Also, Metro spends about $5 million a year collecting its fares and advertising, expenses that could be dramatically reduced if fares were eliminated. So eliminating fares would probably only cost us around $50 million annually. [. . .]

Elimination of fares is not an end game solution. There is still a pressing need for expanded transit service throughout the region. But going to a fare free system may be a way to jump-start a new transit paradigm. With a larger transit constituency, public support for new programs may grow.

The nice thing about the idea is that it is not irrevocable. If it does not result in the hoped for benefits, we can always reverse course and try something else. Houston's transit program has been log-jammed for years with no end in sight. Personally, I am ready to try something different, even if it is a little "out of the box."

Bill King is a good sport and I give him credit for attempting to make the best of a terrible investment. He is not attempting to justify the construction of Phase 2 of the light rail system by eliminating fares (that would be impossible); he simply references Phase 2 to make the point that eliminating fares would have a bigger impact on ridership at a much lower cost. Most of the benefit of his proposal would probably come from eliminating fares on the Park & Ride system and using the system's unused bus capacity.

However, thinking "outside the box" in the face of these numbers (10-12,000 more daily light rail transit riders in return for a $2.5 billion investment?) calls for something far more than just "let'em ride free." Indeed, you could quadruple that increase in daily ridership and it would still be an extremely poor return on investment of public funds.

A more appropriate response in the face of such a poor cost/benefit ratio is to cut the losses altogether, halt the light rail project where it stands and either return the public capital at Metro to the taxpayers or use the funds on something that will truly benefit a substantial portion of the area citizens (flood control or more flexible area-wide bus transit, maybe?). Just how much money will Houston's political leaders allow Houston-area residents to blow before exhibiting true leadership on the colossal light rail boondoggle?

Update: The Chronicle's transit columnist, Rad Sadlee, comments here on King's op-ed.

Posted by Tom at 12:05 AM | Comments (0) |

Guilty verdict in the latest natural gas trader case

We in Houston have become so jaded by dubious prosecutions of businesspeople that the guilty verdict in the latest natural gas trader case passed almost unnoticed late last week. The Department of Justice's press release on the verdict is here, and the article of Tom Fowler -- the Chron reporter who has done a good job of following these the trader cases -- is here. My previous posts on the natural gas trader cases are here.

What is particularly troubling about the result in this particular case is that three relatively young men (the oldest of the three defendants is 48) with families and (at least up to this trial) excellent careers are now facing effective life prison sentences for essentially lying to a magazine. The prosecution's alleged that the three traders provided false information to natural gas industry publications such as the Inside FERC Gas Market Report, which uses data from traders to calculate the index price of natural gas. Inasmuch as movement in index prices can theoretically affect the level of profits that traders can generate, the government's theory was that the defendants provided false information so that they and their employer -- El Paso Natural Gas Co. -- could reap higher profits.

However, it remains unclear whether the magazines actually used the false information that the defendants provided to them or that the false trades actually affected the markets at all. No problem for the prosecution, though. The government contended that the market effect of providing the false information was irrelevant and that it only needed to prove that false information was reported to the magazines in order to make a case against the defendants.

So, key point to all of you businesspeople out there -- don't ever provide any false information to a publication. It really doesn't make any difference whether the false information affects your business. The transmittal of false info is the crime.

I wonder if that applies to movie stars and tabloids, too? ;^)

As Fowler reports in his article, this was the second trial in what has been a five-year investigation of natural gas trading practices by Houston-based federal prosecutors and the Commodity Futures Trading Commission. A dozen Houston-area traders have been criminally charged in the trader cases and half of those have plea guilty. Two others -- former Dynegy trader Michelle Valencia and former El Paso trader Greg Singleton -- were convicted on several wire fraud counts but were acquitted on false reporting charges in 2006. They are still awaiting sentencing.

Posted by Tom at 12:00 AM | Comments (0) |

February 11, 2008

The winds of prosecutorial power

When the Department of Justice decided to prosecute Arthur Andersen out of business despite a manifestly weak case, that confirmed that the creation of enormous wealth for thousands of employees and an impeccable reputation built over decades of fine work provide no insulation these days from the excesses of an rapacious prosecutor's judgment.

Then, the DOJ decided to misapply a criminal law to prosecute several former executives of the social pariah Enron, which a vacuous mainstream media applauded without nary a mention of the dreadful implications that such a misuse of the state's overwhelming prosecutorial power portends.

Given this backdrop, it was not particularly surprising that the government threatened to put large employers out of business unless they served up a few employees for the government to prosecute. Or that the government turned its prosecutorial power on the business news media as well as almost everything else. In the meantime, some of the leading purveyors of this prosecutorial campaign of abuse were being rewarded for their actions and competing for the highest offices in the land.

But now the government is turning its prosecutorial power toward pillars of the legal profession, first with regard to a Mayer Brown partner who performed work for Refco and more recently with regard to Ben Kuehne, who has long been one of the most-admired lawyers in the Miami legal community. Ellen Podgor analyzes the implications of the Kuehne indictment and Ashby Jones adds more context here.

So, after much of the legal profession has stood by for years while prosecutors trampled the rule of law in criminalizing unpopular business executives, where does the profession now "hide [with] the laws all being flat?." Will the profession be able to stand upright in the winds of prosecutorial abuse that are blowing now? Stay tuned.

Posted by Tom at 12:10 AM | Comments (0) |

Comparing Tiger's swing with Hogan's

In comparing the swing of Tiger Woods with that of Ben Hogan in this Links Magazine article, long-time golf teacher Bob Toski makes the following observation about how changes in the nature of golf have prompted swing changes:

One year at the Masters, Hogan drove the ball over a hill to a small flat spot tucked in the corner of the fairway, not visible from the tee but providing a perfect angle to the green. Hogan placed his drive in that tiny area all four days. Most tour pros today would have trouble hitting that spot four days in a row with a wedge.

Toski concludes that Hogan's swing is superior to Woods, but that Woods is such a good athlete that he doesn't need a Hogan-pure swing to dominate the PGA Tour. Check out the entire article.

Posted by Tom at 12:05 AM | Comments (0) |

Vetting the Trans-Texas Corridor

This Ralph Blumenthal/NY Times article does a good job of summarizing the massive scale that is the proposed Trans-Texas Corridor project:

. . . the Trans-Texas Corridor, a public-private partnership unrivaled in the state’s — or probably any state’s — history, that would stretch well into the century and, if completed in full, end up costing around $200 billion. [. . .]

The plan envisions a 4,000-mile network of new toll roads, with car and truck lanes, rail lines, and pipeline and utilities zones, to bypass congested cities and speed freight to and from Mexico. [. . .]

The corridor project grew out of the 2002 governor’s race when [Governor] Rick Perry, . . . surprised transportation experts by taking ideas they had discussed a decade earlier, to little interest, and “supersizing them,” as one recalled.

The project grew to consist of four “priority segments:” new multimodal toll roads up to 1,200 feet wide paralleling Interstates 35 and 37 from Denison in North Texas to the Rio Grande Valley; a proposed I-69 from Texarkana to Houston and Laredo; I-45 from Dallas-Fort Worth to Houston; and I-10 from El Paso to Orange on the Louisiana border. But the exact routes are years away from being designated.

Posted by Tom at 12:00 AM | Comments (0) |

February 10, 2008

Pictures from Houston's neighborhoods

Robert Boyd is a Houston-based blogger who regularly tours Houston neighborhoods and posts interesting pictures and comments on his adventures. His latest tour is the neighborhood just north of downtown, and his dozen or so other tours are here. Check them out and learn a bit more about some of the hidden treasures of this fascinating city.

Posted by Tom at 12:59 AM | Comments (0) |

February 9, 2008

Elevating form over substance

The McCain-Feingold campaign finance bill was not John McCain's finest hour. John Lott makes a good point about the utter hypocrisy of it all in connection with the Clintons' recent loan to Hillary's cash-strapped campaign:

Former President Clinton stands to reap around $20 million -- and will sever a politically sensitive partnership tie to Dubai -- by ending his high-profile business relationship with the investment firm of billionaire friend Ron Burkle. . . .

Obviously Clinton has gotten a lot of money from other sources, so there is no need to single out Burkle, but Burkle obviously can't donate $10 or $12 million to Clinton's campaign. Yet, if he pays Clinton for work that isn't very obvious, Clinton can then turn around and spend it on a campaign. Does it really matter that Burkle can't give the money directly to Clinton?

Posted by Tom at 12:00 AM | Comments (0) |

February 8, 2008

Another Enron Task Force alum rings the bell

Fresh off his victory in the Joseph Nacchio trial, former Enron Task Force prosecutor Cliff Stricklin is the latest former Enron Task Force prosecutor to land a cush job at a big firm. Sean Berkowitz and Andrew Weissmann, among other Task Force prosecutors, cashed in earlier.

The puff piece announcing Stricklin's new job left out a few details of his work with the Enron Task Force. Stricklin was one of the lead prosecutors during the first Enron Broadband trial in which the Task Force was caught eliciting false testimony from one of the Task Force's main witnesses (Ken Rice) and threatening two defense-friendly witnesses, Beth Stier and Lawrence Ciscon. During the trial, U.S. District Judge Vanessa Gilmore angrily cut off Stricklin from further cross-examination of one of the defendants and rebuked him in open court when Stricklin violated one of the Judge's limine orders.

That trial -- which appeared to be a tap-in for the Task Force at the outset -- ended in a crushing defeat for the Task Force. Stricklin parleyed his work in the Broadband case into a role on the prosecution team in the Lay-Skilling trial, where he proceeded to give a lesson in what not to ask on re-direct. That performance led to his appointment as the lead prosecutor in the Naccio case.

So, as Jeff Skilling fights for freedom from what amounts to a barbaric life sentence and many other lives have been shattered by the work of the Enron Task Force, the folks who cut corners to achieve those results are doing quite well, thank you. Given the dismal track record and the dubious tactics of the Enron Task Force, it makes one wonder just what these big law firms would have offered up to former Task Force members if they had done a really good job?

Posted by Tom at 12:10 AM | Comments (0) |

The Dear Abby of business

Lucy Kellaway, Financial Times columnist and associate editor, pens an entertaining blog called Dear Lucy in which she solicits letters from businesspeople about various business problems. Sometimes she comments on them, but all the time she opens them up to reader comments, which range between the insightful, hilarious and bizarre. The following is last week's letter:

I recently submitted an expense report following a routine trip to Frankfurt. Instead of attaching the total bill, I mistakenly attached a fully itemised printout. Unfortunately, this was returned to me, copied to my boss, with one item – “Private Room Entertainment: Adults Only Movie” – highlighted as an illegitimate business expense. I ordered the film more out of curiosity than habit and am usually meticulous over my expenses. I work in the finance department and am a loyal and trusted employee. The form was seen by my secretary, though, and I am anxious that it may become a topic of conversation with her lunchtime colleagues. How do I salvage the situation?

Manager, Male, 43

The following was one reader's advice:

"Go to work tomorrow dressed as a lady. It's sure to deflect from any comments made."

Posted by Tom at 12:05 AM | Comments (0) |

Why betting against Pete Maravich in H-O-R-S-E was not a good idea

Posted by Tom at 12:00 AM | Comments (1) |

February 7, 2008

Warning labels?

Remember when the various credit-rating agencies contended that their relatively sanguine ratings of Enron's debt up until the company went belly-up were the result of the company's misrepresentations? One of the more ludicrous allegations was that the rating agencies didn't understand the true nature of such relatively common structured finance transactions as derivative pre-pay transactions. Yeah, right.

Fast forward a few years and get a load of this W$J article:

In an acknowledgment that the system it used to rate billions of dollars of mortgage-related securities was potentially flawed, Moody's Corp. said it is considering a new way of rating those and other sometimes-volatile structured finance vehicles.

The credit-rating firm is considering an overhaul of its rating procedures that could include new labels to help investors distinguish collateralized debt obligations and other structured-finance investments from corporate bonds and Treasury securities. . .

More broadly, the ratings firm is trying to decide whether to add warning labels that essentially acknowledge the limitations of its ratings.

Warning labels on highly-volatile structured finance investment vehicles? Barry Ritholtz has some fun with that one.

Posted by Tom at 12:10 AM | Comments (1) |

Are they finally getting serious?

The Wall Street Journal ($) reported yesterday afternoon that Houston-based Continental Airlines seemingly perpetual merger negotiations (see also here) with Chicago-based United Airlines are accelerating for a variety of reasons. A Continental-United deal is contingent on Northwest Airlines' ongoing merger negotiations with Delta Airlines because Northwest currently owns the right to block a Continental merger. However, that right evaporates if Northwest merges with Delta.

Whether all of this is the product of rational thought or irrational exuberance remains is another issue. As noted recently here and many other times on this blog, the airline industry is a mess overall and combining two large airlines does not necessarily provide any meaningful competitive benefit. Continental performed in the middle of the airline industry last year, doing reasonably well financially and operationally, but ranking ninth-worst in terms of frequency of bumping customers from flights. Only Delta was worse at bumping customers among the major carriers.

United, on the other hand, has been a basket case for years. In its first full year of operations after emerging from its long bankruptcy case, United's earnings were among the worst in the industry last year (only JetBlue's were worse). Moreover, United struggled with operations, ranking seventh in on-time percentage after a disastrous December that included numerous cancellations and delays. Meanwhile, United's rate of customer complaints was second-worst, ahead of only US Airways, as Professor Bainbridge would attest.

So, what to make of all this? At this point, it's hard to say, other than management of both airlines are probably betting that the biggest airlines have the best chance of survival when the inevitable shakeout of the industry finally is allowed to happen (chronic reorganizations of distressed airlines have delayed that process up to now).

Color me as skeptical.

Posted by Tom at 12:05 AM | Comments (0) |

The importance of recruiting classes

The institutionalized fanaticism that is college football recruiting reached its annual zenith yesterday as hundreds of the nation's best high school senior football players signed National Letters of Intent with various big-time college football programs. It never fails to amaze me how much interest the competition between big-time college programs for 17 and 18 year-olds generates among the supporters of those programs.

But as this earlier post noted, there is no doubt that it is important to the success of the programs. For example, over the past decade, the respective programs of the University of Texas and Texas A&M have mostly been going in the opposite direction, UT up and A&M down. This Suzanne Halliburton/Austin-American Statesman article reviews the past ten UT recruiting classes, while Ryan over at TAMABINP does the same here with regard to A&M's recruiting classes over the same period. As noted earlier here, A&M remains well a decided step below UT in the overall quality of its recruiting classes.

By the way, this website developed by three Stetson School of Business and Economics at Mercer University economists contains information about an econometric football recruiting model that predicts the collegiate choices of high school football players. Check it out.

Posted by Tom at 12:00 AM | Comments (0) |

February 6, 2008

A nice reward

So, what's the reward for inducing Microsoft to overpay for Yahoo!?

Answer: Playing in the AT&T Pebble Beach National Pro-Am (scroll down to the bottom of the list).

Perhaps Bear Stearns' board should have thought of such a reward? ;^)

By the way, Yang will be able to compare notes during the tournament with Houston's Jim Crane, who can tell him a thing or two about a takeover battle.

Update: The Epicurean Dealmaker provides this alternately witty and elegant analysis of the Microsoft bid for Yahoo!

Posted by Tom at 12:10 AM | Comments (0) |

The First and Last 100 Days?

Over at the University of Houston, the university is celebrating the arrival of its impressive new Chancellor and President, Renu Khator. As a part of that celebration, the university has posted this interesting website entitled Building Our Future: The First 100 Days that solicits ideas from the university and Houston communities on the direction of the city's primary public university. Check it out and participate in an exciting time for UH.

Meanwhile, on the other side of the optimism scale, the desperate state of Texas Southern University continues. Ubu Roi over at blogHouston.net provides this good overview of the daunting challenges facing new TSU President, John Rudley (previous posts on TSU are here). As Roi points out, one of TSU's better schools -- its law school -- is at risk of losing its accreditation, and that news comes on the heels of a regional accrediting body recently placing the entire university on probation. Meanwhile, President Rudley is wrestling with the legislative requirements for obtaining $40 million in emergency funding that the institution desperately needs just to keep the lights on.

As noted earlier here, here, and here, TSU is a once-essential institution that is at serious risk of becoming irrelevant. During the era of segregated education in Texas, TSU was arguably Texas' best university for minority students. The institution educated many of Texas' finest minority leaders, including Barbara Jordan and Mickey Leland. However, over the past 20 years, TSU has been bypassed by both the University of Houston-Downtown Campus and Houston Community College as the preferred open admissions alternatives for the Houston area's college students.

At this point, a merger of TSU with one of the other university systems probably makes the most sense, but even that alternative is not easy. Merging UH-Downtown and TSU would serve the purpose of largely consolidating Houston's open admissions institutions, but the UH system does not have sufficient endowed capital to absorb TSU, a shameful legacy of Texas' underfunding of UH's endowment in comparison to the other two major public university systems in Texas, the University of Texas and Texas A&M University systems. Texas A&M already has an open admissions university in its system at Prairie View A&M and UT probably has little interest in increasing its investment in the Houston area given the UT Health Science Center's huge presence in the Texas Medical Center. So, TSU is not a particularly good fit for those far wealthier systems, either.

Thus, at least for the time being, TSU will continue to muddle along. But don't be fooled. TSU is on life support and the emergency measures for keeping it alive are are inadequate to provide the long-term vision that the university needs. It's well past time for state and community leaders to put their parochial interests aside and come up with a long-term plan for TSU that provides the institution with a specific purpose within the framework of college alternatives for Houston area residents. Sadly, dangling $40 million in front of TSU to keep the lights on is not going to accomplish much of anything in defining TSU's purpose.

Posted by Tom at 12:05 AM | Comments (0) |

Waxing philosophic on bad announcing

My standards for announcers of football games are not high, but it seemed to me that the Fox Sports announcing team of Joe Buck and Troy Aikman in last weekend's Super Bowl LXII game were unusually bad. For example, neither of them made much of Coach Belichick's dubious decision of going for it on 4th and 13 on the Giants 32 yard line rather trying a long field goal (49 yards) that is made easier by the pristine conditions in which the game was played. In particular, Aikman -- who has that annoying ability to say absolutely nothing of substance while reciting overlapping clichés -- could not bring himself to stop rhapsodizing about Tom Brady's "coolness under fire" despite the fact that Brady was missing badly on relatively easy passes while looking antsy in the pocket over the brutal pounding that he was enduring from the Giants' front seven.

Noting the same mediocrity in announcing quality, Michael Bérubé takes up another key call in the game and provides this imaginary dialogue between Buck and Aikman.

We can only dream. ;^)

Posted by Tom at 12:00 AM | Comments (1) |

February 5, 2008

The human cost of questionable prosecutions

One of the more discouraging aspects of the societal tide of resentment and scapegoating that has permeated the Enron related criminal prosecutions has been the utter lack of perspective or compassion regarding the horrendous human cost of those prosecutions.

We already know the horrendous financial cost (see also here) of those prosecutions. However, the the starkest example of the human cost is what happened to the family of the death of Ken Lay, who endured the decline of a loving father and grandfather as he defended himself against questionable charges that in a less-heated environment would likely never have been pursued. Almost equally barbaric is the unsupportable 24-year prison sentence assessed to former Enron CEO Jeff Skilling, whose children are threatened with the loss of their father for most of the rest of his life.

The Enron-related criminal prosecutions have thrown numerous other families into turmoil, such as those of the four former Merrill Lynch executives (see also here) who were unjustly jailed for a year in the Nigerian Barge case. Dozens more have lived their lives in fear over the past several years as Enron Task Force prosecutors routinely threatened prosecutions against most anyone who could provide exculpatory testimony for a defendant looking down the Task Force's gun barrel.

But the enormous human toll of these prosecutions was reinforced by this London TimesOnline article, which reports on the heartbreaking child custody case involving the daughter of Gary Mulgrew, one of the former UK bankers known as the NatWest Three who recently entered into a plea bargain of dubious charges against them. Turns out that Mulgrew -- while forced to live in the US away from his family for most of the past two years -- has had to endure the emotional trauma of having his six-year-old daughter taken by his estranged ex-wife to live in Tunisia with the ex-wife's new boyfriend, "Abdul." Based on the difficulty of attempting to enforce Western legal obligations in an Islamic legal system, Mulgrew and his family must be going through a living hell in trying to rescue his daughter from a repressive Islamic culture.

To my knowledge, none of this human drama has been mentioned in the US mainstream media, which has moved on from Enron in its inexhaustible search for the next scapegoats. Wasn't the damage to families and careers that the government and the mainstream media left in the wake of the Enron-related prosecutions enough to satiate our resentment?

Sadly, I don't think so.

Posted by Tom at 12:15 AM | Comments (2) |

Pro Dome? Or just anti-Emmett?

I understand that Ed Emmett is not the Chronicle's favored candidate for Harris County Judge. But isn't it a bit odd for the Chron to be fanning criticism of Emmett for showing rare leadership over the pie-in-the-sky Astrodome hotel redevelopment deal (previous posts here)?

Look, this is really very simple. No equity investor or financial institution in their right mind is going to invest upwards of half a billion dollars to redevelop the Dome into a convention hotel. If there were such investors, they would have stepped up in the over three years that this proposal has been floating about town and the financial markets. The fact that the Astrodome hotel would not even have the primary right to use the Reliant Park space that it sits upon for over a month out of the year (roughly 22 days for the Houston Live Stock Show & Rodeo and another dozen or so days for the Texans) only makes the hotel proposal more speculative in nature. That several County Commissioners continue to think that it's a good idea to pursue the Astrodome hotel project does not make it one. Rather, it simply shows why they are County Commissioners and not businesspeople responsible for creating jobs and turning a profit.

And reliance on a poll of Houstonians to keep the Astrodome hotel dream alive is just plain silly. Sure, most Houstonians would like to preserve the Dome. It's a landmark and an architectural treasure. But I doubt that poll revealed to its participants that mothballing the Dome over the past three years has already cost the County $12-15 million that could have been spent on improving roads, flood control or park improvements. Similarly, that poll almost certainly did not disclose to its participants the financial risk that the County would be taking if an Astrodome convention hotel craters, as many such hotels tend to do. If a poll is taken with such information supplied to its participants, then my bet is that the number of Houstonians wanting to preserve this financial black hole would diminish rapidly.

Emmett is showing leadership in moving the decision-making process on the Dome along. The Chronicle is playing politics in criticizing him for it. Set a reasonable deadline for proposals, consider them and then either move forward with one that makes financial sense or raze the Dome and build a parking ramp for Reliant Park that would generate revenue to pay off the bonded indebtedness that remains on the Dome. That may not be the sexist thing alternative, but it's the responsible thing to do.

Posted by Tom at 12:10 AM | Comments (1) |

What was so super about that?

While most Americans who watched Sunday's Super Bowl XLII were thrilled with a close game that wasn't decided until the final seconds, Financial Times ($) Simon Kuper examines why American football does not translate well to other cultures:

. . . few foreigners watch American sports. The media agency Initiative tallies audiences for sporting events, counting only the average number of live viewers who watched from home, and not in places like bars. It estimated that of the Super Bowl’s 93 million live viewers in 2005, just three million were outside north America, including nearly one million in Mexico.

Meanwhile, game four of baseball’s World Series in 2005 attracted about 21 million viewers in north America and Mexico, and fewer than one million elsewhere (all of them possibly American expats). And the last game of the NBA finals in 2005 drew fewer than one million live viewers outside the US, according to Initiative.

American sports suffer partly from having arrived late: the British empire got everywhere first. Kevin Alavy, an analyst at Initiative, says: “If people have been following the same sports for 50 or 100 years in a country, it’s hard to break into that.”

Furthermore, Alavy points out that, American football’s NFL has almost no foreign players, while baseball draws its foreigners almost exclusively from central America, Venezuela and Japan. Foreign fans elsewhere have no local heroes to root for. The British, by contrast, spread football so thoroughly that foreigners now generally outperform them. Consequently, English football’s Premiership features about 70 nationalities. Qiang Yan, Chinese author of a book on the Premiership, describes 100 million Chinese sitting up at 1am to watch two Chinese play in Everton v Manchester City. “That’s ridiculous, right?” he asks. The Premiership belongs to the Chinese, the French, the Israelis. [. . .]

. . . The gross revenues of major-league baseball were $6.1bn last year, up twofold since 2000. The NFL, the US’s most popular sport, grosses a fraction more. And the average NBA team made pre-tax profits of $9.8m in 2007, says Forbes magazine.

But these sports earn peanuts abroad. That is worrying, because the biggest potential for growth is not in the US but in new markets such as China and Europe. That’s why the NFL staged a league game in London last October. And in 2006 baseball staged the “World Baseball Classic”. Unfortunately, the tournament demonstrated how far the game is from global conquest. Only about 10 countries fielded serious teams. The rest struggled: South Africa’s biggest name was a minor-league pitcher with Wichita. Italy’s star was a 37-year-old American with a Sicilian grandfather. Meanwhile many American fans grumbled that the “classic” was interrupting spring training. [. . .]

Global fans want global leagues, above all the NBA or the Premiership. It’s therefore wrong to think that Beckham will save American soccer by playing for the LA Galaxy. American soccer is alive and well and watching Manchester United on Fox Soccer Channel. This is a posthumous victory for the British empire.

Read the entire article.

Posted by Tom at 12:00 AM | Comments (1) |

February 4, 2008

A birthday wish

Don't miss Greg Mankiw's birthday wish:

My birthday wish is for all of us to stop asking what the government can do for us today. Instead, we should focus on what we can do together to prepare the economy for our children and grandchildren. That means getting ready to care more for ourselves in old age, perhaps by retiring later, perhaps by saving more. I hope that when I celebrate my 100th birthday in 2058, my descendants won’t look upon Grandpa and his generation as the biggest economic problem of their time.

Read the entire op-ed. Salient thought for a political season.

Posted by Tom at 12:05 AM | Comments (0) |

An uncomfortable issue for John McCain

The hypocritical and unproductive nature of the government policy of drug prohibition has been a frequent subject on this blog (see here, here, here and here), so this Radley Balko post about Cindy McCain, John McCain's wife, caught my eye:

. . .the problem with the hypocritical practice of letting politicians’ family members get off for drug crimes that land normal people in prison is that it doesn’t seem to do much in the way of making them more sympathetic. It just hardens them into more militant drug warriors.

Read the entire post.

Posted by Tom at 12:02 AM | Comments (0) |

Can Schiller and Del Grande save Cafe Express?

At one time earlier this decade, the Cafe Express restaurants were among the best "upscale" fast food restaurants in Houston, perhaps anywhere. Then, in 2004, Wendy's International purchased a majority stake in Cafe Express from the original owners, Lonnie Schiller and Robert Del Grande, who also own the popular upscale Houston restaurant, Cafe Annie.

Wendy's promptly operated the Cafe Express restaurants like, well, like Wendy's. No one would confuse their local Wendy's with an upscale fast food restaurant. It became clear quickly that Wendy's did not have a clue of how to manage an upscale fast food restaurant chain. Cafe Express suffered.

Reflecting that hope springs eternal, this David Kaplan/Chronicle article reports that Schiller and Del Grande have purchased Cafe Express from Wendy's (hopefully at a BIG discount). It's a different and more competitive market in the "upscale" fast food industry now than when Schiller and Del Grand sold to Wendy's, so there is no certainly that Schiller and Del Grande will be able to infuse Cafe Express with its lost luster. But I'm pulling for them.

Posted by Tom at 12:00 AM | Comments (0) |

February 3, 2008

WinkingSkull.com

Check out WinkingSkull.com, a worthy counterpart to the Visual Medical Dictionary (noted earlier here) in better understanding anatomy and medical conditions.

Along those lines, did you know that "the bacteria count in the plaque on human teeth approaches the bacteria count in human feces?" (H/T Kevin, MD)

Still biting those fingernails? ;^)

Posted by Tom at 12:00 AM | Comments (0) |

February 2, 2008

Piling on Rosenthal

It's become fashionable around Houston to be critical of outgoing Harris County District Attorney Chuck Rosenthal. Frankly, much of the criticism is deserved. But given what Rosenthal has been going through in federal court over the past couple of days, one has to wonder whether the media firestorm regarding Rosenthal has reached the point that otherwise rational observers have taken leave of their senses.

Take this latest Chronicle article on the hearing over Rosenthal's destruction of emails that he had been ordered to turn over in connection with a civil lawsuit in federal court. The Chron article, which is representative of the newspaper's vitriolic coverage of Rosenthal's political demise, calls the hearing a "contempt hearing" in which the judge could "hold Rosenthal in contempt, . . .[and] put the DA behind bars for six months."

H'mm. I don't think so.

Although the plaintiffs in the civil lawsuit are having a field day excoriating Rosenthal in court and in the media, I can't see how the judge could hold Rosenthal in contempt of court, at least at this stage. The plaintiffs' motion (see here) essentially requests that the judge hold Rosenthal in criminal contempt of court because of Rosenthal's destruction of email evidence and failure to comply with the court-ordered procedure for reviewing the emails. The motion doesn't call for Rosenthal to be held in civil contempt. There is no need for the court to take coercive action and Rosenthal would not be able to take any action to purge the contempt, anyway. The destroyed emails are gone for good and Rosenthal can't do anything about that.

Thus, Rosenthal -- who isn't even a party to the civil lawsuit -- is accused of criminal contempt, but he has been provided none of the protections that due process of law requires for a criminal defendant. Inasmuch as Rosenthal's allegedly contemptuous conduct did not take place in the courtroom, the trial judge does not have the power to hold him in criminal contempt without a full-blown trial on the criminal contempt charges. Indeed, the trial judge cannot even be the judge in Rosenthal's criminal contempt trial because the judge is a potential witness in that trial.

Likewise, the plaintiffs' lawyer in the civil lawsuit cannot prosecute a criminal contempt case against Rosenthal. Rather, the contempt charge must be referred to the U.S. Attorneys' Office, which then decides whether to prosecute Rosenthal based on an evaluation of the evidence and and the charges. If the U.S. Attorney decides to do so, then Rosenthal is entitled to the due process protections that any criminal defendant is entitled to receive, including notification of the specific charges, trial by jury, and confrontation of the adverse witnesses. The circus going on right now over in federal court doesn't come close to fulfilling those Constitutional safeguards.

So, I don't think Judge Hoyt is going to hold Rosenthal in criminal contempt and throw him in jail. Even if Judge Hoyt were to do so, the Fifth Circuit would likely stay the commitment order and eventually overturn it. The Chronicle and Rosenthal's many other detractors can continue to revel in the lame duck DA being filleted in a public court hearing, but at least provide Rosenthal due process of law. We in Houston have already seen what happens to the unpopular public figures of the moment when those protections are ignored.

Posted by Tom at 12:00 AM | Comments (3) |

February 1, 2008

Jérôme Kerviel channels Tom Cruise

In this clever Financial Times op-ed, John Gapper lucidly explains why the business world will always be dealing with risk-takers such as Jérôme Kerviel, the alleged “rogue trader” at Société Générale whose trades are responsible for the $7 billion plus hit that the bank took earlier this month.

According to Gapper, it's because Kerviel went crazy like actor Tom Cruise, except there was a method to Kerviel's madness. Although Kerviel's trades were bizarre and risky, they had a certain crazy logic because traders have big incentives to risk everything for stardom:

In recent days we have witnessed two men taking leave of their senses. In one case, however, there was method to the madness.

The first is Tom Cruise, the Hollywood film star and devoted Scientologist. In a clip made for members of the cult-like religious movement, Mr Cruise can be seen laughing manically and claiming special powers to help the victims of road traffic accidents because of his faith. He seems utterly deluded.

The second is Jérôme Kerviel, the “rogue trader” at Société Générale accused of losing his bank €4.9bn. Mr Kerviel did not make money for himself by his trading. Instead, as Jean-Claude Marin, the Paris prosecutor, said this week: “He wanted to show that he was worth as much as the others around him. He truly believed that ... everyone would recognize his financial genius.”

Crazy, right? That is what Mr Kerviel’s former bosses, most of whom are either out of a job already or soon will be, think. Rather than sticking to his assigned role as a lowly arbitrage trader, Mr Kerviel tried to become a star. “I think that he is completely mad,” says one banker.

Well, not completely. Actually, there is a good argument that Mr Kerviel acted in a financially rational manner, although he broke both his contract and – allegedly – the law. He had as firm a grasp of superstar economics as Mr Cruise, one of the world’s best-paid film actors.

The basic principle of superstar economics, which applies to both entertainment and investment banking, is that a few people take most of the rewards. If you can establish yourself as a top talent either on screen or on a trading floor, you gain status and get rich.

In Mr Cruise’s case, his ability to “open” any film by drawing an audience means studios will bid for his services and he gains a share of gross revenues, amounting to tens of millions of dollars. He over-stepped himself when negotiating a contract with Paramount Pictures in 2006 and now heads United Artists, the stars’ studio formed by Charlie Chaplin and Mary Pickford in 1919.

The banking equivalents of film stars are the financial traders who have such a strong record that they can demand huge bonuses or raise capital from investors to form their own hedge funds. Hedge funds are like films: investors have the confidence to risk money in them only when there is a star name attached.

But there are only a few stars in Hollywood or at banks.

This is not because stars have a monopoly on talent. Marko Terviö, a University of California economist, has found that stars hog the rewards in such industries because talent is displayed only on the job and employers are unwilling to take risks on the untested. Stars get paid a lot because they are proven talents.

The imperative for traders and film actors is therefore to draw attention to themselves and persuade those with capital to take a chance on them. If they fail, they are no worse off than they are already (perhaps better). If they succeed, they get a chance to become a star and earn far more.

In fact, the incentives are so distorted by the star system that people are often driven to take extreme risks, or to act madly, in pursuit of stardom. Reality television programmes rely on the fact that surprisingly many people will eagerly make fools of themselves in order to become national celebrities.

When Mr Kerviel was given a routine job by SocGen executing arbitrage trades, it was only natural for him to look across the trading floor to the stars trading complex over-the-counter derivatives and structured products and to wish he was one of them. He toiled obscurely for €100,000 a year while they got 10 or 20 times that sum.

He knew he was unlikely to get a shot at stardom. He had already been promoted from the bank’s back office and the Delta One arbitrage desk was as far as he was likely to go. So, he told prosecutors, he tried to prove himself by taking unhedged bets on futures markets and hiding his trades.

Consider the rewards and risks of this strategy. On the upside, Mr Kerviel was hoping to triple his bonus (now unpaid) between 2006 and 2007 and might well have turned himself into a star by continuing, as Nick Leeson did at Barings in 1994 by shifting from low-risk arbitrage to fraudulent risk-taking.

On the downside, there was a high risk that he would get caught, as Mr Leeson was – too late – in 1995. Even then, he would become a celebrity and his employers would get most of the blame for not catching him. Mr Kerviel has already acquired Facebook fan clubs, name recognition and many sympathisers in France.

In short, although his behaviour was bizarre and risky, it had a certain crazy logic. That is why rogue traders keep on popping up at banks from Barings to Sumitomo and Allied Irish banks. No matter how carefully institutions try to guard against them, traders have big incentives to risk everything on stardom.

In contrast, Mr Cruise’s behaviour is baffling because he is already a star. Babbling about Scientology and displaying manic intensity on camera serves little purpose when you are famous. The time to act extravagantly and take extreme risks with your reputation is when you seek to be a celebrity, not when you are one.

I suppose that performers become so used to doing anything to grab the limelight that they find it difficult to stop even when they ought to tone down the eccentricity, as Britney Spears is proving. Rogue traders have a better record of self-control. Mr Leeson became famous, went to jail, and runs an Irish football club. Let that be a lesson to you, Mr Kerviel.

Validating Gapper's thesis, this Wall Street Journal ($) article reports today that Kerviel is well on his way to cult star status in France. And Larry Ribstein points out that the mainstream media's infatuation with Kerviel has its roots in cultural antipathy toward wealth.

Posted by Tom at 12:10 AM | Comments (0) |

The never-ending City of Houston corruption probe

It's been a couple of years since I last blogged on it, and it's been over two and a half years since the new defendants were first mentioned as potential targets in the probe, but the feds finally got around last week to indicting Andrew Schatte and Michael Surface, the principals in the Keystone Group who have made a living over the past decade or so managing big construction projects financed by the City of Houston and other municipalities. The press release on the indictment is here and a copy of the indictment is here. For unknown reasons, the U.S. District Clerk's office did not post the indictment publicly until yesterday, which is about as long as it took for the Chronicle's editorial staff to comment on the indictment.

The indictment alleges that Schatte and Surface bribed former City of Houston building services director Monique McGilbra to gain favor on a couple of big City of Housotn building projects for which they were competing. The feds allege that the bribes were both direct (not so big) and indirect (much larger), the latter of which were allegedly funneled through Garland Hardeman, McGilbra's former boyfriend who Schatte and Surface hired to work with them in obtaining the contracts. McGilbra, who copped a plea back in 2005, will be singing like a canary for the prosecution in this case.

Not enough is known about Schatte and Surface's defense strategy at this point to know what will be the most important issues in the case. However, one has to wonder why the U.S. Attorneys' office -- which has been investigating corruption in the City of Houston administration of former Mayor Lee P. Brown now for six years -- waited for over two and a half years after McGilbra had fingered Schatte and Surface to bring the charges against the two? Similarly, when did the feds notify Schatte and Surface that they were targets of a criminal probe? If it was some time ago (as it would appear), then why was Surface serving on the Harris County Sports & Convention Corp board for the past two years while being the target of a federal criminal probe?

The feds need to wrap this matter up.

Posted by Tom at 12:05 AM | Comments (0) |

Protesting the absolute priority rule while wintering in Houston

This Tom Fowler/Chronicle article reports on a retired commercial painter from Ohio is engaging in a rather novel protest of the absolute priority rule, the bankruptcy principle that prevents shareholders from receiving any value under a bankruptcy plan unless creditors either are paid in full or agree that the shareholders can receive something:

Calpine Corp.'s emergence from bankruptcy protection in the coming days will end a tough chapter in the history of Texas' No. 3 power producer, but don't expect applause from shareholder Robert Strouse.

The retired commercial painter from Ohio likely will continue his vigil in front of the company's downtown Houston offices where he's been protesting the bankruptcy plan for the past two weeks.

"They'd like me to go away, but I'm going to hang on as long as I can," said Strouse, 62.

Strouse claims the company misled him about the price he could expect for his stock when Calpine emerges from bankruptcy — a charge the company denies. [. . .]

Strouse said his quarrel with Calpine began last month after a phone conversation with an investor relations official. He said he was told his 5,000 shares probably would be valued at about $1.60 each under the company's reorganization plan. That's a far cry from the $5.12 each he paid for them in March 2004, but better than nothing, he figured, so he voted in favor of the plan.

The plan that came out of the bankruptcy court in December, however, wasn't what he expected. It will cancel outstanding shares of common stock like his and replace them with warrants — the right to purchase new Calpine stock — but at a price likely higher than that at which the stock will begin trading.

"They lied to me, plain and simple," Strouse said.

Calpine said it didn't mislead Strouse and has been careful to tell all shareholders the same thing about the reorganization plan: that shareholders' stake in the company might have no value. [. . .]

Strouse arrived in Houston from his home in Amelia, Ohio, via Greyhound bus earlier this month and has been renting a room at the downtown YMCA for about $130 per week.

He said he wanted to meet face to face with Calpine CEO Bob May, who sometimes works out of the office at 717 Texas Ave., but had to settle for coffee with an investor relations official. She didn't give him the answers he wanted, he said, so he bought some foam board and made a sign stating his complaints with the company.

Nearly every weekday he paces back and forth with the sign in front the Texas Avenue building where Calpine has its largest office, including its energy trading staff.

Workers regularly take pictures of him with their cell phone cameras, he said, but no one has tried to hamper his protest.

When it rains or he needs a break, Strouse ducks into a sandwich shop on the building's ground floor. He usually sits by a window eating lunch or calling friends and family using Skype, an inexpensive Internet-based phone service, over his laptop.

Money has gotten tight, Strouse said, but his house in Ohio is paid for and he already has a return trip ticket, so he's not in a rush to leave Houston or halt his protest. . . .

Posted by Tom at 12:00 AM | Comments (0) |

January 31, 2008

The stadium ruse

Something to think about in regard to the City of Houston's latest stadium boondoggle.

Skip Sauer over at The Sports Economist notes this Rick Eckstein op-ed on the myth of economic benefits from the public financing of sports stadiums:

. . . [M]y colleagues and I studied media coverage of 23 publicly financed stadium initiatives in 16 different cities, including Philadelphia. We found that the mainstream media in most of these cities is noticeably biased toward supporting publicly financed stadiums, which has a significant impact on the initiatives' success.

This bias usually takes the form of uncritically parroting stadium proponents' economic and social promises, quoting stadium supporters far more frequently than stadium opponents, overlooking the numerous objective academic studies on the topic, and failing to independently examine the multitude of failed stadium-centered promises throughout the country, especially those in oft-cited "success cities" such as Denver and Cleveland.

Meanwhile, Houston is bidding on another Super Bowl (XLVI in 2012). Get those yachts lined up, folks.

Posted by Tom at 12:10 AM | Comments (1) |

The wisdom of U.S. Presidential campaigns

Much is wrong with U.S. Presidential campaigns. They last much too long, are far too expensive and the rhetoric is mostly mind-numbing.

However, for all its faults, the messy process does have a way of eliminating the candidates that need to be weeded out (see also here and here).

By the way, Megan McArdle has the New York City perspective on Giuliani's withdrawal.

Posted by Tom at 12:05 AM | Comments (0) |

What time is it over there?

When I'm going to be involved in telephone conferences with folks overseas, I am constantly wondering what time of the day it is for them. This website helps me.

Posted by Tom at 12:00 AM | Comments (0) |

January 30, 2008

Arnold Kling's Medicare experience

As I've noted many times, EconLog's Arnold Kling is doing some of the best writing and thinking about health care and health care finance issues in the U.S. right now. In his latest TCS op-ed, Kling describes the care received recently by his elderly father (who sounds as if he should have been a patient of my late father) and observes:

Medicare is wonderful for relieving the elderly from the burden of worrying about health care expenses. By the same token, it is wonderful for relieving doctors of the burden of worrying about the elderly as customers. You get paid for understanding the billing system, not for understanding your patients.

Read the entire op-ed. An update post is here.

Posted by Tom at 12:10 AM | Comments (0) |

NASCAR golf?

This earlier post suggested a creative approach to generate interest for a PGA Tour golf tournament caught in the Tiger Chasm -- i.e., the neverland of golf tournaments that draw nowhere near the interest or publicity as the 15-18 golf tournaments that Tiger Woods plays in each year.

Along the same lines, Angry Golfer John Hawkins points out that chronic party-boy John Daly is creating a similar type of niche for tournaments that are willing to grant him an exemption to play. Daly has made the cut in just 18 of his last 67 PGA Tour events, is currently tied for 156th place on the money list and is 531st in the World Golf Rankings and, in three tournaments this year, has earned a total of $9,805:

I called several tournament heads last week to get a read on whether Daly's ability to sell tickets is worth the headache he has become. [Honda tournament director] Kennerly didn't return my phone call, but others were quick to reply, and there remains little doubt that Long John Seismograph moves the needle more than a hundred John Sendens. "It's a pretty easy decision for us," says Clair Peterson, who runs the John Deere Classic and already has extended Daly an offer to join the field in July.

"He's like Randy Moss," says another. "He's a freak, he can be a huge burden, but in terms of what he brings you, it's a very unique dynamic. The NASCAR crowd, whatever you want to call it, is why 80 to 90 percent of the events will give him an exemption if he's anywhere near the top 100."

Or 531st, which is where Daly currently resides in the World Ranking, as if the NASCAR gang really gives a Hooters how well their man has been playing or whether he'll ever contend again on the weekend. The recent face-saving contest between PGA Tour brass and Westchester CC reminds us that every sputtering, non-Tiger event is a possible endangered species. Perhaps 15 to 18 tournaments are in excellent health; the rest lack significance or sound economics.

Posted by Tom at 12:05 AM | Comments (0) |

The products of an entertaining form of corruption

Inasmuch as the corrupt sponsorship of big-time football and basketball by academic institutions is a common topic on this blog, the following articles caught my eye:

The Chronicle's Richard Justice surveys several of the ugly recent incidents in big-time college football and calls for higher ethical standards. However, he ignores the perverse incentives built into the highly-regulated system that promote the unethical behavior.

Meanwhile, one of the coaches who has been accused of being ethically-challenged -- former Texas Aggie coach Dennis Franchione -- turns out to be an over-achiever with an interesting story.

And how exactly is it that Rick Neuheisel was able to persuade UCLA to hire him as its new coach in the face of this curriculum vitae?

Look, June Jones, Rich Rodriguez, Franchione, Neuheisel and the other supposedly unethical coaches of the moment are not, on balance, any more unethical than the rest of us. They are simply the products of a highly-regulated system that creates all sorts of perverse incentives to act badly. Change those incentives and the coaches' behavior will change. A good start would be to quit paying the coaches the excess rents that should be paid to the players whose talents generate them.

Posted by Tom at 12:00 AM | Comments (1) |

January 29, 2008

The worst in Major League Baseball?

Sabermetrics Godfather Bill James coined the "Law of Competitive Balance" to explain the trend that teams that win in professional sports tend to slack off in the following year because team management doesn't work as hard, resists taking risks to make the team better, and generally thinks defensively.

For example, Stros management reacted to the club's playoff appearances in 2004-05 by rationalizing that "if we won with Ausmus and Everett in those seasons, then surely we can do it again next season." As a result, the Stros made minor changes to their roster over the past two seasons through free agency and continued a decade-long trend of failing to develop MLB-level players through their farm system. The Stros' decline over the last two seasons of the Biggio-Bagwell era (from 89-73 in 2005 to 73-89 in 2007) is powerful evidence of the validity of the Law of Competitive Balance.

Well, the chickens are really coming home to roost now as Baseball Prospectus has now deemed the Stros' farm system to be the worst in Major League Baseball ($):

The worst farm system in baseball has no top-tier talent, but plenty of older prospects.

[On the top players in the Stros system under the age of 25]: The fact that Pence is the only other player [other than minor leaguers] to qualify for this list, and that he does so by a mere few days, speaks volumes about just how sad the state of affairs is in Houston. The team's recent drafts have been downright laughable, and its once-fruitful Venezuelan pipeline has dried up, as other organizations had passed the Astros in Latin America in terms of committing resources. This is the worst organization in baseball, made even more dreadful by some early moves in the Ed Wade administration that merely upgrade the big-league squad from dreadful to bad. The future is very grim in Space City.

Here is how BP rates the Stros prospects:

Five-Star Prospects: None

Four-Star Prospects: 1. J.R. Towles, C

Three-Star Prospects: 2. Felipe Paulino, RHP; 3. Bud Norris, RHP

Two-Star Prospects: 4. Brad James, RHP; 5. Josh Flores, OF; 6. Chad Reineke, RHP; 7. Mitch Einertson, OF; 8. Eli Iorg, OF; 9. Jordan Parraz, OF; 10. Sergio Perez, RHP; 11. Collin DeLome, OF

What's particularly odd about all this is that the Stros built a consistent winner in the late 1990's and early part of this decade through their farm system, by developing the Venezuelan pipeline of young players, and picking up productive college players. But as noted earlier here, the Stros have drafted poorly this decade, which required the club to invest heavily in free agents to remain competitive. Not only is that approach expensive financially, it has had the additional impact of negatively affecting the Stros' drafts of young talent.

In three of the last five drafts, the Stros have lost their first-round pick as free-agent compensation. Inasmuch as the Stros have generally not offered arbitration to their own free agents, the Stros only once during that period have received bonus choices of their own. Meanwhile, the Stros have been unwilling to pay much over MLB's "slot" recommendations for draft picks. Accordingly, the combination of few bonus choices, lack of first-round picks and financial conservatism culminated in a particularly awful 2007 draft.

As a result of the Carlos Lee and Woody Williams free agent signings, the Stros didn't have a pick in the first two rounds of the 2007 draft. Then, by electing not to offer arbitration to three of their own Type A free agents (Aubrey Huff, Andy Pettitte and Russ Springer), the Stros lost the opportunity to collect three first-round picks and three supplemental first-rounders as compensation. The Stros thought they could sign their first two choices -- third baseman Derek Dietrich (3rd round) and righthander Brett Eibner of The Woodands (4th round) -- but the prospects ended up asking for more than "slot" money and wound up opting for college ball. Consequently, the Stros spent just a tad under $1.6 million on the 2007 draft, which was $3.6 million below the average of the other 29 MLB teams.

Meanwhile, the Stros Venezuelan pipeline largely dried up after former general manager Tim Purpura fired Andres Reiner, the former director of the Stros' Venezuelan scouting and development, who was instrumental in the Stros signing of Venequelan stars Bobby Abreu, Carlos Guillen, Richard Hidalgo and Johan Santana. New Stros General Manager Ed Wade has reorganized the club's scouting department and brought in former Brewers scout Bobby Heck to run it, but it's far too early at this point to assess whether those moves will stem the downturn in the Stros' farm system.

Frankly, absent a concerted effort to collect draft picks and do a better job of drafting players who are likely to opt for pro ball, I have my doubts that the Stros have done enough to turn around the decline in their farm system. Given how bad it is currently, that's a frightening thought for the future of the ballclub.

Posted by Tom at 12:10 AM | Comments (2) |

What's Fertitta's real plan for Landry's?

Given this experience, Landry's Restaurants CEO Tilman Fertitta's offer to take Landry's private in a deal valued at $1.3 billion is not particularly surprising.

But the question is this: Would Fertitta, who owns just under 40% of Landry's, actually prefer what Jim Crane didn't want?

Posted by Tom at 12:06 AM | Comments (0) |

Hillary Clinton's Inner Tracy Flick

Posted by Tom at 12:00 AM | Comments (2) |

January 28, 2008

The power of myths

A common topic on this blog has been the power of anti-business myths within American society. Take Enron, for example. We all know how the myth played out. Enron, which was one of the largest publicly-owned companies in the U.S., was really just an elaborate financial house of cards that a massive conspiracy hid from innocent and unsuspecting investors and employees. The Enron Myth is so widely accepted that otherwise intelligent people reject any notion of ambiguity or fair-minded analysis in addressing facts and issues that call the morality play into question. The primary dynamics by which the myth is perpetuated are scapegoating and resentment, which are common themes of almost every mainstream media report on Enron.

The mainstream media -- always quick to embrace a simple morality play with innocent victims and dastardly villains -- was not about to complicate the story by pointing out that the investors in Enron could have hedged their risk of loss by buying insurance quite similar to that which Enron developed in creating their wealth in the first place. Instead of attempting to examine and tell the nuanced story about what really happened at Enron, much of the mainstream media simply became a part of the mob that ultimately contributed to death of Ken Lay and hailed the barbaric 24 year sentence of Jeff Skilling. 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.

Consequently, as Wall Street continues to endure massive equity write-downs that dwarf the $1.1 billion non-recurring charge against earnings that triggered Enron's demise after the 3rd quarter of 2001, I was somewhat surprised to read this common sense analysis from NY Times columnist, David Brooks:

There is roughly a 100 percent chance that we’re going to spend much of this year talking about the subprime mortgage crisis, the financial markets and the worsening economy. The only question is which narrative is going to prevail, the Greed Narrative or the Ecology Narrative.

The Greed Narrative goes something like this: The financial markets are dominated by absurdly overpaid zillionaires. They invent complex financial instruments, like globally securitized subprime mortgages that few really understand. They dump these things onto the unsuspecting, sending destabilizing waves of money sloshing around the globe. Economies melt down. Regular people lose jobs and savings. Meanwhile, the financial insiders still get their obscene bonuses, rain or shine.

The morality of the Greed Narrative is straightforward. A small number of predators destabilize the economy and reap big bonuses. The financial system is fundamentally broken. Government should step in and control the malefactors of great wealth.

The Ecology Narrative is different. It starts with the premise that investors and borrowers cooperate and compete in a complex ecosystem. Everyone seeks wealth while minimizing risk. As Jim Manzi, a software entrepreneur who specializes in applied artificial intelligence, has noted, the chief tension in this ecosystem is between innovation and uncertainty. We could live in a safer world, but we’d have to forswear creativity. [. . .]

The Ecology Narrative is not morally satisfying. I wouldn’t bet on its popularity as a backlash against Wall Street and finance sweeps across a recession-haunted country. But the Ecology Narrative has one thing going for it. It happens to be true.

Along those same lines, this Landon Thomas/NY times story reports on how two Wall Street executives who were intimately involved in $34 billion in write-downs remain reasonably hot properties on the Wall Street employment market. The Greed Narrative apparently hasn't caught up with those two yet, either.

But not so fast. This NY Times article reports that New York attorney general Andrew Cuomo, who replaced Eliot Spitzer as the Lord of Regulation, is currently putting the squeeze on a company that analyzed the quality of home loans for investment banks to provide evidence to prosecutors that the banks had detailed information that they did not reveal to investors about subprime mortgage risk. So, maybe that Greed Narrative still has legs after all.

But for the final word, don't miss this Larry Ribstein post in which he exposes NY Times columnist Gretchen Morgenson's stubborn adherence to the Greed Narrative even when it is clear from the subject of the story (in this case, the troubles of retailer Sears) that the narrative doesn't fit. In short, Morgenson is not one to allow the facts to get in the way of spinning a Greed Narrative morality play.

Posted by Tom at 12:10 AM | Comments (0) |

The bus to Houston

Check out this interesting story of how a young woman's bus ride to Houston in the 1960's led to a better life. A redeeming quality of Houston is that it attracts folks who are looking to improve their lot in life. I hope that quality never changes.

Posted by Tom at 12:05 AM | Comments (2) |

The costs of prohibition

The nature of the problems that confront Texans and law enforcement officers who live near the Texas-Mexico border have been a frequent topic on this blog (see here, here, and here). Those problems are exacerbated by the archaic nature of U.S. drug laws (see here and here).

This must-read Scott Henson post does an excellent job of defining the parameters of the increasingly serious problems on the Texas-Mexico border.

No Country for Old Men may be fiction, but the story it tells is very real.

Posted by Tom at 12:00 AM | Comments (0) |

January 27, 2008

A truly frightening thought

It's been comforting that John Edwards' demagoguery has not generated the type of buzz and political support that would make him a top contender for the Democratic Party's presidential nomination. However, this Robert Novak/Rasmussen blurb ended my sense of comfort:

Illinois Democrats close to Sen. Barack Obama are quietly passing the word that John Edwards will be named attorney general in an Obama administration.

Installation at the Justice Department of multimillionaire trial lawyer Edwards would please not only the union leaders supporting him for president but organized labor in general. The unions relish the prospect of an unequivocal labor partisan as the nation's top legal officer.

What would an anti-business demagogue be like as attorney general? Here's a preview (another one here). That's not the way to encourage risk-taking for job and wealth creation.

Posted by Tom at 12:00 AM | Comments (1) |

January 26, 2008

Subprime sense

Cato Institute's Alan Reynolds passes along some interesting observations regarding his review of subprime mortgages (see previous posts here). Among them are the following:

Most current foreclosures are on prime mortgages, not subprime.

Half of subprime mortgages are fixed, not ARMs.

Most recent subprime loans were for refinancing, not buying. As appraised values on houses increased, many homeowners just borrowed on the phantom equity and spent it.

About 96% of all mortgages are paid on time. Of the remaining 4%, most are late, but not in default.

Much of the misinformation about mortgages in the mainstream media has come from the Center for Responsible Lending. That's the outfit that received large financial backing from John Paulson, who just made $3-4 billion by shorting mortgage-backed securities during the recent panic in the subprime securities market.

Posted by Tom at 12:00 AM | Comments (0) |

January 25, 2008

The Fastow notes

The big Enron-related news this week was the U.S. Supreme Court's refusal to hear the appeal of the Fifth Circuit's decision to dismiss securities fraud claims against several of Enron's banks (Ted Frank explains the decision). In light of the Supreme Court's recent Stoneridge decision, the denial of the Enron-related appeal was not surprising, although I agree with Larry Ribstein that the Supreme Court should have been clearer in defining the rule against holding third parties liable for another company's alleged securities fraud. Oh well.

Meanwhile, continuing to fly under the mainstream media's radar screen is the growing scandal relating to the Department of Justice's failure to turnover potentially exculpatory evidence to the defense teams in two major Enron-related criminal prosecutions (see previous posts here and here). The DOJ has a long legacy of misconduct in the Enron-related criminal cases that is mirrored by the mainstream media's myopia in ignoring it (see here, here, here and here).

This motion filed recently in the Enron-related Nigerian Barge criminal case describes the DOJ's non-disclosure of hundreds of pages of notes of FBI and DOJ interviews of Andrew Fastow, the former Enron CFO who was a key prosecution witness in the Lay-Skilling trial and a key figure in the Nigerian Barge trial.

Enron Task Force prosecutors withheld the notes of the Fastow interviews from the defense teams prior to the trials in the Lay-Skilling and Nigerian Barge cases. If the Fastow notes turn out to reflect that prosecutors withheld exculpatory evidence or induced Fastow to change his story over time, then that would be strong grounds for reversal of Skilling's conviction and dismissal of the remaining charges against the Merrill Lynch bankers in the Nigerian Barge case. The recent motion underscores the impact of the DOJ's non-disclosure of the Fastow notes in both trials:

The circumstances surrounding the debriefing of Andrew Fastow by the FBI are extraordinary and suspicious. Normally, when the FBI interviews a witness, it creates a 302 contemporaneously with each interview. Here, the government held scores of interviews with Mr. Fastow over 18 months, yet compiled only one composite 302—after apparently destroying any individual 302s or prior drafts of the composite 302 that were created. This does not comport with FBI policy and is highly unusual. . . . Skilling’s Opposition [to the United States’ Motion for Reconsideration by a Three-Judge Panel of Order Requiring it to Produce FBI Raw Notes] sheds light on this troubling and highly unusual practice:

One of Skilling’s claims on appeal is that the government impermissibly thwarted his ability to cross-examine Fastow. It did so by violating FBI policy and Brady, Giglio, and their progeny, inter alia, in (1) failing to prepare an FBI form 302 memoranda for each interview it conducted with Fastow; (b) scripting a 200-plus page “composite” Form 302 that masked inconsistencies, contradictions, and the evolution of Fastow’s story; (c) destroying all drafts of the composite 302s; and (d) refusing to provide Skilling with copies of the underlying raw notes from its more than 1,000 hours of interviews with Fastow.

Moreover, defense counsel in Barge I were never informed by the government that the FBI, contrary to its customary policy, had prepared only one composite 302, rather than a separate 302 for each Fastow interview. This troubling practice of compiling a single 302 to encompass thousands of hours of interviews with Fastow has effectively denied the defendants the benefit of gauging the evolution of Fastow’s story over time, and the shaping by the government of his story. It is not surprising that given these unusual circumstances, and the critical nature of Fastow’s involvement in Enron prosecutions, the Fifth Circuit took the unusual step of ordering the release of the Binders even before final briefing or oral argument in the Skilling appeal.

The motion goes on to describe the DOJ's continued resistance to turning over the Fastow notes, even in the face of the Fifth Circuit order to do so in the Skilling appeal and the DOJ's agreement to do so in open court in the Nigerian Barge case.

So, why is the mainstream media ignoring this scandal? Enron fatigue? Or does it not fit neatly into the media and prosecution-fueled myth that Enron was merely a financial house of cards that its managers knew would ultimately fail? Truth and justice doesn't depend on adherence with such a myth, now does it?

Posted by Tom at 12:10 AM | Comments (5) |

The vanishing primary care physicians

This earlier post on my internist's decision to adopt a concierge health care model for his practice noted that the economic crisis faced by most primary care physicians was one of the primary reasons for the change in his practice. In this recent post, Kevin Pho passes along the story of yet another internist hanging up the stethoscope as a result of not being able to make ends meet within the frazzled U.S. health care finance system:

"I am an Internist for over 20 years, and I recently closed my primary care practice as I cannot make a living at it. I made $23K in the last 11 months. And, my departure from practice is only the beginning of a tsunami of closures of primary care practices . . .

Primary care is unraveling around us. Indeed, all of the articles about the inordinate strain & crowding of emergency departments across the U.S., overlook the obvious - the impending failure of primary care is going to completely overwhelm emergency rooms. There is no way to prepare for this other than to save primary care.

The whole house of cards has begun to collapse, and all the articles and discussions fail to put it in terms with sufficient emphasis. All of the 'universal' systems that actually work are built on very strong and well-funded foundations of primary care. Everything else in health care is built upon that foundation, and that is precisely what is failing across the country. Why are emergency rooms overcrowded? Why are the wait times increasing even for the seriously ill? Because primary care is failing!

Just remember, I told you so."

And here is another primary care physician's analysis of why he turned to the concierge model.

Posted by Tom at 12:05 AM | Comments (1) |

Oh great!

The chronically-troubled airline industry is a common topic on this blog, as is the generally abysmal state of air travel. For good measure, this post by a former air traffic controller explains how air travel isn't particularly safe, either.

Just what I needed to know.

Posted by Tom at 12:00 AM | Comments (2) |

January 24, 2008

The latest boondoggle?

Anne Linehan, Kevin Whited and Cory Crow note this week's "are you kidding me?" moment from City Hall -- two Nancy Sarnoff/Chronicle articles reporting on the trial balloon that Mayor White floated about building a second large convention hotel in downtown Houston next to the George R. Brown Convention Center and the existing 1,200 room, city-owned Hilton Americas Hotel.

Another large downtown convention center hotel is surprising to anyone who has been following the Harris County government's fits and starts in regard to the proposed Astrodome hotel redevelopment project. However, Mayor White recently engineered the hiring of a new leader (Greg Ortale) for the local convention bureau and it looks as if the prospect of elevating Houston to the small tier of U.S. cities with adequate facilities to handle the largest conventions was part of the pitch in that hire.

Does building another big downtown hotel make sense? In and of itself, the answer is clearly no. Private equity interests have no interest in risking their money on such a project, just as they have no interest in doing the same in regard to the Astrodome hotel redevelopment. Thus, the deal only begins to make sense because of the prospect of public financing, which is how the City financed the first downtown convention center hotel.

Despite the lack of any meaningful analysis in the Sarnoff/Chronicle articles, the first hotel has been anything but an unqualified success. The Mayor suggests that the City spent $300 million on it (that seems way low to me) and that its presently worth "at least $350 million" (yeah, but who's buying?). There are a bunch of less risky investments that the City could have made with that $300 million that would have generated more than the speculative $50 million equity that Mayor White thinks the City has in the Hilton Americas.

But the larger question is whether the City ought to be in the business of building convention center hotels in the first place? As Cory points out, the rationale for the investment is that, with the larger number of convention center hotel rooms, Houston could compete with the small number of cities (Las Vegas, Orlando and San Antonio) for the really big conventions that need the concentrated mass of hotel rooms that only those cities offer. Although transit is an issue in getting from the downtown convention area to Houston's cultural areas and attractions, I can see how Houston would be a viable alternative to those other cities. For example, Houston's restaurants, theater district and museum district are better and more diverse than any of the other three alternatives. And Vegas is not every large convention's cup of tea.

But given the alternatives, is another large investment in a second convention center hotel really a prudent allocation of the City of Houston's financial resources? Here is where I have my doubts. As I've noted many times in regard to Houston's light rail boondoggle, allocating $300-$500 million on another downtown convention center hotel has real consequences, such as leaving inadequate resources to make improvements to Houston's infrastructure (flood control and fixing of traffic hotspots, to name just two) that would dramatically decrease the risk of death and property damage. Stated simply, does it make sense for the City to be investing that kind of money in a downtown convention hotel when convention attendees won't be able to get to it from Hobby Airport? The main drag to the Gulf Freeway and downtown from Hobby Airport -- Broadway Street -- is already virtually impassable during even moderate rainstorms.

Maybe taking a flyer on a second downtown convention center hotel would make more sense but for the billions blown on the light rail system. But the size of that boondoggle leaves a very small margin for error in regard to allocation of the City's remaining resources. At this point, a large investment in a second convention center hotel appears to fall well outside that small margin.

By the way, speaking of the Astrodome hotel project, it appears now that even Harris County officials believe that the deal is dead. However, the proposed alternative is to turn it into a horse barn?:

Meanwhile, there could be three or four groups prepared to present plans to transform the Dome.

The Houston Livestock Show and Rodeo may be one contender, said Leroy Shafer, the rodeo's chief operating officer. The rodeo and partners are looking into whether the Dome could serve as a replacement facility for aging Reliant Arena.

Astroturf and tiered stadium seats would give way to more than 1,000 horse stalls and an arena with a capacity of at least 6,000. The vast open area where former Astros stars Jimmy Wynn and Jeff Bagwell hit towering drives would be turned into a three-story exhibition and stalling space, Shafer said.

Posted by Tom at 12:10 AM | Comments (2) |

Have I got a deal for you

Bowie Bonds hit baseball. Or is this a case of a player having an IPO on himself? (H/T Alex Tabarrok)!

You have to give markets credit -- they have created a way for prospects to buy a form of insurance on their careers.

And, as usual, Larry Ribstein asks the essential legal question.

Posted by Tom at 12:05 AM | Comments (0) |

You think it's hard being a Houston sports fan?

As noted earlier here, it's not easy being a fan of Houston sports teams. But as difficult as that may be, it's nothing compared to the angst that long-suffering New York Jets fans are enduring as a result of having their two most-hated rivals in Super Bowl XLII:

Perhaps the only thing worse for Jets fans than watching their team finish 4-12 this season, is knowing the historic Feb. 3 matchup pits their big-brother co-tenants, the Giants, against Bill Belichick and the ever-villainous Patriots.

"I can't wait for this to be over," said [longtime Jets fan Ira] Lieberfarb, a 53-year-old auto-parts wholesaler and a regular caller on local sports-talk radio who attends virtually every Jets game, home and away. "Whichever team wins it, I'm going to suffer. I grew up in Sheepshead Bay getting abused by Giants fans and mostly everyone at my party will be Giants fans. I can't escape that. But I don't know a single Jets fan that could root for the Patriots and Belichick."

Which reminds me of the funny video below that chronicles the reaction of Jets fans to their team's horrible draft picks from over the years:

Posted by Tom at 12:00 AM | Comments (1) |

January 23, 2008

At least he's consistent

Well, at least Rudy Giuliani behaved consistently both before and after becoming Mayor of New York City (Reason's David Weigel also provides this interesting Giuliani piece along the same lines).

Having said that, I don't think that's the type of consistency that most reasoned folks want in a U.S. President.

Posted by Tom at 12:10 AM | Comments (1) |

Rating the recruiting classes

Now that the long college football season has finally ended, the more avid fans turn to the annual period of speculation (see previous posts here and here) as to where the top high school football players will end up playing college football. Along those lines, the Sunday Morning Quarterback blog provides this interesting post that attempts to correlate the top big-time college football programs' performance relative to the rating of their recruiting classes over the past several years.

The entire SMQB blog post is well worth reading and I don't want to give anything away, but let's just say that Texas A&M appears to have made the right decision after last season.

Posted by Tom at 12:00 AM | Comments (0) |

Advances in Islamic divorce law

Certain areas of Islamic law remain archaic. However, it appears that at least technological progress is being made in the area of Islamic divorce law.

Posted by Tom at 12:00 AM | Comments (0) |

January 22, 2008

Birds of a feather?

Perhaps coincidentally, I came across the following two news reports consecutively yesterday morning. First from this BBC article:

Venezuelan President Hugo Chavez has threatened to nationalise farms, in an effort to tackle food shortages.

Government controls keep food prices low in shops to help even the poorest Venezuelans feed themselves.

But some farmers prefer to sell their produce in neighbouring countries where prices are higher, leading to shortages of bread, milk, eggs and meat.

In his weekly television show, Mr Chavez said farmers doing this should have their farms "expropriated". [. . .]

On Saturday, Mr Chavez threatened to nationalise banks which did not give enough low-interest loans to farmers.

Banks are not allowed to charge farmers interest higher than 15% - even though inflation last year ran at 22.5%.

"The bank that fails to comply must be sanctioned, and I am not talking about a little fine," he said. "The bank that does not comply must be seized." [. . .]

Critics say complying with government policy could drive some businesses into bankruptcy.

Then, a little closer to home, came this NY Times article on Democratic Party Presidential candidate Hillary Clinton's views on government control of the economy:

Senator Hillary Rodham Clinton said that if she became president, the federal government would take a more active role in the economy to address what she called the excesses of the market and of the Bush administration.

. . . Mrs. Clinton put her emphasis on issues like inequality and the role of institutions like government, rather than market forces, in addressing them.

She said that economic excesses — including executive-pay packages she characterized as often “offensive” and “wrong” and a tax code that had become “so far out of whack” in favoring the wealthy — were holding down middle-class living standards. [. . .]

“If you go back and look at our history, we were most successful when we had that balance between an effective, vigorous government and a dynamic, appropriately regulated market,” Mrs. Clinton said. “And we have systematically diminished the role and the responsibility of our government, and we have watched our market become imbalanced.”

She added: “I want to get back to the appropriate balance of power between government and the market.” [. . .]

“We’ve done it in previous generations,” she said, alluding to large-scale public projects like the interstate highway system and the space program. “But we’ve got to have a plan.” [. . .]

“Inequality is growing,” Mrs. Clinton said. “The middle class is stalled. The American dream is premised on a growing economy where people are in a meritocracy and, if they’re willing to work hard, they will realize the fruits of their labor.”

So, on one hand, Chavez is demonstrating that, even with the economic benefit of having high-priced oil to export, a government can still lower the living standards of its citizens if it tries hard enough.

On the other hand, Hillary does not appear to recognize that her proposals are quite capable of accomplishing the same thing within the world's most dynamic economy.

Posted by Tom at 12:10 AM | Comments (0) |

Recommendation of the Day

I'm not sure exactly what it means, but it cannot be a good thing for the PGA Tour that the biggest news so far in the pre-Tiger Woods part of the season is the controversy over Golf Channel host Kelly Tilghman's poor attempt at humor a couple of weeks ago.

It's fair to say that Tilghman's comments were blown completely out of proportion. Tilghman by all accounts is a charming person and a good reporter, but she is placed in a position by the Golf Channel where she has to fill up hours of time over many weekends by making idle banter with her co-host, Nick Faldo. Few people this side of Letterman or Leno have the ability to make witty comments over such prolonged periods. If you don't believe it, then just listen to your local news anchor's banter with the weatherperson and sports anchor on the evening news. Consequently, it's hardly surprising that Tilghman made a mistake in judgment under the circumstances.

At any rate, the completely humiliated Tilghman apologized quickly and earnestly to Woods, who graciously accepted her apology and tried to play down the whole matter. Meanwhile, under pressure from the Al Sharpton's of the world, the Golf Channel probably overreacted a bit by suspending Tilghman from her Golf Channel duties for two weeks. But at least that seemed to be the end of the entire affair.

But not so fast. In a truly remarkable display of bad judgment, GolfWeek magazine ran a cover story about the Tilghman affair in last week's issue that contained a cover photograph of a hangman's noose. Amidst an immediate public outcry, the PGA Tour and several advertisers threatened to pull their accounts with Golfweek, prompting the magazine to fire its longtime editor and vice president, Dave Seanor. Ay, yi yi, yi, yi!

So, as all that dust settled, longtime PGA Tour and Senior PGA Tour member Jim Thorpe cut Tilghman some slack, but blasted Golfweek over this past weekend:

"We know there was no racist intent. It was just a bad choice of words,'' he said [with regard to Tilghman]. "But the guy from Golfweek? Let him get barbecued. That's just a major mistake on his part.''

Which leads us to the recommendation of the day from golf writer and blogger, Geoff Shackelford:

"Just a suggestion to the Golfweek staff: I would not put an image of Jim Thorpe barbecuing Dave Seanor on this week's cover."

Posted by Tom at 12:05 AM | Comments (0) |

The Thompson plan

Last week, Ironman over at Political Calculations reviewed the Giuliani income tax simplification plan. This week, he tackles the even more impressively simple tax simplification plan advocated by GOP Presidential candidate, Fred Thompson.

Of course, as if on cue, Thompson dropped out of the GOP race today.

Posted by Tom at 12:00 AM | Comments (0) |

January 21, 2008

The Civil War in Four Minutes

And to The Ashokan Farewell, no less!

Posted by Tom at 12:10 AM | Comments (2) |

The power of Twitter

On Dwight Silverman's recommendation, I've been checking out Twitter over the past couple of weeks and am impressed with it. Although people use it in different ways, Twitter is essentially a social networking and instant communication network. This interesting site called Twittervision provides a quick visual of Twitter's power and potential. Check out Twittervision and give Twitter a try.

Posted by Tom at 12:05 AM | Comments (0) |

Visual Medical Dictionary

This is quite interesting.

Posted by Tom at 12:00 AM | Comments (0) |

January 20, 2008

The improving conversation about PED's in baseball

As noted earlier here, the Mitchell Commission Report is a sloppy hatchet job. However, the report has had the beneficial impact of prompting more reasoned voices to emerge regarding the use of steroids and other performance enhancing drugs in professional baseball to offset the mainstream's media's typical demonization of the players. Here are a few examples:

Eric Walker's new website Steroids and Baseball is worth a look. Walker provides an interesting analysis of power hitting performance over the modern eras using a time series of power factor statistics. Based on putting the time series together at critical points where there is a change in the baseball or an interruption in personnel from a war, Walker shows that you get a series that does not show any meaningful increase in power hitting as measured by the power factor. Indeed, the power factor in the so-called steroid era is no higher than in other eras after subtracting the cumulative effects of changes in the baseball in preceding eras from the time series. In addition, Walker surveys research on the benefits and costs of steroids on athletic performance and health, and again concludes that the results are not all that clear. H/T Art DeVany.

Meanwhile, Radley Balko links to an article by sportswriter Dan Le Batard noting a point that I've frequently made in my prior posts on PED use in baseball -- the motivation behind the use was to improve the capacity of the user's body to hold up under the physically brutal and pathologically competitive nature of MLB. Balko concludes with the following wise advice:

At some point, athletes, rules makers, fans, and ethicists are going to have to drop the hysterics, and begin a serious conversation about all of this. Shaming, prison, and witch hunts aren’t going to make these issues go away.

Following up on Balko's thoughts, this Shawn Macomber/American Spectator article reports on a recent panel discussion over PED use in which Balko participated. Another participant in that panel discussion was Norman Fost, professor of pediatric medicine and director of the Program in Bioethics at the University of Wisconsin, who is the subject of this Chicago Tribune profile. Fost believes that steroids should be available, under a doctor's supervision, to any pro or amateur adult athlete who wants them:

In all the health and morality questions about steroids, Fost said: "It's as though the drug hysteria serves as a distraction from more serious issues. You'd be hard-pressed to find a single death associated with steroid use, yet the TV cameras keep showing [Red Sox manager] Terry Francona drooling disgusting spit from something [chewing tobacco] that has a very high cancer rate associated with it.

"You have 400,000 deaths a year due to tobacco and tens of thousands of alcohol-related deaths, a substance heavily promoted by Major League Baseball, yet the president and Congress and the press have virtually nothing to say about tobacco and alcohol in athletics, but lots to say about steroids. A football player spending more than three years in the NFL has an 80 to 90 percent chance, according to one study, of some permanent disability, but the NFL produces films focusing on the most vicious hits. The dangers to health in sports today come not from enhancement but the sport itself."

Similarly, Malcolm Gladwell builds on his earlier posts on the issue of PED's in baseball with two more posts (here and here) in which he notes the following:

It is perfectly legal for an athlete to undergo "performance enhancing" eye surgery, that moves him from, say, the 50th to the 95th percentile in sight. It is not legal for that same athlete to take "performance enhancing" hormones that move his testosterone from the 50th to the 95th percentile--even thought the additional advantage of the eye surgery may be greater than the additional advantage conferred by the exogenous testosterone. Now, there may be a perfectly valid distinction between those two interventions. But what is it? Shouldn't it be spelled out before we drum Roger Clemens and Barry Bonds out of the Hall of Fame?

Similarly, it is perfectly legal for an athlete to get painkillers after an injury, so he can continue playing (and, I would point out, risk further injury.) It is not legal for that athlete to take Human Growth Hormone, in order to speed his recovery from that same injury. Again, why? What is the distinction? Why is it okay to play hurt but not okay to try and not play hurt? There may be a perfectly valid reason here as well. But don't we need to spell out what it is?

I realize that the people running major league baseball and the NFL are not philosophers. But the intellectual sloppiness with which this current crusade has been conducted is appalling.

Indeed, last week's Congressional hearing over the Mitchell Report included an exchange toward the end that highlighted MLB's long tradition of indulging use of another type of PED -- amphetamines.

Moving on to the legal front, this Maury Brown blog post notes that Rusty Hardin -- whose strategy of defending Roger Clemens has been a head-scratcher from the beginning -- probably ought to quit giving interviews:

T.J. Quinn: Well, when someone sat and looked at just the numbers for Roger’s career, what conclusions do you think they drew?

Rusty Hardin: Oh, I think, I think they drew incredibly stupid inclusions—uh, conclusions, if they concluded that somehow you can look at his performance and it fits in. For instance, everybody talks about his, uh, doing it in order to extend his career. Think about it, T.J. The guy is supposed to have taken steroids in ‘98. In ‘97 he won the Cy Young. ‘98 he won the Cy Young.

T.J. Quinn: Brain McNamee’s—you know, his story was that Roger had already been taking steroids when he approached him in 1998, which would suggest…

Rusty Hardin: I didn’t remember that. You may—if you’re right about that, I didn’t know that.

T.J. Quinn: That’s what he said. That was in the Mitchell report and I think his lawyers addressed that as well, that Brian McNamee said, “I never suggested that Roger take them. He was taking them.” So that would—wouldn’t that explain…

Rusty Hardin: [OVERLAPPING] I never read that. Are you real sure of that?

T.J. Quinn: Quite.

And while many commentators are suggesting that Clemens' alleged PED use is unprovable beyond a reasonable doubt because it boils down to a swearing match between Clemens and his chief accuser, that is not a prudent bet to make. My experience is that lawsuits and investigations have a funny way of discovering people who have knowledge about swearing matches.

Finally, does anyone else get the impression that Houstonian Chuck Knoblauch may need the same type of mental block that he had while throwing a baseball from second to first base in regard to his upcoming Congressional testimony?

Posted by Tom at 12:05 AM | Comments (0) |

January 19, 2008

China Road

Clear Thinkers favorite James Fallows, who is currently working in China for The Atlantic, posts a recommendation for China Road (Random House 2007), a new book about China by NPR's long-time China correspondent Rob Gifford. Inasmuch as one of the best books that I read last year was Adrian Goldsworthy's extraordinary biography of Julius Caesar, Caesar: Life of a Colossus (Yale 2006), one passage from Gifford's book that Fallows includes in his blog post intrigued me, particularly given the West's difficulties over the centuries in maintaining normalized political relations with various Chinese governments:

Chairman Mao was just the most recent of a long line of re-unifiers, and if Emperor Qin were to return to China today, he would recognize the mode of government used by the Communist Party. I have to say that I find this idea rather scary, that two thousand years of history might have done nothing to change the political system of a country. Imagine a Europe today where the Roman Empire had never fallen, that still covered an area from England to North Africa and the Middle East and was run by one man based in Rome, backed by a large army. There you have, roughly, ancient and modern China. The fact that this setup has not changed, or been able to change, in two thousand years must also have huge implications for the question Can China ever change its political system.

Posted by Tom at 12:00 AM | Comments (0) |

January 18, 2008

On ham sandwiches and Texas Supreme Court Justices

The old saw is that a grand jury would indict a ham sandwich if asked to do so by the district attorney.

However, in Houston, a grand jury will indict a Texas Supreme Court Justice even if the DA doesn't ask it to do so.

As noted in this earlier post, Texas Supreme Court Justice David Medina, his wife and several family members have been in the cross-hairs of an arson investigation since their house and a couple of others in the neighborhood were damaged in a June 28, 2007 fire. A Harris County grand jury today indicted Justice Medina on a tampering charge and his wife on arson charges in connection with the fire.

However, in an unusual development (to say the least), the grand jury brought the indictment against the recommendation of the DA's office. Embattled Harris County District Attorney Chuck Rosenthal will request that the indictment be dismissed immediately because the DA's office has concluded that there is insufficient evidence to make a case that would withstand a defense motion for a directed verdict.

That's all well and good, but my question is this: If the DA's office knew going into the grand jury that they did not have sufficient evidence to make a case against Justice Medina, then why on earth did they bring the case before the grand jury at this time? Inquiring minds want to know.

Posted by Tom at 12:10 AM | Comments (4) |

Is the airline industry salvageable?

The chronically troubled airline industry has been a frequent topic on this blog over the years. Even as savvy an investor as Warren Buffett swore off investing in the airlines long ago. After a particularly distasteful experience in an airline investment back in the late 1980's, Buffett observed that if you calculated all of the airline industry's finances since the day the Wright Brothers flew the first plane at Kitty Hawk in 1903, you would discover that the airline industry has cumulatively not made a single penny of profit.

That led Mr. Buffett to suggest famously that, in hindsight, shooting down the Wright Brothers on that beach would have been a reasonable financial, if not moral, move.

However, Buffett's observations aside, when Larry Ribstein gets to the point where even he cannot figure out the structure of a solution to the mess of the airline industry, my sense is that this is an industry that is in serious trouble.

By the way, Professor Ribstein's feelings toward air travel these days are the same as mine.

Posted by Tom at 12:05 AM | Comments (0) |

Sizing up the Texans' needs

As At the beginning of the past two football seasons (here and here), I noted the trend of the blogosphere replacing the mainstream media as the more reliable and insightful source of information on the Houston Texans.

Now, as the Chronicle's Texans beat reporter writes about odd people who call into radio talk shows, Stephanie Stradley and Outlaw (see also here) size up the Texans' main personnel and coaching needs as the team enters the off-season.

As these posts reflect, the blogosphere is definitely rapping the knuckles of the Chronicle right now in the competition of providing meaningful information to the public about the Texans.

Posted by Tom at 12:00 AM | Comments (6) |

January 17, 2008

Signs of a dying regulatory scheme

Regular readers of this blog know that I believe the NCAA's regulation of big-time college sports is hopelessly corrupt, albeit an entertaining form of corruption (see previous posts here, here, here, here, here, here, here, here, and here).

That entertaining form of corruption is pretty valuable, too, as this Forbes List of the 20 Most Valuable College Basketball Programs reflects. And even at a top range of $25 million, the top basketball programs lag well behind the top football programs in value.

But one can only estimate how much these programs would be worth if they were unleashed from the obsolescent NCAA regulatory scheme. Particularly one that not only deprives its main income-generators from being paid their true value, but would open up an administrative investigation into an alleged regulatory violation involving a 97-year old icon:

Just before the start of this college basketball season, UCLA received a letter of inquiry from the NCAA, seeking information about possible illegal contact between a recruit and a person representing the interests of the university.

The recruit was Kevin Love, now the Bruins' star freshman center.

The person representing the interests of the university was [legendary 97-year old former UCLA coach] John Wooden.

The NCAA has not disclosed who made the complaint.

Love and his family visited Wooden during his recruiting trip. They had a nice chat, Wooden teased the Loves' young daughter, Emily, for being so quiet, and a nice time was had by all. [. . .]

. . . The NCAA, apparently shrugging off common sense and going with protocol, procedures and robot-ism, actually wrote a letter of inquiry to UCLA, requiring the school to investigate.

Posted by Tom at 12:05 AM | Comments (2) |

The fascinating "Flea"

Eric Turkewitz interviews Dr. Robert Lindeman, the Boston-based pediatrician who caused quite a stir last year when the Boston Globe broke the story that he was the anonymous blogger nicknamed "Flea" who was blogging a medical malpractice trial while participating as a defendant. One of Dr. Lindeman's answers even has a Houston twist:

A hypothetical question: You've been called for jury duty and the case involves a question of medical malpractice. What will you tell the attorneys during the jury selection process about your ability to sit impartially?

Answer: "I will tell them that Roger Clemens will admit to using performance-enhancing drugs before I will able to sit impartially on a malpractice jury."

Posted by Tom at 12:03 AM | Comments (0) |

Stoneridge redux

The blawgosphere's analysis has been extensive and insightful in regard to the Supreme Court's important decision Tuesday in Stoneridge Investment Partners v. Scientific-Atlanta (previous posts here), which upheld the Central Bank rule against holding third parties secondarily liable for damages for providing financing to a company that is found to have defrauded its investors. The Point of Law.com blog, which has been a leader in providing a forum for discussion of the issues in the case, provides links to many excellent commentators, including Professors Bainbridge and Ribstein, the latter of whom has this follow-up post to his initial one that is well worth reading.

Although the issues and policy implications involved in Stoneridge are easy to understand for those of us involved in business, it's interesting how many people who are not involved in business on a day-to-day basis have asked me about the case and why I think it's so important that the Central Bank rule be upheld. Why shouldn't the banks that facilitated a company defrauding its investors not have to contribute something into the compensation pot for the investors, they inquire?

I have found that directing the folks asking that question to the practical example presented in this earlier post usually does the trick in explaining why erosion of the Central Bank rule is a manifestly bad idea.

Posted by Tom at 12:00 AM | Comments (0) |

January 16, 2008

Texas' best golfer of the moment

There are only four PGA Tour players who have won a tournament in each of the past four seasons. Three of those four are easy picks -- Tiger Woods, Phil Mickelson and Vijay Singh. Who is the fourth?

None other than K.J. Choi of The Woodlands (previous post here), who just won his seventh PGA Tour event in the past eight seasons over the weekend. Choi now has over $17 million in career earnings.

Stu Mulligan over at Waggle Room makes the case that Choi has quietly become one of the elite PGA Tour players even though there is not any area of his game that stands out statistically in comparison to other Tour players. The tortoise still does beat the hare sometimes.

Posted by Tom at 12:05 AM | Comments (0) |

Becker on health care finance reform

Gary Becker proposes four common sense reforms for the American health care finance system, one of which is unassailable:

Eliminate the link between employment and the tax advantage of private health insurance. Since much of the spending on health are investments in human capital, there is good reason to exempt these expenditures, along with other investments, from income taxes. However, this employment link is inequitable because it does not provide the same tax advantages to families without employment-based insurance. It also encourages expensive employer health plans that have significant consumption components since the government picks up much of the cost of such coverage.

Posted by Tom at 12:02 AM | Comments (0) |

What's missing in the tax debate

Wouldn't it be nice if at least one of the Presidential candidates would embrace the basic reform that is really needed in the U.S. tax system? Simply simplification. Previous posts on tax simplification issues are here. Interestingly, one of my least favored Presidential candidates -- Rudy Giuliani -- has the best tax simplification proposal that I've seen so far during the campaign.

Posted by Tom at 12:00 AM | Comments (2) |

January 15, 2008

Re-evaluating boondoggles

Let me get this straight. Mayor White started out with a proposal several months ago to allow the local MLS soccer team to build a stadium at their own expense on downtown land that the City of Houston owned but was not using except for extra parking (previous posts here).

So, how did we get to the point where the City is now willing to pony up at least $20 million and exercise its eminent domain power to acquire land for the private owners of the team to build their stadium? Heck, we haven't even started to talk about who's going to pick up the tab for the cost of the necessary infrastructure improvements or how much "Central Planning Chief" Peter Brown's "mixed used development" ideas are going to cost (for the folly of such ventures, see here). By the way, Mr. Brown, what are the names of the other cities that are lining up to provide financing for a soccer stadium that makes you so sure that the Dynamo will leave if Houston doesn't provide it?

And to top it off, the proposed location of the proposed new stadium figures to increase the cost of an even larger boondoggle.

Granted, we're talking about throwing away "only" $20-30 million on this deal at this point. That's peanuts in comparison to what the City wastes annually on the light rail system. But the way this deal has developed leads one to question whether there is any adult supervision whatsoever down at City Hall? If it's acceptable to throw $20-30 million at a minor league soccer team, then what's next? $20-30 million for the Aeros?

Posted by Tom at 12:10 AM | Comments (3) |

A real train wreck

This LA Times op-ed by transit experts Jim Moore and Tom Rubin examining the LA area's MTA transit system over the past 20 years. They provide a daunting warning for those who rationalize the massive deficits of Houston's light rail system by contending that the system will become cost-efficient in the long run:

. . . the MTA has spent more than $11 billion since 1986 to build its rail network, and the effect has been to reduce total transit ridership on the system by more than 3 billion boardings. That's a bizarre result.

Shouldn't investments in transit infrastructure encourage, not discourage, transit use? So, why is Houston continuing to barrel down a path that LA has already shown is a poor way to invest in mass transit?

Posted by Tom at 12:07 AM | Comments (1) |

Trashing Tracy

Rockets star Tracy McGrady is not having a good season, which has prompted the inevitable local criticism that McGrady is an overrated player who is not "tough" enough to lead his team to success in the NBA playoffs.

On the other hand, Kobe Bryant is widely considered to be one of the best players in the NBA and far superior to McGrady. Ask your average Rockets fan whether they would trade McGrady for Bryant, most would approve the deal in the proverbial "New York minute."

So, statistician Dave Berri compares the careers of McGrady and Bryant. The result of his analysis may surprise you.

Hint -- peer effects make a big difference in basketball.

Posted by Tom at 12:05 AM | Comments (0) |

January 14, 2008

The rotting Enron criminal prosecutions

You won't read about it much in the mainstream media, but the Enron-related criminal prosecutions increasingly smell like a rotting carcass.

After Jeff Skilling was lynched by an angry mob, most of the mainstream business media moved on to other stories, such as various Wall Street firms taking write downs that are far in excess of the $1.1 billion in non-recurring 3rd quarter 2001 charges that began the media-fueled run on Enron that ended with the firm in bankruptcy and many of its executives in the cross-hairs of federal prosecutors. Contrary to public perception, this earlier post chronicled how the Enron Task Force's actual effort in proving Enron-related crimes was nowhere near as effective as its public relations campaign in demonizing the defendants in the Enron-related criminal cases.

To her credit, the Chronicle's Kristen Hays remains one of the few mainstream media reporters who is following up on the Enron-related prosecutions. In this recent article, Hayes reports on the oral argument at the Fifth Circuit Court of Appeals of the Department of Justice's attempt to salvage at least a smidgen of the dubious conviction that the Task Force obtained in 2006 against former Enron Broadband executive Kevin Howard. U.S. District Judge Vanessa Gilmore threw out the conviction based largely on the Fifth Circuit's prior decision in the Nigerian Barge case (see also here).

During oral argument on its appeal, the DOJ's "best" argument before the Fifth Circuit panel was that the prosecution should not have given Judge Gilmore a flawed jury instruction linking the one count that it contends should survive with the four counts that the DOJ concedes should be tossed out. As Hayes reports, "A skeptical [Fifth Circuit Judge Patrick E.] Higginbotham noted that the prosecution supported the instruction and nearly two years later on appeal is saying it shouldn't have been given."

As they say in appellate circles, that's not a good signal from the bench for the DOJ.

If the Fifth Circuit does as expected and denies the DOJ's appeal, then the DOJ will confront whether to try Howard for a third time on Enron-related charges. And given the DOJ's track record, I wouldn't put it past them.

Meanwhile, in a development that I didn't see picked up by any of the mainstream media, U.S. District Judge Ewing Werlein effectively put off the trial of former Merrill Lynch bankers Daniel Bayly and Robert Furst for a year or so by granting Bayly and Furst an interlocutory appeal of a part of his recent decision denying their motion to dismiss the DOJ's ongoing attempt to re-try them in the Nigerian Barge case. Judge Werlein's decision to grant the interlocutory appeal puts that re-trial off for the better part of a year, at least.

Finally, as this recent post noted, Skilling's defense team and the defense teams for the former Merrill bankers are currently sifting through the notes of FBI and Task Force interviews with former Enron CFO Andrew Fastow, who was a key witness in the Skilling trial and a key player in the Nigerian Barge trial. Inasmuch as Task Force attorneys withheld information from those interviews from both defense teams prior to the trials in both cases, if the notes of the Fastow interviews reflect that prosecutors withheld exculpatory evidence or induced Fastow to change his story over time, then that would be strong grounds for reversal of Skilling's conviction and dismissal of the remaining charges against the Merrill bankers. Stay tuned.

Quite a record of that Enron Task Force, eh?

Update: Larry Ribstein points out that these should have never been criminal cases in the first place.

Posted by Tom at 12:10 AM | Comments (2) |

Myths about oil are hard to dispel

Amidst the demagoguery of a U.S. Presidential campaign, it's rare to find the mainstream media willing to run Robert Bryce's common sense on energy policy and oil prices. For example:

Myth 3: Energy independence will let America choke off the flow of money to nasty countries.

Fans of energy independence argue that if the United States stops buying foreign energy, it will deny funds to petro-states such as Iran, Saudi Arabia and Hugo Chavez's Venezuela. But the world marketplace doesn't work like that. Oil is a global commodity. Its price is set globally, not locally. Oil buyers are always seeking the lowest-cost supplier. So any Saudi crude being loaded at the Red Sea port of Yanbu that doesn't get purchased by a refinery in Corpus Christi or Houston will instead wind up in Singapore or Shanghai.

Refer to this article whenever you are listening to the candidates from either party start talking about energy policy. Come to think of it, while considering political choices, you should also keep handy this Bryan Caplan/WaPo op-ed entitled 5 Myths About Our Ballot-Box Behavior.

Posted by Tom at 12:05 AM | Comments (2) |

More costs of prohibition

Geez, could legalization and regulation really be worse than this?

Posted by Tom at 12:00 AM | Comments (0) |

January 13, 2008

The People's Republic of Massachusetts

The development of in-store health care centers over the past decade has unquestionably been a positive development for the American health care system. They provide relatively inexpensive primary care and take some of the burden off of over-crowded emergency rooms that are currently required to provide non-emergency care to folks who have no other conduit to the health care system.

So, in the face of this important service that the in-store health centers are providing to people and communities, what does the Mayor of Boston want to do? Stop them from making money! (H/T Radley Balko):

Mayor Thomas M. Menino embarked on a highly public campaign yesterday to block CVS Corp. and other retailers from opening medical clinics inside their stores, . . . Menino blasted state regulators for paving the way Wednesday for the in-store clinics, which are designed to provide treatment for sore throats, poison ivy, and other minor illnesses.

The decision by the state Public Health Council, "jeopardizes patient safety," Menino said in a written statement. "Limited service medical clinics run by merchants in for-profit corporations will seriously compromise quality of care and hygiene. Allowing retailers to make money off of sick people is wrong."

In a separate letter, Menino urged members of the city's Public Health Commission to consider barring the clinics from Boston.

Meanwhile, W$J columnist David Wessel writes "The business model for big U.S. banks is broken. . . . Banks and Wall Street could devise a better business model. But they'd best hurry. If they don't act, regulators will. And if regulators don't, House Financial Services Committee Chairman Barney Frank and the other Democrats in Congress will."

Wessel's column and Frank's usual anti-business antics prompted Andrew Morriss to write a letter to the WSJ, which Don Boudreaux passes along over at Cafe Hayek:

Mr. Wessel is correct that most banks’ business models are not currently producing profits, but this is not cause for concern for anyone but their shareholders. Markets are a discovery process, with firms and investors learning as they try new ideas and react to changed conditions. What markets need is a stable regulatory environment, in which every dip in the market does not produce a new set of rules.

Unfortunately, there is little evidence that Rep. Frank and his comrades on the House Financial Services Committee understand this, making it virtually certain that they will rush to “solve” the banking crisis with new legislation. The best assistance Rep. Frank could offer would be to commit his committee to resolute inaction for an extended period of time, offering both banks and investors the assurance that the rules of the game would remain unchanged and allowing them to learn from their experience in the market place.

Posted by Tom at 12:00 AM | Comments (0) |

January 12, 2008

Conquering stress in the skies

It seems as if everyone who has been traveling recently has a horror story to relate about an abysmal experience with an airline. Heck, air travel has become so distasteful that I don't even think about flying anymore if I'm traveling within the Houston-Dallas-Austin/SanAntonio triangle here in Texas. I have an excellent chauffeur (i.e., my wife) who handles the driving while I work. It's far more pleasant than dealing with the non-stop hassles of air travel.

But if you simply must endure air travel these days, take a moment to read this Peter Greenberg article that provides about a half-dozen tips for minimizing stress during air travel, such as:

Avoid "direct" flights. The only good flight is a nonstop flight. Labeling a flight "direct" is an airline euphemism that means you'll stop at least once, exponentially increasing your chances of being delayed.

Posted by Tom at 12:00 AM | Comments (1) |

January 11, 2008

I wonder what she thinks about the guys over at the Masonic Temple?

Putting Chuck Rosenthal's troubles aside for a moment, does anyone else think it's time to clean house at the Harris County District Attorneys' Office?:

Republican district attorney candidate Kelly Siegler told a judge last year that members of Houston's Lakewood Church are "screwballs and nuts" and that she works to keep them off of juries.

Siegler made the comment while defending herself from a defense attorney's suggestion that she struck a man from the jury pool in a capital murder case because he is black. It wasn't the man's race that prompted Siegler to eliminate the man from the jury pool, she said. It was the fact that he attends Joel Osteen's megachurch.

"To start with, he's a member of Lakewood Church. And we have had a running agreement, my partner Luci Davidson and I have, since we started, that people who go to Lakewood are screwballs and nuts," Siegler said, according to the court transcript. "I'm very familiar with that church. We try our hardest not to put anybody who goes to Lakewood regularly on any jury, he's a pretty devout member of Lakewood Church. That's one reason that scared me about the man."

Siegler went on to give other reasons why she didn't want him to be on the jury including his membership in the NAACP, a group that opposes the death penalty.

Siegler confirmed today that she complained about Lakewood attendees on the record, but said the comment was taken out of context.

"I was talking to a juror who, in my opinion, was very weak on the death penalty," Siegler said. She said she was obligated to give her reasons for striking the juror, "weak or strong, good or bad," which indicated that he would be weak on the death penalty.

Siegler also said she had never been to Lakewood, and was talking about things she heard about the church. [. . .]

Siegler attends Chapelwood Methodist church. [. . .]

The jury eventually sentenced [the defendant that Siegler was prosecuting] to death.

And that comes from one of this DA's office's "best" prosecutors. Summing up the absurdity of what has been going on in Houston over the past couple of weeks, Slampo provides a multiple choice test to determine how well you have been keeping up on developments.

Posted by Tom at 12:10 AM | Comments (0) |

But how do you really feel, Pete?

Geoff Shackelford interviews legendary golf course designer Pete Dye, who is not exactly a fan of the United States Golf Association:

"God bless the United States Golf Association. They have escalated the cost of maintenance, they have slowed down play, and they have completely lost control of the equipment. Outside of that, they have done a pretty good job."

Interestingly, Dye is also not a supporter of the trend toward ever-faster putting surfaces:

"The other cost escalation the USGA has encouraged is with speed of greens. When Ben Hogan won the U.S. Open at Oakmont [in 1953], then considered the fastest greens in the history of the world, the Stimpmeter was maybe six or seven. One of the things I’m doing in renovating my courses is reducing contour and slope to match today’s speeds. . ."

Read the entire interview. Dye is a true original.

Posted by Tom at 12:05 AM | Comments (0) |

America's worst 20 fast food items

Most folks can get by quite well with eating less than 2,000 calories per day. Each of these food items pretty well gets you there.

Caramel Banana Pecan Cream Stacked and Stuffed hotcakes?

By the way, just to show that you can find almost anything on the Web, The Healthy Dining Finder can help you pick healthier choices from standard restaurant menus by eliminating high-calorie add-ons.

Posted by Tom at 12:00 AM | Comments (0) |

January 10, 2008

A cheap sucker punch

During the entire 35 years that I've lived in Houston, the head basketball coaching position at Rice University has been a thankless job. Attempting to recruit good basketball players to Rice is hard enough, given the academic requirements and the greater university support for both the football and baseball programs. But attempting to recruit good basketball players to play at Rice's home of Autry Court -- which is a dump and not nearly as good a facility as most suburban high school gyms in the Houston area -- is nearly an impossible task.

Nevertheless, for the past 16 years, Willis Wilson has toiled gamely as Rice's head basketball coach. Although rarely have his teams been blessed with much talent, they have always competed hard and played to the best of their ability. Against overwhelming odds, Wilson has produced five Rice teams that have won at least 18 wins in a season and three of his Rice teams earned postseason NIT appearances. And through it all, Wilson has represented his institution as an articulate and professional gentleman.

Accordingly, most folks in the Houston community who have followed local college athletics for awhile like me were particularly pleased for Wilson last year when Rice undertook a long-overdue $23 million renovation of Autry Court that supposedly will bring the facility up to reasonably modern standards. During the renovation, which is not scheduled to be completed until until January of next year, the Owls are being forced to play their home games in several locations around town, including one high school facility that is 35 miles from the Rice campus. But as usual, the classy Wilson hasn't complained a lick and is probably simply thrilled with being able to show off the plans of the renovated Autry to his players and recruits.

So, imagine my surprise when I picked the paper yesterday and saw this article from the Chronicle's Rice athletics beat writer:

Perhaps it is cruelly ironic that after spending more than a dozen years spearheading the effort to renovate Autry Court, Rice men's basketball coach Willis Wilson is facing a groundswell of criticism that might influence whether he coaches in the new facility.

In the midst of his 16th season at the helm of the Rice program, Wilson is enduring vitriol that is difficult to dismiss. [. . .]

The current state of affairs combined with past failures, real and perceived, have legitimized the question of whether Wilson, the most accomplished coach in the program's history, will occupy the bench next season when refurbished Autry Court will be unveiled. [. . .]

And what's even more galling is that the comments in the article from Rice Athletic Director Chris Del Conte make it clear that he certainly didn't want to dispel the rumors that Wilson's tenure at Rice may be over after this season:

"Those are always looming concerns," Rice athletic director Chris Del Conte said of the Owls' recent lack of success. "They're looming concerns because of the importance we're placing on men's basketball at Rice.

"We should be in a situation where we have a viably sustainable athletic program. A lot of private institutions understand the value that is placed on men's basketball in terms of a key financial component of an overall athletic program. And I'll take all those things into consideration as we move forward."

If Rice allows Del Conte to can Willis Wilson after 16 faithful years and before he has had an opportunity to recruit players to -- and have his teams compete in -- a reasonably modern facility, then Rice will make the hypocrisy of Todd Graham look benign in comparison.

And with that kind of hyprocrisy wafting from South Main, just wait until the Marching Owl Band has an opportunity to comment.

Posted by Tom at 12:10 AM | Comments (0) |

The irony of what brought Rosenthal down

Isn't it ironic that tough-guy district attorney Chuck Rosenthal was ultimately brought down as a result of his refusal to stand up to the Harris County Sheriff's Department?

As this Peggy O'Hare/Chronicle article reports, Rosenthal made the appalling decision to prosecute two brothers who were wrongfully arrested and roughed up by sheriff deputies for committing the heinous "crime" of unobtrusively videotaping from a neighboring property some questionable conduct of the deputies during a drug raid. What on earth was Rosenthal thinking in allowing such an absurd prosecution to go forward? No wonder he is in the middle of a wrongful arrest civil lawsuit.

By the way, the four deputies who wrongfully arrested the two brothers remain employed by the sheriff's department. And the Attorney General is now looking into Rosenthal's emails.

Posted by Tom at 12:05 AM | Comments (0) |

Grading the coaches

Following on this earlier post on the most overpaid big-time college football coaches and now that the seemingly unending college football season is mercificully over (and the playoff proponents want to make it longer?), the College Hot Seat posts its final grades (related blog post here) for the big-time college football coaches.

No Texas coaches get an "A." Texas Tech's Mike Leach is the highest graded Texas coach at a B+.

Posted by Tom at 12:00 AM | Comments (0) |

January 9, 2008

Retro golf

Golfweek's Brad Klein enjoyed that outdoor "Winter Classic" National Hockey League game in Buffalo that drew over 70,000 spectators on New Year's Day so much that he is proposing the professional golf equivalent -- a tournament where all the Tour players would be required to play old-style persimmon woods, forged irons and balata balls:

So if hockey can pull this off, why not golf? What better game for evoking youthful memories and feelings – of school-house swings, piecemealed equipment, and of a dreamy, pastoral playing field.

How about the PGA Tour putting together a “Summer Classic” tournament?

Players use older, wooden-headed drivers and “woods,” plus forged, not cast, irons and wound, balata golf balls – the kind that anyone who is 30-plus years old today grew up learning the game with. Forget caddies. Players carry their own golf bags. No yardage books or pin sheets. Golfers eyeball everything and improvise their shots. Leave the bunkers rakes in the maintenance shed. Mow the greens so they actually putt at different speeds.

How much fun would that be to watch? And to play?

The NHL’s “Winter Classic” was a success in every possible regard. And no surprise, despite (or was it because of?) the rough conditions, the game’s premier player, the Penguins’ Sid Crosby, not only displayed his amazing puck handling skills but also scored the winning goal. To their credit, the NHL’s administration even bent the rules slightly in the name of equity by stopping play midway through the third period and overtime to allow the teams to switch sides, lest either one gain an undue advantage from the elements.

That, to me, showed a lot of imagination. Don’t let rules nerds ruin the game in the name of some abstract lawyerly adherence when what counts is the spirit of the sport. With a little imagination and guts, golf, too, can go back to its traditions. It might be the best way of showcasing itself.

Not a bad idea for one of the many PGA Tour events that have fallen into the Tiger Chasm.

On the other hand, Geoff Shackelford already knows who the probable winner would be.

Posted by Tom at 12:10 AM | Comments (0) |

No sympathy

This NY Times article from the other day reports on the increasing numbers of lawyers and doctors who are plagued by self-doubt (who'd have ever thought that?). Mr. Juggles over at Long & Short Capital has no sympathy:

To the lawyers:

In case the Neiman Marcus purchases succeeded in lifting your morale and left you with the impression that what you did counted for something, please let me add some critical information: It doesn’t. This is why you are paid, on an hourly-adjusted basis, like a recent (2nd tier) college graduate.

To the doctors:

The fact that I was able to diagnose my own illness after 15 min on WebMD speaks to the value of your knowledge. Perhaps our relationship would be more productive if you would stop making me wait 3 days for an appointment (and 90 minutes once I get to the office) to diagnose a sinus infection that I already know I have. Give me the antibiotics without the self-importance. I will come see you again when I have something you can actually be helpful with. For instance, after I break my arm trying to carry my bonus home, I will come see you and you can set the cast. Until then, please stop whining.

Posted by Tom at 12:05 AM | Comments (3) |

Marketing to the Obama generation

Midwesterner Larry Ribstein -- who is currently on leave from the University of Illinois Law School while teaching in New York City -- humorously experiences culture shock while shopping in the Big Apple.

Posted by Tom at 12:00 AM | Comments (0) |

January 8, 2008

Dr. Pou's fog of Katrina

This Dr. Susan Okie/New England Journal of Medicine article (H/T Kolahun) provides the most extensive analysis to date of the circumstances surrounding the tragic deaths of the nine New Orleans area hospital patients during the aftermath of Hurricane Katrina that led to the egregious prosecutorial decision to bring criminal charges against one of the treating physicians, former University of Texas Medical School physician, Dr. Anna Pou (previous posts here). Dr. Okie addresses the key question of why these nine patients died ". . . in light of the eventual evacuation of about 200 patients from [the hospital], including patients from the intensive care unit, premature infants, critically ill patients who required dialysis, patients with DNR orders, and two 400-lb men who could not walk." It's an important question to address, but not in the context of a criminal case.

The fog of war analogy is certainly appropriate. Even with as good information as we have about the horrific conditions at the hospital in the aftermath of Katrina, it's still hard to imagine how difficult it was making even basic decisions in the face of the breakdown of civil society and infrastructure. What we do know is that Dr. Pou, who was not experienced in providing emergency medical services in what amounted to a heavy combat war zone, was no ethicist on mission to make a political statement. Rather, she was simply a physician doing the best she could to make the right decisions under the worst circumstances imaginable. It should not surprise us if, with the benefit of hindsight bias, some of those decisions would not have been the ones that a reasonable physician would have made under better conditions.

Posted by Tom at 12:10 AM | Comments (0) |

The power of words

James Fallows hits on what I believe is a very important dynamic in Barack Obama's surge past Hillary Clinton among Democrats -- the power of words:

Words and deeds. Talk and action. Poetry and prose. Presidents obviously do best when they can do both.

But only Obama captured what is unique about a president's role. A President's actions matter -- Lyndon Johnson with his legislation, Richard Nixon with his opening to China -- but lots of other people can help shape policies. A President's words often matter more, and only he -- or she -- can express them. Grant led the Union Army, but Abraham Lincoln, in addition to selecting Grant, wrote and delivered his inaugural and Gettysburg addresses. Long before Franklin Roosevelt actually did anything about the Great Depression, his first inaugural address ("the only thing we have to fear...") was important in itself. The same was true of Winston Churchill just after he succeeded Neville Chamberlain. It would be years before the Nazi advance would be contained, but Churchill's words and bearing were indispensable to Britain's recovery.

On the other hand, George W. Bush's difficulty in expressing himself publicly has exacerbated the perception of a rudderless Administration. With that constant reminder over the past seven years, I'm surprised that Clinton's handlers don't have her better prepared to express herself well in public debates. Perhaps, as with Bush, she simply lacks the public speaking gift of her husband. But I am continually amazed at how often her extemporaneous public statements are littered with the ubiquitous "you know" crutch as she gathers her thoughts. That habit, as well as her instinct to default to a government solution on virtually every issue, fuels the perception that she lacks substance.

Posted by Tom at 12:05 AM | Comments (0) |

YouTube for eggheads?

This looks as if it has great potential. The NY Times has the background story on the project.

Posted by Tom at 12:00 AM | Comments (0) |

January 7, 2008

Colbert on Protestantism

Clear Thinkers favorite Stephen Colbert is back at it, this time taking dead aim at American Protestantism (Colbert is a Catholic) in his new book, I Am an American (and So Can You!) (Grand Central 2007). Ben Witherington has read the book and passes along Colbert's view on Religion from chapter 4:

Chapter 4 of the book is devoted to "Religion" and begins auspiciously with a quote from a Doobie Brothers song "Jesus is just alright with me." To this is added Colbert's retort-- "But are they alright with Jesus? Drop the reefer boys, and pick up a Bible!"

His discussion of denominations begins with the reminder that the Roman Catholic Church is "the church." He adds "Catholics have many advantages over other Christians. One is marble. For the buck I put into the collection plate, I want some production value. That means a church, not some community center that doubles as basketball court. Also Catholics have saints-- more than 10,000 of them. They're like God's customer service reps, and each of them has a speciality." (p. 53).

But then he gets down to brass tacks with Protestanism, here defined as "This is a variant form of Christianity, or 'heresy'." He adds "Protestants don't make me angry as much as disappointed. Unlike the world's crazy made up religions, they're so close to getting it right. They're a single Pope away from reaching their full potential." (p. 53). He says that now that Protestants have had "their little 490 year protest, it's time to move on and stop dwelling in the past." Here's his blow by blow account of various Protestant denominations:

Episcopal Church: "Why don't Episcopalians just come out and say it-- their Anglicans! A bunch of Tory Loyalist Brito-philes...waiting for the day America let's her guard down and they can reinstate Henry VIII"

Methodist Church: "What, the Church of England wasn't heretical enough for you?"

Presbyterian Church: "Presbyterians are identical to Methodists except that one of them says "debt's" instead of "trespasses" in the Lord's prayer. Hundreds of years of bitter armed conflict has failed to resolve this difference. How many more lives must be lost?"

Baptist Church: "I'm a pious guy but even I have my limits. I draw the line right around spending eight hours in church every Sunday. Church should be a solemn 45 minutes to sit quietly and feel guilty, with donuts at the end to make you feel better. I don't go for a full day of singing, dancing, and rejoicing, no matter how nice the hats are. I prefer my Gospel monotonously droned to me from the pulpit, thank you very much."

Quaker Church: "There folks produced only two things I like--Oatmeal and Richard Nixon."
(all the above is on pp. 54-55).

I will spare you his comments on Unitarians, Mormons, and Jews. He defines agnostics as "Atheists, without balls."

He also provides a svelte commentary on the nature of the Bible, for example stressing "After Jesus showed up, the Old Testament basically became a way for Bible publishers to keep their word count up." (p. 57).

Posted by Tom at 12:10 AM | Comments (2) |

Say what?

Let's see now. Patriots quarterback Tom Brady has had one of the best seasons from a performance standpoint of any QB in NFL history. He led his team to a 16-0 record, which is the best regular season record in NFL history. And someone still actually voted for Brett Favre over Brady as the NFL's Most Valuable Player?

I think I know who voted for Favre.

Posted by Tom at 12:05 AM | Comments (0) |

Last chance for glory

This is one of the best ideas for a birthday party that I've seen in quite awhile.

My wife told me not to bother to sign up because she would kill me before I could even attend a practice. ;^)

Posted by Tom at 12:00 AM | Comments (0) |

January 6, 2008

"Che" Kennedy, Hugo Chavez’s useful idiot

This Examiner.com article picks up on something that this previous post noted over a year ago -- the economic absurdity of Joe "Che" Kennedy's deal with Venezuelan strongman Hugo Chavez under which Kennedy's non-profit Citizens Oil Corp buys discounted oil from Venequela to provide low-income American customers with a 40 percent discount on a one-time delivery of up to 200 gallons of heating oil. Kennedy rationalizes this program despite the fact that the poorest of Citizen's customers are relatively wealthy in comparison to the 40% of Venezuelans who subsist on about $2 a day. The Examiner concludes its story with the following observation:

Curiously, despite his wealth, Kennedy receives a $400,000 annual salary [from Citizens, which is a non-profit]. Instead of embracing his uncle's [the late John F. Kennedy] courageous anti-communist legacy, he has become just another smarmy celebrity who yammers on about having compassion for the poor from the doorways of multimillion-dollar mansions and private jets, all the while accepting oil stolen by a dictator. Lenin had a name for Western liberals who did this kind of thing – "useful idiots."

Posted by Tom at 12:20 AM | Comments (0) |

January 5, 2008

The Great Debaters

My younger daughter, my wife and I took in Denzel Washington's new film the other night, The Great Debaters. Although the story was somewhat formulaic and the movie certainly not perfect, we found the movie to be hugely entertaining. The acting is superb, particularly the reliable Mr. Washington and newcomer Denzel Whitaker, a delightful young actor who literally steals the show as the youngest of the college debaters. Mr. Washington, who also directed, wisely decided to tell the story through Mr. Whitaker's character (James Farmer, Jr.), and Mr. Whitaker is more than up to the task. What a talent!

Interestingly, the always-excellent Forest Whitaker plays James Farmer, Sr., the father of the young Mr. Whitaker's character in the movie. However, despite their common last name, the two are not related.

At any rate, in discussing the movie on the way home afterward, my daughter observed that it sure is a good thing that the horrific racism depicted in the movie is not condoned in American society anymore. My reply was that brutal discrimination of blacks is still not as uncommon as we like to think. Scott Henson and Radley Balko comment on the unacceptable revelations of, at minimum, prosecutorial negligence in Dallas. Where is the outrage?

Posted by Tom at 12:00 AM | Comments (0) |

January 4, 2008

Judge Easterbrook has some fun with snake oil

Message to Snake Oil salespeople -- don't expect any breaks from Seventh Circuit Judge Frank Easterbrook.

In this clever opinion, Judge Easterbrook goes after the snake oil salespeople who promoted the Q Ray Ionized Bracelet. The promoters of the bracelet contend that it miraculously relieves arthritic pain through enhancing and balancing the "bio-energies" of the wearer. According to the promoters, the bracelet is even smart -- it "knows" its owner so as to prevent second-hand use of its magical qualities. Unfortunately, these magical properties wear off in after about a year, so the wearer has to buy another one to regain the magical healing properties. But $200 per bracelet is a small price to pay for pain relief, right?

After this form of snake oil had been peddled for a few years on infomercials, the Federal Trade Commission finally stepped in to enjoin the promoters and seek disgorgement of profits, which the District Court allowed to the tune of $16 million. On appeal, the promoters contend that they didn't commit any fraud because the placebo effect of the bracelet provided pain relief for many of its wearers. Judge Easterbrook isn't buying it:

Although it is true, as Arthur C. Clarke said, that “[a]ny sufficiently advanced technology is indistinguishable from magic” by those who don’t understand its principles (“Profiles of the Future” (1961)), a person who promotes a product that contemporary technology does not understand must establish that this “magic” actually works. Proof is what separates an effect new to science from a swindle. . .

The “tests” on which they relied were bunk. (We need not repeat the magistrate judge’s exhaustive evaluation of this subject.) What remain are testimonials, which are not a form of proof because most testimonials represent a logical fallacy: post hoc ergo propter hoc. (A person who experiences a reduction in pain after donning the bracelet may have enjoyed the same reduction without it. That’s why the “testimonial” of someone who keeps elephants off the streets of a large city by snapping his fingers is the basis of a joke rather than proof of cause and effect.) [. . .]

Physicians know how to treat pain. Why pay $200 for a Q-Ray Ionized Bracelet when you can get relief from an aspirin tablet that costs 1¢? Some painful conditions do not respond to analgesics (or the stronger drugs in the pharmacopeia) or to surgery, but it does not follow that a placebo at any price is better. Deceit such as the tall tales that defendants told about the Q-Ray Ionized Bracelet will lead some consumers to avoid treatments that cost less and do more; the lies will lead others to pay too much for pain relief or otherwise interfere with the matching of remedies to medical conditions. That’s why the placebo effect cannot justify fraud in promoting a product. Doctor Dulcamara was a charlatan who harmed most of his customers even though Nemorino gets the girl at the end of Donizetti’s L’elisir d’amore.

That's just a taste. Read the entire opinion. H/T Robert Loblaw.

Posted by Tom at 12:10 AM | Comments (1) |

Interesting golf stat of the week

The first edition of Golf World magazine each year is my favorite of the year. It's a stathead's dream as GW previews the upcoming PGA Tour season by providing extensive individual statistics of each Tour player from the previous season. It's always interesting to compare each player's financial performance on the Tour for the previous season with the statistical analysis of what he was doing well and not so well.

One particularly interesting GW comment involved Jeff Maggert, the longtime Tour player from The Woodlands. Maggert made over $845,000 in prize money during the 2007 season, but that was only good enough for 123rd on the Tour money list and a 255 ranking in the World Golf Rankings. GW's comment on Maggert highlights one of the dramatic changes in Tour golf over the past 14 years:

"Maggert's driving distance average (284.2 yards) ranked tied for 142nd on the Tour, but it would have led the Tour in that category as recently as 1994."

And this Ron Sirak article over at Golf Digest provides even more perspective on the dominance of Tiger Woods:

"There have been 44 majors played since Tiger turned pro. Besides Woods, five players have won multiple times: Phil Mickelson and Vijay Singh, both with three; and Ernie Els, Mark O'Meara, and Retief Goosen, two apiece. Add their totals and it comes to a dozen--one fewer than Woods."

Posted by Tom at 12:05 AM | Comments (1) |

Not much bang for the buck

A frequent topic on this blog (see earlier post here) is how the NCAA's hyper-regulation of big-time college football causes all sorts of financial disparities, not the least of which is that a part of the excess rents that should be paid to compensate players is paid to the top head coaches.

Well, not that big money paid to coaches is a hot topic on college campuses or anything, but I bet that the following performance of the five top-paid college football coaches will be the subject of at least a few conversations in faculty lounges around the country:

1. Charlie Weis ($4,000,000) - worst season in Notre Dame history.

2. Bob Stoops ($3,620,000) - fourth Oklahoma BCS bowl loss in a row.

3. Nick Saban ($3,503,000) - 'Bama avoided a losing record with an Independence Bowl win.

4. Urban Meyer ($3,384,000) - Gators have four losses with a Heisman Trophy winner at QB.

5. Kirk Ferentz ($3,030,000) - After finishing last season 6-7 with a bowl loss, Iowa finished this season 6-6 with a loss to a 5-7 MAC team and no bowl game.

H/T Get the Picture.

Posted by Tom at 12:00 AM | Comments (0) |

January 3, 2008

Landing the tuna rather than the barracuda

As noted here last month, Berkshire Hathaway chairman and mainstream media folk hero Warren Buffett is a key player and, as these NY Times and W$J articles report, perhaps even a key witness in the upcoming criminal trial of a former AIG executive and four former executives of Berkshire's General Reinsurance Corp, including former General Re CEO, Ronald E. Ferguson.

Although Buffett knew about the finite risk transactions that are at the heart of the prosecution, he is exempt from prosecution under the Buffett Rule. Previous posts on this case are here, here, here, here and here.

What's particularly interesting about all this is that the prosecution is attempting to prevent the defense from even mentioning Buffett, whose knowledge of the transactions (and the government's election not even to include Buffett as an unindicted co-conspirator, much less a defendant) is at least some evidence of the defendants' lack of criminal intent (Warren Buffett would not engage in any criminal conduct, now would he?). The prosecution is contending that any evidence relating to Buffett's knowledge of the transactions is hearsay and, thus, inadmissible. But until the testimony regarding Buffett's knowledge is propounded in court, who knows whether it is hearsay?

Of course, the prosecution is not shy about using hearsay testimony when it comes from someone who is not an avuncular media darling such as Buffett. The prosecution has fingered former AIG chairman Maurice "Hank" Greenberg as an unindicted co-conspirator in the trial, which -- based on previous experience -- means that the prosecution will use testimony about Greenberg's statements that would otherwise be hearsay.

As usual, Larry Ribstein sums up the vagaries of the government's policy of selectively criminalizing merely questionable business transactions:

One might think that the government would have been trying to ensnare Buffett, who would be a high-profile trophy. The problem is that trying a cultural icon like Buffett would raise public doubt about the legitimacy of the government's corporate crime enterprise. So Buffett gets the benefit of a version of the Apple rule -- . . . the Buffett rule. In this case, unlike Enron, it's better for the government to land the tuna than the barracuda.

According to the WSJ, the prosecution is arguing that "[t]he defendants want to deflect the issue of their involvement, knowledge and the intent relating to ... the fraudulent transaction at the heart of this case by creating a trial-within-a-trial about Warren Buffett." Deflect? Yes, I guess, for the government, a defendant's insistence on defending himself is a pesky nuisance.

The bottom line is that issues of defendants' guilt, including critical evidence of whether they knew they were engaging in wrongdoing, may not be available because, ultimately, the government decides who testifies by deciding whom to prosecute. All part of the costs of the extensive criminalization of accounting and other conduct of corporate agents.

Posted by Tom at 12:10 AM | Comments (0) |

The most influential person in sports that no one has heard of

The 30 Major League Baseball clubs invested $80 million in a fledgling media company. That initial investment has been repaid and the media company generated $450 million in revenues this past year, producing a $3 million dividend for each MLB club. Several investment banks recently estimated that the value of the clubs' original $80 million investment is now worth $2.5 billion.

Who managed this windfall for MLB? The most influential person in the sports business that no one has ever heard of -- Bob Bowman, the President and Chief Executive Officer of MLB Advanced Media (MLBAM). Maury Brown interviews Brown.

Posted by Tom at 12:00 AM | Comments (0) |

The Waziristan problem

Stanley Kurtz provides this must read op-ed on the safe haven for al Qaeda and the Taliban in northwest Pakistan that Lord Curzon once observed will not be pacified "until the military steam-roller has passed over the country from end to end . . . But I do not want to be the person to start that machine."

Posted by Tom at 12:00 AM | Comments (0) |

January 2, 2008

Legal schadenfreude?

Now, this is interesting. The ABA Journal is running a best blawgs contest. In the voting for the best general law blog category, one of my favorite blawgs (Overlawyered), which is run by a non-lawyer (Walter Olsen) and often provides a critical point of view toward the legal profession, is one of the leading vote-getters. Voting ends today, so don't miss your chance to send a message to the lawyers! ;^)

Posted by Tom at 2:48 PM | Comments (0) |

What's Rusty Hardin thinking?

As noted earlier here, I believe the Mitchell Commission Report is deeply flawed and fails to confront squarely Major League Baseball's long tradition of at least tolerating -- if not outright promoting -- the use of performance-enhancing drugs.

Moreover, Roger Clemens' attorney, Rusty Hardin, is unquestionably one of Houston's most talented trial lawyers.

However, I'm starting to wonder whether Hardin is out of his element in dealing with Clemens' professional crisis of being fingered in the Mitchell Report.

The first inkling that matters are not being particularly well thought out in regard to Clemens' problem was the announcement that Hardin had hired private investigators to assist him and attorneys in his firm in conducting "their own investigation into [Brian] McNamee’s allegations" that he had injected Clemens with PED's.

Now, maybe such a private investigation is a good idea to gather information informally that could be used to cast doubt on McNamee. But what purpose is served by announcing it publicly and making the information the target of Congressional subpoenas or discovery in a civil lawsuit, which is becoming increasingly likely? Sure, Hardin can claim that the information is privileged work product, but that's far from clear. Why create the bulls-eye in the first place?

And, as John Royal pointed out, Hardin's comparison of the Mitchell Commission investigation to the Army-McCarthy hearings of the 1950's is a stretch, to say the least.

But what really has me scratching my head regarding Hardin's strategy is this Murray Chass/NY Times interview of Hardin. Get a load of Chass' impression after interviewing Hardin:

But what if Hardin found one or two people who could say they saw Clemens use steroids and H.G.H.? Would he immediately terminate his investigation and announce that the report was correct? I didn’t ask, but based on his answers to other questions, I suspect that he would at least make it obvious that he was conceding.

Further, I believe that if he found credible evidence that Clemens used illegal substances, Hardin would convince Clemens that he had to be forthcoming and admit his use.

H'mm, that's certainly an interesting impression to leave about one's client. Chass goes on to make the following observation:

Finally, if Clemens did not use performance-enhancing drugs, then why didn’t he accept the invitation to meet with Mitchell so that he could tell him his information was wrong? That was the time to challenge the information, not when it has already been published.

“I don’t think it would have changed anything,” Hardin said. “They haven’t retracted anything. That’s probably proof that if he had talked to them, it wouldn’t have done any good.”

As Chass points out, what is there for the Mitchell Commission to retract? Clemens has done nothing but deny the allegations. Is Hardin suggesting that the Mitchell Commission would not have acknowledged Clemens' denials of McNamee's accusations had Clemens met with the Commission? Even as flawed as the Mitchell Report is, it's highly unlikely that the authors would not have reported that Clemens denied McNamee's allegations.

This is increasingly looking to me as a circumstance where Clemens has a first rate trial attorney working for him when what he really needs is a public relations crisis pro.

Update: At least the conversation about steroids and other PED's is improving.

Posted by Tom at 12:10 AM | Comments (1) |

Reefer madness

In an uncharacteristic display of coherence in the face of stifling prison overcrowding, the Texas legislature passed a law last year that took effect on September 1st that allows police to issue citations for possession of small amounts of marijuana (less than 4 ounces) instead of hauling folks off to an unpleasant and expensive experience in the local county jail. Sounds like a good idea, right?

Well, yes, except that it appears that most counties in the state are ignoring the new law. Why?:

For Greg Davis, Collin County's first assistant district attorney, one of his qualms with the new law is the perception created by ticketing for a drug offense, instead of making an arrest.

"It may . . . lead some people to believe that drug use is no more serious than double parking," Mr. Davis said. "We don't want to send that message to potential drug users, particularly young people."

Yeah, right. Those young people will certainly be safer from the "dangers" of marijuana in the local county jail, now won't they?

Scott Henson provides his usual lucid commentary.

Posted by Tom at 12:01 AM | Comments (1) |

So Chuck, what did you plan on doing after public service?

About the only question remaining regarding Harris County District Attorney Chuck Rosenthal is whether his holiday season was as bad as the Aggies'?

First, there were the revelations in a civil lawsuit that Rosenthal placed his former mistress in a cushy administrative assistant position and used DA office email to send sweet nothings to her, all of which was picked up quickly by such national media outlets as the NY Times and the Wall Street Journal.

But if that were not enough, Rosenthal -- in declining local GOP leaders' requests that he step aside for the 2008 election -- publicly stated that "the local Republican Party had never done much" for him in his 2000 and 2004 election campaigns and "that party leaders have become 'Chicken Littles,' unjustifiably fearful the scandal will damage the entire Republican roster of candidates in the county."

Well, those remarks are certainly an interesting way of engendering loyalty among the party faithful. ;^)

Finally, Rosenthal still has some explaining to do in the civil suit regarding the apparent deletion of 2,000 emails. Was the D.A. involved in destruction of evidence? Sheesh!

I'm no political pundit, but when an elected official seeks to retain a position as hard as Rosenthal is attempting to keep his in light of the above, it's a pretty good indication that it's past time to replace that official.

As usual, Kevin Whited, Slampo and Cory Crow have insightful thoughts on the affair.

Update: Late on Wednesday afternoon, Rosenthal withdrew as a candidate for District Attorney in the Republican primary.

Posted by Tom at 12:00 AM | Comments (0) |

January 1, 2008

Vidal v. Mailer

Until coming across this recent Dick Cavett blog post, I had forgotten about the time that Gore Vidal and Norman Mailer showed up as guests on Cavett's old television show one evening in 1971. For a good laugh to start the New Year, check out Cavett's memories of the bizarre episode.

Happy New Year and here's hoping you have a great '08!

Posted by Tom at 12:00 AM | Comments (2) |