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December 31, 2009

The Mike Leach Train Wreck

After what happened earlier this year, no one should really be surprised that Texas Tech University elected to fire Mike Leach yesterday.

But we still are. Just how does someone as successful and intelligent as Leach lose one of the 20 or so highest-paying jobs in big-time college football?

Absent a financial settlement between Tech and Leach, this mess will make for a particularly nasty lawsuit. From the beginning of their relationship, Tech has never been entirely comfortable with Leach, while Leach has been without success trying to find a better job than the Tech gig almost from the day he set foot in Lubbock. So, both parties have incentive to get this settled without exposing all that dirty laundry in court, notwithstanding Leach's somewhat provocative public statement about his termination.

Frankly, I don't have a clue from reading media reports whether Leach's handling of Adam James justified a termination for cause (i.e., no further compensation) under his contract. Football is a tough sport and coaches are often rough on players to make a point. Leach has also alleged publicly that James was a slacker and that his prominent father lobbied him and the other Tech coaches on behalf of his son. For what it's worth, Leach has supporters and detractors among the folks close to the program who have personal knowledge about the situation.

Although Leach's alleged conduct toward James was clearly odd and certainly meant to embarrass the young man, it's reasonably clear that James was never physically endangered or abused. Thus, this does not appear to be a situation that rises to the level of risking what happened to Ereck Plancher at at Central Florida last year or the alleged physical and verbal abuse that supposedly led to the recent resignation of Mark Mangino at Kansas.

On the other hand, this is another example of a situation that -- for whatever reason -- Leach just didn't handle well.

Beyond his shabby treatment of James, Leach was apparently given the opportunity by Tech to resolve the matter privately with an apology to James. Leach balked at that, so Tech suspended him from coaching the upcoming Alamo Bowl game. When Leach sued Tech seeking to be "unsuspended," Tech fired him (in my experience, employers often have that reaction when sued by their employees). That's not the advice I would have given Leach, but his lawyer (Ted A. Liggett) purports to be on the aggressive side.

Furthermore, stories about Leach's eccentric behavior have circulated for years. For example, Leach's tardiness for meetings is legendary (sometimes very tardy) and has caused much misery for his staff and players. When one of his players called Leach out on Twitter about that habit earlier this year, Leach reacted by banning Tech's players from using Twitter. Leach has also used poor judgment in making public remarks about assistant coaches on his staff.

Finally, although Leach did a good job at Tech, his public relations were better than his overall record.

But still, even with all that, how did it come to this?

Given Leach's eccentricities, there is certainly no assurance that any other big-time college football program will take a flyer on him -- it's telling that none came calling during his successful tenure at Tech. Leach has now blown a contract that would have paid he and his family around $11 million over the next four years and may well be the best contract that he ever has.

And what does he have left to show for it? A lawsuit.

As complicated as we tend to make such issues, my sense is that the answer to what would have prevented this imbroglio is really quite simple.

Mike Leach needs to grow up.

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

December 30, 2009

The risks of health care finance

A ran across a couple of particularly good articles yesterday regarding the current national debate over reform of the American health care finance system.

First, Canadian Mark Steyn does not believe that Obamacare's drift toward universal coverage will even be as effective as the underachieving Canadian model:

.  .  . Government health care turns out to be all government and no health care. Adding up the zillions of new taxes and bureaucracies and regulations it imposes on the citizenry, one might almost think that was the only point of the exercise.

That's why I believe America's belated embrace of government health care will be far more expensive and disastrous than the Euro-Canadian models. Whatever one's philosophical objection to the Canadian health system, it is, broadly, fair: Unless you are a Cabinet minister or a big-time hockey player, you'll enjoy the same equality of crappiness and universal lack of access that everybody else does.

But, even before it's up and running, Pelosi-Reid-Obamacare is an impenetrable thicket of contradictory boondoggles, shameless payoffs and arbitrary shakedowns.  .  .  .

Meanwhile, the WSJ's Anna Wilde Mathews provides this distressing analysis of the difficulties that a self-employed Phoenix businessman named James Mannett faced in tapping into catastrophic insurance coverage after being diagnosed with a particularly aggressive cancer:

In September 2005, Mr. Mannett felt a sharp pain in his abdomen. At the emergency room of Phoenix's St. Joseph's Hospital and Medical Center, a scan revealed a five-centimeter tumor on his small intestine, and three tennis-ball-size tumors in his liver. The doctor told him he likely had only two years to live.   .  .  .

Doctors removed the tumor on his small intestine and a third of his colon. He went home a week later, accompanied by his mother and a cousin, a nurse, who had come to care for him.

As Mr. Mannett recovered, the bills stacked up. Assurant (his health insurance company) wasn't making any payments, he says. Instead, the insurer demanded from Mr. Mannett the names and addresses of every doctor he'd seen for the previous five years, so it could verify that he hadn't concealed his cancer when he bought the policy. The investigation dragged on for months, until, according to Mr. Mannett, he called the insurer and warned that the next contact would be from his lawyer. Soon after, he says, Assurant paid the hospital more than $29,000, as well as several other bills.

Mannett's experience is the ugly side of the private health care insurance industry, which has a responsibility to shareholders to limit claims and maximize profits.

This dynamic is why I have always believed that a substantial governmental component -- preferably as a re-insurer on catastrophic policies provided by the private sector -- would be necessary in any well-structured health care finance system.

For all its virtues in terms of encouraging innovation and providing top-notch care, the current health care finance system simply does not deal well with the cost of catastrophic illness or injury, particularly where the cost exceeds private insurance limits.

Of course, resolving that issue necessarily involves tough choices, which is something that continues to be largely ignored in Congress during the current health care policy debate.

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

December 29, 2009

Thinking about security theater

Given the Homeland Security Department and Transportation Security Administration's typically over-the-top reaction (see also here) to the Christmas Day attempt to blow up a jet flying into Detroit from Amsterdam, one wonders at what point the government's elaborate "security theater" will finally make flying so miserable that it will choke the life out of the U.S. airline industry? Professor Bainbridge provides a good roundup of the blogosphere's discussion of that and related issues.

The latest incident also reminded me of this prophetic Bruce Schneier post from about a month ago. Schneier does the best job that I've read of explaining why a balance between legitimate and symbolic is helpful in deterring terrorism, but that most of Homeland Security's security theater is utterly misguided, as well as a waste of time and resources.

The entire post is excellent, but two points he makes are particularly important.

First, Schneier observes that the governmental impulse "to do something" in response to an attack is mostly misdirected:

Often, this 'something' is directly related to the details of a recent event: we confiscate liquids, screen shoes, and ban box cutters on aeroplanes. But it's not the target and tactics of the last attack that are important, but the next attack. These measures are only effective if we happen to guess what the next terrorists are planning .   .   . Terrorists don't care what they blow up and it shouldn't be our goal merely to force the terrorists to make a minor change in their tactics or targets  .   .   .

Even more importantly, Schneier points out that the right kind of security theater -- that is, the best way to counteract the damage that terrorism attempts to inflict upon all of us -- is to act as if we are not scared of it:

The best way to help people feel secure is by acting secure around them. Instead of reacting to terrorism with fear, we -- and our leaders -- need to react with indomitability.

By not overreacting, by not responding to movie-plot threats, and by not becoming defensive, we demonstrate the resilience of our society, in our laws, our culture, our freedoms. There is a difference between indomitability and arrogant 'bring 'em on' ehetoric. There's a difference between accepting the inherent risk that comes with a free and open society, and hyping the threats .   .   .

Despite fearful rhetoric to the contrary, terrorism is not a transcendent threat. A terrorist attack cannot possibly destroy a country's way of life; it's only our reaction to that attack that can do that kind of damage.

Schneier is spot on. Rather than making air travel increasingly distasteful, Homeland Security and the TSA ought to be encouraging Americans to spit in the terrorists' collective eye by traveling even more by air under reasonably tolerable and legitimate security arrangements.

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

December 28, 2009

2009 Weekly local football review

(Doug Benc/Getty Images photo; previous weekly reviews for this season are here).

Texans 27 Dolphins 20

The Texans (8-7) continue to have a remote chance of gaining an AFC playoff spot with their 27-20 victory over the Dolphins (7-8), but the way in which they won reflected why many folks are skeptical that Gary Kubiak has what it takes as a head coach to propel the club to success in the playoffs.

The Texans need to win next Sunday against the Patriots (10-5) at Reliant Stadium (a distinct possibility because the Patriots locked up the AFC East title on Sunday) and for two of the three other 8-7 teams — the Ravens, Jets or Broncos — have to lose for the Texans to achieve an AFC wild card playoff spot.

Nevertheless, the Texans playoff chances are not all that great. The Jets play the Bengals (10-5), who have clinched the AFC North, so that looks like a probable win for the Jets. The Ravens go on the road to play the Raiders (5-10), so who knows what will happen there. But the Broncos host the Chiefs (3-12), so that's not looking good from the Texans standpoint. I don't see two losses for the 8-7 teams coming out of those three games

After playing their best half of football all season, the Texans led 27-3 at the half. The first half was so lopsided that, at one point, the Texans had outgained the Dolphins 310-46 in total offense and 15-2 in first downs. A field goal immediately before the half was all that kept the Dolphins from being skunked.

But if the rest of the game was easy, this wouldn't be the Texans.

As has inexplicably occurred on multiple occasions during Kubiak's tenure as head coach, the opposition made routine adjustments at halftime and the Texans appeared to make none. The result? Not surprisingly, the Dolphins dominated the second half and probably would have at least tied the Texans in the fourth quarter but for a leg whip penalty that negated a long TD pass play.

Now, who knows what really is going on with the Texans? Perhaps Kubiak and his staff make adjustments and the players don't execute them.

But whatever the reason, anyone could tell that something was wrong with the Texans during the third quarter of this game. They looked as unprepared to play that quarter as the Dolphins looked during the first two.

And that should worry Bob McNair about continuing to hitch the Texans' future to Kubiak and his staff.

Oh well, a win is a win, right? The Texans did finally show the semblance of a rushing attack (126 yards) with previous practice squad RB Arian Foster and backup Ryan Moats showing the quickness at the point of attack that has been missing the entire season for the Texans.

Although their playoff hopes are slim, a win over the Patriots would give the Texans a winning record for the first time in the franchise's eight seasons.

In the Texans' mostly woebegone world, that's decided progress.

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

December 27, 2009

Accord Perfection

In the continuing series of remarkable commercials, Honda chips in.

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

December 26, 2009

Again, why bother with a trial?

The popular view is that R. Allen Stanford is a crook and should spend the rest of his life in prison.

But doesn't the U.S. Constitution -- not to speak of simple human decency -- provide him with the opportunity to contest the government's charges against him fairly?

These earlier posts (here, too) touched on the indefensible prison conditions that the federal government has imposed on R. Allen Stanford as he awaits trial on criminal fraud charges arising from the demise of Stanford Financial Group.

Last week, Stanford's lawyers filed the motion below requesting that U.S. District Judge David Hittner release Stanford on strict conditions pending his trial that would make it virtually impossible for him to go to the corner drug store without the U.S. Marshals being notified immediately.

Judge Hittner promptly denied the motion without comment, which is next to inexplicable given what is contained in the motion. Here is a mere sampling:

Mr. Stanford has been incarcerated since June 18, 2009 and was moved to the [Federal Detention Center] on September 29, 2009. Immediately upon his arrival at the FDC, he underwent general anesthesia surgery due to injuries that were inflicted upon him at the Joe Corley Detention Facility. He was then immediately taken from surgery and placed in the Maximum Security Section — known as the “Special Housing Unit” (SHU) — in a 7' x 6 1/2' solitary cell. He was kept there, 24 hours a day, unless visited by his lawyers. No other visitors were permitted, nor was he permitted to make or receive telephone calls. He had virtually no contact with other human beings, except for guards or his lawyers.

When he was taken from his cell, even for legal visits, he was forced to put his hands behind his back and place them through a small opening in the door. He then was handcuffed, with his arms behind his back, and removed from his cell. After being searched, he was escorted to the attorney visiting room down the hall from his cell; he was placed in the room and then the guards locked the heavy steel door. He was required, again, to back up to the door and place his shackled hands through the opening, so that the handcuffs could be removed. At the conclusion of his legal visits, he was handcuffed through the steel door, again, and then taken to a different cell where he was once again required to back up to the cell door to have his handcuffs removed and then forced to remove all of his clothing. Once he was nude, the guards then conducted a complete, external and internal search of his body, including his anus and genitalia. He was then shackled and returned to his cell. In his cell there was neither a television nor a radio and only minimal reading material  was made available to him. He remained there in complete solitude and isolation until the next time his lawyers returned for a visit.

In short, Mr. Stanford was confined under the same maximum security conditions as a convicted death row prisoner, even though the allegations against him are for white collar, non-violent offenses. He is certainly not viewed as someone who poses a threat to other persons or the community, nevertheless, he has been deprived of human contact, communication with family and friends, and was incarcerated under conditions reserved for the most violent of convicted criminals. Officials at the FDC informed counsel that this was for Mr. Stanford’s “own protection” and to minimize their liability.  .  .  .

The U.S. criminal justice system used to be an institution that distinguished a free society from those that endured under oppressive regimes.

But with cases such as Stanford's, it's sure getting hard to tell the difference between the U.S. system and the supposedly more oppressive ones.

Mtn for Reconsideration of Detention Order

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

December 25, 2009

The Light in the Darkness

Every Christmas since 1949, The Wall Street Journal has published the following op-ed -- In Hoc Anno Domini -- from the late Vernon Royster.

Royster's piece reminds us not only the the brutal nature of life in the Roman Empire, but the extraordinary impact that Judeo-Christian culture has had over the past two thousand years in improving the quality of life.

We take it for granted at our peril.

So the light came into the world.

When Saul of Tarsus set out on his journey to Damascus the whole of the known world lay in bondage. There was one state, and it was Rome. There was one master for it all, and he was Tiberius Caesar.

Everywhere there was civil order, for the arm of the Roman law was long. Everywhere there was stability, in government and in society, for the centurions saw that it was so.

But everywhere there was something else, too. There was oppression—for those who were not the friends of Tiberius Caesar. There was the tax gatherer to take the grain from the fields and the flax from the spindle to feed the legions or to fill the hungry treasury from which divine Caesar gave largess to the people. There was the impressor to find recruits for the circuses. There were executioners to quiet those whom the Emperor proscribed. What was a man for but to serve Caesar?

There was the persecution of men who dared think differently, who heard strange voices or read strange manuscripts. There was enslavement of men whose tribes came not from Rome, disdain for those who did not have the familiar visage. And most of all, there was everywhere a contempt for human life. What, to the strong, was one man more or less in a crowded world?

Then, of a sudden, there was a light in the world, and a man from Galilee saying, Render unto Caesar the things which are Caesar's and unto God the things that are God's.

And the voice from Galilee, which would defy Caesar, offered a new Kingdom in which each man could walk upright and bow to none but his God. Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me. And he sent this gospel of the Kingdom of Man into the uttermost ends of the earth.

So the light came into the world and the men who lived in darkness were afraid, and they tried to lower a curtain so that man would still believe salvation lay with the leaders.

But it came to pass for a while in divers places that the truth did set man free, although the men of darkness were offended and they tried to put out the light. The voice said, Haste ye. Walk while you have the light, lest darkness come upon you, for he that walketh in darkness knoweth not whither he goeth.

Along the road to Damascus the light shone brightly. But afterward Paul of Tarsus, too, was sore afraid. He feared that other Caesars, other prophets, might one day persuade men that man was nothing save a servant unto them, that men might yield up their birthright from God for pottage and walk no more in freedom.

Then might it come to pass that darkness would settle again over the lands and there would be a burning of books and men would think only of what they should eat and what they should wear, and would give heed only to new Caesars and to false prophets. Then might it come to pass that men would not look upward to see even a winter's star in the East, and once more, there would be no light at all in the darkness.

And so Paul, the apostle of the Son of Man, spoke to his brethren, the Galatians, the words he would have us remember afterward in each of the years of his Lord:

Stand fast therefore in the liberty wherewith Christ has made us free and be not entangled again with the yoke of bondage.

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

December 24, 2009

Merry Christmas from the Family

It wouldn't be Christmas in Texas without taking a moment to listen to Texas singer-songwriter and Houston native Robert Earl Keen's classic Texas Christmas carol and video, Merry Christmas from the Family Keen is playing the House of Blues at 8 p.m. on Monday.

Have a restful, joyous and safe holiday!

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

December 23, 2009

To Everything There is a Season

Still sounding darn good in 2006, Roger McGuinn, Chris Hillman and David Crosby sing Pete Seeger's classic that The Byrds made famous in the 1960's, Turn! Turn! Turn!

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

December 22, 2009

On the Tiger Myth

I really didn't think that I would do more than one post on the Tiger Woods affair, but a couple of recent articles merit taking the topic up one last time.

First, in this weekend op-ed piece, the NY Times' Frank Rich piously excoriates Woods and his handlers for promoting a myth about Woods that was as fictitious as the pre-collapse myths about Enron (among others).

Of course, Rich fails to comprehend that the mainstream media's myths about Enron after its demise weren't any closer to the truth.

Meanwhile, Golf Digest's Jaime Diaz -- the golf writer who has known Woods the longest and best -- provides this far more insightful article on Woods' life, as well as the expectations and pressures that may have contributed to his secret life.

Morality plays are easy to embrace. The truth is usually more nuanced and difficult, but ultimately much more fulfilling to understand.

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

December 21, 2009

2009 Weekly local football review

(AP Photo/Jeff Roberson photo; previous weekly reviews for this season are here).

Texans 16 Rams 13

It is a reflection of the Texans (7-7) endearing mediocrity that they can out-gain the Rams (1-13) by almost 200 yards and struggle to win by a field goal.

Now the Rams have been playing reasonably well over the past month and a half (only one blow-out loss during that span), but come on. They are still the Rams.

Although most sports talk hosts and fans think the Texans are underachieving, my sense is that their record is an accurate measure of their ability at this point in time.

For a variety of reasons, the Texans do not run the ball well. They do spray the ball reasonably well in the passing game, but they lost their second-most explosive receiver (Owen Daniels) to injury several games ago.

The defense has improved steadily during the season, but the lack of a consistent pass rush still puts too much pressure on the secondary, which is the weak link in the unit. The fact that 2007 first-round draft choice DT Amobi Okoye is doing a good imitation of former first-round DT bust Travis Johnson isn't helping matters on the defensive line.

Finally, kicker Kris Brown has been so inconsistent that he looks as if he has all the confidence of a professional golfer undergoing a swing change in an effort to save his career.

Thus, with two games to go (the Dolphins at Miami and home against the Patriots), the Texans still have a chance to register the best record of their tortured eight-season existence. As a team, the Texans don't seem to play with much confidence, which is probably attributable in good part to the overall youth of the team.

But the reality is that the Texans continue to improve. Just not as fast as their followers prefer.

The issue that Texans owner Bob McNair has to resolve is whether it is more likely that such improvement will continue under Gary Kubiak? Or is it more likely to continue under another head coach?

The answer is not clear.

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

December 20, 2009

That wild Landry's ride continues

Owning shares of stock in Houston-based Landry's Restaurants, Inc. has never been for the faint-hearted.

First, Landry's board of directors failed to obtain a standstill agreement from Landry's chairman and CEO, Tilman Fertitta, as his failed take-private offers over the past couple of years that would have prevented Fertitta from acquiring majority stock ownership in the company while its stock tanked.

Then, the Pershing Square Capital hedge fund entered the picture, bought up a bunch of Landry's shares and announced that it opposed Fertitta's most recent buyout offer.

Now, as Steve Davidoff explains, it appears that Fertitta has not been complying with his board's instructions in making public disclosures about his buyout offers.

At least partly as a result, counsel for a special committee of Landry's board that was created to negotiate Fertitta's buyout offers resigned, apparently in protest.

As a result of this disclosure and other developments, don't be surprised if the Securities and Exchange Commission comes knocking on Landry's door to look into these developments.

And Tilman Fertitta's firm grip on Landry's from its inception may be slowly slipping away.

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

December 19, 2009

Unreliable eyewitness

This video demonstrates one of the reasons that eyewitness accounts are often unreliable.

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

December 18, 2009

They got how much? For doing what?

Just when it looked as if progress was being made, the harsh reality of the severe trial penalty and the absurd severity of punishment parameters in white collar criminal cases reared its ugly head.

This time its the harsh sentences that U.S. District Judge Melinda Harmon handed down on Thursday to three former El Paso Natural Gas Company natural gas traders -- 14 years to one defendant and 11 years and 3 months to the other two. They were convicted of multiple counts fraud and false reporting in connection with what has become known in Houston as "the trader cases."

The severity of the sentences is mind-boggling when compared with the nature of the alleged "crime."

The government alleged that the three traders provided false information to natural gas industry publications such as the Inside FERC Gas Market Report, which use data from traders to calculate an 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 El Paso could reap higher profits on their trades.

However, the government never proved that the magazines actually used the false information that the defendants provided to them or that the information actually affected the natural gas markets at all. Indeed, a myriad of market factors affect natural gas prices, as with the price of any commodity.

That was no problem for prosecutors, though. The government contended that the market effect of providing the false information was irrelevant and that the prosecution needed only to prove that false information was reported to the magazines in order to make a gain a conviction of the defendants. And they got away with it.

So, key point to all businesspeople -- don't ever provide any information to a publication about your business that could be construed to be false. It really doesn't make any difference whether the false information affects your company. The government contends that the mere transmittal of the false information is the crime.

Meanwhile, three relatively young men (the oldest is 49) with families and promising careers are now facing over a decade of imprisonment for the "crime" of reporting false price information to a magazine.

Just what is the purpose of this?

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

December 17, 2009

"Mr. Ruehle, you are a free man"

Larry Ribstein and the WSJ's Holman Jenkins -- both of whom exposed the vacuity of the federal government's backdating witch hunt from the very beginning -- provided their usual insightful perspective on U.S. District Judge Cormac Carney's decision earlier this week to dismiss the government's remaining criminal charges against former Broadcom CFO William J. Ruehle and Broadcom's co-founder, Henry Nicholas, III. A copy of the transcript of Judge Carney's inspiring ruling is below.

Given the excellence of Professor Ribstein and Mr. Jenkins' analysis of the corrupt nature of the backdating prosecutions, there is really nothing to add in that regard. The bottom line is that the unchecked prosecutorial power of the state does enormous damage to lives, families, and careers, as well as job and wealth creation.

But as I read the transcript below and the motion to dismiss that prompted it, imagine my surprise to discover that one of the prosecutors involved in the Broadcom misconduct was a member of the Enron Task Force that engaged in similar conduct in connection with the prosecution of former Enron CEO Jeff Skilling and chairman Ken Lay. Frankly, as bad as the prosecutorial misconduct was in the criminal case against Mr. Ruehle and the other Broadcom executives, it pales in comparison to what prosecutors made Skilling and Lay endure.

Judge Carney provided in the Broadcom prosecutions a perspective of fairness and wisdom that was sadly lacking in the Enron cases. He reminds us that the line between freedom and oppression in civil society is often razor-thin.

His final declaration in the transcript below is one that we should all embrace:

"I don't think anything needs to be said further other than, Mr. Ruehle, you are a free man."

Download Transcript of Judge Carney's Ruling

.

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

December 16, 2009

Criminalizing the neighborhood pharmacist

This blog has long addressed the enormous cost to American society of overcriminalization generally and particularly with regard to business and risk-taking.

But lest we think that the problem is limited to such things as business and victimless crimes, think again says Bob Wachter:

Along comes another case involving jail time for a medical mistake, this one featuring an Ohio pharmacist named Eric Cropp.

Eric was the lead pharmacist at Cleveland’s Rainbow Babies and Children’s Hospital on February 26, 2006. The pharmacy, understaffed that day, received a rush order for chemotherapy for a 2-year-old girl, Emily Jerry, who was undergoing treatment for a spinal malignancy.

An unlicensed and distracted (by press accounts, she was planning her wedding on the day of the event) pharmacy technician mistakenly mixed the chemo with 23% saline rather than the intended 0.9%. Eric, working in cramped quarters and rushed for time, gave final approval to the mixture, partly because, after seeing a spent bag of 0.9% saline next to the mixed solution, he assumed that it had gone into the solution.

In other words, the case was a classic illustration of James Reason’s Swiss cheese model, in which numerous safety checks failed due to a confluence of systems and human errors. Tragically, little Emily died from the hypertonic saline infusion.

On hearing of the error, a Cuyahoga County DA decided that the case merited criminal prosecution, even though Eric had no history of errors in his pharmacy career and root cause analysis of the case confirmed that its cause was simple human error compounded by systems problems. At trial, fearing even harsher penalties, Eric pleaded guilty to involuntary manslaughter, and was sentenced to 6 months in the state prison, 6 months of home confinement, 3 years of probation, 400 hours of community service, and a $5,000 fine. Moreover, the Ohio pharmacy board permanently stripped him of his license, depriving him of his livelihood – forever.  .  .  .

During last week’s webcast, Mike Cohen described visiting Eric in prison. “Like a scene out of a movie,” he recalled, with Eric in his orange jumpsuit, speaking to visitors through a glass wall, other felons – including violent offenders – milling about. As he related the visit, Mike choked up with emotion, clearly seeing this tale as both powerfully tragic and cautionary.

How has it come to the point where the criminal justice system exacerbates the tragedy of a young girl's accidental death by ruining a career and inflicting enormous damage on an innocent family? At least the young girl's family recovered substantial financial damages resulting from the pharmacist's negligence. Where does the young pharmacist's family turn for help?

A truly civil society would find a better way.

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

December 15, 2009

How many felonies did you commit today?

Overcriminalization of daily life, particularly as it relates to punishing taking risks necessary to create jobs and wealth, are common topics on this blog.

Longtime Boston attorney Harvey A. Silverglate is an expert on this troubling trend in American jurisprudence. His recent book -- Three Felonies a Day: How the Feds Target the Innocent (Encounter Books, 2009) -- examines how pliable politicians have expanded the criminal laws to the point where the freedom of virtually anyone who attempts to take risks to create jobs and wealth is subject to the whims of often avaricious prosecutors.

Silverglate is currently guest-posting over at The Volokh Conspiracy where, in this post, he examines how the crime of honest services wire fraud involved in the Skilling case has allowed prosecutors pretty much to choose whether to indict and prosecute business people at their discretion:

Because of the vague terminology increasingly used in the ever-expanding federal criminal code, combined with the erosion of intent as a requirement for conduct to be considered prosecutable, the average citizen can easily commit several felonies in any given day.  .  .  .

“Honest services” fraud is an instructive example of this trend, but the federal law books are cluttered with countless others. Creative interpretations of the Computer Fraud and Abuse Act, obstruction of justice statutes, and controversial Patriot Act provisions—to name a few—have turned honest citizens into federal defendants and even convicted felons. [.  .  .]

This dangerous trend is exacerbated by the “win at all costs” mentality of the Justice Department. Colleagues are turned into stool pigeons as prosecutors offer deals for testimony that often bears little resemblance to the truth. (As my colleague Alan Dershowitz colorfully but all-too-accurately puts it, “prosecutors can pressure witnesses not only to sing, but also to compose.”)

Faced with the prospect of a long prison sentence, enormous costs of defense counsel, and frequent threats to indict family members who are thus held hostage, defendants often choose, to parody an old cigarette commercial, to switch rather than fight.

At some point, shouldn't we be asking the question -- why are we doing this to ourselves?

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

December 14, 2009

2009 Weekly local football review

(Bob Levey/Getty Image; previous weekly reviews for this season are here)

Texans 34 Seahawks 7

Key tip of the day to Seahawk Defensive Coordinator Casey Bradley -- your cornerbacks need safety help in covering Texans WR Andre Johnson.

After a 64 yd TD reception on the first play of the game, Johnson proceeded to run through, around and over the beleaguered Seahawk (5-8) secondary for 193 total receiving yards as the Texans (6-7) broke a four game losing streak in this laugher.

The game was so one-sided that Texans QB Matt Schaub had only 29 yds passing in the 2nd half and still had 365 yds for the game. Before the Seahawks final drive of the first half, the Texans had outgained them 311-25.

Moreover, the Texans defense continued to show signs of improvement as they held the Seahawks to under 300 yds of total offense while forcing three fumbles, sacking Seahawks QB Matt Hasselback three times and injuring his right shoulder on another hard hit. The Texans held the Seahawks to about 20 yards on 14 plays during their first four drives of the game, resulting in four punts.

The Texans to on the road for the next couple of weeks against the Rams (1-12) and Dolphins (7-6) before returning to Reliant Stadium to close the season against the Patriots (8-5). All those games are winnable, but one concern is that PK Kris Brown remains in a funk, missing a 48 yard FG attempt and having another short one blocked when he appeared to kick it thin and low. Many a close NFL game has been lost because of a kicker who suddenly has gone into a funk. Brown certainly appears to be in a serious funk.

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

December 13, 2009

Beauty is nothing without brains

Below is another in the continuing series of commercials that represent some of the most creative product on television.

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

December 12, 2009

The Skilling Merits Brief

On the heels of the U.S. Supreme Court's hearing earlier this week in Conrad Black's appeal of his criminal conviction on honest services wire-fraud charges under 18 U.S.C. § 1346 ("Section 1346), former Enron CEO Jeff Skilling filed his brief on the merits of his similar appeal with the Supreme Court yesterday.  Oral argument on Skilling's appeal will take place on March1st of next year at 1 p.m.

A copy of the Skilling's merits brief is below. The sections of that copy are bookmarked in Adobe Acrobat to facilitate ease of review, so download a copy to take advantage of those features.

This earlier post and Lyle Denniston's ScotusBlog post on the Skilling merits brief provide thorough analysis of the issues involved in Skilling's appeal, which differ a bit from Lord Black's appeal. So, I won't reiterate those points here.

However, the following are some highlights of the brief, which is well-written and forceful. Citations to the appellate record that are contained in the brief are deleted in the following excerpts.

The following excerpts get to the heart of the appeal:

Skilling not only was tried by jurors drawn from a community passionately committed to convicting him, but he was prosecuted under a vague statute that virtually ensured jurors would vindicate that objective.

Section 1346 is an unconstitutionally vague statute. A federal criminal statute must define the conduct it proscribes so that ordinary persons have notice of what is prohibited, and prosecutors are constrained in what they can prosecute. But everyone agrees that § 1346 on its face says nothing about the conduct it proscribes. To identify its meaning, one must consult almost two decades worth of Federal Reports, searching for cases describing or enforcing the judicially-created crime of honest-services fraud, before this Court rejected them all as exceeding the judicial function in McNally v. U.S., 483 U.S. 350 (1987).

But those cases reflect only the same morass of conflict and confusion that, in part, led this Court to require that Congress define the crime clearly in the first place. Congress did not do so. And it is beyond the judicial function to identify, through common-law exegesis of pre-McNally precedents, the crime that Congress failed to define. [.  .  .]

The Government’s theory is not that Skilling received bribes or kickbacks, or that he directed money or property to an entity in which he had a personal interest, or indeed that he acted for any private gain that was distinct from his ordinary compensation incentives. The Government openly conceded at trial that Skilling stole no money from Enron, that the case against Skilling was not about “greed,” that Skilling sought to pursue Enron’s “best interests,” and that every act for which he was prosecuted was undertaken for the purpose of protecting Enron and promoting its share value.

The Government proceeded on the theory that Skilling nonetheless committed honest-services fraud simply because he took on too much risk for the long-term good of Enron, and improperly touted the company. It did not seek an instruction requiring jurors to find that Skilling acted pursuant to undisclosed personal financial interests in conflict with Enron’s. Instead the Government urged the jury to send Skilling to prison simply because he breached his “duty to do [his] job and do it appropriately.” That theory of honest-services fraud has no grounding in pre-McNally caselaw, and is totally at odds with the Government’s current conception of the statute.

The implications of that theory, moreover, extend far beyond what Congress reasonably could have intended when it enacted § 1346 to overrule McNally, a public-official kickback case. In the private sector, corporate officers are expected to take business risks and cheerlead for their enterprises. A rule that criminalizes every business decision that seems imprudent to prosecutors or lay jurors in hindsight — but does not involve the corrupt pursuit of private gain— would force officers to proceed at their peril in making everyday business judgments. Fortunately, the theory of honest-services fraud the Government advanced below is not the law, as the Government now recognizes.

In that regard, Skilling reminds the Court of the chillingly scant basis of the "crime" the Enron Task Force prosecutors told the jury that Skilling had committed:

In closing argument, the Government declared that Skilling and Lay committed honest-services fraud because they violated a duty to Enron’s “employees” — one prosecutors described as “a duty of good faith and honest services, a duty to be truthful, and a duty to do their job … and do it appropriately.” [.  .  .]

[The Enron Task Force's] consistent position in this case has been that the evidence needed only to show—and did only show—“a material violation of a fiduciary duty that defendants owed to Enron and its shareholders.”

In other words, making a bad decision or doing a poor job in running a business is a crime. Almost nothing else need be said in explaining why the Skilling appeal is of paramount importance to the protection of taking risk and creating wealth in the American business community.

On the issue of why Skilling should have never been tried in Houston, check out part of the brief's summary of the community prejudice against Skilling that the leader of the mob promoted:

What follows is a sampling of the searing media attacks. One column in the Houston Chronicle, entitled “Your Tar and Feathers Ready? Mine Are,” demanded a “witch hunt.” Houstonians maintained that Skilling and Lay had “stole[n] money from investors,” “ripped off their stockholders for billions,” and “destroyed a great corporation.”

Skilling and Lay were compared to Al Qaeda, Hitler, Satan, child molesters, rapists, embezzlers, and terrorists and encouraged to “go to jail” and “to hell.” Some suggested they should face “the old time Code of the West.” A local rap song (entitled “Drop the S Off Skilling”) threatened Skilling’s murder. Polling showed that Houstonians routinely labeled Skilling a “pig,” “snake,” “crook,” “thief,” “fraud,” “asshole,” “criminal,” “bastard,” “scoundrel,” “liar,” “weasel,” “economic terrorist,” “evil,” “deceitful,” “dishonest,” “greedy,” “devious,” “lecherous,” “despicable,” “equivalent [to] an axe murderer,” and a man who had “no conscience,” “stole from employees,” and “swindled a lot of people.” Skilling’s picture was “used as a dartboard” and placed on “Wanted” posters next to Osama bin Laden. When Skilling was indicted, the Chronicle proclaimed: “Most Agree: Indictment Overdue.” The paper’s negative coverage extended to articles on sports, education, music, and more.

After detailing how potential jurors' pre-trial questionnaire answers about the case mirrored the foregoing community prejudice, Skilling describes U.S. District Judge Sim Lake's nominal questioning of the jurors that was hopelessly inadequate to overcome the presumption of community prejudice:

Skilling sought extensive, non-public, individualized voir dire to try to screen out all the potentially biased jurors—especially in light of the questionnaire responses exposing specific prejudices. But the court took the opposite tack, holding voir dire before throngs of reporters in a ceremonial courtroom, limiting it to just five hours, and twice chastising defense counsel for asking too many questions about potential prejudice because the court had prohibited “individual voir dire.” Just 46 people were questioned—eight more than the minimum necessary—and only for a few minutes each. Only seven were struck for cause, with one excused for hardship.

Skilling then explains what should have happened in the face of such clear bias:

[I]f the [District Court] had presumed prejudice among all potential jurors, it could not have refused to permit probing inquiry into each individual juror’s biases. To the contrary, the Government would have been forced to make detailed inquiries of each juror in order to prove each juror’s impartiality beyond a reasonable doubt, and of course the defense would have been entitled to pursue similar lines to smoke out concealed or latent prejudices.

None of that happened here. Instead the district court satisfied itself that Skilling failed to prove actual prejudice for little reason other than the court looked jurors “in the eye” and decided to credit their promises of fairness. If the presumption of prejudice can be rebutted on that kind of showing, the presumption has no meaning at all.

As I've noted many times previously, a humane and civil society would find a better way than what was done to Jeff Skilling to hold people responsible for their errors in business judgment while they are attempting to create jobs for communities and wealth for investors. I remain hopeful that the U.S. Supreme Court will agree.

Jeff Skilling's Merits Brief at SCOTUS

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

December 11, 2009

Junior Brown

One of the best shows that I've attended during my almost 40 years in Texas is one by Austin's Junior Brown.

In addition to being arguably Texas' most gifted guitarist, Junior performs an amazing breadth of material that spans Country-Western, Rock and Roll, the Blues and Surf music.

Below are videos of two of his classic country western songs -- My Wife Thinks Your Dead and Highway Patrol -- and, after the fold, a recording of 409 by Junior and the Beach Boys, plus another of his special medley of rock songs, which includes his spot-on imitation of Jimi Hendrix's Purple Haze (!) at around minute six or so.

Junior Brown is a Texas treasure. Enjoy.

 

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

December 10, 2009

Differing compensation under a corrupt -- but entertaining -- system

A frequent topic on this blog has been the NCAA and its member institutions' corrupt regulation of intercollegiate sports.

It's an entertaining system of corruption, but corrupt nonetheless.

Particularly appalling is the NCAA's restriction of compensation to football and basketball players, who are the people who actually generate most of the wealth for the university athletic programs.

In that regard, a couple of news items from yesterday highlight the absurdities that often arise from this perverse regulatory scheme.

First, the University of Texas announced that it has increased the annual salary of its head football coach, Mack Brown, to a cool $5 million.

Now, Brown is a good coach who has done a fine job over the past 12 seasons at Texas. And he is a wonderful man who is a great representative for the University of Texas.

But the only way that UT can rationalize or afford to pay him $5 million per year is that it is not paying a portion of its football income as compensation to the players who create the income in the first place.

By way of comparison, in the National Football League -- which is simply a higher level of professional football than big-time college football -- very few coaches earn $5 million per year despite the fact that NFL franchises generate far more income than UT's football program does.

One of the primary reasons that NFL teams do not generally pay such amounts to their coaches is that a substantial portion of the each NFL team's income is paid to players as compensation.

So, to put it bluntly, Brown makes $5 million annually because UT and the NCAA prevent Longhorn players from receiving fair compensation for the considerable risks that they take.

Meanwhile, excess regulation almost always generates creative efforts to get around those regulations.

Thus, many big-time college football programs provide indirect compensation to their athletes through exclusive use of luxurious "resort" facilities, such as private housing, elaborate workout centers and special academic services.

But those elaborate resort facilities all look alike after awhile.

So, what additional form of indirect compensation can a football program offer to attract the best athletes?

The University of Tennessee has apparently came up with one by utilizing upon one of the oldest forms of compensation known to man.

The NCAA Rules and Regulation Manual already rivals the Internal Revenue Code in terms of length and mind-numbing detail.

Perhaps the Tennessee investigation may at least result in a new section of the NCAA Manual that the football coaches and college administrators might actually enjoy reading?

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

December 9, 2009

The Real Tiger Tragedy

Watching the carnage unfold from the Tiger Woods affair is a bit like watching a train wreck in slow motion.

A train wreck unfolding with hyper-speed commentary from modern social media, that is.

The affair is a tragedy on several levels, from the public humiliation of Woods' wife to the distinct prospect of job losses in the reeling Woods' business empire (see also here). We should all have sympathy for those who are caught in this cauldron of insecurity resulting from Woods' appalling arrogance and irresponsibility.

But in so saying, it is not my purpose to pile on with more harsh criticism of Woods. The only time I have met Woods was back in the mid-1990's when he was attending Stanford and was in Houston practicing at Lochinvar Golf Club with his then-coach, Butch Harmon, who at that time was the head pro at the club.

When Butch introduced us, Woods could not have been more gracious. He thanked me as a club member for allowing him to practice at such a fine facility. My enduring thought of that brief encounter is that Woods' parents did a very fine job of raising him.

Frankly, the type of societal ridicule that Woods and his family are enduring always makes me a bit uncomfortable. As noted years ago in connection with the death of Ken Lay, the preoccupation with Woods' troubles is a palpable reminder of the fragile nature of the individual and civil society. The vulnerability that underlies our innate human insecurity is scary to behold, so we use myths and the related dynamics of scapegoating and resentment to distract us. We rationalize that a wealthy athlete did bad things that we would never do if placed in the same position (yeah, right) and thus, he is deserving of our scorn and ridicule. That the scapegoat is portrayed as arrogant and irresponsible makes the lynch mob even more bloodthirsty as it attempts to purge collectively that which is too shameful for us to confront individually.

In my experience, people in the public eye are often quite different in the context of a personal relationship than they are perceived publicly. That certainly could be the case with Woods, who people close to the PGA Tour tell me gets along quite well with most of his fellow Tour players. The same cannot be said about a number of other top Tour players from previous eras.

Similarly, the public scrutiny that Woods' private life is currently enduring exceeds anything that a major sports figure has ever had to deal with (the Woods affair has been on the front page of the New York Daily News for the past ten days straight!). Arnold Palmer -- a far more charismatic sportsman than Woods who is one of the few to rival Woods' wealth and business empire -- candidly admitted several years ago that, during his early days of success on the Tour, he had been less than completely faithful to his beloved late wife, Winnie. Although Palmer was never as indiscrete or arrogant as Woods has been, Palmer was also never subjected to the type of media scrutiny that Woods has endured. The media simply handled such things differently in Palmer's heyday.

Moreover, Woods has been unfairly criticized for his behavior since the scandal broke open on the early morning after Thanksgiving. As I noted on Twitter on the Sunday morning after his early Friday morning car wreck, Woods' silence has been absolutely essential and appropriate to the protection of his family and himself. Although none of us know what really happened leading up to Woods' car wreck, Woods and his wife clearly faced at least the distinct possibility of serious criminal charges.

Under those circumstances, any competent lawyer would have advised Woods and his wife to refrain from saying anything to the police or publicly, as many public relations "experts" were proposing that they do. The bottom line is that Woods has done -- and continues to do -- the right thing by remaining silent.

On the other hand, Woods and his business team have their work cut out for them in attempting to stem the damage to the billion dollar Woods business empire resulting from the affair and the societal reaction to it. Woods' main sponsors have stood by him so far, and I suspect that Nike -- his main sponsor from the beginning of his career -- will continue to support him.

But that Woods' sponsors are staying with him now does not mean that they are going to renew their contractual arrangements with him.

You see, Woods has earned most of that billion dollar net worth by parleying his nearly unrivaled record of excellence on the golf course to sponsors who have wanted to associate with that excellence.

What will those sponsors do -- particularly in fast-changing and dynamic advertising markets -- when excellence they previously associated with has been transformed into a joke?

That, my friends, is literally uncharted territory.

Finally, in one key respect, Woods' ordeal is similar to the one that former federal district judge Sam Kent endured over the past couple of years.

That is, how did the life of one of the most phenomenal athletes of our time come to this?

Where were Woods' "friends" who knew about his risky behavior and his thinly-veiled insecurities that were manifested in such behavior?

Why did these "friends" not intervene and help him before it was too late?

The reality is that Tiger Woods may not have any real friends.

And that might just be the saddest tragedy of this entire sordid affair.

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

December 8, 2009

Society's New Lepers

The increasingly draconian nature of child pornography laws in the U.S. has been a frequent topic on this blog over the years.

In an effort to punish child predators, the laws have become so broadly interpreted and enforced that many citizens have become branded as child predators and forced to serve long prison sentences merely as a result of viewing child pornography.

Even after serving severe sentences, the victims of this modern day witch hunt are demonized further by being branded as child predators for life and prevented by law from living in anything but the least desirable neighborhoods in many communities.

As this NPR/All Things Considered article (H/T Doug Berman) explains, a Florida minister is trying to do something constructive for the society's new lepers:

More than 20 states, including Florida, limit where convicted sex offenders can live — keeping them away from schools, parks and other places where children congregate.

In Miami, dozens of homeless sex offenders live under a bridge because there are few, if any, options nearby. But 90 miles away, there's a community dedicated to housing sex offenders. [.  .  .]

This is the church at Miracle Park, a community mostly made up of sex offenders. Dick Witherow is their pastor. [.  .  .]

Witherow once had a ranch for sex offenders in Okeechobee County. But zoning law changes forced that facility to close. His search for another spot brought him here, to a small community he renamed Miracle Park. It's a collection of duplexes about 3 miles east of the town of Pahokee, in rural Palm Beach County.

It's surrounded on every side by sugar cane fields. About 40 of those living there now are sex offenders. [.  .  .]

Witherow has authored a book about sex offenders called The Modern Day Leper. He says he could have worn the same label as the men at Miracle Park. He was 18 years old when he met his first wife. She was just 14, and before long she was pregnant. A judge allowed them to get married but told Witherow he could have been charged with statutory rape.

"If that would have happened in today's society, I would have been charged with sexual battery on a minor, been given anywhere from 10 to 25 years in prison, plus extended probation time after that, and then been labeled a sex offender," he says.

Witherow knows that there are those who argue that's what should have happened.

Something to think about during a season that celebrates the birth of a savior who embraced the lepers of his day.

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

December 7, 2009

2009 Weekly local football review

(AP Photo/Stephen Morton; previous weekly reviews for this season are here)

Texas Longhorns 13 Nebraska 12

Has any team ever gone through an undefeated season and been in position to win the national championship with a more unimpressive offensive line than 2nd-ranked Texas (13-0)?

If there has been one, I can't remember it.

Nevertheless, the Horns overcame an inspired Nebraska (9-4) effort and a serious brain fart in the closing seconds to win the Big 12 Championship game and set up another Rose Bowl BCS Championship Game, this time with SEC champ, Alabama (13-0).

After their only truly bad game of the season last week against the Texas Aggies, the salty Texas defense reappeared just in time to bail out the Horns out. It didn't hurt Bthat the Huskers' offensive line is worse than the Longhorns' line.

Bama opened as a four point favorite over the Horns in the national championship game, but Texas has a reasonable chance to pull off its second national championship in five years. The initial line is a bit skewed by the Tide's impressive win over Florida (12-1) and the Horns' difficulties against Nebraska, but Bama has had its own consistency problems this season. Plus, a dynamic of such big games is that there often is a psychological advantage to the team playing as an underdog.

I expect the game to be close with the Horns having a reasonable chance of pulling it out if they can control Bama's punishing ground game and figure out some way of giving Horns' QB Colt McCoy enough time to distribute the ball to Texas' talented group of receivers.

But in the meantime, Bama's defensive front will be licking their chops to get after Texas' offensive line. Thank goodness for Texas that Bama doesn't have Nebraska DT Ndamukong Suh.

East Carolina 38 Houston Cougars 32

In a game that was as entertaining as the Texas-Nebraska game was not, the Cougars (10-3) spirited comeback effort in the Conference USA Championship game was snuffed out in the final minute as QB Case Keenum's pass bounced off his receiver's shoulder in the end zone and into the hands of an East Carolina (9-4) safety.

The teams were evenly matched and neither team's defense could consistently stop the other's offense. So, the game came down to turnovers, and the Cougars had three more (4) than the Pirates (1). The most costly one was bad throw that Keenum made at the beginning of the 4th quarter that was intercepted to set up the Pirates' TD that extended the lead to 11.

But not widely reported in the mainstream media is the fact that an outrageously horrendous call by the officiating crew led to one of the interceptions and may well have cost the Cougars the game.

While leading 13-7 and driving deep in East Carolina midway through the 2nd quarter, the Cougars quick-snapped while the Pirates' defense had at least 13 players on the field. Thinking that he had a "free" play because of the obvious penalty, Keenum threw the ball into the end zone trying for a TD, but the ball was intercepted. No problem though because of the penalty, right?

Not so fast. Not only did the officiating crew not throw a flag on the play, they ignored the clear video evidence (it's a reviewable call) of 13 Pirate defenders on the field when UH Coach Kevin Sumlin challenged the call on the field.

So, rather than Houston having the ball deep in Carolina territory ready to go up 20-7, the officials gave the Pirates the ball first and ten on their 20.

ESPN commentators Ron Franklin and Gary Cunningham were incredulous over the blown call. To make matters worse, the officiating crew proceeded to call at least two other "too many men on the field" penalties on the Pirates' defense at much less important stages of the game. Go figure.

As usual, Keenum was again phenomenal (56/75 for 527 yds/5 TD's/3 INT) and cemented his performance this season as one of the greatest of any QB in NCAA history.

Also, Houston WR James Cleveland came back from an injury that had sidelined him the past two games to catch an incredible 19 passes for 241 yds and 3 TD's.

Due to Conference USA's poor bowl tie-ins, the Cougars are again slated to play Air Force (7-5) this bowl season in the Armed Forces Bowl in Ft. Worth on New Year's Even afternoon. The game will be a replay of Houston's win over Air Force in last season's game.

There are a bunch of teams in bigger bowl games that are glad that they don't have to play this Houston team.

Jaguars 23 Texans 18

Does this sound familiar?

The Texans (5-7) start lethargically, fall far behind, battle back gamely, but ultimately shoot themselves in the foot and lose.

Key note to Coach Kubiak -- Chris Brown does not remind anyone of Paul Hornung on the halfback pass play.

The Texans begin playing out their eighth straight string next Sunday at Reliant Stadium against Seattle (4-7). My over/under for actual attendance -- 40,000.

Finally, the Texas Aggies (6-6) will play Georgia (7-5) in Shreveport's Independence Bowl on the evening of December 28th.

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

December 6, 2009

"I hate rude behavior in a man. Won't tolerate it."

Below is the latest In the continuing series of excellent scenes (previous here and here) from the outstanding television mini-series of Larry McMurtry's Pulitzer Prize-winning novel, Lonesome Dove.

In this one, Tommy Lee Jones as Capt. Woodrow F. Call delivers one of the most frightening beatings in the history of cinema to a scout for a U.S. Army troop who attempts to take by force a horse from one of Call's men. That's Houston's Danny Kamin playing the part of the U.S. Army Captain who directs his men to gather up what's left of the scout after Call is done with him.

The title to this post -- which is Call's brief post-beating explanation to the dumbfounded townsfolk of the reason for his rather drastic action -- is my wife's and my favorite line from the movie.

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

December 5, 2009

Opera Krispies

As noted several times over the years, some of the most creative product generated for television are commercials. And as this Rice Krispies commercial from the 1960's reflects, creativity in commercials is not a new phenomena.

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

December 4, 2009

Shelby Foote

I would enjoy listening to the late Shelby Foote reading a phone book.

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

December 3, 2009

"He's got enough cotton in his mouth to knit a sweater"

That's how Lee Trevino describes a golfer who is choking under pressure.

But as noted in this outstanding Jaime Diaz/Golf Digest interview of the now 70 year-old Trevino, Merry Mex didn't choke much during his career on the PGA Tour.

Winner of 29 Tour events, Trevino won six majors (Jack Nicklaus finished in second place in four of them!) and probably would have won several more had he not been badly injured by an on-course lightning strike in 1975. After Ben Hogan and Byron Nelson, there has been no better Texas golfer than Lee Trevino.

Trevino remains a genuine character. Here are a few gems from the interview:

On Jack Nicklaus:

"In those days, when Jack parked his car he was already four under."

On handling tournament pressure:

"Pressure was never really there for me.  .  .  . Where I came from, and where I'd gotten, I was playing with house money."

Who is better? Jack or Tiger?:

"[T]o answer your question—and I bite my lip every time I say this—Tiger's better."

On winning the 1984 PGA at Shoal Creek:

Going into the last round, on the practice putting green, I broke everyone up.

Herman [Mitchell, Trevino's longtime caddy] has got the gout, he's in a bad mood, and we're walking to the first tee, and some guy in the gallery yells at me:

"What do you feed that caddie?"

I look at the guy and say: "Rednecks!"

And Herman says: "And I'm getting hungry, too!"

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

December 2, 2009

"But not me"

My favorite novel of the late Kurt Vonnegut is Slaughterhouse Five, the haunting, semi-biographical story of a U.S. prisoner-of-war who endured the Allied fire-bombing of Dresden, Germany near the end of World War II.

I was reminded of Vonnegut and his fine novel by one of the most interesting sites that I've come across this year -- Letters of Note, which passes along "correspondence deserving of a wider audience."

This Letters of Note post provides Vonnegut's first letter to his parents that got through to the U.S. after he had been captured by the Nazis in 1944 and then freed by the Russians in 1945. It is a fascinating tale of his capture, the suffering he and his fellow prisoners endured as POW's, and his almost as harrowing repatriation.

An appropriate story to reflect upon as our federal government commits even more of our soldiers to a far off land.

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

December 1, 2009

Kay Bailey's health care finance confusion

What exactly is Texas Senator Kay Bailey Hutchison's political appeal?

She has never seemed to me to have a particularly good grasp of even basic issues. But I never dreamed that she actually supported universal health insurance even while mimicking the GOP party line against such a mandate all these years.

Uwe Reinhardt provides the Senate subcommittee context for Hutchinson's revelation:

[Hutchison] was proposing that women should not have to decide between spending $250 of their own money to get a mammogram or go without it, and that the key here is to get someone else — either public or private health insurance — to pay for it.

I cannot recall a clearer statement of unreserved support for universal and comprehensive health insurance for America and a more straightforward definition of rationing health care.

I am sure that she would extend her remarkable dictum on rationing to cover routine screening for other cancers as well — e.g., to colonoscopies for colon cancer, to P.S.A. tests and biopsies for prostate cancer or to regular examinations for thyroid cancer.

Furthermore, I would assume that her concern for timely medical attention extends even beyond cancer to the prevention of all serious illnesses — e.g., the control of blood pressure for Americans with hypertension through drug therapy or the prevention of diabetes.

In a nutshell, whether she realized it or not, hers is a clear clarion call for comprehensive, universal health insurance in America.

I don't agree with Senator Hutchison's viewpoint regarding universal coverage. However, I understand it and acknowledge that it's not an unreasonable position. I just don't think it's the best way to control the cost of health care services and products.

But why isn't she honest about her true position?

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

November 30, 2009

2009 Weekly local football review

(AP Photo/Bob Levey; previous weekly reviews for this season are here)

Colts 35 Texans 27

As the Texans' eighth season fades into the sunset of playoff also-rans once again, a legitimate question exists as to whether fourth-year Texans Coach Gary Kubiak is the right coach to transform the Texans into a legitimate NFL playoff contender.

Alan Burge examined that question earlier in the week and wondered whether Kubiak has the leadership qualities necessary to be a successful NFL head coach. I've been skeptical about Kubiak from the start, primarily because I believed that he was an odd fit for the "strong coach" model that Texans owner Bob McNair embraced when he fired the Texans' initial GM and head coach after a disastrous fourth season.

Despite my reservations, each of Kubiak's teams have improved during his tenure with the Texans, and his current team is the strongest team that the Texans have fielded in their eight seasons.

Thus, even though every other NFL team has either made the playoffs or fired its head coach during Kubiak's tenure with the Texans, Kubiak supporters can make a decent case that McNair should stick with him despite this season's disappointing performance.

But the Texans' (5-6) loss to the Colts (11-0) yesterday -- as well as last week's Monday Night loss to the Titans (5-6) -- are good examples of Kubiak's main weaknesses as a coach -- a failure to make adjustments on the fly during the game necessary to help the team win. This is one of the primary reasons Kubiak's Texans teams have not been able to get over the hump of winning close games.

After building a 20-7 lead while largely dominating the first half, the well-seasoned Colts made multiple adjustments at halftime. From the looks of it, the Texans made none.

The result? The Colts bludgeoned the Texans 28-7 in the second half and won the game going away.

Similarly, during the Monday Night game, the Texans pass-rushers continually rushed up field past Titans QB Vince Young, which allowed Young to step up in the pocket and run for first downs on multiple occasions. The Texans never made the adjustments necessary to keep Young in the pocket where his passing statistics were quite pedestrian.

It's almost as if Kubiak and his staff stubbornly say "Our game plan got us ahead and is good enough to win the game if executed correctly. We're not changing it, no matter what happens." Along those lines, after the game, Kubiak stated that the Texans simply "did not play well in the second half." Maybe so, but Kubiak and his staff did not put the players into a position to play well in the second half.

Perhaps most frustrating for Texans fans is that Kubiak and his staff have shown that they are capable of making effective in-game adjustments. The first game against the Titans, as well as the first Colts game, are two examples this season of where Kubiak and his staff made adjustments on the fly that gave their team a chance to win.

But Kubiak and Co. have not shown that they can make such adjustments consistently. If Bob McNair decides to replace Kubiak after this season, then that failure will likely be at the top to the list of reasons why Kubiak is let go.

Texas Longhorns 49 Texas Aggies 39

What do you get when you mix 3rd-ranked Texas' (12-0/8-0) worst defensive game of the season with Texas A&M's (6-6/3-5) best offensive effort?

One heckuva entertaining Thanksgiving evening game.

Longhorn QB Colt McCoy continued his improved play of late by having his best game of the season (24/40 fpr 304 yds/4 TD's/0 INT/18 carries for 175 yds/1 TD) and the Longhorns were lucky that he did. But even with McCoy's Herculean effort, the Horns did not put this one away until WR Marquise Goodwin's 95 yd kickoff return for a TD with just under 7 minutes to go in the game.

Although the Aggies' well-balanced offense gave the Horns' salty defensive unit fits all night, the game showed the big difference between the two programs. Outside of DE Von Miller, the Aggies lack of speed in their defensive front seven was palpable the entire game. Unless or until that deficiency is corrected, the Aggies will not contend for a Big 12 South title.

Meanwhile, despite the Horns' poor defensive effort, I do not believe that it portends problems for Texas against Nebraska (9-3/6-2) next Saturday night in the Big 12 Championship game. Nebraska has about 1/2 the offense that A&M has and, although their defense is solid, the Horns will score at least 25 points against that unit unless the Horns suffer a turnover epidemic.

I look for a relatively easy Texas win and a berth in the BCS Championship Game against the winner of the Alabama-Florida SEC Championship Game.

Houston Cougars 73 Rice 14

You knew things were not going to end well for Rice (2-10/2-6) when Houston (10-2/6-2) led 31-0 less than one minute into the 2nd quarter and prolific Cougar QB Case Keenum had not even thrown a TD pass yet.

The 18th-ranked Coogs went on to lead 59-0 at halftime, at which time they had more TD's (eight) than Rice had first downs (five). The game was not that close.

Keenum did not play in the 2nd half, but he generated his usual spectacular statistical line anyway (25/31 for 323 yds/2 TD's/0 INT/2 carries for 8 yds/1 TD).

What makes Keenum one of the best QB's in college football this season is his uncanny field presence -- he is literally like having a coach on the field during the game.

Rice often dropped eight defenders into coverage in an attempt to slow down the Cougars passing attack, so Keenum checked-off at the line of scrimmage and unleashed Houston's rushing attack, which rolled up 221 of Houston's 683 yds of total offense. When Rice defenders crept closer to the line to stop the run, Keenum scorched them with quick-hitting passes to eight different receivers.

Chron beat writer Steve Campbell pointed out in his blog that, over the past two blow-out games, Keenum has played four quarters and four minutes. In so doing, Keenum completed 54 of 70 passes (77 percent) for 728 yards, seven TD's and no interceptions. The Cougars scored 14 touchdowns and one field goal, while punting once, in the 16 possessions that Keenum has directed over the past two games.

I am convinced that this season's game films of Keenum's field presence and management of the Cougars' passing game will be studied by coaches and aspiring QB's for years. He has been that good.

The game was a disappointment for Rice, which had played well over the past month after a disastrous start to the season. The gulf in talent between the Owls and the Cougars is quite large at this point in time.

The Cougars travel to East Carolina (8-4/7-1) next Saturday afternoon for the C-USA Championship game. ECU has won five of their last six games (their only loss was to Virginia Tech), so the Cougars will likely have their hands full in Greenville, N.C.

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

November 29, 2009

The Minstrel Boy

The masterful Danny Quinn. Enjoy.

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

November 28, 2009

Noticing injustice

Following on a point made in these earlier posts, the Chron's Mary Flood reports on the indefensible conditions that the federal government has imposed on R. Allen Stanford as he awaits trial on criminal fraud charges arising from the demise of Stanford Financial Group.

Sort of reminds you of the way in which certain other countries handle the prosecution of business executives, doesn't it?

Ironically, while rightfully questioning whether Stanford is being given a fair shake, the Chron continues to avoid examining its equally dubious record in creating a presumption of community prejudice against Jeff Skilling.

Witch hunts do not reflect well on the participants.

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

November 27, 2009

Ditching in the Hudson River

This is a pretty darn impressive computer reconstruction of US Airways 1549's emergency landing in the Hudson River earlier this year.

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

November 26, 2009

Turkey Day Carving

For all you turkey carvers, check out the instructions above, this interesting article and this great NY Times video to get the most meat out of your turkey.

Carve away!

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

November 25, 2009

"People get put in jail for importing lobsters"

The disturbing trend of an increasingly powerful federal government criminalizing all sorts of conduct that should not be criminalized has been a frequent topic (see also here) on this blog.

Adam Liptak of the NY Times, who has written extensively about the over-criminalization of American society, reports that a bipartisan group is finally organizing to do something about it:

“It’s a remarkable phenomenon,” said Norman L. Reimer, executive director of the National Association of Criminal Defense Lawyers. “The left and the right have bent to the point where they are now in agreement on many issues. In the area of criminal justice, the whole idea of less government, less intrusion, less regulation has taken hold.”

Edwin Meese III, who was known as a fervent supporter of law and order as attorney general in the Reagan administration, now spends much of his time criticizing what he calls the astounding number and vagueness of federal criminal laws.[.  .  .]

There are, the [Heritage Foundation] says, more than 4,400 criminal offenses in the federal code, many of them lacking a requirement that prosecutors prove traditional kinds of criminal intent.

“It’s a violation of federal law to give a false weather report,” Mr. Meese said.

“People get put in jail for importing lobsters.”

Nice quote from Meese, but Radley Balko points out that his involvement in the movement would mean more if he admitted his past involvement in the problem.

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

November 24, 2009

Who fears freeing whom?

In this lengthy NY Times Magazine piece from this past weekend, Andrew Meier decries the Russian government's unjust prosecution and treatment of former Yukos chairman, Mikhail Khodorkovsky:

Many can’t quite embrace an oligarch as a prisoner of conscience. He is a titan who fell from favor, some say, not a dissident physicist or a novelist arrested for a subversive manuscript. Whatever his sins, though, Khodorkovsky was not jailed for breaking the law. His courting of the Bush White House and pursuit of oil partners at home and abroad infuriated the Kremlin. But his gravest error was to challenge Putin. The reason behind his imprisonment, Khodorkovsky claims, “is well known and widely discussed. It was my constant support of opposition parties and the Kremlin’s desire to deprive them of an independent source of financing. As for the more base reason, it was the desire to seize someone else’s efficient company.”

His motives may have been mercenary, but Khodorkovsky in his cell has come to embody the fiat of the state, its arbitrary and boundless power. To date, the authorities have brought charges against 43 former Yukos employees and associates, conducted more than 100 raids .   .   .

Meanwhile, the Times and most of the rest of the mainstream media have largely ignored -- and often promoted -- similar mistreatment and persecution of business executives in our own country.

Yeah, Russian criminal justice system is corrupt, America's is far superior.

Old narratives die hard.

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

November 23, 2009

2009 Weekly local football review

(AP Photo/Erich Schlegel; previous weekly reviews for this season are here)

Texas Longhorns 51 Kansas 20

The 3rd-ranked Longhorns (11-0/7-0) continued their seemingly unstoppable roll to the BCS Championship Game with another laugher against a Big 12 North opponent, the Fighting Manginos (i.e., Kansas (5-6/1-6)).

QB Colt McCoy had his best game of the season (32/41 for 396 yds/4 TD's/0 INT) in his final home game as a Longhorn, and it was fun watching him bang on Big Bertha and set off the cannon after the game. The clueless ESPN announcers continue to hype McCoy for the Heisman Trophy, but that they do so undermines the integrity of the award.

Although a fine QB, McCoy has not had close to as good a season as the best college football players this season. Given the highly complementary nature of football, that's certainly not entirely -- or even primarily -- McCoy's fault. But this Texas team revolves around its ferocious defense, not its QB.

Having said that, McCoy has had a phenomenal career at UT. It's hard to think of a harder act to follow than Vince Young and the BCS National Championship that he delivered, but McCoy has actually been a big part of elevating the UT program to a level even higher than it was in Young's championship season. That is a remarkable achievement and one that vaults McCoy to the very top of the list of best Longhorn QB's.

The Horns finish the regular season with their annual rivalry game at A&M (6-5/3-4) on Thanksgiving evening and then the Big 12 Championship game against Nebraska (8-3/5-2) on December 5th at Jerry's World in Arlington.

In the meantime, Mack Brown and his staff better figure out a way to shore up the Horns' offensive line, which had McCoy dodging bullets quite often against a mediocre Kansas defensive front. Nebraska probably doesn't have enough offense to beat the Horns, but their front seven is pretty salty and could give McCoy fits if the Horns' offensive line plays like it did against Kansas.

Frankly, either the Florida or Alabama defensive front will likely annihilate McCoy if the Horns' OL doesn't shape up before the BCS Championship Game.

Texas Aggies 38 Baylor 3

The Aggies (6-5/3-4) schizophrenic season continued as they hammered Baylor (4-7/1-6) and qualified for a bowl game for the first time since the 2006 season. The Aggies have now won games by margins of 35, 37, 22, 25 and 35 while losing games by margins of 28, 48, and 55. Go figure.

The Ags finish up the regular season on Thanksgiving evening against the Longhorns, and the Ags would do well to stay within two TD's of the Horns.

A&M still has a long ways to go before they have personnel or depth on par with the Horns, but progress is being made, particularly on the offensive side of the ball where the Aggies sport a well-balanced attack when not embroiled in one of their periodic desperation meltdowns. The extra practice time that the Aggies will receive in preparation for their bowl game should be a good springboard to the 2010 season in which A&M hopes to be competitive in every game on the schedule. As bad as A&M football has been over the past couple of seasons, this year’s bowl game will be the Aggies' sixth in the past decade. Most programs only dream for such a success rate.

Houston Cougars 55 Memphis 14

The pure excellence of Cougar (9-2/5-2) QB Case Keenum was best displayed at the end of the 2nd quarter in the 23rd-ranked Cougars romp over Memphis (2-9/1-6).

After Keenum had filleted the Tigers for 35 points and 3 TD passes in the first 22 minutes of the game, Memphis came back with a long scoring drive to close to within 35-14 with 2:38 left in the half. The Tigers have an NFL-quality RB in Curtis Steele, who the Cougars' leaky defense was having trouble stopping. If Memphis could generate another such drive at the start of the 2nd half, then one could see how they could make a game of it by keeping the ball away from the Cougar offense, much in the same way that Central Florida did in upsetting the Coogs last week.

Keenum would have none of that. In a minute and 58 seconds, he drove the Cougars 73 yds in 8 plays to make it 42-14 at halftime. When the Cougar defense forced a three-and-out on Memphis at the start of the 2nd half, Keenum drove the Cougars to another quick TD to make it 49-14. Keenum took a seat on the bench for the remainder of the game only four minutes into the 2nd half. The Coogs scored on 7 of their first 8 possessions and rolled up 690 yards to Memphis’ 342.

Game, set, match, Keenum and Houston.

It is a testament to Keenum's brilliance this season that he generated better statistics (29/39 for 405 yds/5 TD's/0 INT) in a little over a half against Memphis than Texas QB Colt McCoy generated in his best effort of the season this weekend against Kansas playing the entire game.

The Cougars host cross-town rival Rice (2-9/2-5) next Saturday night and, assuming they win that game, will either host Southern Miss (6-5/5-2) or go to East Carolina (7-4/6-1) in the C-USA Championship Game the following weekend, courtesy of Marshall's (6-5/4-3) victory over SMU (6-5/5-2) this past weekend.

Rice 30 UTEP 29

The feisty Owls (2-9/2-5) upset UTEP (3-8/2-5) by forcing six turnovers. After an 0-7 start, Rice has now been competitive in all three games since their off-week during the last week in October, and have won two of those games by forcing turnovers, minimizing errors offensively and making big plays on both sides of the ball. The Owls' strong play of late will make them sky-high for their game against Houston, which they would dearly love to knock off.

After two straight weekends off, the Texans (5-4) play the Monday Night Game tonight against the Titans (3-6) followed by a showdown next Sunday at Reliant against the undefeated Colts (10-0). Should be an interesting week of football in Houston.

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

November 22, 2009

Saturday Night Dinner

My talented wife's lovely salad with a glass of Aymara Merlot Reserve 2006 (Argentina). Delightful!

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

November 21, 2009

Gus Dies

Larry McMurtry's Lonesome Dove is one of the best Texas novels of our time. The Pulitzer Prize-winning novel was later made into a wonderful television mini-series, which starred Robert Duvall and Tommy Lee Jones as the iconic former Texas Rangers, Gus McRae and Woodrow Call.

One of the best scenes from the mini-series -- and arguably one of the best scenes ever produced for television -- is the scene in which Gus dies after being badly injured in an Indian ambush. After searching for his missing friend, Call finds Gus in a doctor's office after Gus has had one of his gangrene-infected legs amputated. Rather than have his other infected leg amputated, Gus elects to die.

Two old friends -- played by brilliant actors at the top of their game -- have a final conversation. Television has never been better. Enjoy.

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

November 20, 2009

The headline says it all

The fundamental problem with the American health care finance system is that reliance on tax-deductible, employer-based health insurance and government subsidized insurance (such as Medicaid, Medicare) created a culture since WWII in which consumers of health care at the point of delivery expect to pay none (or only a small fraction) of the cost of that health care.

That culture has led to highly inefficient consumption of health care services and product. Some folks consume too much because they have no financial incentive to be prudent about their purchases, while many others who really need services and products go without.

So, reforming the system should start with changing the culture, right?

So much for that:

US wealthy should pay for health care overhaul, poll finds

Data could boost House plan to tax top-tier earners

WASHINGTON - Americans don’t want to shoulder the cost of President Obama’s health care overhaul themselves. They think the rich should pay for it.

That’s the finding from a new Associated Press poll, and it could be a boost for House Democrats, whose plan approved this month proposed taxing upper-income people to fund their sweeping remake of the medical system.  .  .  .

Thus, rather than true reform, Congress simply debates transferring payments from one group to another. Reminds me of the observation that the late Milton Friedman used to make about spending money:

There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you're doing, and you try to get the most for your money.

Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I'm not so careful about the content of the present, but I'm very careful about the cost.

Then, I can spend somebody else's money on myself. And if I spend somebody else's money on myself, then I'm sure going to have a good lunch!

Finally, I can spend somebody else's money on somebody else. And if I spend somebody else's money on somebody else, I'm not concerned about how much it is, and I'm not concerned about what I get.

And that's government.   .   .

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

November 19, 2009

Pranav Mistry on SixthSense Technology

The link to the video on the TED site is here.

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

November 18, 2009

Thinking about financial regulation

Peter Wallison and Steve Randy Waldman have each written a thought-provoking and important analysis of the effect of regulation on the recent financial crisis.

First Wallison:

What caused the financial crisis?

The widely accepted narrative, prominent in the media and pressed by the Obama administration, is that the crisis was caused by deregulation--the "repeal" of the Glass-Steagall Act and the failure to regulate both derivatives and mortgage brokers--which allowed excessive financial innovation, risk taking, and greed among financial players from mortgage brokers to Wall Street bankers.

With this diagnosis, the proposed remedy is more regulation and government control of the financial system, from the over-the-counter derivative markets to mortgage brokers and the compensation of CEOs.

The alternative explanation is that the crisis was caused by the government's own housing policies, which fostered the creation of 25 million subprime and other low-quality mortgages--almost 50 percent of all mortgages in the United States--that are now defaulting at unprecedented rates.

In this narrative, the fact that two-thirds of all these weak mortgages are now held by government agencies, or were produced by government requirements, shows that the demand for these mortgages--and the financial crisis itself--originated in Washington.

The problem for the administration's narrative is that its principal examples do not stand up to analysis: the repeal of a portion of the Glass-Steagall Act did not eliminate the restrictions on banks' securities activities (they were left unchanged), the mortgage brokers were responding to demand created by the government, and, there is no evidence that the failure to regulate credit default swaps (CDS) had any effect in causing or enhancing the financial crisis.

Without a persuasive explanation for the cause of the financial crisis, the administration's regulatory proposals rest on a mythic foundation.

And Waldman:

An enduring truth about financial regulation is this: Given the discretion to do so, financial regulators will always do the wrong thing.

Remember -- it's the incentives, folks.

Posted by Tom at 12:01 AM | Comments (5) |

November 17, 2009

Fertitta gets squeezed this time

Looks as if Tilman Fertitta is about to endure a bit of his own medicine.

As this post from a couple of months ago explains in detail, Landry's Restaurants, Inc. shareholders have had a wild -- and mostly bad -- ride over the past several years as Fertitta (who is the company's founder, CEO and chairman) tried to figure out a way to finance taking the company private.

Because Landry's board failed to obtain a standstill agreement from Fertitta while he put shareholders through a series of failed buyout offers, Fertitta increased his ownership stake in Landry's from approximately 39% to 55% as the company's stock fell as low as $5 per share. As you might expect, Fertitta and the Landry's board are defendants in a shareholder lawsuit in connection with that oversight.

Finally, after shareholders and the markets widely panned Fertitta's Saltgrass Steakhouse spinoff proposal in September, the Landry's board tentatively approved an offer from Fertitta to buy the balance of Landry's shares for $14.75 per share. Compared to the spinoff proposal, Fertitta's cash offer looked relatively good.

There is just one small problem with Fertitta's proposal this time -- under Delaware corporate law, Fertitta had to agree that his proposal is subject to a requirement that a majority of the Landry's shares that Fertitta does not control have to approve the deal.

Enter William Ackman and his Pershing Square Capital Management hedge fund.

In an Schedule 13D filed with the SEC this past Friday, Pershing and its partner William McGuire (the Borders Group chairman) announced that they had purchased just under 10% of Landry's outstanding shares and that they hold derivatives contracts that could hike the share to almost 14% of the oustanding shares.

And while they were at it, Pershing and McGuire announced that they opposed Fertitta's $14.75 per share buyout offer.

So, Fertitta would appear to have only two choices. Either pull his proposal off the table -- and risk a wholesale shareholder revolt of his actions that have depressed the company's stock price over the past several years-- or raise his offer to satisfy Pershing.

And even if he decides to meet Pershing's asking price, where is Fertitta going to find the financing for his proposal? It's not as if the financing markets have been particularly bullish on the company over the past couple of years.

Hold on tight, Landry's shareholders. Your wild ride is not over yet.

The NY Times Steve Davidoff has more.

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

November 16, 2009

2009 Weekly local football review

(AP Photo/Tony Gutierrez; previous weekly reviews for this season are here)

Central Florida 37 Houston Cougars 32

As I've noted many times, Houston (10-2/4-2) games over the past several seasons are just different. The game against Central Florida (6-4/4-2) was a case in point.

The 24th-ranked Coogs jumped out to a 17-3 lead with 7 minutes to go in the first half, but Central Florida -- which had held out its starting QB and RB in last week's game against Texas -- controlled the ball for essentially the entire 2nd quarter and narrowed the score to 17-10 by the end of the half. Inasmuch as one of the Cougar TD's was on a kick-off return, the Coogs' offense really didn't play much in the 2nd quarter.

Thus, by the 3rd quarter, the Houston offense had lost its rhythm. UCF's defensive front -- which is pretty stout -- began dominating the line of scrimmage and Houston's undermanned defense began to wear down.

Before you know it, the Coogs were reeling and UCF had outscored Houston 28-3 during the 3rd quarter and the first half of the 4th quarter. As usual, QB Case Keenum brought the Coogs back with two late scores, but the magic of a miracle finish was used last week at Tulsa.

With the loss and despite their fine season to date, the Cougars find themselves trailing SMU (6-4/5-1) in the C-USA West Division race. The Ponies play a decent Marshall (5-5/3-3) team next Saturday in West Virginia and then close at home against truly horrid Tulane (3-7/1-5). If SMU wins both those games, then the Ponies will win the C-USA West Division and play in the conference championship game against the C-USA East champ, either East Carolina (5-4/4-1) or Southern Miss (6-4/4-2). Despite having the best overall record in the league by far, the Cougars will be shut out of the conference championship game.

The Cougars close the season with home games against Memphis (2-8/1-5) and Rice (1-9/1-5). Interestingly, assuming Houston wins both those games and does not play in the C-USA Championship game, the Coogs will probably secure a more attractive bowl invitation than if they would receive if they won the C-USA Championship game (the Liberty Bowl in Memphis).

Rice 28 Tulane 20

The Owls (1-9/1-5) finally broke through against woeful Tulane (3-7/1-5) for their first victory as WR Toren Dixon did his best Jarett Dillard imitation (7 rec/158 yds/3 TD's), including a spectacular 29 yard TD reception in the final minute that secured the win.

Rice has now played two straight good games after their off-week, and they have another chance for a win this Saturday against up-and-down UTEP (3-7/2-4). The Owls close their season on the Saturday after Thanksgiving against cross-town rival Houston.

Oklahoma 65 Texas Aggies 10

As with the Kansas State game a month ago, the Aggies (5-5/2-4) rolled over and played dead against an underachieving Oklahoma (6-4/4-2) team that was itching to hammer someone. Even considering the Aggies' talent limitations, how can that not be a huge concern for those who are hoping for a rebound of the Aggie program?

The Aggies finish the season with home games against Baylor (4-6/1-5) and Texas (10-0/6-0). After A&M's recent wins over Texas Tech and Iowa State, the Baylor game looked like a reasonably sure win as the Aggies marched toward bowl eligibility. But after two straight disheartening losses, the Bears are no longer looking like such a sure thing.

A loss to Baylor would almost make certain that the Ags would not become bowl eligible, which would be another major disappointment in the Mike Sherman era.

So it goes these days in Aggieland.

Texas 47 Baylor 14

The Horns (10-0/6-0) continued to cruise toward a probable berth in the BCS Championship game with an easy win over the chronically undermanned Bears (4-6/1-5). The Horns were up 40-0 at the half and let up on the gas pedal for the rest of the game.

Texas finishes the regular season against Kansas (5-5/1-5) and A&M before taking on either Kansas State (6-5/4-3) or Nebraska (7-3/4-2) in the Big 12 Championship game. It will be shocking If UT wins any of those games by less than two TD's.

The Texans (5-4) were off this past week as they prepare for two straight interesting home games against the resurgent Titans (3-6) and the suddenly vulnerable-looking Colts (9-0).

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

November 15, 2009

Sound of Silence

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

November 14, 2009

Homeward Bound

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

November 13, 2009

The easiest question for a lawyer to answer

Should I talk to the police?

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

November 12, 2009

UPS vs. FedEx

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

November 11, 2009

Refusing to throw in the towel is not a crime

Thank goodness.

Despite the government's sordid expansion of crimes against business people over the past decade, at least it's not a crime to decline to throw in the towel on a business venture simply because there are signs that it might fail. As John Carney eloquently points out, that's in all of our best interests.

Sort of makes one wonder what would have happened if Jeff Skilling had been tried in even a reasonably fair environment?

And the government's response of putting Messrs. Cioffi and Tannin through hell over the past year?:

"Of course, we are disappointed by the outcome in this case, but the jurors have spoken, and we accept their verdict," said Benton Campbell, the U.S. Attorney for the Eastern District of New York, in a written statement.

Of course, the off-the-record response was a tad less diplomatic toward the jury. But at least Campbell should know about failed prosecutions. Is a result such as this the reason why he insists on continuing to bring them?

Update: Frostburg State Economics Professor William Anderson, who has written extensively on the adverse economic impact of the government's criminalization of business policy, followed the trial closely and provides this insightful postscript, which includes the following insightful observation about the obstacles that defendants face even in the face of a weak prosecution:

If anything, the slanderous and dishonest post-acquittal remarks by prosecutors drive home just how contemptuous federal prosecutors are of everyone else. The jury did not acquit because they were too stupid and vapid to understand the clarity of the prosecution’s case; they acquitted because they did understand that the government’s simple, clear presentation was not true, or, at very best, did not do a good job of meeting the "reasonable doubt" standards.

I was not surprised at the acquittal, given what I knew was presented in court and given what my sources had been telling me. My only fear was a federal jury being, well, a federal jury that throws sops to those poor, underpaid prosecutors who claim they only are trying to do justice.

In the end, however, the jury did its job, and judge did his job, the defendants were innocent, and the prosecution continued to lie. Oh, and the media will continue to be the media. Like the Bourbons, they "learn nothing and they forget nothing."

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

November 10, 2009

Too Big Even to Consider Failing

As with many folks in the financial and legal world, I'm finishing up Andrew Ross Sorkin's entertaining new best-seller, Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System---and Themselves (Viking 2009). Clear Thinkers favorite Arnold Kling has the best analysis of the book that I've read to date:

Reading the book leads me to ponder the differences between Chauffered America--Hollywood, investment bankers, and high government officials--and Strip Mall America--people who launch businesses like restaurants, hair salons, and other small enterprises. [.  .  .]

The obvious sociological point is that the top finance people live in a bubble, with secret entrances, isolated offices, chauffered automobiles, and private jets. Even the top government officials inhabit this world. Sorkin describes Geithner arriving at the airport in DC and losing it over not being met by a driver. Forced to take a taxi, Geithner turns to his colleague and says that he has no cash. Perhaps this would have been a moment to teach the head of the New York Fed how to use an ATM. [.  .  .]

I do not see how reading this book can help but reinforce a Simon Johnson/James Kwak view of Washington captured by Wall Street. Paulson seems to have no use for anyone who is not a Goldman Sachs alumnus. Geithner seems to have no use for anyone who is not a CEO of a large financial institution. Both of them view the collapse of major Wall Street firms as Armageddon.

The "regulatory overhaul" promised by the Obama Administration is still the same-old, same-old. Chauffered America will be restored to its exalted status, with a few new rules and regulations thrown in.

Instead, somebody should be asking the deeper question about Chauffered America. If Chauffered America were to disappear, would the rest of us miss it? Or could Strip Mall America get along just fine without the big-time bankers and their friends in government?

One comes away from the book with the conclusion that the primary purpose of the government and corporate leaders involved in resolving the crisis was to maintain the elitist culture of Wall Street with regard to financial matters, while at all times making sure that the government protected the maximum number of the folks making the bad bets from ever having to endure the true extent of the risk that they took in placing those bets. That's why things like this happened.

As I noted after the demise of Lehman Brothers last fall, resolving the crisis was not rocket science. Sorkin's book establishes that the leaders who were calling the shots were never going to let on that such was the case.

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

November 9, 2009

2009 Weekly local football review

(AP Photo/Tom Stratton; previous weekly reviews for this season are here)

Colts 20 Texans 17

The Texans (5-4) basically rolled over and played dead against the Colts (8-0) for the first quarter and a half. By early in the 2nd quarter, the Colts led the Texans in first downs 15-0 and total yards 196-12, while Texans already had seven penalties.

But amazingly, the Texans made a game of it and would have sent the contest into OT but for Kris Brown's missed 42 yard FG attempt in the final seconds of the game.

However, even more important than Brown's miss was head coach Gary Kubiak's blunder with two minutes to go in the first half. With the Texans poised to score with a first and goal at the Colts 2-yard line, Kubiak elected to allow the play clock to run-down to the two-minute warning timeout rather than run a first down play. The timeout gave the Colts coaching staff time to challenge the preceding play in which the Texans' Ryan Moats appeared to fumble while being tackled at the out-of-bounds line. The instant replay official overturned the ruling on the field and ruled that the fumble was recovered by the Colts on the goal line, resulting in a touchback and ball to the Colts at the 20-yard line.

Had Kubiak directed the Texans to run the first down play prior to the two-minute warning, it is extremely unlikely that the Colts' coaching staff would have gotten it together in time to challenge the call on the previous play. It's precisely that lack of situational awareness that makes me wonder whether Kubiak really has what it takes to be an above-average NFL head coach.

The Texans now have their off-week and so don't play again until the Monday night before Thanksgiving when they meet the Vince Young-led Titans (2-6), who have won two straight. The Texans get the Colts again at Reliant Stadium the Sunday after Thanksgiving.

Houston Cougars 46 Tulsa 45

What is Case Keenum going to do for an encore?

Last week, the amazing Houston Cougar (8-1/4-1) QB drove his team 78 yards for a TD in 30 seconds of the final minute to pull out a victory over Southern Miss.

On Saturday night against Tulsa (4-5/2-3), Keenum drove the Coogs 60 yards for a TD in the final 3 minutes to close to within 45-43 with 21 seconds to go. Then, after the Cougars recovered the ensuing on-side kick, Keenum drove the Cougars 28 yards in 17 seconds to set up Matt Hogan's game-winning 51-yard field goal as time expired.

For the game, Keenum was 40/60 for 522 yds, 3 TD's and 0 INT. That was the 10th time that Keenum has passed for more than 400 yards in a game. The 4th-quarter comeback victory was the fourth that Keenum has engineered this season and the eighth of his collegiate career.

He is simply the best quarterback in college football this season.

By the way, the win was particularly sweet for a couple of reasons. First, it gave a Houston team another victory over Tulsa head coach Todd Graham, much to the delight of most Rice Owl fans.

Moreover, the Coogs also prevailed despite the strong appearance that Graham had at least a half-dozen of his players fake injuries during the Cougars' 4th-quarter comeback in an effort to slow down the Houston no-huddle offense. C-USA officials should be taking a careful look at the game films and sanctioning Graham unless Tulsa provides evidence that the suspicious-looking injuries were legit.

The 13th-ranked Cougars travel to Orlando next Saturday to play Central Florida (5-4/3-2), which held out its starting QB and top RB in its game against Texas this week so that they would be ready for Houston. That's life in the Top 20.

Colorado 35 Texas Aggies 34

This one hurt the Aggies' (5-4/2-3) fragile rebuilding project badly.

The Aggies led 21-10 at the half and 31-21 midway through the 4th quarter before a pretty bad Colorado (3-6/2-3) rallied to pull out the victory with a TD pass with 2 minutes to go. Even then, the Ags had two more chances to move into field goal range, but blew those opportunities with an interception and a fumbled punt. Ouch!

The Ags must now regroup to travel next Saturday to Norman to take on a wounded Oklahoma (5-4/3-2) team, which -- after their upset loss to Nebraska (6-3/3-2) on Saturday -- has dropped out of the Top 25 for the first time in memory. That sixth win for bowl eligibility is not going to come easily for the Aggies.

Texas Longhorns 35 Central Florida 3

This amounted to nothing more than a well-attended scrimmage for the 2nd-ranked Horns (9-0/5-0).

With Central Florida (5-4/3-2) holding out their starting QB and top RB for Houston next week, the Horns cruised to victory while finally showing some signs of a consistent passing offense (star WR Jordan Shipley went off for 273 yards on 11 receptions).

But the story of this UT team remains the defense, which held UCF to 150 yards of total offense. Interestingly, the top three teams in college football this season -- Texas, Florida and Alabama -- all have suffocating defenses with somewhat underachieving offenses. Call it the backlash of the defenses to the spread offense.

The Horns travel to Waco to play Baylor (4-5/1-4) next week before returning home to face Kansas (5-4/1-4) and the Aggies in their final two regular season games. With Kansas State (6-3/4-2) or Nebraska (6-3/3-2) as their opponent in the Big 12 championship game, Texas has the easiest route of the top three teams to the BCS National Championship game.

SMU 31 Rice 28

Rice (0-9/0-5) played their best game of the season, but a 10-point turnaround at the end of the first half (blocked Rice FG attempt was returned by SMU for a TD) was more than the struggling Owls could overcome against improving SMU (5-4/4-1).  The Owls have their two best chances for a victories this season against Tulane (3-6/1-4) and UTEP (3-6/2-3) at home over the next two weekends before finishing the season with their traditional post-Thanksgiving Saturday game against Houston.

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

November 8, 2009

An amazing Amazing Grace for a Sunday

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

November 7, 2009

Customer service

Robert Duvall -- in his classic role of former Texas Ranger Gus McCrae in Larry McMurtry's Lonesome Dove -- reminds a bartender the importance of good customer service.

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

November 6, 2009

Dylan does Christmas

Andrew Ferguson is not impressed with Bob Dylan or his new Christmas CD:

The production and packaging are professional. The band is competent in a midnight-at-the-Nashville Hyatt sort of way--maybe a little heavy on the tremolo but still. And the songs themselves are fine, of course. The arrangements, though, are jarringly slick, with sleigh bells and gossamer strings and cooing girl singers--as if Dylan had chosen to lift the backing tracks from an Andy Williams Christmas special circa 1968. Oozing just beneath his asthmatic croak, the arrangements give an effect of overwhelming creepiness. His voice gets worse with every track. You wonder whether someone left the karaoke machine on in the emphysema ward at the old folks' home. He doesn't sing notes so much as make exhausted gestures in their general direction, until at a break he falls silent and is rescued by the backup singers, who reestablish the melody in the proper key. But then he starts singing again.

Yeah well, maybe ol' Bob blew the Christmas CD. But even at the age of 50 in the video below from almost 20 years ago, Dylan could still rock with the best of them -- Roger McGuinn, Tom Petty, Neil Young, Eric Clapton and the late George Harrison. Enjoy.

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

November 5, 2009

A European's view of American health care finance reform

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

November 4, 2009

Muddled thinking

Everyone who follows football around these parts is feeling bad for Texans' TE Owen Daniels, who blew out an ACL in this past Sunday's game against Buffalo. He is done for the remainder of the season.

At the time of the injury, Daniels was having the best season of his four-year career and was leading NFL tight ends in receiving yardage.

But what is really bad about Daniels' situation is that he and his agent rolled the dice and rejected the Texans' offer of at least $15 million in guaranteed money for signing a multi-year contract before the beginning of this season. As a result, Daniels is playing this season under a one-year club tender called for by the collective bargaining agreement that pays him $2.8 million.

Daniels and his agent apparent rationale in rejecting the offer was that the Texans were low-balling in comparison to what other first-tier tight ends have received over the past couple of seasons. So, they decided that Daniels should take the risk of injury and play well this season so that, after the season, he could force the Texans either to match a higher offer from another team or let him go to the higher bidder.

But given the high risk of injury in the NFL, how could Daniels and his agent leave at least $12.2 million on the negotiating table? What were they thinking?

Now, Daniels will probably not be able to a complete season at full strength until the 2011 season. And there is no certainty that another lucrative offer will be awaiting him then even if he fully recovers from the injury and plays well.

I don't like the NFL compensation system. I believe it is far too highly-regulated. The system wrongly prevents the players who endure terrible physical risk and create most of the wealth for the owners from offering their services to the highest bidder.

But what I like even less is muddled thinking that results in a huge financial loss for a talented young man such as Daniels.

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

November 3, 2009

Why is Timothy Geithner still employed?

Last week, we learned that Timothy Geithner, while the head of the New York Fed, let Goldman Sachs and several other large investment banks fleece the Fed in connection with the AIG bailout.

Then, over the weekend, we learn that the Geithner-orchestrated $2.3 billion federal government investment in C.I.T. Group last fall without requiring debtor-in-possession financing protections under chapter 11 of the Bankruptcy Code is going to result in a total loss of that investment. Why? Because C.I.T. has decided to file bankruptcy now.

Now, in the big scheme of things, $2.3 billion is not all that much money when placed in the context of the federal budget and the American economy. Heck, it's not even close to as much as Geithner left on the table for the investment banks in regard to the AIG bailout.

But Geithner has proven beyond a reasonable doubt that he is in over his head. This bailout stuff is not rocket science.

Why is Geithner still Treasury Secretary?

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

November 2, 2009

2009 Weekly local football review

(AP Photo/Don Heupel; previous weekly reviews for this season are here)

Texans 31 Bills 10

The Texans (5-3) dominated the game, but somehow found themselves trailing the Bills (3-5) after three quarters.

Previous Texans teams probably would have folded, but this one seems to be improving on defense enough that the offense can shoot blanks for awhile and the game will not be lost (but remember, this is the Bill's offense that we're talking about here). The Texans' offense finally straightened things out in the fourth quarter, hammered away at the Bills' tiring defensive front and the Texans won this one going away with three rushing TD's in the final quarter. All in all, not a bad way to prepare for next Sunday's showdown at Indianapolis against the Colts (7-0).

A couple of notes. Backup RB Ryan Moats played really well (23/126 yd/6 rec/63 yd/3 TD's) in relief of fumble-prone RB Steve Slaton. Somewhat surprisingly, there did not seem to be any drop-off in production in going with Moats over Slaton and, if anything, it appeared that Moats hit the holes quicker and with more authority than Slaton. And without the fumbles.

Also, the Texans lost their second-best receiver -- TE Owen Daniels -- to what appeared to be a serious knee injury that will probably end his season. Will we now have a James Casey sighting?

Finally, for some reason, CBS did not show a replay of how Daniels got hurt (he was not involved in the pass on the play in which it occurred). However, Coach Kubiak was furious with the referees on the sideline at the time. Why on earth did the CBS announcers simply ignore how Daniels' injury occurred and why Kubiak was so upset?

Texas Longhorns 41 Oklahoma State 14

As noted last week, I expected the second-ranked Longhorns (8-0/5-0) to beat the Cowboys (6-2/3-2) relatively easily if the Horns' offense did not give the game away. As it turned out, the Horns' rugged defense forced five Cowboy turnovers, returned two of them for TD's and generally suffocated Okie State's high-powered offense. An impressive performance, indeed.

Despite this story line, ABC's absurd television production subjected viewers to dozens of shots of QB Colt McCoy and his parents, plus non-stop blather about McCoy's Heisman Trophy prospects.

Note to ABC -- McCoy specifically, and UT's offense in general, is not having all that good a season. Yes, McCoy had a very good season last year. But that was last season.

This season, there are at least a dozen QB's in major college football who are having a better season than McCoy. Yes, Texas remains undefeated, but that is largely the result of its stout defense and the fact that the offense has not stunk it up so badly in any game so far to blow one (although they were close to doing so in the OU game).

So, please. Give this "McCoy for Heisman" stuff a rest.  

The Horns have a non-conference scrimmage next Saturday in Austin against Central Florida (4-3/3-3) of C-USA before finishing the regular season at Baylor (3-5/0-4), at home against Kansas (5-3/1-3) and at A&M (5-3/2-2). With its probable opponent in the Big 12 championship game being either Kansas State (5-4/3-2) or Nebraska (5-3/2-2), the Horns appear to have the easiest route of any of the top teams to the BCS National Championship game.

Houston Cougars 50 Southern Miss 43

15th-ranked Houston (7-1/3-1) QB Case Keenum's legend continues to grow.

This was one of those back and forth Houston games in which the opposition -- this time a pretty good Southern Miss (5-4/3-2) team -- couldn't stop the Cougar offense while the somewhat undermanned Houston defense was having trouble slowing down the other side.

Nevertheless, Houston usually wins these games, except when it turns the ball over more than the opposition, which it did in this game. So, when Southern Miss scored the tying TD with only 51 seconds to go, this game looked as if it was headed to overtime.

But Keenum proceeded to direct a five-play, 78 yard drive in about 30 seconds to pull out the win in regulation. His stats on the day -- 44 of 54 for 559 yds, 5 TD's and 1 interception. As I've noted many times, Keenum is playing at the highest level of any QB in major college football this season.

The Coogs face another tough test next Saturday at Tulsa (4-4/2-2), which is looking to bounce back from a home loss on Saturday to SMU. After the 70-30 shellacking the Cougars put on Tulsa in Houston last season, expect the Golden Hurricanes to be primed for an upset next week.

Texas Aggies 35 Iowa State 10 

For the second straight week, the Aggies (5-3/2-2) generated a productive, balanced offense and won going away against the outmanned Cyclones (5-4/2-3). In their final four games, the Ags have two games in which they could win their sixth game and become bowl eligible -- at Colorado (2-6/1-3) next week and home against Baylor (3-5/0-4) on November 21st. The other two games -- OU (5-3/3-1) and Texas (8-0/5-0) -- appear to be long shots for an Aggie victory.

Thus, next week's Colorado game appears to be critical for the Aggies' season. The Ags will probably handle Baylor, which is playing out the string after losing star QB Robert Griffin for the season. A loss to Colorado would likely mean a 6-6 season for the Ags and a marginal bowl bid. Despite its poor record this season, Colorado is not without talent, so the young Aggies will have their hands full in Boulder next Saturday. But 7-5 final record sure looks better than 6-6.

Rice (0-8/0-4) was idle this past weekend. The Owls have a tough game at SMU (4-4/3-1) before returning home to play Tulane (2-6/0-4), which appears to be the Owls only remaining realistic chance for a victory this season.

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

November 1, 2009

Secret Agent Man

One of the most underappreciated rockers from the 60's, Johnny Rivers.

Posted by Tom at 4:58 AM | Comments (0) |

October 31, 2009

Jonathon Winters' Stick

Before Robin Williams and Jim Carrey, there was Jonathon Winters. Enjoy.

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

October 30, 2009

John O'Quinn, R.I.P.

The Houston legal community remains in shock over the death yesterday in a car accident of famed trial lawyer, John O'Quinn. He was 68 years old at the time of his death.

O'Quinn was a remarkably talented plaintiff's lawyer and became one of the wealthiest attorneys in the country as a result. And a controversial one at times, too (also see here).

But those who only knew John through news reports never knew the man. John had a heart as big as Texas, as reflected by his generous donations over the years to the University of Houston, Texas Medical Center institutions and numerous other charitable organizations.

Moreover, John's big heart extended into legal cases, too. Most recently, John took on the case of former mid-level Dynegy executive Jamie Olis, whose criminal case epitomizes the brutal nature of the government's criminalization of business in the aftermath of Enron's demise.

After taking on the case, John told me that his review of many of my blog posts on the Olis case was one of the reasons that he decided to take on the case. He never received a dime for the work he did on the case, but he didn't care a lick. He simply was appalled by what the government had done to a decent young man and his family, and he was intent on doing something about it.

My most recent contact with John was at University of Houston Law Foundation board meetings, which he attended faithfully for many years (he was the law school's largest benefactor). John was a delight to work with at such meetings, intensely interested in what was going on at the law school, but always wonderfully good-natured about the inherent limitations of such boards to do much more than raise money and encourage the Dean to hire good people.

My lasting memory of John will be leaving our last such meeting together, talking about the Olis case as we walked to our cars. We observed to each other on just how difficult it had become to be a wealthy businessperson in America. He cracked that it was almost enough to turn him into a criminal defense attorney.

Make no doubt about it, John O'Quinn was one of the most talented trial lawyers of his time. His preparation regimen for trial was legendary, and his ability to connect with jurors was the best that I have ever seen in the courtroom.

I will miss John very much.

Funeral arrangements for John O'Quinn:

Viewing Tuesday, November 3, 4:00pm to 8:00pm
George H. Lewis Funeral Home
1010 Bering Drive
Houston, Texas 77057
(713) 789-3005

Funeral Wednesday, November 4, 11:00am
Second Baptist Church
6400 Woodway
Houston, Texas 77057
(713) 465-3408

Update: Links on Q'Quinn's life and death:

John Council and Brenda Sapino Jeffreys

Rick Casey

Observations of colleagues

O'Quinn and the medical community (see also here)

Q'Quinn's environmental legacy

Q'Quinn's real estate investments

O'Quinn's car collection with Tim Spell's anecdotes

O'Quinn's obituary

Mary Flood on O'Quinn's funeral

Posted by Tom at 12:01 AM | Comments (5) |

October 29, 2009

Bluffing Geithner is profitable

Say what?

Timothy Geithner -- while heading up the New York Fed in 2008 -- left upwards of $13 billion of taxpayer money on the table to the likes of Goldman Sachs, Merrill Lynch and Deutsche Bank during negotiations over payment of AIG's credit default swaps because "some counterparties insisted on being paid in full" and Geithner "did not want to negotiate separate deals."

As regular readers of this blog know, I thought the federal bailout of AIG and various other Wall Street firms was a bad idea from the start because it prevented our insolvency and reorganization system from allocating the risk of loss among the creditors of the financially-troubled firms.

Nevertheless, after various political forces stoked a climate of fear, Congress approved broad bailout legislation even though it was clear at the time that few of the legislators understood what they were approving.

Not surprisingly, various large creditors of the financially-troubled firms did very well for themselves under the bailout legislation. Can't blame them for protecting their shareholders' interests, now can you?

But really. Geithner got fleeced for billions in regard to AIG's bailout by investment banks that had no negotiating leverage whatsoever. What were the banks going to do if Geithner had demanded that they take a discounted amount? Risk a global financial meltdown by demanding that the Fed pay AIG's CDS's at par?

Geithner let them get away with it. And now he is out Treasury Secretary.

So it goes.

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

October 28, 2009

The Prisoner's Dilemma

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

October 27, 2009

Ellen Podgor on the trial penalty

Stetson College of Law Professor Ellen S. Podgor, who authors the popular White Collar Crime Prof Blog, has written an important law review article on a key issue that is confronting defense attorneys and courts in this age of criminalizing merely unpopular business people and practices -- the onerous trial penalty that a defendant faces for electing to exercise the right to force the government to prove guilt beyond a reasonable doubt:

This Article  .  .  . shows that innocence is no longer the key determinant in some aspects of the federal criminal justice system, even for those charged with white collar offenses. Rather, our existing legal system places the risk of going to trial, and in some cases even being charged with a crime, so high, that innocence and guilt no longer become the real considerations. This is especially true for upper level white collar offenders like CEOs3 and corporate entities. In these cases maneuvering the system to receive the least onerous consequences may ensure the best result for the accused party, regardless of innocence.

Arthur Andersen LLP, Jamie Olis, and Jeffrey Skilling proceeded to trial after criminal charges were brought against them. In contrast, KPMG, Gene Foster, and Andrew Fastow secured plea agreements or deferred prosecution agreements with reduced sentences and finite results. As one might imagine, the latter group's sentences or fines were significantly below those of the individuals and entities that proceeded to trial. The pronounced gap between those risking trial and those securing pleas is what raises concerns here. [.  .   .]

The reward of a "not guilty" verdict at trial comes at a high cost. There is the high cost of going to trial, a cost that far exceeds the typical street crime because of the long investigation and trial and in large part be-cause these cases are predominantly a product of documents. It can also be a short-lived verdict when the government decides to proceed against the individual with a second prosecution, even after a not guilty finding. [.  .  .]

This means that innocence or guilt does not frame the judicial process in white collar cases. The risk of trial becomes so great that in order to minimize the possible consequences innocence becomes an irrelevancy. Although the plea bargain to trial differential existed for many years in crimes outside the white collar crime context, the high sentences now being given to individuals and entities charged with white collar crimes place those crimes in comparable stead with street crimes. This gives pause to whether the next phase of wrongful convictions might move beyond street crimes into the white collar world.

My sense is that many prosecutors these days have come to the conclusion that merely obtaining an indictment in a business-related case means that they probably won't have to bother with a trial -- the trial penalty that the defendant faces will almost always prompt a plea bargain. Thus, the indictment itself has become the punishment for risky business behavior that prosecutors simply do not like.

We live in scary times indeed.

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

October 26, 2009

2009 Weekly local football review

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

Texans 24 49ers 21

The Texans (4-3) inched above .500 for one of the rare times in their eight season history with the win over the 49ers (3-3), but the way they accomplished it indicates that the team has a ways to go before becoming an above-average NFL team.

The Texans built a commanding 21-0 lead after a half, but let the 49ers come back behind their backup QB Alex Smith to have a chance to tie or win the game in the final two minutes. The Texans defense, which bottled up the 49ers in the first half -- became passive in the second half, allowing long TD drives in three of five second half possessions.

Meanwhile, the Texans offense -- which really was not hitting on all cylinders this day -- had only one sustained drive in the second half. The combination of defensive breakdowns with an offense that could not keep the defense off the field is usually a prescription for failure in the NFL.

But a win is a win in the brutal NFL, so the Texans head to next Sunday's game against the rugged but offensively-challenged Bills (3-4) with a legitimate shot at going into Indianapolis the following weekend at 5-3. They better beat the Bills because it does not currently look as if the Texans have much of a chance of slowing down the red-hot Colts (6-0). Thus, a 5-4 record going into the Week 10 bye-week is probably the best the Texans can realistically hope for.

Texas Aggies 52 Texas Tech 30

How do you explain the Aggies (4-3/1-2) beating the spread by 43 points in defeating Tech (5-3/2-2), which had just blasted a team (Kansas State) by 52 points two weeks ago that pummeled the Aggies by 48 last week?

You simply can't. That's one of the endearing characteristics of college football, folks.

As noted earlier here, the Aggies have a bunch of talented players, but most of the them are playing either their first or second season of major college football. As a result, there are wild swings in their performance level, as reflected by the results of the past two games.

However, if the Aggies can win the turnover battle and their generally over-matched defense can keep the game close enough so that A&M can rely on a balanced offensive attack, then the Ags have a good chance of winning three (Iowa State, Colorado and Baylor) of their final five games (only Texas and Oklahoma look to be out of reach). A 7-5 mark in Coach Mike Sherman's second season at the helm would be a major success in Aggieland.

Surprising Iowa State (5-3/2-2) is up next for A&M at College Station this coming Saturday.

Texas Longhorns 41 Missouri 7

In a game that was not as close as the score indicates, the 3rd-ranked Longhorns (7-0/4-0) staked out a 21-0 first quarter lead and a 35-7 halftime lead over the Tigers (4-3/0-3) before slipping into cruise control in the second half.

The Texas offense showed signs of life as QB Colt McCoy finally had a decent game (26/31/269 yds/3 TD's/1 INT), but this simply is not the Horns' offense of last season. McCoy is not close to operating at the level he was last season or as the top QB's in the college game are this season (such as Houston's Case Keenum).

This Texas team wins games with a suffocating and hard-hitting defense, which is equally effective against the pass or run.  With that defense, McCoy and the rest of the offense probably need only to be competent for UT to win out and play for the BCS National Championship.

The Horns game of the season to date is next Saturday night at Oklahoma State (6-1/3-0). If the Horns play in a similar manner as they did against Mizzou, then my sense is that they will win by at least two TD's.

Houston Cougars 38 SMU 15

As I've noted throughout this season, 15th-ranked Houston (6-1/2-1) QB Case Keenum has been among the best QB's in college football. Like a coach on the field, Keenum saw early that SMU (3-4/2-1) was dropping 8 and sometimes 9 defenders into coverage, so he patiently attacked the Mustangs with the running game and short flank passes.

The result was that the Cougars built a comfortable 24-3 halftime lead in a workmanlike manner. Thus, when WR Tyron Carrier took the 2nd half kickoff 92 yards for an electrifying TD, the Cougars had this one in the bag and essentially held serve for the remainder of the second half.

Although Keenum did not have a gaudy game statistically, his excellence was nevertheless apparent. When the Ponies closed to 31-15 with about 9 minutes to go, Keenum calmly directed the Cougars on a six minute, 11 play, 78 yard TD drive to put the game away without question. Impressive, indeed.

The Cougars face a tough test next Saturday afternoon against Southern Miss (5-3/3-1) at Robertson Stadium.

Central Florida 49 Rice 7

The Owls (0-8/0-4) are experiencing just how good the trio of QB Chase Clement, WR Jarett Dillard and HB James Casey were over the two seasons prior to this one. It now appears that the Owls only realistic chance for a victory this season is in three weeks against Tulane (2-5/0-4) at Rice Stadium. After a bye-week next Saturday, the Owls travel to Dallas to play SMU (3-4/2-1) on November 7th.

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

October 25, 2009

Chris Rock provides key advice

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

October 24, 2009

Inspiration for a football Saturday

Still one of the finest endings in the history of cinema. Charles Dutton as Rudy's mentor Fortune, Jon Favreau as D-Bob and Ned Beatty as Rudy's father steal the scene.

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

October 23, 2009

Looping for Legends

Mark over at the Kaddy's Korner provides this interesting post about his experience in filling in as Tom Watson's caddy during the Champions Tour's Administaff Open at the Tournament Course in The Woodlands last weekend. Mark concludes his post in the following manner about spending a week with a legend:

Growing up, most of my heroes were baseball players, and I might be too old for a new one, but I think I found one.

During the week, I watched one of the top-10 golfers of all time practice his trade. Most guys work into their practice routine slowly with their wedges first, but Tom started warming up each day with a 3-iron, and none of them sounded clunky. He made sure he acknowledged all the fans, sincerely understanding what they do for the game. He walked through the crowds gazing into their eyes, waving, and none of it was forced. Most guys work up a strained smile and a nod.

There were only two people at the tournament who gathered a larger following: Arnold Palmer and former President George H. W. Bush. That’s not bad company.

Which reminds me of the classic video below of Bill Murray hilariously describing the experience of looping a round with another legend. Hint -- he was very well compensated ;^):

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

October 22, 2009

More thoughts on business "crimes"

Clear Thinkers favorite Holman Jenkins has yet another excellent column this week entitled When Bad Luck is a Crime (or, stated another way, the new crime of violating the obligation to throw in the towel).

Among other points, Jenkins notes that the mainstream media to date has done a poor job of resisting hindsight bias in reporting on business failures:

When it comes to cheering CEOs, booing them or throwing them in jail, a consideration that ought to be nagging is whether we're reacting to luck or design.

Ken Lay, to cite a notorious example, was prosecuted not for the sins that brought down Enron, but for failing to tell investors the company was predestined to fail even as he tried to save it. Exactly the same treatment is now being meted out to two ex-Bear Stearns hedge- fund managers on trial in New York this week. Then there's Ken Lewis, the Bank of America chief, who hasn't been indicted (yet) but is being roundly booed in the media because his acquisition of Merrill Lynch is deemed in retrospect to have been a mistake.

Now we might be tempted to say journalists are especially susceptible to the hindsight fallacy. But a truer statement is that we thrive on it, are its avenging angels, forever treating every bad outcome as proof of incompetence if not malfeasance, and every good outcome as the result of far-seeing excellence. [.  .  .]

.  .  .  Here, journalism, and perhaps only journalism, can unpack the final puzzle—albeit a journalism that properly understands the role of luck in determining the outcomes that so excite journalists and sometimes prosecutors in the first place.

Meanwhile, Stephen Bainbridge and Larry Ribstein -- both of whom have been pre-eminent blogosphere leaders in educating the public about business law issues -- provide insightful analysis of the legal and policy issues involved in the Galleon insider trading case that the Department of Justice initiated late last week.

As noted here before, criminalizing insider trading risks harming legal and socially beneficial trading. The line is thin indeed between illegal insider trading, on one hand, and an entirely legal and productive hedge fund operation on the other.

Sort of makes one wonder whether the criminalization of insider trading does more harm than good?

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

October 21, 2009

An Enron Task Force-induced nightmare ends

So, the Fifth Circuit followed the instructions of the U.S. Supreme Court and finally directed the U.S. District Court in Houston to dismiss all remaining charges against former Enron Broadband executive, Scott Yeager. The appellate court's order effectively ends a prosecution that was an abomination from the very beginning.

No convictions from trial resulted from the Enron Broadband criminal case. The prosecution generated only a few plea bargains (see also here and here) that were clearly motivated by the onerous trial penalty and expense of defending against the government's intransigent pressing of its dubious theory of criminal liability. The Houston Chronicle's Mary Flood interviewed Yeager and touches on the pressures he endured in fighting the charges.

Meanwhile, Jeff Skilling has now served over three years in prison because of a flawed conviction based on a similarly dubious theory of criminality. And Jamie Olis lost six years of his life away from his young family as a result of an equally bogus prosecution.

The prosecutors who pursued these cases ruined careers and harmed families by abusing the state's overwhelming prosecutorial power. They remind me of Ayn Rand's observation about socialists who use state power to further their supposedly altruistic goals:

"[T]he truth about their souls is worse than the obscene excuse you have allowed them, the excuse that the end justifies the means and that the horrors they practice are means to nobler ends."

"The truth is that those horrors are their ends."

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

October 20, 2009

Kramer's Entrances

Every single Kramer entrance from Seinfeld, in chronological order, in a little over six minutes. Enjoy!

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

October 19, 2009

2009 Weekly local football review

(AP Photo/Donna McWilliam; previous weekly reviews for this season are here)

Texas Longhorns 16 Oklahoma 13

In an entertaining but sloppily-played game, 3rd-ranked Texas (6-0/3-0) rode their hard-hitting defense to tense victory over the now-reeling Sooners (3-3/1-1), who have a real chance at losing five games in a season for the first time since Coach Bob Stoops' first season at OU in 1999.

The Horns are good, but the inconsistent offensive production has to be a big concern for the Longhorn fans who are hoping for a return to the BCS Championship game.

QB Colt McCoy is not having a good season, the offensive line has been mediocre for most of the season and the wide receiving corps -- thought to be a strength at the beginning of the season -- was led on Saturday by true freshman Marquise Goodwin.

Despite UT's stellar defense, the Horns are likely going to need more than 16 points to beat Oklahoma State (5-1/2-0) the week after next in Stillwater.

The Longhorns play at Missouri (4-2/0-2) next week in an ABC Saturday night game.

Texans 28 Bengals 17

The Texans (3-3) beat the Bengals (4-2) surprisingly easily, although all four of Cincinnati's wins this season have been nailbiters than could have gone either way. QB Matt Schaub pitched 4 TD's on 28-40 passes for 392 yards, although he also threw his seemingly obligatory bonehead interception that set up a Bengals field goal that allowed Cincy to seize the lead at the half.

The Texans had a good game plan against the Bengals. They used quick passes from Schaub to their talented group of receivers to set the pace, and then worked in periodic runs from RB's Slaton and Brown to keep the defense off-balance. This is essentially the approach that the Patriots have used successfully for years, so the Texans -- who have a smallish offensive line -- would appear to be well-equipped to emulate it.

But the more encouraging development for the Texans is that, for the second week in a row, the defensive unit shut down an opposing offense with a seasoned QB for the entire 2nd half of the game. NFL defenses tend to improve in spurts, and it would not surprise me that the Texans' unit -- which is sprinkled with high draft picks -- is starting to show signs of coming together. Given the potency of the Texans' offense, if the defense can mature into even a middle-of-the-pack NFL defensive unit, that could well be enough to vault the Texans to their first winning record in franchise history.

The Texans host the 49'ers (3-2), who are coming off their bye week, next Sunday at Reliant Stadium before hitting the road against the Bills (2-4) and the Colts (5-0) leading up to the Texans' Week 10 bye week.

Houston Cougars 44 Tulane 16

There is something odd about playing in the cavernous Superdome in front of the tiny crowds that Tulane (2-4/0-3) attracts. As a result, Houston (5-1/1-1) seemed to sleep walk through the first half of this one before QB Case Keenum directed the Coogs' offense to five straight TD second-half TD drives and an easy victory over the Green Wave.

The 17th-ranked Cougars return home next Saturday to play much-improved SMU (3-3/2-0), which lost a heartbreaker in overtime to a good Navy team on Saturday. The Mustangs are still looking for the signature upset in the second-year of Coach June Jones' rebuilding program, so the Cougars better be ready to play on Saturday night.

Kansas State 62 Texas Aggies 14

Oh my.

In a game that was not as close as the score indicates, the Aggies (3-3/0-2) took a giant step backward from the overall progress that the young team had shown for much of the season in rolling over and playing dead to a mediocre Kansas State (4-3/2-1) team.

A&M has gone from looking like a reasonable candidate for winning 7 games this season just one week ago to wondering whether they can win another game. It is reasonably certain that a win will not come next Saturday when the Ags travel to Lubbock to play Texas Tech (5-2/2-1), which scorched Kansas State  66-14 just one week ago.

My sense is that the A&M administration is going to be patient with head coach Mike Sherman. However, if the Ags roll over and play dead to Tech as they did against Kansas State, will the Aggie tradition of unceremoniously dumping coaches overwhelm Sherman?

East Carolina 49 Rice 13

The Owls (0-7/0-3) looked a bit better this week on offense (faint praise given the offense's impotence this season), but the Owl defense took a hike against a rather pedestrian East Carolina (4-3/3/1) offense. I still think the Owls can win a couple of games this season, but their winnable games begin next Saturday at home against Central Florida (3-3/1-2). So, it's time for the Owls to start producing.

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

October 18, 2009

Colbert on the Stock Market

Colbert was on fire this week.

Posted by Tom at 8:17 PM | Comments (0) |

October 17, 2009

Colbert: Bend it Like Beck

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

October 16, 2009

"Why, those sorry bastards"

During football season, two Clear Thinkers favorite subjects are the annual Texas-OU game and former Texas head coach Darrell Royal (here, here, here, here and here).

So, this Barking Carnival post on the epic 1976 game -- Royal's last as Texas' coach -- is a must read on the eve of this year's game. The comment referred to in the title of this post was Royal's reply to former OU coach Barry Switzer's response to Royal's allegation that the OU coaching staff was spying on Texas practices.

The raw emotion of the game -- arguably the most severe of any rivalry game already -- rose to a boiling point in the '76 game as a result of the animosity between the coaching staffs.

Get ready to rumble!

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

October 15, 2009

The Leader of the Mob reacts

You know, it's not every day that a federal appellate court concludes that a newspaper's coverage of a particular event was a major factor in the creation of a presumption of community prejudice.

But that's precisely what the Fifth Circuit Court of Appeals did with regard to the Houston Chronicle's coverage of the demise of Enron generally and the prosecution of Jeff Skilling specifically  (see pp. 41-45 of the Fifth Circuit decision).

And now the Supreme Court has decided to review the Fifth Circuit's refusal to grant a Skilling a new trial in another venue because of that presumption of community prejudice. That almost never happens.

So, what does Loren Steffy -- the Chronicle's main business columnist and one of the main leaders of the mob against Skilling (see here, here, here, here and here) -- have to say about the Supreme Court's decision to review his handiwork?:

More surprising was the court's decision to review the venue issues. The district court never gave much credence to the argument that pretrial publicity and Enron's stature in Houston tainted potential jurors, and Skilling's attorney, Dan Petrocelli, never mentioned it his is argument before the appeals court.

As I've said before, the media coverage issue is especially interesting, given that someone from Skilling's legal team apparently was actively engaging in the media coverage by making anonymous posts on Chronicle blogs, including this one.

So, let's review. Houston's only daily newspaper reports on the demise of one the city's largest employers in such a biased fashion that an appellate court uses it as a basis for finding a presumption of community prejudice in the criminal trial of one of the company's leading executives. Then, the Supreme Court of the United States finds the issue so troubling that it decides to review it, which rarely happens in regard to this particular issue.

And the leader of the mob's reaction to all this?:

(1) That "the district court never gave much credence" to the issue?

Well, the Fifth Circuit has already decided that the district court was wrong about that.

(ii) That Skilling's lawyer "never mentioned it" during oral argument?

Oral argument is driven by the appellate judges' questions to the lawyers, which in this case were directed to the honest services wire-fraud issue. A substantial part of Skilling's appellate briefs addressed the community prejudice issue.

(iii) That the Chronicle's biased coverage was no big deal because someone from Skilling's team attempted to provide at least a small dose of balance to the Chronicle's biased coverage of the Skilling trial by commenting on Chronicle blog sites?

So much for fair and balanced reporting, eh?

Meanwhile, over the past couple of years, precisely what happened to Enron has also taken down numerous trust-based Wall Street firms and substantial evidence has arisen that the Enron Task Force engaged in widespread prosecutorial misconduct in prosecuting Skilling.

The Chronicle has not even acknowledged the former, while it has soft-pedaled coverage of the serious scandal represented by the latter.

Wouldn't it be ironic if that, in its haste to lead the mob against Skilling and Enron, the Chronicle misses what Larry Ribstein has characterized as the real crime in regard to Enron -- the prosecution of Skilling?

Posted by Tom at 12:01 AM | Comments (5) |

October 14, 2009

The reeling prosecution in the Skilling case

On the heels of the U.S. Supreme Court's decision earlier this year to hear Conrad Black's appeal of his criminal conviction on honest services wire-fraud charges under 18 U.S.C. § 1346 ("Section 1346), the Court yesterday granted former Enron CEO Jeff Skilling's appeal on similar grounds. A copy of the Skilling's cert petition and its appendix, which are bookmarked in Adobe Acrobat to facilitate ease of review, can be downloaded here.

My sense is that Skilling has a good chance of having the Supreme Court overturn his conviction. Here's why.

The Fifth Circuit Court of Appeal's decision in Skilling's appeal -- which is looking by the minute similar to the Fifth Circuit's decision in the Arthur Andersen case that was overturned by a unanimous Supreme Court -- made a mess of two key issues:

(i) application of the honest services wire-fraud statute to Skilling's actions, and

(ii) application of the standard for deciding the proper venue for Skilling's trial in the face of a presumption of community prejudice against Skilling.

As noted previously, the Fifth Circuit panel's decision in Skilling's appeal failed to reconcile the reasoning in upholding Skilling's conviction for honest services wire-fraud with earlier Fifth Circuit panel decisions on the same issue in the Nigerian Barge and Kevin Howard cases. Inasmuch as there is now a split between Fifth Circuit decisions and several other circuit appellate courts on the scope of honest services wire-fraud, the issue is ripe for Supreme Court consideration. Indeed, Justice Antonin Scalia earlier this year urged the Supreme Court to take up the issue in his dissent from denial of certiorari in Sorich, et al v. U.S., 129 S.Ct. 1308, 1310 (2009):

"Without some coherent limiting principle to define what ‘the intangible right of honest services’ is, whence it derives, and how it is violated, this expansive phrase invites abuse by headline grabbing prosecutors in pursuit of local officials, state legislators, and corporate CEOs who engage in any manner of unappealing or ethically questionable conduct.  .   .   . Indeed, it seems to me quite irresponsible to let the current chaos prevail.”

Since Justice Scalia's dissent in Sorich, at least four other Justices (the number it takes to grant an appeal to the Supreme Court) have repeatedly voted over the objection of the Department of Justice to confront the meaning and constitutionality of Section 1346, first in the Black appeal, again in another case in June (Weyhrauch v. U.S.) and now in the Skilling appeal.

As I've noted many times over the years, the Enron Task Force's use of honest services wire-fraud charges to criminalize Enron executives has been the legal equivalent of trying to stick a square peg in a round hole.

Honest services wire-fraud under Section 1346 was intended by Congress to penalize corporate executives and governmental officials for accepting bribes and kickbacks and for engaging in self-dealing at the expense of the employer-- i.e., the private gain requirement of the crime.

The Task Force faced a big problem with prosecuting Skilling at all because he never stole a dime from Enron (that is, no private gain). In fact, the Task Force conceded at trial that, not only did Skilling not embezzle any money from Enron, the case against him was not about “greed,” that Skilling always sought to pursue Enron’s “best interests,” and that every act for which he was being prosecuted was undertaken for the purpose of protecting Enron and promoting its share price.

Despite the foregoing, the Task Force persuaded U.S. District Judge Sim Lake to allow the prosecution to proceed against Skilling on a much broader honest services theory -- that is, that Skilling simply took on too much risk for the long-term good of Enron and improperly touted the company to the markets.

However, all corporate executives take business risks and promote their companies, so a rule that criminalizes any business decision that seems imprudent to prosecutors or lay jurors operating with hindsight bias -- even if if the executive was pursuing the interest of the company -- would force corporate executives to proceed at peril of criminal liability in making day-to-day business judgments. Indeed, in a civil case, Skilling would have had the protection of the "business judgment rule" for his business decisions,  but the Enron Task Force's theory of honest services in Skilling’s case provided for no such defense. Instead, the Task Force lawyers urged the jury to send Skilling to prison effectively for life simply because he breached his duty to do his job and do it appropriately.

Thus, the essence of Skilling's appeal on the honest services wire-fraud issue is that bribes, kickbacks, and self-dealing is what Congress intended to criminalize under Section 1346, not lapses in business judgment. Where a corporate executive has not sought private gain, his conduct -- no matter how questionable, unwise, or wrongful -- should not be subject to prosecution under Section 1346, but should be left to assessment for damages that it caused in a civil lawsuit in which responsibility can be assessed to all potentially responsible parties.

The Supreme Court will also consider Skilling's arguments that (i) if Section 1346 is not limited as described above, it must be struck down entirely as unconstitutionally vague, and (ii) strongly negative publicity about Enron and Skilling in Houston made it impossible for him to be tried by an impartial jury. 

On that latter issue, Skilling argues that the Fifth Circuit improperly allowed Judge Lake to rebut a presumption of community prejudice against Skilling through a superficial voir dire of individual jurors even though the Fifth Circuit concluded that Judge Lake had improperly failed to apply the presumption of community prejudice against Skilling. Frankly, given the extensive evidence of both pervasive local media bias and prospective juror bias against Skilling, if the Supreme Court allows the Fifth Circuit's decision to stand on the venue issue, then a denial of a motion to change the venue of a trial within the Fifth Circuit will effectively no longer be grounds for an appeal.

Accordingly, the Supreme Court's review of Section 1346 in the Skilling appeal and the two related cases directly confronts how avaricious prosecutors have abused the open-ended nature of the statute. The amicus brief of the National Association of Criminal Defense Attorneys in the Skilling appeal sums it up well:

[T]e time has come to resolve the confusion that engulfs the honest services statute. [.  .  .] [The fundamental issue is] whether courts have the power to engraft limiting principles -- none of which has any strong textual basis -- on the vague language of Sec. 1346.  If federal judges lack that power, then the Court must decide whether the honest services statute, shorn of judge-created limiting principles, is void for vagueness  .   .   . The effort by courts to infuse meaning into Sec. 1346 collides .  .  . with the principle that there is no federal common law of crimes.   .    . Federal crimes are defined by statute rather than by common law.

Meanwhile, back down in the trial court part of the Skilling case, things are looking even worse for the prosecution.

First, the Fifth Circuit ordered Judge Lake to re-sentence Skilling because of an error that was made in applying a sentencing enhancement in assessing Skilling's 24-year sentence. The District Court's  docket of Skilling's criminal case reveals that Judge Lake originally scheduled Skilling's re-sentencing for July 30th but that Skilling and the prosecution filed a joint motion requesting Judge Lake to put off the re-sentencing indefinitely pending the filing of Skilling's motion for a new trial, the prosecution's response to that motion, and the Court's disposition of the motion.

In that regard, the Fifth Circuit decision invited Skilling to file a motion for new trial based on issues of prosecutorial misconduct that Skilling raised in the appeal after discovering the evidence post-trial. Specifically, the Fifth Circuit was particularly concerned about the failure of the Enron Task Force to comply with federal rules requiring the disclosure of exculpatory evidence to the defense from the Task Force's pre-trial interviews with main Skilling accuser, former Enron CFO Andrew Fastow.

Fastow testified at trial that he told Skilling about the Global Galactic agreement, which purportedly documented a series of illegal "side deals" between Fastow and former Enron chief accountant Richard Causey that guaranteed Fastow would not lose money on certain special purpose entities that he was managing. Skilling denied any knowledge of the purported agreement.

After Skilling's conviction, the Skilling defense team discovered Fastow interview notes that the Enron Task Force had failed to disclose to the Skilling team prior to trial. Among other things, those notes revealed that Fastow had told the Task Force lawyers that he didn't think he had told Skilling about the Global Galactic agreement. The Fifth Circuit characterized the Task Force's non-disclosure as "troubling" in inviting Skilling to file a motion for new trial with the District Court.

Interestingly, the docket reflects that the parties have requested that the deadline for Skilling's motion for a new trial be pushed back several times over the past six months. The deadline is now in mid-November and, as a result of the Supreme decision to review of Skilling's appeal, will probably be pushed back until after the Supreme Court rules.

So, what is going on here?

Could it be that Skilling's team has discovered even more exculpatory evidence that the Task Force failed to disclose to the Skilling defense prior to the trial?

Could it be that the government's current lawyers -- who were not members of the now-disbanded Task Force --  are now finding themselves dealing with a serious failure of the Task Force members to comply with rules requiring the disclosure of exculpatory evidence to the defense in Skilling's case and have little incentive to cover for their predecessors?

In short, could the Skilling case in the trial court be turning into something similar to this?

Finally, as if to remind us how little we have learned from the Enron debacle, on the same day that the Supreme Court announced that it would consider Skilling's appeal, the parties began picking a jury in the criminal case against two Bear Stearns executives who are accused of committing the "crime" of violating the obligation to throw in the towel on their business venture. Larry Ribstein has more.

A humane and civil society would find a better way to hold people responsible for their errors in business judgment while creating jobs for communities and wealth for investors. I am hopeful that the Supreme Court will agree.

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

October 13, 2009

Gameday Saturday in Death Valley

I went over to Baton Rouge this past Saturday with my friend John Stevenson and his family to visit my old friend Dan McCarney -- who is now the Assistant Head Coach of the Florida Gators -- and to attend the SEC showdown between the 4th-ranked LSU Tigers and the no. 1 ranked Gators. The Gators won 13-3 in a defensive slugfest.

Gameday Saturday in Baton Rouge is a special cultural event. The entire state of Louisiana -- which produces more NFL players per capita than any state in the U.S. -- takes special pride in its flagship university and its football team. A record Tiger Stadium crowd of over 93,000 attended the game, but tens of thousands more milled around outside the stadium in hundreds of tailgating parties (which feature splendid Cajun and New Orleans-inspired cuisine) spread throughout the campus.

The atmosphere for a big Saturday night football game is so intimidating for the opposition that the stadium was nicknamed "Death Valley" years ago. The Florida win on Saturday night snapped a 32-game winning streak for LSU in Saturday night games at Death Valley.

Here is slideshow that will give you a glimpse of Gameday Saturday in Baton Rouge. It is one the special experiences in college football. Enjoy!

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

October 12, 2009

2009 Weekly local football review

(AP Photo/Ross D. Franklin; previous weekly reviews for this season are here)

Cardinals 28 Texans 21

The Texans 3rd loss in the fifth game of their eighth season (2-3) was actually four games in one:

The first 28 minutes, which the Texans were lucky to lose only 7-0;

The second was the final 2 minutes of the first half in which the Texans were pummeled 14-0;

The third was the first 23 minutes of the 2nd half, which the Texans dominated 21-0; and

The fourth was the final 7 minutes of the game, which the Texans lost 7-0 on a poorly-thrown pass that was returned for a TD and the failure to punch in a TD from the 1-yard line three times in the final minute of the game.

The message here is that, for whatever reason, the Texans do not play most games without breakdowns such as they suffered in the first, second and fourth games above. It's not clear to me that they are capable of doing so on a consistent basis.

The Texans travel to Cincinnati (4-1) next Sunday to play the red-hot Bengals before returning home the week after to play the 49er's (3-2).

Oklahoma State 36 Texas Aggies 31

Despite the NCAA's best efforts to help the Aggies (3-2/0-1) by suspending Oklahoma State's (4-1) best player (WR/PR Dez Bryant), the Cowboys prevailed as the Aggie defense -- exposed last week in the loss to Arkansas -- again could not stop a hard-chargin' marching band, much less the potent Cowboys.

The Aggies travel to Manhattan, Kansas next week to face Kansas State (3-3/1-1) and then to Lubbock to face Texas Tech (4-2/1-1). The Kansas State game is winnable for the Aggies; the Tech game does not appear to be.

Texas Longhorns 38 Colorado 14

If the Longhorns' (5-0/2-0) offense tries to hang another performance next week in Dallas against Oklahoma (3-2/1-0) like the one they got away with last Saturday against lowly Colorado (1-4/0-1), the 3rd-ranked Horns can kiss their dreams of an undefeated season and a national championship good-bye.

The Texas defense is very good. At this point of the season, the Texas offense is not.

Houston Cougars 31 Mississippi State 24

The 23rd-ranked Cougars (4-1/0-1) rebounded from their disappointing loss to UTEP by beating a BCS Conference opponent for the third time, which is the most of any non-BCS conference team this season. Despite throwing an interception for a TD, Cougar QB Case Keenum continues his amazing season, generating 434 yards passing (39-52) and 4 TD's. There is simply no QB playing in college football at a higher level of efficiency than Keenum.

The Coogs play Tulane (2-3/0-2) at New Orleans next Saturday before returning home to host SMU (3-2/2-0) and Southern Miss (3-3/1-1) in successive weeks.

Navy 63 Rice 14

Yeah, it's hard to prepare in a week for Navy's (4-2) idiosyncratic triple-option attack. But it's not that hard. The Owls (0-6/0-2) gave the first indication in this game that they are a team capable of losing every game season. I still think they will win a couple, but not if they play as they did against the Middies. The Owls travel to East Carolina (3-3/2-1) next Saturday.

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

October 11, 2009

Dylan’s Best

Posted by Tom at 12:00 AM | Comments (0) |

October 10, 2009

My favorite rock video

The legendary Roy Orbison, the Boss and James Burton collaborate on one of the best.

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

October 9, 2009

Stairway to Heaven

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

October 8, 2009

The mind of a true thief

Disgraced New York City attorney Marc Dreier's letter to his sentencing judge was quite interesting. His recent 60 Minutes interview is just as fascinating.

Dreier -- who unquestionably stole over $400 million -- received a lighter prison sentence than former Enron CEO Jeff Skilling, who didn't steal a dime.

There is a huge difference between what Marc Dreier did and what Jeff Skilling did. It reflects poorly on us that our criminal justice system cannot distinguish between the two.

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

October 7, 2009

Fat chance

A couple of interesting health care-related items caught my eye today.

First, I went by my internist's office for my annual physical and noticed that another group of doctors had leased a much larger office across the hall from my doctor's office.

I peaked inside the new doctors' office window and noticed that the reception area was nicely furnished with plush leather sofas and chairs, flat screen TV's, handsome hardwood flooring and tasteful Persian rugs.

The opulence of the office prompted me to find out what kind of doctors were apparently doing so well, so I grabbed one of the doctor's cards from the reception area. It read (not the real name):

"John Smith, M.D., Laparoscopic Obesity Surgery"

Meanwhile, this NY Times article reveals the utterly unsurprising fact that New York City regulations requiring fast food restaurants to post the caloric content of their food did not induce obese consumers from eating less:

A study of New York City’s pioneering law on posting calories in restaurant chains suggests that when it comes to deciding what to order, people’s stomachs are more powerful than their brains.

The study, by several professors at New York University and Yale, tracked customers at four fast-food chains — McDonald’s, Wendy’s, Burger King and Kentucky Fried Chicken — in poor neighborhoods of New York City where there are high rates of obesity.

It found that about half the customers noticed the calorie counts, which were prominently posted on menu boards. About 28 percent of those who noticed them said the information had influenced their ordering, and 9 out of 10 of those said they had made healthier choices as a result.

But when the researchers checked receipts afterward, they found that people had, in fact, ordered slightly more calories than the typical customer had before the labeling law went into effect, in July 2008.

The findings, to be published Tuesday in the online version of the journal Health Affairs come amid the spreading popularity of calorie-counting proposals as a way to improve public health across the country.

“I think it does show us that labels are not enough,” Brian Elbel, an assistant professor at the New York University School of Medicine and the lead author of the study, said in an interview.

"Labels are not enough?" Makes one wonder what regulation Professor Elbel will suggest next -- maybe governmental rationing of fast food?

The argument in favor of these types of absurd governmental intrusions into our lives is that government subsidizes medical insurance, so government should attempt through regulation to decrease obesity, which unfairly heaps a portion of health-care costs relating to obesity on tax-paying citizens who are not obese.

But putting aside for a moment the debatable notion of whether obesity really increases health-care costs all that much, the far more effective regulation to decrease obesity would be to provide a financial incentive for citizens to lose weight. Namely, reduce the governmental subsidy of medical insurance for those who choose to remain obese.

Fat chance of that happening.

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

October 6, 2009

Chris Rock on Roman Polanski, Michael Vick and dogs

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

October 5, 2009

2009 Weekly local football review

(AP Photo/Dave J. Phillip; previous weekly reviews for this season are here)

Texans 29 Raiders 6

So, what happens when the NFL's worst defense meets one of the NFL's worst offenses? Well, this time, Raiders (1-3) QB JaMarcus Russell is so bad that the Texans (2-2) defense dominated the game and propelled the local club to an easy victory.

The Texans potent offense played reasonably well in the first half, but after the Texans defense and special teams generated 9 points in about 10 seconds early in the third quarter (a safety and resulting Jacoby Jones kick-return for a TD), the offense simply held serve as the heretofore porous Texans defense held the Raiders to 165 total yards. The lack of offense from both teams made the final half almost unwatchable.

Prediction -- Russell will not be a starting NFL QB after this season. Maybe even before the end of this season.

The Texans now enter a tough stretch in their schedule in which they play four out of the next five games on the road before the Week 10 bye-week. First up is the Cardinals (1-2) coming off their bye week in Phoenix.

Note to the Texans defense -- Kurt Warner is no JaMarcus Russell.

Arkansas 47 Texas Aggies 19

This one was essentially two games -- the first was the initial ten minutes of the game in which the inspired Aggies (3-1) stunned the Razorbacks (2-2) and led 10-0.

Unfortunately for A&M, the other game was the remaining 50 minutes in which the Hogs blitzed the Aggies 47-9.

Look, the Aggies are not without talent, most of it quite young. But when a team is starting a true freshman at left offensive tackle, and mostly freshmen and sophomores comprise the two-deep roster, the reality is that such a team is going to get manhandled from time-to-time by more seasoned squads.

That's what happened to the Aggies yesterday. But I saw nothing in the game that indicated to me that the Aggies are a lost cause. On the contrary, give this bunch another year of maturity and sprinkle in another group of solid recruits, my sense is that the Aggies will again be competitive with all but the top flight programs (i.e., Texas and Oklahoma) in the Big 12. Even this season, the Aggies could win four more games (@Kansas State, Iowa State, @Colorado and Baylor). The others -- Oklahoma State (next week at home), @Texas Tech, @Oklahoma and Texas -- appear to be more problematic.

In the meantime, I'm picking Aggies QB Jerrod Johnson to be the QB on my sandlot team.

UTEP 58 Houston Cougars 41

How does a team such as UTEP (2-3) that didn't generate 58 yards total offense in its game last week (a 64-7 loss to Texas) turnaround and score that many points in handing formerly 12-ranked Houston (3-1) its first defeat of the season?

The answer is in my first weekly football review of the season:

The trick for the Cougars this season will be to figure out how their young defense -- which lacks depth from several seasons of under-recruiting on the defensive side by previous head coach, Art Briles -- can maintain the type of gritty effort that the unit displayed against OSU's potent offense. UH defensive coordinator John Skladany is a master at getting the most out of undermanned defensive units (he was the DC for my friend Dan McCarney during Iowa State's bowl run earlier this decade), but he will have his work cut out for him in the coming weeks. If the Coogs defensive unit can consistently play at the level it did against OSU, and the team can avoid injuries to key personnel, the Cougars are likely to be a top-20 team.

The Coogs' defensive unit held up reasonably well against Oklahoma State and Texas Tech, but a hot UTEP squad exposed it for what it is -- a young and not particularly physically-imposing group that simply cannot play at the same level as Houston's high-powered offense.

The difference in this particular game was that Houston's defense was not able to force any turnovers, which it was able to do in both the OSU and Tech upsets. When the Cougar offense uncharacteristically failed to score on a couple of 2nd quarter trips into the UTEP red zone, that plus the lack of turnovers gave the Miners the edge they needed to pull off the upset.

By the way, even with the upset, Houston QB Case Keenum continues to play at the highest level of any quarterback in the nation through five weeks of the season.

The Cougars will not be able to lick their wounds for long as they take to the road again next week to play tough Mississippi State (2-3), which almost upset 5th-ranked LSU two weeks ago. After that, the Coogs ease into the main part of their Conference USA schedule, which should allow the Cougars to get back on track.

Tulsa 27 Rice 10

In the latest edition of the bitter Todd Graham Bowl, the Owls (0-5) continue to struggle on offense while their defense plays well enough to keep the score respectable. My over/under for Rice wins this season continues at two, and that may be a bit optimistic. The Owls host the potent Navy (3-2) triple-option attack next Saturday.

The Texas Longhorns (4-0) were off this weekend before starting the meat of their schedule next week  at Colorado (1-3). Following that game, the Horns play in successive weeks 19th-ranked Oklahoma at Dallas, at 24th-ranked Missouri, and at 15th-ranked Oklahoma State.

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

October 4, 2009

Capitalism, Whole Foods-style

Whole Foods' CEO John Mackey, who is certainly not a conventional business executive, provides in this Stephen Moore/WSJ interview a compelling counterbalance to Michael Moore's indictment of a market-based economy:

His odyssey from a long-haired counterculture anticapitalist in the early 1970s to running a company that now has $8 billion in sales and 280 stores—is a remarkable tale in itself. He attended the University of Texas where he studied philosophy and religion. [. . .]

Before I started my business, my political philosophy was that business is evil and government is good. I think I just breathed it in with the culture. Businesses, they're selfish because they're trying to make money."

At age 25, John Mackey was mugged by reality. "Once you start meeting a payroll you have a little different attitude about those things." This insight explains why he thinks it's a shame that so few elected officials have ever run a business. "Most are lawyers," he says, which is why Washington treats companies like cash dispensers.

Mr. Mackey's latest crusade involves traveling to college campuses across the country, trying to persuade young people that business, profits and capitalism aren't forces of evil.  .  .  .

Read the entire interview. Providing jobs for communities and creating wealth for investors are good things. It's unfortunate that more executives such as Mackey aren't reminding us of that.

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

October 3, 2009

Capitalism is Michael Moore's megaphone

Larry Ribstein, who has written extensively about filmmakers' generally negative views toward business -- zeroes in on the irony of Michael Moore's new reductionist documentary on the evils of capitalism:

The irony is that many of these films could not reach a wide audience if not for their backing by – yes, capitalists. [.  .  .]

Capitalism is easy to knock because it produces losers that artists can juxtapose with winners. It gets bad press compared to alternatives like socialism that produces less social wealth but also less envy and resentment. The irony is that some of the biggest winners are also the biggest whiners. Only capitalism enables the dissemination of any ideas that anybody wants to hear. Capitalism gives Michael Moore his megaphone.

It's almost enough to make me an anti-capitalist.

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

October 2, 2009

Compared to What

The incomparable Les McCann and Eddie Harris perform one of their signature hits from their great live album of the early 1970's.

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October 1, 2009

What price for taking on this risk?

I've never really understood the basis of the widespread criticism that professional football players are paid too much. In light of the pubic disclosure of the findings of a National Football League-sponsored study regarding the high rate of dementia in former NFL players, it occurs to me that the players aren't paid enough for the risks that they take.

Moreover, what happened to star Florida QB Tim Tebow last weekend underscores that the professional players in big-time college football are even more grossly underpaid than NFL players. Although an entertaining form of corruption, the NCAA's regulation of compensation to the athletes who largely create the wealth for university college football programs is nonetheless stunningly brazen corruption. That the mainstream media and much of the public stand by and continue to allow this parasitic system to flourish does not reflect well on us.

There is nothing wrong with universities being involved in promoting minor league professional football. If university leaders conclude that that such an investment is good for the promotion of the school and the academic environment, then so be it. But let's be honest about it. Allow the players who create wealth for the university to be paid directly, let's allow the universities to establish farm team agreements with NFL teams, and let's cut out the hypocritical incentives that are built into the current system.

Not only will it be fairer for the players who take substantial risk of injury, it would obviate the compromising of academic integrity that universities commonly endure under the current system.

Shouldn't that be enough incentive to reform the current system?

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

September 30, 2009

Fearless Critic 2010 is here

The best local restaurant evaluation guide -- Fearless Critic Houston Restaurant Guide 2010 -- is now available. The brutally honest restaurant guide is put together by a group of undercover local critics who "dine incognito, don't accept freebies, and don't pull punches" in rating a cross-section of 450 restaurants in the Houston metropolitan area.

Da Marco, Tony's and Catalan take the top three spots this time around (the guide is published every other year), but one of the aspects about Fearless Critic that I most enjoy is that it rates restaurants based upon the quality of the food relative to cost, so many not-so-high-priced restaurants rate far better than many expensive restaurants. For example, Huynh, a relatively inexpensive Vietnamese restaurant in downtown, comes in at 7th in the rankings.

You won't always agree with their evaluations, but the Fearless Critics make their case well. It's definitely worth the eleven buck cost currently on Amazon. Check it out.

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

September 29, 2009

Why pay even more?

In addition to being quite frustrating from a purely football standpoint, attending Houston Texans games is incredibly expensive. And as ESPN.com's Lestor Munson points out, if the NFL has its way in the American Needle case currently pending before the U.S. Supreme Court, then professional franchises will have virtual carte blanche to coordinate high prices with other clubs in their leagues.

A group of sports economists led by Roger Noll have filed the brief below with the Supreme Court explaining how the NFL position in favor of an exemption from anti-trust laws will likely result in a loss of consumer welfare. In short, the economists argue that economic research provides a firm basis for distinguishing between collaborative activities of league members that enhance economic efficiency and benefit consumers, on one hand, from collusive activities that are not essential for the efficient operation of a league and that simply benefit league members by reducing competition among teams.

The owners of professional sports leagues have already received a dramatic financial benefit from the billions of dollars of public financing for stadiums that local governments have thrown their way over the past generation. Providing an unnecessary anti-trust exemption that will provide anti-competitive incentives for league members while providing no economic benefit to the members' customers will only make matters worse.

Food for thought as Houston leaders prepare to gift-wrap another dubious public subsidy for the owners of a professional sports franchise.

Sports Economists Amicus Brief in American Needle Case

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

September 28, 2009

2009 Weekly local football review

(AP Photo/Dave J. Phillip; previous weekly reviews for this season are here)

Houston Cougars 29 Texas Tech 28

In one of the most entertaining games of the young season, the now 12th-ranked Cougars (3-0) pulled out the victory over Tech (2-2) with a magnificent 95-yard TD drive late in the 4th quarter engineered by QB Case Keenum, who has played better than any QB in the nation through the early part of this season. The Coogs did not play as well in this game as they did in knocking off then fifth-ranked Oklahoma State two weeks ago, but a plucky defense and the cerebral Keenum -- combined with a boneheaded decision by Tech Coach Leach to eschew a chip shot field goal in the 4th quarter -- were enough to propel Houston to victory. The Cougars travel to El Paso next week to face a UTEP (1-3) team that is licking its wounds after being hammered by Texas.

Jaguars 31 Texans 24

The Texans (1-2) continue to be plagued by a generally horrendous defense, although a horrific penalty call nullified what should have been a game-tying TD with about two minutes left. Although the Texans' offense looks to be productive enough for the club to have a decent shot at winning half their games, the lack of defensive development through three games raises a legitimate question of whether Head Coach Gary Kubiak has the depth necessary to correct the Texans' chronically deficient defense (anyone else think that Mike Nolan looks like a really good hire by the Broncos?). When an NFL defensive team that is comprised of multiple high draft picks still cannot stop the run or put pressure on the opposing QB, that's usually a sure sign that something is seriously wrong in the coordination of that unit. The Texans better even their record next Sunday against the Raiders (1-2) at Reliant because four of the following five games are on the road.

Texas Longhorns 64 UTEP 7

I mean really -- what are the second-ranked Longhorns (4-0) doing playing opponents such as UTEP (1-3)? The Horns' third-team could have beaten the Miners by 30. Incredibly, the Horns' defense held UTEP without a touchdown and to a total of 53 yards on 51 plays. Texas has an off-week before facing under-performing Colorado (1-2) in Austin on October 10th and then 8th-ranked Oklahoma (3-1) the following weekend in Dallas.

Texas Aggies 56 UAB 19

The Ags (3-0) won their third straight against creampuff competition, so the jury is still out on whether the Ags will be competitive against the better teams of the Big 12. Nevertheless, the Aggies are halfway toward qualifying for a bowl game for the first imte in three seasons and those chances improved markedly over the weekend with Baylor's loss of star QB Robert Griffen (torn ACL) for the season. The Ags take on an Arkansas (1-2) team next weekend in Dallas that has to date not been able to stop a hard-chargin' marching band. But at least the Razorbacks are an SEC opponent. That counts for something.

Vanderbilt 36 Rice 17

You know that the renaissance in Rice (0-4) football is over when the local media emphasizes that the Owls defense played really well in holding Vandy (2-2) to a 10-10 halftime tie. The reality is that the Owls are playing with an inexperienced group of QB's with a new offensive coordinator. This has not gone well and the next three opponents -- Tulsa (3-1), Navy (2-2) and East Carolina (2-2) -- are unlikely to allow the Owls to turn it around. My current over/under on Rice victories this season is two.

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

September 27, 2009

Leaving Italy during a Tuscan Sunset

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September 26, 2009

Breakfast on Via dei Neri

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September 25, 2009

Porta San Niccolò

As seen from a patio of Museo Pietro Annigoni at Villa Bardini on Costa San Giorgio in Florence.

Posted by Tom at 12:37 AM | Comments (0) |

September 24, 2009

Mime outside the Uffizi Gallery

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September 23, 2009

Gelato Carabe on Via Ricasoli

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September 22, 2009

The Duomo from San Marco

The dome of Florence’s Cathedral of Santa Maria del Fiore from inside the former Dominican convent, Museo di San Marco.

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September 21, 2009

Basilica di San Lorenzo

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September 20, 2009

Florence at Dusk

As seen from the Piazzale Michelangelo.

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September 19, 2009

San Gaetano

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September 18, 2009

San Miniato

The view of the San Miniato Church and Piazzale Michelangelo overlooking Florence, Italy from the Ponte alle Grazie Bridge.

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

September 17, 2009

Pizzeria I Tarocchi, Florence, Italy

Prosciutto and Mushroom Pizza from one of Florence’s best pizzerias. Pure heaven for around ten bucks.

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

September 16, 2009

While you're at it, Judge Rakoff

The legal and business communities are still buzzing over U.S. District Judge Jed Rakoff's scathing refusal earlier in the week to approve the proposed $33 million "settlement" (i.e., sweep under the rug) between the SEC and Bank of America over that the Bank's failure (at least transparently) to disclose to its shareholders the billions in bonuses that the Bank agreed that an insolvent Merrill Lynch was allowed to pay to its employees.

The 12-page decision is certainly worth a read. Judge Rakoff tears into into the SEC for contradicting its own guidelines in penalizing BofA shareholders rather than the executives and lawyers who supposedly approved the lack of disclosure. The settlement "does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the Bank's alleged misconduct now pay the penalty for that misconduct." The Judge didn't buy the SEC's contention that this punishment will result in better management, characterizing it as "absurd." Sort of like the notion that the SEC can really police this type of thing in the first place.

Judge Rakoff goes on in his opinion to raise at least another half-dozen or so good questions about the proposed settlement. But there's a couple more that I wish he'd asked.

A few years ago, former Enron chairman Ken Lay was prosecuted to death for promoting Enron to its shareholders even though he had a reasonable basis for believing that what he was saying about his company was true.

In contrast, the BofA executives and lawyers could not even offer the defense in a criminal fraud trial that the bad things they intentionally failed to tell BofA shareholders about the Merrill Lynch deal were immaterial.

So, isn't it about time that somebody in the federal government acknowledge that it was a mistake to prosecute Ken Lay to death? And isn't it about time that the government do something about this barbaric injustice?

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

September 15, 2009

Does anyone take John McClain seriously?

Please indulge me one last Texans-related post for the week.

John McClain, the lead Chronicle sportswriter covering the Texans, condemned this past Sunday's Texans' loss as the worst in the team's history.

Now that normally wouldn't be all that unusual. I mean, the Texans really did stink up Reliant Stadium.

However, McClain said the same thing about the Texans' loss to the Ravens just 10.5 months ago.

But even that wouldn't be so absurd except that, in between those two "worst" games, McClain generally dished up this type of blather about how good the Texans are poised to be this season.

I mean really, with far superior blogosphere sources such as Stepanie Stradley, Lance Zerlein and Alan Burge around to provide coverage of the Texans, does anyone take McClain seriously anymore?

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

September 14, 2009

2009 Weekly local football review

(AP Photo/Dave J. Phillip; previous weekly reviews for this season are here)

Jets 24 Texans 7

Well, as one salty high school football coach used to put it, "That went over about as well as a fart in church!"

In a home opener that was arguably as bad as the one in the their disastrous 2-14 Year Four season, the Texans had their collective ass kicked by a Jets team that was led by a rookie coach and QB. The Jets defensive front manhandled the Texans' offensive line, which is supposed to be one of the team's strengths.

Key tip of the day: Don't even think about listening to sports talk radio shows in Houston this coming week.

The reality of early-season games such as this is that the Texans (0-1) probably aren't as bad as they looked and the Jets (1-0) are probably not as good as the Texans helped make them look.

However, what should concern Texans owner Bob McNair is that Head Coach Gary Kubiak and his supposedly experienced and top-notch staff were clearly out-coached in preparation for the game and in making adjustments during the game. To his credit, Kubiak admitted as much during his post-game interview. But coming in his fourth season as a head coach, these types of debacles have to be wearing thin on even the extraordinarily patient McNair. And let's face it, despite their reasonably respectable 8-8 record last season, the Texans were only 3-7 going into their 11th game on November 24th.

The Texans face the Tennessee Titans (0-1) next Sunday in Nashville. Anyone who watched any of the Texans-Jets game already know the Titans' defensive game plan.

Houston Cougars 45 Oklahoma State 35

As I noted several times last season, the Houston Cougars (2-0) under second-year coach Kevin Sumlin are an endearing and fascinating team to follow. Thus, although the Coogs were a 16-point underdog at fifth-ranked Oklahoma State (1-1) on Saturday, anyone who has followed the Cougars under Coach Sumlin was not shocked (pleasantly surprised, yes) that Houston pulled off the upset of the Cowboys.

Behind third-year QB Case Keenum, Houston sports one of the best offenses in the country. Oklahoma State eventually figured out how to slow it down a bit in the 2nd half, but they were never able to stop it. Keenum throws the screen pass better than any college QB that I've seen in years -- his 32-yard TD pass to WR/Sprinter Tyron Carrier on a middle-screen play just before the half against OSU will be used by offensive coaches around the country for the next several years as the quintessential example of how to execute that particular play.

The trick for the Cougars this season will be to figure out how their young defense -- which lacks depth from several seasons of under-recruiting on the defensive side by previous head coach, Art Briles -- can maintain the type of gritty effort that the unit displayed against OSU's potent offense. UH defensive coordinator John Skladany is a master at getting the most out of undermanned defensive units (he was the DC for my friend Dan McCarney during Iowa State's bowl run earlier this decade), but he will have his work cut out for him in the coming weeks. If the Coogs defensive unit can consistently play at the level it did against OSU, and the team can avoid injuries to key personnel, the Cougars are likely to be a top-20 team.

The Cougars take next Saturday off before taking on high-powered Texas Tech (2-0) at Robertson Stadium late on Saturday, September 26th. Now that is shaping up to be one wild affair.

Texas Longhorns 41 Wyoming 10

Earlier in Texas Head Coach Mack Brown's tenure at UT, this is a game that the Horns (2-0) could have lost or at least sweated until the very end. An inexplicably bad offensive game plan, poor special teams play, a below-average 1st half performance by star QB Colt McCoy, only 30,000 or so fans watching the game in a far-off locale -- those were all elements that could have led to an upset of the Longhorns under Brown five or six seasons ago.

But things are different for the Texas program now. Not only does Texas have as much NFL-caliber talent as any program in the country, the Longhorns of this part of Coach Brown's era at Texas play rock-ribbed, tough defense. Accordingly, against the likes of Wyoming, Texas now can under-perform for a half on offense and still win the game going away.

Now, the Horns won't want to risk that approach against Oklahoma, or even Texas Tech (2-0) next Saturday in an unusual early-season Big 12 Conference game. But my sense is that they won't. If the Horns can find a consistent running back out of their four or five good prospects at that position, then this team will be very difficult to beat.

Texas Tech 55 Rice 10

Through two blowout losses, this season is shaping up to be a very difficult one for Rice (0-2), particularly after last season's success.

Undecided at the QB position and working in a new offensive coordinator, even an Owl defense that held the potent Tech offense to 14 points in the 1st half wilted during the 2nd half as the Owl offense continued to struggle.

And things don't get any easier for Rice over the next month. They face an angry Oklahoma State (1-1) team at Stillwater next Saturday, then they have consecutive home games against Vanderbilt (who gave LSU a good game last Saturday night in Baton Rouge), Tulsa (2-0) and Navy (1-1).

This could be a very long season for the Owls.

The Texas Aggies (1-0) were off on Saturday after last week's blow-out win over a poor New Mexico team (0-2, scorched by Tulsa 44-10 on Saturday). The Aggies take on Utah State next Saturday at College Station.

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

September 13, 2009

Ben Hogan's Mystique

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September 12, 2009

Townes, Pancho & Lefty

The late Townes Van Zandt tells how he met Pancho & Lefty in Brenham.

And almost 10 years later, he delivers arguably his best television performance of his legendary song:

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

September 11, 2009

Houston Texans, Year Eight

Year Eight of the Houston Texans begins this Sunday with a home game against the Jets, so it's time for my sixth annual preview of the team (previous annual previews are here).

Largely ignored amidst the inexplicable interest over the absurdly over-long NFL pre-season training camps is the harsh reality that the Texans have the worst record of any expansion franchise in the modern National Football League history.

As is usually the case in football, there are many reasons for the Texans' poor record, not all of which are 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 seven years, so it's helpful to review the team's journey in evaluating whether the Texans are finally ready to make the leap to being in contention for the NFL playoffs.

The Texans were the toast of Houston for their first three seasons during which Houston football fans were simply happy to have an NFL team again and didn't really have much in the way of expectations. 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 (or whatever he ended up changing his name to) and CB Dunta Robinson -- seemed to indicate that the Texans' plan was working.

Unfortunately, those progressively better won-loss records distracted Texans management from recognizing the fact that the Texans' overall personnel was 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 and defensive line problems (remember LT Tony Boselli, the flirtation with LT Orlando Pace, and the thoroughly unimpressive DT Anthony Weaver?). The 2005 draft was an absolute disaster (DT Travis Johnson as the 15th pick in the first round?) and initial Texans head coach Dom Capers' changes to the offensive and defensive systems between Years Three and Four proved equally disastrous. After the Texans limped home with a desultory 2-14 record in Year Four, Texans owner Bob McNair mercifully dispensed with Casserly and Capers.

Subsequently, McNair decided to blow up his original Texans management model and surprisingly hired Gary 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 before Year Six and clearly overpaid for over-the-hill running back Ahman Green. Not much improved through 12 games of Year Six as even the local mainstream media cheerleaders were questioning whether Kubiak was the proper coach to right the Texans' ship.

Then, the Texans showed some spark and won three of their last four games to finish with an 8-8 record for Year Six, 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 cheerleading local mainstream media and long-suffering Texans' fan base hope that things might finally turn around for the franchise in Year Seven.

Unfortunately, Year Seven amounted to running-in-place for the Texans. A solid season-ending win over the Bears allowed the Texans to finish at 8-8 again, but the team did not contend for a playoff spot and suffered several demoralizing defeats. Given that the team had a 7-9 record after Year Three, a reasonable case could be made that not much progress had been made from the end of Year Three through Year Seven. The offense was better, but the defense was worse than it was after Year Three. Had the deck chairs simply been rearranged on the Texans' Titanic?

On the other hand, several clear signs in Year Seven indicated that the Texans are headed in the right direction. The offensive line and the receiving corps were far-improved and have more depth than at any time in franchise history. Despite being somewhat brittle, Schaub showed the talent necessary to be a consistently above-average NFL QB. Likewise, RB Steve Slaton emerged as a game-breaking back who will only get better if another complementary back steps up from among a group of talented backs that the Texans have accumulated on their roster.

Moreover, although the Texans' defense did not improve statistically last season, the Texans have a nucleus of young defensive players who -- with proper coaching and sensible personnel adjustments -- are likely to gel into a reasonably effective unit sometime over the next couple of seasons. Improvement in NFL defensive units generally gestates over several seasons as young players gain needed experience, so I expect the defense to improve under new defensive coordinator Frank Bush, who is clearly a favorite of the players (unlike Kubiak's prior DC, Richard Smith).

Although I'm still not sold that Kubiak is the coach to take the Texans to the playoffs, I have always been impressed by his willingness to recognize mistakes, cut losses and make changes. He does not seem to be burdened with the stubbornness that often undermines NFL head coaches. In fact, that characteristic was a big part of why Dom Capers failed as the first Texans head coach.

Continuity in coaching staffs and personnel are the most common elements of successful NFL teams. Accordingly, absent a total meltdown similar to Year Four, my sense is that the eternally patient McNair will continue to endure blunders such as the Ahman Green deal in the hope that maintaining stability will ultimately reward him with a consistent winner. McNair certainly deserves it given the stellar support that he has provided to the Texans football operation.

So, are the Texans ready to contend for a playoff spot this season? Hard to say given the lack of defensive improvement during Year Seven. As I noted several years ago in defending the Texans' first-pick-in-the-draft selection of DE Mario Williams against almost universal mainstream media criticism, a common thread through NFL teams that take the step from mediocrity to playoff contention is that they find the right mix of defensive players that make it difficult for the opposition to mount a consistent rushing attack. The Texans have not found that mix yet, so playoff contention would appear to be a long-shot until they do.

However, 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. The Texans have accumulated enough talented football players on the offensive side of the football that they are in a position to seize the playoff opportunity if the variables tilt in their favor on the defensive side. But defensive improvement will likely be the key to whether this season is a breakthrough season or another disappointment. My sense is that the over/under for Texans' wins this season is eight, the same as last season.

Now that the sports blogosphere is matured, there really is little reason to rely any longer on the mainstream media for Texans news and analysis. The Chronicle sportswriters provide extensive coverage of the Texans, but the coverage lacks meaningful insight. Far superior coverage and analysis is provided in Stephanie Stradley's excellent blog, which she updates frequently, and  Lance Zerlein's blog, which he updates several times a week. Moreover, the Houston Examiner's Alan Burge does a much better job of covering the Texans than the Chronicle sportswriters. I will continue my tradition of providing a 2009 weekly local football review each Monday during the season.

Finally, the following Texans blogs also provide superior analysis to that in the local mainstream media: Texans Gab; Battle Red Blog; DGDB&D (for "Da Good, Da Bad & DeMeco"); In the Bullseye.com; and Houston Diehards.

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

September 10, 2009

The Landry's debacle

There are bad stock plays and there are horrible stock plays. And then there is Houston-based Landry's Restaurants, Inc.

This story began back in July of 2007 when the company announced that it was delinquent in its regulatory filings with the SEC and that it was in need of refinancing over $400 million in debt in a rapidly deteriorating debt market. Shortly thereafter, the company sued some of its bondholders for declaring the company in technical default under their bonds, but the company quickly settled that litigation on not particularly good terms.

A few months later, Landry's announced in January 2008 that its CEO and major shareholder (39%), Tilman Fertitta, had made an offer to take the company private by buying the other 61% of the company's stock for $23.50 share, which worked to be a $1.3 billion deal, including debt.

Given the circumstances, that offer sounded pretty good, particularly given that the proposed purchase price was a 40% premium over the $16.67 share price at the time of the offer.

Unfortunately, a spate of shareholder lawsuits followed Fertitta's bid. By early March, 2008, it was apparent that Fertitta's bid was so speculative that he hadn't even lined up financing for it.

So, in April of 2008, Fertitta lowered his offer to $21 per share because of "tighter credit markets", and Landry's announced that it had accepted that price in June.

But by the fall of 2008, the financial crisis on Wall Street had roiled credit markets even further and Hurricane Ike caused considerable damage to several Landry's properties.

So, in October of 2008, Fertitta lowered his offer to $13.50 per share.

Then, in mid January of 2009, Landry's announced that it was terminating the proposed deal with Fertitta. The reason was a bit convoluted, but here is the gist of it.

Landry's contended that the SEC was requiring the company to issue a proxy statement disclosing information about a confidential commitment letter from the lead lenders on the buyout deal. However, Landry's was negotiating with those same lenders to refinance the bond indebtedness that the company promised to refinance in connection with October, 2007 litigation settlement with its bondholders noted above. Inasmuch as the lenders' commitment for financing Fertitta's buyout required that the terms of the commitment remain confidential, the company elected to terminate the buyout rather than risk that the lenders would declare a default for breach of confidentiality and back out of the financing commitment as well as the negotiations on refinancing the bond indebtedness.

Amidst all this, Landry's stock was tanking, closing at under $5 per share.

Meanwhile, while the take-private bids languished and the company's stock plummeted to historic lows, Fertitta continued to buy more Landry's stock so that he now controls somewhere in the neighborhood of 55% of the company's shares.

Yes, that's right. Despite a series of unsuccessful take-private offers over a year and a half, Landry's board failed to obtain a standstill agreement from Fertitta that would have prevented him from taking a majority equity position while Landry's stock price was tanking.

So, given all of that, how could Fertitta and the Landry's directors screw things up any worse?

How about proposing yet another deal in which Fertitta would buyout Landry's other shareholders in return for giving them an equity stake in a publicly-owned spin-off (Saltgrass Steakhouse) in a brutally competitive niche of the restaurant market?

Prediction: This is not going to turn out well.

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

September 9, 2009

Innovative teaching

Having been raised by one, I've always been drawn to great teachers wherever I find them.

Jeff Ritter is a young golf teaching professional in the Phoenix area who combines excellent analytical ability with formidable communication skills to provide some of the best golf swing instruction that I've seen on the Web.

In this 10-minute video, Ritter shows how, over the course of a week, he improves the swing of a low-handicap amateur golfer who had come to Phoenix to work with him. In so doing, Ritter takes a good golf swing and turns it into a very good one.

Here are some more Ritter teaching videos, generally 1-3 minutes in length, that focus on various aspects of the golf swing. This is a wonderful example of how a talented teacher is using the Web in innovative ways to reach thousands of students who would not otherwise have access to his insight.

Some other sites in which to discover great teachers:

Top 7 Places to Watch Great Minds in Action

100 Incredible Lectures from the World’s Top Scientists

One Day University

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

September 8, 2009

Understanding storytelling

When young attorneys ask me how they can become more effective advocates in the courtroom, I usually tell them: "Become better at telling stories."

Several years ago, Derek Sivers interviewed the late Kurt Vonnegut, who was no slouch as a storyteller. Check out Vonnegut's views on story-telling, which he believed promotes the need for drama in people's lives.

Essential reading for anyone who seeks to persuade.

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

September 7, 2009

Love at the Five and Dime

Born in Seguin and now of Austin, the great Texas singer-songwriter, Nanci Griffith.

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

September 6, 2009

Confession and Avoidance

As our own country confronts the difficult issues involved in conducting war, it seems appropriate to recall the closing defense argument in one of the all-time great lawyer movies, Breaker Morant.

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

September 5, 2009

Crunchy excellence

Continuing on the thread of creative advertising, check out this brilliant series of Cinnamon Toast Crunch commercials by McCann Erickson/Campbell Mithun.

 

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

September 4, 2009

A great interview

Anything that happens in U.S. Open tennis over the Labor Day weekend is unlikely to match this hilarious post-match interview of Andy Roddick during the 2007 Australian Open after Roger Federer had defeated him in particularly dominating style.

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

September 3, 2009

An illusion of safety, but at what cost?

The only two airline-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.

Nevertheless, as Patrick Smith explains, the wasteful airport security process that we have allowed the Transportation Security Administration to impose on us continues unabated at a substantial direct cost and an even greater indirect one.

It's bad enough that the TSA's procedures do virtually nothing to discourage serious terrorist threats. But what's even worse is that the incompetent inspection process is really just "security theater" that makes a few naive travelers feel safer about airline travel.

And if all that weren't bad enough, the worst news is that once a governmental "safeguard" such as the TSA procedures are adopted, Congress is not interested in dismantling it even when it's clear that process is ineffective, expensive and obtrusive to citizens.

Smith sums up the dilemma well:

The novelty of the Sept. 11 attacks notwithstanding, the primary threat to commercial planes is, was and shall remain the smuggling aboard of explosives, which is what happened on Pan Am 103 [the Lockerbie explosion twenty years ago whose instigator was recently set free]. The bomb came onboard in a suitcase. The hijack paradigm changed forever on 9/11, rendering the inflight takeover concept unworkable for a terrorist. .   .   .

Yet whether by virtue of incompetence or willful ignorance, TSA continues to waste untold time and untold millions of dollars on a tedious, zero-tolerance fixation with blades and sharps. This does nothing to make us safer, and in fact draws security resources away from worthy pursuits.

Yes, TSA scans most bags for explosives. Mandates were put in place after 9/11 that have greatly increased the percentage of bags that are run through high-tech detectors, with a goal of screening all of them. But eight years later, screening is still not fully comprehensive. It does not yet include 100 percent of luggage and cargo, and procedures remain inadequate at many overseas airports from which thousands of U.S.-registered jetliners depart each week. Neither is there widespread screening for explosive materials that somebody can carry on his or her person. Good luck getting a hobby knife through a concourse checkpoint, while a pocket full of Semtex is unlikely to be noticed.   .   .   .

There is a level of inherent risk that we simply must learn to accept. But, if we are going to have an airport security apparatus, and if we are going to devote millions of tax dollars to the cause of thwarting attacks, can we please do it smartly and at least improve our odds? Am I the only one who finds it maddening, and even a little scary, that we can't get this right? Is it not a national disgrace that TSA should spend its time confiscating butter knives from uniformed pilots rather than focusing on deadly threats with a long historical precedent?

Where are the voices of protest? As I've said before, the airlines ought to be speaking out and pressuring TSA to revise its policies. I know it puts them in a tough spot, liability-wise -- carriers don't want to be perceived as opposing security, even when that security isn't helpful -- but much of what people despise about flying pertains to the TSA rigmarole.

And passengers, for their part, are apparently content with, or at least resigned to, the idea of security theater in lieu of the real thing. Indeed, rather than demand or expect change, hundreds of thousands of Americans have paid good money for the chance to simply circumvent the hassle of TSA.

Food for thought as Congress considers the creation of an even larger governmental apparatus as the "solution" to problems in the U.S. health care finance system.

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

September 2, 2009

Tecumseh Valley

The incomparable Nanci Griffith sings a classic song by the late, great Texas songwriter, Towne Van Zandt.

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

September 1, 2009

County Fair, L.A. style

Yet another example of how commercials (see earlier examples here) are providing some of the most creative product on television(H/T Glenn Reynolds ):

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

August 31, 2009

Rationing health care in a disaster

If you read one article health care-related this week, make it this extraordinary Sheri Fink/NY Times Magazine article on the impossible choices that the heroic doctors -- including Dr. Anna Pou -- faced at the former Memorial Medical Center in New Orleans in rationing limited medical and evacuation services for their patients during the chaotic aftermath of Hurricane Katrina.

Ms. Fink summarizes the issues raised by the issues that Dr. Pou and her colleagues well:

The story of Memorial Medical Center raises other questions:

Which patients should get a share of limited resources, and who decides?

What does it mean to do the greatest good for the greatest number, and does that end justify all means?

Where is the line between appropriate comfort care and mercy killing?

How, if at all, should doctors and nurses be held accountable for their actions in the most desperate of circumstances, especially when their government fails them?

Interestingly, after the federal, state and local governments largely failed the doctors, other workers and patients at Memorial in the aftermath of Katrina, get a load of how the government forces acted once the decision was made to arrest Dr. Pou:

AT ABOUT 9 P.M. on July 17, 2006 — nearly a year after floodwaters from Katrina swamped Memorial hospital — Pou opened the door of her home to find state and federal agents, clad in body armor and carrying weapons. They told her they had a warrant for her arrest on four counts of principal to second-degree murder.

Pou was wearing rumpled surgical scrubs from several hours of surgery she performed earlier in the day. She knew she was a target of the investigation, but her lawyer thought he had assurance that she could surrender voluntarily. “What about my patients?” she asked reflexively. An agent suggested that Pou call a colleague to take over their care. She was allowed to freshen up and then was read her rights, handcuffed and ultimately driven to the Orleans Parish jail.  .   .   .

Read the entire article. Whose judgment do you trust more? Dr. Pou and her colleagues? Or that of those governmental officials who decided to arrest her?

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

August 30, 2009

Hitchens lays the wood to an apologist for Islamic jihad

Christopher Hitchens at his best (H/T Reuben Moore).

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

August 29, 2009

The Five Minute University

Food for thought from Father Guido Sarducci to collegians starting the new school year.

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

August 28, 2009

A real head scratcher

The Stanford Financial Group scandal has been anything but typical, but yesterday's developments may have been the most bizarre yet.

The big news, other than the hospitalization of R. Allen Stanford, was the guilty plea that Stanford's right-hand man and long-time friend, James Davis, entered in connection with a plea bargain that he worked out with federal prosecutors.

The background section of the plea deal makes for some entertaining reading (bribes to, and a blood oath with, an Antiguan bank regulator?). But the more interesting aspect is that Davis' plea is the latest chapter in a most curious defense strategy.

From almost the outset of the Stanford Financial scandal, Davis' attorney -- Dallas-based attorney David Finn -- has been telling any media outlet that was willing to quote him that his client was guilty of a huge fraud on Stanford investors and that Davis was going to plead guilty to charges as soon as he could work out details of a plea deal with federal prosecutors. Even the most rabid prosecutors would never risk making such public statements, so effectively Finn has been doing much of the prosecutors' public relations work for them.

And now we finally know the terms of the plea deal between the prosecutors and Davis.

On one hand, David pled guilty “in exchange for” a Level 43 under the Sentencing Guidelines (reduced from a Level 46 -- do the Sentencing Guidelines even go up that high?!) “with acceptance” deal. Based on my understanding, that means that Davis has agreed to a prison sentence of 30 years to life. Davis is 60, so assuming that he gets the full benefit of the the traditional 1/3rd off under the guidelines for being a good snitch (no cinch bet in Judge Hittner's court), Davis will do 20 years and be 80 by the time he shuffles out of prison.

On the other hand, the prosecution "gets” Davis as their primary witness, who -- according to the prosecution's own theory of the case -- was one of the key participants in a six billion dollar scam from the beginning. If, as prosecutors alleged during the hearing, Stanford Financial was a “giant house of cards," then why cut a “deal” with the guy who was one of the lead architects of the scam?

Well, we now have the answer to that question. The plea deal is not a "deal" at all. It's total surrender.

Davis is reportedly working as a day laborer at $10 per hour to pay his legal fees. From the looks of it, he is getting the quality of representation that he is currently capable of paying for.

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

August 27, 2009

Ali and Arnie

The Observer provides this entertaining compilation of quotes from Muhammad Ali, who just turned 67. My two favorites:

On his Parkinson's disease: "It wasn't the boxing, it was the autographs." (2003)

On his biggest battle: "My toughest fight was with my first wife." (1967)

And don't miss this Tom Callahan/Golf Digest piece on Arnold Palmer, who turns 80 on September 10th. Palmer's old friend, Dow Finsterwald, makes an interesting observation about Palmer that some current Tour pros should take to heart:

"But the thing Arnie and I truly had in common, the thing both of us enjoyed most of all, was playing golf. That may sound funny, but you'd be surprised how many good players, how many pros, weren't able to enjoy it nearly as much as we did. To us it was an avocation as well as a vocation. I think of him as the greatest amateur-professional who ever lived. By that I mean he never stopped playing the game for the love of it, like an amateur. Sure, he liked making a nice living. But he loved to play. Still does."

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

August 26, 2009

Re-tracing Graham Greene's journey across Mexico

In the first of a series of upcoming blog posts that will interest most Texans, The Atlantic's Graeme Wood addresses many of the difficult issues facing Mexico that have been a frequent topic on this blog. Wood is re-tracing the journey across Mexico of Graham Greene of The Lawless Roads fame seventy years ago:

Seventy years ago, Graham Greene crossed the US-Mexican border into a land blighted by violence, unrest, insurgency, and religious and counter-religious mayhem. If he came back today he would find a country riven by other forces, but in some ways just as chaotic, and just as worthy of the title he gave his account of the journey, The Lawless Roads.

The news out of Mexico is all bad. When I was a kid, my parents and I went across the border at Reynosa, Matamoros, and Tijuana to take awkwardly posed photos on the backs of burros, buy cheap Kahlúa, and eat frog-legs at Garcia's. Now the drug war has re-ignited, the rules of engagement between police and crime syndicates have changed, and the environment has become more savage. The government of Felipe Calderon has challenged the narco-traffickers and has militarized the border. Garcia's is still open, but tourists have vanished. College kids don't head down here from South Padre so much, which is a good indicator of the downturn, because they are college students, and that Kahlúa was awfully cheap. There are serious questions of whether Mexico is becoming that scariest of things, a military state in only partial control -- i.e., a Latin American Pakistan.

Only some of the drama is on the border. Greene's trip through Mexico crossed the country on its long axis and reported how Mexicans were dealing with the effects of the Cristero War, its violent suppression of the Catholic church, and the armed discontent that suppression sparked. Over the next cycle of posts, I will steer my rented Mexican Ford (an inglorious chariot that feels like it would crumple like a soda can, if I were to give it a bear-hug) along Greene's path, with deviations, to see whether that lawlessness is a permanent condition.

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

August 25, 2009

Amazingly bad decision-making

One fringe benefit of economic downturns is that local public officials generally defer their financial decisions, which tend to be uniformly bad even during good economic times.

Except apparently in Houston.

Over the past few days, Houstonians have been bombarded with a flurry of bad decisions by their public officials, who seem undeterred by the growing consensus that the nation is going through the worst economic recession since the Great Depression of the 1930's.

First, as Kevin Whited notes, the City of Houston publicly announced this past Friday that it had removed the final local regulatory roadblocks to the construction of the long-delayed Ashby high-rise condominium project in a tony residential subdivision near the Texas Medical Center. In so doing, the City forgot to tell the news to the most interested people, namely the owners of the property where the project is to be built.

At any rate, the City's announcement ended an egregious example of local governmental interference with productive development of private property. Of course, in the present climate for financing high-rise condos, the chances of the owners being able to revive the project any time soon are about as good as the Stros' chances of leaping into World Series contention.

Thus, rather than having dozens of wealthy condo owners paying substantial amounts of property taxes and for other City services, the City continues to enjoy the "benefit" of a run-down apartment complex on the property where the Ashby high-rise was to be built.

So, not only did the City fail to take advantage of the opportunity to increase its tax base through re-development of the Ashby high-rise site, it benefited the owners of the site by deterring them from taking the financial risk that would have generated that financial boon to the City.

Now, that type of government mismanagement really takes some effort.

Meanwhile, as if trying to one-up the City's bungling of the Ashby high-rise deal, local governmental officials were reported on Monday to be on the "home stretch" of putting together a financing package for construction of a new downtown soccer stadium, a new jail facility and the redevelopment of the Astrodome.

I mean, really. Where to start?

As noted many times, the City has already paid millions at a top-of-the-market price for the site of the proposed soccer stadium while at least maintaining that it's up to the owners of the Dynamo soccer club to put together the private financing for the construction of the stadium itself.

Now, the City is going to finance the construction of the soccer stadium itself through selling TIRZ bonds? When did the prior approach change? Did I miss something?

Similarly, there's not much left to say about the City and the County governments' reprehensible handing of the Harris County and City jails, both of which have both been condemned by the Department of Justice because of their horrific condition and mismanagement (the latest on the City jail conditions is here).

It's clear that the true problem of the existing jails is a combination of underfunding and needless overcrowding from sloppy processing of prisoners who do not need to be incarcerated pending their trial. So, what do local governmental officials do? Wait until the conditions become so barbaric that all they can do is throw tens of millions of dollars (perhaps illegally?) at constructing yet another jail facility in an attempt to placate federal officials.

But both the proposed soccer stadium and jail facility pale in comparison to the potential boondoggle that is the Astrodome redevelopment project.

After years of assuring local citizens that they would not be called upon to pick up the financing of redeveloping the Dome, local governmental officials are now proposing that the citizens do just that.

And as if to make that change of policy even more galling, the governmental officials who leaked the information on the financing plans to the Chronicle did not even bother to spell out what the Dome is to be turned into as a result of the redevelopment.

So much for transparency, eh?

In the meantime, as City and County officials dither over the details of these proposed boondoggles, City officials continue to ignore this ticking financial time bomb (see also here) while wasting billions on yet another boondoggle, the spending on which swamps even the quarter of a billion proposed for the current round of boondoggles.

Frankly, it's difficult to imagine how even the traditionally resilient Houston economy is going to withstand the dead weight of such pervasive financial mismanagement.

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

August 24, 2009

The evolution of primary care

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

August 23, 2009

Mathemagic

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

August 22, 2009

Stros 2009 Season Review, Part Three

Given the inexplicable popularity of NFL football practice in these parts, who cares about Major League Baseball anymore, anyway?

As expected, the Stros (59-62) faded into obscurity during the third quarter of the 2009 season, going 19-21 during that stretch. Although the mainstream media reported mainly that the Stros fell apart during the third quarter, the truth is that they did not play all that much different from the first two quarters of the season (18-22; 23-19). The 2009 Stros simply is not -- and never has been -- a good baseball team.

Reviewing basic productivity statistics reflects what happened to the Stros during the third quarter of the season. As regular readers of this blog know, the RCAA ("runs created against average") and RSAA ("runs saved against average") statistics, developed by Lee Sinins for his Sabermetric Baseball Encyclopedia, provide a simple but revealing benchmark of how an MLB player or MLB team is performing during the long MLB season.

RCAA reflects how many more (or fewer) runs that a player generates relative to a league-average player (an exactly league-average player's RCAA is zero).

Similarly, RSAA measures how many more (or fewer) runs that a pitcher saves relative to a league-average pitcher (an exactly league-average pitcher RSAA is zero).

Thus, a club's positive RCAA number reflects how many more runs a club's hitters are generating relative to what a league-average club would generate using the same number of outs. Likewise, a club's positive RSAA number reflects how many more runs the club's pitching staff is saving relative to what a league-average pitching staff would prevent in the same number of innings. Negative RCAA and RSAA numbers are just the opposite. A negative RCAA reflects how many fewer runs a club's hitters are generating relative to a league-average club and a negative RSAA indicates how many more runs a pitching staff is giving up in comparison to a league-average staff.

As a result, good teams generally have a positive net RCAA/RSAA figure, while bad teams tend to have a negative net RCAA/RSAA statistic. Occasionally, a good team will have a high RSAA statistic and a negative RCAA figure (i.e., the Stros' 2005 World Series team), but it's almost never the case that a good team will have a high RCAA and a substantially negative RSAA. In other words, you can win with really good pitching and poor hitting, but it's hard to win consistently with really good hitting if your pitching is poor.

The following charts shows the NL Central clubs' net RCAA/RSAA figure at the All-Star break and after the third quarter of the 2009 season, along with their current percentage chance of making the playoffs, as calculated by Coolstandings.com:

Through 2nd Quarter

 

 Through 3rd Quarter

Team	RCAA	RSAA	Net	Record	% Playoffs
Cards	43	33	76	70-53	87.0
Cubs	-33	57	24	61-58	16.5
Brewers	52	-89	-37	58-62	0.9
Stros	2	-60	-58	59-62	0.3
Reds	-78	-21	-99	51-69	<0.1
Pirates	-39	-43	-82	49-70	<0.1

As you can see, the Stros were muddling around with a .500 record based on slightly above-average hitting and slightly below-average pitching as of All-Star break. However, the Stros pitching fell apart during third quarter, saving an astounding 43 fewer runs during that 40-game stretch than a National League-average pitching staff would have saved over those games. Combine that with a downturn in hitting resulting from a DL stint by slugger 1B Lance Berkman and slumps from regular players such as SS Miguel Tejada and RF Hunter Pence, along with the Cardinals' upsurge in hitting primarily from the acquisition of Matt Holliday, and it's not surprising that the Stros are 10 games out of first place in the NL Central.

As noted in the preview of the 2009 Stros back in April, this performance level was easily predictable given what Baseball Prospectus has dubbed the "stars-and-scrubs" Stros roster. Frankly, the Stros are an organization playing out a weak hand while attempting to deal with the long-overdue rebuilding program that has became necessary -- but was generally ignored -- during the final years of the Biggio-Bagwell era. GM Ed Wade has just completed his second straight strong draft in terms of numbers (36 out of 51 drafted players signed), so the rebuilding program is in full swing. But it's going to take another 2-3 years before any appreciable amount of that investment begins to payoff at the MLB level.

So, hang in there, Stros followers. In the meantime, please pray that the Stros don't do anything idiotic in the free agent market, similar to what they did in regard to the Carlos Lee deal. Tejada and closer Jose Valverde will become free agents after this season and neither of them is good enough at this stage of their career to command an expensive contract. The Stros would be much better off giving younger, cheaper and likely just as productive players the playing time that fading and overrated veterans such as Tejada and Valverde would otherwise take up.

By the way, the Stros' trade of C Ivan Rodriguez this past week to the Rangers for a couple of marginal prospects did not indicate, as some mainstream media commentators suggested, that the Stros were "giving up on the season." A club does not "give up on a season" by trading the dead weight of one of the least productive regular players in the National League. Rather, the deal would be better characterized as getting "something for nothing."

The 2009 season statistics for the Stros through the first 80 games 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' active roster is here with links to each individual player's statistics:

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

August 21, 2009

Scalding Scalia

Never one to avoid a lively debate, Harvard law prof Alan S. Dershowitz (previous posts here) lays the wood to Supreme Court Justices Antonin Scalia and Clarence Thomas in this Daily Beast op-ed over the extent of their rationalizations to avoid restricting application of the death penalty:

I never thought I would live to see the day when a justice of the Supreme Court would publish the following words:

“This court has never held that the Constitution forbids the execution of a convicted defendant who has had a full and fair trial but is later able to convince a habeas court that he is ‘actually’ innocent. Quite to the contrary, we have repeatedly left that question unresolved, while expressing considerable doubt that any claim based on alleged ‘actual innocence’ is constitutionally cognizable.”

Yet these words appeared in a dissenting opinion issued by Justices Antonin Scalia and Clarence Thomas on Monday. Let us be clear precisely what this means.

If a defendant were convicted, after a constitutionally unflawed trial, of murdering his wife, and then came to the Supreme Court with his very much alive wife at his side, and sought a new trial based on newly discovered evidence (namely that his wife was alive), these two justices would tell him, in effect: “Look, your wife may be alive as a matter of fact, but as a matter of constitutional law, she’s dead, and as for you, Mr. Innocent Defendant, you’re dead, too, since there is no constitutional right not to be executed merely because you’re innocent.”

You know, he's got a point. As noted earlier here, Justices Scalia and Thomas' rigid reasoning sure do lead to some dubious decisions.

Posted by Tom at 12:01 AM | Comments (9) |

August 20, 2009

A Texas original

Given the achievement of covering his 200th major golf tournament at the U.S. Open this past June, Clear Thinkers favorite and fellow Texan Dan Jenkins has been making the interview rounds and it has been a rollicking good time.

Last week at the PGA Tournament (Jenkins' 201st major tournament), the PGA presented Jenkins to the press corps one afternoon and the interview session ended up being the most entertaining of the week. Here are a few snippets:

"It's been a great geographic trip, because I got to cover the dominant player in the world from Texas [Ben Hogan] and then the one from Pennsylvania [Arnold Palmer] and then the one from Ohio [Jack Nicklaus], the one from Missouri [Tom Watson] and the one from Spain [Seve Ballesteros], and now a guy from California [Tiger Woods]. Pretty good geographic journey."

Recalling an anecdote from an Atlanta hotel that Jenkins stayed in while covering a tournament:

Jenkins: "What exactly is the name of the property we're staying in?"

Julius Mason, a Jenkins friend: "It's the Sheraton Four Points."

Jenkins: "Four points out of 10? No air conditioning, no ice, no TV, no phone. It was a grand slam."

On his future:

Question: "How long are you going to keep doing this?"

Jenkins: "I'm not qualified to do anything else. So I'll be here until they carry me out and the message on my tombstone will be 'I knew this would happen.'"

On his two passions, golf and college football:

"Hey, golf is fun. It's beautiful. It's elite. It's gorgeous and all those things. But college football -- it's important. People live and die for that sport."

And, as noted earlier here, the 79 year-old Jenkins has taken to Twitter like a fish to water. Here are a few of his twit gems from last weekend's PGA:

"Tiger three-putts for bogey. Still gets standing ovation."

"Tiger throws grass in the air on the fifth fairway. Gets another standing ovation."

On Vijay Singh's 3rd round putting woes:

"Vijay putted today like your member-guest partner. The partner you don't invite back."

"I see 'Squeaky' Fromme was let out of prison Friday. Maybe the Eagles will sign her."

"Female mixed martial arts seems to be catching on. Some of my friends believe they might have been married to a couple of them."

"I just noticed I'm closing in on 4,500 [Twitter] followers. My daughter says, 'Great, Dad. Still two million behind Britney Spears.'"

On Irishman Padrig Harrington's quintuple bogey 8 that took him out of contention on the final day:

"The Irish do love funerals."

On South Korean Y.E. Yang's victory in the PGA:

"After conquering the LPGA Tour, the South Koreans have now set their sights on the men. And after all we've done for them."

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

August 19, 2009

Robert D. Novak, R.I.P.

Longtime Washington political columnist and television political pundit Robert D. Novak died yesterday, ending a virtually unparalleled 60-year career of reporting on national politics from the nation's capitol. David Broder, Jack Shafer. Tim Carney, Stephen Miller, Jeffrey Bell and the WSJ Editors do a good job of putting this formidable career and fascinating man in perspective.

Inasmuch as I was not particularly interested in Novak's obsessive-style of political reporting in his columns and on television, I didn't appreciate Novak until late in life. That changed when a friend recommended Novak's The Prince of Darkness: 50 Years Reporting in Washington (Crown 2007) (prior post here), which I probably would never have read but for my friend's urging.

Turns out that The Prince of Darkness is a thoroughly enjoyable read, particularly because Novak passes along his reflections on the relationships he had with virtually every major figure in American politics over the past 60 years, which pretty well spans my lifetime. I went from not really being interested in Novak to not being able to put the book down. It remains one of the most unexpectedly delightful books that I've read in the past couple of years.

Characters such as Novak are rare these days, and we are not the better for that.

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

August 18, 2009

Alain de Botton on the randomness of merit

If you watch just one TED video this year, check out this 17 minute presentation by Alain de Botton on the cult of meritocracy and related issues. H/T Epicurean Dealmaker.

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

August 17, 2009

Where is the outrage?

A couple of stories caught my eye over the weekend.

The first was the one involving Bob Dylan being pulled over by a couple of young cops while taking a walk in a New Jersey neighborhood a few hours before his show that evening. The theme of the story is how funny it is that neither of the 20-something year-old policeman recognized the iconic musician.

However, my thought was the same as Radley Balko's -- how sad it is that a 68 year-old grandfather cannot go for a walk in a neighborhood without being confronted by a couple of policeman and ultimately escorted back to his hotel. Dylan was doing nothing wrong and there was no report of a crime in the area, yet he is pulled over and taken off the street simply because he left his ID back at the hotel. As with the Gates affair, the primary reason that police are getting away with treating citizens in such a manner is that most of the public is simply making light of it when it happens to someone else.

Meanwhile, the Dylan affair received more publicity than even a greater outrage -- that is, the guilty plea to racketeering charges of Gary S. Kaplan, who did nothing other than create and help run the publicly-owned internet gambling company named BetOnSports (previous posts here).

You may remember this lurid case from 2006. Avaricious federal prosecutors, with apparently nothing else to do, indicted BetOnSports, Kaplan and several other of the company's executives were arrested while changing planes in the U.S. despite the fact that the company was not accused of doing anything dishonest toward its customers, who simply enjoyed placing bets online. As a result of the arrests and the indictment, BetOnSports ultimately liquidated, resulting in hundreds of millions of dollars in losses for American customers.

In essence, Kaplan and his associates were thrown in U.S. jails for years before trial and told that a business that they believed was legal was a criminal enterprise even though it was being run in the open and publicly-traded on the London Stock Exchange. Apparently, U.S. prosecutors now believe they can enforce even ambiguous U.S. laws on any business, wherever based, solely because some of the customers of the business happen to be Americans. The legal theory is bad enough, but the imprisonment of foreign businessmen passing through the U.S., while at the same time causing American citizens to suffer undeserved financial losses, reflects a serious lack of adult supervision at the Department of Justice.

Sure, Dylan is a funny old man now. And who cares about a few foreign businessmen who get inconvenienced by the American criminal justice system?

But as Sir Thomas More reminds us, "when the last law was down, and the Devil turned 'round on you, where would you hide, the laws all being flat? .   .  . do you really thing you could stand upright in the winds that would blow then?"

One of the clearest lessons of the 20th century is that large governments, unrestrained by their citizenry, have the capacity to cause unspeakable evil. As injustices such as the foregoing unfold with nary a protest from citizens, is that lesson already forgotten?

Posted by Tom at 12:01 AM | Comments (5) |

August 16, 2009

The Hubble Ultra Deep Field

I watched this video enlarged on my 27-inch HD monitor. It is incredible. Enjoy.

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

August 15, 2009

Johnnie Walker "Walk"

As noted earlier here, the most creative product being generated on television these days is commercials. The commercial below is the latest in that trend:

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

August 14, 2009

Les Paul, R.I.P.

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

August 13, 2009

The Stanford D&O Policy

This earlier post noted that alleged Ponzi-schemer R. Allen Stanford has been denied use of proceeds of a director's and officer's insurance policy to pay his defense costs because of claims made on that policy by the receiver appointed in the SEC's civil lawsuit against Stanford Financial Group.

Inasmuch as Stanford's personal assets have been frozen in that civil lawsuit, the lack of insurance coverage under the D&O policy has effectively prevented Stanford from finalizing arrangements for his defense in the criminal case. That state of affairs has certainly contributed to this unfortunate situation.

Thus, the issue of who is entitled to the proceeds of the Stanford D&O policy is extremely important, and Kevin LaCroix over at The D&O Diary has done this excellent analysis of the issues involved. It looks to me as if the Stanford officers have the better case than the receiver to the proceeds, but what do I know?

At any rate, if I am right, then Stanford and other Stanford Financial Group officers are being severely damaged as a result of the insurers declining to pay claims under the policy pending resolution of the receiver's claim to the policy proceeds.

It sure doesn't look as if anyone in the judiciary cares about that much.

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

August 12, 2009

Colbert does Julie & Julia

The crack about "certainly there was something they haven't deep-fat fried yet" is an instant classic.

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

August 11, 2009

Enron, the play

It was probably inevitable, although I would have guessed an opening Off Broadway rather than in London. But the play is actually getting decent reviews. And it almost has to be better than this trash.

Where are Zero Mostel and Gene Wilder when you really need them?

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

August 10, 2009

Reflecting on astonishing abuses of power

As Congress contemplates an historic extension of governmental control in regard to health care finance, a couple of stories relating to the growth of unrestrained exercise of governmental power in another area grabbed my attention.

First, former Dynegy executive Jamie Olis was formally released from federal prison on Friday. Along with the egregious prosecution of Arthur Andersen, the prosecution and barbaric sentencing of Olis represents a festering wound for anyone who believes in principles of limited government and innocence until proven guilty. That the judicial system allowed the executive branch to bully Dynegy into serving Olis up as the initial sacrificial lamb of business corruption in the wake of Enron's collapse is a frightening example of how little protection citizens have from dubious prosecutions. For whatever purpose, Olis remains on probation for another three years.

Meanwhile, reinforcing the point made above, Mary Flood reports that the Department of Justice -- apparently with not enough to do in investigating the meltdown on Wall Street over the past year and a half -- is actually considering another Enron-related prosecution of the disgraceful Nigerian Barge case, which has already resulted in the unjust imprisonment of four former Merrill Lynch executives for over a year before the Fifth Circuit Court of Appeals threw out their convictions.  As noted in this post from over four years ago (!), the Nigerian Barge prosecution was baseless from the start and, as later developments revealed, trumped-up to boot. That this outrage is allowed to continue is yet another indication that the judiciary has ceded its role as an effective check on executive branch excesses.

Finally, the docket of the prosecution of former Enron CEO Jeff Skilling now reflects that the deadline for Skilling's motion for new trial based on pervasive prosecutorial misconduct has been extended to September 9th. As noted in this previous post, a reasonable interpretation of the reason for the extensions of the deadline for Skilling's motion is that the government has turned over massive amounts of exculpatory evidence that the Enron Task Force illegally withheld from Skilling's defense team during the prosecution of Skilling and the late Ken Lay. Skilling's Fifth Circuit-ordered re-sentencing that will reduce his inhumane 24-year sentence has been put off indefinitely pending disposition of his motion for a new trial.

The Olis, Nigerian Barge and Skilling prosecutions are the other side of the coin of what happened to Professor Gates. What protection do we have that the same won't happen to you and me?

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

August 9, 2009

12

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August 8, 2009

A good sign

One of the many fascinating aspects of golf is that you can learn much about a person by playing a round of golf with them.

Based on this Time article (h/t Geoff Shackelford), President Obama sounds as if he would fit in quite well with the groups in which I play golf regularly.

That makes me feel better.

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

August 7, 2009

The increasing cost of public equity

Frank Quattrone, the former CSFB investment banker who has an interesting perspective, notes a dynamic of the now almost decade-long criminalization of business that I have been warning business owners and lawyers about for quite some time now -- the increasing cost of public equity:

[W]hy did [public offerings] disappear in the first place?

One reason is the heightened bar for small companies to go public, Mr. Quattrone said. Throughout his career, he said, some of the greatest companies he was associated with had $30 million to $50 million in revenue when they went public. Today, he said, bankers require companies to have $100 million or even $200 million in revenue.

Part of the underappreciated societal impact of prosecutors such as those on the Enron Task Force implementing the criminalization of business lottery is that the days of small companies tapping public equity for relatively cheap venture capital are gone. Moreover, the supply of executives who are willing to work for public companies is smaller because many of the best and the brightest simply do not consider the risk of operating in the public domain worth the draconian downside. The result is that investment alternatives for investors in public markets are declining.

Not exactly a policy to encourage economic revival, now is it?

Update: Along the same lines, Larry Ribstein reviews the destruction of public equity wealth in regard to AIG that resulted in no small part from Eliot Spitzer's machinations. It's a risk that I first noted in regard to AIG way back in early 2005. When will we learn?

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

August 6, 2009

The health care finance wedge

Writing in the Wall Street Journal, Arthur Laffer lucidly identifies one of the key obstructions to controlling costs in America's health care finance system:

Consumers are receiving quality medical care at little direct cost to themselves. This creates runaway costs that have to be addressed. But ill-advised reforms can make things much worse.

An effective cure begins with an accurate diagnosis, which is sorely lacking in most policy circles. The proposals currently on offer fail to address the fundamental driver of health-care costs: the health-care wedge.

The health-care wedge is an economic term that reflects the difference between what health-care costs the specific provider and what the patient actually pays. When health care is subsidized, no one should be surprised that people demand more of it and that the costs to produce it increase. Mr. Obama’s health-care plan does nothing to address the gap between the price paid and the price received. Instead, it’s like a negative tax: Costs rise and people demand more than they need. [.  .  .]

The bottom line is that when the government spends money on health care, the patient does not. The patient is then separated from the transaction in the sense that costs are no longer his concern. And when the patient doesn’t care about costs, only those who want higher costs—like doctors and drug companies—care.

I have an interesting perspective on the health-care wedge. For 20 years from 1980-2000, I was involved in negotiating group health care insurance policies for my law firm.

Over the past decade in my solo practice, I have essentially self-insured by paying health-care costs out of pocket while taking out a family health-care policy with a large deductible to protect against catastrophic injury or illness.

During the earlier period when I was negotiating group policies for my firm, I had a good understanding of the cost of premiums for those policies, but I had no clue about the true cost of medical services and products.

However, since becoming self-insured, I have a very good understanding of the cost of most medical services and products.

Funny how that works, isn't it?

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

August 5, 2009

What's the purpose of the Madoff sentence?

When Bernie Madoff was sentenced a few weeks ago, my reaction was that it is utterly absurd to imprison a 72 year-old white collar criminal for 150 years. I mean, really -- what's the point?

Herb Hoelter agrees:

Bernie Madoff's 150-year prison sentence was an affront to the federal criminal justice system.  .  .  .

I've been a professional federal sentencing consultant for more than 32 years. I have worked with hundreds of white-collar offenders over the past 25 years - Madoff, most recently - whose punishments dramatically increased in direct proportion to the government trumpets of justice, punishment and deterrence. Having lived through the past two decades of federal sentencing guidelines (no longer to be "presumed reasonable," ruled the Supreme Court this year), I know that the Madoff sentence was the crown jewel for the government.

In imposing sentence, however, the court ignored virtually all statutory sentencing principles and trumped the defunct federal sentencing guidelines. The sentence was imposed, acknowledged Judge Denny Chin, for symbolic purposes, which violates the supposed blindfolds of our nation's justice system.

The sentence was, of course, within the law. But being within the law does not always mean a sentence is appropriate. Legal scholars will be hard-pressed to find a first-offender sentence of Madoff proportions - the maximum statutory term imposed on each count, to be served consecutively. [.  .  .]

The court's responsibility is to deliver justice, not respond to emotional tactics. The Madoff sentence - with its "symbolic" justification - failed a big test.   .   .   .

In the meantime, this even more egregious sentence of a man who didn't steal a dime from his company or investors continues to fade from our society's consciousness.

A truly civil society would find a better way.

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

August 4, 2009

I thought Ghostbusters seemed familiar

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

August 3, 2009

Unintended Consequences

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

August 2, 2009

A Serious Man

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

August 1, 2009

While we're on this whole police arrogance problem

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Current Events - Tasers
www.colbertnation.com
Colbert Report Full Episodes Political Humor Tasers

Posted by Tom at 12:00 AM | Comments (0) |

July 31, 2009

“Is it not like hiring a personal trainer who is morbidly obese?”

Has there ever been a Treasury Secretary who has been an easier target than Timothy Geithner?

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Home Crisis Investigation
www.thedailyshow.com
Daily Show Full Episodes Political Humor Joke of the Day

Posted by Tom at 12:00 AM | Comments (0) |

July 30, 2009

At least police arrogance isn't solely an American problem

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

July 29, 2009

The real message of the Gates affair

Despite America's dubious legacy of exercising state power to oppress minorities, that legacy really was not the most important dynamic in play in regard to the improper arrest of Harvard professor Henry Louis Gates.

Rather, the real issue here is the increasing arrogance of America's governmental officials to condone arrest of citizens as punishment for non-criminal behavior that police or prosecutors simply don't like.

Interestingly, as Alice Ristroph explains, the judicial acquiescence to this increasing problem has Texas roots. Gail Atwater was an Austin-area soccer mom who got into it with police officer and was arrested for a seatbelt violation, a "crime" that calls for no jail time. Atwater fought the charges, but the U.S. Supreme Court held in a 5-4 decision (what were Justices Souter, Kennedy, Scalia, Thomas and Rehnquist thinking?) that police officers may arrest citizens even for perceived offenses that call for no jail time. In short, the Court concluded that the "gratuitous humiliations" that the police officer imposed on Atwater were within the scope of the officer's discretion. Thus, Sergeant Crowley's exercise of power to put Professor Gates through the same humiliations over a bullshit disorderly conduct charge is protected by the Supreme Court.

Couple the foregoing with America's penchant for increasing criminalization of virtually everything and you have a very troubling trend. As Glenn Loury notes in this NY Times op-ed, "anyone who looks closely into the issue of crime and punishment in America cannot fail to notice that the institutions of domestic security — policing, surveillance, prisons, anti-drug policy, post-release parole supervision — have grown hugely over the past two generations." Similarly, given the expansion of the federal criminal code over the past generation, Radley Balko notes that "you're probably a federal criminal, too." Indeed, the Cato Institute for years has been criticizing what it calls the "overcriminalization of conduct and the overfederalization of criminal law." We already know all about that here in Houston, now don't we?

As I first noted in 2004 in regard to Martha Stewart's conviction on criminal charges, and as I've noted many times over the years in regard to other examples of overreaching prosecutions, Sir Thomas More in A Man for All Seasons alerts us on why we should all be concerned with such increasing judicial deference to the overwhelming prosecutorial power of the state. The context is the scene in which Sir Thomas explains to his wife, his daughter and her fiance why he won't misuse his power as Chancellor of England to arrest his student Richard Rich, despite the fact that Rich is preparing to betray Sir Thomas to Thomas Cromwell and Henry VIII:

Lady Alice (Sir Thomas' Wife): "Arrest him!"

Sir Thomas: "For what?"

Lady Alice: "He's dangerous!"

Roper: "For all we know he's a spy!"

Daughter Margaret: "Father, that man is bad!"

Sir Thomas: "There's no law against that!"

Roper: "But there is, God's law!"

Sir Thomas: "Then let God arrest him!"

Lady Alice: "While you talk he's gone!"

Sir Thomas: "And go he should, if he were the Devil himself, until he broke the law!"

Roper: "So, now you give the Devil the benefit of law!"

Sir Thomas: "Yes! What would you do? Cut a great road through the law to get after the Devil?"

Roper: "Why, yes! I'd cut down every law in England to do that!"

Sir Thomas: "Oh? And when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down--and you're just the man to do it, Roper!--do you really think you could stand upright in the winds that would blow then?"

"Yes, I'd give the Devil the benefit of the law. For my own safety's sake."

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

July 28, 2009

Why bother with a trial?

This earlier post noted the troubling indications that R. Allen Stanford and that the federal judiciary to date is doing precious little to check the prosecutorial power of the executive branch as it applies to Stanford. This is not the first time that the prosecutorial power has run amok in a Stanford case.

Now, the motion below reveals that the Department of Justice has placed Stanford under jail conditions that are roughly comparable to those that prisoners endure in third world prisons.

Meanwhile, Stanford essentially has no ability to assist his counsel in the defense of a complicated white collar criminal case.

Increasingly, the U.S. criminal justice system is resembling this one. Yet, after the judiciary and the local media allowed the Enron Task Force to get away with various outrages against Jeff Skilling and various other former Enron executives, it's as if even the most overreaching actions of the executive branch are now considered acceptable. Or at least not worth the effort of an objection. Or serious media scrutiny.

We live in scary times.

Stanford Mtn Re Jail Conditions

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

July 27, 2009

The incredible lightness of the Chron's pre-season Texans coverage

This past Sunday's edition of the Chronicle marked the beginning of what is arguably the most mind-numbing portion of the sporting year -- the five-week period of media coverage of football practice prior to the start of the National Football League season in the second week of September.

Putting aside for a moment his delusions that the Stros actually have a legitimate chance of making the National League playoffs this season when 3/5th's of their starting rotation are well-below NL-average pitchers, the Chron's Richard Justice dusts off his Texans' cheerleading garb and lays this piece of fluff on us:

At least we've gotten beyond the basic issues that smothered the Texans for so long. There should be few questions about the coach or general manager. Gary Kubiak and Rick Smith have done their jobs well.

They inherited a 2-14 mess three years ago and rebuilt it breathtakingly fast. To go from 2-14 to 8-8 in two off-seasons is an amazing accomplishment.

Of course, this is the same Richard Justice who was saying the following just last October (2008):

Wouldn’t you love Bob McNair to start holding people accountable? Wouldn’t you love it if he acted like he cares as much as all those people who write the newspaper and phone the talk shows?

Do you think he understands he’s why this football team stinks? In the end, he’s the guy in charge and every stinking loss starts with him. [.  .  .]

Coaching isn’t just drawing up a running play that works. Coaching is instilling the right mindset in a team.

It’s getting players to understand what’s important. Don’t think for a moment the Texans don’t care. They do.

Rosenfels cares. Chester Pitts and Ephraim Salaam and DeMeco Ryans and Johnson care.

Those mistakes aren’t a statement about how much they care. They’re a reflection that somewhere along the way, this organization has gotten way off track.

If it was one game, or one series of mistakes, that would be one thing. This is year after year of mistakes, of figuring out different ways to write the same ending.

In fact, what Justice is saying about the Texans now is quite similar to what he was saying about the Texans under the Casserly-Capers regime immediately before the disastrous 2-14 season in 2004:

The Texans have made good use of their honeymoon. They've drafted wisely and spent shrewdly on free agents. They've assembled a front office admired around the NFL. Their players seem to be quality people. [. . .]

The danger for them is that their greatest strength could become their greatest weakness. They've done so many things right and have built such a model operation that it's impossible not to put expectations on a fast track. [. . .]

So far, it's impossible not to be impressed with what the Texans have done. They are run as efficiently as any sports franchise I've ever been around.

Just before the start of training camp, Casserly gathered his employees and thanked them for all their hard work. Then he went down the list of different departments and explained some little thing each had done that made the team - and the organization - better.

That's the kind of thing the people who run sports franchises almost never do, and it left every person who was mentioned proud to be associated with the Texans.[. . .]

Capers believes it's vital to emphasize doing things right because "if you ever slip, you can never get it back."

So far, the Texans haven't slipped in any significant way.

Meanwhile, the blogosphere continues to bail the Chronicle out. Stephanie Stradley, who pens the Texans Chick blog for the Chronicle, has just completed a series of blog posts (the first one is here and the final one with links to the other four posts is here) that provides more astute analysis of good information on the Texans than anything that I've ever read by the Chronicle sports staff. Another Chron blogger, Lance Zierlein, also does a better job of analyzing the NFL than any of the Chron sportswriters.

Given Stradley's competence in regard to professional football, guess what Justice thinks of her?

It's going to be a long NFL pre-season.

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

July 26, 2009

Early Morning Rain

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

July 25, 2009

Falling Slowly

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July 24, 2009

Dave Mason, We Just Disagree

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July 23, 2009

Kiri Te Kanawa, O mio babbino caro

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

July 22, 2009

Rationing and health care finance reform

The video below (H/T Professor Bainbridge) of a Milton Friedman lecture on the health care finance system is as timely now as it was in 1978 when he gave it at the Mayo Clinic. I was reminded of the Friedman lecture when a doctor friend of mine passed along the following front-line observations triggered by this article reporting on the recentt death of a young British man who died while waiting on a liver transplant:

Unless we, as a society, decide that we are going to pay for everything for everybody, there will have to be some form of rationing of health care services. And, into the 21st century, we now can do so much (with some having questionable efficacy) that we can no longer afford to do everything for everybody.

We can ration by age -- this is what Obama was suggesting when he said that "maybe you're better off not having the surgery, but taking the painkiller". No more knee or hip replacements if you're over a certain age. Perhaps the first step toward a "Soylent Green" society?

Or we can ration by disease, which is what happened in the UK to the fellow who died awaiting a liver transplant and here we get into morals and away from science. It's kind of like the game we played in psychology courses in high school or college -- you're stuck on a desert island with a bunch of folks who represent a cross culture of society, so who do you choose to get on the life raft? Medical care actually was easier when we did not have the technology to do things like liver transplants. Folks such as this guy just died. 

Now, as a society, with the finite resources we are willing to spend on health care, we have to decide if we want to spend $250K to give this guy a new liver (which he may or may not trash through further drinking), to which is added the $25K per year for his follow up care and (very expensive) anti-rejection drugs. Or, do we decide that it would be better to treat 1,000 people who have hypertension by giving them cheap generic meds for $250 per year each?  Who is more deserving of a "second chance", as the referenced patient's mother asks -- the one or the thousand?  There are no right or wrong answers, but remember, it's now a zero-sum game. When you spend money on one group of patients, there will be less to spend on others.

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

July 21, 2009

Is there a problem with the Airbus 330?

When I travel to Europe, I normally fly on Air France, which is one of my favorite airlines. Professional, orderly, reasonably comfortable and clean. It's amazing how few airlines combine those characteristics these days. 

Air France's fleet includes a large number of Airbus 330 aircraft, which is the aircraft that crashed into the Atlantic Ocean last month on Air France's Flight 447 from Rio de Janeiro to Paris. So, given my preference for Air France, I've been following the development of information on that crash with particular interest.

James Fallows, who is a long-time aviator, follows most aircraft crashes closely, and he has provided much-needed information and insight in his posts on Flight 447 here, here, here and here. Initial speculation on the cause of the crash revolved around multiple system failures occurring during an unusually violent storm.

But now, questions are beginning to emerge as to whether there is a fundamental problem with the design of the Airbus 330. This lengthy David Rose/Mail Online article surveys the evidence that suggests a problem. Here is a list of the recent troubled flights of the Airbus 330 model:

August 2008 - Air Caraibes Atlantique - Paris to Martinique: Plane flying through turbulence experiences failure of autopilot, ADIRU and computerized instruments. Pilots successfully fight to restore control.

September 2008 - Air Caraibes Atlantique - Paris to Martinique: Second Air Caraibes flight to Martinique has identical experience. Plane is same model, different aircraft.

October 7, 2008 - Qantas Flight 72 - Singapore to Perth: Makes emergency landing after twice plunging uncontrollably in flight following failure of ADIRU, autopilot and instruments. 64 injured, 14 seriously.

December 28, 2008 - Qantas Flight 71 - Perth to Singapore: Forced to return to base after failure of autopilot and ADIRU.  Different aircraft, same model as in previous incident.

May 21, 2009 - TAM Flight 8901 - Miami to Sao Paulo: Experiences failure of autopilot, ADIRU and instruments. Crew regain control after five minutes. No injuries. US investigation under way.

June 1, 2009 - Air France Flight 447 - Rio to Paris: Crashes during Atlantic storm, killing 228. Automatic radio messages indicate that in minutes before crash, crew lost autopilot, ADIRU and computerized instruments.

June 23, 2009 - Northwest Airlines - Hong Kong to Tokyo: Flight loses autopilot, ADIRU and instruments before landing safely.  US investigation under way.

Rose goes on to report:

Interviews with pilots, lawyers and crash investigators suggest there may be an underlying problem with A330s. It’s impossible to conclude what this is, but there are two prime suspects – either flaws in the software, or with the wiring found inside huge numbers of modern aircraft.

‘It looks to me like there’s only one reason why AF447 crashed and QF72 survived,’ says Charles-Henri Tardivat, a former crash investigator who’s now part of a team from the London law firm Stewarts Law, which represents the victims’ families. ‘On QF72, the same things started happening that preceded the Air France crash. They were able to recover control because they were flying in daylight and perfect weather. They could see what was happening, even without their instruments. But AF447 was caught in a violent storm at night. The A330 is a very well-built aircraft, but there obviously is a problem somewhere. With so many of them out there, we need to find it.’

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

July 20, 2009

"Somebody gave him the steal sign"

If you haven't already seen it, then don't miss Jon Stewart's classic destruction of the fawning treatment that former Phillies and Mets outfielder Lenny Dykstra received from several financial media outlets over the past several years in regard to his supposedly magical investment strategies. Ryan Chittum summarizes the media outlets' attraction in Dykstra's case to glitz over substance. Another reminder that the "too good to be true" rule is an important one to embrace when evaluating investment alternatives.

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

July 19, 2009

Can he do it?

A year after 53 year-old Greg Norman flirted with winning the Open Championship, 59 year-old Tom Watson, just two months shy of his 60th birthday, is leading the Open going into the final round Sunday at Turnberry in Ayrshire on the western coast of Scotland.

Leave it to Clear Thinkers favorite Dan Jenkins, who at 79 has provided the best commentary on the Open through his Twitter page, to put Watson's remarkable feat in perspective:

"I was Watson's age 20 years ago--still drinking a lot, practically buying Elaine's. I thought I was immortal. What's the big deal about 59?"

As with Norman, I don't think Watson can do it, but I will be pulling for him along with millions around the world. Watson's run as a dominant player on the PGA Tour ended in the 1980's when he inexplicably lost the deft putting stroke that had been the common thread through his eight major championships (5 Opens, 2 Master's and 1 U.S. Open). Watson has magically regained that stroke this week and, if it holds for one more day, he could pull off the most improbable victory in the history of golf.

One thing going for Watson -- playing golf as a youth during the winter months in his native Kansas City helped him to become on one of the best bad weather golfers of the modern era. And it will probably be blustery in Turnberry on Sunday.

Update: Watson gave it a great go, but lost in a playoff to Stewart Cink. It is Cink's first major championship. Dan Wexler does a good job summing up Watson's accomplishment.

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

July 18, 2009

Wish I Hadn't Stayed So Long

Another gem from The Woodlands native, Hayes Carll.

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July 17, 2009

Cecilia Bartoli and Renee Fleming from The Met

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July 16, 2009

Big Fan

I suspect that the NFL would prefer that you watch something else going into this upcoming season, but Big Fan looks interesting.

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

July 15, 2009

The Money Pit

Casey Mulligan's clever post below reminded me of the classic Onion News segment that follows:

In 2008, we were told that each American taxpayer had to spend thousands on bank bailouts in order to avoid utter disaster. We were not supposed to object, because a few thousand is a cheap price to pay for disaster avoidance.

In early 2009, we were told that each American taxpayer had to spend thousands on fiscal stimulus in order to avoid utter disaster. We were not supposed to object, because a few thousand is a cheap price to pay for disaster avoidance.

Now we are told that each American taxpayer has to spend thousands (? amount to be unveiled later) on government health care in order to avoid utter disaster. We were not supposed to object, because a few thousand is a cheap price to pay for disaster avoidance.

We are lucky to have the White House to save us from so many disasters!

In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

 

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

July 14, 2009

Checking in on MLB and the NL Central at the All-Star Break

The Major League Baseball All-Star break is this week, so it's a good time to step back and review the key statistics to identify the most productive players and teams over the first half of the season.

Following on my latest periodic post on the Stros, regular readers of this blog know that RCAA ("runs created against average") and RSAA ("runs saved against average") statistics, developed by Lee Sinins for his Sabermetric Baseball Encyclopedia, provide a simple but revealing benchmark of how an MLB player or MLB team is performing during the long MLB season.

RCAA reflects how many more (or fewer) runs that player generate relative to a league-average player (an exactly league-average player's RCAA is zero).

Similarly, RSAA measures how many more (or fewer) runs that a pitcher saves relative to a league-average pitcher (an exactly league-average pitcher RSAA is zero).

Thus, a club's positive RCAA number reflects how many more runs a club's hitters are generating relative to what a league-average club would generate using the same number of outs. Likewise, a club's positive RSAA number reflects how many more runs the club's pitching staff is saving relative to what a league-average pitching staff would prevent in the same number of innings. Negative RCAA and RSAA numbers are just the opposite. A negative RCAA reflects how many fewer runs a club's hitters are generating relative to a league-average club and a negative RSAA indicates how many more runs a pitching staff is giving up in comparison to a league-average staff.

Accordingly, focusing on those two basic statistics, let's review the top players and the top teams from the first half of the 2009 season:

The top 20 hitters in RCAA in the National League:

The top 20 hitters in RCAA from the American League:

Yes, that no. 2 in AL RCAA is the same Ben Zobrist who was a throw-in by the Stros in the Dan Wheeler-for-Aubrey Huff trade with the Rays a couple of years ago. And former Stros OF Luke Scott (T 7th) would be more productive, a whole lot cheaper and much better defensively than the Stros LF, Carlos Lee. Ouch!

The top 10 pitchers in RSAA from the National League:

And the top 10 pitchers in RSAA from the American League:

The following is how the National League teams stack up in terms of RCAA:

And here is the National League teams' rankings in terms of RSAA:

Note that the Dodgers are the only NL club with a well above-average RCAA and RSAA number. Every other club is mediocre or poor in either RCAA or RSAA, or both.

Here is how the American League teams rank in RCAA:

And the American League teams' RSAA rankings:

The AL East has three of MLB's strongest teams in the Yankees, Red Sox and Rays. And the Blue Jays are pretty decent, too!

Here are the Stros hitters' individual RCAA ranking:

And the Stros pitchers' RSAA:

The following chart shows the NL Central clubs' net RCAA/RSAA figure, along with the current percentage chance of making the playoffs, as calculated by Coolstandings.com.

National League Central

And finally, the following chart shows the Stros' net RCAA/RSAA figures and corresponding won/loss record for each season since the 2000 season. Note that the Stros' only losing seasons were in seasons in which the pitching staff fell apart (large negative RSAA in 2000 and 2007) and the club's most successful season was when the pitching staff was dominant (2005). Also, note how the club's deterioration since 2006 coincides with a substantial decline in the Stros' generally productive pitching staffs from earlier in the decade:

The bottom line -- although a considerably better hitting club than last season's poor-hitting outfit, and despite the fact that the Stros have been arguably the luckiest team in MLB so far this season, the club's combination of barely above-average hitting and below-average pitching will struggle to equal last season's record. A break even mark or somewhat below break even is more likely.

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

July 12, 2009

A daunting jury verdict for deal lawyers

Flying a bit under the radar this past weekend was the dreaded "we're sure as hell not coming back on Monday" verdict that the jury returned on Friday afternoon in the Refco, Inc-related criminal case against Mayer Brown partner, Joseph P. Collins.

Collins was Refco's outside corporate counsel for ten years or so before Refco disintegrated into bankruptcy in October, 2005. A New York city federal jury found Collins guilty on five of 14 criminal counts, including two counts of wire fraud, two counts of securities fraud and conspiracy, and a mistrial was declared on the other nine counts. Sentencing is scheduled for November 3rd. A previous post on the indictment is here and a copy of the original indictment against Collins is here and previous posts about the Refco case are here.

The jury verdict against Collins crosses the Rubicon in terms of the federal government's willingness to prosecute an outside deal lawyer for merely advising a client in regard to structuring transactions that are not intrinsically illegal. As is typical of most business prosecutions over the past several years that criminalize questionable business judgment rather than clear white collar criminal acts such as embezzlement, the case against Collins was a jumble of conclusory allegations of fraud without any specific allegations of what Collins did that was criminal.

Heck, it was undisputed at trial that Collins barely worked on the transactions on which the prosecutors based their case against him. Essentially, the prosecution alleged that Collins assisted former Refco CEO and controlling shareholder Phillip Bennett in using Refco's credit to reduce indebtedness to Refco of an affiliate controlled by Bennett. That's not a crime, but the government asserted that Collins committed a crime by aiding Bennett in misleading Refco auditors and investors by not telling them about the use of Refco's credit to reduce the affiliate's debt to Refco.

It didn't help Colling that a couple of other former Refco officers who copped pleas testified for the prosecution, although Bennett was not one of them. And the fact that a couple of partners from Weil Gotshal -- which replaced Mayer Brown as Refco's corporate counsel after Thomas H. Lee Partners bought a majority stake in the firm a few months before Refco's public offering -- also testified against Collins. I'd bet that testimony didn't help relations between the two firms.

What's curious about all of this is that numerous lawyers, accountants and investment bankers scrutinized and presumably profited from Refco over the past several years in connection with various investments in the firm, including its well-publicized public offering that valued the company at $4 billion five months before it disintegrated into bankruptcy. Not only did those professionals fail to uncover the alleged fraud, but none of them other than Collins was targeted as a criminal. See why these matters are better suited for civil cases in which responsibility for wrongdoing can be allocated among all the responsible parties?

Moreover, as this earlier post notes, if Collins knew about a massive fraud at Refco, then why on earth did he allow the company to be bought by Thomas H. Lee Partners and then go public where discovery of the fraud would likely lead to far more draconian consequences than if Refco had remained private?

Collins testified in his own defense and rightfully contended that it was never the job of Collins -- or generally any outside corporate counsel, for that matter -- to monitor the company's transactions, which would be an impossible task for outside counsel. Collins went on to testify that was never informed of the hidden debt and that Refco's top executives lied to him from the beginning.

At any rate, at the end of the trial, the prosecution contended that none of the specifics really meant much. Collins and Mayer Brown made millions off of Refco, which ultimately tanked. Thus, Collins must have done something wrong, right? Even this apparently divided jury agreed with that twisted logic.

Here's hoping that the trial judge will set aside the verdict against Collins, but that's probably wishful thinking in these anti-business times. The problem with this emerging governmental policy of prosecuting transactional lawyers is similar to the policy of criminalizing agency costs against corporate officers. There is a big difference between prosecuting agency costs and prosecuting clear-cut crimes, such as embezzlement. The difference relates primarily to the nature of the evidence involved, the relevance of contracts, and the subtleties of dividing responsibility between corporate actors.

Larry Ribstein has put it this way. Suppose somebody mugs you on the street. There is no question that is a crime. However, what if they ask you first if they can borrow your wallet, you loan it to them, and then they don't give it back in time? What if they ask your employee who's running the store for you whether they can borrow some money, the employee loans it to them and then they don't pay it back? What if the "thief" is another employee who says the manager gave him the money as bonus compensation?

Who is liable in these situations turns on the contracts and the legal relationships among the various parties. Proof depends on who said what to whom. Can we rely on what the witnesses say about this? What if the prosecutor tells the guy who's minding the store that he'll not face a prosecution for conspiracy if he spills the beans on the employee?

In the meantime, the Collins verdict sends an ominous message to transactional lawyers everywhere. Rest assured that American business -- and ultimately all of us -- will endure the additional costs that deal lawyers will charge to endure the risk that the government will prosecute them for a crime that they do not know about.

Posted by Tom at 8:28 PM | Comments (5) |

They just don't make movie trailers like this anymore

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

July 11, 2009

A Meeting with the Pope

Richard Z. Chesnoff is one of America's foremost commentators on Middle Eastern affairs (see prior posts here). And he tells a pretty darn good joke, too. From the magnificent Old Jews Telling Jokes:

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

July 10, 2009

Marc Dreier's letter to his sentencing judge

It will take awhile before you will read a more interesting -- and really quite extraordinary -- letter from a defendant to a sentencing judge than the one below that disgraced New York lawyer Marc Dreier wrote.

It's hard to imagine, much less understand, the personal hell that Dreier created for himself. Dreier's letter provides a glimpse of how it happened.

The webs we weave.

Marc Dreier Letter to Judge

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

July 9, 2009

Is Allen Stanford being railroaded?

I recognize that he is not the most popular fellow in Houston investment circles these days, but is anyone else but me a tad uncomfotable that the federal government is running roughshod over R. Allen Stanford?

As everyone following the Stanford Financial Group scandal knows by now, at the request of the Department of Justice, U.S. District Judge David Hittner overruled a federal magistrate's order last week that would have allowed Stanford to remain free on bond pending his trial on business fraud charges. As a result, Stanford is imprisoned in Houston's Federal Detention Center pending his trial, which will probably not occur until sometime next year.

Meanwhile, the DOJ, the SEC, a federal court-appointed receiver and a British receiver operating in Antigua have frozen all of Stanford's personal assets, as well as the assets of the Stanford Financial empire. Consequently, Stanford has no funds with which to retain counsel.

And now he doesn't even have the freedom to help his attorneys prepare his defense.

However, it's now become reasonably clear that the DOJ and the SEC's repeated public allegations that Stanford was running a Ponzi Scheme through Stanford Financial are, if not outright false, at least misleading and irresponsible.

Stanford Financial clearly owned substantial assets, including the Antiguan Bank that also owned substantial assets itself. Perhaps those assets were over-valued and perhaps Stanford and his associates misled investors on the bank's capability of repaying the certificates of deposit that the company promoted and sold. But that's a far cry from running a Ponzi Scheme.

Moreover, the government's efforts to prevent Stanford from paying for defense counsel are downright scary.

The fact that Stanford Financial is not in a position to pay them is not particularly surprising. The company would probably be in bankruptcy if it were not already in receivership, and it's unlikely that either a bankruptcy judge or a U.S. district judge would allow the company to pay for Stanford's criminal defense.

But putting aside for the moment the issue of Stanford not being allowed to use his personal assets to defend himself, Stanford Financial has a Director's & Officer's insurance policy that provides for payment of at least a portion of Stanford's defense However,  the Stanford Financial receiver has threatened to seek contempt charges against the insurer (Lloyds) if it pays Stanford's defense costs as it is contractually obligated to do under the policy. At the same time, the receiver, the DOJ, and the receiver are spending millions in preparing the case against Stanford. My conservative estimate is that the government's tab is more than $25 million already (the receiver alone has a pending request for $20 million in fees).

Finally, Stanford has exhibited absolutely no inclination to flee from the charges against him. He has numerous family ties to Texas and the Houston area, and he has no prior criminal record. And it's not as if Stanford can just walk away from the charges if he is allowed out on bond. He has no passport and, with the GPS tracking device that the U.S. Marshal's Office requires criminal defendants to wear these days, the U.S. Marshals know immediately when a defendant is going somewhere that he is not supposed to be.

It's easy to look the other way when this type of concerted effort by the federal government essentially strips an unpopular businessman of the capacity to defend himself against charges that could imprison him for the rest of his life.

But remember -- if it can happen to R. Allen Stanford, then it can certainly happen to you and me.

A copy of Stanford's motions seeking release of funds for his defense and for reconsideration of his detention order are below.

 

Stanford Mtn to Release Funds

Posted by Tom at 12:01 AM | Comments (11) |

July 8, 2009

Crossing Heaven's Border

Over the past decade, tens of thousands defectors have crossed the dangerous waters of the Tumen and Yalu Rivers into northeast China to escape from North Korea, the world’s last closed Communist state. In the hour-long documentary Crossing Heaven’s Border, Wide Angle tells the moving stories of a few of those defectors.

Pastor Chun Ki Won is the director of Durihana, a Christian missionary organization that helps North Korean defectors make the treacherous journey along the Asian underground railroad to safety in South Korea. In the six-minute interview below, Chun describes the ordeal that the defectors endure and the complex relationship that they have with Christianity. The Wide Angle website on Crossing Heaven's Border is here.

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

July 7, 2009

Stros 2009 Season Review, Part Two

The Stros (41-41) reached the halfway point of the 2009 season in an incongruous position.

Although they are performing only slightly better than predicted before the season and are in fifth place in the six team National League Central Division, the Stros are only two losses behind the first-place Cardinals (45-39). 

How could that be? Are the Stros better than expected? Do they really have a good chance of contending for a playoff spot? What is going on here?

The answers: (1) Baseball remains a funny game; (2) Only slightly; (3) Not much of a chance; and (4) Mediocre teams playing mostly other mediocre teams will generally split about even over the long haul of a season.

In coming to these answers, it's helpful to review the aggregate RCAA and RSAA numbers of each club because that statistic provides a simple but revealing benchmark of how a team is performing during the long MLB season. Baseball remains a deceptively simple game. If your team's hitters generate more runs than the opposition, and your team's pitchers allow fewer runs from being scored than the opposition's pitchers, then your team is going to be a winner.

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 (or given up) in comparison to a National League-average club.

A negative RCAA number reflects that a club's hitters have generated fewer runs relative to what an average National League club would have generated using the same number of outs, and a negative RSAA number reflects that a pitching staff has saved its club fewer runs than an average National League pitching staff would have prevented in the same number of innings. Positive numbers in both cases are just the opposite -- hitters are generating more runs than a National League average club and a pitching staff is saving more runs than a National League average staff.

Although the Stros' record during the second quarter of the season was a bit above-average (23-19), the Stros remain a National League-average hitting team (2 RCAA) with a below National League-average pitching staff (-19 RSAA) at the halfway point of the season. Not surprisingly, that performance leaves the Stros smack dab in the middle (8th) of the 16 teams National League clubs from a hitting standpoint and the bottom 25% of the league (12th) in regard to pitching.

Interestingly, that aggregate -17 RCAA/RSAA figure is a considerable improvement over the club’s performance at roughly the same time last season [-42 RCAA/RSAA = (-41 RCAA +-1 RSAA], although the 2008 club’s hitting was quite a bit worse while it’s pitching was quite a bit better than this year’s outfit. But is that 25-run improvement in RCAA/RSAA the main reason why the Stros are just 3 games out of first place in the NL Central this season while they were 13 games out at about the same time last season?

No, it's not. The main reason the Stros are in a better competitive position this season is simply that the Stros' competition is decidedly less imposing this season. Last season, both the Brewers and the Cubs were well-balanced clubs with hefty, positive aggregate RCAA/RSAA numbers that had generated records 10 games over .500 for each club by this point in the season.

In comparison, through half of the 2009 season, none of the Stros' NL Central competitors have been particularly well-balanced. The division-leading Cardinals (45-39) have the best-balanced club in the division with a solid 26 RSAA and a decent 13 RCAA, but that latter number pales when the realization hits that 1B Albert Pujols' 57 RCAA covers up the fact that the remainder of the Cards' hitters have generated 44 fewer runs than a National League-average hitters would have created using the same number of outs as those players have used. Given the fall off between Pujols and the other Cardinals' hitters, why do pitchers give Pujols any pitches to hit?

Meanwhile, the Brewers (43-39) still hit well (45 RCAA, although most of that is attributable to IB Prince Fielder's 41 RCAA), but their pitching staff has fallen apart (-30 RSAA). The Cubs' (41-39) pitching remains dominant (35 RSAA), but their hitting has been pathetic (-32 RCAA). Similarly, the Reds (40-40) young pitching staff has bloomed (50 RSAA), but the club’s hitting has been the worst in the NL (-53 RCAA). Finally, the last-place (but not by far) Pirates (37-46) have actually performed a bit better than the Stros [-8 RCAA/RSAA = (-4 RCAA + -4 RSAA)].

In fact, except for the 52-30 Dodgers (55 RCAA/27 RSAA), the National League teams have been either mediocre or downright poor this season. Although that performance level doesn’t generate the best quality of baseball, it certainly does keep games competitive for the most part.

So, do the Stros have a legitimate shot at a playoff spot? On the surface, it would appear so.

Roy Oswalt (2 RSAA/3.81 ERA) has had three straight superlative starts after a generally lackluster first half and 1B Lance Berkman had an excellent second quarter of the season to boost his season statistics toward his more typical output level (21 RCAA/.398 OBA/.526 SLG/.924 OPS). Although LF Carlos Lee (7 RCAA/.346 OBA/.466 SLG/.812 OPS) and 2B Kaz Matsui (-11 RCAA/.284 OBA/.310 SLG/.594 OPS) were mediocre and poor respectively during the first half of the season, it's not unreasonable, based on previous performance, to assume that both will increase their production considerably in the second half of the season.

Thus, if pleasant surprises RF Hunter Pence (14 RCAA/.372 OBA/.495 SLG/.867 OPS), SS Miguel Tejada (8 RCAA/.356 OBA/.472 SLG/.828 OPS) and CF Michael Bourn (8 RCAA/.359 OBA/.395 SLG/.754 OPS) can maintain their first half production levels, it's not unreasonable to project that the Stros could end up a well above National League-average hitting club. And that's the case even though the hitters continue to carry the albatross of over-the-hill starters C Ivan Rodriguez (-13 RCAA/.274 OBA/.395 SLG/.669 OPS) and 3B Geoff Blum (4 RCAA/.333 OBA/.333 SLG/.667 OPS), as well as the brittle Matsui.

However, appearances are deceiving. There is a reason that the Stros are currently projected to have only an 8.7% chance of reaching the NL playoffs.

The reality is that this is simply not a team that is strong enough either in hitting or pitching to string together the type of winning streak that separates a contender from the rest of a the pack in a pennant race. Except for Oswalt and Wandy Rodriguez (9 RSAA/3.21 ERA), every other Stros starter has been below National League-average in terms of saving runs. Moreover, a couple of them -- Brian Moehler (-12 RSAA/5.64 ERA) and Felipe Paulino (-16 RSAA/6.66 ERA) -- have been among the least productive starters in the National League.

That doesn't mean that those below-average starters won't occasionally pitch a good game, as all of them have done at some point in the first half. But what it does mean is that it is extremely unlikely that they will do so consistently. And the reason that these below-average pitchers are pitching is that the Stros do not have anybody better down at AAA. Combine that ineffectiveness with continued reliance on below-replacement level "veterans" such as Darin Erstad (he of the incredibly low .481 OPS!), Matsui, Blum, Brandon Backe and Rodriguez, and it's not hard to understand why the Stros are more likely to descend into the NL Central cellar than rise to the top. The fact that Manager Cecil Cooper often makes dubious decisions (why would Blum ever bat before Pence in the lineup?) doesn't help matters, either.

Consequently, for the remainder of this season, the Stros most likely will continue to mosey along at around a .500 clip or dip below that closer to my pre-season over/under number for wins (74) if injuries begin to take their toll. Just as last season, when the Stros never attained much more than a 10% of making the playoffs even during their hot stretch drive, the odds are decidedly against this club achieving a playoff spot.

Nonetheless, there is reason for optimism about the club. The Stros have completed signing a substantial number of their draft picks for the second straight year, continuing the re-stocking of the club's farm system that is one of the main reasons for the club's demise since its 2005 World Series appearance. Lisa Gray has posted a couple of interesting posts (here and here) in regard to the Stros' drafts, so check them out if you are interested in how a few bad drafts can negatively impact a club such as the Stros. The Stros are still at least two strong drafts away from re-establishing a strong farm system, but after a decade of poor drafts (see also here and Zac Levine's overview of the Stros' minor leaguers for the first half of this season), it's better to get started late rather than never. I'm bullish on the way in which GM Ed Wade and personnel director Bobby Heck have handled the past two drafts.

So, hang in there. The playoffs are not in the cards for the next few seasons, but the Stros ship appears headed in the right direction. Given the seemingly unending downward spiral since 2005, that's progress in my book.

The 2009 season statistics for the Stros through the first 80 games 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' active roster is here with links to each individual player's statistics:

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

July 6, 2009

The Homeopathic ER

An instant classic from That Mitchell and Webb Look (H/T Kevin, M.D.). Enjoy.

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

July 5, 2009

First, Henry VIII, then this

A rather odd postlude from Trinity Wall Street Episcopal Church. H/T J.D. Walt from The Firstborn Son :

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

July 4, 2009

The Yankee Doodle Boy

The late Michael Jackson was inarguably one of the most talented entertainers of our time and certainly one of the most innovative dancers. But well before Jackson, there was James Cagney, who was every bit as talented an entertainer and dancer as Jackson. In fact, I seem to recall reading an interview of Jackson years ago in which he admitted that he patterned many of his dance techniques on those of Cagney.

Although better known for his gangster movie roles, Cagney was actually Hollywood's best dancer for much of his long and storied career. Check out three of Cagney's signature dance scenes below from the 1942 film, Yankee Doodle Dandy, in which Cagney plays the early-20th century composer, George M. Cohan.

The first video below is probably Cagney's most famous dance sequence, the "Yankee Doodle Boy" scene from Cohan's first big-hit musical in the movie. The end of that video includes a short clip of a later salute to Cagney by Mickey Rooney and Judy Garland, which serves primarily to prove just how far Cagney's glorious talent exceeded that of a couple of pedestrian Hollywood hoofers. The third video below is the final dance scene of the movie in which Cagney as an ebullient Cohan descends the White House staircase after receiving the Congressional Medal of Honor from President Roosevelt. Note that the scene is shot in one take (the camera never strays from Cagney) and Cagney never once looks down at his feet. Heck, I cannot even walk down a staircase of that size without watching my feet. Enjoy!

 

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

July 3, 2009

Albert Collins

I saw Albert Collins perform at a Houston jazz club back in the late 1970's when he opened for a well-known local jazz musician. Suffice it to say that Albert stole the show. The headliner decided to have Collins and his band come out and play with him during his part of the show. It was a very smart move.

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

July 2, 2009

The Chronicle's continuing Enron hypocrisy

Being generally an optimistic sort, I keep thinking that the financial crisis of the past year or so will eventually prompt the Houston Chronicle to reconsider its generally biased coverage of the demise of Enron over the past seven years. After all, it's not every day that the Fifth Circuit Court of Appeals concludes that a newspaper's coverage of a particular event was a major factor in the creation of a presumption of community prejudice.

Nevertheless, the local paper's recent coverage of disgraced financiers R. Allen Stanford and Bernard Madoff reflects that no such soul-searching is likely to emerge anytime soon down on Texas Avenue.

Take this recent Loren Steffy column in which he asks the following: "Why, then, does Madoff get a sentence six times that of [former WorldCom CEO Bernie] Ebbers or Enron’s Jeff Skilling?"

I mean, really. Is the answer to that question all that difficult?

Madoff turns himself in and admits from the outset that he was stealing money from investors for years by running a Ponzi scheme. Any wonder why he was hammered by the sentencing judge?

Ebbers was essentially convicted of covering up accounting fraud at WorldCom, but he at least put up a colorable defense that he was not responsible for such matters and had no knowledge of the fraud.

Moreover, Skilling wasn't even accused of accounting fraud. He was convicted essentially of making too many rose-colored statements about Enron, notwithstanding that his belief in the truth of those statements was never seriously challenged.

Finally, neither Ebbers nor Skilling stole a dime from the investors of their respective companies. Yet, Steffy insists upon comparing them with the larcenous Madoff. who essentially stole tens of millions. The Greed Narrative prevails again.

But here's my main point. Now that what happened to Enron has happened to numerous other trust-based Wall Street firms, shouldn't the Chronicle be advocating that similarly aggressive criminal prosecutions be mounted against numerous executives of the Wall Street firms who made the same type of rosy statements about their wobbling companies as Skilling made about Enron?

Now, I don't believe that there was widespread criminal fraud at Enron. The only true criminal fraud there was relatively small and isolated in Andrew Fastow's Global Finance unit. Similarly, I don't believe that there was widespread criminal fraud at the Wall Street firms that endured the same downward spiral that engulfed Enron.

But inasmuch as the Chronicle fanned the flames of criminal prosecutions against dozens of Enron executives and others involved in transactions with them, shouldn't the Chronicle be taking the same position with regard to executives at the similarly-situated Wall Street firms? Or at least shouldn't the Chronicle be explaining why it threw dozens of Enron executives under the bus even though it now fails to advocate similar treatment for executives of the failed Wall Street firms?

It seems like the least that the local newspaper can do.

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

July 1, 2009

The tough choices of health care finance reform

Following on a point made in this recent post, this Avery Johnson/WSJ article addresses one of the tough issues that must be addressed if there is going to be any meaningful reform of the U.S. health care finance system:

The widespread use of expensive cancer drugs to prolong patients’ lives by just weeks or months was called into question by an article published Monday in the Journal of the National Cancer Institute.

Crunching data from published studies, the authors found that treating a lung-cancer patient with Erbitux, a drug that costs $80,000 for an 18-week regimen, prolongs survival by only 1.2 months.

Based on that estimate, extending the lives of the 550,000 Americans who die of cancer annually by one year would then cost $440 billion, they extrapolated.

How to control escalating spending on end-of-life care is one of the thorniest questions facing lawmakers working on the overhaul of the U.S. health-care system. [.  .  .]

“Many Americans would not regard a 1.2-month survival advantage as ‘significant’ progress,” the authors wrote. “But would an individual patient disagree? Although we lack the answer to that question, we would suggest that the death of a mother of four at age 37 years would be no less painful were it to occur at age 37 years and 1 month, nor would the passing of a 67-year-old who planned to travel after retiring be any less difficult for the spouse were it to have occurred one month later.”

While some policy experts consider the rationing of health-care resources inevitable in the quest to control medical spending, many Americans have long resisted putting the collective fiscal good over their individual health.  .   .   .

Read the entire article. I have many reservations about the direction of the Obama Administration's proposed reforms of the U.S. health care finance system. But that the proposed reforms are triggering discussion of key issues such as the one set forth above is not one of them.

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

June 30, 2009

The Stoning of Soraya M.

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

June 29, 2009

Levity to start the week

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June 28, 2009

Classic Buddy Hackett

The video of Ed McMahon and Johnny Carson posted earlier this week reminded me of this classic joke that the late Buddy Hackett told and acted out on the Tonight Show years ago. Enjoy.

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

June 27, 2009

The Hurt Locker

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June 26, 2009

Old Jews telling jokes is back

After a short break, one of the best new websites of the year -- Old Jews Telling Jokes -- is back with a new round of jokes. Enjoy.

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

June 25, 2009

Ed McMahon, R.I.P.

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

June 24, 2009

The swing that won the U.S. Open

No wonder 2009 U.S. Open champion Lucas Glover is one of the leaders on the PGA Tour in the total driving statistic. At 6'2", he achieves amazing extension on his backswing and then delivers a powerful but controlled blow to the ball as he swings around his body on the downswing. This is the type of swing that holds up well under the pressure of tournament golf.

 

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

June 23, 2009

Houston's connection to the new U.S. Open champion

Houston is synonymous with golf, so it's appropriate that new U.S. Open champion Lucas Glover's former teacher and mentor was the late Dick Harmon (see also here), who was one of Houston's most respected golf instructors for decades before his sudden death in 2006. Glover was one of Dick's pallbearers, delivered one of the eulogies at the funeral and had to fight back tears when he was asked about his relationship with Dick during his post-U.S. Open interview session. What a fitting tribute for a student to give to a wonderful teacher whose spirit still permeates Houston's golf community.

The 29 year-old Glover has long been considered a likely star by other professional golfers and appeared to be ready to fulfill that promise in the 2005-2006 seasons when he won his first tournament (the 2005 Walt Disney Classic), recorded 16 top-10 finishes and just missed earning a spot on the 2006 Ryder Cup team.

However, Glover struggled after Harmon's death in late 2006 and fell all the way to 178th in the World Golf Rankings after last season. Things got so bad that Glover put his clubs away for two months after last season to refresh himself from the grind of PGA Tour golf. Before the U.S. Open, he had already shown signs of regaining his form this season with a tie for 3rd at the Buick Invitational, a tie for 2nd at Quail Hollow and a jump to 71st in the World Golf Rankings. But Glover now appears ready to vault into the top echelons of golf with his U.S. Open championship at Bethpage. He has a superb all-around game.

Finally, as satisfying as Glover's victory was, it may not have been as gratifying as David Duval contending for the title and finishing in a tie for second. As noted here almost five years ago, it's been a long, strange trip back to the top tier of professional golf for Duval. Here's hoping that he stays this time.

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

June 22, 2009

Jenkins @ the Open

With the 2009 U.S. Open that is finishing today, Clear Thinkers favorite Dan Jenkins is covering his 200th major golf tournament. In one of the more remarkable developments of the tournament, the 79 year-old Jenkins has been reporting on developments through Twitter, where he has proved to be a natural (one of his recent posts: "If David Duval wins this thing, it'll be the biggest comeback from a slump since Mickey Rourke got nominated for an Oscar"). Below is a recent HBO interview of Jenkins talking about his friend Ben Hogan, who was the master of the U.S. Open during the late 1940's and early 50's. Enjoy a true Texas original reminiscing about another one:

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June 21, 2009

The Human Experience

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June 20, 2009

The Defense of Freedom

There is no question that President Obama is confronted with a delicate diplomatic situation in regard to the ongoing political unrest in Iran. But it is ironic that the main issue that is bubbling over on the streets of Tehran is the same one that John Quincy Adams addressed in the U.S. Supreme Court in the case of the illegally imported slaves that is wonderfully portrayed in the Stephen Spielberg movie, Amistad. In a magnificent performance, Anthony Hopkins plays the elderly Adams defending the slaves before the Supreme Court. Enjoy.

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June 19, 2009

How to make the U.S. Open telecast more exciting

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June 18, 2009

Final Argument

The late Paul Newman in The Verdict playing a talented but alcoholic lawyer who gets a final opportunity to redeem a disappointing career in a difficult medical malpractice case. Enjoy.

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June 17, 2009

Italy is pretty good in Opera, too

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June 16, 2009

A small Austin brokerage house schools the big banks

Tongues were wagging in financial circles around the world last week regarding this Wall Street Journal article about Austin-based Amherst Holdings' amazing play in which they sold credit default swaps on mortgage bonds to a number of Wall Street and London's biggest banks. Amherst then turned around and bought the mortgages underlying the bonds upon which the CDS were written to prevent a default that would have triggered Amherst's obligation to pay on the CDS.

Thus, in short, Amherst sold CDS on bonds and then bought the security for the bonds, thereby rendering the CDS worthless. Although the amount of profit is somewhat unclear, Amherst reportedly pocketed tens of millions of dollars on the deal.

The Financial Times' economist Willem Buiter does an entertaining job of explaining Amherst's transactional plan in the context of gambling and the difficulties involved in regulating such transactions. In so doing, he makes the following observation:

"The scheme is beautiful in its simplicity, absolutely outrageous, quite unethical, deeply deceptive and duplicitous, indeed quite immoral, but apparently legal."

Geez, maybe these Amherst sharpies could have saved AIG?

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

June 15, 2009

Will Obama address this key health care finance issue?

Marginal Revolution's Tyler Cowen penned this insightful NY times op-ed over the weekend that addresses the problem of the elephant in the parlor in regard to Obama's proposed reform of America's dysfunctional health care finance system:

MEDICARE expenditures threaten to crush the federal budget, yet the Obama administration is proposing that we start by spending more now so we can spend less later.

This runs the risk of becoming the new voodoo economics. If we can’t realize significant savings in health care costs now, don’t expect savings in the future, either.

It’s not the profits of the drug companies or the overhead of the insurance companies that make American health care so expensive, but the financial incentives for doctors and medical institutions to recommend more procedures, whether or not they are effective. So far, the American people have been unwilling to say no.

Drawing upon the ideas of the Harvard economist David Cutler, the Obama administration talks of empowering an independent board of experts to judge the comparative effectiveness of health care expenditures; the goal is to limit or withdraw Medicare support for ineffective ones. This idea is long overdue, and the critics who contend that it amounts to “rationing” or “the government telling you which medical treatments you can have” are missing the point. The motivating idea is the old conservative chestnut that not every private-sector expenditure deserves a government subsidy.

Nonetheless, this principle is radical in its implications and has met with resistance. In particular, Congress has not been willing to give up its power over what is perhaps the government’s single most important program, nor should we expect such a surrender of power in the future. There is already a Medicare Advisory Payment Commission, but it isn’t allowed to actually cut costs. [. . .]

Those cuts alone will not solve the fiscal problem, but if we aren’t willing to take even limited steps to conserve resources, we shouldn’t be spending any more money elsewhere. [.  .  .]

The demand for universal coverage sounds like a moral imperative to “take care of everybody,” but in reality it would make only a marginal difference when it comes to the overall health of the American population. The sober reality is that universal coverage is another way to spend money, which may or may not be a good idea.

The most likely possibility is that the government will spend more on health care today, promise to realize savings tomorrow and never succeed in lowering costs. It is rare that governments successfully cut costs by first spending more money.

Mr. Obama has pledged to be a fiscally responsible president. This is the biggest chance so far to see whether he means it.

Read the entire op-ed. Any reform of the U.S. 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 -- that is, what is the basic level of health care that every individual in the U.S. is entitled to receive regardless of cost? For example, 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.

As Arnold Kling has been saying for years, many of us live under the delusion that we cannot possibly afford health care if we pay for it individually, but of course we can afford it if we pay for it collectively. For those of you who think that the government can magically make health care more affordable, just remember what happened after the government directed Fannie Mae and Freddie Mac to make home ownership more affordable.

Update:Charles Kenny makes a good point that better health care is not necessarily expensive.

Update II: Steve Chapman chimes in with a timely observation:

There are only three ways to pay for this expansion of health insurance coverage: increased taxes, reduced benefits, or shiny gold ingots falling out of the sky. Voters emphatically prefer the latter option, so that is the one most likely to be embraced by Congress and the administration.

Update III: Arnold Kling notes the problems with Obama's "dessert now, spinach later" approach.

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

June 14, 2009

Lucy and Ethel in Iowa City

While reminiscing about my late mother with family members and friends at her recent funeral, it occurred to me that her remarkable life would be a great subject for a Larry McMurtry novel.

Along those lines, Sarah Swisher, an old family friend and a columnist for the Iowa City Press-Citizen, penned this column regarding an hilarious caper from the early 1960's involving my mother and Sarah's mother, who were dear friends. What started out as an attempt to create a plot for an Alfred Hitchcock movie quickly transformed into an episode of I Love Lucy with a touch of The  Honeymooners.

You really can't make this stuff up.

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June 13, 2009

The Stand-up Economist on the Financial Crisis

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June 12, 2009

Not a good week for freedom

First, in the face of a duplicitous government prosecution and a draconian trial penalty, Kevin Howard was forced to plead guilty to a crime that he did not commit.

Then, the executive branch of the federal government, unchecked by feckless legislative and judicial branches, undermined the U.S. Bankruptcy Code by preferring certain Chrysler creditors over others while improperly using the TARP legislation (see also here) -- which was expressly limited to financial institutions -- as a basis to loan billions to Chrysler. Moreover, the government's shots in regard to such matters are being called by a rank rookie.

Finally, the federal government seized $34 million of American citizens' funds without notice or judicial process simply because those citizens enjoy playing poker.

One of the clearest lessons of the 20th century is that large governments have the capacity to cause unspeakable evil. As these injustices unfold with nary a protest from our leaders, is that important lesson already forgotten?

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June 11, 2009

The genius of Richard Pryor

This fine Stephan Kanfer/City Journal piece on the late Richard Pryor reminded me of this old Saturday Night Live skit entitled "Word Association." Enjoy.

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June 10, 2009

A continuing civic shame

My first blog post on the chronically shameful condition of the Harris County Jail was four years ago. There have been quite a few others since then.

Still, nothing has changed.

Despite my libertarian leanings, it's way past time for the federal government to intervene and correct the inhumane conditions of the Harris County Jail.

The Harris County Commissioners have proven themselves to be incapable of administering the jail properly, reflected by County Judge Ed Emmett's most recent suspension of belief over the scathing report: "Actually, if you read the report, it is fairly positive. It has some episodic events but it does not show a pattern of problems.” Moreover, many years of over-sentencing by local criminal district judges hasn't helped the situation, either. On a day in which most of the civilized world is decrying North Korea's imprisonment of two American reporters in one of that country's horrific labor camps, it's worth reminding ourselves that we do not have to travel any further than our local jail to witness barbaric prison conditions.

Houston possesses many things of which to be proud. Sadly, the Harris County Jail is not one of them.

Update: Scott Henson agrees with me.

Update II: Chris Bradford recounts his experience on the in capability of Harris County administrators to operate the jail humanely.

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

June 9, 2009

The thin line of business criminality

In this earlier post regarding former Enron Broadband CFO Kevin Howard's recent plea deal, I predicted that the factual basis for the plea deal would barely describe wrongdoing, much less criminality.

Turns out I was right. Check out paragraph 14 of the plea agreement at the bottom of page 6, which sets forth the factual basis of the deal.

That paragraph describes that Enron had told the market that its Broadband unit had great potential, but that it expected to lose at least $60 million for the year. Inasmuch as Enron's prediction was turning out to be correct, Howard helped arrange a joint venture transaction that monetized a portion of Broadband's lucrative deal with Blockbuster. Nothing unusual about that.

So, what's the problem, you ask? Essentially, the factual basis provides that Howard did not disclose to Enron's auditor (Arthur Andersen) that Enron's joint venture partner was not expecting to be a long-term partner in the joint venture, even though the partner verified by signing the joint venture agreement that it was not relying on any such expectation in connection with entering into the venture. Nevertheless, if Andersen had known that the partner was really not expecting to be in the venture for the long haul despite the terms of the written agreement, suggests the factual statement, then the auditor may not have allowed Enron to account for the deal in a way that reduced the Broadband unit's losses to the $60 million level that the company had projected and ultimately reported.

That's the basis for a crime?

Frankly, U.S. District Judge Vanessa Gilmore should have the same reaction to Howard's proposed plea deal that U.S. District Judge Lynn Hughes had to the equally vacuous deal that Enron Task Force prosecutors crammed down the throat of former Enron mid-level executive Chris Calger back in 2005. At least the DOJ ultimately threw in the towel on the stinky Calger plea deal.

Based on the foregoing, any business executive who engages in a transaction for the purpose of helping his company achieve earning projections is at risk of being indicted and convicted of a crime, and sentenced to a long prison sentence.

And by a long prison sentence, I don't mean the 4-12 months of home confinement to which Howard agreed in his deal.

Remember, the foregoing transaction is one for which Jeff Skilling is currently serving 24 years in prison.

We live in truly perilous times.

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

June 8, 2009

A productive idea for the Dome

Over the weekend, the Chronicle ran this story about Harris County officials considering an idea to convert the Astrodome into a planetarium and a medical and science education facility. It's actually a good idea and one that was suggested here months ago. Given the Dome's proximity to the Texas Medical Center, a county/med center partnership to turn the Dome into the premiere medical/science educational facility in the world makes a lot of sense.

On the other hand, the financing of such a project is not going to be easy, particularly in this economic climate. Nevertheless, given the potential benefit to Houston of becoming a leader in medical/science education, hopefully county officials will give this proposal a fair shake. It certainly makes far more sense than the alternative proposal.

Common sense aside, everyone needs to realize that this new proposal could effectively be scuttled by the financial commitments that have already been made in connection with Houston's previous poor public financing choices. That risk reminds us that such poor utilization of resources ultimately has consequences. It could a harsh irony if Houston's most well-known landmark is a victim of those bad choices.

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

June 7, 2009

Bud Light's latest

As noted earlier here and here, commercials continue to provide some of the most creative entertainment on television. Check out Bud Light's latest:

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June 6, 2009

The WSJ's Steve Moore channels Milton Friedman

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June 5, 2009

Eye of the Tiger

Ever since participating in a really good junior high school band, I've always been amazed at the way in which excellent music instructors can elicit outstanding musical performances from children. Another example here:

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June 4, 2009

A timely reminder

As the heat of the summer months rises and thunderstorms become more frequent, this Bill Pennington/NY Times article passes along a helpful reminder to golfers regarding two commonly often overlooked hazards -- overexposure of skin to the sun and lightning strikes:

Dermatologists say golfers are notoriously poor at protecting themselves from sun damage and frequently need treatment for harmful lesions on ears, hands and noses. And in a typical year, lightning kills more people than tornadoes or hurricanes.  [.  .  .]

“Men also completely forget about their ears, and they miss the patch of skin on the side of their neck just below the ear,” [Dermatologist Dr. Wendy] Roberts said. “I remove a lot of cancers from that spot.” [. . .]

Lightning often strikes 10 miles from any rainfall and can strike ahead of storms or seemingly after they have passed.

“On a golf course, you usually have a good view of a coming storm, and if you hear any thunder, you should head inside a building or a hard-topped car as soon as you can get there,” [National Weather Service lightning safety expert John] Jensenius said. “I study the case histories of all lightning fatalities. Often, if people had gotten inside 5 or 10 minutes earlier, they would be alive. All the cases are very sad; these are good people who make a mistake.”

Jensenius said golf clubs and other metal objects do not attract lightning and that getting in the cart would not protect you. The rubber tires do not help, he said. Lightning victims, for example, are struck and injured riding lawn mowers. Cars are safe, he said, because they have metal roofs and sides.

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June 3, 2009

Nice job, Doc

Check out this Lisa Sanders/NY Times article if you think that a trail of specialists is the surest way to figure out a knotty medical problem:

How come not one of the dozens of doctors — including an endocrinologist — that he saw over the nearly 15 years of interrupted sleep and other symptoms figured out that he had acromegaly? Perhaps because the various symptoms of his tumor were, for the most part, common problems: insomnia, high blood pressure, allergies and acne. They developed separately, years apart, and each was addressed by a specialist. It would take an act of imagination to link these symptoms. The patient never made that leap, and neither did any of his doctors. [.  .   .]

Not long after meeting [the doctor who finally made the correct diagnosis], the patient visited his primary-care doctor — the doctor who had known him for years — and told her that acromegaly was being considered. No way, she first told him. But sitting there, looking at his face and thinking about the changes caused by this disease, she began to reconsider. He did have the characteristically broad chin and nose. He was wearing braces because of changes in his jaw and teeth. His hands were huge. Suddenly, she could see the possibilities. Maybe he did have acromegaly.

The diagnosis was staring her in the face for years, but she did not see it. Psychologists call this inattention blindness — instances when we don’t see something because it’s not what we are expecting to see; it’s not what we are looking for. Sherlock Holmes had a somewhat different description. “I have trained myself to notice what I see,” Holmes says.Arthur Conan Doyle, himself a physician, imbued his character with the kind of keen observational skills so essential to a good physician. This ability consists of casting a wide net to see the whole picture — even when the complaint that brings the patient to medical attention is commonplace, like insomnia.

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June 2, 2009

Chalk up another trial penalty deal

With no valid case against former Enron Broadband CFO Kevin Howard, what was the Department of Justice to do?

Rattle the saber of the trial penalty and cut a deal.

On one hand, the deal appears to be an extraordinarily good one for Howard. The DOJ has already run him through two financially and emotionally draining trials and related appeals, both of which resulted in embarrassing defeats for the DOJ. Had the DOJ been able to persuade a jury to make even a small portion of the charges stick (not particularly difficult in this climate), Howard would probably have been looking at doing between 5-10 years of prison time while appealing his convictions (believe me, there is precedent for that in the Enron-related criminal cases). So, serving four to 12 months of probation or home confinement doesn't look too bad in comparison.

But on another level, the deal that Howard was forced to take stinks.

As with Jeff Skilling, Kevin Howard didn't steal a dime from Enron and was simply trying to do the best job he could of preserving value in the company's broadband unit under difficult market conditions.

Moreover, it's not as if the unit didn't have potential -- Enron's joint venture with Blockbuster was intended to bring video on demand to millions of households. Almost a decade later, this technology exists on cable and is quite similar to the technology used in Apple Computer's popular iPod. This latter system is a elegant accommodation to copyrighted music and video programming in which artists are compensated and consumers have tremendously enhanced access to information and entertainment.

As Skilling testified during his trial, although Enron's investment in its broadband unit turned out to be a loser, Enron's bet on broadband had been the right one to make:

"And one last thing -- I'll make the last one argument for Broadband because people criticize me about Broadband, and I will take the criticism. We -- certainly, we made a mistake. But it wasn't big. I mean, it was a billion dollars. We invested a billion dollars in the Broadband business. If it had worked, it could have been worth $30 billion. It didn't work. We lost a billion dollars, but if you can make those kinds of bets, that's the kind of the risk you [should be taking] as a corporation. And if you do a lot of [deals with a] downside of a billion and upside of $30 [billion], you're doing a good job for your shareholders in the long run, in my opinion. This one didn't work."

That, as Skilling noted, is the type of risk that management needs the freedom to take in order to create wealth for shareholders. Criminalizing those types of failed bets is a sure way to dampen the climate for wealth creation.

Thus, confronted with no evidence of criminal wrongdoing outside of Andrew Fastow's relatively small Enron circle of friends, and under heavy political pressure to identify some Enron scapegoats, the Enron Task Force made up a crime against Howard and others. It turned out to be violation of the honest services wire-fraud statute under 18 U.S.C. § 1346. 

However, there was a problem with the Task Force's theory of criminal liability. Honest services wire-fraud is normally supposed to address the situation where a business executive takes a kickback or a bribe in violation of his fiduciary duty to his company. Howard wasn't even accused of doing any such thing. In Howard's case -- as with the case against Skilling -- the Task Force simply used those inapplicable charges as a means to appeal to juror resentment (see also here) against anything having to do with Enron.

In reality, Howard was involved in representing Enron in the negotiation of legitimate business transactions that were evidenced by written agreements that provided that all agreements or representations between the parties that are not contained in the written agreements were void and unenforceable.

But that's not what really happened, contended the prosecution -- Howard entered into "secret side deals" that changed the risk allocation of the written agreements and eviscerated Enron's accounting treatment of the transactions. The prosecution "paid" a couple of witnesses to testify against Howard by cutting favorable plea deals with them and "presto" -- the DOJ had a colorable criminal case to pursue against Howard. Who cares whether the statute under which the prosecution is brought has nothing to do with the alleged crime?

Now, two expensive trials and related appeals later, Howard was confronted with the choice of, on one hand, admitting to a crime that he did not commit and a soft sentence or, on the other, a third trial and a draconian trial penalty.

Howard's dilemma sheds light on the disparate burdens on civil and criminal defendants in business misconduct cases. While a defendant in a civil business misconduct lawsuit has protections against another party's vexatious litigation tactics, those protections do not exist in a criminal business misconduct case against an unpopular businessman-defendant. Indeed, many of the Enron Task Force prosecutors who promoted these failed Enron-related prosecutions have gone on to lucrative careers in private practice.

Meanwhile, the damaged lives, ruined career, and destroyed wealth that lie in the wake of the prosecutions of Kevin Howard is tangible evidence of the enormous cost of such prosecutions.

The statement of facts upon which Howard's plea is based is still not available online; I will post it when it is filed with the District Court. But my bet is that most of the statement will not even describe wrongdoing, much less criminal conduct.

During a time in which we ought to be thinking about how to create incentives for generating wealth and jobs, a truly civilized society would find a better way.

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

June 1, 2009

The golf shot of the year

National championships don't happen all that often at Texas A&M.

Consequently, this video is an instant Aggie classic in that it shows the remarkable wedge shot that The Woodands' Bronson Burgoon stiffed on the 18th hole of the final match to win his match 1 up and seal the Aggies' first NCAA Golf Championship this past weekend at storied Inverness Golf Club in Toledo, Ohio.

GolfWeek has the full coverage here of the Aggies' remarkable run.  Way to go Ags!

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

May 31, 2009

A Brit visits Texas

A friend of mine from London, on his first visit to Houston, candidly admitted that he was surprised that there were so many trees and no sagebrush or sandstorms. One can only imagine the similar misperceptions that this BBC video (H/T Professor Bainbridge) has created in English minds:

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

May 30, 2009

Tea Party

As noted in this earlier post, some of the most creative work on television these days is being done in commercials.

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May 29, 2009

Remembering a special mother

My mother, Margaret Allen Kirkendall, died yesterday evening at Finley Hospital in Dubuque, Iowa after a lengthy illness. She was 86 years old.

The following is an obituary for Margaret that my brother Matt wrote with contributions from many of my siblings. It conveys well the special nature of this remarkable woman and her considerable contribution to making Houston a better place to live.

Margaret Allen Kirkendall died on Thursday, May 28, 2009 at 9:22 P.M at Finley Hospital in Dubuque, Iowa after a lengthy illness. She was 86 years old. Funeral arrangements are pending with Egelhof, Siegert, & Casper Funeral Homes in Dubuque, Iowa making the arrangements.  The Funeral Mass and burial will be in Texas.

Margaret Jane Allen was born on March 24, 1923 in Cedar Rapids, Iowa, the first child of Grace (Payne) and William Allen. She grew up in Cedar Rapids and graduated from Franklin High School in 1940. At an early age, Margaret decided to become a nurse and eventually put herself through the nursing program at the University of Iowa in nearby Iowa City, graduating with an RN degree in 1946. 

Margaret planned to pursue a career in academic nursing, but met a new medical resident, Dr. Walter M. Kirkendall, who had come to the University of Iowa following his military service in Italy during World War II. In their own version of “Pride and Prejudice,” initial mutual irritation turned into fascination, and subsequently, love. They were married at St. Thomas More Catholic Church in Iowa City on March 30, 1948 with Father McElhaney officiating.

Throughout their life together, Walter and Margaret had a close relationship and truly seemed to complete one another. As Walter pursued his academic career in medicine at the University of Iowa Medical School, Margaret supported his efforts and always worked to provide a stable home life for him, providing the venerable “safe port in stormy weather”.

Margaret and Walter were the proud parents of 10 children. During the 1960's, their home at 430 Brown Street in Iowa City was known as a busy and often boisterous place. There was always an open door for the frequent visitors and Margaret was well known for her energy, hospitality, and plentiful food (industrial cooking she termed it). To the amazement and consternation of her children, she developed a system of friends and community contacts through which she seemed to know the names and activities of every child in the Iowa City/Coralville area. The result of this was that her children found that they could never get anything by her (not that they didn’t try on occasion).

In 1971, Walter accepted an opportunity to help establish a new medical school at the Texas Medical Center and moved the family to Houston. Margaret admitted to some trepidation at leaving Iowa and her many friends, but she lived by her often-quoted adage that “you bloom where you are planted.”  With this attitude, it was not long before she brought many new friends and Texas traditions into her life that was centered around the vibrant home she established for her family at the corner of Sage Road and Del Monte Drive in Houston. Margaret transferred her open door policy from Iowa to her family's new home in Houston and, over the ensuing 20 years, literally hundreds of medical students, colleagues, and other friends were attracted to the dynamic household that Margaret lovingly maintained.     

Throughout this time, Walter and Margaret continued to work as a team to help establish the Department of Internal Medicine at the University of Texas Medical School at Houston. Their efforts helped set the foundation for the medical school and its subsequent development into a premier teaching institution.

At Walter’s death in 1991, Margaret admitted that a large part of her died with him. Despite her loss, she remained busy with her family and friends and participated in a wide variety of community service, often as what she termed as "the old nurse." In retirement, she lived in New Braunfels and then Austin, Texas until she finally returned to Iowa, to live in Dubuque.

While her later years were hampered by illness and disability, she has been supported throughout this time by her many friends, especially Nora Lee Balmer, Jean Eckstein, and Virginia Grady of Iowa City, Dr. Jack Tausend of Houston, Texas, and her oldest and dearest friend, “Auntie Ruth” Pichette, of Highland, Michigan.

She is survived by her sister, Francis Allen Rassenfoss of Park Ridge, Illinois and her 10 children: W.C. (Alice) of Seguin, Texas; James (Kathleen) of Minneapolis, Minnesota; Matthew (Isabelle) of Dubuque, Iowa; Thomas (Susan) of the Woodlands, Texas; David (Ann) of Tomball, Texas; Nancy (Robert) Cook of Austin, Texas; Mary of San Antonio, Texas; Kathryn (Gene) Acuna of Austin, Texas; Joseph of Los Angeles, California; Michael of Austin, Texas; her 32 grandchildren and five great grandchildren, (with another on the way).

Memorial gifts may be sent to the endowment for the Walter M. Kirkendall, M.D. Lecture Series in Internal Medicine at the University of Texas Medical School, 6431 Fannin, MSB. 1.122, Houston, TX, 77030, in care of Philip C. Johnson, M.D, F.A.C.P.

The family would like to acknowledge and thank the following: Father Dwayne Thoman, Deacon Dave McGhee, and Sister Damian O'Brien for their strong spiritual support; Dr. Ronald Iverson, Dr. Darryl Mozena, Dr. Roger Shafer, the administration, nurses, and staff of Stonehill Nursing Home, and the nurses and staff of the 5th floor at the Finley Hospital for their expert and compassionate care of Margaret.  Finally, the family extends our most heartfelt thanks to Joan Reimer, who provided Margaret with selfless, dedicated, and loving attention as her caregiver over the final years of her life.

Funeral arrangements are being handled by Tres Hewell Mortuary,165 Tor Dr. Seguin, TX (830) 549-5912 (www.treshewell.com). The family will greet friends at the funeral home on Tuesday, June 2nd from 5-7 p.m., and a Rosary will follow at 7 p.m.

The funeral will be on Wednesday, June 3rd at 10 a.m. at St. Peter and Paul Catholic Church, 386 N. Castell St, New Braunfels, TX. The family will have a reception for friends at the church immediately following the funeral.

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

May 28, 2009

"The Hospital"

From one of the best new websites of the past year, Old Jews Telling Jokes.

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

May 27, 2009

The power of info visualization

Check out this elegant example of information visualization focusing on the changes in life expectancy and wealth over the past 200 years.

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

May 26, 2009

There is no crying in baseball

With the passing of Memorial Day, it's officially baseball season, even though the dang NBA Playoffs seem endless. Thus, it's time for Tom Hanks as exasperated Manager Jimmy Dugan to remind us of the best baseball tirade in cinematic history. Enjoy.

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

May 25, 2009

"Rock & Roll specialist" Buddy Holly

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May 24, 2009

What's better? The goal or the call?

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

May 23, 2009

Stros 2009 Season Review, Part One

While waiting in line to pick up a bottle of water at a Stros game earlier in the week, an old friend of mine and fellow longtime Stros season-ticket holder stopped by to say hello and chat.

Eventually, the conversation turned to the current Stros squad:

"This is a pretty bad baseball team," I observed.

"No," my friend countered. "This is a seriously bad baseball team."

Alas, the 2009 Stros have not done much during the first quarter of the season to contest my friend's evaluation.

The Stros (18-22) are currently in last place in the NL Central, 7 games behind the division-leading Brewers (26-16). Only three of the other 15 National League clubs (Rockies, DBacks, and Nationals) have a worse record than the Stros.

The Stros as a team have created 7 fewer runs than an average National League team would have generated using the same number of outs ("RCAA", explained here), which is 8th among the 16 National League teams. That's about the same rate that the Stros generated runs during the comparable part of both the 2007 and 2008 seasons, but better only than the Reds -27 RCAA among NL Central teams this season.

Meanwhile, the Stros pitching staff has saved 8 fewer runs than an average National League pitching staff would have saved in the same number of innings, which is 12th in the National League ("RSAA", explained here). Again, that's about the same as the pitching staffs of the past two Stros clubs at the same stage of the season. However, every other pitching staff in the NL Central has a better RSAA than the Stros, including the division-leading Brewers' 20 RSAA.

The 2008 Stros club finished fast to finish in second place in the NL Central with an 86-75 record, while the 2007 Stros faded to finish with a 73-89 record, the club's worst record since the late 1980's. So, given that the 2009 Stros have produced about the same statistically as those two prior clubs produced through a comparable part of the season, that raises an interesting question:

Is the 2009 club more likely over the balance of the season to progress similar to the 2008 club or deteriorate similar to the 2007 club?

On one hand, room for optimism exists. CF Michael Bourn (3 RCAA/.365 OBA/.401 SLG/.766 OPS) has finally shown signs of potential, although some of the mainstream media's fawning over him is utterly premature because of the small sample size. RF Hunter Pence (13 RCAA/.414 OBA/.527 SLG/.941 OPS) has picked up from his hot finish to last season, and SS Miguel Tejada (3 RCAA/.353 OBA/.485 SLG/.837 OPS) -- who finished last season as one of the poorest-producing regular players in MLB -- is off to a good start to this season. Even archaic C Ivan Rodriguez (-5 RCAA/.316 OBA/.468 SLG/.784 OPS) has been an improvement on Brad Ausmus.

Add to the foregoing that P Wandy Rodriguez is having an All-Star-type season (17 RSAA/1.83 ERA), and that dependable stars P Roy Oswalt (0 RSAA/4.47 ERA), 1B Lance Berkman (4 RCAA/.380 OBA/.478 SLG/.857), LF Carlos Lee (8 RCAA/.373 OBA/.549 SLG/.922 OPS and injured closer Jose Valverde (-1 RSAA/5.63 ERA) really have not hit their stride yet this season, one can make the case that the Stros are primed for improvement over the balance of the season.

Unfortunately, for a variety of reasons, my sense is that this club's trajectory will be more along the lines of the 2007 club than last season's.

The primary reason for my pessimism is that this Stros pitching staff is not performing as well as last season's, which was the main reason for that club's strong finish. Only four pitchers on the staff have a positive RSAA through the first quarter of the season --Rodriguez, Chris Sampson, LaTroy Hawkins and Tim Byrdak. The balance of the staff has already allowed 38 more runs than an average National League staff would have given up through the first quarter of the season.

Moreover, starters Mike Hampton (-4 RSAA/5.23 ERA), Russ Ortiz (-4 RSAA/5.81 ERA), Brian Moehler (-8 RSAA/7.71 ERA) and Felipe Paulino (-7 RSAA/6.93 ERA) have been awful so far and there is very little reason to believe that any of those other than Paulino could improve much. Inasmuch as 60% of the starting rotation is getting bashed regularly, that is putting too much pressure on the bullpen, which is already depleted due to injuries to Valverde, Doug Brocail and Geoff Geary, who were the three best relief pitchers on the 2008 club.

Add in the fact that Tejada and Rodriguez will probably fade as the season wears on, that team management inexplicably continues to trot out 3B Geoff Blum (-6 RCAA/.336 OBA/.308 SLG/.642 OPS) regularly, and that oft-injured 2B Kaz Matsui is having a terrible season (-9 RCAA/.291 OBA/.314 SLG/.605 OPS), there simply is not much of a chance that the Stros will be equal to or above National League-average in either creating runs or saving runs for the remainder of this season.

Finally, that apparently no one much likes overmatched Manager Cecil Cooper doesn't help things, either.

So, what should Stros management do for the rest of the season?

Well, the first thing is to keep this club's mediocrity in perspective. This is only Year Two of the rebuilding of the Stros farm system that owner Drayton McLane started after cleaning house toward the end of the 2007 season. GM Ed Wade and his scouting staff did what appears to be a good job during the 2008 draft (evaluations of baseball drafts are iffy for the first few years after a particular draft) and the most important thing for the club is that management continues strong drafting for at least the next four seasons or so. That's generally the minimum amount of time necessary to rebuild an MLB farm system.

Meanwhile, Stros management should be allowing what little talent the club has in its farm system develop at the MLB level to determine whether a couple of diamonds in the rough might emerge. For example, it makes no sense to have slick-fielding Tommy Manzella at AAA Round Rock instead of playing in Houston when moving the immobile Tejada to 3B and dispensing with the unproductive Blum would strengthen the major league club. It's not as if the light-hitting Manzella is likely to be any less productive at the plate than Blum. And the Stros pitchers would certainly be much more appreciative of Manzella's fielding at short than Tejada's.

Similarly, Rodriguez is not the answer at catcher, so the Stros should be preparing to bring J.R. Towles back up from AAA to get a fairer shot than he had last season at playing every day at the MLB level. Towles was effectively jumped from AA to MLB last season and he struggled as most prospects do who are forced to bypass AAA ball. However, Towles has excelled at AAA both at the end of last season and so far this season. Thus, it makes sense to develop that talent at the MLB level this season rather than wasting innings on the over-the-hill Rodriguez and his lackluster backup, Humberto Quintero.

Finally, Stros management should stay on their toes for potentially beneficial trade possibilities. Traditionally, trades are not the way in which to build a good MLB team -- you tend to come out on the losing end of trades more often than the winning side. But the Stros do have some attractive assets for contending teams, particularly Oswalt and Berkman. Both are elite-level players, so the Stros should require multiple top prospects in return for trading either of them. That's not likely to to be offered, but once the playoff races start heating up, you never know.

The bottom line is that the Stros are going to require patience from their fan base for the foreseeable future. Rebuilding in Major League Baseball simply does not happen quickly. So long as the Stros do a better job of drafting and signing prospects than they did in the decade from 1998-2007, and so long as Stros management looks for trades of valuable assets that could help re-stock the farm system, the club's long track record of success during the Biggio-Bagwell era (only two seasons below .500 winning percentage in the past 17) justifies giving management a reasonable amount of time to right the ship.

By the way, Lisa Gray's Stros blog remains a reliable source of day-to-day information on the Stros, as is the Chronicle's Zac Levine's blog and the Crawfish Boxes blog. However, a new Stros blog -- Astros County -- also does an excellent job of providing daily information on the Stros. Check it out.

The 2009 season statistics through for the Stros through the first 40 games 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 (0) |

May 22, 2009

Brothers at War

The trailer for the new documentary -- particularly appropriate for the Memorial Day weekend -- is below.

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

May 21, 2009

Advantage Cartwright

Texas Monthly's Gary Cartwright caught my eye recently with this op-ed in which he bemoans the decline of sports writing in Texas.

I mean really. Can anyone who regularly reads the sports pages of Texas newspapers make a good faith argument against the notion that the current slate of Texas newspaper sportswriters cannot hold a candle to Dan Jenkins and his contemporaries?

Enter the Chronicle's lead sports columnist, Richard Justice.

Justice -- whose shoddy reporting, vapid analysis and bizarre blog comment attacks have been a frequent topic here for years -- essentially proves Cartwright's point about the demise of Texas sportswriting with this snarling and petty reply to Cartwright's op-ed.

An old saying in India is that "sarcasm is the last weapon of the defeated wit."

Justice is living proof of the truth of that adage.

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

May 20, 2009

An amazing sporting feat

Although it is flying under the radar screen outside of golfing circles, Lance Ten Broeck's performance at last weekend's Valero Texas Open in San Antonio is one of the most amazing sports stories of the year. In fact, it would be so in most any year.

Ten Broeck is a 53 year-old former University of Texas golfer who bounced around the PGA Tour and satellite tours for decades before settling in to become a well-regarded caddy on the PGA Tour. Ten Broeck has looped for several well-known PGA Tour players and currently caddies for Jesper Parvenik.

As a former PGA Tour player, Ten Broeck was one of the alternates for the tournament in the event that one of the qualifying players dropped out. However, not expecting anyone to drop out of the tournament, Ten Broeck didn't even bring his golf clubs to San Antonio.

Then, last Thursday, as Ten Broeck was getting ready to caddy for Parvenik, tournament officials informed Ten Broeck that a player had dropped out because of injury and that a spot in the tournament had opened up for him.

In 90 degree heat, Ten Broeck proceeded to caddy for Parvenik during his morning round on the incredibly hilly La Cantera Golf Course. Then, in the afternoon -- and after borrowing clubs and shoes and buying a pair of pants at a nearby Dillard's -- Ten Broech went out and walked the course again while shooting a one-over-par 71 in the afternoon!

Incredibly, on Friday, again in 90 degree heat and after borrowing another set of clubs, Ten Broeck caddied for Parvenik in the morning and then went out and shot an even par 70. His 141 total for two days missed the 36-hole cut by two strokes.

By the way, Ten Broeck's boss Parvenik shot 70-74 = 144 to finish below his caddy in the tournament.

I've played La Cantera several times. The thought of walking that hilly course twice on one hot day is daunting enough. However, that a 53 year-old did so while carrying a PGA Tour member's bag, and then while shooting near par golf under PGA Tour tournament conditions, is flat-out unbelievable.

Brian Wacker provides more info here.

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

May 19, 2009

SCOTUS takes up the honest services issue

Well now, that certainly did not take long, now did it?

Just a week after former Enron CEO Jeff Skilling appealed his criminal conviction and monstrous 24-year prison sentence to the U.S. Supreme Court on an allegedly erroneous application of the honest services wire-fraud statute (18 U.S.C. § 1346), the Supreme Court agreed to hear the appeal of former Hollinger International chairman Conrad Black on similar grounds. The briefs in support and opposition to Black's petition for certiorari to the Supreme Court can be reviewed here.

Black's conviction revolves around allegations that he diverted about $6 million from Hollinger International, which owned the Sun-Times and a number of other newspapers. He and two other former executives whose appeals will also be heard by the Supreme Court -- former Hollinger CFO John Boultbee and corporate counsel Mark Kipnis -- were convicted of three counts of mail fraud based on the theory that they improperly arranged the transfer of $5.5 million from a Hollinger subsidiary under sham non-compete agreements.

The high court's decision to hear Black's appeal on the honest services wire fraud issue leaves the Skilling petition somewhat in limbo. Although Skilling's appeal arguably frames the issue better than Black's, the Court could simply carry Skilling's petition along with Black's appeal and then remand Skilling's case to the Fifth Circuit once it has adjudicated Black's appeal.

But regardless whether the Supreme Court grants cert in Skilling's appeal, the Court's decision to hear Black's appeal is very good news for Skilling.

By the way, as if on cue, Lord Black from his prison cell provides this entertaining evisceration of the forces that prevented him from selling for the benefit of shareholders the now bankrupt and worthless Chicago Sun-Times. Here's a taste of Lord Black's analysis of the situation:

[Former Bush I administration SEC chairman Richard] Breeden, whose career highlights include whitewashing George W. Bush on his lucrative insider trade in Harken Energy shares before the Gulf War in 1991, while he was Bush Sr.'s SEC chairman, and his immensely well-paid stints as special monitor or counsel of KPMG, WorldCom, and Fannie Mae, produced his special committee report in August 2005. (He has since, with no background at all, set up an offshore hedge fund and has promptly lost more than half his investors' money.)

The report had cost over $100 million, accused us of a $500 million kleptocracy, and promised a future of unheard-of profitability for the company. On this, Breeden has delivered, as no profit has been heard of since he usurped the management. He also promised $1 billion of recoveries for the shareholders, and has instead wiped them out; $2 billion from the pockets and retirement and college funds of scores of thousands of people.

His report did fulfill his objective of generating criminal charges that, if substantially successful, could vacate or at least mitigate my $1 billion libel suits against him, the largest defamation claims in Canadian history.

Lord Black is a genuine piece of work.

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

May 18, 2009

Bad regulation vs. deregulation

Clear Thinkers favorite Niall Ferguson provides this timely reminder to those who believe that the financial turmoil of the past couple of years is the result of lax regulation of financial markets:

Human beings are as good at devising ex post facto explanations for big disasters as they are bad at anticipating those disasters. It is indeed impressive how rapidly the economists who failed to predict this crisis — or predicted the wrong crisis (a dollar crash) — have been able to produce such a satisfying story about its origins. Yes, it was all the fault of deregulation.

There are just three problems with this story. First, deregulation began quite a while ago (the Depository Institutions Deregulation and Monetary Control Act was passed in 1980). If deregulation is to blame for the recession that began in December 2007, presumably it should also get some of the credit for the intervening growth. Second, the much greater financial regulation of the 1970s failed to prevent the United States from suffering not only double-digit inflation in that decade but also a recession (between 1973 and 1975) every bit as severe and protracted as the one we’re in now. Third, the continental Europeans — who supposedly have much better-regulated financial sectors than the United States — have even worse problems in their banking sector than we do. The German government likes to wag its finger disapprovingly at the “Anglo Saxon” financial model, but last year average bank leverage was four times higher in Germany than in the United States. Schadenfreude will be in order when the German banking crisis strikes.

We need to remember that much financial innovation over the past 30 years was economically beneficial, and not just to the fat cats of Wall Street. New vehicles like hedge funds gave investors like pension funds and endowments vastly more to choose from than the time-honored choice among cash, bonds and stocks. Likewise, innovations like securitization lowered borrowing costs for most consumers. And the globalization of finance played a crucial role in raising growth rates in emerging markets, particularly in Asia, propelling hundreds of millions of people out of poverty.

The reality is that crises are more often caused by bad regulation than by deregulation. [.  .  .]

.  .  . Taxpayers, therefore, should beware. It is more than a little convenient for America’s political class to blame deregulation for this financial crisis and the resulting excesses of the free market. Not only does that neatly pass the buck, but it also creates a justification for . . . more regulation. The old Latin question is highly apposite here: Quis custodiet ipsos custodes? — Who regulates the regulators? Until that question is answered, calls for more regulation are symptoms of the very disease they purport to cure.

Stated another way, it's not that rules are unnecessary for markets to perform efficiently. But what type of rules are better?

Rules that politicians enact and government bureaucrats enforce generally are far less efficient than rules that emerge as a result of the voluntary interactions of millions of individuals and companies. The successes and mistakes of those individuals and companies pursuing their own interests create rules that are the product of competition and personal responsibility. When those rules become sufficiently important in the fabric of a market economy, they become formalized as common law and precedent by courts. The distinction between inefficient government-imposed rules and the decentralized rules that facilitate productive market economies is an important one to understand as we wade through this current financial crisis.

The rules that the government is currently making up on the fly in connection with the Chrysler bankruptcy are a good example of rules that are destined to allocate resources inefficiently.

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

May 17, 2009

Kevin Spacey is very good at impersonations

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

May 16, 2009

Still the best rendition of Pancho & Lefty

Emmylou Harris' version in 1977 of Townes Van Zandt's classic song.

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

May 15, 2009

More Collision

This earlier post provided the trailer for Collision, the new Darren Doake-directed documentary about the series of debates and conversations last year between Christopher Hitchens and Douglas Wilson over the existence of God. Here is a longer sneak peak of the documentary. It looks as if it is very well done. Enjoy.

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

May 14, 2009

Thinking about the Chrysler deal

Unworkable credit situation, UAW ownership and Italian engineering. What could possibly go wrong?

The blogosphere has really stepped up in analyzing the government-pushed and government-subsidized asset sale by Chrysler out of its only recently-filed chapter 11 case (handy site on the chapter 11 case is here). The best technical bankruptcy analysis has been provided by Steve Jakubowski, while Larry Ribstein, Professor Bainbridge, Mark Roe and the Epicurean Dealmaker have weighed in ably on the policy considerations of the deal. But Todd Zywicki in this W$J op-ed does the best job of summing up the long-range risk of what the Obama Administration is doing here:

By stepping over the bright line between the rule of law and the arbitrary behavior of men, President Obama may have created a thousand new failing businesses. That is, businesses that might have received financing before but that now will not, since lenders face the potential of future government confiscation. In other words, Mr. Obama may have helped save the jobs of thousands of union workers whose dues, in part, engineered his election. But what about the untold number of job losses in the future caused by trampling the sanctity of contracts today?

Chrysler's proposed asset sale is unusual, but not unprecedented. Still, the legality of what is going on here is certainly sketchy. And what is unprecedented about this case is the participation of the government in financing the deal and the new Chrysler. Theoretically, another bidder could emerge and top the new Chrysler's bid for the assets. However, such a competing bid simply could not be financed under current market conditions absent a subsidy from another government.

So, what to make of all this? Here's what I will be watching.

Will the government market in Chrysler debt? If so, how will the market price it?

Or will the government simply hold the Chrysler debt as the company attempts to re-invent itself, turning the debt into a type of quasi-equity?

And will a company owned predominantly by a union and the government be able to attract the type of creative management and engineering talent that will be necessary to create wealth for the owners?

Frankly, the government bailout is the easy part. Creating wealth is a whole lot tougher.

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

May 13, 2009

The state of the Skilling case

The attorneys for former Enron CEO Jeff Skilling filed a petition for a writ of certiorari with the U.S. Supreme Court yesterday, which is quite interesting and is being widely reported in the mainstream media.

However, as interesting as a Supreme Court appeal is, that is not the most interesting aspect of the Skilling case right now.

But first the petition. As usual, Skilling's legal team at O'Melveny & Myers did an outstanding job in lucidly presenting why the Supreme Court should consider Skilling's appeal. A copy of the petition and its appendix, bookmarked in Adobe Acrobat to facilitate ease of review, can be downloaded here.

In short, Skilling's petition contends that the Fifth Circuit Court of Appeal's decision in Skilling's appeal made a mess of two key issues:

(i) application of the honest services wire fraud statute (18 U.S.C. § 1346) to Skilling's actions, and

(ii) application of the standard for deciding the proper venue for Skilling's trial in the face of a presumption of community prejudice against Skilling.

As noted previously, the Fifth Circuit panel's decision in Skilling's appeal failed to reconcile its reasoning in upholding Skilling's conviction for honest services wire-fraud under 18 U.S.C. § 1346 with earlier Fifth Circuit panel decisions on the same issue in the Nigerian Barge and Kevin Howard cases. Inasmuch as there is now a clear split between Fifth Circuit decisions and other circuit appellate courts on the scope of honest services wire-fraud, the issue appears ripe for Supreme Court consideration. Indeed, Skilling's petition notes Supreme Court Justice Scalia's recent observation about the need for the high court to take up the issue:

"Without some coherent limiting principle to define what ‘the intangible right of honest services’ is, whence it derives, and how it is violated, this expansive phrase invites abuse by headline grabbing prosecutors in pursuit of local officials, state legislators, and corporate CEOs who engage in any manner of unappealing or ethically questionable conduct.” Sorich v. U.S., 129 S.Ct. 1308, 1310 (2009). [.  .  .]

There is a “serious argument” that, as Justice Scalia put it, “a freestanding, open-ended duty to provide ‘honest services’—with the details to be worked out case-by-case”—amounts to “nothing more than an invitation for federal courts to develop a common-law crime of unethical conduct.” Sorich, 129 S.Ct. at 1310. And because the notion that courts can “discover[]” whether conduct is criminal using common-law reasoning is “utterly anathema,” [cite deleted] there is an equally serious argument that § 1346 is unconstitutionally vague. [cite deleted[.

It should not be the task of federal courts to save a facially vague and unenforceable statute from itself. Only Congress can properly demarcate the boundaries of honest-services fraud. .  .  .

Yeah, we know all about those "headline grabbing prosecutors," don't we?

The venue issue is even simpler. Skilling argues that the Fifth Circuit improperly allowed U.S. District Judge Sim Lake to rebut a presumption of community prejudice against Skilling through a superficial voir dire of individual jurors even though the Fifth Circuit concluded that Judge Lake had improperly failed to apply the presumption of community prejudice against Skilling. The Fifth Circuit's ruling is at odds with several other circuit courts decisions that maintain that such a presumption simply cannot be rebutted, so that conflict between the circuits tees up another Supreme Court issue.

Frankly, given the extensive evidence of both pervasive media bias and prospective juror bias against Skilling, if the Supreme Court allows the Fifth Circuit's decision to stand on the venue issue, then a denial of a motion to change the venue of a trial within the Fifth Circuit will no longer be grounds for an appeal.

But now for the more interesting developments in Skilling's case.

Flying almost completely under the radar screen is the fact that the Fifth Circuit decision remanded a portion of Skilling's case for two reasons.

First, the Fifth Circuit ordered Judge Lake to re-sentence Skilling because of an error that was made in applying a sentencing enhancement in assessing Skilling's 24-year sentence.

Moreover, the Fifth Circuit decision invited Skilling to file a motion for new trial based on issues of prosecutorial misconduct. Specifically, the Fifth Circuit was particularly concerned about the failure of the Enron Task Force to comply with federal rules requiring the disclosure of exculpatory evidence to the defense from the Task Force's pre-trial interviews with main Skilling accuser, former Enron CFO Andrew Fastow.

Fastow testified at trial that he told Skilling about the Global Galactic agreement, which purportedly documented a series of illegal "side deals" between Fastow and former Enron chief accountant Richard Causey that guaranteed Fastow would not lose money on certain special purpose entities that he was managing. Skilling denied any knowledge of the purported agreement.

After Skilling's conviction, the Skilling defense team discovered Fastow interview notes that the Enron Task Force had failed to disclose to the Skilling team prior to trial. Among other things, those notes revealed that Fastow had told the Task Force lawyers that he didn't think he had told Skilling about the Global Galactic agreement. The Fifth Circuit characterized the Task Force's non-disclosure as "troubling" in inviting Skilling to file a motion for new trial with the District Court.

So, where does the Fifth Circuit's remand of the Skilling appeal stand in the District Court?

Well, a review of the District Court docket of Skilling's criminal case reveals that Judge Lake originally scheduled Skilling's resentencing for July 30th.

However, in a highly unusual move, Skilling and the prosecution filed a joint motion requesting Judge Lake to put off the re-sentencing indefinitely pending the filing of Skilling's motion for a new trial, the prosecution's response to that motion, and the Court's disposition of the motion. Moreover, the parties requested that the deadline for Skilling's motion be pushed back to July 10th, which Judge Lake approved.

So, what is going on here?

Could it be that Skilling's team has discovered even more exculpatory evidence that the Task Force failed to disclose to the Skilling defense prior to the trial?

Could it be that the government's current lawyers -- who were not members of the now disbanded Task Force and who have little incentive to cover for their predecessors -- are now finding themselves dealing with a serious failure of the Task Force members to comply with rules requiring the disclosure of exculpatory evidence to the defense in Skilling's case?

Could the Skilling case be turning into something similar to this?

Stay tuned.

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

May 12, 2009

How did it come to this?

That's the question I kept asking myself as I watched former U.S. District Judge Sam Kent be sentenced to 33 months in federal prison yesterday (previous posts here).

I had an early-morning hearing in federal court yesterday and another one in the mid-afternoon. So, instead of returning to my office between hearings, I decided to attend the sentencing hearing for Judge Kent. It's not every day that a federal judge is sentenced to prison.

The first hour or so of the hearing was stupefying as prosecutors and Kent defense attorney Dick DeGuerin argued over objections to the government's pre-sentencing report. The main reason for the boredom was that, for the most part, no one except the lawyers in involved in the case and U.S. District Judge Roger Vinson knew what they were talking about. That vacuum of information was a direct result of Judge Vinson's dubious decision to keep a substantial amount of the information about the charges against Kent under seal and away from public scrutiny.

Judge Vinson's decision in that regard might have been somewhat defensible had the two victims of Kent's sexual assaults requested secrecy to preserve what little privacy they could salvage from this ordeal. But neither of the victims requested such treatment, and my sense is that Kent didn't want it, either.

So, Judge Vinson decided to conduct this case largely outside the public eye for his own reasons. In my 30 years of practicing law, I have never seen the volume of information in a case placed under seal as was done in this case.

In sentencing Kent, Judge Vinson claimed that he was upholding the justice system by showing that even a powerful judge is not above the law. Unfortunately, he undermined that same system by preventing the public from learning the details of the accusations against Kent and Kent's responses to those allegations.

Although the first part of the hearing could have induced a snooze, the pace picked up dramatically when the two victims of Kent's assaults made their way to the podium to make their victim statements to the court (one of the victim's statements is here, courtesy of the Houston Chronicle). Both victims were extremely impressive in their presentations, describing the emotional and family carnage that Kent's assaults and abuse of power caused. We also learned tidbits of information that likely would have been already been revealed had Judge Vinson not maintained such tight control over information:

The case manager reported Kent's assaults to her supervisor, who did not take appropriate steps to report it to higher authorities out of fear for her job;

A "culture of fear" existed among employees at the Galveston federal courthouse as a result of Kent's manipulative behavior and frequent drunkenness; and

Kent is estranged from much of his family.

There was a good bit of discussion from the victims and the lawyers regarding Kent's alcoholism and his "serious" psychological issues, for which Judge Vinson ordered him to continue treatment. Also, Kent has been rendered virtually insolvent from his funding of the cost of defense of the case.

For his part, Kent did a good job in his statement to the court, apologizing to his accusers, his staff, his family, other judges and "the system." He promised Judge Vinson that he would continue to rehabilitate himself regardless of the sentence. My sense was that Kent was sincere.

I do not know Kent personally. I handled several hearings in his court over the years and never had a problem with him.

However, I know plenty of lawyers who found Kent insufferable and rude (see also here), and I heard the rumors about his alleged favoritism of certain Galveston lawyers, particularly in admiralty cases. In 2001, the Chief Judge of the Southern District of Texas took the unprecedented step of reassigning 85 cases away from Kent that were being handled by one of Kent's best friends.

And now it appears that Kent was drinking heavily for much of the past decade and that he was frequently intoxicated while at the courthouse. You have to wonder whether concerns about Kent's behavior impacted out-of-town parties' decisions in cases such as this one?

So, I circle back to the question I asked at the beginning of this post -- how did the judicial career of Sam Kent come to this sordid and sad ending?

Where were Kent's "friends" who knew about his excessive drinking and other personal problems, and were in a position to intervene and help him before it was too late?

What are we to make of the federal government's human resources apparatus that an entire federal courthouse could have been placed under a culture of fear by the abusive behavior of one man?

And doesn't the Fifth Circuit Judicial Council have some explaining to do on why it issued its agreed order of public reprimand of Kent without interviewing either of the victims during the council's investigation?

Finally what are we to conclude about our justice system that the Houston Chronicle -- which, along with its coverage of Hurricane Ike, should have been won a Pulitzer Prize for its reporting on the Kent case -- provides much more information to the public about the crimes of an abusive judge than the prosecution of that judge?

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

May 11, 2009

Is the case against Sir Allen getting more complicated?

On first blush, the criminal case against Sir Allen Stanford, the mercurial chairman of Stanford Financial Group, would appear to be pretty straightforward.

On the other hand, why was the Securities and Exchange Commission apparently falling over itself for years to avoid closing down Stanford Capital, even in the face of credible, inside information provided to the agency regarding Stanford's scam nature?

Could Sir Allen have been keeping the regulators at bay by playing several agencies of the federal government off against one another?:

A Panorama (BBC) investigation has suggested that Sir Allen was shielded from an earlier inquiry into his activities because he co-operated with a US Drug Enforcement Administration (DEA) attempt to track money laundering by Latin American drug cartels. [. . .]

Panorama claimed some US officials were aware of Sir Allen's cartel links as long ago as 1990. It reported that Sir Allen, paid a $3.1 million (£2.05 million) cheque to the DEA in 1999 after that sum was invested in his bank by another Mexican drug gang, the Juarez cartel of Amada Carillo Fuentes.

According to Panorama, whose investigation will air on Monday, Sir Allen was initially investigated by the SEC over suspicions he was running a Ponzi scheme in the summer of 2006, but the inquiry was over by the winter of that year.

The BBC claims the decision to close the investigation followed a request by another government agency.

Panorama says it is aware of "strong evidence" that Sir Allen was a "confidential agent" for the DEA as far back as 1999 and turned over details of money laundering by clients from Colombia, Mexico and Ecuador.

Rodney Gallagher, a British financial investigator, who knew Sir Allen in the 1980s said it was clear to him that the Texan had "a very close relationship with the DEA" and occasionally hired former agency staff to work for him.

The DEA declined to comment to the BBC on its allegations.  .   .  .

If Sir Allen bought time for a scam by playing nice with the DEA, the federal government's dubious prohibition policy toward certain drugs will have added an entirely new layer of costs.

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

May 10, 2009

An effective ad

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

May 9, 2009

Cruising the Houston Ship Channel

The oil and gas industry is synonymous with Houston, but many folks do not know that health care and the Port of Houston are huge economic drivers in the local economy, too. Check out this time lapse video by Lou Vest on a ship leaving the Port of Houston along the Houston Ship Channel. Here is a similar video that Vest did last year during the daytime. Enjoy.

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

May 8, 2009

Mostly for Trekkies

With the latest Star Trek movie opening this weekend, you may want to pass the following video of an old William Shatner Saturday Night Life sketch along to your Trekkie friends. Be sure to watch through the end.

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

May 7, 2009

Jenkins returns to Sawgrass

Clear Thinkers favorites Dan Jenkins, the dean of American golf writers, is making his first trek to TPC Sawgrass in a decade this week to cover my favorite tournament, The Players (which includes the always fun video of the 17th hole).

Geoff Shackelford scores this interview with Jenkins (which is a follow-up on this one from last year), and it is clear that Jenkins is already in mid-season form. The first part of the answer below is from last year's interview, the second from this year's:

The men's tour sucks. Everybody drives it 340 and shoots 63. I've never heard of half their names, and don't care to know them until they get back to me with two majors.

My fee for talking to Tiger Woods is going up every day. I've tried for 10 years to get a one-on-one with him---and can't. Why? Because Mark Steinberg says, "We have nothing to gain."

Can you imagine what the men's tour would look like if Tiger and Phil both suffered career-ending injuries? I'll tell you. It would look like what it looks like today when they aren't in the field. It would increase interest in polo.

.   .   .[I]in my declining years, I have arrived at the point where I don't give a damn about anything but the four majors and the Ryder Cup. They are important. The regular tour sucks.

I should mention that the regular tour didn't used to suck. It used to be quite glamorous, when the LA Open was always first, when the Crosby was the Crosby, when the players wore snappy clothes and movie stars hung around them, when the Florida swing had its own charm, same for Texas, and so on. But mainly when every winner was SOMEBODY.

I live in the past. It was a better world.

No doubt that more than a few of the folks attending the tournament this week will, at least part of the time, be enjoying Jenkins' classic “Mankind’s 10 Stages of Drunkenness” from his 1981 novel, Baja Oklahoma:

0) Sober

1) Witty and Charming

2) Rich and Powerful

3) Benevolent

4) Clairvoyant

5) F**k Dinner

6) Patriotic

7) Crank Up the Enola Gay

8) Witty and Charming, Part II

9) Invisible

10) Bulletproof

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

May 6, 2009

A big risk of health care finance reform

In addressing issues relating to health care and health care finance reform over the years, I've tried to be careful to differentiate America's Byzantine and inefficient health care finance system from the quality of America's health care, which remains very good overall.

But strains in the quality of care are definitely beginning to show as America's existing health care finance system crumbles under the weight of, among other things, excess government regulation on medical insurance markets, unrealistic expectations regarding the supply and allocation of medical resources, over-reliance on third-party payors and the failure of American society to confront the issues pertaining to the limits of care.

The following is an email from a friend of mine, who is a first-rate internist who has been working as a hospitalist for the past several years. He is preparing to leave a hospital for which he has worked for the past couple of years because of the failure of the hospital's administration to address worsening working conditions for the hospital's primary care physicians:

I'm down to ten days left there, and those days can't go by fast enough for me.

The average number of admissions in a weekday day shift (7 a.m. to 7 p.m.) is 12.

We had 23 yesterday.

When you take the standard estimate of an average of 75 minutes necessary to complete a new patient admission to the hospital -- with the attendant patient interview and data collection, physical exam, review of lab and x-ray results, formulation of treatment plan, preparation of admission orders, and dictation of the official patient history & physical for the medical record -- the amount of work requested from our hospitalist group yesterday was 13+ hours over average. This is more than another full-time equivalent doctor, yet we can't persuade the national hospitalist company managing the hospital to provide any more help for us.

As a consequence of the barrage of admissions, I did not complete my "morning" rounds on existing hospital patients until 6 p.m.  There were a couple of patients who could have been discharged from the hospital yesterday, but by the time we got to them, it was too late in the day to discharge them (area nursing homes won't take transfers after 2 p.m.).

As you can imagine, this type of delay causes longer length-of-stay and more expense for the system.  And this does not even begin to address the mistakes in care that may have been (or more likely WERE) made due to all of us rushing around as if we were in a 12-hour long fire drill.

It's a bad way to practice medicine.

Contrast this to my new situation, which is a hospital-administered program. They believe in and adhere to the notion that the risk is high that patient care is likely to suffer once a doctor is required to see more than 15 hospitalized patients per day. Inasmuch as they don't have the heavy administrative overhead that national hospitalist companies are required to service, my new hospital can allow their docs to work at a more controlled pace and still make ends meet.

Ten more shifts and I'm gone.

Thanks for letting me vent.

Believe me, my friend is the type of doctor that you want to have taking care of you if you find yourself in the hospital. That a hospital administration is willing to let him get away is a sure warning sign that the problems in the health care finance sector are adversely affecting the quality of care.

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

May 5, 2009

If the Rockets can shoot like this, then they may just beat the Lakers

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

May 4, 2009

Princess Leia can roast with the best of them

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

May 3, 2009

The Butcher vs. The Oilman

Daniel Day-Lewis as Bill the Butcher from Gangs of New York has a discussion with Daniel Day-Lewis as Daniel Plainview of There Will Be Blood.

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

May 2, 2009

Heineken's Walk-in Cooler

Following up on this earlier post, isn't it interesting that some of the most creative product on television these days is in commercials?

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

May 1, 2009

American Violet

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

April 30, 2009

McClain keeps mailing it in

This really was not meant to be my "bash the Chronicle" week. I mean, really -- the local newspaper already has enough problems.

But what else can one do when confronted with this blather from the Chronicle's lead NFL columnist, John McClain?:

Let’s cut to the chase: The Texans should make the playoffs for the first time. We all know it.

The Texans are better than they’ve ever been. Their offense was terrific when Matt Schaub returned from his knee injury and won three of his last four starts. The Texans have got a better running game.

With Frank Bush as the new coordinator, the defense should improve dramatically with the addition of nine free agents and draft choices competing for playing time.

Just six months ago, this is what McClain was saying:

I picked the Texans to beat the Ravens by three. Many of you said, in so many words, that I was a moron to pick the Texans. I was. I've learned my lesson. After getting every pick right this season, I blew this one. I won't make that mistake again this season.

After watching Sunday's game against Baltimore, I think the Texans are fully capable of losing the rest of their games and finishing 3-13. It's time to start preparing for the draft. Gary Kubiak's third season is over.

The Texans are a joke, an embarrassment to themselves, the organization and to the city. They put on a wretched performance at Reliant Stadium on Sunday when they quit in the fourth quarter and allowed the Ravens to humiliate them 41-13.

Under the circumstances, I believe this was the worst loss in team history. A victory at home over a team with a rookie head coach and a rookie quarterback would have made them 4-5. Now they're 3-6 with road games against Indianapolis and Cleveland, two more struggling teams that'll be licking their chops at the prospects of playing such a putrid team.

The Texans were horrible on offense and terrible on defense. Everyone on the team — indeed, everybody in the organization — should be embarrassed to say they participated in or witnessed this debacle.

Anyway, you saw what I saw. There's nothing left for me to say about this abomination  .  .  .

Despite McClain's despair, the Texans somehow pulled themselves together to finish 8-8 on the season.

Of course, the above outburst came over a year after McClain had breathlessly anointed Coach Kubiak as the second coming of Bill Walsh.

And that came after years of McClain columns in which he extolled how former Texans GM Charlie Casserly and head coach Dom Capers were "building the Texans the right way." McClain quickly changed his tune when Casserly and Capers' "effective building" resulted in a disastrous 2-14 record in the Texans' fourth season.

Frankly, the Chronicle's NFL citizen-bloggers Stephanie Stradley and Lance Zierlein are much more measured and analytical than McClain in their coverage of the NFL and the Texans.

Does anyone in Chronicle management even notice?

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

April 29, 2009

Permanent Enron myopia

Inasmuch as what took place with regard to Enron earlier in the decade has now happened to much of Wall Street, the vacuity of the Houston Chronicle's coverage of Enron-related matters has become clear.

Nevertheless, Chronicle business columnist Loren Steffy still cannot work himself out of his small Enron shell.

Most recently, Steffy wrote this column in which he compares Sir Allen Stanford of the beleaguered Stanford Financial Group to former Enron executives, Ken Lay and Jeff Skilling:

All this finger pointing should bring a strong sense of déjà vu to Houstonians, who watched Enron’s meteoric rise and fall, as well as the unsuccessful efforts of the late company chairman Ken Lay and CEO Jeff Skilling to plead ignorance of the company’s fraudulent accounting practices and blame any criminal behavior on the chief financial officer, Andy Fastow.  .  .  .

If Stanford is any indication, the “I’m not a crook, I’m an idiot” defense for CEOs remains alive and well. For those who buy the idea that people who construct and direct massive financial enterprises are really dunces who haven’t a clue how they function, we’ve got a truckload of Enron shares to sell.

Of course, the foregoing is a complete misrepresentation of Skilling and Lay's defense. Rather than contending that he did not know what was going on at Enron, Skilling contended that he was a hand's-on manager over virtually all facets of Enron's far-flung business operations. Similarly, Lay contended that he became intimately involved in day-to-day management of the company after re-taking the Enron CEO role when Skilling resigned unexpectedly in August, 2001. Thus, Skilling and Lay's position was that they were totally engaged in Enron's massive business operations, that there was no wide-ranging fraud, and that Enron's trust-based business model failed when skittish post-9/11 markets became spooked over conflict-of-interest allegations regarding Fastow's role in generally legitimate special purpose entities.

That's a bit different than Sir Allen's defense that "he left all the financial stuff" to Stanford Capital's CFO James Davis, don't you think?

Steffy has done this before in regard to Enron-related matters, so another misrepresentation isn't really surprising. But what is troubling is the Chronicle's continued promotion of Steffy's simplistic world view in which most troubled businesses are seen as merely a vehicle by which greedy and unethical executives exploit helpless investors. Indeed, Steffy's fatuous viewpoint casts complex business events as merely struggles by honest investors against bad executives. Not only does this viewpoint ignore reality, it provides Steffy comfort by allowing himself to feel morally certain and superior to those he is belittling, while saving himself from the hard work of performing any serious analysis.

Morality plays are comfortable and easy to tell. The truth is more nuanced and harder to explain. In choosing to take the easy way out, the Chronicle and Steffy have forfeited the opportunity to provide a valuable service to investors and businesspeople by furthering understanding on such key subjects as the importance of hedging risk and the fragile nature of trust-based businesses.

That type of understanding sure would have come in handy for many investors in Wall Street firms over the past couple of years.

April 30, 2009 Update: Loren Steffy responds here and points out that the quote that I used above is from a Chronicle editorial that he did not write. For that error, I apologize.

However, Steffy's related column here makes the same misrepresentation regarding Ken Lay's defense and Steffy's blog post continues to fail to respond to the misrepresentation.

Some things never change.

Posted by Tom at 12:01 AM | Comments (5) |

April 28, 2009

NBA Playoffs Win Probability

This is very cool.

Brian Burke, who authors the Advanced NFL Stats webpage, has developed a model for win probability for the NBA playoffs.  So, as you watch the Rockets/Blazers playoff game tonight, you can also watch a chart that calculates and constantly updates the probability of victory for each team while the game progresses.

Can you imagine the dynamic that these charts will contribute to the already electric playoff atmosphere at the Las Vegas casino sports books? ;^)

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

April 27, 2009

Barcelona 1908

This 36 Hours in Barcelona column in Sunday's New York Times reminded me of this fascinating video of Barcelona in 1908 shot from a streetcar. Enjoy.

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

April 26, 2009

Hayes Carll "Beaumont"

From The Woodlands, Texas, Hayes Carll.

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

April 25, 2009

Sisters Morales "You Wanna Love Me"

Another talented group that came of age in the Houston club scene, the Sisters Morales.

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

April 24, 2009

Remember Ken Lay?

Joe Weisenthal and Henry Blodget over at Clusterstock have been all over the breaking story yesterday that, as many of us suspected, former Treasury Secretary Henry Paulson and perhaps other governmental officials threatened Bank of America CEO Ken Lewis and the BofA board if the bank exercised its right to terminate the Merrill Lynch acquisition based on a material change in Merrill Lynch's financial condition.

Of course, this is not the story that Lewis and Paulson were telling to BofA shareholders. They were assuring the shareholders that the Merrill Lynch acquisition was a great deal for BofA.

A few years ago, former Enron chairman 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. In contrast, neither Lewis nor Paulson could even offer the defense in a criminal fraud trial that they thought that the good things that they were telling BofA shareholders about the Merrill Lynch deal were true. We now know that they knew that the assurances were false.

This is not to suggest that Paulson or Lewis should be prosecuted for criminal fraud. They were in an extremely difficult situation -- they and others were concerned that the U.S. and world financial system might collapse if the markets became spooked by BofA backing out of the Merrill Lynch deal. I didn't agree with that concern, but I understood the position of those that did. They may have been correct. At this point, we'll never know for sure.

However, regardless of whether that view was correct, neither Paulson nor Lewis should be prosecuted for a violation of criminal law for their actions. Although they made intentionally false statements to the markets regarding BofA's acquisition of Merrill Lynch, there is no question that they thought what they were doing was essential to saving the financial system and firms such as BofA. If their actions make them responsible for damages to BofA shareholders, then let that liability be sorted out in civil court where liability can be allocated fairly to everyone who had a hand in causing those damages. What's to be gained by throwing them in prison? They simply were not operating on the same fraud plane as Bernie Madoff.

But here is my other point -- Ken Lay was prosecuted to death for conduct that was not even intentional. Now that what happened to Enron has happened to many of the biggest and most prestigious Wall Street firms, isn't it about time that somebody in the federal government acknowledges that what was done to Ken Lay was a massive injustice?

And in the meantime, isn't it about time that this barbaric injustice be rectified, too?

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

April 23, 2009

Checking in on J.R. Richard

According to this interesting Bugs and Cranks interview of former Stros fireballer J.R. Richard, the 6' 8" righthander is still holding some grudges against the local ballclub:

Five Astros pitchers have had their numbers retired, including two, Nolan Ryan and Don Wilson, who won fewer games with Houston than you did. Why isn’t your number 50 retired at Minute Maid Park?

That question I cannot answer. I do not have anything to do with that. Really, the same question has often been offered at me — why? But I cannot ask myself too many questions about that, I don’t try to seek the answers, because at this time, I really don’t know. And I have a lot of people, everywhere I go asking me the same question — why? And I have no answer.

Richard's career was tragically cut short by the stroke he suffered at the age of 30, and it is well-chronicled that the Stros management at the time did a poor job of arranging for a proper diagnosis of Richard's condition that might have prevented the stroke. That led Richard to undertake some questionable treatment on his own, including a trip to a chiropractor on the day he suffered the stroke.

However, as good as Richard was from the age of 26 to 30, he was not as good as current Stros ace, Roy Oswalt. In those five seasons, Richard saved a total of 73 more runs than an average National League pitcher would have saved pitching the same number of runs as Richard pitched (Runs Saved Against Average -- "RSAA"). In his seasons from age 26-30, Roy O's RSAA was almost 137, almost twice that of Richard's.

Interestingly, Nolan Ryan, who was Richard's teammate at the time of Richard's stroke, had an RSAA for the same period in his career of 77, just slightly better than Richard's.

The career statistics or Richard, Oswalt and Ryan are below, courtesy of Lee Sinins' sabermetric Complete Baseball Encyclopedia. The abbreviations for the pitching stats are here:

J.R. Richard Stats

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

April 21, 2009

The Latest Gaffigan

Posted by Tom at 10:18 PM | Comments (0) |

The importance of good timing

As noted earlier here, the Shell Houston Open had its best field in decades earlier this month when it was played the week before the Masters. Based on the World Golf Rankings, 15 of the top 20 players, and 21 of the top 30 played in the SHO, including No. 2 Phil Mickelson, No. 3 Sergio Garcia, No. 5 Padraig Harrigton and No. 6 Vijay Singh.

Just three years ago, when the SHO was being played in the slot two weeks after the Masters, Only two of the top 10 players in the World Rankings played and only ten others in the top 60 of the World Rankings bothered to show up.

This year, the Zurich Classic of New Orleans has the slot two weeks after the Masters that the SHO used to inhabit. Only one of the top 10 players in the World Rankings is playing -- Kenny Perry (5) -- and only two more of the World top 20 are in the field, Steve Stricker (12) and Mike Weir (20). And that's even with New Orleans offering arguably the best cuisine of any event on the PGA Tour.

Timing is everything in the Tiger Chasm.

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

April 20, 2009

Clear Thinking to begin the week

Former Cardinals and Pirates outfielder Andy Van Slyke from this recent interview ($) in Baseball Prospectus:

"Well, [former Astros pitcher] Mike Scott, to me, is the best pitcher to ever pitch in the big leagues. I went 1-for-38 against him.  .  .  . Mike Scott, when he was at the apex of his career, was actually cheating very well. When he threw that forkball, and he scuffed it all up... he threw 97-98 mph, and then he'd throw a forkball that was in the 90s and I just couldn't hit him."

Q: Were there a lot of guys "cheating very well" in your era?

"I think there was more of it going on back then than there is today. You don't really see guys scuffing balls—you don't see guys with sandpaper—but it was very prevalent when I came to the big leagues. The guys... everybody knew who was doing it. It was just hard to catch them."

Arnold Kling on an upcoming debate that he will be having with Robert Kuttner regarding health care finance:

The debate should be about how the cost-benefit trade-offs and rationing will take place. I will argue that most health care spending should be paid for out of pocket, with insurance reimbursement only for very large expenses over a multi-year period. With consumers paying out of pocket, they will take price into account in making their choices, and they will self-ration. The alternative is to have government officials make the choices about what treatments people are to obtain. I do not think that this is a one-sided debate, in which one position is clearly better than the other. But I hope that Kuttner and I can have this debate, rather than go off into red herrings like drug company profits.

The Financial Times' Clive Cook chimes in on America's intractable but nonsensical drug prohibition policy ($) (other posts on drug prohibition are here):

How much misery can a policy cause before it is acknowledged as a failure and reversed?

The US “war on drugs” suggests there is no upper limit. The country’s implacable blend of prohibition and punitive criminal justice is wrong-headed in every way: immoral in principle, since it prosecutes victimless crimes, and in practice a disaster of remarkable proportions. Yet for a US politician to suggest wholesale reform of this brainless regime is still seen as an act of reckless self-harm. [.  .  .]

Strict enforcement,  .   .   .  has reduced drug use only modestly – supposing for the moment that this is even a legitimate objective. The collateral damage is of a different order altogether. Violence related to drug crimes has surged in Mexico and in US cities close to the border, giving rise to renewed interest in the topic.  .  .  . [.  .  .]

Few policies manage to fail so comprehensively, and what makes it all the odder is that the US has seen it all before. Everybody understands that alcohol prohibition in the 1920s suffered from many of the same pathologies – albeit on a smaller scale – and was eventually abandoned. [.  .  .]

Is an outbreak of common sense on this subject likely? Unfortunately, no. Only the most daring politicians seem willing to think about it seriously.  .  .   . [.  .  .]

Somebody in the White House should take a look. This national calamity is no laughing matter.

And finally, Mark Steyn notes the insidious nature of encroaching government regulation over citizens:

The proper response of free men to the trivial but degrading impositions of the state is to answer as [gun owner] Pierre Lemieux did. But it requires a kind of 24/7 tenacity few can muster - and the machinery of bureaucracy barely pauses to scoff: In an age of mass communication and computer records, the screen blips for the merest nano-second, and your gun rights disappear. The remorseless, incremental annexation of "individual existence" by technologically all-pervasive micro-regulation is a profound threat to free peoples. But do we have the will to resist it?

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

April 19, 2009

Hayes Carll "She Left Me for Jesus"

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

April 18, 2009

Tyson

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

April 17, 2009

This Church has something for you

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

April 16, 2009

A Houston Original

One of Houston's many treasures is Jack Burke (earlier posts here), the 86 year-old co-founder and owner of Champions Golf Club. The energetic Burke was recently slowed by a "mild" stroke (my late father used to say that the only mild strokes were those that happened to someone else), but that didn't stop Jack from taking his family to Augusta National Golf Club last week for the Masters, where Burke is a former champion (1956). John Garrity provides this fine article on Burke's Augusta National visit (H/T Geoff Shackelford), which includes the following hilarious and typically Burkean anecdote that former Masters champion Bob Goalby tells fellow PGA Tour member, Miller Barber:

"You know Miller?" Goalby arches an eyebrow. "He's got about 14 curlicues in his backswing, and then he sticks the club straight up in the air with no wrist cock. Anyway, he asked Jackie for a lesson."

"They went out on the range, dumped the balls out. Miller said, 'I'm mixed up on my backswing. Watch me hit some.' So he hit about a dozen balls before Jackie turned and started walking away."

"Miller's got this squeaky voice. He shouted, 'Jackie! Jackie! Where are you going?' And Jackie said, 'Back to the clubhouse. I'm not going to live long enough to figure out that backswing.'"

 

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

April 15, 2009

Defining Health Insurance

All sorts of interesting debates regarding reform of the American health care finance are breaking out across the blogosphere, which is a good thing.

Those discussions prompted one of the best thinkers on health care finance reform -- Clear Thinkers favorite Arnold Kling -- to provide a particularly lucid explanation of the illusory nature of American health insurance and, in so doing, highlight one of the key issues to implementing reform of the current system:

Let me offer two choices:

(a) Health insurance is the collective provision of all health care.

(b) Health insurance is the sharing of extreme risk in health care spending.

In my view, (a) represents what most people think of as good health insurance. For example, I have a friend who says her health insurance is great because she can get new eyeglasses every year for everyone in her family for a co-payment of only $10.

We have never observed (b). (b) would mean something where you only make a claim when your expenses are going to run into the tens of thousands of dollars. Claims would be rare and large, as in fire insurance. Premiums would be low, as in fire insurance.

Since we never have observed (b), we do not know whether it is something that could be provided by the market or would have to be provided by government. I am willing to concede that it may be the latter. However, what most people mean by universal health coverage is (a), which has some pretty obvious incentive problems. [.  .  .]

The bottom line is that what we think of as health insurance is not going to survive if we are going to get control of health care costs. Either health insurance is going to become very intrusive about our choices of medical services (the top-down, government option, under the guise of "health care quality"), or we are going to see much higher deductibles and co-payments (the bottom-up option).

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

April 14, 2009

The Chronicle's Enron myopia

Even when it is on the right side of an issue, the Chronicle reminds us of its failings.

As noted earlier here, it has become fashionable among the Old Media to support the recent decision of the Justice Department to request dismissal of the criminal case against former Alaska senator Ted Stevens because of the DOJ's misconduct in handling the prosecution. The Chronicle chimed in last week with this self-righteous editorial.

Of course, for anyone paying attention, prosecutorial misconduct by the DOJ is not unusual. U.S. District Judge Lewis Kaplan sanctioned the DOJ by dismissing indictments against 13 former KPMG partners. Federal prosecutors in Miami are in hot water with a federal judge there over abusive tactics in a criminal drug case against a local doctor. There even appears to be a connection between the prosecutorial misconduct in the Steven case and the dubious case against former Vice-Presidential aide, Scooter Libby.

As the always-insightful Larry Ribstein points out, could it be that there are agency costs in managing corporate criminal prosecutions just as there are in managing corporations? Along the same lines, Doug Berman suggests that an insidious culture within the DOJ has produced the abuse of power.

But the most galling aspect of the Chronicle's emergent awareness of abusive state power is that it has virtually ignored the egregious examples of prosecutorial misconduct in its own hometown, particularly in the case against Jeff Skilling that resulted in a barbaric and indefensible 24-year prison sentence.

As conflicted publications such as the Wall Street Journal promoted Enron myths and the demonization of Enron executives, the Chronicle could have provided a valuable public service by providing balanced reporting and analysis of what really caused Enron's demise and how such a company can be better-structured to survive in even the most adverse market conditions. When clear evidence of prosecutorial misconduct emerged early in the Enron-related criminal cases, the Chronicle could have provided an even greater public service by taking a strong stand against such dangerous abuse of state power. It's certainly not hard to find historical reminders of the injustice that results from such abuse.

So, what did the Chronicle do instead? It embraced the Enron Myth and led the mob in demonizing Enron executives. From the beginning of the Enron-related criminal cases, the Chronicle editorial staff simply elected to ignore mounting evidence of prosecutorial misconduct in favor of the easier approach of leading the angry mob. The Chronicle's coverage of the Skilling prosecution was so inflammatory and biased that the Fifth Circuit Court of Appeals made the highly unusual finding that the Chronicle created a presumption of community prejudice against Skilling (see pp. 41-45 of the Fifth Circuit decision).

Even now, despite the legacy of prosecutorial misconduct in the Enron-related criminal cases and the fact that what happened to Enron has now happened to many big Wall Street firms, the Chronicle stubbornly clings to the Enron Myth and refuses even to acknowledge that the evidence of prosecutorial abuse in the Enron-related cases is worse than what caused the dismissal of the Stevens case.

As with most Old Media newspapers these days, the Chronicle is struggling to survive. Winning that first Pulitzer Prize sure would sure provide a boost to the Chronicle's flagging spirits.

Wouldn't it be the ultimate irony if the decision to lead the angry mob against Enron distracted the Chronicle from a truly enthralling story of prosecutorial misconduct that could have won the newspaper that elusive Pulitzer?

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

April 13, 2009

The Trial of Sir Thomas More

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

April 12, 2009

Colbert defends Christ

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Bart Ehrman
colbertnation.com
Colbert Report Full Episodes Political Humor NASA Name Contest

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

April 11, 2009

Reason.tv on Tax Time

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

April 10, 2009

Dylan on Politics

From Bill Flanagan's recent interview with Bob Dylan:

What's your take on politics?

Politics is entertainment. It's a sport. It's for the well groomed and well heeled. The impeccably dressed. Party animals. Politicians are interchangeable.

Don't you believe in the democratic process?

Yeah, but what's that got to do with politics? Politics creates more problems than it solves. It can be counter-productive. The real power is in the hands of small groups of people and I don't think they have titles.

H'mm.

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

April 9, 2009

Not a bad way to start the day

"I can only tell you that eggs, country ham, biscuits, a pot of coffee, a morning paper, a table by the window overlooking the veranda and putting green, listening to the idle chitchat of competitors, authors, wits and philosophers, hasn't exactly been a torturous way to begin each day at the Masters all these years."

--Dan Jenkins, Golf Digest (1985)

The lowdown on the 2009 Masters field is here, and Geoff Shackelford is doing his usual fine job of providing a daily review of the best information being generated in connection with the tournament. Starting at 9:45 a.m. CDT, you can watch a live feed of the tournament here.

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

April 8, 2009

Rationing health care

One of the common complaints heard regarding government-controlled, single payor health care finance systems is that they ration care in a manner that often results in long delays for even routine procedures.

However, as this MedPage blog post points out, private providers in America's Byzantine health care finance system also ration care, and the results aren't all that satisfying, either.

Meanwhile, this NY Times article reports on how many private physicians are rationing care by choosing not to accept patients who use Medicare for payment because the net reimbursement for services rendered is simply not worth it. The article also notes the growing trend of physicians opting for a concierge practice, a development that is the subject of earlier posts here and here.

Finally, Arnold Kling, who has done some of the best thinking on health care finance in the blogosphere over the past five years, sums up a big problem with the way in which the American system currently rations care:

In America, about 90 percent of health care spending is paid for by third parties--most individuals do not fend for themselves.  .  .  . My view of the American health care system is that it hardly rations health care at all. That is why we spend so much more than other countries. I wish we put more responsibility on individuals. Instead, we have this delusion that we cannot possibly afford health care if we pay for it individually, but of course we can afford it if we pay for it collectively.

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

April 7, 2009

Is this really the best that the Chronicle can do for its lead sports columnist?

Remember awhile back when Chronicle lead sports columnist Richard Justice defamed Stephanie Stradley, a very good local blogger on the Texans and the NFL who now blogs at the Chronicle?

Well, ol' Richard is at it again.

This time the subject of Justice's venom is Alan Burge, who pens a very good blog on the Texans for the Houston Examiner.

Burge recently made a comment on one of Justice's blog posts regarding Texans GM Rick Smith, who Justice has been belittling for months because Smith fired Justice's friend, former Texans strength coach, Dan Riley.

At any rate, after Burge commented (he goes by "AJ" in the comments) on Justice's blog post, Justice responded by belittling Burge's comment. Burge responded by again challenging Justice's statements regarding NFL contract provisions. Justice responded by continuing to belittle Burge and concluded by accusing Burge of stealing "from others and calling it research."

Inasmuch as Justice has previously removed some of his defamatory statements from his blog site after publishing them, I copied four of Burge's comments and Justice's replies to them before Justice could remove or edit them (he has, in fact, done so now). Burge's comments and Justice's replies are set forth in the document below. Also included in the document is a comment from another commenter who was appalled by Justice's comments toward Burge and Justice's reply to that comment.

With "top" talent such as this, is there any hope for the Chronicle?

 

Richard Justice Comments

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

April 6, 2009

Batter up! Stros 2009 Season Preview

Today is Opening Day for the Major League Baseball season and Houston, so it's time for HCT's annual preview of the Stros' upcoming season (previous annual previews since 2004 are here). The Stros opening day roster is here over at Astros.com.

Despite an unlikely 42-24 run in the second half of last season that allowed the Stros to finish second with a 86-75 record behind the Cubs in the National League Central, there is really not much to be excited about in regard to the Stros this season. Last season's club failed to make the playoffs for the third straight season since the Stros 2005 World Series appearance. This season's club is substantially weaker than last season's club and is even less likely to contend for a playoff spot.

As noted in previous previews, 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. Owner Drayton McLane cleaned house toward the end of the disastrous 2007 season and the club is now firmly in the process of rebuilding its farm system, which had deteriorated into one of MLB's worst over the latter stages of the Biggio-Bagwell era.  Even though Stros management continues to promote the delusion that the Stros can contend for a National League playoff spot, this season's club has virtually no chance of doing so absent highly unlikely circumstances.

The Stros' problems are really fairly simple to explain. Due to the decline in the farm system, and the failure of farm prospects Chris Burke, Morgan Ensberg and Jason Lane to pan out into at least average National League players, the Stros are deficient in a core of good young players who are capable of sustaining successful seasons. The Stros essentially have two very good players -- 1B Lance Berkman and SP Roy Oswalt -- one above-National League average hitter -- LF Carlos Lee -- a decent, but not great, closer -- RP Jose Valverde -- and a player in his prime who has the potential to develop into an above-National League player -- RF Hunter Pence. The rest of the club is an amalgamation of below-National League position players and a pitching staff taht will struggle to be National League-average overall this season. That's not much of a prescription for a successful season.

Last season's club was a poor hitting club that generated 46 fewer runs than an average National League club would have using the same number of outs ("RCAA"), which was 12th among the 16 National League teams. This season's club is unlikely to hit as well as last season's club and the way in which Stros management dealt with the situation reveals why.

In a cost-cutting move during these lean economic times (partly a consequence of over-paying for players during good times), Stros management allowed 3B Ty Wigginton to leave as a free agent after the best season of his career. Inasmuch as the club lacks any ready prospect at the position, the Stros will run a platoon of Geoff Blum and newly-acquired Reds castoff Jeff Keppinger out there every day.

A Blum platoon with over-the-hill Aaron Boone was the original plan, but Boone will miss the season after being diagnosed with a heart ailment and undergoing surgery. Beginning with the 2003 season in which former Stros manager Jimy Williams probably cost the Stros the National League Central title by insisting on platooning Blum with the clearly superior Ensberg, Blum has deteriorated to a point where he is not even close to being an adequate reserve, much less a starter. He has had under a .300 on-base average in five of the past six seasons, has batted .247 BA/.300 OBA/.371 SLG in about 2,000 plate appearances during that stretch, and has generated 100 fewer runs than a National League-average hitter during that period. Thus, the suggestion that Blum is likely to be even close to a National League-average 3B borders on the absurd.

In fact, the Stros would probably be better off moving over-the-hill SS Miguel Tejeda over to 3B and starting slick-fielding minor league SS Tommy Manzella at shortstop, which at least would provide a defensive upgrade. Good defense is going to be particularly important this season given that the Stros' old and low-strikeout starting rotation. On the other hand, it will take a minor miracle for starters Mike Hampton and Russ Ortiz -- who have pitched a total of about 150 innings between them over the past three seasons -- to pitch a total of 150 innings between them this season. One shudders to think who will make up the difference.

Thus, this is likely to be a brutal season for the Stros. The most likely result is a return to the 73 win-level of the 2007 season and there is a real chance that the improving Pirates may finally move ahead of the Stros and relegate the local club to the National League Central basement. The Cubs again are the class of the NL Central and my sense is that the Reds are the most likely club to make a jump up the standings this season. The good news for the Stros is that neither the Brewers nor the Cardinals have improved, either, so at least there is likely to be a muddle of mediocrity underneath the Cubs in the division. However, there is virtually no chance that the NL Wild-Card playoff team will come out of the NL Central.

As with prior seasons, I will continue my periodic reviews of the Stros during the season ("Stros 2009 Season Review, Part __"). This season I will post them after each quarter of the season, which works out to be after each 40 game segment of the season. So, look for my first season review this season after around mid-May, give or take a few days in the event of postponed games. The best sources for keeping up with the Stros on a day-to-day basis are Lisa Gray's insightful Stros blog, the reliable Crawfish Boxes blog, and the Chronicle's Zac Levine's blog. Zac will also provide reports via Twitter this season.

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

April 5, 2009

Observations from the SHO

The following are a few observations from my annual trek to the Shell Houston Open at the Tournament Course at Redstone Golf Club:

• As I've noted on a number of occasions, the Tournament Course has a reasonable number of interesting holes that are effectively distributed between three different courses -- no. 1 and 18, no. 2-9, and no. 10-17. Inasmuch as the three sections of the course are relatively far away from each other, the best way to watch the action is to pick one of the three courses and then stick to that course for much of your stay at the tournament.

• If you prefer to limit your walking while at the tournament, stick to the area that contains no. 1 and no. 18. That area includes two reasonably interesting holes -- no. 1 is a short par 4, while no. 18 is a long 4-par that is one of the hardest holes on the course. In addition, the area includes the driving range and putting green, numerous grandstands and concession areas. Accordingly, you can see all of the competitors without having to walk around much.

• My favorite spot on the golf course to watch the action is the area behind the 6th hole, the adjacent 7th tee and the close-by 8th tee. The players have to hit a reasonably long shot into the 6th green, a short but dicey iron on the par 3 7th and a big drive on the par-5 8th. Thus, you can watch all of the players hit a nice variety of shots while walking a very small area of the course. The only downside -- the area is a good 30 minute walk from the 1st tee-18th green area.

• The Tournament Course is in extraordinarily good shape. The Houston Golf Association overseeds the course with rye grass during the winter months and the rye remains vibrant in Houston through about mid-April. That's why the players enjoy putting on the greens so much -- the rye has very little grain in comparison to the slower and grainier Bermuda grass that takes over the course during the warmer months from mid-April through mid-November.

• Although the Tournament Course is in great condition, the HGA could spruce it up a bit by planting some flowers around the course. For example, the unsightly drainage ditch that separates no. 1 and 18 from the rest of the course could use some wildflowers on the banks to provide some color. Moreover, given the lush green color of much of the rest of the course, some well-placed azaleas and other bright flowers would improve the ambiance of the course nicely.

• One of the most enjoyable aspects of PGA Tour events is that the players are almost all extremely nice and friendly. Each time I said "nice putt" or "nice shot" or "great birdie" to one of the players walking by, every one of them made eye contact, smiled and said "thanks."

• I'm always amazed at the increasing number of good ball-strikers on at these events. Everyone knows about such long-time ball-strikers par excellence such as Greg Norman, Fred Couples, Steve Elkington, Ernie Els, Sergio Garcia and Tommy Armour, III, among others. But relatively unknown players such as Jonathon Byrd, Vaughn Taylor, Michael Leitzig and Kevin Na are absolutely wonderful ball-strikers. It really makes you appreciate the depth of talent on the PGA Tour.

• By the way, the 54 year-old Norman and the 49 year-old Couples remain marvelous drivers of the golf ball. They remain amazingly long and accurate.

• Geoff Ogilvy is now firmly entrenched as one of golf's big stars. You can tell it by the way he carries himself -- he has that quiet air of confidence of one who knows that he belongs among the top players in the game. He is going to be around the top of the leaderboards for a long time. He really does hit the ball high, too.

• It is simply amazing to me that Paul Casey has never won a PGA Tour event. He is an wonderfully well-rounded player. His lack of a Tour win is another reflection of the incredible depth of talent on the PGA Tour.

• Phil Mickelson was a mess in his two rounds at Redstone (9 over par). On Friday morning, I watched him fan a 144 yard 9-iron into the water hazard 20 yards left of the hole on the par 3 7th hole. His drives were similarly erratic and he didn't putt well. I can't imagine that he feels much confidence going into Augusta National next week.

• While strolling over to the driving range, I had a nice chat with Houston-based teaching professional Jim Hardy, who was tutoring a number of his pupils during the week. We shared a nice chuckle on how Jack Nicklaus' idiosyncratic swing principles had created an annuity for teaching professionals over the past generation because of the necessity to correct the swings of all the golfers who were attempting to emulate Nicklaus.

• If Sergio Garcia putted with the confidence that he hits his other shots, then he would have won multiple majors by now.

• A conversation between a couple of Tour pros on the 2nd tee overheard by a friend of mine: "Were you in Stanford [Financial Group]?" "Thank God, no. I passed on that one."

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

April 4, 2009

"Steve Earle" by Sugarland

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

April 3, 2009

The Tyranny of the Busybodies

"Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

- C. S. Lewis, God in the Dock

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

April 1, 2009

The Wavering Rule of Law

So, because of prosecutorial misconduct, the Justice Department decides to move for dismissal of the political corruption case against former Alaska senator Ted Stevens (previous posts here and here).

Meanwhile, Jeff Skilling, who created billions of dollars in wealth and thousands of jobs by revolutionizing risk management of natural gas prices for producers and industrial consumers, sits in a Colorado prison cell under the weight of a barbaric 24-year prison sentence. Skilling's conviction involved even more egregious prosecutorial misconduct than the Stevens case. The criminal case against Skilling was materially weaker than the case against Stevens, too.

It is a sad reflection of the current state of American rule of law that the DOJ readily concedes prosecutorial misconduct against an arguably corrupt legislator, but ignores it in a shaky case against a businessperson who created many jobs and great wealth.

And how bizarre is it that America's primary business newspaper rightly decries the government's abuse of Stevens' due process rights but continues to ignore even worse abuses with regard to a creative and productive businessperson?

Update: Larry Ribstein chimes in, too.

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

The Postrel Health Care Finance Articles

Clear Thinkers favorite Virginia Postrel (previous posts here) is well-known in health care finance circles for her authorship of a reasoned critique of one-payor, centralized health care plans back in the 1990's. She now writes for The Atlantic.

Over the past year or so, Virginia has been experiencing serious health care issues, so she has recently penned two extraordinary articles in The Atlantic (here and here) chronicling her personal experience with America's Byzantine health care finance system. Both articles are must-reads for anyone interested in these important issues, but here are a couple of snippets from the second article that are representative of the wisdom that Virginia provides:

Mr. Daily [a critic] shares a common belief, expressed less dramatically in other letters, that there is somewhere a pot of money dedicated to “health care” which “society” divides between winners and losers. In the United States, at least, there is no health care pot, any more than there is a pot for housing or education or magazine subscriptions. There is simply an economy, which includes health care among other goods, and the amount we spend on health care grows out of the largely decentralized decisions made by individuals and organizations. As productivity increases and prices drop in some areas—food, clothes, entertainment—we can afford to spend more on health care (even without overall economic growth or increased health-care efficiency). [.  .  .]

.  .  . We do not currently treat health care as a right. That we don’t is, in fact, what most letter writers are objecting to. Neither do we regard it exactly as a privilege, to be allocated to the worthy few or even to be limited to those who can afford to pay for it, directly or indirectly. Rather, it is a good, produced and purchased in a complex marketplace through a combination of individual, organizational, and political decisions.

Even this formulation is misleading, however. Health care isn’t a single good, nor, like food, is it easily defined in terms of a minimum to sustain life. Studying other countries’ supposedly universal systems only demonstrates how fraught the concept of “health care” is: one bundle of services in British Columbia and a less-generous one in Nova Scotia, one in England and another in Scotland, one in New Zealand before the election and another afterwards. Arguably the U.S. already has universal care, in the sense that everyone can get some care—if only from an emergency room—for some things, and that citizens (a critical word in this context) without money are covered by Medicaid.

The real issue is how you define “health care.” What gets included is a matter not only of medicine and economics but of culture and politics.

What limitations on health care are Americans willing to accept in return for universal coverage? That is one of the core issues that those who are currently crafting health care finance reform are assiduously avoiding. But true reform will never occur without addressing that issue.

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

March 31, 2009

Florence Slideshow

Posted by Tom at 12:00 AM | Comments (0) |

March 30, 2009

Henderson on the Nature of Government

David Henderson makes an insightful point about the Ryan Moats/Robert Powell run-in in Dallas last week in which Powell (the policeman) exhibited an utter lack of common sense, much less prosecutorial discretion (and this incident is apparently not the first time that Powell has exhibited this type of behavior):

So what is the essence? The issue of control. Read the abridged transcript of the interaction or, better yet, watch the whole 20-minute video. What comes out loud and clear is that the policeman was upset because the driver, Ryan Moats, tried passionately to tell him the nature of the emergency, whereas what Robert Powell saw as being primary was that Moats wait patiently while Powell wrote him a ticket. Even once a nurse came out from the hospital and assured the policeman that Moats's mother-in-law was dying, Powell, writing the ticket, said, "I'm almost done." Must get that ticket written no matter why Moats jumped a red light. [.  .  .]

This is the nature of government whether the government employees are policemen with guns on their sides or sometimes in their hands or are teachers in government-financed schools. The whole Powell-Moats incident reminds me of a passage from Steven E. Landsburg's book, Fair Play: What Your Child Can Teach You About Economics, Values, and the Meaning of Life. Landsburg tells of the propaganda his daughter Cayley's teachers subjected her to about the importance of not letting the water run when she brushed her teeth. Landsburg writes:

[.  .  .]

Where is the pattern, then? What general rule compels us to conserve water but not to conserve on resources devoted to education? The blunt truth is that there is no pattern, and the general rule is simply this: Only the teacher can tell you which resources should be conserved. The whole exercise is not about toothbrushing; it is about authority.

The Moats-Powell incident is a micro example of the government's proclivity to exert power arbitrarily. That essential nature is being largely ignored as the Obama Administration runs headlong into seeking even greater governmental regulation over broad sectors of the economy.

Given that one of the clearest lessons of the 20th century is the capacity of large government to cause unspeakable evil, any effort to centralize more power in the federal government should be subject to the most careful scrutiny and not the type of superficial posturing that Congress has exhibited to date.

Count me as not confident that Congress will oblige.

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

March 29, 2009

It's 2009 Shell Houston Open Week

The Shell Houston Open has finally arrived as a big-time PGA Tour event.

After an ugly divorce from The Woodlands, and a difficult transition period in which most of the best PGA Tour players avoided the event, the 2009 tournament has attracted the best field in the history of the event and one of the top fields of the PGA Tour season to date. Although Tiger Woods will be tuning up in Florida for the Masters next week, 15 of the top 20 players (and 21 of the top 30) in the World Rankings will be playing, including No. 2 Phil Mickelson, No. 3 Sergio Garcia, No. 5 Padraig Harrigton and No. 6 Vijay Singh.

The first Houston Open was in 1922 and the tournament 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 fourth Houston Open to be played on the Tournament Course at Redstone Golf Club and the seventh event overall at Redstone, which hosted its first three Houston Opens on the club's Jacobson-Hardy Course while the Tournament Course was being planned and built.

This is the SHO's third year of being played the week before The Masters and, despite Woods' policy of not playing the week before major championships, the strong field is confirmation that the SHO's move to the pre-Masters date was the right one. The Houston Golf Association has done a good job of promoting the tournament with Tour players by grooming the Tournament Course in a manner similar to Augusta National, but the course is actually a flat-land course that bears little resemblance to the hilly venues of Augusta.

Even with its superior conditioning, the Tournament Course is a favorite of neither players nor spectators. The course actually has a nice variety of interesting holes, but the routing of the course is a disaster, with 16 of the holes separated by a long walk and a drainage ditch from the 1st and 18th holes, the driving range and the clubhouse. Unfortunately, there is not much the Houston Golf Association can do about that routing problem, so let's just hope that the course's superior conditioning and the SHO's attractive tune-up date for The Masters keeps persuading the top players to overlook the routing problem.

Although I've had my doubts that the HGA would be able to turnaround the SHO at Redstone, I'm happy to be wrong on that score. Houston has a rich golfing tradition and the HGA is a fine charitable organization that worked miracles in reviving the tournament during its 20-year run in The Woodlands. It's going to be a great week at Redstone, so sit back and enjoy the SHO!

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

March 28, 2009

Our Congress at work

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

As regular readers of this blog know, I thought the federal bailout of AIG and various other Wall Street firms was a bad idea from the start because it prevented our bankruptcy system from allocating the risk of loss among the creditors of the financially-troubled firms.

Nevertheless, after various forces stoked a climate of fear, Congress approved broad bailout legislation even though it was clear at the time that few of the legislators understood what they were approving.

Not surprisingly, various large creditors of the financially-troubled firms did very well for themselves under the bailout legislation. Can't blame them for protecting their shareholders' interests, now can you?

So now, confronted with the fact that the bailout primarily benefited these large institutional creditors, various members of Congress and New York AG ("Attorney General" or "Aspiring Governor," take your pick) Andrew Cuomo are starting investigations into why AIG did precisely what it was supposed to do -- i.e., pay its bills -- with the bailout funds.

A little late, don't you think?

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

March 27, 2009

Collision

Here is the trailer for Collision, the new Darren Doake-directed documentary about the series of debates and conversations between Christopher Hitchens and Douglas Wilson over the existence of God. Interestingly, Hitchens and Wilson became quite good friends during their travels and debates. The early reviews of the documentary indicate that it is even-handed and very well done.

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

March 26, 2009

Losing the grip on AIG

The business blogosphere was abuzz yesterday over publication of AIG executive Jake DeSantis' remarkable resignation letter to AIG CEO, Ed Liddy.

But what was even more remarkable was the reaction of some commentators that makes abundantly clear that common sense often evaporates in the face of big money.

DeSantis is a longtime AIG executive who worked for one of AIG's profitable units. When AIG was going down the tubes last year because of losses incurred in the company's untethered CDS trading unit, DeSantis agreed to stay on at a nominal salary and continue making profits in his unit in return for a substantial, but not over-market, bonus.

Such arrangements are not unusual for financially-troubled companies and might very well have been arranged even had AIG gone into a chapter 11 reorganization rather than become the subject of an ill-advised government bailout. In short, it's a good thing for creditors of AIG -- including now U.S. taxpayers -- that the company retain people such as DeSantis who might make the company profitable and valuable again.

Or course, we all know what happened when AIG disclosed publicly that it had made the bonus payments to DeSantis and other AIG executives. They were demonized in a manner that has not been seen since Enron.

DeSantis' resignation letter lays this all out and notes the indisputable hypocrisy of AIG executives and government officials who knew about these compensation arrangements, but who flamed the public uproar rather than provide the quite simple and reasonable explanation for the bonuses.

I mean really. Who could argue that DeSantis and the other similarly-situated AIG executives were treated in an abominable manner?

Well, up to the plate steps one Brian Montopoli, a CBSNews.com political reporter, who establishes beyond any doubt that he needs to remain a political, rather than business, reporter:

Mr. DeSantis is not a plumber. He is a Wall Street executive who has made millions of dollars. And it’s safe to assume that most plumbers don’t believe he has gotten a bad deal, AIG scandal notwithstanding.

In essence, Montopoli reasons that other people are working just as hard as DeSantis and they would gladly trade places with him if they could have made as much scratch as he has earned over the years. Given that DeSantis made a lot of money while he was at AIG, Montopoli thinks he is "tone deaf" for pointing out the injustice of being unfairly demonized and cheated out of the compensation that was promised to him in return for staying on at AIG under extremely difficult circumstances.

In short, those evil capitalist roaders deserve most of our scorn and they should just shut the hell up.

In the face of such addled reasoning, it's hard to know where to begin. But let's start by pointing out that Montopoli ignores the rather important fact that no one has stopped him or anyone else from attempting to compete with DeSantis in his area of business and make just as much money as he has over the years. The reality is that there are relatively few people who do what DeSantis does well. That's why he commands a larger salary than most of us.

The fact that DeSantis makes more money than we do doesn't mean that it's OK to screw him out of his compensation or that he shouldn't be heard to set the record straight when such an injustice takes place.

Posted by Tom at 12:01 AM | Comments (9) |

March 25, 2009

Say what, Richard Justice?

The Chronicle's primary sports page columnist, Richard Justice, is gushing over the Houston Rockets' management now that the local club has seized first place in the NBA's Southwest Division going into the last ten games of the regular season:

[Rockets General Manager] Daryl Morey has been perfect. Two years ago, he took over a playoff team, a team that had just won 52 games, and he did something remarkable with it.

He made it better. He did it without having a high draft pick or spending on a big-ticket free agent. He just evaluated talent better than some other teams evaluate it.

His hiring is a tribute to Rockets owner Leslie Alexander, too. Actually, everything the Rockets do begins with Alexander. [ .  .  .]

He’s this city’s best owner by miles, .  .  .

Of course, this is the same Richard Justice who less than two years ago was derisively calling Alexander "Clueless Les" and Morey "Boy Wonder."

So, which is it, Richard?

Well, the reality is neither.

Alexander has actually been a quite mediocre owner who had the good luck to inherit a strong roster when he bought the team. That group promptly won two straight NBA titles for Alexander in the mid-1990's.

However, under Alexander's management, the Rockets now have failed to win a playoff series in 12 straight seasons. That is a streak of futility that is matched by only a few other NBA teams.

Although Justice didn't think so at the time, Alexander does appear to have made a good decision in hiring Morey, who has rebuilt the Rockets' roster over the past two seasons despite having to deal with Tracy McGrady's bloated contract. But geez, can't we at least have a playoff series victory before deeming Morey the basketball version of Billy Beane?

How did someone such as Justice -- who lacks any meaningful ability to analyze sports -- become the Chronicle's top sports columnist?

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

March 23, 2009

Houston golf is a bargain

As I've noted several times over the years, the value of Houston-area golf courses is often under-appreciated by golfers in other parts of the country. In this Golf.com Press Tent blog post , Gary VanSickle indirectly highlights one of the major reasons that Houston golf is under-appreciated:

You tell me what's wrong with this picture. I flew into Miami International Airport .  .  .  and thought I'd stop in at the Melreese Golf Course, a municipal track operated by the city of Miami. It's basically just down the street from the rental car lots in an area that is not well-off -- most of the neighborhood's homes have bars over the windows.

It's noon. It's a Monday. It's beautiful -- 82 degrees, light wind. The course looks to be in outstanding condition, especially for a muni. When I ask if I can play a few holes, I'm told, sure, the course is wide open. In fact, it is all but deserted.

The girl working the register asks if I'm a Florida resident. Nope. She rings up my greens fee. That'll be $158. What, I say? State residents play for $78, non-residents are $158. Do you have a nine-hole rate, I ask? No. I totally understand trying to keep a public course available for use by local golfers. They should get a big discount. It's their course. But this isn't a local discount, it's statewide? What good does that do? You think anybody is going to fly down from Jacksonville to golf Melreese when there are 1,200 other courses in the state? City residents should get the golf discount.

So I settle on hitting a bag of 60 range balls (that's what the sign in the shop says) for $6. When I dump the bag out on the practice range, it doesn't look like 60 balls. I count them. There are 47. I'm 13 short. That's more than 20 percent I've been shortchanged. And while many of the balls looked white and shiny, too many of them just didn't get up in the air and go, no matter how well I hit them. Mushy range balls are a fact of life in golf. Getting 20 percent less product than I was promised, that's something else.

After I hit balls, I chipped and putted on the practice green (which was in very nice shape) for more than an hour. A couple of German guys who'd been hitting on the range did the same. They eventually left. So did I. I spent less than $10 at the course -- I bought range balls, plus a drink and crackers. I gladly would have paid $80 to play, but not $158. So due to excessive pricing, the course got zero.

Melreese used to be an example of how to run a muni. Improved conditions usually brings more play, more golfers. I was there for 90 minutes and saw no one tee off. I saw a couple of twosomes, a threesome and a single already on the course. The old parking lot was closed due to construction of a new clubhouse and, I presume, a new cart barn.

Somebody has to pay for that. But it's not going to be my $158.

What's wrong with golf? Gee, I can't imagine.

VanSickle could have hit the same number of range balls and played 18 holes at Houston's venerable muni, Memorial Golf Course (which is a better course than Miami's Melreese) for $42 if he took a cart, $31 if he walked. $15 more if he called ahead to reserve a tee time.

Posted by Tom at 4:54 PM | Comments (0) |

Getting a grip on AIG

Geez. I leave the country for ten days on a European trip and, upon my return, the entire U.S. body politic appears to be going batshit over a couple hundred million dollars of performance bonuses that the now-thoroughly Enronized American International Group paid to its employees.

What on earth is going on here?

Well, Michael Lewis pretty well nails the dynamic in this Bloomberg.com article:

To the political process, all big numbers look alike; above a certain number the money becomes purely symbolic. The general public has no ability to feel the relative weight of 173 billion and 165 million. You can generate as much political action and public anger over millions as you can over billions. Maybe more: the larger the number the more abstract it becomes and, therefore, the easier to ignore.  .   .   .

Of course, the 173 billion that Lewis refers to in the foregoing passage is the amount that the federal government funneled through AIG to Goldman Sachs and various other big AIG creditors.

Meanwhile, Goldman is feeling some of the shrapnel from the AIG-bonus explosion and has disclosed publicly for the first time the details of why it would not have really been damaged all that much by an AIG bankruptcy.

When the U.S. Treasury started throwing money at AIG in September, Goldman had already gathered from AIG $7.5 billion of collateral against insurance that AIG had written on a $20 billion portfolio of debt securities. Moreover, Goldman arranged $2.5 billion in primarily credit derivative hedges on AIG because Goldman was betting that the value of the securities portfolio was substantially lower than AIG's was betting. Finally, Goldman received another $2.5 billion of collateral from AIG between September and the end of last year and the Fed transferred another $5.6 billion to Goldman to purchase the AIG-insured securities for the Maiden Lane III bail-out entity. Meanwhile, Goldman continues to extract additional collateral on about $6 billion of securities that did not qualify for Maiden Lane III.

None of the foregoing is particularly surprising. Goldman is one of the world's largest trading entitles and AIG is one of the world's largest insurers, so it is inevitable that their affairs are going to be intertwined. When the federal government caved to fears of a global financial calamity and bailed AIG out, Goldman secured its position in regard to AIG in a manner that was consistent with Goldman's best interests. As Joe Weisenthal points out, it really doesn't make any sense to get angry at Goldman for taking advantage of the federal government's bad financial decisions.

So, let's lay off the AIG bonuses -- in the big scheme of things, they are innocuous. Similarly, let's not hyperventilate over Goldman and various other AIG creditors taking advantage of the federal government's dubious investment in AIG. If we are honest, then most of us would admit that we would have done the same thing had we been in the creditors' position.

But let's do start insisting that our representatives get out of the way and allow the market to force these creditors to endure the true cost of the risk that they took in entering into contractual relationships with AIG. Until that risk of loss is properly allocated, investment capital is going to remain on the sidelines, particularly while the government continues to make ill-advised investments that postpones and distorts such allocation.

It's already been an expensive lesson, but one that might well be worth the cost if the counterproductive nature of the governmental actions in regard to AIG comes to be better understood.

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

March 22, 2009

Leaving Florence at dusk

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

March 21, 2009

Palazzo Pitti from the top of the Broboli Gardens (Florence)

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

March 20, 2009

The Arno in the morning

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March 19, 2009

Porta San Niccolo from the Villa Bardini Museum (Florence)

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

March 18, 2009

The Arno from the Ponte Vecchio Bridge

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March 17, 2009

Via del Cannelo in the Ortharno, Florence

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March 16, 2009

Piazza della Repubblica on a Sunday in Spring

This is the site of the original Roman forum in Florence. It is now a large plaza surrounded by chic cafes. The people watching on a beautiful March Sunday is extraordinary.

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

March 15, 2009

Via di San Niccolò, Florence, Italy

Posted by Tom at 2:59 AM | Comments (1) |

March 14, 2009

Cathedral of Santa Maria de Fiore (Florence)

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

March 13, 2009

Morning in Pisa

I am in Italy for a few days with my son Andy helping him get set up in his apartment while he lives in Florence. We flew into Pisa last night and slept there before driving to Florence this morning. Inasmuch as it was late when we arrived in Pisa, we just grabbed a late dinner and didn’t look around much. So, it was a nice that when I went out on the balcony of our hotel room this morning that I turned and saw this view of the Leaning Tower. You are never very far from history while in Italy.

Posted by Tom at 6:09 AM | Comments (1) |

March 12, 2009

The real March Madness

As I've noted many times, big-time college sports in the U.S. is structured in a corrupt manner, but it's an entertaining form of corruption that makes reform difficult (how would reform affect my team?).

That reality rears its rather unsavory head each March as the nation looks forward to the NCAA Basketball Tournament, in which predominantly young black males entertain us in return for legally-sanctioned, below-market compensation. Most of the players do not make it into the high-dollar dream world of the less-compensation restricted forms of professional basketball (the NBA and the other professional leagues), and many of the players do not even receive a real college education or graduate. Many end up with little other than a life of dealing with the after-effects of serious injuries.

To make matters even worse, as Andrew Zimbalist notes in this WSJ op-ed, most academic institutions lose their shirt attempting to compete in this entertaining form of corruption:

The annual three-week orgy of basketball, involving the nation's top 65 college teams, is once again upon us. March Madness they call it, and madness it is. [.  .  .]

So, a captivated national audience, a massive television deal and dozens of corporations drooling to get a piece of the action must all add up to a financial bonanza, right? Not quite.

There are a few winners. The National Collegiate Athletic Association, for instance, makes out quite well. Last year, Madness brought in $548 million from TV rights and an additional $40 million from ticket sales and sponsorships, together representing an eye-popping 96% of all NCAA revenue.

Amid this cornucopia, the schools themselves are usually the losers. According to the NCAA's latest Revenues and Expenses report, in 2005-06 the median Division I men's basketball team generated revenue of $480,000 and had operating costs of $1.33 million, yielding a net operating loss of $850,000. If capital expenses and full university overhead were included, these results would be even more dismal.

The most successful programs, of course, will do better (the top 10 basketball teams had revenues of more than $11 million), but even these programs frequently lose money when the accounting is done properly. Why?

Most of the 300-plus Division I schools aspire to make it to the March tournament. To do so, they have to spend big. Since they can't go to a free-agent market to hire the best high-school players, they attempt to attract them in other ways. First, they spend lavishly to court the players during the recruitment process.

Next, they attempt to provide state-of-the-art arenas and training facilities, complete with luxury suites, Jumbotron scoreboards and spacious locker rooms. They invest in academic tutoring facilities, costing as much as $15 million, to help the athletes stay eligible for competition. Then they hire well-known coaches with a reputation for sending an occasional player to the NBA.

And the coaches don't fare too shabbily either. In 2005-06, the head coaches of the 65 Division I teams in Madness had an average maximum compensation of $959,486, with the top paid coach earning a guaranteed salary of $2.1 million and a maximum salary of $3.4 million. These figures exclude extensive perquisites, including free use of cars, housing subsidies, country-club memberships, access to private jets, exceptionally generous severance packages, handsome opportunities for outside income, and more.

These guys are making almost as much as NBA coaches, even though their teams' revenues generally are below one-tenth those in the senior circuit. The trick, of course, is that the players aren't allowed to be paid, so the coaches, in essence, get the value produced by their recruits. It doesn't hurt that college sports benefit from state subsidies and federal tax exemptions, and that they have no stockholders looking for quarterly profits.

There is a better way.

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

March 11, 2009

Trampling Stanford

As most folks following the upfolding Stanford Financial Group scandal know by now, Laura Pendergest-Holt was the first Stanford executive arrested in connection with the scandal.

If only a few of the allegations contained in the motion below are true, it looks as if the Justice Department and the SEC are well on their way to trampling the Constitutional rights of Ms. Pendergest-Holt, R. Allen Stanford and the other targeted Stanford executives in a manner that we've seen before.

Pendergest-Holt Motion to Set Aside Receiver #141

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

March 10, 2009

The Goldman Sachs bailout

Why do most pundits continue to characterize the billions of dollars that the federal government has loaned to AIG over the past six months as "the AIG bailout?"

As this WSJ weekend article and this subsequent Bloomberg article note, the funds that the Fed and the Treasury have loaned to AIG really bailout out Goldman Sachs and a number of other prominent banks, including some Europe's largest.

Thus, shouldn't we be calling this the "Goldman Sachs bailout?"

By now, we all know what happened. AIG sold credit default swaps that provided the buyer of the CDS with insurance against default on bonds and other credit instruments that the buyers held.

However, insurance is only as good as the financial capacity of the insurer to pay claims on that insurance. So, when it became apparent last summer that AIG had seriously blown the assessment of its risk in issuing CDS, the level of the credit risk that AIG had insured was well beyond its ability to pay potential claims on the CDS. That's not good news for a trust-based business.

Consequently, when bond defaults started hemorrhaging through the mortgage markets, the buyers of AIG's CDS -- namely Goldman and the Euro banks -- had a similar problem to AIG's. They had failed to assess the risk of doing business with their insurer accurately and they were facing huge losses on their CDS claims.

Well, under normal circumstances, that shouldn't have been any big deal to anyone other than parties involved. AIG would have been floundered into chapter 11, Goldman and the other big creditors would have assessed whether it made sense to reorganize the company or simply liquidate its constituent parts, the creditors would have converted their debt to equity in a new AIG or taken a haircut on their claims in return for receiving a portion of AIG's liquidation proceeds, everyone would have licked their wounds and the profitable parts of AIG's business would have emerged from bankruptcy with new owners highly incentivized to generate value for their ownership interest. That's the way markets have sorted out such errors in judgment for generations.

However, as we all know, that's not what has happened this time. Instead, after stirring up a climate of fear, the federal government -- led by supposedly free-market oriented Republicans -- paid Goldman and the Euro banks full price for the unsecured claims that they would otherwise be asserting against AIG in a chapter 11 case. The new Democratic administration doesn't appear to have any better understanding of what to do now that it is clear that the prior Administration's gambit has failed miserably.

It really is not rocket science. Larry Ribstein concurs.

The Financial Times' William Buiter summarizes the lesson that we all should learn from this:

The logic of collective action teaches us that a small group of interested parties, each with much at stake, will run rings around large numbers of interested parties each one of which has much less at stake individually, even though their aggregate stake may well be larger. The organized lobbying bulldozer of Wall Street sweeps the floor with the US tax payer anytime.

The modalities of the bailout by the Fed of the AIG counterparties is a textbook example of the logic of collective action at work. It is scandalous: unfair, inefficient, expensive and unnecessary.

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

March 9, 2009

The real reason why the Texans re-signed David Anderson

I don't keep up on the market in the NFL for back-up wide receivers, but I was still surprised last week when the Texans matched Denver's $4.5 million offer (including a cool $1 million up front) to restricted free agent David Anderson.

$4.5 million for a back-up wide receiver and special teams guy? Really?

But now I know the real reason that the Texans re-signed Anderson -- he keeps the other players loose in the locker room. And based on the video below, he is well worth the $4.5 million. Check out Anderson's imitation of ESPN's NFL Gameday analyst Ron Jaworski. Absolutely spot on.

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

March 8, 2009

Lyle Lovett Time Again

Another song from one of Houston's treasures.

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

March 7, 2009

Conan O'Brien's Greatest Guest Moments

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March 6, 2009

Insightful thoughts to close the week

Writing in 1951 about popular attitudes toward income inequality in "The Ethics of Redistribution," Bertrand de Jouvenel observed the following (H/T WSJ):

The film-star or the crooner is not grudged the income that is grudged to the oil magnate, because the people appreciate the entertainer's accomplishment and not the entrepreneur's, and because the former's personality is liked and the latter's is not. They feel that consumption of the entertainer's income is itself an entertainment, while the capitalist's is not, and somehow think that what the entertainer enjoys is deliberately given by them while the capitalist's income is somehow filched from them.

In arguably the best financial blog post to date in 2009, the Epicurean Dealmaker analyzes the skewed dynamics that led to the Merrill Lynch high-level executive bonus pool and observes, among other things:

It would not be outlandish to consider the Merrill executives' bonus pool as the latest and largest campaign gift toward Mr. [Andrew] Cuomo's 2010 gubernatorial run.

Meanwhile, Andrew Morris wrote the following in a letter to the WSJ editor (H/T Don Boudreaux):

At first, when I read your headline “States give gambling a closer look” (Mar. 3) I thought you were reporting on yet another “stimulus” or “bailout” bill in which politicians played games of chance with taxpayers’ money. Hardly news -- just another “dog bites man” story.

Then I realized it was just a story about allowing ordinary people to risk their own money  --  now that’s a “man bites dog” story!

Along the same lines, the WSJ's Notable and Quotable series provided the following excerpt from Friedrich A. Hayek's "The Constitution of Liberty" (1960) on the illusory nature of progressive taxation and large increases in governmental spending:

Not only is the revenue derived from the high rates levied on large incomes, particularly in the highest brackets, so small compared with the total revenue as to make hardly any difference to the burden borne by the rest; but for a long time . . . it was not the poorest who benefited from it but entirely the better-off working class and the lower strata of the middle class who provided the largest number of voters.

It would probably be true, on the other hand, to say that the illusion that by means of progressive taxation the burden can be shifted substantially onto the shoulders of the wealthy has been the chief reason why taxation has increased as fast as it has done and that, under the influence of this illusion, the masses have come to accept a much heavier load than they would have done otherwise. The only major result of the policy has been the severe limitation of the incomes that could be earned by the most successful and thereby gratification of the envy of the less-well-off.

And Jason Kottke noted the technological irony of the week:

Now you can go to the iTunes Store to buy the Kindle app from Amazon that lets you read ebooks made for the Kindle device on the iPhone.

Finally, legendary Houston trial lawyer Joe Jamail passes along this anecdote about the late, great Houston criminal defense lawyer, Percy Foreman:

In the early 1980s, Jamail represented his courtroom idol, Houston criminal defense attorney Percy Foreman, whose neck was injured when his car was rear-ended by a commercial truck. On direct examination, Foreman testified that he had not experienced any neck problems before the accident, and that he was entitled to $75,000 for lost income due to the injury.

But on cross-examination, the defense revealed that Foreman had been hospitalized nine times for neck problems prior to this accident.

“The jury looked at me, expecting me to give them an answer,” says Jamail. “So I told them that Percy had been a great lawyer throughout his life, but that he was now just an old man and was growing senile.”

At that moment, Foreman jumped up and yelled out across the courtroom, “You goddamned son of a bitch!”

“See what I mean,” Jamail immediately told jurors. “He doesn’t even know where he is right now.”

The jury awarded Foreman the sum of $75,004. Jamail says he never figured out why the extra $4.

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

March 5, 2009

What if they liked the course?

This year's Shell Houston Open during the first week of April is shaping up to have its best field in over 20 years. The Chron's Steve Campbell reports:

Tournament director Steve Timms announced another flurry of player commitments Monday that includes No. 13 Paul Casey, No. 15 Steve Stricker, No. 22 K.J. Choi and former British Open champions Justin Leonard (No. 25) and Ben Curtis (No. 32).

With nearly a full month until the April 2-5 event at the Redstone Golf Club Tournament Course, the SHO has commitments from four of the world’s top eight players (Sergio Garcia, Padraig Harrington, Henrik Stenson and Robert Karlsson) and 13 of the top 30. And that’s not even taking into account former No. 1 Greg Norman making one of his infrequent appearances to tune up for the Masters. [.  .  .] What’s more, Timms has plenty reason to hope No. 3 Phil Mickelson, No. 4 Geoff Ogilvy and defending Masters champion Trevor Immelman (No. 29) will submit their entries by the March 27 deadline. That trio of major champions teed it up at Redstone last year, after all. 

The SHO is one top-30 player away from having the most in its field since 1986 — the first year of the world rankings.  .   .   . Just three years ago, only four top-30 players teed it up at the SHO.

In the era of the Tiger Chasm, that's a darn good field. It's looking as if the SHO's recent move to the week before The Masters, coupled with The Players Tournament moving to mid-May, is really paying dividends. The Houston Golf Association's attention to good conditioning of the Tournament Course at Redstone hasn't hurt in attracting top players, either.

But think of the quality of the field that the SHO might attract if it was played on a golf course that the Tour players really enjoyed.

Another consequence of bad decisions?

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

March 4, 2009

The Chron's last gasp?

With traditional newspapers folding left and right, it's no surprise that the newspaper business is no bowl of cherries these days. According to this WSJ Digits blog post, that uncertainty is prompting Houston's main daily newspaper -- the Houston Chronicle -- to consider some big changes:

Hearst said its newspapers plan to hold back at least some content from their free Web sites, launching the publisher onto the vanguard of print media companies to begin charging for their digital news and information.

A top executive at Hearst, which publishes 16 newspapers including the Houston Chronicle and Seattle Post-Intelligencer, said the company is mulling how much of its online offerings to keep free, while reserving some content exclusively for people who pay.

“Exactly how much paid content to hold back from our free sites will be a judgment call made daily by our management, whose mission should be to run the best free Web sites in our markets without compromising our ability to get a fair price from consumers for the expensive, unique reporting and writing that we produce each day,” Steven Swartz, the president of Hearst newspapers, said in a staff memo.

The text of the staff memo is included at the end of the blog post.

Meanwhile, financial blogger Felix Salmon, who has been following the newspaper website subscription issue for the past couple of years, thinks that the Wall Street Journal's website subscription model -- which is the business model that the Chron hopes to mirror -- is doomed to failure:

My feeling is that [WSJ editor Robert] Thomson was entirely right when he said that [news] commentary had become commoditized, and that therefore you couldn't charge for it; he also said the same thing about most news. But what he calls "specialized content" is to a large degree just taking commoditized news, and adding the kind of value that comes from informed commentators.

Yes, there are things which Dow Jones the WSJ can do and no one else can do in quite the same way -- Thomson was interesting when he started talking about selling content on the subject of India to Japan, for instance. And in a world where Dow Jones is looking to individual subscriptions to make up the losses from corporate subscriptions, it's going to be very difficult for them to start slashing those individual subscription rates to zero.

But I suspect that eventually the WSJ will do the math and work out that the best way to monetize and grow its large number of unique visitors is to maximize the time they spend on the site. And the best way to do that is to go free.

Give the Chronicle credit for taking risks in a battle for survival rather than simply fading away as many other newspapers are doing. However, I am not convinced that the Chron's pay-for-some-content approach has much of a chance of succeeding.

Frankly, the Chronicle simply does not appear capable of producing the type of specialized content that is necessary even to have a chance of generating the level of individual subscriptions that will be necessary for success.

For example, the Chron was inexplicably behind other major newspapers and blogs in its coverage of the recent Stanford Financial Group scandal. Its follow-up coverage really has not provided any meaningful content that cannot be found elsewhere from free news sources and blogs.

Moreover, even where the Chron indisputably takes the lead in regard to a local story of national interest -- such as the newspaper's excellent coverage of the various legal cases involving former U.S. District Judge Sam Kent or its amazing coverage of Hurricane Ike -- the information generated is still not sufficiently distinguishable from other free news sources so that readers will be likely to pay for the content.

Don't get me wrong. The Chronicle is not without talent. Tech columnist Dwight Silverman is one of the most-respected writers in his field. Science reporter Eric Berger does a fine job, and Todd Ackerman has done a first-rate job of covering the Medical Center for years. Ditto for Nancy Sarnoff in regard to local real estate. The Chron sports bloggers Stephanie Stradley, Lance Zierlein and Zac Levine provide better content and analysis than the Chron's sportswriters. I'm leaving others out who also do a fine job.

But is the specialized product that such talent generates sufficient to induce enough online readers to pay for content so that the Chronicle can transform itself into a profitable web-based news provider?

When even longtime Chronicle subscribers are seriously thinking about giving up their subscriptions, I have my doubts.

Posted by Tom at 12:01 AM | Comments (7) |

March 3, 2009

An uncivilized routine

Former Hollinger International chairman and CEO Conrad Black's daily routine these days is not quite as civilized as the one followed by Winston Churchill, wouldn't you agree?:

I get up just after 7 except on the weekends and holidays when it is possible to sleep in. I eat some granola and go to my workplace where I tutor high school-leaving candidates, one-on-one, though sometimes I have to deal with up to four at a time, around my desk, and talk with fellow tutors and other convivial people. I lunch around 11 with friends from education, work on e-mails, play the piano for 30 to 60 minutes, return to my tutoring tasks by 1, return to my unit at 3, deal with more e-mails, rest from 4 to 6, eat dinner in the unit then, and go for a walk in the compound or recreation yard for a couple of hours, drinking coffee well-made by Colombian fellow-residents, and come back into the residence about 8:30, deal with e-mails and whatever, have my shower etc., around midnight, read until 1-1:30 a.m. and go to sleep. On the weekends it is pretty open. [.  .  .]

The days and weeks tend to resemble each other. Time does go by quickly but a bit imperceptibly. I have quite a lot of e-mail and correspondence and limited telephone traffic. Essentially, I try to keep as well in touch with people and events as possible and I am lucky that many friends outside want to correspond. I psychologically live outside this facility most of the time.

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

March 2, 2009

Fiddling while Rome burns

My wife and I attended the annual Houston Livestock Show and Rodeo Barbeque Cook-off at Reliant Park over the weekend, so we again were reminded of the wasteful land use represented by the Astrodome.

With the rodeo and related activities cramped for space and Reliant Park desperately in need of more convenient parking, why do our local leaders persist in chasing rainbows over an obsolescent stadium that is expensive to mothball and has no alternative use absent a massive and risky governmental subsidy?

Meanwhile, with our local governments already locked into tens of millions of dollars of subsidies in regard to a proposed stadium for Houston's minor league soccer club, perhaps a few of our local leaders should review this AZCentral.com article about the bath that Glendale, Arizona is taking in regard to bailing out the Phoenix Coyotes National Hockey League team, which is the primary tenant of the Glendale's local arena. The Coyotes have lost over $200 million since moving to Glendale five years ago.

Thus, on one hand, Houston governmental leaders waste millions annually while they dither over what should be an easy decision regarding valuable government-owned property. On the other hand, local leaders have committed tens of millions of dollars in subsidies to a venture that is far more speculative than even a National Hockey League team.

In short, our leaders are fiddling while Rome burns. And, as Leo Strauss once observed, what makes matters worse is that those leaders not only fail to realize that they are fiddling, they don't even appear to understand that Rome is burning.

Posted by Tom at 12:01 AM | Comments (5) |

March 1, 2009

Lyle Lovett Time

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

February 28, 2009

The Price of Progress

As noted here last fall, one of the key dynamics that is delaying the recovery of financial markets is the resistance of many societal forces to allow the markets to allocate the risk of loss among the various investors in failed businesses.

Inasmuch as private capital will not invest in even a potentially viable business until that company's financial condition is likely to reward such an investment, the liquidation of unviable companies is an essential part of the process that has allowed market-based economies to generate the most wealth and jobs throughout modern history.

Despite the foregoing, the beneficial aspects of liquidating unprofitable businesses remains often unappreciated. A scene from the 1991 Norman Jewison film "Other's People Money" illustrates this truth wonderfully, first as Gregory Peck's character demonizes the forces of liquidation and then as Danny DeVito's "Larry the Liquidator" shatters the myths upon which such demonizing rests. Enjoy.

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

February 27, 2009

He's back

Tiger Woods returned from major knee surgery to make his first appearance of the PGA Tour season this week, although Tim Clark made it a brief initial appearance.

Meanwhile, Woods' major sponsor Nike rolled out this commercial to celebrate Woods' return. It continues the trend of commercials representing some of the most creative product on television. Watch through the end and enjoy.

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

February 26, 2009

The Making of the Godfather

Don't miss Mark Seal's wonderful Vanity Fair piece on the making -- and particularly the war over casting -- of The Godfather:

With The Godfather, the era of the $100 million blockbuster had begun, and its creator was the last to know.

“I had been so conditioned to think the film was bad—too dark, too long, too boring—that I didn’t think it would have any success,” says Francis Ford Coppola.

“In fact, the reason I took the job to write [a screenplay for the 1974 remake of] The Great Gatsby was because I had no money and three kids and was sure I’d need the money. I heard about the success of The Godfather from my wife, who called me while I was writing Gatsby. I wasn’t even there."

"Masterpiece, ha! I was not even confident it would be a mild success.”

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

February 25, 2009

Greed in perspective

In market economies, people who create jobs and wealth often generate great wealth personally. During periods of market unrest, those wealthy folks are often demonized as being greedy.

During a period of economic malaise in1979, the late Milton Friedman counsels Phil Donahue on the vacuity of demonizing greed. Enjoy.

Posted by Tom at 12:01 AM | Comments (5) |

February 24, 2009

Judge Kent cops a plea

As most local lawyers expected, U.S. District Judge Sam Kent entered into a plea bargain on the courthouse steps today. The deal derailed what would have been an extremely ugly trial on sexual abuse and obstruction of justice charges, and ended Judge Kent's 18-year career as a federal judge. Here is the factual basis for the plea deal and also the plea agreement. Earlier posts on the case against Judge Kent are here.

As noted, Judge Kent's plea deal was not a surprise, although the courthouse steps nature of it was. It looks as if defense attorney Dick DeGuerin -- one of Houston's best criminal defense attorneys for this type of case -- pushed the case to the brink in an attempt to gain the best possible deal, which it appears he did.

In the factual basis for the plea, Judge Kent admitted only to lying to the Fifth Circuit Judicial Council about unwanted sexual advances that he made toward a subordinate. That leaves out any admissions regarding the serious sexual abuse charges that the prosecution dismissed as a part of the plea deal. Those non-admissions have to be considered a victory for the defense in a case such as this.

Moreover, Judge Kent's retirement will likely avoid impeachment. If so, then Judge Kent he will be able to collect his federal pension.

However, those victories probably won't prevent Judge Kent from being sentenced to do some serious prison time. The prosecution agreed only not to recommend any more than a three-year sentence in regard to the maximum 20-year sentence that Judge Kent could receive on the obstruction charge, and visiting U.S. District Judge Roger Vinson has a reputation of handing down relatively harsh sentences. I'm no expert on sentencing, but my initial sense is that Judge Kent is looking at between a 3-5 year sentence.

That's probably lighter than the sentence that Judge Kent would have assessed to a defendant convicted of the same charge in a similar case in his court.

But it's not going to be a picnic, either.

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

February 23, 2009

The Journal's curious case of myopia

Bully for the Wall Street Journal for running this editorial last week decrying the prosecutorial misconduct of the Justice Department in obtaining the conviction of former Alaska Senator Ted Stevens on ethics charges (Mike over at the Crime and Federalism blog has posted a copy of the defense motion describing the prosecutorial misconduct here).

However, where was the nation's leading business newspaper when even more egregious prosecutorial misconduct was involved in criminal cases that the DOJ brought in regard to Enron, particularly the prosecution of Jeff Skilling?

Could it be that the Journal was invested in the DOJ's myth regarding Enron?

How ironic that the WSJ condemns prosecutorial misconduct with regard to the case against a politician, but largely ignores it in cases against businesspeople.

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

February 22, 2009

A civilized routine

Check out Winston Churchill's entirely wonderful daily routine from the quite interesting blog, Daily Routines:

Despite all this activity Churchill’s daily routine changed little during these years. He awoke about 7:30 a.m. and remained in bed for a substantial breakfast and reading of mail and all the national newspapers. For the next couple of hours, still in bed, he worked, dictating to his secretaries.

At 11:00 a.m., he arose, bathed, and perhaps took a walk around the garden, and took a weak whisky and soda to his study.

At 1:00 p.m. he joined guests and family for a three-course lunch. Clementine drank claret, Winston champagne, preferable Pol Roger served at a specific temperature, port brandy and cigars. When lunch ended, about 3:30 p.m. he returned to his study to work, or supervised work on his estate, or played cards or backgammon with Clementine.

At 5:00 p.m., after another weak whisky and soda, he went to be for an hour and a half. He said this siesta, a habit gained in Cuba, allowed him to work 1 1/2 days in every 24 hours. At 6:30 p.m. he awoke, bathed again, and dressed for dinner at 8:00 p.m.

Dinner was the focal-point and highlight of Churchill’s day. Table talk, dominated by Churchill, was as important as the meal. Sometimes, depending on the company, drinks and cigars extended the event well past midnight. The guests retired, Churchill returned to his study for another hour or so of work.

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

February 21, 2009

Quotes of the Week

Emanuel Derman:

"The market wants Churchill and they keep tossing it Chamberlains."

John Nash (via David Henderson) on his progress out of mental illness in the late 1980's:

"Then gradually I began to intellectually reject some of the delusionally influenced lines of thinking which had been characteristic of my orientation. This began, most recognizably, with the rejection of politically-oriented thinking as essentially a hopeless waste of intellectual effort."

Dick Armey:

"In reality, no one spends someone else's money better than they spend their own. The charade of the current stimulus package, chockablock with earmarks to favored pet constituencies and virtually devoid of national policy considerations, is the logical consequence of Keynesianism in action. It is about politics and power, not sound economics, and I believe that the American people will reject it."

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

February 20, 2009

IMG's bad week

The late Mark McCormack must be spinning in his grave. His baby has had a very bad week.

McCormack was the attorney who parleyed his friendship with PGA Tour star Arnold Palmer to create the world's leading management firm for professional athletes and celebrities, International Management Group, now known as IMG. In addition to Palmer, McCormack represented such icons as Jack Nicklaus, Tiger Woods, Margaret Thatcher, Mikhail Gorbachev and Pope John Paul II, to name just a few.

McCormack died in 2003 after suffering a major heart attack and his shares in IMG were sold in connection with the administration of his estate. With his death, the oversight of IMG passed on to a new generation of managers led by über-agent, Ted Forstmann.

Well, that new generation of managers just hit a serious bump in the road.

First, although a relatively small deal, IMG suffered a disproportionate amount of horrendous national publicity over its handling of the contract negotiations of eccentric but successful Texas Tech football coach, Mike Leach.

Not only did IMG alienate the decision-makers at Tech to the point that the university seriously considered firing Leach, IMG's handling of the matter forced Leach to resolve the contract impasse himself in a face-to-face meeting with Tech's chancellor yesterday afternoon. What is Leach paying IMG for, anyway?

At any rate, Leach's resolution of the impasse over his contract at least saved IMG from facing the prospect of a $10 million-plus malpractice damage claim from Leach for fouling up the negotiations.

But it appears that IMG may not be as fortunate with regard to its relationship with the major business fraud of this week, Stanford Financial Group.

Check out this NY Post article (H/T Joe Weisenthal at Clusterstock):

The Post has learned that IMG quietly agreed to steer clients looking for investment advice to Stanford Financial Group, potentially exposing them to millions of dollars in losses resulting from the financial firm's alleged fraud.

According to three sources with knowledge of the situation, IMG and Stanford have a quid-pro-quo agreement under which Stanford Financial pays IMG a low- to mid-seven-figure consulting fee in exchange for IMG advising its clients - which include golfers Tiger Woods, Arnold Palmer, David Toms, Sergio Garcia and others - to have their money managed by Stanford.

The backroom bargaining has exposed IMG to charges of double-dealing, and is raising questions about where the firm's allegiances lay: with Stanford Financial or its athlete clients. [.  .  .]

IMG's deal with Stanford Financial involved the management firm advising the now-tarnished financial firm on where to spend sponsorship money, particularly related to golf tournaments.

Stanford's alleged fraud could cost IMG north of $10 million in fees, as well as any clients who got burned in the scandal.

For the time being, IMG is denying that it parked some of its clients' funds at Stanford in return for Stanford hiring IMG as a consultant. But IMG's denial raises as many questions as it answers, such as how did IMG's clients find Stanford if IMG didn't point them in that direction? You can rest assured that, if IMG was in fact consulting for Stanford while recommending that its clients invest money with the firm, IMG will probably just open up its pocketbook and reimburse those clients for any losses attributable to Stanford's demise.

Any other approach to the Stanford problem would be an even bigger public relations fiasco than what IMG has suffered over the Leach-Tech contract negotiations.

Frankly, regardless of whether IMG had a consulting deal with Stanford, that IMG may have recommended that at least some of its clients invest funds with Stanford raises serious questions about the firm's judgment. As noted earlier here, the Houston business community widely-knew for years that any investment in Stanford was an extremely risky bet.

IMG's immediate and vehement denial of any conflict of interest in regard to Stanford and its other clients reflects that it is taking this problem seriously. We all know what happens when a trust-based business loses the trust of the market.

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

February 19, 2009

Hope in the battle against the fire ants!

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

February 18, 2009

Stanford blows up

Well, that certainly didn't take long, now did it?

As noted here this past Sunday, R. Allen Stanford's Stanford Financial Group has been well-known around Houston as a smoke-and-mirrors investment outfit for quite awhile. Joe Weisenthal over at Clusterstock has the best overview of Stanford's collapse, while Felix Salmon does a good job of summarizing the SEC complaint and asking the right questions about the principals of the firm. The Chron's Kristen Hays and Tom Fowler provide the local angle here.

Meanwhile, the Chronicle's business columnist Loren Steffy bemoans the fact that government regulators -- who have been investigating Stanford for at least the past four years -- were again behind the knowledge curve in protecting investors from Stanford's apparent investment fraud.

However, Steffy's expectations are simply misplaced. A government regulatory body will rarely be as effective or efficient as the information marketplace in preventing or mitigating investment fraud loss. Had the investors in Stanford relied on Houston's information market in deciding on whether to invest in the company, they wouldn't have needed the "protection" of government regulation.

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

February 17, 2009

It's tough following sports in Houston

As noted earlier here, given all of the incredible disappointments over the years, there must be a special place in Heaven for folks who continue to follow Houston sports teams.

The latest example The Stros haven't even held their first full team workout in Spring Training yet, but the news is already .  .  . well, .  . not so good.

First, Baseball Prospectus lists precisely one Stros farmhand -- catcher Jason Castro -- in its Top 100 baseball prospects, and Castro is no. 76 on that list. I guess that new "build from within" program is going to take some time.

Or course, this comes on the heels of an extremely quiet winter for the Stros, who didn't make any major moves in a depressed free agent market. They aren't admitting it, but Stros management apparently realizes that this club's window for competing for a playoff spot is closed.

Although an improbable 36-18 second-half record allowed last season's Stros to win 86 games and at least con some naive fans into thinking that they actually had a chance for the NL wild-card spot, Baseball Prospectus' PECOTA prediction system projects this season's Stros to contend for the league's worst team. PECOTA has the Stros topping the woeful Pirates by only one win, 65 to 64.

In view of that, it probably makes sense that the Stros spent most of the off-season cutting costs. In one of their key moves, the Stros withdrew a $27 million three-year offer to reasonably effective pitcher Randy Wolf in favor of a relatively cheap, one-year, $2 million deal with 36 year-old lefty Mike Hampton, who has pitched a total of 147 innings over the past four seasons.

Granted, that's not much production over that stretch. But that means chances are he'll break out and be more productive this season, right?

Well, so much for that theory.

Finally, to put a punctuation mark on another dismal day of following Houston sports teams, I flicked on the car radio to a local sports talk show Monday afternoon while driving between meetings.

The two hosts and a caller were addressing Michael Lewis' NY Sunday Times Magazine article about Rockets forward Shane Battier.

In the article, Lewis provides an in-depth analysis of how the Rockets are on the cutting-edge of modifying traditional statistical analysis to find undervalued players such as Battier. It is clearly one of the most interesting, erudite, well-researched and important articles written about sports so far this year.

Despite that, Here is how the conversation went between the two sports talk radio hosts and their caller:

Caller: "Have you guys read the Michael Lewis article in the New York Times about Shane Battier and the Rockets?"

Host One: "I've heard about it, but I haven't gotten around to reading it yet."

Host Two: "Oh yeah, I also heard about it, but I haven't read it yet, either. What's it all about?"

Caller: "Well, I haven't read the article, either. I was hoping you guys had read it and could tell me about it."

Mercifully, I turned off the radio.

Chalk it up to just another episode in the continuing sordid story of following Houston sports teams.

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

February 16, 2009

What are Leach and IMG thinking?

This earlier post noted the fascinating contract dispute that has arisen between Texas Tech University and the most successful coach in the school's history, Mike Leach.

Now, with the university and Leach at loggerheads, and a university-imposed February 17th deadline looming to get a deal done on a proposed modification and extension of Leach's contract, the real issue ought to be this -- why has IMG, Leach's agent in these negotiations, allowed the negotiations to reach impasse?

Well, it probably is not all IMG's fault because Leach has a law degree and is likely highly-involved in the negotiations. But one has to wonder about the judgment of the agent and the coach who would allow a five-year, $12.7 million contract go up in smoke over a few contractual details that simply should not be deal breakers.

To put this in perspective, the contract that Tech has offered Leach is one of most lucrative in big-time college football, almost certainly one of the top 10 or 15 contracts in terms of compensation. What makes that all the more remarkable is that Tech -- with a relatively modest athletic budget of a bit less than $50 million a year -- is not close to being one of the most lucrative football programs in college football. By way of comparison, Texas' annual athletic budget is over $100 million and Oklahoma's is about $75 million.

In short, a distinct possibility exists that the eccentric Leach will never receive another offer as lucrative as Tech's current one in his coaching career. How on earth is Leach -- who is a good but not great coach -- thumbing his nose at that kind of scratch?

In short, because IMG and Leach don't like several contractual details of the university's proposed contract. For example, IMG and Leach want it to be relatively inexpensive for another program to swoop in and hire Leach away from Tech. Not surprisingly, Tech wants it to be relatively expensive for another program -- at least during the first three years of the new deal -- to hire Leach away from Tech.

Similarly, Tech doesn't want to have to pay an arm and a leg to buyout Leach's contract if it wants to make a change, while IMG wants Tech to pay Leach a buyout equal to 40% of the remaining compensation due Leach under the contract at the time Tech elects to fire him.

The other two issues are so minor that they barely merit mentioning. First, Tech wants Leach to pay a penalty of $1.5 million if he interviews with another school during the term of the contract without Tech's consent. The other issue is that Tech wants to have any outside income that Leach arranges approved by Tech and run through the athletic department.

Having been involved in a few of these rodeos, here's why I think IMG and Leach are foolish if they allow this potentially lucrative deal to evaporate on Tuesday.

First, it's simply not unreasonable for Tech -- which does not have a particularly wealthy football program -- to hedge its risk of losing Leach to another program by requiring a substantial buyout of the contract. The purpose of such a buyout is to allow Tech to mitigate its loss by using the buyout funds to hire a good coach to replace Leach. Moreover, the amount of Tech's proposed buyout will not deter a bigger program that really wants Leach. IMG and Leach ought to recognize this reality, negotiate the least amount of buyout that they can, and move on.

The buyout of Leach is the toughest issue, but not all that difficult to resolve. IMG's 40% proposal, particularly during the early years of the contract, is unrealistic given the size of Tech's resources, so they should come off those amounts. On the other hand, Tech's proposal for the buyout in the later years of the contract is relatively paltry, so Tech should come up considerably on those amounts. By both sides giving a bit in those areas, a deal can be reached.

The other two problem provisions are easily resolvable. On the outside compensation issue, Tech has to regulate that income under NCAA regulations, so requiring Leach to obtain Tech's approval is not an unusual or unreasonable demand. Leach and Tech should simply agree that Tech will have the right to approve any such outside comp and that such approval will not be withheld unreasonably. For his part, Leach should agree that he will report and account to Tech for all such outside income so that Tech can comply with its obligations under NCAA regulations.

Finally, Tech would probably waive the proposed $1.5 million penalty if Leach would simply agree that he won't interview for another job during the term of the contract without Tech's approval, which Tech should agree would not be unreasonably withheld. Then, if Leach were to do so anyway, Tech could elect to fire Leach for cause, which means that it wouldn't have to pay him anything further under the contract. That would resolve that issue.

So, if the foregoing is all that it would take for Leach to become a multi-millionaire, then why are IMG and Leach thumbing their noses at Tech's attractive offer?

The only answer I can come up with is that sometimes pride and emotion really can overwhelm good judgment during the heat of negotiations.

Having said that, I still think cooler heads prevail and a deal gets done. There is simply too much for Leach to lose by not doing so. Leach may be eccentric, but he is not stupid.

And IMG didn't become the world's most successful agents by recommending that their clients reject very lucrative contracts.

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

February 15, 2009

Houston's Madoff?

The mainstream media has finally begun to notice the unusual circumstances surrounding R. Allen Stanford and his Houston-based investment firm, Stanford Financial Group (the latest Chronicle story is here).

Although the firm characterized the various investigations as "routine" in news reports, believe me -- it's never "routine" when the FBI starts nosing around. This is doubtful to end well for Stanford and its investors.

But what's most remarkable about all this is how long it has taken for the media and regulators to catch on to Stanford. It took blogger Alex Dalmody less than 30 minutes to size up the situation, and it didn't take Felix Salmon (update here) much longer.

Meanwhile, this Business Week article reports that the SEC has been investigating Stanford for the past three years!

Interestingly, I've asked dozens of folks in Houston investment community about Stanford over the years and have never once heard one vouch that an investment in the firm would be a good idea except as an absolute flyer. Nevertheless, I cannot recall even one media article over the years examining how Stanford was supposedly paying its lucrative returns to investors. Sure, the firm advertised well and contributed money to a number of powerful politicians. But I kept hearing from competent investment folks -- exactly how is the firm paying those kinds of returns on CD's again? And then there was that whole false association thing with the late Leland Stanford of Stanford University. How could anyone really take this outfit seriously?

Well, as recent news reports indicate, apparently about 30,000 investors did just that.

Now, it appears that many of these investors are from Central and South America, so maybe those investors didn't have ready access to the information about Stanford that was available in Houston. But the important point here is that -- as with Bernard Madoff -- no regulatory agency is ever going to do a better job than the information market in preventing or mitigating fraud loss. I mean really, can you imagine how an investor who bought a Stanford CD during the past three years is feeling toward the SEC right now?

Thinking that the government can prevent a slick con man from fleecing investors is about as rational as investing one's life savings with Stanford Financial Group.

Posted by Tom at 12:01 AM | Comments (16) |

February 14, 2009

An unintended consequence of drug prohibition

While this post from earlier in the week highlighted the historical backdrop to the United States' failed drug prohibition policy, this Telegraph.co.uk article passes along an unintended consequence of that policy that should put to rest any concerns about reconsidering it:

The Home Office has admitted that the street price of both cocaine and heroin has fallen by nearly half in the last ten years, making the most dangerous illegal drugs cheaper than they have ever been.

That means a line of cocaine can cost as little as £1, with an average price per line of between £2 and £4.

The average price of a pint of lager is around £2.75, although some pub chains have reacted to the credit crunch by cutting the price of a pint as low as 99p. A glass of wine typically costs £3.50.  .  .  .

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

February 13, 2009

Can't the NY Times get anything right?

Posted by Tom at 12:00 AM | Comments (0) |

February 12, 2009

What Not to Wear, PGA Tour-style

Golf Digest fashion director Marty Hackel takes Phil Mickelson to task for wearing a white belt with his otherwise all-black oufit at the PGA Tour stop last weekend at Torrey Pines in San Diego:

OK, I have had a look at it and it's not ideal. You are correct in that if you wear a white belt and have a big waist you should select trousers that have less contrast.

White belts are fine, but, and this is a big BUT, if your waist is big, DO NOT HAVE CONTRAST. The white belt with the black trousers called your eye and attention on his waist. Save the white belt for beige trousers and a white golf shirt!!

Golf Digest writer John Strege observes that Mickelson’s outfit might spur a new fashion rule:

One press tent wag suggested a Rule 32 apply, that if you're older than 32 or have a waist size larger than 32 you should not wear a white belt.

Meanwhile, while enduring less encouraging news about professional athletes, take a moment to check out this nice story about PGA Tour veteran J.P. Hayes, who is finding a welcome market for sponsor’s exemptions into Tour events after he disqualified himself over a technical rules violation during the PGA Tour Q-School last fall.

Sometimes, good guys really do win.

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

February 11, 2009

Interesting historical perspectives

Cato Unbound points us to a couple of articles that provide insightful observations on two of the crises that are swirling around us these days.

First, William Niskanen cautions us regarding the fear-mongering that supporters of the Obama Administration's fiscal stimulus plan are using to justify emergency passage of the plan:

This is the fifth time in my adult life that the president has asked for or asserted unprecedented authority on an expedited basis with little or no congressional review. Each of the prior occasions turned out to be a disaster. [.  .  .]

The only coherence in this plan is political, not whether it is an effective or efficient method to stimulate the economy.   .   .  .  Again, as in the four prior episodes, there is every reason not to rush to approve a program of such magnitude.

The primary reason for the current financial crisis is that many banks cannot evaluate their own solvency or that of their current or potential counter-parties, primarily because of the difficulty of valuing mortgage-backed securities and other complex derivatives, and neither TARP nor the fiscal stimulus plan addresses this problem.

Our political system, unfortunately, is strongly biased to try to protect people against the effects of a crisis without addressing the causes of the crisis. To Congress: Slow down. Make sure you understand the causes of the financial crisis and the potential solutions before you burden your children and your grandchildren with another trillion dollars of federal debt.

Your present course is best described as fiscal child abuse.

Meanwhile, as Texans continue to watch nervously to the south as the Mexican government teeters on the brink of losing control of large sectors of the country to drug kingpins, Dale Gieringer reminds us that the main cause of this crisis -- U.S. drug prohibition -- is the result of dubious public policy:

This week marks the centennial of a fateful landmark in U.S. history, the nation's first drug prohibition law.  On February 9, 1909, Congress passed the Opium Exclusion Act, barring the importation of opium for smoking as of April 1.  Thus began a hundred-year crusade that has unleashed unprecedented crime, violence and corruption around the world —a war with no victory in sight.

Long accustomed to federal drug control, most Americans are unaware that there was once a time when people were free to buy any drug, including opium, cocaine, and cannabis, at the pharmacy.  In that bygone era, drug-related crime and violence were largely unknown, and drug use was not a major public concern. [.  .  .]

Early 20th-century Americans would be astounded to see what a problem drugs have become since the establishment of drug prohibition. Every year, two million Americans are arrested and 400,000 imprisoned for drug offenses that did not exist in their time.  Drug laws are now the number-one source of crime in the U.S., with one-half of the entire adult population having violated them.

Long gone are the days when Americans were free to keep opium in their closet; today, even gravely suffering patients are denied pain-killing narcotics by their doctors out of fear of federal prosecution. While smoking opium has faded from the scene, the country is now rife with more potent and lethal narcotics, which are widely sold on the illegal market. 

Seen in retrospect, drug prohibition ranks as one of the great man-made disasters of the 20th century. .  .  .

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

February 10, 2009

The real A-Rod tragedy

As predicted here last year, the names of the MLB players who tested positive for steroids or other performance-enhancing drug use in MLB's 2003 survey test of 240 players are finally being leaked to the media (previous posts on PED use in sports are here).

That survey test was done under a deal between MLB and the MLB Players' Association for the purpose of encouraging voluntary and confidential disclosure of PED use by players so that MLB and the Players' Association could develop a productive program for helping the players get off the juice and monitor future use.

With the leaking of A-Rod's name and the ensuing public outcry, so much for the notion of encouraging players to get help by assuring confidentiality.

Predictably, the mainstream media and much of the public are castigating Rodriguez, who is an easy target.

Of course, much of that same mainstream media and public contribute to the pathologically competitive MLB culture by regularly reveling in players who risk career-threatening disability by taking painkilling drugs so that they can play through injuries.

But players who used PED's in in an effort to strengthen their bodies to avoid or minimize the inevitable injuries of the physically-brutal MLB season are pariahs. Go figure.

Meanwhile, the fact that MLB players have been using PED's for at least the past two generations to enhance their performance is not even mentioned in the mind-numbingly superficial analysis of the PED issue that is being trotted out by most media outlets. Sure, Barry Bonds hit quite a few home runs during a time in which he was apparently using PED's. But should Pete Rose be denied the record for breaking Ty Cobb's total base hits standard simply because he used performance-enhancing amphetamines throughout his MLB career?

As noted here last year in connection with release of the Mitchell Commission report, witch hunts, investigations, criminal indictments, morality plays and public shaming episodes are not advancing a dispassionate debate regarding the complex issues that are at the heart of the use of PED's in baseball and other sports. On a very basic level, it is not even clear that the controlled use of PED's to enhance athletic performance is as dangerous to health as many of the sports in which the users compete.

A truly civilized society would find a better way to address these issues.

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

February 9, 2009

A couple of questions regarding the proposed soccer stadium

The always-entertaining Houston real estate blog, Swamplot, provided this post last week with typically pretty pictures from a KHOU-TV video of the long-proposed soccer stadium for the Houston Dynamo MLS soccer team.

Have we really been talking about this for almost two years now?

At any rate, now that the City of Houston and Harris County have committed a total of $25-30 million to the deal, and the City is on the hook for millions more in infrastructure improvements, Dynamo management is publicly representing that it is prepared to contribute another $80 million to build the stadium.

Now, I'm never seen the Dynamo's financial statement, but my guess is that it generates between $10-15 million in revenues. Maybe that increases by 30-40% if the club gets its own stadium. A nice small business, but .  .  .

In these lean economic times, what bank is going to take the lead in loaning $80 million to a business that would have to dedicate a substantial amount of its revenue base just to pay debt service on the loan?

Is this a bankable deal? Or just pie-in-the-sky absent the local governments coughing up substantially more dough?

Inquiring minds want to know.

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

February 8, 2009

Is Leach worth it for Tech?

A fascinating dispute between Texas Tech football coach Mike Leach and Texas Tech University highlights the tension in the relationship between the business of big-time college football and academia.

According to this Examiner.com article (a more-detailed Don Williams/Avalanche Journal article is here and a Double-T Nation blog post is here), Leach and Tech have agreed on the financial terms of an extended contract, but are hung up over several issues relating to termination and buyout of the contract, including Tech's demand that Leach agree to pay the school $1.5 million if he interviews for another head coaching job without Tech's permission.

Thus, despite Leach being Tech's most successful football coach, Tech isn't all that secure about Leach. And despite Leach's success at Tech, Leach isn't all that thrilled about being at Tech, which is evidenced by his continually seeking other head coaching jobs. Tech apparently thinks that Leach's wanderlust makes Tech look bad, so Tech is seeking to restrain Leach's efforts to obtain another job by making it expensive for him to do so. However, by making such a demand, Tech reinforces to Leach that he really would prefer to be somewhere else.

So, Tech is caught in a conundrum. On one hand, Leach has generated profitable attention for Tech; thus, it makes sense to pay big money to keep him. However, on the other hand, Leach turns around and disparages Tech in the coach marketplace by continually trying to leave. Why pay big money to someone who is diminishing the value of your product?

Nevertheless, Tech is probably over-thinking this issue. Leach is a good coach, but not the best diplomat. Pay him a salary commensurate with Tech's financial capability and Tech's position in the Big 12, and then require a hefty buyout to compensate Tech if another program hires Leach. Don't worry much about Leach's wanderlust -- a large buyout will deter most programs from pursuing Leach. Trying to restrict Leach's wanderlust by imposing a penalty is counterproductive in that it forces Tech to endure a coach who really does not want to be there while reducing the chance that Tech will realize a windfall from another program hiring Leach and paying Tech the buyout.

Having said all that, is Leach really worth it for Tech? Could Tech's program do about as well with another (and likely, far less expensive) coach who is truly content with his position at Tech?

It sure would be refreshing to see Tech decide to find out.

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

February 7, 2009

A good partner is hard to find

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

February 6, 2009

What the Tour players really think

Golf Digest is running in this month's issue the results of an interesting survey that the magazine recently took of 25 of the top PGA Tour players.

Clear Thinkers favorite and longtime Houstonian Steve Elkington scores highly in one of the most important questions:

WHO'S THE BEST JOKE-TELLER ON TOUR?
Todd Hamilton: 17%
Steve Elkington: 13%
Harrison Frazar: 8%
Neal Lancaster: 8%
OTHERS RECEIVING VOTES: Paul Azinger, Rich Beem, Tim Clark, Carlos Franco, Paul Goydos, Peter Jacobsen, Peter Lonard, Nick Price, Chris Riley, Boo Weekley

And you have to like the answers to the question "Who would you rather have dinner with, Phil Mickelson or Vijay Singh?"

Phil: 50%
Vijay: 50%
COMMENTS: "What are we eating?" ... "So either I listen to Phil tell me everything he thinks he knows, or I sit with Vijay while he says nothing." ... "Give me a choice!"

Moreover, in response to the "What's the worst course you play on Tour?" question, La Cantera in San Antonio was the runaway winner (good thing that tournament is moving to a new course next year), while the Shell Houston Open's Tournament Course at Redstone is one of a half-dozen courses in the "Others Receiving Votes" category for that question. That will go over like a lead balloon at Houston Golf Association's offices.

But my favorite answer came in the "Others Receiving Votes" category to the question "Who's the Slowest Player on Tour?"

"Any Swede."

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

February 5, 2009

Thinking about Cheney's remarks

Many Americans were repulsed by the methods former Vice-President Dick Cheney used to consolidate and exercise war powers in the Executive Branch during the administration of George W. Bush.

Unfortunately, that controversy clouds many people's judgment on Cheney's many noteworthy accomplishments during his 30-year career in public service. He has been an extraordinary public servant.

My sense is that Cheney based his aggressive exercise of war powers during the Bush Administration in large part on classified information regarding the risk of more attacks on U.S. citizens after the attacks of September 11, 2001, a point that Barton Gellman notes in his seminal but generally critical book on the Cheney vice-presidency, Angler: The Cheney Vice-Presidency (Penguin 2008).

Cheney's public comments from earlier this week appear to be consistent with my impression regarding his assessment of the risk of further attacks.

Given that, when you have 25 minutes or so, take the time to watch the video below of Irwin Redlener's recent TED lecture on how the nature of a nuclear attack threat on the United States has changed, but our generally deficient approach to preparing for one has not.

As Dick Cheney says, fighting those who would levy such an attack on the U.S. is “a tough, mean, dirty, nasty business.”

Here's hoping that the Obama Administration is up to the task.

Posted by Tom at 12:01 AM | Comments (5) |

February 4, 2009

Blogging NASA

One of my favorite new blogs is Wayne Hale's blog in which he discusses working at NASA generally and on the Space Shuttle program specifically. Despite being a political football from time-to-time, NASA remains a fascinating place.

Every one of Hale's blog posts is interesting, and most of them are downright capitvating. His most recent post -- "Don't Call Him Willy Any More" -- is representative:

Back when the world was much younger than it is now, I was a young shuttle flight controller working in the MCC on several early flights.  We were all learning about the shuttle in those days, and one fellow I knew actually saved the shuttle because he knew what to do when the unexpected happened. [.  .  .]

Willy was an up and coming Captain in the USAF and made a great GNC.  He knew the guidance, navigation, and flight control systems forwards and backwards.  We worked together a lot in those days since the PROP console (mine) was responsible for the attitude control thrusters, their plumbing, etc., while the GNC console was responsible for the Auto Pilot that called on those thrusters to maintain attitude.  Even in those days, Willy demonstrated what military men call "command presence".

But almost as important, Willy could do the most devastatingly funny imitation of our legendary boss, Gene Kranz.  Willy had the mannerisms down exactly right, could put the gruff intonation into the right pitch, and deliver a comedy routine that had all of us in the trench in stitches.  Always during LOS or debrief between sim runs, of course.  Never during the training runs, and especially not during a real flight. Hmm. [.  .  .]

After the shuttle main engines cut off and the External Tank is jettisoned, there is still a lot of the main propulsion system propellant -- liquid hydrogen and liquid oxygen - trapped in the large pipes in the orbiter aft compartment.  .  .  . Not really a safety issue, but a nuisance and something that could cause interruptions later on.

The booster guys came up with a dandy plan to get rid of these propellants faster.   .  .   . those actions would cause a more thorough dump and eliminate the pesky vacuum inerting procedures that interrupted later activities.

So we tried it.  Worked great in the simulator.  Hmm.  In flight, . . . .well . ..

Ascent is always a tense time.  Willy, I, and all the other flight controllers were glued to the data.  Everything went nominally all through mainstage.  No systems issues.  MECO, ET sep, dump start, OOOPS!

The increased propellant dump flow out the side of the orbiter caused it to bank sharply -- the wing headed for the jettisoned but not distant ET.  Willy, calm as could be, relayed the instructions to the crew to regain attitude control.  The wing missed the tank, by how much I don't know, but not by much.

It was all over in just a couple of minutes.  We took a deep breath and got about the business of flying the orbiter in space.

After Challenger, all the USAF "detailees" were pulled out of flight control.  I haven't seen Willy in probably two decades until I ran into him recently.  He has done well in his USAF career, has stars on his epaulets now.  I wouldn't recommend you call him Willy these days.

But then, I haven't called him that since the day he saved the shuttle.

And I bet you didn't even know.

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

February 3, 2009

The Rockets at mid-season

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." -- continues to be the dominant theme among most of the mainstream media in regard to the local NBA team.

In reality, McGrady is long past being a bona fide NBA superstar and really is not much more than a bit above-average NBA player at this point in his career.

However, despite McGrady's and newcomer Ron Artest's relative mediocrity this season, the Rockets are muddling along with a 29-19 record and -- barring further injuries -- are in the thick of the race for an upper division Western Conference playoff spot.

Given the Rockets' narrative, how is that possible? Let's take a look at the numbers.

Dave Berri doesn't rely on subjective narratives and instead continues to provide some of the best objective analysis of what is really happening in the NBA over at his Wages of Wins blog. Here are his mid-season player rankings (organized by team here), which are much more revealing than the Rockets narrative.

Berri's ratings, which he calls the "Wins Produced Model," begins with a player’s statistics -- his points scored, shot attempts, rebounds, steals, turnovers, etc.. -- and translates them into how many wins those statistics create over the course of a season. 

Under Berri's system, players who do many things well -- such as former stars Oscar Robertson, Bill Russell, Wilt Chamberlain, Magic Johnson, Larry Bird, Michael Jordan and Hakeem Olajuwon, as well as current stars LeBron James, Shaquille O’Neal, Tim Duncan, and Kevin Garnett -- are among the most productive players, just as most of us know intuitively.

On the other hand, players who only score a lot of points but who have deficiencies such as low shooting efficiency, high turnover rates, and poor rebounding skills are not as productive as many folks believe based on their high scoring. Current examples of that type of player are Allen Iverson, Antoine Walker, and Carmelo Anthony.

Finally, players who are excellent rebounders -- such as the aforementioned Russell or Dennis Rodman, or current players Ben Wallace and Marcus Camby -- are usually much more productive than most folks give them credit for.

So, players who do not shoot efficiently, or who turn the ball over frequently, do not help their team win many games.  On the other hand, players who generate large numbers of rebounds, or who score consistently and efficiently, or who create steals -- they generally help their teams win more games than average.

Thus, Berri's Wins Produced statistic tells us how productive a player has been. What it does not tell us is why a player shoots inefficiently, commits turnovers, rebounds well or creates steals. That's a question for team management and coaches to figure out.

Having said all that, the following are few observations on the mid-season statistics:

The most productive players by position are as follows:

• Point guard: Chris Paul, who is currently the most productive player in the NBA with a 15.9 WP (an average NBA player's WP is 1.0). Paul is the best NBA point guard since Magic Johnson.
• Shooting guard: Dwyane Wade
• Small forward: LeBron James
• Power forward: Kevin Garnett
• Center: Dwight Howard

The Rockets most productive player so far this season is Yao Ming, who is the NBA's 17th most productive player at 7.1 WP, which is only three spots below the Lakers' Kobe Bryant (7.4 WP).

The Rockets second most-productive player this season is not McGrady, or Artest (120th-ranked at 2.0 WP), or PG Rafer Alston. It's PF Luis Scola (62nd most productive at 3.8 WP).

Even with all his physical problems, McGrady (73rd-ranked at 3.2 WP) is the third most productive player on the team. Having said that, the Rockets aren't any more productive by playing McGrady than SF Carl Landry (74th-ranked at 3.2 WP).

Are the Rockets ever going to have a highly productive point guard again (Alston -- 134th-ranked at 1.6 WP; Aaron Brooks -- 196th-ranked at .7 WP)?

Also, SF Shane Battier (157th-ranked at 1.3 WP) is a marginal starter at this point in time, although fan favorite Von Wafer (173rd-ranked at 1.1 WP) really isn't a better alternative.

Although the Rockets do not have many highly-productive players, they also do not have any players who are actually counter-productive -- i.e., who have a negative WP. Most teams have at least a few counter-productive players.

If McGrady and Artest ever get healthy, then the Rockets' best chance of finally winning a playoff series (it has been 12 years now) may well be playing a lineup of McGrady at the point with Artest at shooting guard, Landry at SF with Scola at PF, and of course Yao at C.

By the way, in view of all this, why do so many folks continue to expect so much from McGrady?

Call it the curse of the big contract -- McGrady is pulling down a total of $40 million guaranteed over this season and next. Many folks just can't come to terms with the fact that sometimes the player gets the better of management in contact negotiations.

Me, I just think McGrady has a good agent. ;^)

Posted by Tom at 3:48 AM | Comments (2) |

February 2, 2009

Sound thoughts to start the week

 Felix Salmon:

It may or may not be true that we would have avoided much of this crisis had credit default swaps never been invented. I suspect it's not true, and that the CDS market, in allowing people to short the credit market, actually helped at the margin to stop the credit bubble from expanding. But even if it is true, that doesn't mean that the solution is to ban or unwind the CDS market which now exists. It was foolish to sell protection too cheaply on risky debt; it was sensible to buy that protection when it was cheap. So let's not punish the sensible people and bail out the foolish ones by abrogating those contracts.

Peter Gordon:

"Animal spirits", Keynes' view of capitalists, reeks of detachment and some condescension. Trouble is no one really knows how to incite the barnyard or rattle the cage. The past six months of ad hoccery have not helped and I am pessimistic about the next chapter, guessing that whatever comes out of the Washington sausage factory will do more harm than good. Bad times do breed bad policy. And there is now very little sympathy for getting the taxman (and the politician) out of the way.

Gordon again:

There are some very smart people who claim that desperate measures are called for. But desperate measures can also make matters worse. Printing money to finance questionable projects that enrich lobbyists, empower bureaucrats and entrench politicians is surely not a promising signal to investors here or abroad.

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

February 1, 2009

A solid Super Bowl Ad

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

January 31, 2009

Vitals

Vitals is an ambitious project -- providing free information and patient ratings on doctors throughout the U.S.

I've checked on a number of my doctor friends and every one of them is included in the database, so it appears to be quite thorough. Inasmuch as the project is quite new, there are not many patient reviews yet. But the information provided is cleanly presented and quite helpful.

My sense is that this is a very good idea.

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

January 30, 2009

Considering the whole man

Over the years, I've written quite a bit (for example, here, here and here) on the questionable nature of the prosecutions of the executives who were involved in the AIG/General Re finite risk transaction that prompted Eliot Spitzer to demonize Hank Greenberg.

However, I've never written as eloquently about the injustice of those prosecutions as Anthony O'Donnell does in this I&T post about the sentencing of former AIG vice-president of reinsurance, Christian Milton.

As noted previously here, the human toll of the criminalization-of-business lottery is incalculable. Careers destroyed while lives and families are shattered.

A truly civil society would find a better way.

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

January 29, 2009

Updike on Golf

The late author John Updike loved to write about and play golf, and his death this week reminded me of a fine speech that he gave about the game during the United States Golf Association's Centennial Dinner in New York in late 1994.

Thankfully, the USGA has posted Updike's speech on its website, the beginning and closing of which is set forth below. The entire speech is a must read for any golfer:

When I was asked to speak to you this evening, my first thought was, "Oh, no – my golf is not nearly good enough!" But then I reflected that one of the charms of the game is that nobody’s golf, not even Fred Couples’ and Nick Faldo’s, is good enough – good enough to please them and their supporters all the time.

Golf is a game that almost never fails, even at the highest levels on which it can be played, to mar a round with a lapse or two, and that at the other extreme rarely fails to grant even the most abject duffer, somewhere in his or her round, with the wayward miracle of a good shot. I am here – I have written so much about the game – because I am curiously, disproportionately, undeservedly happy on a golf course, and perhaps we are all here for much the same reason. [.  .  .]

When did American golf come of age? Some might say in 1904, when Walter Travis won the British Amateur Championship, the first foreigner to do so. Some might pinpoint the 1920s and the international admiration and affection won by the great Bobby Jones. But perhaps most would specify the happy moment in September of 1913 when the unknown 20-year-old Francis Ouimet beat the two foremost British players, Harry Vardon and Ted Ray, for the U.S. Open Championship – an upset that made news, not just golf news. The moment is commemorated by a USGA Centennial logo, based on a well-known photograph.

Look at it; what do we see? Two figures, one of them our heroic golfer, a workingman’s son who happened to live in a modest house across from The Country Club in Brookline, Mass. He picked up golf balls on his way to school, he watched the matches across the street, a member gave his older brother some cast-off clubs, the young Ouimets fell in love with the game. Francis played without fuss; needing, on the 18th green, needing to sink a 5-foot putt to enter a playoff with the Englishmen, he rapped it at the back of the cup without a second look. The next day, he calmly beat Vardon by five strokes and Ray by six. And who is the other figure in our logo, a little figure? He is Ouimet’s caddie, a local 10-year-old called Eddie Lowery, carrying a canvas bag that looks to hold about eight clubs. Think of the caddies in today’s championships – burly yardage technicians toting bags the size of small sofas, loudly blazoned with manufacturers’ names for the greedy eyes of the television cameras.

We have come a long way in American golf, but has it been a journey without a price? Amid the million-dollar tournaments and the $5 million clubhouses, might we be losing the unassuming simplicity of the game itself?

This out-of-doors simplicity, surely, lies at the heart of golfing bliss, as we are reminded by our logo of two New England boys out for a walk on a drizzly September day.

All it takes for a golfer to attain his happiness is a fence rail to throw his coat on, and a target somewhere over the rise.

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

January 28, 2009

Evaluating the NFL QB's and RB's

As Super Sunday approaches, check out this Dave Berri post on his final quarterback and running back ratings for the 2008 season.

A few observations:

The Texans' QB Matt Schaub had the 10th best season among QB's and rookie RB Steve Slaton had the 4th best season among running backs. Three of the seven QB's selected for the Pro Bowl rated worse than Schaub. All six of the Pro Bowl RB's rated worse than Slaton!

QB Chad Pennington, who the Jets discarded in favor of Brett Favre, finished 3rd in the rankings. Aaron Rodgers, who the Packers kept instead of Favre, finished 11th, one behind Schaub.  Favre finished 27th, which was among the worst performances in the league. Favre, not Pennington, Rodgers or Schaub, was invited to the Pro Bowl. John Madden does very good PR for Brett Favre.

One of the only five QB's who rated worse than Favre this season is the Steelers' Ben Roethlisberger, who just happens to be QB'ing the favored team in Sunday's big game. Kurt Warner, the opposing QB in the Super Bowl, finished in 9th place, one slot ahead of Schaub.

Finally, Berri makes an important distinction between the highly interdependent nature of football in comparison to baseball and basketball:

[W]e must remember that systematic analysis in football is extremely difficult.  Unlike basketball and baseball -- where player performance is largely independent of his teammates (at least for hitters in baseball) -- the performance of football players depends on the performance of the player’s teammates.  These interaction effects severely hamper the objective analysis of the game.

And that can be seen when we look at how much time I devote to discussing football.  Like I did with basketball, I also have a model to measure performance in football.  But the measurement of performance in football really only tells one story.  The interaction effects in football cause the performance statistics to be inconsistent.  So the players we see perform well today are not necessarily going to perform well tomorrow.  Although I like telling that story, it’s really about all I ever say about the NFL.

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

January 27, 2009

The potential consequences of being tricky

It's rarely pleasant for a businessman to have his personal affairs splashed across the front page of the New York Times business section.

But it has to be particularly unsettling for the businessman when he is already the target of numerous civil lawsuits and, quite possibly, a criminal prosecution.

Frankly, I've never understood the reasoning of lawyers who advise their clients at the center of such a litigation firestorm to transfer assets to their family members. Fuld and his wife are reportedly quite wealthy, so maybe they have legitimate estate planning reasons for Fuld to transfer his interest in a multi-million dollar home to his wife for nominal consideration.

But Fuld is also subject to numerous civil lawsuits in connection with the Lehman Brothers meltdown. Those lawsuits seek hundreds of millions in damages, and the company's officers and directors' insurance likely will not come close to covering those damages. Thus, the fact that Fuld is transferring a valuable interest in an asset to his wife for nominal consideration at this particular time will be of more than passing interest to the plaintiffs in those lawsuits.

Inasmuch as Fuld is the only person in his family who has any civil liability in those lawsuits, why subject other family members to possible fraudulent transfer liability?

Similarly, in the unlikely -- but certainly possible -- event that Fuld's litigation problems force him into a personal bankruptcy case, why take the risk that his legal right to a discharge of personal liability for claims against him would be denied because of the transfer to his wife?

However, beyond the civil liability concerns, the main reason that Fuld should not have engaged in this type of transfer under his particular circumstances is simply that it looks bad. Real bad. Not only to potential creditors, but more importantly, to prosecutors who will make the decision on whether to indict Fuld. And, most importantly, to jurors who will decide Fuld's fate.

For example, remember the criminal case against former Enron chairman, Ken Lay? The prosecutors conceded (bragged?) afterward that it was a very weak case. So, rather than focus on the supposed criminal conduct, the prosecutors hammered away on Lay's indiscrete use of his personal line of credit with the company. As noted in my concluding post on the seventeen-week trial:

[I]f there was a defining moment in the trial that sealed the defendants' fate, then it likely came in Week Fourteen during Task Force prosecutor John Hueston's cross-examination of Lay over the use of his company line of credit.

Although Lay's line of credit was legal and the company disclosed his use of it in accordance with applicable law, Lay's repayment of the large draws on the line with Enron stock at a time when he was encouraging employees and the market to buy company stock was an apparent contradiction that the jurors could easily grasp.

Similarly, Lay's decision to draw down $1 million on the line five days before Enron's bankruptcy [to help pay off the mortgage on Lay's condominium] was a disastrous decision for the defense. Although done on advice of counsel, Lay's last-minute draw as the company was sinking into insolvency looked so bad that reference to that testimony by leaders of the jury during deliberations was probably enough to seal any wavering non-leader juror's view on whether to convict.

If Fuld is indicted, then you can rest assured that prosecutors will bring his recent transfer to his wife to the attention of the judge during proceedings over the amount of his bond pending trial. And although the transfer has nothing to do with the probable criminal charges against Fuld (i.e., violating the obligation to throw in the towel), prosecutors will try to use it anyway to make him look tricky in the eyes of jurors.

You see, such a transfer plays right into the real presumption these days in business crime prosecutions -- Fuld is wealthy and his company collapsed, so he must be guilty of some crime in connection with his company's demise.

Sadly, being proven greedy is often enough to be convicted of a crime.

 

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

January 26, 2009

Making bad policy

It sure is getting hard to keep up with all the rules involved in determining whether an important person gets prosecuted for an alleged business crime.

First, there was the Apple Rule, which was quickly followed by the Dell Rule.

Next, there was the Buffett Rule.

And then we had the GM Rule.

Now, Larry Ribstein reports that we have the Geithner Rule.

None of which is likely to help Wachovia's Bob Steel, who the SEC apparently believes violated the obligation to throw in the towel.

Does anyone really believe that all these rules and the criminalization-of-business lottery constitutes a coherent policy for regulating questionable business deals?

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

January 25, 2009

Can Mayor White pull off another "win-win" deal?

Although the developers of the proposed Ashby high-rise condominium project didn't know it at the time, Houston Mayor Bill White did the developers a huge favor by putting up roadblocks to that project.

Can you imagine trying to peddle those condos in the current real estate market? Mayor White's blocking of the condos ended being a classic "win-win" deal.

Accordingly, I wonder if Mayor White might be inclined to do the same thing in regard to Houston's proposed soccer stadium?

Things aren't looking too rosy for MLS soccer these days:

Major League Soccer is not quite ready to carry its own night on TV.

After two years of anemic ratings that started low and finished lower, ESPN executives decided to cancel the league’s regular Thursday night telecast on ESPN2 this season.  .  .  .

“We didn’t see the kind of ratings climb we’d like to, so we’re trying something different,” said Scott Guglielmino, ESPN vice president of programming.

The decision to cancel the regular Thursday night game marks a stunning turnaround for a league that two years ago believed it was creating destination programming that would increase interest in MLS. But even the 2007 arrival of David Beckham couldn’t boost MLS ratings.

MLS games averaged a 0.2 rating and 289,000 viewers on ESPN2 in 2007. Those numbers dropped to 0.2/253,000 viewers the following year. Its highest rating during that period was Beckham’s second regular-season game in August 2007 that earned a 0.6/658,000 households.

Canceling “MLS Primetime Thursday” is a tacit admission that MLS is not strong enough to anchor a regular prime-time slot on its own. ESPN is entering the third year of an eight-year rights deal that pays MLS $8 million annually.

So, MLS franchises are being downgraded by the most important sports programming network in the nation, which can't be good for the value of those teams. The attendance at MLS games is poor, at least outside Houston and a couple of other cities. And the perception in sophisticated soccer circles is that the MLS is decidedly minor-league.

Meanwhile, Mayor White has already had Houstonians invest $20 million or so in buying downtown property at a premium price for the proposed soccer stadium, despite the fact that the city already owned nearby property that would have been perfectly fine for such a stadium. Moreover, the city will be on the hook for tens of millions of dollars more in infrastructure improvements if the Dynamo owners somehow cobble together their private financing for the stadium.

Now, it's looking as if the Dynamo may not even have a viable league to play in by the time the proposed soccer stadium is completed in a couple of years.

Pull the plug on the soccer stadium, Mayor. It will be another "win-win" deal.

Posted by Tom at 12:01 AM | Comments (8) |

January 24, 2009

Oral history of the Bush White House

When you have a spare hour or so, check out this "Oral History of the Bush White House" by Cullen Murphy, Todd Purdum and Philippe Sands in the current issue of Vanity Fair.

The format of the article is a timeline recreating of the last eight years with participants' observations on many of the major moments and a number of minor ones, which often end up being as instructive as the reactions to the major ones.

The entire article is a must-read, but the following observations of Kenneth Adelman, a member of former Defense Secretary Donald Rumsfeld’s advisory Defense Policy Board, will give you a flavor.

The context of Adelman's comments are a confrontation that he had with the Defense Secretary several days after Rumsfeld had dismissed the significance of the breakdown of civil order in Iraq by publicly observing that "stuff happens":

So he says, It might be best if you got off the Defense Policy Board. You’re very negative. I said, I am negative, Don. You’re absolutely right. I’m not negative about our friendship. But I think your decisions have been abysmal when it really counted.

Start out with, you know, when you stood up there and said things—“Stuff happens.” I said, That’s your entry in Bartlett’s. The only thing people will remember about you is “Stuff happens.” I mean, how could you say that? “This is what free people do.” This is not what free people do. This is what barbarians do. And I said, Do you realize what the looting did to us? It legitimized the idea that liberation comes with chaos rather than with freedom and a better life. And it demystified the potency of American forces. Plus, destroying, what, 30 percent of the infrastructure.

I said, You have 140,000 troops there, and they didn’t do jack shit. I said, There was no order to stop the looting. And he says, There was an order. I said, Well, did you give the order? He says, I didn’t give the order, but someone around here gave the order. I said, Who gave the order?

So he takes out his yellow pad of paper and he writes down—he says, I’m going to tell you. I’ll get back to you and tell you. And I said, I’d like to know who gave the order, and write down the second question on your yellow pad there. Tell me why 140,000 U.S. troops in Iraq disobeyed the order. Write that down, too.

And so that was not a successful conversation.

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

January 23, 2009

Thinking about Ted Kennedy's health care

As the Obama Adminstration begins exploring how to reform America's broken health care finance system, Kevin Pho makes an insightful observation regarding the current medical treatment of one of the leading reformers:

As we know, Massachusetts Senator Ted Kennedy has an advanced stage brain tumor, and was recently hospitalized for a seizure.

Seizures are a common side effect of malignant brain tumors, and often controlled with a variety of anti-seizure medications. There will be times where seizures can break through medication control, leading to the frightening episode that occurred on Inauguration Day.

Family physician Doug Farrago asks some pointed questions about the stellar care that the Senator receives, observing that "he travels around with a team of physicians," and, "most patients in [Senator Kennedy's condition] usually are in hospice care."

Senator Kennedy should be commended for his efforts to bring about health care reform. But is the care he is receiving, including instant opinions and access from revered institutions like Massachusetts General Hospital and Duke University Medical Center, representative of the kind of care he's advocating for the American public?

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

January 22, 2009

You won't see this at the local Metro Light Rail station

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

January 21, 2009

Skilling fires back

As noted earlier here, the Fifth Circuit Court of Appeals panel decision in former Enron CEO Jeff Skilling's appeal of his criminal conviction was unusual in several respects.

For example, even though the three-judge panel reversed Skilling's sentence and remanded that part of the case to the U.S. District Judge Sim Lake for re-sentencing, the part of the panel's decision affirming the conviction was oddly superficial in a number of key respects.

In particular, the panel's decision failed to reconcile its reasoning in upholding Skilling's conviction for honest services wire-fraud under 18 U.S.C. § 1346 with the Fifth Circuit's earlier decisions on the same issue in the Nigerian Barge and Kevin Howard cases.

Similarly, despite finding that Judge Lake had improperly failed to grant Skilling a presumption of community prejudice for purposes of establishing the correct venue and in selecting jurors, the panel turned around and affirmed the conviction anyway by reasoning that Skilling had waived his juror argument by failing to object to the seated jurors (except one) and by finding that Judge Lake had overcome the presumption of prejudice against Skilling by conducting an "exemplary" voir dire.

Now it's time for Skilling's team to fire back at the Fifth Circuit panel's decision.

Yesterday, Skilling's lawyers zeroed in on the unusual aspects of the panel's decision by filing this Petition for Panel Rehearing and this Petition for Rehearing En Banc in front of the entire Fifth Circuit Court of Appeals (Kristen Hays' Chronicle article is here). As with the panel's earlier decision, the copies of Skillings' petitions provided in this post are bookmarked, key arguments are highlighted, and a few of my comments are included.

The Petition for Rehearing En Banc is the meatier of the two pleadings in analyzing the alleged defects in the panel's decision.

First, Skilling hammers the panel's creation of a "following orders" exception to rationalize affirming Skilling's conviction on the honest services wire-fraud charge even though that decision is inconsistent with the Fifth Circuit's previous decisions in the Nigerian Barge and Kevin Howard cases and other appellate decisions on the same issue. In short, Skilling argues that the only discernable “rule” that can be gleaned from the Fifth Circuit's conflicting decisions on the issue is that an employee cannot be convicted for honest services wire fraud if the conduct charged was in furtherance of the corporate interest (Nigerian Barge decision) unless the employee is a senior executive (Skilling decision) except in certain unspecified circumstances (Howard decision).

Skilling rightly asks: How could "any employee .  .  . know under existing circuit precedent what conduct will subject him to prosecution for honest-services fraud?"

Heck, maybe we all ought to be signing up for this.

Moreover, Skilling argues that the panel simply misread the trial record in finding that Skilling had "failed to challenge for cause all but one of the jurors." The panel used that key finding to conclude that Skilling had "waived most of his argument" regarding improper venue and juror bias.

This is important because of the panel's finding that the District Court committed error in failing to find presumed community prejudice against Skilling. In effect, the panel’s waiver analysis relieved the Enron Task Force of its burden to show that each juror was impartial. Instead, the panel required Skilling to show that each juror was biased, which confuses an actual prejudice case (in which Skilling would bear the burden of proving bias) with a presumed prejudice case, where the prosecution is required to fulfill the tough burden of proving that each juror is impartial.

Inasmuch as Skilling's appellate petitions specify in the trial record where he challenged the entire jury and objected specifically to at least seven seated jurors, Skilling's request for rehearing on this ground appears to be solid. Frankly, if it is not clear error for the District Court to have denied Skilling's motion to change the venue of his trial because of the unprecedented community bias against him, then there is simply no longer a legal basis to change the venue of a trial on that basis within the Fifth Circuit.

Finally, Skilling argues that the panel was wrong to affirm the District Court’s (i) jury charge on the definition of “materiality” for purposes of securities fraud, and (ii) its refusal to dismiss “puffing” statements that are normally dismissed as immaterial in civil securities fraud cases.

It is well-settled in securities law generally that reasonable investors rely on facts in assessing the value of a company's stock and not mere expressions of optimism from company spokespeople. Consequently, Skilling argues that the panel was wrong to affirm the District Court's decision that Skilling's misstatements had to be submitted to the jury even though they were indistinguishable from misstatements that the Fifth Circuit has routinely ruled could not sustain a securities fraud claim. In fact, Skilling relies on a Fifth Circuit decision in a recent Enron-related civil case as support for his argument.

So, where does all this leave Skilling?

Well, on one hand, it's never easy winning a case on appeal in the best of circumstances, and it's hard to imagine a worse political climate than the present one for a formerly wealthy businessman to be pursuing sympathy from an appellate court in regard to the way in which he was prosecuted for alleged business crimes.

On the other hand, the prosecution of Skilling stinks to high-Heaven. Moreover, there are a number of Fifth Circuit judges with first-rate business law experience who could very well be uncomfortable with the way in which the Department of Justice is attempting to convict businesspeople such as Skilling by placing the square peg of the honest services wire-fraud charge in the round hole of a non-kickback, non-bribery business crime case.

My bet is that Skilling has a better than normal chance of the full Fifth Circuit taking a good, hard look at his appeal. Stay tuned.

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

January 20, 2009

Reality Bites

This earlier post made the following point about folks who lost their entire nest egg by investing it with Bernard Madoff:

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.  .  .  .

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."

Professor Antony Davies of Duquesne University in Pittsburgh makes an analogous point in this W$J letter-to-the-editor (H/T Don Boudreaux) about folks who are calling for increased regulation because of losses incurred in their 401(k) retirement accounts:

In the article "Big Slide in 401(k)s Spurs Calls for Change" (page one, Jan. 8), 35-year-old project manager Kristine Gardner says in response to the 44% drop in her 401(k) last year: "There's just no guarantee that when you're ready to retire you're going to have the money."

Newsflash: Higher returns are the compensation for incurring risk, and lower returns are the price of safety. Ms. Gardner's 401(k) would have been completely safe had she shifted her investment allocations into money markets. As money markets yield a paltry 1%, Ms. Gardner's real complaint isn't that 401(k)s are unsafe, but rather that financial markets require her to incur risk in exchange for being compensated for incurring risk.

Retirement consultant Robyn Credico claims that "This is the biggest test that the 401(k) plan has seen . . . and it has failed." Au contraire, 401(k) plans have worked exactly as designed. It is the workers (and their retirement consultants) who have failed.

There is only one reason why the average person close to retirement should have lost 50% of his 401(k): incompetence. Most workers at that age should have long since shifted the bulk of their 401(k)s into bonds and money markets. The 401(k) is a powerful investment tool but can be dangerous when abused.

If you aren't willing to put forth the effort to learn the principles of investing, that's your choice. But don't hobble the rest of us by asking for government regulation of a tool that works perfectly well just so that you can be spared the effort of figuring out how to use it.

As with the security theater in our nation's airports, increased regulatory control over retirement investment is a fake safety net. It will not protect retirement savings (check out the solvency of the Social Security system if you don't believe that), and the "protection" of increased regulation will lead many investors to believe that they still do not need to understand the best ways to create wealth and hedge risk in their retirement accounts.

Indulging ignorance is generally not a good reason for increasing governmental power.

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

January 19, 2009

An entertaining upcoming week in Houston

No one in Houston this week can complain about lack of opportunity for intellectual stimulation.

First, well-known legal blogger and Clear Thinkers favorite Larry Ribstein will be lecturing on Thursday afternoon from noon to 2 p.m. at the University of Houston Law Center as the first speaker of the semester in UH Law Professor Lonny Hoffman's “Colloquium” course that brings noted legal scholars from around the country to UH each year to give presentations on the scholar's work in progress.

Great teachers are a popular topic on this blog (see here and here), so I'm particularly pleased that Professor Ribstein is taking the time out of his busy schedule to visit Houston. As regular HCT readers know, Professor Ribstein is one of the premier business law scholars in the country.

The holder of the Mildred Van Voorhis Jones Chair at the University of Illinois College of Law, Professor Ribstein's widely-read Ideoblog has been at the forefront of the blawgosphere's enormous impact on legal analysis and education, literally pushing legal scholarship from what had been mostly closed conversations between fellow academics into a hugely valuable resource that is now readily available to anyone over the Web. Already the leading expert in the U.S. in the area of unincorporated business associations, Professor Ribstein is also one of the blawgosphere's most insightful thinkers on corporate governance issues and the effects of regulation on markets and business. His blog has contributed as much to the understanding and appreciation of business law issues over the past five years as any resource of which I am aware.

Professor Ribstein's talk on Thursday will be on this paper that he co-authored with George Mason University law professor Bruce Kobiyashi that examines the empirical factors that influence limited liability companies' choice of where to organize. Seating for the talk is limited, so contact Professor Hoffman at Lhoffman@central.uh.edu or 713.743.5206 as soon as possible to reserve a seat. The lecture will be held in the Heritage Room of the UH Law Center.

Meanwhile, on Wednesday from 11:30-1:30 p.m., popular author and journalist Malcolm Gladwell will be giving a talk on his new book, Outliers, at the Hilton-Americas Houston hotel (Chron article here). Tickets are $75 and include a copy of the book and the luncheon, which is co-sponsored by Inprint, the Greater Houston Partnership and Brazos Bookstore. Contact Jill Reese at 713.844.3682 or jreese@houston.org to make reservations, the deadline for which is noon on Tuesday.

Finally, author and former Houstonian Larry McMurtry -- the pre-eminent Texas writer of the past 30 years -- will be giving the lecture on Wednesday evening from 7-8:00 p.m. in Rice University's Distinguished Lecture series. The lecture will be held in the Grand Hall of Rice's Ley Student Center and is open to the public.

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

January 18, 2009

The Hardest Job in Football

As you settle in to watch today's two NFL conference championship games, be sure to check out Mark Bowden's excellent article in this month's Atlantic on the enormous human and technological resources that to into the television production of a typical NFL game.

Sort of makes a two-minute offense at the end of a game seem a bit mundane in comparison, wouldn't you agree?

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

January 17, 2009

Hayes Carll on the Battle of Crystal Beach

Clear Thinkers favorite Hayes Carll sings "I Got a Gig" and tells the humorous story about about his first gigs in Crystal Beach, Texas.

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

January 16, 2009

Marathon madness

The annual running of the Houston Marathon is this weekend, so the Houston Chronicle is running its typical series of supposedly inspiring stories about various participants.

A couple of days ago, the story was about a couple of folks who had lost huge amounts of weight while training for marathons. Richard Justice wrote this column about some fellow who is so obsessive about running that he has run in "82 marathons across 26 years, four continents and 29 states."

Yesterday's Chronicle article, however, takes the cake. Check out the headline:

Sunday’s race will be extra special for Stacie Rubin, who will be competing five months after suffering a heart attack

The story goes on to describe a Kingwood mother of four children who has run long distances daily for years. She had a heart attack while training one day and didn't even go to the doctor's office for several days because she was so convinced that someone as "healthy" as her could not have anything seriously wrong with her. Even after the heart attack, she was so obsessed about her long-distance training that she was back running again within a couple of weeks of the heart attack and is now planning on running in the marathon this weekend.

The Chronicle article presents all of this as heroic and the epitome of physical fitness.

Frankly, I think these stories are grossly misleading and the people telling them are badly misguided.

In my younger days, I used to run long-distances, too. I even ran a 37 minute flat 10K -- 6.2 miles -- once. As with most folks in my generation, I bought into the myth that long-distance running was excellent aerobic exercise that allowed me to maintain good health while eating most anything I wanted.

However, about 15 years ago, after falling out of shape during a busy time in my practice, I decided to do some extensive research into exercise protocols and nutrition to put myself back on track. After about six months of research, I concluded that most of my pre-conceived notions about exercise and nutrition were flat-out wrong.

For example, I discovered that long-distance running is neither a particularly healthy form of exercise nor an effective method of weight control.

Note, for example, this abstract from the a study published in the Annals of the New York Academy of Sciences:

Ann N Y Acad Sci. 1977;301:593-619. Related Articles, Links

Coronary heart disease in marathon runners.

Noakes T, Opie L, Beck W, McKechnie J, Benchimol A, Desser K.

Six highly trained marathon runners developed myocardial infarction. One of the two cases of clinically diagnosed myocardial infarction was fatal, and there were four cases of angiographically-proven infarction. Two athletes had significant arterial disease of two major coronary arteries, a third had stenosis of the anterior descending and the fourth of the right coronary artery. All these athletes had warning symptoms. Three of them completed marathon races despite symptoms, one athlete running more than 20 miles after the onset of exertional discomfort to complete the 56 mile Comrades Marathon. In spite of developing chest pain, another athlete who died had continued training for three weeks, including a 40 mile run. Two other athletes also continued to train with chest pain. We conclude that the marathon runners studied were not immune to coronary heart disease, nor to coronary atherosclerosis and that high levels of physical fitness did not guarantee the absence of significant cardiovascular disease. In addition, the relationship of exercise and myocardial infarction was complex because two athletes developed myocardial infarction during marathon running in the absence of complete coronary artery occlusion. We stress that marathon runners, like other sportsmen, should be warned of the serious significance of the development of exertional symptoms. Our conclusions do not reflect on the possible value of exercise in the prevention of coronary heart disease. Rather we refute exaggerated claims that marathon running provides complete immunity from coronary heart disease.

This recent University of Maryland Medical Center study examines another health risk of long-distance running.

Art DeVany -- who has been studying physiology and exercise protocols for years -- has written a series of blog posts over the years regarding the unhealthy nature and outright dangers of long-distance running. DeVany points out that many endurance runners in fact are not particularly healthy people, often suffering from lack of muscle mass, overuse injuries, dangerous inflammation and dubious nutrition.

Similarly, in this timely article, Mark Sisson lucidly explains why endurance training is hazardous to one's health. Here is a snippet:

The problem with many, if not most, age group endurance athletes is that the low-level training gets out of hand. They overtrain in their exuberance to excel at racing, and they over consume carbohydrates in an effort to stay fueled. The result is that over the years, their muscle mass, immune function, and testosterone decrease, while their cortisol, insulin and oxidative output increase (unless you work so hard that you actually exhaust the adrenals, introducing an even more disconcerting scenario). Any anti-aging doc will tell you that if you do this long enough, you will hasten, rather than retard, the aging process. Studies have shown an increase in mortality when weekly caloric expenditure exceeds 4,000. [. . .]

Now, what does all this mean for the generation of us who bought into Ken Cooper’s "more aerobics is better" philosophy? Is it too late to get on the anti-aging train? Hey, we're still probably a lot better off than our college classmates who gained 60 pounds and can't walk up a flight of stairs. Sure, we may look a little older and move a little slower than we'd like, but there's still time to readjust the training to fit our DNA blueprint. Maybe just move a little slower, lift some weights, do some yoga and eat right and there's a good chance you'll maximize the quality of your remaining years… and look good doing whatever you do.

In this recent post, Sisson describes a weekly method of aerobic exercise that provides most of the health benefit derived from long-distance running at a fraction of the time expenditure and at far less risk of injury. Add in a couple of short (about 20-25 minutes sessions) weight-training sessions per week to maintain your lead body mass, lead an active recreational lifestyle and observe balanced nutrition, and you are likely to be far healthier than the folks who are spending untold hours beating themselves up running long-distances.

If you are interested in developing such a plan, check out both DeVany and Sisson's blogs. They provide a wealth of information on how to tailor an efficient exercise and nutrition plan.

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

January 15, 2009

Fertitta calls off bid to take Landry's private, but takes it private, anyway

Suffice it to say that it's been an interesting past year and a half for Houston-based Landry's Restaurants Inc., which owns restaurants such as Landry's, Rainforest Cafe, Charley's Crab, The Chart House, and Saltgrass Steak House, as well as the Golden Nugget Hotel & Casino in Las Vegas and Laughlin, Nev.

The saga started in late July of 2007 when the company announced that it was delinquent in its regulatory filings with the SEC and that it was in need of refinancing over $400 million in debt in a rapidly deteriorating debt market.

Shortly thereafter, the company sued some of its bondholders for declaring the company in technical default under their bonds, but the company quickly settled that litigation on not particularly good terms.

A few months later, Landry's announced in January 2008 that its CEO and major shareholder (39%), Tilman Fertitta, had made an offer to take the company private by buying the other 61% of the company's stock for $23.50 share, which worked to be a $1.3 billion deal, including debt.

That offer seemed all well and good, particularly given that the proposed purchase price was a 40% premium over the $16.67 share price at the time of the offer.

Unfortunately, a spate of shareholder lawsuits followed Fertitta's bid. By early March, 2008, it was apparent that Fertitta's bid was so speculative that he hadn't even lined up financing for it.

So, the following month, Fertitta lowered his offer to $21 per share because of "tighter credit markets", and Landry's announced that it had accepted that price in June.

But by the fall, the financial crisis on Wall Street had roiled credit markets even further and Hurricane Ike caused considerable damage to several Landry's properties. So, in October, Fertitta lowered his offer to $13.50 per share.

Then, on Monday of this week, the company announced that it was terminating the proposed deal with Fertitta. The company contended that the SEC was requiring the company to issue a proxy statement disclosing information about a confidential commitment letter from the lead lenders on the buyout deal. The company is negotiating with those same lenders to refinance the bond indebtedness that the company promised to refinance in connection with October, 2007 litigation settlement noted above. Inasmuch as the lenders' commitment for financing Fertitta's buyout required that the terms of the commitment remain confidential, the company elected to terminate the buyout deal rather than risk that the lenders would declare a default for breach of confidentiality and back out of the financing commitment for the buyout, as well as the negotiations on the refinancing of the bond indebtedness.

Oh yeah, amidst all this, Landry's stock closed at $6.54 per share today.

Meanwhile, what has Fertitta been doing while his take-private bids have languished and the company's stock has plummeted to historic lows?

He has been buying more Landry's stock. So much so that he now controls 56.7% of the company's shares.

That's right. Landry's board failed to obtain a standstill agreement from Fertitta while his buyout offers were pending over the past year.

As Steve Davidoff notes, this is "truly worthy of Deal From Hell status." Loren Steffy has the same take.

While Landry's directors are checking on the amount of the company's D&O policy, I wonder whether Landry's lenders will follow through on the refinancing negotiations for the bond indebtedness in light of the market's hammering of Landry's share price?

If that refinancing doesn't happen, then those bondholders who Landry's sued back in August of 2007 will likely not be easy for the company to deal with.

In that case, maybe Fertitta's additional purchases of Landry's stock won't look so smart after all.

Stay tuned.

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

January 14, 2009

Fascinating trend

Following on this earlier post, isn't it interesting that companies selling alcoholic beverages are funding some of the most creative product on television?

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

January 13, 2009

The criminalization-of-business lottery

The owners of Long Term Capital Management may have been the earliest winners in the most recent era of what Larry Ribstein has coined the criminalization-of-business lottery.

On the other hand, Jamie Olis may have been the earliest big loser.

Martha Stewart lost, but at least never lost her business enterprise. Frank Quattrone also lost, but then he won, although I suspect that he believes that he lost overall.

Subsequently, Theodore Sihpol won while Bill Fuhs and his family lost a year of his life before he won, too. But he and his family will never get that year back.

Then, Ken Lay lost big even though he had a reasonable basis for believing that he should have won. Same with Jeff Skilling.

Meanwhile, mainstream media darlings Steve Jobs and Warren Buffett won, although several of Buffett's associates did not fare as well. Neither did relative media unknown Greg Reyes.

But General Motors CEO Rick Wagoner appears to be a winner, even though those two Bear Stearns executives probably aren't.

And who knows about those Lehman Brothers executives -- they may be winners, after all? I mean, everyone was doing it, right?

Finally, for awhile, it looked as if David Stockman was going to be a big loser. But in a startling turnaround, Stockman is now a winner.

Just as with a gambling lottery, there is no rhyme or reason as to who wins or loses in the criminalization-of-business lottery. But in this lottery -- which does little or nothing to deter the true business criminals of the world -- the losers and their families give up much more than merely money.

A truly civil society would find a better way.

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

January 12, 2009

2008 Weekly local football review

(previous weekly reviews are here)

Texas Longhorns 24 Ohio State 21

In a not particularly well-played, but nevertheless highly-entertaining Fiesta Bowl last Monday night, the Longhorns (12-1) used some more QB Colt McCoy magic with 16 seconds left to pull out the victory over upset-minded Ohio State (10-3).

After arguably his worst half of the season, McCoy (41-59/414 yds/2 TD/1 INT) rebounded in the second half of the game to lead the Horns to a 17-6 third quarter lead, then engineered the spine-tingling comeback in the final two minutes after the Buckeyes had rallied during the fourth quarter to take the lead. WR Quan Cosby had a monster game (14 receptions for 171 yds and 2 TD's) and capped his Longhorn career with a spectacular catch and run for the game-clinching TD.

In many respects, this Longhorn team was the product of the best performance by head coach Mack Brown during his tenure at UT. With Oklahoma's (12-2) loss to Florida in the BCS Championship game, the win over tOSU gave the Horns the best record and the highest national ranking of any Big 12 team. The Horns survived a brutal mid-season stretch of games against highly-ranked teams and came within a dropped interception in the final minute of the Texas Tech game of playing in the BCS Championship game. Given their improvement on defense this season over the 2007 season, the stability of the coaching staff and the return of McCoy next season, UT's future remains bright, although the failure of a dominant running back to emerge this season is cause for some concern.

UT's troubles against Ohio State, Texas Tech's embarrassing loss to Mississippi in the Cotton Bowl, and OU's loss to Florida reflects a trend of Big 12 teams having problems against top-tier defenses of non-Big 12 teams. The Longhorns' lack of a consistent rushing attack was a problem against the salty Ohio State defense and that inconsistency could leave the Horns vulnerable next season to the tougher defenses that they will face against a top tier team in a bowl game.

In fact, the lack of top-notch defenses overall in the Big 12 should be at least a moderate concern for conference coaches and officials, who appear to have swung the pendulum too far in favor of the offenses in an effort to create exciting, high-scoring games. Texas Tech's offensive linemen looked absolutely shocked during the Cotton Bowl when referees from another conference actually called holding against them a couple of times during the game. Tech's offensive linemen rarely endured holding calls this season from Big 12 referees.

Such small problems aside, things are definitely looking up for the Longhorns next season. With a much more favorable schedule, the Longhorns will begin the 2009 campaign as a consensus top 3 pick in the national polls. Inasmuch as OU will probably have to replace their star QB Sam Bradford, the Horns will probably also be the consensus favorite to win the Big 12 championship.

It's all good these days in Longhorn Country.

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

January 11, 2009

Men are from Mars, Women from Venus

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

January 10, 2009

Dan Jenkins' 2009 Golf Season Pop Quiz

Clear Thinkers favorite Dan Jenkins is already in mid-season form with this hilarious pop quiz (H/T Geoff Shackelford) for the start of the 2009 PGA Tour season. Some of the questions to get you started:

7. Camilo Villegas is:
(a) A golfer on the PGA Tour.
(b) A golfer on the LPGA Tour.
(c) An island off the coast of Spain.
(d) A contestant on "Dancing With the Stars."

11. When 38-year-old Phil Mickelson said that he had somehow grown an inch through stretching exercises, was it in:
(a) Height?
(b) Width?
(c) Between the ears?

15. Since winning the Masters in April, Trevor Immelman has:
(a) Disappeared.
(b) Quit golf.
(c) Changed his name to Sam Parks Jr.

Meanwhile, with the dawn of the 2009 season, Daniel Wexler provides this timely overview of the current top players on the PGA and LPGA Tours. It's an excellent primer for the upcoming season.

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

January 9, 2009

Can Judge Kent receive a fair trial in Houston?

By now, most folks have heard that the government has filed a superceding indictment against U.S. District Judge Sam Kent alleging sexual abuse against a second federal employee and also obstruction of justice in connection with the Fifth Circuit's previous investigation into the allegations. The previous posts on Judge Kent's case are here.

As this Mary Flood/Chronicle article notes, Judge Kent faces an enormously difficult fight for his life in the upcoming trial. Given the latest allegations, my sense is that his chances are remote of finding a Houston jury that is not tainted by the lurid local news reports on the case.

As of this date, Judge Kent's formidable defense attorney -- Dick DeGuerin -- has still not requested a change of venue. Should he now?

Although Racehorse Haynes is still trying cases well into his 70's, DeGuerin is now widely regarded as having accepted the baton from Haynes as being the dean of Houston's outstanding criminal defense bar. Given the difficulty of the case against Judge Kent, could this case be DeGuerin's equivalent of Hayes' career-defining T. Cullen Davis case?

Stay tuned.

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

January 8, 2009

Another Angry Mob

The Fifth Circuit's decision yesterday reminded us of the angry mob that lynched Jeff Skilling.

Now, as this timely Roger Parloff/Fortune article notes, an even larger mob is gathering to lynch the businesspeople who were attempting to save their companies in the wake of last year's financial meltdown on Wall Street:

The level of fury surrounding these inquiries is of a different order from what we saw with, say, the backdating scandals or the Enron and WorldCom failures. Today's credit collapse has already vaporized about $9 trillion in investment capital, while ripping another trillion in assorted bailout money from the pockets of enraged taxpayers - also sometimes known as "jurors."

Based on the Fifth Circuit's Skilling decision, those targeted businesspeople would be wise not to rely on the courts for protection from the mob.

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

January 7, 2009

The Fifth Circuit rules in the Skilling appeal

In this current anti-business climate, not many folks were expecting that the Fifth Circuit Court of Appeals would set aside former Enron CEO Jeff Skilling's conviction.

On the other hand, not many folks expected this decision, either.

In the curiously detached 104 page opinion, the Fifth Circuit affirmed Skilling's conviction, but reversed his sentence and remanded that part of the case to U.S. District Judge Sim Lake for resentencing based on the appellate court's rejection of Judge Lake's four level enhancement under the sentencing guidelines for for "substantially jeopardizing a financial institution."

Based on my rough calculations, I think that means that the range for Skilling sentence would be reduced from 292-365 months to 188-235 months. If Judge Lake resentences Skilling at the bottom of new range, then Skilling's 24 year sentence would be reduced by 104 months, which computes to an 8.5 year reduction.

That's certainly better than nothing.

In reading the opinion, I gathered the impression that the Fifth Circuit panel really did not have its heart in it. Despite the 104 page length, the opinion mostly glosses over the hotly-disputed fact issues regarding the government's charges against Skilling. And even in affirming Skilling's conviction, parts of the decision provide hope to Skilling that his monstrously unjust 24 year sentence will be set aside completely or reduced even further.

Rather than parse the decision in a blog post, here is a copy of the decision in which I have used Adobe Acrobat to bookmark the sections of the decision, as well as highlight and annotate comments on my initial reading of the decision.

First and foremost, the decision muddles the adjudication of Skilling's argument that his conviction was tainted by the government's legally invalid "honest services" theory.

If you've been following the Enron-related criminal cases from the first one (Arthur Andersen), you know the drill -- in an effort to facilitate prosecutions, the Enron Task Force developed a fallacious theory of criminal liability out of the honest services wire fraud statute that is normally used in corporate crime cases involving bribes or kickbacks. In short, the government's new theory attempted to stick a square peg in a round hole.

As a result, none of the Enron-related prosecutions proceeded smoothly. The government would normally bludgeon former Enron executives into plea deals, have them testify about "secret side deals" that changed the nature of an otherwise valid business transaction and then accuse defendants such as Skilling of breaching their fiduciary duty to the company and committing the crime of honest services wire fraud by allowing the transactions to be accounted for pursuant to the terms of written agreements rather than the "secret side deal." The fact that all of the written agreements contained provisions that rendered any such oral agreements void has been regularly ignored by the government and most courts throughout the entire Enron ordeal.

After the Enron Task Force used this theory of honest services wire fraud to convict Skilling, the Fifth Circuit struck down the theory in the Nigerian Barge case by concluding that it does not apply where employees "breached a fiduciary duty in pursuit of what they understood to be a corporate goal."  Accordingly, the Skilling team based a major part of his appeal on the Fifth Circuit's decision in the Nigerian Barge case.

Without expressly saying so, the Fifth Circuit in Skilling creates a "policymaker exception" to the rule that a breach of fiduciary duty that is aligned with corporate interests cannot be an honest services wire fraud. The Court reasons that, since Skilling was the person who authorized the fraudulent means to achieve the corporate goal, he could be held criminally liable under the honest services wire fraud statute even if his employees could not (pp. 21-23).

Not particularly persuasive reasoning, but there you go.

Some other observations:

At several points in the prosecutorial misconduct section, the Court invites Skilling to file a motion for a new trial with Judge Lake, particularly in regard to the Fastow interview notes that the prosecution failed to turn over to Judge Lake during the trial. The Court specifically finds that "the omission of this statement [that Fastow did not think he discussed Global Galactic with Skilling] from the [FBI Form] 302's is troubling."

The Court clearly is not impressed by the objectivity of the Houston Chronicle, citing the newspaper's highly inflammatory coverage of Skilling's case in finding presumed community prejudice against Skilling. Of course, the Chronicle's most vitriolic critic of Skilling doesn't even notice (see also here and here) the Court's criticism.

On one hand, the Fifth Circuit finds that Judge Lake committed error by failing to presume jury prejudice for purposes of Skilling's change of venue and jury prejudice argument. Then, on the other, the Court rules that Skilling waived his jury prejudice argument on appeal by failing to register objections for cause on 11 of the 12 jurors.

The Court concludes that Judge Lake's "exemplary voir dire" helped the government fulfill its burden of establishing that an impartial jury had been impaneled despite the presumed prejudice against Skilling. I have my doubts.

The Court chides Judge Lake for his remarks during a pre-trial hearing that there was a "reasonable likelihood" that the witnesses did not cooperate with Skilling because the witnesses were guilty of related crimes and wished to assert their Fifth Amendment privilege to avoid incriminating themselves. However, the Court concludes that Judge Lake's improper remarks were harmless error.

The Fifth Circuit lets former Enron Task Force Andrew Weissmann off the hook with regard to Skilling's allegation of witness intimidation, but notes that "Weissmann would have done well to have brought the issue [of alleged conflict of interest] to the court's attention instead of emailing [former Enron executive Ken] Rice's lawyer."

The opinion starts out by observing that "[A]n initial investigation uncovered an elaborate conspiracy to deceive investors about eh state of Enron's fiscal health." The Court does not identify who conducted this "initial investigation" or who the participants were in the "elaborate conspiracy." Not particularly convincing.

Although the Fifth Circuit opinion provides Skilling with some running room to continue challenging his conviction and sentence, it is foreboding to the dozens of business executives who are currently subjects of various pending grand juries investigating the meltdown on Wall Street. Given the paper-thin nature of the government's allegations of criminal conduct against Skilling and the substantial evidence of prosecutorial misconduct, the Fifth Circuit's decision sweeping most of that under the rug is a strong indicator that obtaining convictions in future prosecutions of business executives will be akin to shooting fish in a barrel.

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

January 6, 2009

As the Rockets' World Turns

With the football season winding down in these parts, folks are finally noticing that the Houston Rockets are approaching the halfway point of the NBA season and again look like an also-ran in the playoff race. It's now been a dozen years since the one-time back-to-back NBA champions have won a mere playoff series.

What happened this time? Dave Berri thinks that Ron Artest has not been the answer.

Meanwhile, Rockets owner Les Alexander has been getting hammered in areas other than basketball, too:

Houston Rockets owner Leslie Alexander has seen his 20% stake in First Marblehead Corp., once valued at nearly $1 billion, plunge to about $15 million. The company, which packages student loans and sells them to investors, saw its business evaporate in 2008. Its shares fell more than 90% last year to about $1.

Thankfully for Alexander, his original investment in the company was only $4 million and -- before the 2008 meltdown -- he sold a portion of his company stock for $250 million, a substantial portion of which was probably used to pay a $150 million divorce settlement.

What I can't figure out is whether all of that makes it harder ("We're paying him what?!") or easier ("It's only money!") for Alexander to pay Tracy McGrady a total of $40 million over this and next season?

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

January 5, 2009

2008 Weekly local football review

(WRMSOX photo; previous weekly reviews are here)

Rice 38 Western Michigan 14

As expected, the Owls (10-3) rolled to an easy win in the Texas Bowl last Tuesday as star QB Chase Clement (30-44/307 yds/3 TD's/12 carries for 72 yds/1 TD/1 catch/13 yds/1 TD) and the potent Rice offense overwhelmed the Western Michigan defense (9-5). Any further question why Notre Dame opted for the Aloha Bowl over facing the Owls in the Texas Bowl?

The victory gave the Owls their 10th win in a season for the first time in almost 60 years and their first win in a bowl game since the 1954 Cotton Bowl.

Inasmuch as I've been watching the Rice offense develop over past three seasons under Clement, I was not surprised by the Owls' performance this season. Clement, WR Jaret Dillard and WR-TE-RB James Casey were as talented a trio of offensive players on one team as any in the nation.

The problem that the Owls face is whether they can sustain that level of performance.

Clement and Dillard are both seniors, as is a substantial part of the Owls' offensive line. Casey is a likely NFL draft choice, so it is unlikely that he will take the risk of uncompensated injury by returning for another season at Rice. Tom Herman, the Owls' offensive coordinator who really ignited Rice's spread offense over the past two seasons, left Rice last week to take the same position at Iowa State.

So, Owls head coach David Bailiff is going to have his hands full trying to maintain the performance level that the Owls attained this season. I hope he can, but I have my doubts.

Houston Cougars 34 Air Force 28

The Cougars (8-5) completed a successful first season under new head coach Kevin Sumlin with a victory over a plucky Air Force (8-5) squad on New Year's Even afternoon in the Bell Helicopter Armed Forces Bowl in Ft. Worth.

The game should not have been as close as it was. The referees inexplicably took away a second half TD from Houston even though it was clear from the replay that RB Bryce Beall had possession of the ball while breaking the plane of the goal line before fumbling (see picture above). Also, the Air Force's only second-half TD, which allowed the Falcons to narrow the Coogs' lead to three, was set up by star Cougar TE Mark Hafner allowing an easy pass reception to ricochet off his chest into the hands of a Falcon defender. But for that blown call and Hafner's gaffe, the Coogs would have won this one going away.

Nevertheless, the Coogs will take the victory, their first bowl win in nine tries since their last bowl win the 1980 Garden State Bowl. Beall, the Cougars' true freshman RB, was the star of the game as he shredded the Falcons' defense for 135 yds on 22 carries (6.1 ave) and a TD, while catching four screen passes for an additional 92 yds.

Meanwhile, Cougar QB Case Keenum managed the Cougar offense magnificently (no college QB sets up and throws a screen pass any better), guiding the Coogs to over 400 yds total offense while spreading the ball around to seven different Cougar receivers.

And as noted above, the Cougar defense -- which has been the team's weak point all season -- really stepped up in the second half and did a fine job of containing the Falcons' wishbone offense.

With almost all of their offensive playmakers returning, the Cougars should possess one of the most potent offenses in college football next season. The challenge will be to upgrade the defense, which has suffered the past two seasons from several years of under-recruiting by former Houston coach Art Briles' staff. Given the probable productivity of the Cougars offense, even a relatively small improvement in the Cougars' defense next season is likely to vault Houston to the top tier of non-BCS Conference football teams.

Texas Longhorns

The Longhorns (11-1) take on Ohio State (10-2) in the Tostitos Fiesta Bowl at 7 p.m. tonight in Phoenix on FOX. The Vegas line on the game began at Texas minus 11, but it has since moved to Texas minus 8 and, at a couple of casinos, Texas minus 7.5. Take that for what it's worth.

Houston Texans

As predicted, head coach Gary Kubiak didn't waste any time after the conclusion of the season in firing defensive coordinator Richard Smith and two of his assistants.

As noted since his hiring, I'm not convinced that Kubiak is the best fit as a coach to develop the Texans into a playoff caliber team. However, I am impressed with his willingness to recognize mistakes and take actions to attempt to correct them. Stubbornness is a common characteristic of unsuccessful NFL coaches and Kubiak does not appear to be afflicted with it. Hopefully, he will hire a seasoned NFL defensive assistant who can develop the Texans' young talent into a unit that is as productive as the Texans' offense.

On the other hand, I couldn't help but note the following passage from this NY Times article on the recent firing of long-time Denver Broncos head coach and Kubiak mentor, Mike Shanahan:

Although [QB Jay] Cutler gave the Broncos hope for the future, Shanahan was ultimately undone by an increasingly leaky defense, something a revolving door of defensive coordinators could not seal, and a string of questionable draft picks and free-agent signings that Shanahan made as the team’s executive vice president for football operations. In Shanahan’s absence, the Broncos are in the market for a general manager as well.

The Broncos’ defense was ranked among the league’s top seven in seven of the nine seasons beginning in 1997. In the last four years, however, the defense plunged to middle-of-the-pack status, then to No. 29 in 2008.

If Kubiak hires a Denver retread as his new defensive coordinator who doesn't improve the Texans' defense markedly, then similar words will be written about him within a year or two.

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

January 4, 2009

How much did you say he made?

Except for the incredibly large amounts, there are no surprises at the top of Golf Digest's annual list (H/T Geoff Shackelford) of professional golf's top 50 money earners from both prize money and endorsement income.

Tiger Woods ($117 mil total/$110 mil endorsements), Phil Mickelson ($45 mil/$38.5 mil endorsements) and Vijay Singh ($$43 mil/$26 mil endorsements) lead the way, while Arnold Palmer ($30 mil in endorsement income!) and Greg Norman ($25 mil in endorsements) rounding out the top five.

And, by the way, Golf Digest calculates that Woods has earned close to $900 million in winnings and endorsements since 1996.

Although there aren't any surprises in the Top Ten earners, there are certainly a few down the list a bit.

For example, can anyone explain to me how 12th-ranked Retief Goosen -- who induces sleep whenever interviewed -- managed to generate $9 million in endorsement income?

Or how 34th-ranked Rory Sabbatini -- one of the most boorish players on the Tour -- generated $3.5 million in endorsement income, which is $1.5 million more than 35th-ranked Geoff Ogilvy, who is one of the most pleasant players on the Tour?

Maybe Katie Couric at $15 million a year is a bargain for CBS News, after all?

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

January 3, 2009

Football or P.R. Genius?

Richard Justice has already deemed him a genius.

Earlier this month, he visited President Bush in the White House and, on Sunday night, he will be profiled on CBS-TV's 60 Minutes.

Even Michael Lewis has bought in to the genius story.

But after a middle-of-the-road SEC program thoroughly manhandled his Texas Tech squad in the Cotton Bowl yesterday, Mike Leach looks more like a public relations genius than a football one.

Look, Leach is a reasonably good coach with an innovative offense. However, he is not close to being the savant that Tech's breakout season is leading some folks to suggest.

In fact, an objective evaluation of Leach's Tech career reveals that his teams run up big offensive numbers, but are not particularly impressive against teams with comparable or better talent.

After Tech's 11-2 record this season, Leach has a 76-39-0 record in his nine seasons at Tech, which works out to a salty 66% winning percentage. Although that is the best mark of any long-time coach at Tech over the past 70 years, a substantial part of Leach's success has been his 29-5 (85.2%) regular season mark against non-Big 12 opponents, which have been mostly sacrificial lambs.

Of those 34 non-conference games, only five have been against other BCS-conference teams -- Ohio State (loss), Mississippi (2 wins) and North Carolina State (2 losses). The last time that Tech even played a non-conference regular season game against a BCS-conference opponent was in 2003.

Meanwhile, Tech under Leach has feasted on such sacrificial lambs as Division 1-AA teams Stephen F. Austin, Sam Houston State, Indiana State, Southeastern Louisiana, Northwestern State, Eastern Washington and UMass, as well as undermanned Division I-A outfits such as SMU and New Mexico. Eleven of Tech's non-conference wins under Leach have been against SMU and New Mexico. Winning over 85% of those games isn't particularly impressive.

On the other hand, Leach's Big 12 conference record is another story. Even after this season's 7-1 Big 12 record, Leach's record in Big 12 play is 42-30 (58.3%). Leach-coached Tech teams are only 4-14 against Texas and Oklahoma, including this season's 65-21 embarrassing loss to the Sooners that removed Tech from any serious consideration for a BCS Bowl game.

Indeed, Leach's teams have had only a 4-4 Big 12 conference record in four of of his nine seasons at Tech, including two of the last three. With yesterday's loss in the Cotton Bowl, Leach's bowl record at Tech is a decent, but certainly not superlative, 5-4.

Finally, Leach has used extremely poor judgment in some of his public remarks about assistant coaches on his staff, and he has exhibited a selective memory in his comments about game officials, too.

So, given Leach's prolific offense, why aren't his teams better against big-time opponents?

The main reason is that the defenses on Leach's Tech teams have been generally dreadful, a quality that has not been helped by Leach's tendency to place his defenses in awkward field position situations by taking bizarre fourth-down chances and throwing high-risk passing plays deep in Tech's side of the field. This is genius?

Having said all that, Leach has done an admirable job at Tech. Producing a consistently winning team and going to nine straight bowl games is a noteworthy accomplishment at Tech.

However, Leach's record at Tech is simply not extraordinary and not indicative of the genius label that many are attaching to him. And it is unlikely that he will ever do better than he has this past season because the nature of his system makes it difficult for him to recruit the defensive talent necessary to compete at the highest levels of the big-time college game.

Frankly, my sense is that it's more likely that another innovator of offensive football -- Georgia Tech's Paul Johnson -- will get his team to a BCS Bowl game before Mike Leach.

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

January 2, 2009

Summing up the New Year's Day Bowls

Says TigerHawk:

"Until I witnessed Brent Musburger's love of USC, I did not think it was possible for a journalist to love a subject more than Chris Matthews loves Barack Obama. Now I am not so sure."

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

January 1, 2009

The Big Picture does Gaza

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