Why is it that the Chronicle ignores principles of truth-in-advertising (not to mention common sense) in each of its articles regarding the proposed downtown minor-league soccer stadium?
In this most recent Chron puff piece, Chronicle reporter Jose De Jesus Ortiz suggests that, based on the anecdotal observations of several stadium supporters, the new stadium will be an economic boon for the area near the stadium.
Of course, Ortiz doesnít even mention the bountiful economic research that shows scant evidence of large increases in income or employment associated with professional sports or the construction of new stadiums.
If the Chronicle admitted that the economic benefits of the minor-league soccer stadium are questionable, but that the intangible benefits to the community override the financial risk of the deal, then at least the Chronís support of the deal would be based upon an honest presentation of the issues.
Is that too much to expect?
I don’t watch much television news. But when I catch a glimpse these days, it always seems as if some politician is loudly declaring the need for more governmental financial regulation.
Mostly, the politicos contend that financial derivatives are dangerous instruments that are contrary to sound public policy. We have to protect those poor souls who bet against John Paulson, don’t you see?
But the proponents of this view simply do not want to understand the nature of derivatives, just as most of the same ones didn’t want to understand the valuable nature of the risk management of natural gas prices that Ken Lay and Jeff Skilling contributed to markets 20 years ago.
Derivatives are simply a way for an investor to warn by trading – that is, by putting his money where his mouth is – that he has information about an upcoming shift in the markets. That facilitates a transparent and well-informed marketplace.
However, heavily regulating traders from taking advantage of that valuable source of information only makes it more difficult for valuable information about market shifts to reach the marketplace. How is that good for investors seeking as transparent and well-informed marketplace as possible?
An underappreciated cause of the Wall Street crisis was the underlying information failure. As opposed to restricting trading, we ought to be finding ways to bring more information to the market faster so that prices can be adjusted promptly.
Rather than demonizing folks who bet their money in bringing information to the marketplace, we ought to be encouraging them.
I won’t hold my breath waiting for that to happen.
Donít miss this clever Malcolm Gladwell/New Yorker review of ìBritish journalist Ben Macintyreís brilliant and almost absurdly entertaining Operation Mincemeat, the espionage caper that threw the Nazis off of the Allied invasion of Sicily:
On April 30, 1943, a fisherman came across a badly decomposed corpse floating in the water off the coast of Huelva, in southwestern Spain. The body was of an adult male dressed in a trenchcoat, a uniform, and boots, with a black attachÈ case chained to his waist. His wallet identified him as Major William Martin, of the Royal Marines. [. . .]
It did not take long for word of the downed officer to make its way to German intelligence agents in the region. Spain was a neutral country, but much of its military was pro-German, and the Nazis found an officer in the Spanish general staff who was willing to help. A thin metal rod was inserted into the envelope; the documents were then wound around it and slid out through a gap, without disturbing the envelopeís seals. What the officer discovered was astounding.
Major Martin was a courier, carrying a personal letter from Lieutenant General Archibald Nye, the vice-chief of the Imperial General Staff, in London, to General Harold Alexander, the senior British officer under Eisenhower in Tunisia. Nyeís letter spelled out what Allied intentions were in southern Europe. American and British forces planned to cross the Mediterranean from their positions in North Africa, and launch an attack on German-held Greece and Sardinia. Hitler transferred a Panzer division from France to the Peloponnese, in Greece, and the German military command sent an urgent message to the head of its forces in the region: ìThe measures to be taken in Sardinia and the Peloponnese have priority over any others.î
The Germans did not realizeóuntil it was too lateóthat ìWilliam Martinî was a fiction. The man they took to be a high-level courier was a mentally ill vagrant who had eaten rat poison; his body had been liberated from a London morgue and dressed up in officerís clothing. The letter was a fake, and the frantic messages between London and Madrid a carefully choreographed act. When a hundred and sixty thousand Allied troops invaded Sicily on July 10, 1943, it became clear that the Germans had fallen victim to one of the most remarkable deceptions in modern military history.
Gladwell goes on to summarize the tale of how the Nazis fell for the caper, but then ponders whether espionage is really worth the trouble:
In the case of Operation Mincemeat, Germanyís spies told their superiors that something false was actually true (even though, secretly, some of those spies might have known better), and Germany acted on it. In the case of Cicero, Germanyís spies told their superiors that something was true that may indeed have been true, though maybe wasnít, or maybe was true for a while and not true for a while, depending on whether you believe the word of someone two decades after the war was overóand in this case Germany didnít really act on it at all. Looking at that track record, you have to wonder if Germany would have been better off not having any spies at all.
And the money quote:
Translation: the proper function of spies is to remind those who rely on spies that the kinds of thing found out by spies can’t be trusted.
Read the entire review.
Although it really shouldn’t have surprised anyone, the big business news at the end of last week was the the Department of Justice had opened up a criminal probe of Goldman Sachs well before the filing of the SEC’s lawsuit a couple of weeks ago.
Craig Pirrong provides his typically lucid perspective toward the news, while the Epicurean Dealmaker insightfully notes a dynamic involved in the growing cascade against Goldman Sachs that should concern us all. Interestingly, that dynamic is the same one that was involved in the prosecution to death of former Enron chairman, Ken Lay.
Frankly, after almost a decade of misdirected prosecutions of businesspeople, it’s confounding that many citizens believe that a prosecution of Goldman Sachs would serve any useful public interest.
It is indisputable that government cannot possibly discover or prosecute all business fraud. But government policies that purport to prevent fraud by prosecuting simply prompt private parties to be less careful in detecting or avoiding fraud in the first place.
Moreover, the utter randomness of the criminalization-of-business policy undermines the public’s respect for the rule of law. For example, who can possibly keep up with all the rules that government has invoked in determining whether an important businessperson gets prosecuted for a supposed business crime?
First, there was the Apple Rule, which was quickly followed by the Dell Rule.
Then there was the Buffett Rule, closely followed by the GM Rule.
And who could forget the Geithner Rule?
Frankly, the rule of law has been replaced by what Larry Ribstein has coined the criminalization-of-business lottery where winning or losing becomes random.
For instance, the owners of Long Term Capital Management may have been the earliest winners in the most recent era. 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.
And no one lost bigger than Jeff Skilling.
Meanwhile, although mainstream media darlings Steve Jobs and Warren Buffett won, several of Buffett’s associates did not fare as well. Neither did Greg Reyes.
And who knows about those Lehman Brothers executives — they may be winners, after all? I mean, everyone was doing it, right? But you never know for sure.
Finally, who possibly can justify what Bill Furst has been through?
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.
Itís not a surprise that the Stros (8-15; five straight losses) are bad this season. But this is looking to be one of the worst hitting teams in the history of the Strosí franchise.
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 club is performing during the long MLB season.
RCAA reflects how many more (or fewer) runs that a player (or team) generates relative to a league-average player (or team). An exactly league-average player’s (or teamís) RCAA is zero.
Similarly, RSAA measures how many more (or fewer) runs that a pitcher (or pitching staff) saves relative to a league-average pitcher (or pitching staff). As with RCAA, an exactly league-average pitcherís (or teamís) RSAA is zero.
After a rough start to the season, the Strosí pitching staff has come around to a 3 RSAA (through Fridayís game), which means itís a slightly above-average NL pitching staff.
But the hitters? Well, thatís another story.
Through 23 games (a bit over 14% of the season), the Stros hitters have created an astounding 42 fewer runs than an average NL club of hitters would have created using the same number of outs. Thatís by far the worst in Major League Baseball (the Orioles are the next worst at ñ26) and ñ with still over 80% of the season to go ñ already the 10th worst performance in Stros franchise history:
1 Colt 45ís 1964 -138
2 Colt 45ís 1963 -107
3 Colt 45ís 1962 -101
4 Astros 1989 -64
5 Astros 1982 -63
6 Astros 1968 -51
7 Astros 1990 -49
8 Astros 2006 -47
9 Astros 2008 -46
10 Astros 2010 -42
11 Astros 1991 -39
12 Astros 2009 -34
13 Astros 2005 -26
14 Astros 1971 -16
15 Astros 1979 -13
To make matters worse, the Stros hitters do not appear poised to improve over the balance of the season. The clubís best hitter ñ 1B Lance Berkman ñ is gimpy with a balky knee and other assorted injuries. The clubís only other consistently good hitter ñ LF Carlos Lee ñ has fallen off a cliff to the point where he is one of the worst hitting regular NL players (-11 RCAA).
In fact, the only regular Stros player with a positive RCAA is CF Michael Bourn and he is barely above-average (3 RCAA). With the exception of RF Hunter Pence, there is not another regular Stros player who appears capable of generating a positive RCAA over the rest of the season.
Similarly, there is no player in the upper levels of the Strosí farm system who appears capable of generating a positive RCAA for the big-league club.
Thus, it appears almost certain that this will be the worst hitting Stros team in club history. Even the club-record worst performances of the three Colt 45 teams from 1962-64 are within reach of this seasonís team.
And if the pitching staff falls apart in the second-half of the season as it did last year, this season could get really ugly.
Remember C.I.T. Group?
That was the company that Treasury Secretary Timothy Geithner orchestrated a $2.3 billion bailout for without requiring debtor-in-possession financing protection. Of course, after that federal bailout, CIT promptly filed for reorganization under chapter 11.
Well, as this WSJ editorial explains, there is a reasonably happy ending to the CIT saga — ìNot only did CIT’s filing not cause the end of the world for its counterparties or customers, but the company quickly emerged from bankruptcy and has embarked on an aggressive turnaround.î
Allocating risk of loss properly is really not rocket science.
You think the TSA is irritating? John Cleese provides a lesson on how to really irritate people.
Two items exhibiting the dubious judgment of government bureaucrats caught my attention today.
The first is that Securities and Exchange Commission going to try and make a fraud case against Goldman Sachs. Inasmuch as the SEC couldn’t uncover Bernie Madoff or Stanford Financial’s sketchy affairs despite being told about them, how on earth is the agency going to prove fraud in a transaction between sophisticated investors who knew what was going on? Expect a financial settlement any day now.
Meanwhile, let’s check out another government agency’s bumbling decision-making:
More than thirty organizations across the political spectrum have filed a formal petition with the Department of Homeland Security, urging the federal agency to suspend the airport body scanner program.Leading security expert Bruce Schneier stated, “Body scanners are one more example of security theater.
Last year, the organizations asked Secretary Janet Napolitano to give the public an opportunity to comment on the proposal to expand the body scanner program. Secretary Napolitano rejected the request.
Since that time, evidence has emerged that the privacy safeguards do not work and that the devices are not very effective. “At this point, there is no question that the body scanner program should be shut down. This is the worst type of government boondoggle — expensive, ineffective, and offensive to Constitutional rights and deeply held religious beliefs,” said Marc Rotenberg, President of EPIC.
And if Bruce Schneier‘s opinion isn’t good enough for you, take heed of what a leading security expert who is constantly on the front lines says about the scanners:
A leading Israeli airport security expert says the Canadian government has wasted millions of dollars to install “useless” imaging machines at airports across the country.
“I don’t know why everybody is running to buy these expensive and useless machines. I can overcome the body scanners with enough explosives to bring down a Boeing 747,” Rafi Sela told parliamentarians probing the state of aviation safety in Canada.”That’s why we haven’t put them in our airport,” Sela said, referring to Tel Aviv’s Ben Gurion International Airport, which has some of the toughest security in the world.
Sela, former chief security officer of the Israel Airport Authority and a 30-year veteran in airport security and defense technology, helped design the security at Ben Gurion.
Despite what the experts say, he 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. What’s worse is that the inspection process is really just “security theater” that makes only 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 has no interest in dismantling it even when it’s clear that process is ineffective, expensive and obtrusive to citizens. Stated simply, the TSA has become a jobs program for thousands of registered voters.
James Fallows sums up the absurdity of the situation well:
TSA + defense contractor + security theater vs Israeli expert + Schneier + common sense.
Hmmm, I don’t know what to believe.
