Author Archives: Tom

Counting down with the Quad

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1F3 Tuba pivots It’s less than three months until the kick-off of the 2008 college football season, so in anticipation of the upcoming season, the New York Times’ quite good college sports blog — the Quad — is providing an excellent summary each day of the 110 or so Division I-A teams. The Quad rates the Rice Owls at no. 104, which seems far too pessimistic to me given the Owls’ returning offensive firepower. But the summaries are generally thorough and provide a decent perspective of each program, so they are a good primer for the college football season. In these parts, it’s never too early to get ready for some football!

Slugging Metro?

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Slugging Traffic I’d bet that a program such as this (H/T Craig Newmark) would rival (if not exceed) the ridership on Houston Metro’s light rail line.

Slugging is a term used to describe a unique form of commuting found in the Washington, DC area sometimes referred to as "Instant Carpooling" or "Casual Carpooling".   It’s unique because people commuting into the city stop to pickup other passengers even though they are total strangers! However, slugging is a very organized system with its own set of rules, proper etiquette, and specific pickup and drop-off locations.  It has thousands of vehicles at its disposal, moves thousands of commuters daily, and the best part, it’s FREE! Not only is it free, but it gets people to and from work faster than the typical bus, metro, or train.  I think you’ll find that it is the most efficient, cost-effective form of commuting in the nation.

Here is the etiquette and rules of the process. Being a "slug" doesn’t sound all that bad! ;^)

What’s the Difference?

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Mel Weiss was sentenced to 2.5 years in prison yesterday for making undisclosed payments to class representatives in class action lawsuits that his firm handled. Weiss really didn’t have much of a choice given the trial penalty that he was facing.

Meanwhile, in return for being the key witness against former Enron CEO Jeff Skilling, Enron Task Force prosecutors “paid” Andy Fastow with a lighter prison sentence than the one the prosecutors disclosed to the jury and the judge during Skilling’s trial.

Those same prosecutors also withheld from Skilling’s defense team exculpatory statements about Skilling that Fastow made before he elected to accept the prosecutors “payment” of a lighter sentence and testify against him.

The lead prosecutors involved in arranging Fastow’s testimony have gone on to lucrative careers in private practice. Skilling is serving an effective life prison sentence.

As Larry Ribstein has long contended, paying kickbacks should not be condoned. However, the hyprocrisy reflected by the above-described state of affairs is not going to be solved by demonizing Mel Weiss.

Ron Paul, we hardly knew ye

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Ron Paul 050108This post from last June noted Houston-area Congressman Ron Paul’s deft media touch on Comedy Central’s Daily Show. Now, a year later, Jim Henley sums up the utter failure that Paul’s presidential campaign became:

This fellow can’t spell "candidate," but by being willing to come out and say that Ron Paul Lost, he’s closer to wisdom than the entire staff of Takimag. The full measure of Paul’s failure isn’t even that he’s not going to be the Republican nominee. It’s that, even since everyone else dropped out of the race but Paul and McCain, he’s still been losing to Mike Huckabee in every state where the Huckster was on the ballot except Pennsyvlania (Paul was born in Pennsylvania.) Idaho is the only other primary state where he broke 10%. (He hit low double-digits in a few caucus states.) He has 35 delegates by CNN’s reckoning. Huckabee has 275 and Romney 255. With his $30 million in donations, he’s barely breaking the million-bucks-a-delegate mark. That’s ten times the much-ridiculed rate of Mitt Romney.

Paul failed to win any states, to move the GOP debate in his direction, to accrue significant delegates or to leverage his fund-raising into a third-party run. And word is he’s staying quiet about endorsing an independent because he doesn’t want the Congressional GOP leadership to strip him of committee assignments come the fall. Paul accomplished the one thing he’s always been good at: using political appeals to get people to send money. I don’t feel freer.

The price of soccer keeps going up

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Soccor stadium proposed dynamo Based on what’s going on in Washington, D.C., my prediction on the eventual public subsidy of the proposed Dynamo soccer stadium in Houston may be a tad low. With D.C.’s proposed $150 million public subsidy for about 25,000 seats, that works out to $6,000 per seat for what amounts to minor league soccer. Is there any rational argument that such an outlay could possibly be worth it for D.C. citizens?

By the way, Dennis Coates, the professor of economics at the University of Maryland-Baltimore County whose recent op-ed on public subsidies for stadiums was featured here,  narrates the short Reason.TV video below on the same subject, focusing on the Washington Nationals new stadium (H/T Skip Sauer) :

I would have never guessed

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albertusmagnus 053108 That, according to this handy database, this person would have given the most commencement speeches during this current season of university graduation ceremonies.

Similarly, I would not have guessed the city in the world that is home to the most billionaires.

The Bear Stearns lesson

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Bear Stearns building at night Yesterday brought the final installment of Kate Kelly’s extraordinary three–part W$J series on the fall of Bear Stearns (Kelly also contributed to today’s story on Bear’s final shareholders meeting). My goodness, was Kelly a fly on the wall over at Bear’s office during all of this? Dear John Thain has an interesting critical analysis of the series here, here and here, while Larry Ribstein and John Carney point out that Kelly apparently fell for what has become known as "the loophole legend" in regard to JP Morgan’s buyout of Bear.

Although all the articles in the series are fun reading, Kelly’s most insightful observation comes from the second installment:

It was the beginning of a frantic 72 hours that would bring the Wall Street firm to its knees and threaten the stability of the global financial system.  .  .  . The brokerage’s sudden fall was a stark reminder of the fragility and ferocity of a financial system built to a remarkable degree on trust. Billions of dollars in securities are traded each day with nothing more than an implicit agreement that trading partners will pay up when asked. When investors became concerned that Bear Stearns wouldn’t be able to settle its trades with clients, that confidence evaporated in a flash. Trading partners, eager to avoid losses, began to disappear almost as quickly. That further fueled rumors of trouble. Some partners, spotting a chance to profit, made bets against Bear Stearns, helping accelerate its demise.  .  .  .

Even after the Bear Stearns lesson, our understanding of the pesky trust-based business model is still not what it should be. Improving the investing public’s understanding of how best to hedge the risk of investing in trust-based businesses is a far more productive response to Bear Stearns-type business failures than this. 

The instinct against the money-makers

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southwest planes I swear, you can’t make this stuff up.

As Larry Ribstein cogently explains, Southwest Airlines has taken advantage of futures markets over the past several years to hedge its fuel costs (previous posts on Southwest’s hedging program are here). That hedging program has been one of the major factors in allowing Southwest to remain one of the only profitable U.S. airlines. Along the same lines, Bloomberg’s Matthew Lynn explains how such markets provide an essential function in re-directing resources in the overall economy.

Meanwhile, Congress is trying to hamstring the very markets (see also here) that provided Southwest and many other businesses with the platform on which they hedged fuel-cost and other business risk. The wealth and lower prices generated from those hedges is not inconsequential.

Finally, the Justice Department continues its advocacy of an effective life sentence for one of the men primarily responsible for developing the robust markets that facilitate Southwest and others’ wealth creation for shareholders and lower costs for customers.

And these folks in Congress and the Justice Department are supposed to be representing our interests?

Hope on the horizon

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hope on the horizon Following up on this post from awhile back, don’t tell the folks at MIT that the prospects for mankind are gloomy. Check out this MIT News article that resulted from the institute’s news office asking a collection of MIT faculty and researchers for their thoughts on the potentially life-altering technologies that are just around the corner.

Despite what the presidential candidates say, it’s not all that bleak out there, folks!

Checking out Houston on the tour bus

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HoustonBungalow4 Randal O’Toole went on a bus tours of different parts of Houston while he was in town for the Preserving the American Dream Conference a couple of weeks ago and he chronicles his impressions with observations here (neighborhoods between downtown and the Galleria area) and here (one of the Houston area’s several master-planned communities, Sienna Plantation). Upon finishing the tour of Sienna, O’Toole commented on the trip back to his downtown hotel:

After finishing up our tour of Sienna, we took the Fort Bend Parkway, one of the region’s many toll roads, back to Houston. This 6.2-mile, four-lane highway required just over a year to build and opened in 2004 at a cost of $60 million. That’s less than $2.5 million per lane mile, including on- and off-ramps, over- and underpasses, and toll facilities. By comparison, $60 million would barely get you one mile of light rail and less than a mile of heavy rail. The toll for the 6.2 miles was $2, even for our full-sized buses.

And compare that to this!