Daily Archives: April 21, 2004

Redding checking flights to New Orleans

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Tim Redding‘s start this season went from mediocre to disastrous this evening as the Redbirds lit him up for 8 runs in three and two thirds innings on their way to routing the ‘Stros, 12-6. Just for good measure, Jim Edmunds cranked a grand salami off of Ricky Stone in the fifth to make sure that the ‘Stros didn’t have any illusions about making a game of it.
Redding now attempts to avoid Manager Jimy Williams for the next several days as the skipper contemplates calling up either Jared Fernandez (54 ERA, but 8 scoreless innings since going down to AAA New Orleans) or rehabbing Carlos Hernandez (0.84 ERA in 10 innings at New Orleans) to replace the listing Redding in the starting rotation.
Roy O will take the hill as the ‘Stros try to salvage one game of the three game set with the Cards tomorrow night. After that game, the Astros go to Denver and Pittsburgh before returning home for a series next weekend against the Reds.

Why Health Care Has No Wal-Mart

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This short BusinessWeek Online story does a good job of summarizing the reasons why America’s health care finance system hinders the decline in prices in health care that Americans have enjoyed in many other sectors of the economy, most notably retail sales (ala the Wal-Mart reference). One big reason noted:

Sometimes, however, Americans use more care because they think it’s free, or almost free. And that’s one big reason why health care hasn’t become Wal-Mart-ized. When you buy that DVD player, you whip out your credit card and pay with your own money. That makes you want to comparison shop for the best deal. But when it comes to buying drugs, consumers have little incentive to shop around. If you have good insurance, you’re going to pay the same $10 or $15 whether you need the most expensive drugs or not.
A recent study that looked at drugs used to treat arthritis pain provides some insight. Arthritis sufferers can buy relatively inexpensive over-the-counter treatments, such as Motrin or similar generics, or much more costly prescription medications called cox-2 inhibitors, such as Celebrex or Vioxx. Both kinds provide equal pain relief, but the cox-2 drugs may reduce the chances of stomach bleeding or ulcers.
The study concluded that people with good drug insurance were twice as likely to get the more expensive drugs than those without insurance, whether they were at risk for bleeding or not. If someone else — the insurance company — is paying, price doesn’t matter.

Hat tip to the Mises Economics Blog for the line to this article.

Three Duke Energy traders indicted

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Three former executives involved in Duke Energy‘s energy trading operation have been indicted in what the local U.S. Attorney’s Office contends was a fraudulent scheme to attain bonus compensation through making part of Duke Energy’s trading operations look profitable when they really were not.
Timothy Kramer, 40, former vice president of Duke Energy North America. Todd Reid, 41, former vice president, and Brian Lavielle, 33, a former trader were charged with racketeering, wire and mail fraud, and falsification of corporate books and records. All of them pled not guilty today and were released on $100,000 bond. If convicted on all counts, the defendants face prison sentences of anywhere from five years to life, in addition to forfeiture of $7 million in “false gains” plus penalties of up to $9 million.
The gist of the indictment is that the defendants allegedly ginned up phony electricity and natural-gas trades to boost trading volumes and inflate profits in a trading book that was the basis of their annual bonuses. The indictment alleges that there were 400 rigged trades that produced a $50 million profit in the trade book used for bonus calculations between March 2001 and May 2002. The schemes are alleged to have inflated bonuses for the defendants by a total of at least $7 million.
Moreover, this is the first federal case that I know of in which senior-level executives have been accused of devising schemes to generate trading profits in a “mark-to-market” book that determined bonuses, on one hand, and to enter losses in an “accrual” book that had no bearing on bonuses, on the other. Duke and many other energy trades used mark-to-market accounting to record profit and loss for energy contracts that might not settle for many years. However, the mark to market accounting method has come under intense scrutiny since the demise of Enron Corp. in late 2001 because of the latitude that the method allows in recording results.
Interestingly, the amount of money involved in the alleged fraud is relatively small when compared with Duke Energy’s pretax profits in 2001 from energy trading. Wholesale energy trading that year generated a pretax profit of $1.34 billion, and Duke’s wholesale-trading profits more than tripled from 2000 to 2001.

Skilling’s New York adventure comes under scrutiny

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The bizarre tale of former Enron CEO Jeff Skilling‘s hospitalization in New York a couple of weeks ago took another twist as the Enron Task Force filed pleadings in the pending criminal case against Skilling today contending that Skilling’s conduct violated terms of his pre-trial release arrangement.
As expected, Skilling was stone drunk when he was hospitalized (he had a blood alcohol level of .19, which is very drunk). In its pleading filed today, the Task Force does not specify any proposed modification to the terms of Skillings’ pre-trial release, probably because they are still scratching their heads over the incident themselves.
On a serious note, Skilling is facing a criminal trial in an extremely unfavorable venue that, if he loses, probably will result in what amounts to a life sentence in federal prison. Such pressure must be generating incredible stress on Skilling, in addition to the stress he is enduring from his decimated business career. People will do unusual things under rxtraordinary stress. My sense is that Judge Lake will understand that will move the case past this incident without much comment.

Did Cink improve his lie?

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Tour professional golfer Stewart Cink won the MCI Heritage Golf Tournament last Sunday at Hilton Head over Ted Purdy by making a birdie on the fifth playoff hole. However, on his approach shot to the green on that hole, it appeared that Cink improved the lie of his ball in a waste bunker by creating an indentation behind the ball so that his sand wedge would be less likely to bounce off the surface before striking the ball. Cink proceeded to hit the shot stiff to within six feet of the pin and sunk the birdie putt for the win.
Rule 13.2 of the Rules of Golf provides in relevant part as follows:

13-2. Improving Lie, Area of Intended Stance or Swing, or Line of Play
A player must not improve or allow to be improved:
? the position or lie of his ball,
by any of the following actions:
? creating or eliminating irregularities of surface, [or]
? removing or pressing down sand, loose soil, replaced divots or other cut turf placed in position . . .

Television showed Cink removing loose impediments behind his ball (which he is allowed to do) and then, on a close up, a clear indentation behind the ball where Cink was removing the loose impediments. Accordingly, several television viewers called in to Tournament officials and reported the apparent rules violation, which would have resulted in a penalty to Cink that would awarded the victory to Purdy. Upon reviewing the matter immediately after Cink’s birdie putt, Tournament officials ruled that no violation had occurred and confirmed Cink’s victory.
Here is the explanation of the Tournament officials’ ruling on the matter, which I find less than convincing. Hat tip to Mr. Poon (the low handicap blogger) for the link.

Is American health care more productive?

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Tyler Cowan over at Marginal Revolution and Jane Galt at Asymmetrical Information have interesting posts on the productivity of American health care, health care cost, and related statistics. Mr. Cowan concludes that Americans pay more for health care than other countries, but get better health care in return. We die sooner than people in other countries because we eat too much and exercise too little, among other facts. Similarly, Ms. Galt points out that many of the outcomes measured in the health care debate are both difficult to measure between countries, primarily because many have non-health-care contributing factors. Both posts are insightful and well worth reading.
As each of these posts reflect, generalized nationalized health care is no panacea for the problems that we face in America’s health care finance system.

Clarett seeks stay from SCOTUS

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The Maurice Clarett v. NFL case went to the U.S. Supreme Court yesterday as Clarett’s attorneys filed a motion requesting that SCOTUS stay the Second Circuit’s Monday ruling that barred Clarett from being eligible for this weekend’s NFL Draft.
Although I believe that Clarett’s position in this case is the correct one, my sense is that this motion to SCOTUS does not have much of a chance. The Second Circuit’s order barring Clarett from the draft was premised on the notion that the NFL had agreed to conduct a supplemental draft before the 2004 NFL season for Clarett and other underclassmen if the NFL lost on the merits of its appeal to the Second Circuit. Accordingly, the Second Circuit reasoned that there was little damage to Clarett by barring him from this weekend’s draft while the Second Circuit considered the NFL’s appeal on the merits. I suspect that Justice Ginsburg, who drew Clarett’s motion to SCOTUS, will likely have a similar view, although the inherent weakness of the NFL’s underlying case might persuade her that the NFL has no reasonable likelihood of success on the merits of its appeal, in which case she could justify staying the Second Circuit’s order barring Clarett from the draft.