The Texas 14th Court of Appeals finally lowered Robert Durst’s bail to $450,000 from the absurd $3 billion amount that Galveston State District Judge Susan Criss had set earlier this year. Here are earlier posts on the Durst murder case.
Ceci Connolly of the Washington Post is one of the best reporters on health care finance issues. This article in yesterday’s edition reviews the dubious financial projections behind the Bush Administration’s health care finance proposals:
If the Republican-controlled Congress enacted President Bush’s entire health care agenda, as many as 10 million people who lack health insurance would be covered at a cost of $102 billion over the next decade, according to his campaign aides.
But when the Bush-Cheney team was asked to provide documentation, the hard data fell far short of the claims, a gap supported by several independent analyses.
Projections by the Congressional Budget Office, the Treasury Department, academics and the campaign’s Web site suggest that under the best circumstances, Bush’s plans for health care would extend coverage to no more than 6 million people over the next decade and possibly as few as 2 million.
“There’s little reason to expect that there would be any reduction in the overall numbers of Americans without health insurance,” Brookings Institution health policy expert Henry J. Aaron said. “We’re swimming against a rather swift current in our efforts to reduce the number of uninsured, and the power of President Bush’s proposals to move against that current is, it seems to me, very, very limited.”
On the other hand, the article notes that the credibility of the Kerry campaign’s health care finance projections is not particularly compelling, either:
Sen. John F. Kerry (Mass.), has released a health care agenda that is more ambitious and more expensive, with plans to expand government health programs, offer tax credits similar to Bush’s and reimburse businesses for some of their most costly catastrophic cases.
Forecasting the cost and impact of policy proposals is always complicated, and both presidential campaigns try to spin the numbers to their advantage. Kerry, for example, estimates his health care proposals would cover 27 million people at a 10-year cost of $653 billion. But that assumes $300 billion in “savings” that the Bush team says might prove elusive. Without the savings, the cost of the Kerry package jumps to nearly $1 trillion.
Sigh.
Bill James would enjoy this method in evaluating potential candidates for the U.S. Supreme Court.
Hat tip to Craig Newmark for the link.
Monday Night Football is ABC‘s highest rated show. However, ABC is currently losing about $250 million on MNF. This LA Times (free online registration required) article is a good overview on the economics of televising professional football and the difficult decisions that ABC faces in regard to MNF.
Hat tip to Professor Sauer for the link to this article.
Houston-based El Paso Corp. released some preliminary 2004 financial numbers and previewed its restatement of financial results from 1999 to 2003 following a review of its accounting for natural-gas hedges. El Paso previously announced plans to restate results because of downward revisions to its oil and natural-gas reserves and warned at the time that it likely would have to restate for its hedge accounting as well.
The company said that the revision to its reserves will cut the value of El Paso’s oil and gas assets by $2.7 billion and result in a corresponding after-tax reduction in shareholder equity. El Paso also announced that the restatement to eliminate hedge accounting will result in a $1 billion pretax cumulative charge on shareholder equity and will trigger an additional $1.6 billion in charges.
El Paso has yet to file its financial reports for 2003 or for the first two quarters of 2004. It warned that the 2004 figures it provided today are “subject to further review by El Paso and its independent auditor and, therefore, [are] subject to change.” Not exactly a statement brimming with confidence.
El Paso reduced its net debt by about $1.9 billion in the first six months of the year, finishing the second quarter with net debt of $18.6 billion. The company expects net debt to fall below $17 billion by the end of 2004, and to $15 billion by the end of 2005. In addition, El Paso’s businesses have been somewhat bolstered as high prices for oil and natural gas have been aiding the company’s rebound effort.
Despite the foregoing, El Paso remains a strong candidate for reorganization under chapter 11 as its high debt burden makes an acquisition outside of bankruptcy problematic.
The Rocket lasted long enough for his first win in almost a month — the 323rd victory of his career — and Carlos Beltran belted a three-run yak to lead the Stros over the Phillies 8-4 Monday night at the Juice Box.
After leaving in the fourth inning of his start against the Phils last week when he injured his right calf, Clemens hobbled around on the injured leg throughout much of his incredible seven-inning outing. Clemens (13-4) allowed only two runs and five hits with eight K’s and two walks in his first win in five starts since July 28.
Beltran connected in the seventh to become the 45th player in major league history with 30 home runs and 30 steals in a season. Bidg went 3-for-4 with two doubles as the Stros won their fourth straight over the Phils.
Carlos Hernandez tries to get untracked in tonight’s game against the Phils’ Brett Myers.
The much anticipated pitching matchup between the Stros’ Roy O and the Cubs’ Kerry Wood deteriorated into an old-fashioned beanball contest as the Cubs pounded the Stros 11-6 on Sunday afternoon at the Juice Box.
The shenanigans began in the second when Wood beaned Jason Lane after Mike Lamb had nailed a long solo yak to open the scoring. Oswalt reciprocated the following inning by nailing Michael Barrett squarely in the back after Aramis Ramirez had taken a bit too long in rounding the bases after cranking a two out, three run tater on an 0-2 pitch in the third. Oswalt was ejected immediately, but Wood stayed around until the fifth (despite nailing Beltran in the next inning on a slider in the dirt, which the the umps let that pass) when he nailed JK. At that point, Wood was gone along with Cubs manager Dusty Baker.
That was about the only excitement in this game, which was out of reach the way the Stros hit (or, more accurately, don’t hit) after Ramirez’s blast gae them a 5-1 lead. The Cubs are simply a better overall team than the Stros, particularly in the area in which the Stros struggle — hitting the ball hard.
Our periodic review of the Stros hitters’ runs created against average (“RCAA”) and the Stros pitchers’ runs saved against average (“RSAA” and RCAA explained here) accurately reflects the Stros’ current status in the National League — about average, but not close to being a contender for a playoff spot. Here are the Stros hitters’ RCAA numbers, courtesy of Lee Sinins:
Lance Berkman 45
Carlos Beltran 12
Mike Lamb 6
Jeff Bagwell 5
Craig Biggio 5
Eric Bruntlett 2
Chris Burke -1
Jeff Kent -1
Jason Lane -2
Orlando Palmeiro -3
Richard Hidalgo -9
Jose Vizcaino -9
Morgan Ensberg -12
Adam Everett -12
Raul Chavez -14
Brad Ausmus -23
The Stros are 10th out of the 16 National League teams in RCAA, and have generated 11 fewer runs than an average National League team would have generated so far this season.
Berkman, and Beltran continue to be the only Stros having excellent seasons hitting the ball (Beltran’s RCAA is 29 when his Kansas City RCAA is added to his Stros RCAA). Bidg‘s performance is in free fall as his RCAA over the past month has been a negative 8 and his performance is now equal to the disappointing output of Bags. Those two players combined RCAA is about one half their output from last season. Combine that drop in performance with the precipitous drops in RCAA from Ensberg, Kent, and Hidalgo from their output of last season and you have a presciption for a ballclub that struggles to score runs.
Meanwhile, the injuries to the Stros’ pitchers are starting to take a toll on the Stros’ pitching staff’s overall performance. After topping out two weeks ago in 3rd among the 16 National League pitching staffs in RSAA, the Stros’ pitching staff has fallen back to fifth, but still have given up 34 runs less than an average NL pitching staff. Here are the individual RSAA of each Stros pitcher:
Roger Clemens 26
Roy Oswalt 19
Brad Lidge 18
Wade Miller 10
Octavio Dotel 5
Darren Oliver 5
Andy Pettitte 4
Dan Miceli 3
Brandon Backe 1
Kirk Bullinger 0
Mike Gallo -2
David Weathers -2
Jeremy Griffiths -3
Pete Munro -3
Chad Qualls -3
Ricky Stone -3
Carlos Hernandez -4
Jared Fernandez -6
Chad Harville -8
Brandon Duckworth -9
Tim Redding -14
Clemens, Oswalt and Lidge continue to have outstanding seasons, but the remainder of the healthy Stros’ pitchers are led by Miceli‘s barely above-average performance. Consequently, unless Clemens or Oswalt goes late into a game and hands the ball to Miceli and Lidge, or the Stros enjoy an unexpected performance such as the one Backe provided on Saturday night, the Stros are going to lose more games than they win because of their overall combination of below average pitching after the big three and far below average hitting after Berkman and Beltran.
Interestingly, as predicted, the Stros have settled into third place in the National League Central and I suspect that they will stay there for the remainder of the season unless the Stros’ players simply pack it in. However, the Stros have no realistic shot at the Wildcard Playoff berth because their available personnel simply is unlikely to generate enough improvement over the remaining 40 games to compete with the Giants, Cubs, and Padres for that spot.
The Rocket takes the hill on Monday in the opener of a three game series against the Phils. After the Wednesday game of that series, the Stros travel to Chicago for a four game set at Wrigley on Thursday through Sunday and then to Cincy to pad their hitting statistics against the Reds’ horrifying pitching staff.
Professional football has clearly overtaken Major League Baseball as the most popular sport in American society. However, Saturday night’s Stros-Cubs game is an example of why the appeal of Major League Baseball will endure through the ages regardless of its place in the pecking order of popular sports popularity.
Let’s set the stage. The Stros’ Brandon Backe is an obscure 26 year old from Galveston who began his professional baseball career as an outfielder in the Devil Ray organization. After converting to a pitcher, Backe was rushed through the thin Devil Ray minor league system as a relief pitcher and was never given adequate time to develop as a pitcher.
After coming over to the Stros in the Geoff Blum trade before this season, Backe toiled ineffectively in the Stros’ bullpen for a short time during the first part of the season. However, the Stros’ management decided that Backe’s underdevelopment in the Devil Rays’ system had finally caught up with him, and so they sent him down to AAA New Orleans to become a starter there and pitch every fourth day. Backe pitched well this season at New Orleans, and the Stros recalled him recently when Andy Pettitte decided to have season ending elbow surgery. Saturday night’s game was his first start in Major League Baseball.
On the other hand, the Cubs’ Mark Prior, 24, is unquestionably one of the best young players in all of Major League Baseball. Prior has impeccable pitching mechanics, tremendous control, and a 96 m.p.h. heater. During the 2003 season, Prior was 18-6 and arguably the best pitcher in the National League. Barring injury, Prior will likely be the best pitcher in the National League over the next decade.
Moreover, the Cubs are legitimate contenders for the National League Wildcard Playoff spot and are coming off Friday night’s game in which they made two Stros’ pitching staff members look like batting practice pitchers. The Stros are 5 1/2 games back in the Wild Card race and realistically, are playing out the string on the 2004 season.
Given that backdrop, Saturday night’s Stros-Cubs game looked like a classic mismatch — the Cubs’ Prior versus the Stros’ Backe, who was starting his first game in Major League Baseball. To make matters worse, the Stros’ bullpen was not available to bail Backe out after having been used heavily over the past three games in which the Stros had given up 27 runs.
So, what happens? Backe pitches seven shutout innings and hits a two run single off of Prior to stake the Stros to a 2-0 lead over the Cubs after seven innings.
Then, after Miceli and Lidge blew the save, the Stros came back with two runs in the bottom of the ninth to pull out a stirring 4-3 win over the Cubs.
As the oldtimers say, “That’s why you play the game.”
Backe was magnificant, giving up only four hits and three walks in seven innings. He baffled the Cubs’ hitters by throwing a lively 92 m.p.h. heater mixed with a slow and hard curve, and a hard slider.
Viz and Jason Lane were the Stros’ heros in the bottom of the ninth along with the Cubs’ Macias, who contributed a key throwing error that put the tying and winning runs in scoring position. After Macias’ miscue, Viz tied it with a single and then Lane — who had come into the game for Bidg in the top of the ninth as a defensive replacement — won it with a single to right as the Stros’ dugout and the Juice Box crowd went bananas.
As my 16 year old son and I walked away from the Juice Box after the game, he turned to me and said, “Dad, it doesn’t get any better than that.”
Amen.
The Stros’ Roy O and the Cubs’ Kerry Wood tangle in an attractive rubber game on Sunday afternoon, but they will have to be in top form to compete with the Backe-Prior matchup from Saturday night’s game. The Phillies come to town on Monday for a three game set with the Rocket opening that series for the Stros.
This Wall Street Journal ($) editorial addresses a litigation phenomenon that has been increasing in recent years — public employee pension funds serving as plaintiffs in class action lawsuits. And as the editorial notes, this new willingness to serve in such a role reflects even more troubling signs on the way in which at least several of those pension funds are operated:
It’s an article of faith these days that institutional investors are the white knights of the corporate governance crusade. And the most loyal acolytes of fiduciary duty, we are told, are the state-administered funds that provide retirement benefits for public-sector employees. But a couple of recent cases show that some public pension funds are not only failing their own beneficiaries, they are making mischief for well-run corporations.
The Journal notes that a few pension plans are collaborating with a few plaintiffs’ securities lawyers to shake down the companies in which the pension plans invest:
[T]wo funds representing Pennsylvania’s public school teachers and state employees have been busy this year suing corporate giants Time Warner and Royal Dutch/Shell Group. Alleging that the companies misled investors, the lawsuits seek hundreds of millions in damages. Since shareholders are essentially suing themselves, the main winners here will be the lawyers..
Meanwhile, the pension fund managers are not exactly providing overwhelming performance in their primary duty to the funds:
[T]he fund managers show more zeal for litigation than they do for stock picking. The two funds have lost $20 billion, or 25% of their value, over the last few years, despite paying $250 million a year in management fees. As a result, state and local governments will have to come up with extra tax revenue to make up the shortfall.
And though the performance of the managers of the Pennsylvania funds has been less than exemplary, it does not hold a candle to the corruption that takes place when one concocts the volatile mix of plaintiffs’ securities litigation with the traditional corruption of Louisiana politics:
[In Louisiana] the trustees of the state’s Teachers Retirement System were found to have violated state ethics rules by accepting golf outings, hunting trips, football games and $150 bottles of champagne from a Texas private equity firm, Hicks Muse Tate & Furst. The fund then committed more than $900 million to Hicks’s investments. The fund says that 23% of its $10 billion in assets were committed to similar “alternative” investments, earning it the rating of riskiest public pension fund in the country from Wilshire Associates. Because this strategy cost the fund somewhere between $500 million and $2 billion by different estimates, retirees are foregoing cost-of-living increases, and the state general fund and local school boards are struggling to make up billions in unfunded liabilities.
But instead of re-evaluating their investment practices, the trustees of the Louisiana fund have instead been racking up an impressive record of litigation. It has been involved in 60 class-action lawsuits in the last eight years, and a Tennessee judge last year rebuked it for seeking “lead plaintiff” status in 24 suits while already taking that role in eight others.
And what is the Louisiana fund managers’ response to such risky investment practices? They sue the company that represents one of their best investments:
To top it all off, last year the Louisiana fund tried to sue the majority shareholders of Regal Entertainment, the country’s largest operator of movie cinemas. Despite having only a $30,000 investment in the company, the fund launched an 11th hour lawsuit to stop the company from issuing an extraordinary dividend, accusing Regal’s controlling shareholders of “looting” the company.
This incendiary accusation was truly laughable. The dividend was paid equally to all shareholders, and no other investors found reason to object. After all, the company enjoys a strong cash flow, so distributing profits and increasing the company’s leverage was a legitimate management decision.
How can we say that with such certainty? Because the Louisiana teachers’ fund admitted as much when it dropped the case, in order to avoid a counterclaim by Regal. That climbdown only came after the judge refused to grant a preliminary injunction against the dividend because there was “not a shred of evidence” that minority shareholders would be hurt.
The biggest shock was just how little the Louisiana fund’s administrators knew, or cared to know, about the litigation they sponsored. Director Bonita Brown admitted in a deposition that, despite being one of only two officials responsible for deciding to initiate lawsuits, she not only had had no contact with the Regal management ahead of the lawsuit, but she also did not know whose idea it was to sue.
The Journal editorial concludes by summarizing the absurdity of it all:
So what we have here is a public fund whose risky practices have cost the taxpayer billions throwing mud at a profitable company’s management — throwing it, moreover, at a company (Regal) that was one of the fund’s better-returning investments. If the Louisiana and Pennsylvania pension funds were private entities, their trustees might well be the target of a lawsuit themselves for being so lackadaisical about their fiduciary duty. Given the ethics violations in Louisiana, state investigators might check to see whether law firms are illegally compensating trustees with junkets so they’ll ignore their duty to protect their funds from possible counterclaims arising from frivolous lawsuits.
But then everybody knows that the real blame lies with the politicians who appoint and protect these incompetent managers, and it’s up to voters to hold them accountable. Perhaps the better question is why Congress and federal judges still allow such funds to posture as guardians of good corporate governance while they dance to the trial lawyers’ tune.
Read the entire piece. The Journal editorial is correct in noting that the conduct of the pension fund trustees is certainly troubling in these particular cases. However, a related issue that the editorial does not address is whether the dubious cases are truly a significant problem or merely an anecdotal byproduct of an open civil justice system. For a detailed analysis of that issue in the context of class action settlements, see this article by Cal-Berkeley Law Professor Steven J. Choi and this Professor Bainbridge comment on Professor Choi’s article.
Tyler Cowen of Marginal Revolution is writing a new book on economics, and he provides the following excerpt in explaining his fundamental preference for politics that encourage sustained economic growth:
The importance of the growth rate increases, the further into the future we look. If a country grows at two percent, as opposed to growing at one percent, the difference in welfare in a single year is relatively small. But over time the difference becomes very large. For instance, had America grown one percentage point less per year, between 1870 and 1990, the America of 1990 would be no richer than the Mexico of 1990. At a growth rate of five percent per annum, it takes just over eighty years for a country to move from a per capita income of $500 to a per capita income of $25,000, defining both in terms of constant real dollars. At a growth rate of one percent, such an improvement takes 393 years.
Professor Cowen goes on to explain the cornerstone of his political views in the following manner:
If I had to explain, in one sentence, the reason I am not on the political left, I would cite the enormous long-run benefits of economic growth. Of course it still can be argued that various left-wing policies, properly understood, will contribute to long-term growth. But in my view, if you are not supporting growth-maximizing economic policies, you better had a pretty good reason in your pocket.
Amen.