Monthly Archives: January 2005

The risks of the Texas-Mexico border

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This Washington Post article reports on a troubling development that many Texans prefer to ignore — that is, the increasing number of missing persons who are being abducted in the Mexican border towns along the border of Texas and Mexico.
21 U.S. citizens have been kidnapped or disappeared between August and December of last year. Of those 21, nine were later released, two were killed, and 10 remain missing. Moreover, law enforcement officials report an alarming rate of kidnappings that are occurring across Mexico, including what are dubbed “express” kidnappings that are performed for “quick cash” ransoms.
The Rio Grande Valley of Texas — or “the Valley” as Texans call it — has always been a fascinating and troubling part of Texan culture. Larry McMurtry portrayed the late 19th century version of the area brilliantly in his Pulitzer Prize winning novel, Lonesome Dove, which was made into one of the best television mini-series of all time in 1989 with Robert Duvall and Tommie Lee Jones in the main roles. Filmmaker John Sayles provides an equally remarkable portrayal of the area during the 1950’s and 1980’s in his fine 1996 film, Lone Star, which includes Valley native Kris Kristofferson in the flat out best performance of his acting career. The area is among the lowest in terms of per capita income in the United States, yet even that chronically depressed economy is a fantasy of riches for many of those living in the poverty of the teeming Mexican border towns.
The region’s problems are complex and difficult, which makes the area prone to being ignored. The increased violence of late is the natural result of such neglect, and the usual response to such spikes in violence along the border — i.e., heightened law enforcement — is only a short term solution that often contributes to the animus that many of the Hispanic citizens of the area have toward the state. The area is desperate for leadership and a vision for solving its problems, yet those intractable problems tend to repel those in government who are in a position to do something about them. In short, the Valley needs statesmen, which are in short supply in the polarized American political landscape of the early 21st century.

The real reason for the Jenn-Brad split

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There just had to be more to the breakdown in the Jennifer Aniston-Brad Pitt marriage than the MSM has been reporting. This Watley Review piece reveals the true reason for the breakup:

“Brad’s always been a fan of Wittgenstein,” confided Hanson Terrell, an assistant at the Plan B production company co-owned by the pair. “You know, kind of abstract, more focused on issues of language and so on. Jennifer, on the other hand, is a pure Karl Popper fan, all pragmatism. It’s kind of amazing they got married in the first place.”
“She felt Brad was screwing around with her, that when he stared into space at the beach he wasn’t resolving apparent paradoxes through analyzing their phrasing, but instead checking out the brunette in the thong,” said gossip columnist Mark Lisanti of The Defamer.

ACLU quandry

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This NY Times article reports on an interesting struggle that is developing within the American Civil Liberties Union board of directors.
I wonder whether the ACLU will represent the board members against the ACLU in protesting the ACLU’s attempt to chill their free speech rights? ;^)

Brobeck Trustee sues firm’s former partners

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This Law.com article reports on the avoidance lawsuits that the bankruptcy trustee of the former high tech law firm Brobeck, Phleger & Harrison is filing against the firm’s former partners for bonuses and a portion of the firm’s unpaid bank debt.
The key issues in pursuing former Brobck partners is when the firm became insolvent and whether partners took money out of the firm for inadequate consideration. Under the California Corporations Code, limited liability partnerships may make distributions to partners only when the total assets of the firm exceed liabilities.
The trustee contends that Brobeck’s income began to decline in 2000, a decline that accelerated during the second half of that year and continued until the firm tanked in September, 2003. Although Brobeck’s net per-partner income dropped to $245,000 for 2002, the trustee contends that Brobeck’s partners did not correspondingly reduce the distributions they received.
According to the trustee, in 2001 and 2002 alone, Brobeck’s partners spent more than $100 million more than the firm’s net income on partner distributions and leasehold improvements. Brobeck financed these excess distributions through debt, which increased from $34 million and $173,000 per partner in 2000 to $89 million and $505,000 per partner in 2002. In particular, the trustee asserts that Brobeck borrowed an additional $39 million on its credit line in the first quarter of 2002 and distributed over $43 million to its partners during the same time period.

Noonan and Ignatius on the Inauguration

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Following Paul Gigot’s thoughts in this post from yesterday, Peggy Noonan writes this Opinion Journal op-ed today regarding President Bush’s Inaugural speech, in which she observes the following:

There were moments of eloquence: “America will not pretend that jailed dissidents prefer their chains, or that women welcome humiliation and servitude, or that any human being aspires to live at the mercy of bullies.” “We do not accept the existence of permanent tyranny because we do not accept the possibility of permanent slavery.” And, to the young people of our country, “You have seen that life is fragile, and evil is real, and courage triumphs.” They have, since 9/11, seen exactly that.
And yet such promising moments were followed by this, the ending of the speech. “Renewed in our strength — tested, but not weary — we are ready for the greatest achievements in the history of freedom.”
This is — how else to put it? — over the top. It is the kind of sentence that makes you wonder if this White House did not, in the preparation period, have a case of what I have called in the past “mission inebriation.” A sense that there are few legitimate boundaries to the desires born in the goodness of their good hearts.
One wonders if they shouldn’t ease up, calm down, breathe deep, get more securely grounded. The most moving speeches summon us to the cause of what is actually possible. Perfection in the life of man on earth is not.

Along the same lines, David Ignatius of the Washington Post observes in this op-ed:

The late congressman Phil Burton of California used to say that government officials got in trouble when they began to believe that all the show and pomp of Washington was “for real.” By that, he meant that officials were led astray when they began to think it was about themselves and their party rather than the nation. That delusion is especially easy in a second term, after four years in the adulatory echo chamber of the capital. Just ask survivors of the Nixon administration.

Updating the Yukos case — Judge Clark postpones Yukos discovery

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U.S. Bankruptcy Judge Leticia Clark denied OAO Yukos‘ request Thursday to commence discovery in regard to its claims for damages against several international financial institutions and Russian entities pending a February 16th hearing on OAO Gazprom‘s motion to dismiss the Yukos chapter 11 case in Houston for lack of jurisdiction. Here are the previous posts on the Yukos saga.
Although the MSM heralds the decision as a setback to Yukos, it’s really not. Judge Clark recognizes that it is inefficient to allow expensive discovery to commence before she has decided whether the Bankruptcy Court has jurisdiction over the Yukos case. There will be plenty of time for discovery if she decides that Yukos’ chapter 11 case can move forward in the American bankruptcy system.
That’s really the big issue in the case — i.e., whether the acceptance of Western investment capital by Russian business interests will bring with it the corresponding risk of having such capital protected in the American civil justice and bankruptcy systems? If Judge Clark rules in favor of Yukos on that issue, how long will it be before the Russian government is hiring lobbyists to support Republican Congressional initiatives for tort and bankruptcy reform?

Cert petition filed in Roe v. Wade case

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As noted in this previous posts, Norma McCorvey of Dallas, the original plaintiff in the seminal anti-abortion case Roe v. Wade, has been attempting over the past couple of years to persuade the federal courts to allow her to challenge the original judgment in that case under Fed. R. Civ. P. 60(b). In this opinion from last year, the Fifth Circuit Court of Appeals upheld the District Court’s rejection of Ms. McCorvey’s Rule 60(b) motion on procedural grounds and dismissed the case, although Fifth Circuit Judge Edith Jones‘ concurring opinion did address some of the substantive issues pertaining to the underlying case.
Now, as noted in this AP article, Ms. McCorvey has asked the U.S. Supreme Court to reverse the lower courts and direct the District Court to grant her Rule 60(b) motion. Here is a link to the cert petition, courtesy of the excellent SCOTUSblog.
Due to the procedural nature of the challenge to Roe v. Wade, my sense is that the cert petition does not have much of a chance of success at the Supreme Court. Nevertheless, stay tuned. Stranger things have happened.

The Martha Redemption?

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In Frank Darabont‘s wonderful movie, The Shawshank Redemption (1994), unjustly imprisoned Andy Dufresne ends up making some pretty decent money while in prison.
In an ironic twist in regard to another unjust imprisonment, this NY Times article reports that the value of Martha Stewart‘s stake in Martha Stewart Living Omnimedia has nearly tripled — from about $320 million to around $830 million — since her conviction last year.
Markets are sweet, aren’t they?

Gadzooks is liquidating

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Carrollton-based Gadzooks, the teen fashion retailer that has been wandering aimlessly in chapter 11 since February of last year, announced yesterday that it would sell its assets to the highest bidder and give up on its dream of reorganizing and emerging from chapter 11.
As in the recent case of sandwich franchisor, Schlotzky’s, Gadzooks’ liquidation will generate a pittance in comparison to the company’s debt, which means that unsecured creditors will likely receive no dividend on their claims against the company.
The business risk of highly-leveraged and specialized companies such as Gadzooks is perhaps best articulated by the reaction of one of my two teenage daughters, both of whom are both experts in the area of purchasing from teen fashion retailers. Although dismayed last year when Gadzooks went into the tank, when I mentioned the latest news about Gadzooks’ final demise, one of my girls turned to me and observed with no remorse:

“Oh, yeah. I remember that store. They were toast a long time ago.”

Except Southwest, airlines continue to reel

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Several major airlines reported quarterly earnings yesterday, and the reports continue to verify what everyone already knows — the legacy airline business model is broken and in need of such serious reorganization that it is questionable whether many can or should survive.
While American Airlines parent AMR Corp. and Northwest Airlines reported another round of large fourth-quarter losses, even industry profit leader — Dallas-based Southwest Airlines — reported a 15% profit decline. That Southwest’s profits are declining underscores the grim outlook for the entire industry — of the 10 largest U.S. carriers, only Southwest is expected to report a fourth-quarter profit.
Houston-based Continental Airlines, Inc. reported a fourth quarter loss of $206 million. Continental is implementing a plan to generate $1.1 billion in savings and expand its more profitable international flights. The carrier is also negotiating $500 million in worker wage and benefit concessions that it needs to have in place prior to the end of the first quarter of 2005 to help defray further losses.
All airlines carriers are being hammered by an unusual combination of high fuel prices, fare competition and growing seat capacity in the U.S. market. Had it not been for fuel hedges that saved Southwest $174 million in the quarter, it also would have reported a quarterly loss.
Meanwhile, the other discount airlines that have generated the brutal low-fare competition are also being stung by declining fares as quarterly losses are expected from America West Holdings Corp., JetBlue Airways, AirTran Holdings Inc. and Frontier Airlines. THe primary reason that the other discounters are not profitable is that they do not have the liquidity of Southwest to hedge fuel costs.
Southwest’s quarterly profit fell to $56 million (or seven cents a share) from $66 million last year. Revenue totaled $1.66 billion, which was an increase of about 9% compared to the fourth quarter of 2003. Southwest’s unit costs in the quarter fell 1.3%, or 4.5% excluding fuel.
With several airlines wallowing in chapter 11 cases without clear reorganization plans, is 2005 the year that the needed shakeout in the airline industry will take place?