More on criminalizing risk-taking

kpmg logo30.jpgRobert Weisberg is Edwin E. Huddleson, Jr. Professor of Law and director of the Criminal Justice Center at Stanford University, where he teaches a course on white collar crime with David Mills, who is a senior lecturer there. In this Wall Street Journal ($) op-ed, Messrs. Weisberg and Mills dissect the Justice Department’s indictment against eight former KPMG partners for their involvement in advising and promoting allegedly illegal tax shelters for clients of the firm. Messrs. Weisberg and Mills point out that there is just one small problem with the indictment:

In the months leading up to it (and the now-rumored indictment of other tax advisors on similar grounds), numerous news stories suggested the KPMG accountants had somehow knowingly participated in tax fraud by creating fake losses for wealthy clients. Whether or not this proves true, the indictment makes no such allegation.

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Stros 2005 Review: 2005 NLCS Preview

Stros in St. Louis2.jpgSo, after vanquishing the Braves for the second straight season in the National League Divisional Series, the Stros (89-73) face a 2005 rematch of the thrilling 2004 National League Championship Series against their arch-rival — the St. Louis Cardinals (100-62).
As was the case before the 2004 series, the Cardinals have had the better season (combined RCAA/RSAA of 168 to the Stros’ 75), but the two clubs are surprisingly evenly-matched coming into the NLCS. The Cardinals hit better than the Stros and actually have a slightly stronger pitching staff overall, but the Stros front three starting pitchers are the best in baseball and their key closers are pitching better than the Cards’ main closers at this point. In fact, since bottoming out in late May, the Stros had precisely the same record as the Cards over the final 120 games of the seasons — 74-46 for .617 winning percentage. Thus, the 2005 NLCS — as with last season’s seven game gut wrencher — has all the makings of another close, hard-fought series.

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Daniel Drezner is moving on

danieldrezner.jpgDanielDrezner.com — maintained by University of Chicago assistant professor of political science, Daniel Drezner — is one of the first weblogs that I regularly reviewed and it remains one of my favorites. Over its three year existence, it has become one of the most popular academic blogs in the blogosphere.
Professor Drezner disclosed this past weekend that his application for tenure at the University of Chicago had been denied and that, as a result, he will be moving on from his position there. This New York Sun article (hat tip to Howard Bashman) is already speculating that Professor Drezner’s popular blog was one of the factors working against him in the notoriously stuffy academic world of considering tenure applications. Larry Ribstein — who is at the forefront of addressing academic issues relating to blogging — has more analysis here.
Regardless of whether Professor Drezner’s blogging had any effect on the rejection of his tenure application, my sense is that this is a temporary setback for him. He is an insightful commentator on politics generally, and on foreign affairs and political economy issues in particular, so he will not be without gainful employment opportunities for long. UChicago’s loss will be someone else’s gain.

Nobel Laureate Thomas C. Schelling

schellin.gifFormer University of Maryland economics professor Thomas C. Schelling was named the winner of the Nobel Memorial Prize in Economic Science yesterday along with Israeli economist Robert J. Aumann for their work in game theory, which essentially attempts to explain the choices that competitors make in situations that require strategic thinking. Mr. Schelling was the mentor of Marginal Revolution’s Tyler Cowen, so don’t miss Tyler’s excellent overview of Professor Schelling’s career and extraordinary contributions to economics, foreign policy and clear thinking. Tim Harford of the Financial Times also chimes in. Enjoy.

Does Time Inc.’s management read Clear Thinkers?

mike price3.jpgLast month, this post commented on the interesting story of former University of Alabama football coach and current University of Texas at El Paso football coach Mike Price‘s $20 million libel lawsuit against Time Inc. That post ended with the following comment:

“Does anyone else get the sense that Time needs to settle this case quietly?”

Well, Time Inc. has taken that advice and settled with Coach Price.
Time Inc. made a very good decision. Vanderbilt’s football team would have a better chance of beating the University of Alabama at Tuscaloosa than Time Inc. would have had of prevailing against Coach Price in a Birmingham courtroom.

Addressing the real problem in New Orleans

New Orleans map.gifEdmund Phelps is the McVickar Professor of Political Economy at Columbia University. In this Wall Street Journal ($) op-ed, Professor Phelps makes the remarkably simple but adroit insight that much of the political debate over the rebuilding of New Orleans from the damage of Hurricane Katrina is missing the true problem that bedeviled New Orleans:

The nation is still reflecting on the sight of New Orleans unprotected from Katrina and too feeble from poverty to run from it. Yet some basic issues have scarcely been debated.
So far, the focus has been on what to do about lost and damaged infrastructure. For our legislators and the public, that has raised fascinating questions of political philosophy. The federal government does not pay to defend New York state against Lyme disease or New York City against terrorist attack. So it is a question why it is a federal duty to pay for measures to protect or repair New Orleans from local storms.
The economist’s answer is that a disrupted New Orleans has external costs on the farmers upriver and the producers everywhere who depend heavily on the city’s great port to ship grain. At likely levels, New York’s Lyme disease does not threaten the rest of the nation. Protecting Wall Street ranks high on that external cost test, but not high enough in the estimation of Congress. It is a matter of degree.

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2005 Weekly local football review

macbrownstoops curse.jpgDespite this, football was still noticed in these parts over the weekend. First, the good.
Texas Longhorns 45 Oklahoma 12

Dr. Vince Young found a cure for the Stoops Curse — it’s called “Give me the ball and get out of the way.”
Young threw for 241 yards and three TD’s as the Horns (5-0) romped to their largest margin of victory in this hallowed series. Although Young is such an extraordinary player that he tends to attract most of the attention, the Horns’ defense was really the difference in this game as it absolutely manhandled an overmatched OU offense that could muster only 171 yards of total offense.
Probably the best evidence that the Stoops Curse is officially a thing of the past is Coach Stoops’ dubious decision to play injured stud running back Adrian Peterson, who “ran” ineffectively for 10 yards on three carries. That was a clear sign of desperation that reflects that things are getting a bit testy these days in Norman, Oklahoma.
By the way, the Horns will have their toughest game next Saturday since the Ohio State game when they host surprising Colorado (4-1).

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A baseball weekend in Houston for the ages

Chris Burke.jpgUntil this weekend, I really never thought that anything would top this game. But I was wrong.
What can one say about a game in which the following occurred?:

The Stros came back from a 6-1 deficit with only four outs left in the game.
Superstar Lance Berkman lighting a fuse to the Minute Maid Park crowd that exploded when he hit a grand salami — the second one in the game, following the Braves’ Adam LaRoche‘s 3rd inning bomb — to bring the Stros improbably within a run of the lead in the bottom of the 8th inning:
With the Stros within an out of returning to Atlanta for a Game 5 of the series, light-hitting Brad Ausmus — probably the weakest hitting regular National League player over the past five years — ripped a line drive yak to deep left-center (only his fourth home run of the season) that landed about an inch above the yellow home-run line and just a couple of inches beyond the Braves centerfielder Andruw Jones‘ outstretched glove;
Rookie Luke Scott — who was the Stros’ hottest hitter coming out of spring training but who eventually was farmed back to AAA Round Rock for another season of minor league training — coaxing a key walk during the 8th inning rally and then coming within inches of winning the game in the 10th with his own walk-off yak;
The Stros using all of their position players so that burly backup catcher Raul Chavez ended up playing first base;
Every available pitcher in the Stros’ bullpen pitching a total of 13 and 2rds innings and giving up just one run;
Dan Wheeler pitching three innings of masterful relief — his longest stint of the season — almost on fumes by the end the 15th inning;

Clemens v Braves.jpg

As the last Stros pitcher available, 43 year-old Roger Clemens taking hold of his exhausted team and pulling them across the finish line with incredibly unyielding will and three innings of one hit relief pitching; and
25 year-old Chris Burke — a potentially solid National League regular player who has accepted a part-time role on the club while a future Hall of Famer plays out his string at Burke’s primary position — pounding his first walk-off tater of his young career to end the longest Major League Baseball playoff game in history.

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Delphi finally tanks

Delphi.gifIn perhaps the least surprising business move of the year, Delphi Corp. and 38 of its U.S. subsidiaries filed chapter 11 reorganization cases today in an attempt to restructure its money-losing auto supply business and resolve over-priced union contracts. Delphi advised the bankruptcy court in its initial filings that it has secured a $4.5 billion in debtor-in-possession financing and that it hopes to emerge from its reorganization in mid-2007.

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Former General Re CEO receives a Wells notice

Gen Re 11.gifFollowing on earlier plea bargains, former General Reinsurance Corp. CEO Ronald Ferguson received a Wells notice from the Securities and Exchange Commission late last week in regard to the SEC’s investigation into various “finite risk” structured finance transactions between General Re — a subsidiary of Warren Buffett’s Berkshire Hathaway — with American Insurance General. A Wells notice advises the recipient that the SEC intends to pursue him for alleged violations of securities law and often precedes a criminal indictment on the same matters. Here are the previous posts on the investigation into General Re, AIG and Berkshire.

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