Monthly Archives: November 2006

Houston’s Mr. Fix-It returns to Washington

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baker112606.jpgThis NY Sunday Times article reviews Former White House Chief of Staff, Secretary of State and Secretary of Treasury James Baker, III co-chairmanship of the Iraq Study Group, which is currently scheduled to deliver its report to the President by mid-December. Mr. Baker, who spends most of his time these days at the Baker Institute at Houston’s Rice University, is described in the article as wanting the chairmanship of the Iraq Group to be the template for his role as an elder statesman in the coming years:

Now, at 76, Mr. Baker is in high diplomat mode, on a mission, friends and supporters say, to aid his country and his president ó and, while he is at it, seal his legacy in the realm of statesmen, a sphere he cares about far more than politics.
ìI think heíd like to be remembered as a 21st-century Disraeli,î said Leon Panetta, a Democratic member of the group, referring to the 19th-century British statesman and prime minister. ìI think deep down he is someone who believes that his diplomatic career, in many ways, helped change the world.î

Read the entire article.

2006 Weekly local football review

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mcgee-06tu10.jpgTexas Aggies 12 Texas Longhorns 7

In the signature moment of Dennis Franchione’s mostly rocky tenure at A&M, the Aggies (9-3, 5-3) rode a magnificent defensive performance and an already legendary 16-play, almost 9 minute, 88-yard fourth quarter TD drive to hand the Longhorns (9-3, 6-2) a BCS bowl-bashing loss. The Aggies surprisingly battered the Horns nation-leading run defense with almost 250 yards rushing, while the Aggie defense gave up only about 160 yards after the Horns came up empty on their initial 75 yard drive to open the game. Horns QB Colt McCoy did not look sharp coming off his injury in the Horns’ previous loss to KSU, and Horns coach Mack Brown’s decision to go with McCoy in the game re-triggered discussion of Brown’s often dubious QB decisions during the pre-Vince Young era. Both the Ags and the Horns will be going to top-flight bowl games, but it won’t be determined which ones until after the Oklahoma-Nebraska Big 12 championship game next week.

Rice 31 SMU 27

Placing an exclamation point on the one of the best stories of the college football season, the Owls (7-5,6-2) pulled out another come-from-behind win to qualify for a post-season bowl game for the first time since the 1961 season. The win was particularly impressive given that the Owls played without star QB Chase Clement, who sat out the game (except for one pass) with an injury. The win also prompted the Chronicle to notice the Owls by finally giving them a headline and a couple of well-deserved front page stories. Heck, the Chronicle even ran a story on another remarkable story that it has ignored for most of the season, Houston RB/WR Anthony Alridge. Better late than never, I guess. The Owls now wait a week or so for their bowl assignment, which quite likely will be in Ft. Worth.

Jets 26 Texans 11

In a game that was unwatchable, the Texans (3-8) rode the incessant mediocrity of QB David Carr to yet another loss in the weak portion of their schedule. As usual, Carr — who appears to be a very nice young man with almost no leadership skills whatsoever — was 39 for 54 for 321 yards with a late TD, one interception, and four sacks, but that included a 19-of-24 performance for 162 yards in the final 8 minutes when the game was largely out of reach. That works out to around a 4.63 yards per pass (YPA), which is horrible and not close to a rate that is required to win consistently in the NFL. In this Weekend Journal article from over the weekend, Allen St. John explores YPA, a simple statistic that is a far better measure of a QB’s true effectiveness than the NFL’s arcane and misleading QB rating. Carr’s YPA is pedestrian this season, as it has been for his entire career. Even more revealing, though, is that Carr’s offensive teammates simply do not respond positively to Carr. It’s time for the Texans to make the change at QB and let Carr attempt to create a productive NFL career for himself elsewhere. It is not going to happen here. The Texans go to Oakland next week to play the equally hapless Raiders (2-9) before returning home the following week to play Vince Young Bowl II against the Titans (4-7).

Does anyone have a radio?

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nfl_large.gifUnless you are among the very small percentage of citizens who thinks that there are not enough National Football League games on television already, you may not have noticed that the NFL owners have started their own network to televise certain NFL games. And as if on cue, a dispute has arisen between two particularly distasteful business interests — the NFL owners and some of the country’s biggest television cable companies. The two sides are effectively playing a high-stakes game of chicken over whether the NFL Network is going to be available to a large part of the country.
The NFL reportedly left about a half-billion on the bargaining table in its last round of television-rights negotiations to reserve for the NFL Network eight late-season prime-time games featuring attractive teams with wide followings. The first took place on Thanksgiving night between the Kansas City Chiefs and the Denver Broncos, but it was available in less than half of the 90 million or so homes wired for cable or satellite.
Indeed, in an absolutely appropriate bit of fate, ailing Chiefs owner Lamar Hunt — who has lobbied his fellow NFL owners for 37 years to put a Thanksgiving Day game in Kansas City — had to listen to his Chiefs beat Denver on this past Thanksgiving Day night over the phone in his hospital bed. As with most NFL fans, Hunt was unable to view the game because the hospital he had been admitted to is not hooked into the NFL Network. So, his daughter held the phone near her television while he listened on the other end.
Cable operators such as Cablevision Systems Corp. and Time Warner Inc. are balking at carrying the network because the league wants to boost what it charges them each month to carry the network to a reported 70 cents per subscriber. The NFL currently charges those companies a the fee of about 20 cents per subsciber to carry its non-NFL Network games. Moreover, NFL owners are not only insisting on a high price for the NFL Network, but they are also pushing to have the network included as a part of each company’s standard cable package, which doesn’t charge subscribers premium fees to get the network. Cable companies are contending that customers who do not watch the NFL should not be required to foot the bill to indulge those who want those games.
The NFL owners are banking on cable company customers pitching such a fit that there companies will give in to the NFL owners’ demands. On the other hand, some publicity-seeking politicians are already using the spat as a reason to attempt to extend the government’s regulatory power over the “key” issue of whether a few NFL games will be televised. From my viewpoint, I hope the cable companies hold firm, the NFL owners put even more games on their little network and that market forces inform NFL owners what millions in the Los Angeles area have already discovered with regard to live NFL games — that life without the NFL is not all that bad.

The Lee and Williams deals

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c_lee_200.jpgwoodywilliams2005.JPGThe Stros jumped into the super-charged 2006 free agent market in a big way yesterday by signing former Brewers slugger Carlos Lee and, in a lesser deal, former Padres starter Woody Williams. Although there is always a certain amount of giddiness whenever the hometown club opens up the bank vault to attract a couple of star players who might propel the Stros back into the playoffs, the stark reality is that these two deals are highly risky and do little to solve the Stros’ main problem.
The Lee contract is the bigger of the two deals by far, $100 million spread over 6 seasons with a no-trade clause for the first four, which makes Lee the highest-paid Stro player this side of Roger Clemens. Lee is a 30 year old, 6’2″, 235 lbs Panamanian leftfielder who reached the majors in the White Sox organization at the age of 23 and basically showed little potential during his first three seasons. He had his first good season with Sox in 2002 as a 26 year old, hitting 17 RCAA/.359 OBA/.484 SLG/.843 OPS. After falling off some in 2003, Lee had his best season in the majors in 2004 when he hit 26/.366/.525/.891, including 31 taters. After falling off a bit again in 2005 when he was traded to the Brewers, Lee had another solid season in 2006 with the Brewers and the Rangers, hitting 24/.355/.540/.895, including 37 yaks. His career statistics over eight seasons are 78/.340/.495/.835 with 221 homers, although it should be noted that he has been substantially more productive during his past four seasons than he was in his first three.
Thus, although he becomes the highest-paid Stros hitter, Lee has been nowhere near as productive a hitter over his career as Stros 1B Lance Berkman (353/.420/.621/1.041). Perhaps Lee is a late-bloomer and will continue his productivity surge of the past four seasons over the next six seasons. However, Lee doesn’t walk much, so there is a higher than normal risk that his on-base average will decline as he gets older, and he is neither fast nor a good fielder. Accordingly, the Stros bought high and long on a hitter who has been roughly 20% as productive as Berkman during his career to date. Maybe it works out, but nobody should be deluding themselves that the Stros got a steal.
The two-year, $12.5 million Williams deal is not as risky as the Lee deal, although any type of deal on a 40 year-old pitcher not named Clemens has to be viewed with at least one raised eyebrow. The good news is that Williams has been a consistently productive pitcher over his 14 year career, rarely magnificent but just as rarely bad. He has had only one really good season, from midway thought the 2001 season through midway through the 2002 season when he pitcher 32 RSAA/2.40 ERA, but he was shelved midway through the 2002 season with arm trouble. On the other hand, his only really bad season was in 2004 with the Padres (-19 RSAA/4.85 ERA), but he bounced back last season to post a respectable 9 RSAA/3.65 ERA, which was about the the same as Andy Pettitte posted last season with the Stros. Williams’ career numbers are 41 RSAA/ 4.09 ERA.
So, the Stros clearly strengthen their club with these signings, but the question looms whether they overpaid for what they are likely to receive. I would have preferred J.D. Drew to Lee among free agent sluggers, but Lee is clearly more durable than Drew and there is that whole Scott Boras thing with regard to dealing with Drew. Williams appears to be a reasonable risk, but without Clemens and Pettitte, the Stros are still in need of several of their young pitchers to step up to fill out their starting rotation next season.
But more importantly, neither of these deals addresses the Stros’ main problem, which is having unproductive hitters such as Taveras, Everett, Ausmus and Bidg last season in the Stros’ everyday lineup. If Luke Scott can continue his productive hitting and takeover in right field, then the Stros could take care of one of those problems by repacing Taveras in centerfield with either Chris Burke or a hopefully rebounding Jason Lane. But even with that move, given the Stros’ indulgence of Bidg’s quest for 3,000 hits and Everett’s superlative defense at short, something needs to be done to replace Ausmus at catcher or else the Stros will continue to have three far-below National League-average hitters in their everyday lineup. The Stros got to a World Series in 2005 with such a lineup, but it took one of the best pitching performances by three starting pitchers on one team in Major League Baseball history to accomplish that. Inasmuch as that is not likely to happen again, here’s hoping that the Stros aren’t finished dealing this off-season to plug at least another of those holes in their lineup.
Lee and Williams’ career statistics are below.

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An NY Times snit fuels Gretchen Morgenson’s nightmare

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morgensongretchen3.jpgIt’s not every day that a newspaper editor’s defense of one of the newspaper’s star columnists ends up fueling the cause to expose the vacuity of the columnist’s work.
As noted earlier here and here, Clear Thinkers favorite Larry Ribstein has written a series of posts over the past year or so in which he uses the weekly columns of NY Times business columnist Gretchen Morgenson as examples of the mainstream media’s misrepresention and misinterpretion of business issues to further a generally anti-big wealth agenda. That anti-big wealth agenda was in full bloom during the Enron criminal trials, which I noted on several occasions, most recently here.
Well, along those same lines, the Wall Street Journal’s Holman Jenkins recently wrote this column ($) (described here in length in an earlier Ribstein post) in which he exposes an interesting fact about this earlier Times story (Times Select-$) on a supposedly virtuous CEO who turned down stock options because his father told him “‘don’t ever feel that you are worth it.’ I don’t want him to say that to me again.”
Turns out that Jenkins had been offered the story before it ended up in the Times, but passed on it when he discovered facts the largely undermined the excessive compensation slant that the Times ultimately put on the story — the CEO owned a big stake in a privately held company and so didn’t need the options as an incentive and the CEO’s doting father was a former Tyco board member and mentor of Dennis Kozlowski who suffered as a result of Kozlowski’s excesses in that case. Neither of those salient facts made it into the Times story, which was written by Morgenson, a fact that Jenkins didn’t even mention in his column.
At any rate, it didn’t take long for the Times long to spring to Morgenson’s defense. In this WSJ letter to the editor ($) entitled “Misrepresented, Insulted and Belittled.” Times executive editor Bill Keller lashes out at Jenkins:

Mr. Jenkins misrepresented my paper’s reporting, casually insulted one of the best journalists in the business, denounced our editors for dereliction of duty, and, in conclusion, belittled the corporate structure that prevents the New York Times from being owned by a hedge fund.

The rest of Keller’s letter is long on similar bombast but short on substance, a point that Professor Ribstein makes in this post disassembling Keller’s letter. In a wonderful twist of fate, Professor Ribstein reveals at the end of his post that Keller’s letter has actually had the effect of facilitating the cause of exposing Morgenson’s agenda:

I confess that after seven months of Morgenson I was tempted to go onto other subjects. I’ve got articles and books to write, classes to teach, papers to grade. The blog basically comes out of my sleep time. So I have to make sure that what I write about has some sort of payoff (after all, I don’t even sell ads). I was starting to wonder whether I should continue to cast my stones into the darkness.
But the NYT’s editor’s odd and completely unjustified attack on Jenkins (who, by the way, didn’t even mention Morgenson by name in his column) convinced me that the problem here runs very deep. So I’m going to keep slogging.

Can someone please get Ms. Morgenson another stiff drink?
By the way, Keller’s piece also contains a curious defense of the Times’ anti-takeover mechanism that is contrary to Morgenson’s usual position regarding shareholder supremacy. Keller contends that the family trust that controls a majority of the voting shares (but not a majority of the equity) is committed to serious journalism, while the majority owners (you know, which could be those devious and profit-fixated hedge funds) would not be. In other words, shareholder power is good for those bad companies that allow their executives to make too much money, but it is bad for news media companies, which have no such problems.
Got that?

Giving thanks to Milton Friedman’s bookie

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milton-friedman-9.jpgOne of the underappreciated contributions of the late Milton Friedman is the impact of his market theories on the explosive development of derivative financial markets, particularly after the Nixon Administration abandoned in 1971 the fixed exchange rates that the Allies had established under the Bretton Woods Accords of 1944.
As Jim Johnston of the Heartland Institute notes here, Nixon Administration Treasury Secretary George Shultz — a close friend of Professor Friedman’s — led the campaign to remove the fixed exchange rates. As the story goes, part of Secretary Schultz’s motivation for removing the fixed exchange rates was Professor Friedman’s disappointment that he could not place a bet against the British pound in the financial markets of the late 1960s. As we all know now, replacing regulation of fixed exchange rates by central bankers with markets for foreign exchange futures such as FOREX derivative contracts substantially improved the ability of business interests to hedge risk in currencies. Johnston explains:

Banks initially opposed the [Forex derivative] contracts, calling them the creation of Chicago “crapshooters.” Later the banks used the FOREX contracts to hedge the tailored currency guarantees they sold to their customers. The move from regulation to markets was to pave the way for derivative contracts in heating oil, gasoline, crude oil, and natural gas in the order that they were deregulated.

The growth in financial and other derivatives, where speculators meet hedgers, continues even today. Indeed, so much so that the daily volume of trading exceeds trillions of dollars. It would not be unfair to say financial derivative trading is one of the largest institutions in the world.

Just think, it started out by being Milton Friedman’s bookie.

The story of the open road

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80r.gifAs many of us get ready to hit the road over the holiday weekend, Ralph Bennett in this TCS Daily article provides an excellent overview of the birth of the nation’s Interstate Highway System during the Eisenhower Administration. We tend to take the system for granted these days, but it is truly an engineering and economic marvel that is one of our many blessings for which we will give thanks this holiday weekend.

A dream golf round

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Pebble Beach Course.jpgSounds as if Jack Kendall, who owns a couple of Lexus dealerships in the Houston area, had the round of a lifetime recently at Pebble Beach Golf Club:

Kendall, 63, . . . made Pebble Beach history when he became the first golfer, amateur or professional, to ace two holes in the same round on the first nine holes of the 86-year-old course. His holes-in-one came on the par-3 5th and 7th holes.

To put this accomplishment in perspective, many very good golfers go a lifetime without ever making a hole in one. To it twice in a round is almost unheard of. To do it twice in a round while playing one of the most revered golf courses in the US? Now, that’s going to be rather difficult to top.

While the Weary case is dismissed, the SWAT danger continues

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Swat icon.jpgIn the right move, Texans’ offensive lineman Fred Weary’s criminal case was dismissed yesterday by Harris County Court at Law Judge Pam Derbyshire, who commented from the bench that Weary did not use enough force against police officers during the Nov. 14 incident to justify either the charge or, presumably, being Tasered.
Meanwhile on the police overreaction front, this Pokerati series of posts chronicles the latest Dallas SWAT team “success” — breaking into and destroying several of the city’s underground poker rooms. Pokerati has firsthand accounts of Dallas SWAT teams swooping into the poker rooms, breaking windows, kicking down doors, and charging with assault weapons drawn into peaceful gatherings of “dangerous” Texas Hold ‘Em enthusiasts. I’m sure everyone in the Metroplex is sleeping more restfully now that these evil card sharpies are behind bars.
As former Cato Institute policy analyst Radley Balko shows in this Cato study, small municipalities frequently misuse SWAT squads for routine police work, which has led to an increasing number of botched raids resulting in injury or even death to innocent citizens. The Dallas poker raids were only the most recent example of unnecessary and dangerous SWAT unit deployments; this earlier post reported on one in a Houston suburb. Police overreaction is dangerous enough when it occurs in the spur of the moment as in the Weary case. But the risk of innocent citizens being harmed goes off the charts when SWAT teams are unnecessarily deployed to break up peaceful gatherings of people engaging in harmless activities.

Is the Big 12 Conference really viable?

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BIG12c.jpgAs noted earlier here, the Big 12 Conference was formed as a money grab rather than because of any meaningful allegiances between most of the conference members. And, as noted here, football programs of the institutions in the Big 12 North Division have a difficult time competing with their better-funded and located (at least in terms of attracting good football players) brethen in the Big 12 South Division.
Well, Mark Kiszla of the Denver Post has been noticing the same thing. In this column entitled Divided, Big 12 bound to fall, he observes that the Big 12 is a poorly-structured alliance of convenience based almost entirely on money. As such, Kiszla predicts that the conference is destined to fail:

A football conference divided cannot stand.
There’s a feud in the Big 12 Conference between the North and South. It’s a civil war in which nobody wins and Colorado too often loses.
This league – held together by little except greed and a championship game that’s regularly as flat as a too-long-open can of Dr Pepper – is a clash of cultures as different as the Birkenstocks in Boulder and the ten-gallon hats of Texas.
In a conference in which the haves and have-nots are divided by geography, what has gone wrong? [. . .]
Can’t we all get along here?
I’m afraid not.
For a league in which almost half the football teams have trouble putting up a good fight, there’s way too much bad blood.
The Big 12 is a conference split by a Red River of tears, as the bullies from the south have won 13 of 16 games this season against the 98-pound weaklings from the northern plains.
Although the Big 12 boasts of three squads ranked among the top 25 (Longhorns, Sooners, Aggies), you again hear barely any noise from the north, other than the wind blowing through towns from Lawrence, Kan., to Ames, Iowa, as the Jayhawks and Cyclones get blown away by real football teams.
If something does not change, the Big 12 will be slowly ripped asunder, and I fear as the imbalance of power grows worse, the league as we know it will not exist 10 years down the road.

Just another example of the pressures arising from the increasing gap between the haves and the have-nots in big-time minor league — er, I mean — college football.