Monthly Archives: January 2007

Malcolm Gladwell on Enron

Posted on by
3

enronlogo30.gifMalcolm Gladwell, he of Tipping Point fame, has authored this must-read New Yorker article on the demise of Enron. Although Gladwell gets a couple of things wrong, his article provides a refreshingly candid and objective view of what happened to Enron and highlights several aspects of the company’s demise that makes criminalization of the affair so troubling. Reading Gladwell’s account along side this earlier post on the case against Jeff Skilling, is there really any meaningful doubt that an enormous injustice has occurred in regard to the conviction and sentencing of Skilling to 24 years in prison?
By the way, these observations are quite interesting regarding a lecture that Gladwell recently gave in Dallas.

Government Finance 101

Posted on by
1

myths.gifIn this post from almost three years ago, I noted the utter hypocrisy of Congress regularly vilifying big business for attempting creative financing mechanisms to hedge risk. So, over the holidays, this letter to Washington Post from the Comptroller General of the United States caught my eye:

The largest employer in the world announced on Dec. 15 that it lost about $450 billion in fiscal 2006. Its auditor found that its financial statements were unreliable and that its controls were inadequate for the 10th straight year. On top of that, the entity’s total liabilities and unfunded commitments rose to about $50 trillion, up from $20 trillion in just six years.
If this announcement related to a private company, the news would have been on the front page of major newspapers. Unfortunately, such was not the case — even though the entity is the U.S. government.
To put the figures in perspective, $50 trillion is $440,000 per American household and is more than nine times as much as the median household income.
The only way elected officials will be able to make the tough choices necessary to put our nation on a more prudent and sustainable long-term fiscal path is if opinion leaders state the facts and speak the truth to the American people.
The Government Accountability Office is working with the Concord Coalition, the Brookings Institution, the Heritage Foundation and others to help educate the public about the facts in a professional, nonpartisan way. We hope the media and other opinion leaders do their part to save the future for our children and grandchildren.
DAVID M. WALKER
Comptroller General of the United States
Government Accountability Office
Washington

Reviewing medical advances

Posted on by
1

balloon_angioplasty.JPGFresh off his fascinating article on Dr. Michael DeBakey’s confrontation with death (here and here), the NY Times’ Lawrence K. Altman reminds us in this article that — despite the dysfunctional U.S. health care finance system — medical advances are continuing at an increasing rate:

As a reporter for The New York Times for 37 years, I have witnessed many important medical events, from new treatments to new diseases. In reflecting on that panorama, it is clear that technology has accounted for the greatest changes in medicine. Technology has improved laboratory testing; allowed for the development of CT scans, magnetic resonance imaging exams and positron emission tomography, or PET, imaging to improve diagnostic accuracy; and produced new drugs and devices. Basic science, too, has deepened our understanding of disease, and much of that work depends on technology.
At the same time, the care for many ailments has been greatly improved by ancillary developments like better nursing care, newer antibiotics, transfusions of platelets to prevent bleeding, the insertion of monitoring tubes in major veins, and better organization of some services. [. . .]
Few people appreciate that medicine has advanced more since World War II than in all of earlier history. Newer drugs and devices and better understanding of disease mechanisms have vastly improved the care of patients. For male babies born in this country in 1960, the life expectancy was 66.6 years; for female babies, it was 73.1 years. In 2004, the figures, respectively, were 75.2 and 80.4. Medical advances account for much, though not all, of the gain.

Altman’s point regarding the importance of medical advances reminds me of a similar one that Donald J. DiPette, the chairman of the Texas A&M Internal Medicine Department, made while giving the Walter M. Kirkendall Lecture at the University of Texas Health Science Center this past spring. Given the advances in treatment of hypertension over the past 60 years, Dr. DiPette noted that President Franklin D. Roosevelt would have never been allowed to participate in the Yalta Conference at the end of World War II had his doctors known then what doctors knew a decade later about the traumatic implications of acute hypertension. In short, a better understanding of hypertension at the time of Yalta almost certainly would have changed the course of human history.

Is the WSJ sizing up Nabors?

Posted on by
Reply

nbr_logo.gifRemember awhile back when longtime Houston-based Nabors Industries Ltd was facing Congressional scrutiny over its efforts to minimize its tax obligations by maintaining its registration in Bermuda (or was that Barbados?)? Well, that little dust-up may be nothing in comparison to what emerged for Nabors over the holidays.
Last week, the Wall Street Journal ($) ran this article reporting that longtime Nabors CEO that Eugene Isenberg is among the highest-paid corporate executives in history, receiving more than $450 million in compensation over the past 19 years, much of which was generated through the exercise of stock-option grants whose value the WSJ contends was enhanced by certain “controversial moves” made by the company. The WSJ article alleged that the company allowed Isenberg to trade in certain worthless options for new ones with lower exercise prices and “reloaded” Isenberg with new options when he cashed in others.
A day later, Nabors announced that it was initiating a further review of its option-granting practices in light of “issues raised” in the WSJ article. This current review follows an earlier internal review of the company’s stock-option practices since 1998 that the company contends “did not suggest that there was reason to question the propriety” of its option-granting practices.
Nabors has enjoyed a meteoric rise over the past 20 years or so, similar to that of another Houston-based company that the WSJ latched its teeth into awhile back.
Stay tuned.

2006 Weekly local football review

Posted on by
Reply

bob mcnair.jpgTexans 14 Browns 6

Despite having no effective passing game, the Texans (6-10) rode a strong second half rushing performance from rookie RB Chris Taylor and another spunky defensive effort to beat the Browns and fulfill my pre-season prediction that the team would win six games. Although two straight wins with strong defensive performances to close out the season must be gratifying to Texans owner Bob McNair, this remains a team that has multiple problems to address in the off-season — generally poor pass blocking, QB David Carr, a need for a big-time running back, depth on defense, etc. The Texans will pick eighth in the first round of the upcoming NFL draft and then will rotate with the two other 6-10 teams (the Dolphins and Vikings) for the 7th, 8th and 9th slots for the remaining rounds of the draft.
Although the Texans remain far from contending for a playoff spot, they did finish 6-10 after a horrendous 0-3 start, going 6-7 over their final 13 games and 2-2 in their last four. They won their last game for the first time and won back-to-back games for only the second time in franchise history (the other time was in late December 2004). They did all this without a top notch QB or RB, three starters lost to injury in the offensive line, two starting defensive tackles lost to injury, Pro Bowl kick returner Jerome Mathis contributing for only two games and former star RB Domanick Davis not playing a lick. As Andy Dufresne says in The Shawshank Redemption, “Hope is a great thing, maybe the best of things.”

Texas Longhorns 26 Iowa 24

The Longhorns (10-3) avoided another major embarrassment by edging a mediocre Iowa (6-7) team in the Alamo Bowl, and the game underscored the problems that the Horns will need to address over the off-season if the Horns are going to return to becoming a true top-10 team. The two main problems are a lackluster rushing attack and inconsistent pass coverage, which again combined to cause the Horns to sweat another game against an opponent with inferior personnel. Already facing a search to replace departed defensive coordinator Gene Chizek, head coach Mack Brown has his work cut out for him over the next several months.

Cal 45 Texas Aggies 10

After staying close for a half, the Aggies (9-4) laid a major egg in folding down the stretch in the Holiday Bowl to the Cal Bears (10-3). As already noted, the Aggies’ lackluster performance has already revived skepticism in Aggieland over head coach Dennis Franchione, whose four year performance at A&M has not been particularly impressive. Although this season’s 9-4 finish was the best of Franchione’s tenure at A&M, most of those wins came against cupcakes and the only signature win came against the Longhorns in the final game of the regular season. The Aggies still struggle throwing the ball effectively and the defense remains suspect, so those are two areas that the Ags will need to address in the upcoming off-season.

South Carolina 44 Houston 36

In a hugely-entertaining game, South Carolina (8-5) edged the Cougars (10-4) in a Liberty Bowl shootout. Essentially, neither team’s defense could stop the other team’s offense, so the difference in this one was a Houston fumble that allowed South Carolina to score an easy TD and a key second half possession when a bad snap foiled a a third and goal situation for the Cougars at the SC five yard line. Replacing outstanding QB Kevin Kolb and upgrading the defense are the key areas that the Cougars need to address during the off-season, but this season has returned the Houston program to the college football map in Texas. The future looks bright over on Cullen Avenue.

Rutgers 37 Kansas State 10

Rutgers (11-2) easily handled a mediocre Kansas State (7-6) team in the Texas Bowl over at Reliant Stadium, but not many folks in Houston were able to watch it because the television network carrying the game — the NFL Network — does not allow Time Warner Cable, the major cable company in the Houston area, to carry the network. As noted earlier, the NFL owners are attempting to induce an outcry from cable customers over Time Warner’s failure to accede to the NFL owners’ financial demands, but what’s happening instead is that the NFL owners are coming off as being petty and greedy. I cannot imagine a worse way of marketing what essentially is a public relations product for a community than to limit the number of television viewers who can watch the game.

Texas Tech 44 Minnesota 41

Although not technically a local team, the Texas Tech Red Raiders (8-5) merit a mention this week for their amazing comeback victory over Minnesota (6-7) in the Insight Bowl. Down 38-7 with less than 20 minutes to play in the game, the Raiders scored 31 straight points to send the game into overtime, and then won the game with a TD in OT. The Gophers reacted to the stunning loss by firing their coach. I know where the Gophers can find an excellent replacement.