Daily Archives: January 29, 2007

The ethanol con

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ethanol.jpgWhile President Bush on one hand made a productive health care finance proposal in his State of Union Address last week, his big push for alternative fuel development was not as well-conceived. As this OpinionJounal op-ed notes, the development of ethanol as an alternative fuel source has been mostly a con job of epic proportions.

[F]ederal and state subsidies for ethanol ran to about $6 billion last year, equivalent to roughly half its wholesale market price. Ethanol gets a 51-cent a gallon domestic subsidy, and there’s another 54-cent a gallon tariff applied at the border against imported ethanol. Without those subsidies, hardly anyone would make the stuff, much less buy it–despite recent high oil prices.

Jerry Taylor of the Cato Institute has done a ton of work exposing the ethanol boondoggle, and this recent post links several of his works. The ethanol con is a quintessential example of special interests manipulating market conditions and political rhetoric to capture a windfall that would not otherwise be available. It’s also a reminder to all of us to grab our pocketbooks whenever we hear a government official touting the next big government program to develop something at a supposedly cheaper or more stable price than what the markets are providing.

Local attorney accused of bankruptcy fraud

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cash%20on%20scale.jpgBankruptcy is strong medicine with serious side effects, so it’s not a remedy for legal problems to be taken lightly. I don’t know if local attorney Jose Antonio Villalon took the notion of filing bankruptcy lightly, but his multiple bankruptcy filings several years ago have resulted in a three-count indictment accusing him of bankruptcy fraud in connection with his alleged failure to disclosed an interest in an oil and gas lease that he either owned or had transferred shortly before commencing his bankruptcy cases. The U.S. Attorney’s press release on Villalon’s indictment is here.
Notably, Villalon did not even receive a discharge of his personal liability for his debts, which is the primary benefit of enduring a bankruptcy case in the first place. Both of Villalon’s bankruptcy cases were dismissed before he received a discharge, and the second one was reopened after the trustee discovered the allegedly undisclosed asset. Thus, Villalon’s creditors still can recover their claims against his non-exempt assets, assuming that they can find them, and Villalon has only a criminal indictment and no discharge for all his bankruptcy trouble.
Serious side effects indeed.

Risky Business

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David%20Carr%20grimacing%20012907.jpgAs we endure the overblown run-up to Super Bowl XLI this week, there will invariably be much blather about the high incomes of the participants and professional football players generally. Frankly, given the risks of what these players face, they deserve every dime they make.
As this NY Times article reports, the life of even a relatively high-income NFL football player is no picnic:

[F]ootball playersí careers resemble life as Thomas Hobbes described it in the 17th century: theyíre nasty, brutish and short. The average football career lasts less than four years, . . .
The minority of players who do make it past a fourth year are still treated like (highly paid) temporary or contract workers. In baseball and basketball, teams must honor multiyear contracts, even if players suffer career-ending injuries or if their skills decline.
Not so in football. ìA person with a five-year contract will get paid only for the current year if he suffers a career-ending injury,î Professor [Skip] Sauer [of The Sports Economist fame] noted.
Star players with bargaining power have been able to protect themselves by negotiating guaranteed multimillion-dollar signing bonuses. But less-valued players are not able to extract those bonuses, and the relatively weak playersí union has not been effective in getting many concessions from owners, nor much protection for players hurt on the job.

The article goes on to mention the examples of former Houston Oilers Hall of Fame running back, Earl Campbell, who is partially disabled from the punishment he took during his football career, and the more recent case of former Philadelphia Eagles defensive back Andre Waters, who committed suicide after battling depression and brain damage caused by the multiple collisions he endured while playing football.
Along those same lines, San Francisco Chronicle reporter Stan Kroichick recently wrote this fine series of articles (see also here, here and here) on the 1981 San Francisco 49er’s, the first of that franchise’s four Super Bowl championships of the 1980’s (the 1994 team won another one) in which he chronicles the physical problems that the players on the 1981 team have endured over the 26 years since that magic season (and here’s another one examining the health problems of Wilbur Marshall, one of the stars of the 1985 Bears Super Bowl championship team). It’s a daunting tale and one that will be simmering just beneath the surface of the NFLís pomp and circumstance during Super Bowl week.