“Middle-class people are great, too”

map_santa_barbara.pngI swear, you can’t make this stuff up. This NY Times article reports on subsidized housing, Santa Barbara-style:

Next time you sit down to write your monthly mortgage or rent check, consider this: In Santa Barbara, about 90 miles northwest of Los Angeles, a public-private partnership is planning to build a subsidized-housing development for some families earning as much as $177,000.
ìIt does sound unusual,î admitted Rob Pearson, the executive director of the cityís Housing Authority, which helped broker the deal for the development, to be called Los Portales. ìBut Santa Barbara is getting Gucci-fied. If we donít do something, weíll lose our middle class.î [. . .]
City officials say theyíve worked to provide affordable homes for lower-income residents; about 12 percent of local housing stock falls into this category, much of it subsidized with public money. But with the average median home price in the Santa Barbara area hovering around $1.2 million, many well-employed citizens are finding it tough to buy a home.
ìItís even problematic for people like doctors,î says Martha Sadler, a housing reporter for The Santa Barbara Independent weekly newspaper. [. . .]
ìThis is good for Santa Barbaraî Sadler says. ìRich people are great, and itís interesting to live with C.E.O.ís. But there are middle-class people who are great, too.î

But not too middle class, right? ;^)

Judge Posner: The FBI should not be in
the counterterrorism business

fbisealwmed.jpgProlific Seventh Circuit Judge Richard Posner has become one of the nation’s leading experts on domestic intelligence issues (see previous posts here, here and here) and is the author of Uncertain Shield: The U.S. Intelligence System in the Throes of Reform ( Rowman & Littlefield 2006). In this Wall Street Journal ($) op-ed, Judge Posner says that it’s time to quit placing the round peg of the Federal Bureau of Investigation into the square hole of counterterrorism:

Is it the case that the FBI is “incapable of effective counterterrorism,” as an editorial in this newspaper wondered? Does the country need “to debate again whether domestic antiterror functions should be taken from the FBI and given to a new agency modeled after Britain’s MI5”?
The answer to both questions is yes. [. . .]
For prosecutors and detectives, success is measured by arrests, convictions and sentences. That is fine when the object is merely to keep the crime rate within tolerable limits. But the object of counterterrorism is prevention. Terrorist attacks are too calamitous for the punishment of the terrorists who survive the attack to be an adequate substitute for prevention.
Detecting terrorist plots in advance so that they can be thwarted is the business of intelligence agencies. The FBI is not an intelligence agency, and has a truncated conception of intelligence: gathering information that can be used to obtain a conviction. A crime is committed, having a definite time and place and usually witnesses and often physical evidence and even suspects. This enables a criminal investigation to be tightly focused. Prevention, in contrast, requires casting a very wide investigative net, chasing down ambiguous clues, and assembling tiny bits of information (hence the importance of information technology, which plays a limited role in criminal investigations).
The bureau lacks the tradition, the skills, the patience, the incentive structures, the recruitment criteria, the training methods, the languages, the cultural sensitivities and the career paths that national-security intelligence requires. All the bureau’s intelligence operations officers undergo the full special-agent training. That training emphasizes firearms skills, arrest techniques and self-defense, and the legal rules governing criminal investigations. None of these proficiencies are germane to national-security intelligence. What could be more perverse than to train new employees for one kind of work and assign them to another for which they have not been trained?

Read the entire op-ed. Despite my reservations about creating another governmental agency with the power to spy on citizens, what Judge Posner advocates makes a lot of sense.

EGL board approves management-led buyout
amid allegations of a higher bid

EGL%20logo%20032007.pngBen Stein won’t like it, but the board of directors of global logistics company EGL, Inc. approved a $1.7 billion private equity buyout of the company by a group headed by chief executive officer Jim Crane, who is also the largest shareholder of the company. Previous posts on the private equity plays for EGL are here, here and here.
Crane will have 51% of the privatize company and the other 49% will be owned by private-equity firm Centerbridge Partners LP and Canada’s Woodbridge Co., which is the investment vehicle of the Thomson family, one of Canada’s wealthy Canadian family. The price of $38 a share represents over a 25% premium over the $29.75 price of EGL’s shares in late December. Crane’s previous buyout offer, which tanked after the release of less-than-stellar fourth quarter numbers, was based on a $36 per share price. EGL’s shares closed at $34.96 in Nasdaq Stock Market composite trading this past Friday.
Meanwhile, the Chronicle’s Bill Hensel is reporting today that a letter from New York-based Apollo Management has surfaced stating that it had put together a group that had offered an all-cash deal for EGL worth $2 a share more than the management-led buyout. No word yet on whether EGL’s board, in approving the management-led offer, had considered the competing bid, which will remain open until this Friday. The NY Times/Reuters story on the Apollo bid is here.
In its letter, Apollo claims to have left several voicemails and e-mails with the boardís special committee, its financial advisers at Deutsche Bank and its counsel at Andrew & Kurth. Also, Apollo claims that EGL refused to open its books to allow Apollo to conduct due diligence. Finally, Apollo asserts that the last written communication from the company was last Thursday, when EGL advised that ìbest and finalî bids were due March 26. As late as last Sunday, Deutsche had told Apollo that no deal was imminent. The following is from the letter:

We wonder what urgency the company saw in cutting this process short (without informing us or giving us a chance to exceed the C.E.O.ís bid) or in suddenly negotiating a deal at an inferior price and with, we suspect, breakup fees and other deal protections for the benefit of the CEO. That would not seem in the best interests of your shareholders, other than Mr. Crane personally.

So, even if Crane’s group is the winning bidder for EGL, he and the board will likely have to endure a shareholder’s lawsuit that they favored Crane’s lower bid over the non-insider, higher bid. Public equity is not looking all that attractive these days. Frankly, is anyone surprised?