Monthly Archives: January 2008

Re-evaluating boondoggles

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Houston%20Dynamo%20stadium%20011508.gifLet me get this straight. Mayor White started out with a proposal several months ago to allow the local MLS soccer team to build a stadium at their own expense on downtown land that the City of Houston owned but was not using except for extra parking (previous posts here).
So, how did we get to the point where the City is now willing to pony up at least $20 million and exercise its eminent domain power to acquire land for the private owners of the team to build their stadium? Heck, we haven’t even started to talk about who’s going to pick up the tab for the cost of the necessary infrastructure improvements or how much “Central Planning Chief” Peter Brown’s “mixed used development” ideas are going to cost (for the folly of such ventures, see here). By the way, Mr. Brown, what are the names of the other cities that are lining up to provide financing for a soccer stadium that makes you so sure that the Dynamo will leave if Houston doesn’t provide it?
And to top it off, the proposed location of the proposed new stadium figures to increase the cost of an even larger boondoggle.
Granted, we’re talking about throwing away “only” $20-30 million on this deal at this point. That’s peanuts in comparison to what the City wastes annually on the light rail system. But the way this deal has developed leads one to question whether there is any adult supervision whatsoever down at City Hall? If it’s acceptable to throw $20-30 million at a minor league soccer team, then what’s next? $20-30 million for the Aeros?

A real train wreck

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Metrorail%20car-Houston%20011508.jpgThis LA Times op-ed by transit experts Jim Moore and Tom Rubin examining the LA area’s MTA transit system over the past 20 years. They provide a daunting warning for those who rationalize the massive deficits of Houston’s light rail system by contending that the system will become cost-efficient in the long run:

. . . the MTA has spent more than $11 billion since 1986 to build its rail network, and the effect has been to reduce total transit ridership on the system by more than 3 billion boardings. That’s a bizarre result.

Shouldn’t investments in transit infrastructure encourage, not discourage, transit use? So, why is Houston continuing to barrel down a path that LA has already shown is a poor way to invest in mass transit?

Trashing Tracy

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mcgrady%20011508.jpgRockets star Tracy McGrady is not having a good season, which has prompted the inevitable local criticism that McGrady is an overrated player who is not “tough” enough to lead his team to success in the NBA playoffs.
On the other hand, Kobe Bryant is widely considered to be one of the best players in the NBA and far superior to McGrady. Ask your average Rockets fan whether they would trade McGrady for Bryant, most would approve the deal in the proverbial “New York minute.”
So, statistician Dave Berri compares the careers of McGrady and Bryant. The result of his analysis may surprise you.
Hint — peer effects make a big difference in basketball.

The Rotting Enron Criminal Prosecutions

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You won’t read about it much in the mainstream media, but the Enron-related criminal prosecutions increasingly smell like a rotting carcass.

After Jeff Skilling was lynched by an angry mob, most of the mainstream business media moved on to other stories, such as various Wall Street firms taking write downs that are far in excess of the $1.1 billion in non-recurring 3rd quarter 2001 charges that began the media-fueled run on Enron that ended with the firm in bankruptcy and many of its executives in the cross-hairs of federal prosecutors.

Contrary to public perception, the Enron Task Force’s actual effort in proving Enron-related crimes was nowhere near as effective as its public relations campaign in demonizing the defendants in the Enron-related criminal cases.

To her credit, the Chronicle’s Kristen Hays remains one of the few mainstream media reporters who is following up on the Enron-related prosecutions.

In this recent article, Hayes reports on the oral argument at the Fifth Circuit Court of Appeals of the Department of Justice’s attempt to salvage at least a smidgen of the dubious conviction that the Task Force obtained in 2006 against former Enron Broadband executive Kevin Howard. U.S. District Judge Vanessa Gilmore threw out the conviction based largely on the Fifth Circuit’s prior decision in the Nigerian Barge case.

During oral argument on its appeal, the DOJ’s “best” argument before the Fifth Circuit panel was that the prosecution should not have given Judge Gilmore a flawed jury instruction linking the one count that it contends should survive with the four counts that the DOJ concedes should be tossed out.

As Hayes reports, “A skeptical [Fifth Circuit Judge Patrick E.] Higginbotham noted that the prosecution supported the instruction and nearly two years later on appeal is saying it shouldn’t have been given.”

As they say in appellate circles, that’s not a good signal from the bench for the DOJ.

If the Fifth Circuit does as expected and denies the DOJ’s appeal, then the DOJ will confront whether to try Howard for a third time on Enron-related charges. And given the DOJ’s track record, I wouldn’t put it past them.

Meanwhile, in a development that I didn’t see picked up by any of the mainstream media, U.S. District Judge Ewing Werlein effectively put off the trial of former Merrill Lynch bankers Daniel Bayly and Robert Furst for a year or so by granting Bayly and Furst an interlocutory appeal of a part of his recent decision denying their motion to dismiss the DOJ’s ongoing attempt to re-try them in the Nigerian Barge case. Judge Werlein’s decision puts that re-trial off for the better part of a year, at least.

Finally, as this recent post noted, Skilling’s defense team and the defense teams for the former Merrill bankers are currently sifting through the notes of FBI and Task Force interviews with former Enron CFO Andrew Fastow, who was a key witness in the Skilling trial and a key player in the Nigerian Barge trial.

Inasmuch as Task Force attorneys withheld information from those interviews from both defense teams prior to the trials in both cases, if the notes of the Fastow interviews reflect that prosecutors withheld exculpatory evidence or induced Fastow to change his story over time, then that would be strong grounds for reversal of Skilling’s conviction and dismissal of the remaining charges against the Merrill bankers. Stay tuned.

Quite a record of that Enron Task Force, eh?

Update: Larry Ribstein points out that these should have never been criminal cases in the first place.

Myths about oil are hard to dispel

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myths%20011408.GIFAmidst the demagoguery of a U.S. Presidential campaign, it’s rare to find the mainstream media willing to run Robert Bryce’s common sense on energy policy and oil prices. For example:

Myth 3: Energy independence will let America choke off the flow of money to nasty countries.
Fans of energy independence argue that if the United States stops buying foreign energy, it will deny funds to petro-states such as Iran, Saudi Arabia and Hugo Chavez’s Venezuela. But the world marketplace doesn’t work like that. Oil is a global commodity. Its price is set globally, not locally. Oil buyers are always seeking the lowest-cost supplier. So any Saudi crude being loaded at the Red Sea port of Yanbu that doesn’t get purchased by a refinery in Corpus Christi or Houston will instead wind up in Singapore or Shanghai.

Refer to this article whenever you are listening to the candidates from either party start talking about energy policy. Come to think of it, while considering political choices, you should also keep handy this Bryan Caplan/WaPo op-ed entitled 5 Myths About Our Ballot-Box Behavior.

More costs of prohibition

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dollar%20roll%20011408.jpgGeez, could legalization and regulation really be worse than this?

The People’s Republic of Massachusetts

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massachusetts%20flag.gifThe development of in-store health care centers over the past decade has unquestionably been a positive development for the American health care system. They provide relatively inexpensive primary care and take some of the burden off of over-crowded emergency rooms that are currently required to provide non-emergency care to folks who have no other conduit to the health care system.
So, in the face of this important service that the in-store health centers are providing to people and communities, what does the Mayor of Boston want to do? Stop them from making money! (H/T Radley Balko):

Mayor Thomas M. Menino embarked on a highly public campaign yesterday to block CVS Corp. and other retailers from opening medical clinics inside their stores, . . . Menino blasted state regulators for paving the way Wednesday for the in-store clinics, which are designed to provide treatment for sore throats, poison ivy, and other minor illnesses.
The decision by the state Public Health Council, “jeopardizes patient safety,” Menino said in a written statement. “Limited service medical clinics run by merchants in for-profit corporations will seriously compromise quality of care and hygiene. Allowing retailers to make money off of sick people is wrong.”
In a separate letter, Menino urged members of the city’s Public Health Commission to consider barring the clinics from Boston.

Meanwhile, W$J columnist David Wessel writes “The business model for big U.S. banks is broken. . . . Banks and Wall Street could devise a better business model. But they’d best hurry. If they don’t act, regulators will. And if regulators don’t, House Financial Services Committee Chairman Barney Frank and the other Democrats in Congress will.”
Wessel’s column and Frank’s usual anti-business antics prompted Andrew Morriss to write a letter to the WSJ, which Don Boudreaux passes along over at Cafe Hayek:

Mr. Wessel is correct that most banksí business models are not currently producing profits, but this is not cause for concern for anyone but their shareholders. Markets are a discovery process, with firms and investors learning as they try new ideas and react to changed conditions. What markets need is a stable regulatory environment, in which every dip in the market does not produce a new set of rules.
Unfortunately, there is little evidence that Rep. Frank and his comrades on the House Financial Services Committee understand this, making it virtually certain that they will rush to ìsolveî the banking crisis with new legislation. The best assistance Rep. Frank could offer would be to commit his committee to resolute inaction for an extended period of time, offering both banks and investors the assurance that the rules of the game would remain unchanged and allowing them to learn from their experience in the market place.

Conquering stress in the skies

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Airplane.gifIt seems as if everyone who has been traveling recently has a horror story to relate about an abysmal experience with an airline. Heck, air travel has become so distasteful that I don’t even think about flying anymore if I’m traveling within the Houston-Dallas-Austin/SanAntonio triangle here in Texas. I have an excellent chauffeur (i.e., my wife) who handles the driving while I work. It’s far more pleasant than dealing with the non-stop hassles of air travel.
But if you simply must endure air travel these days, take a moment to read this Peter Greenberg article that provides about a half-dozen tips for minimizing stress during air travel, such as:

Avoid “direct” flights. The only good flight is a nonstop flight. Labeling a flight “direct” is an airline euphemism that means you’ll stop at least once, exponentially increasing your chances of being delayed.

I wonder what she thinks about the guys over at the Masonic Temple?

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Harris%20County%20DA%27s%20office.jpgPutting Chuck Rosenthal’s troubles aside for a moment, does anyone else think it’s time to clean house at the Harris County District Attorneys’ Office?:

Republican district attorney candidate Kelly Siegler told a judge last year that members of Houston’s Lakewood Church are “screwballs and nuts” and that she works to keep them off of juries.
Siegler made the comment while defending herself from a defense attorney’s suggestion that she struck a man from the jury pool in a capital murder case because he is black. It wasn’t the man’s race that prompted Siegler to eliminate the man from the jury pool, she said. It was the fact that he attends Joel Osteen’s megachurch.
“To start with, he’s a member of Lakewood Church. And we have had a running agreement, my partner Luci Davidson and I have, since we started, that people who go to Lakewood are screwballs and nuts,” Siegler said, according to the court transcript. “I’m very familiar with that church. We try our hardest not to put anybody who goes to Lakewood regularly on any jury, he’s a pretty devout member of Lakewood Church. That’s one reason that scared me about the man.”
Siegler went on to give other reasons why she didn’t want him to be on the jury including his membership in the NAACP, a group that opposes the death penalty.
Siegler confirmed today that she complained about Lakewood attendees on the record, but said the comment was taken out of context.
“I was talking to a juror who, in my opinion, was very weak on the death penalty,” Siegler said. She said she was obligated to give her reasons for striking the juror, “weak or strong, good or bad,” which indicated that he would be weak on the death penalty.
Siegler also said she had never been to Lakewood, and was talking about things she heard about the church. [. . .]
Siegler attends Chapelwood Methodist church. [. . .]
The jury eventually sentenced [the defendant that Siegler was prosecuting] to death.

And that comes from one of this DA’s office’s “best” prosecutors. Summing up the absurdity of what has been going on in Houston over the past couple of weeks, Slampo provides a multiple choice test to determine how well you have been keeping up on developments.

But how do you really feel, Pete?

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dye2.jpgGeoff Shackelford interviews legendary golf course designer Pete Dye, who is not exactly a fan of the United States Golf Association:

“God bless the United States Golf Association. They have escalated the cost of maintenance, they have slowed down play, and they have completely lost control of the equipment. Outside of that, they have done a pretty good job.”

Interestingly, Dye is also not a supporter of the trend toward ever-faster putting surfaces:

“The other cost escalation the USGA has encouraged is with speed of greens. When Ben Hogan won the U.S. Open at Oakmont [in 1953], then considered the fastest greens in the history of the world, the Stimpmeter was maybe six or seven. One of the things Iím doing in renovating my courses is reducing contour and slope to match todayís speeds. . .”

Read the entire interview. Dye is a true original.