Security theater

tsa While considering the abject vacuity of the presidential candidates’ positions on the major issues this election season, I started thinking about some minor issues that might make a difference in my vote.

For example, if either major candidate came out in favor of dismantling the "security" apparatus that the federal government has foisted upon us to make airline travel an aggravation, at best, and an ordeal most of the time, then that candidate would probably get my vote.

Alas, neither candidate has proposed such a dismantling.

Nevertheless, don’t miss this clever-but-serious Jeffrey Goldberg/Atlantic.com article on the utter uselessness of the Transportation Safety Administration’s airport security procedures (prior post here).

Inasmuch as the only two airport-security measures that really matter — fortified cockpit doors and the awareness of the flying public as to what a hijacking can mean — have been in place virtually since the attacks of September 11, 2001, Goldberg zeroes in on the wasteful airport security process that we have allowed the TSA to impose on us at a substantial direct cost and an even greater indirect one.

Moreover, that process does virtually nothing to discourage serious terrorist threats. Rather, the inspection process is "security theater" that simply makes a few naive travelers feel safer about airline travel.

Finally, if all that weren’t bad enough, the worst news is that once a governmental "safeguard" such as the TSA apparatus is adopted, few politicians are interested in dismantling it even when it’s clear that process is ineffective, expensive and obtrusive.

That’s food for thought as we get ready to endure implementation of the next round of governmental regulation of business.

2008 Weekly local football review

Ahman Green (AP Photo/Dave Einsel; previous weekly reviews are here)

Texans 28 Lions 21

Texans (2-4) continue to be a work-in-progress. They hammered the atrocious Lions (0-6) for three quarters and looked to be on their way to an easy win.

But then Houston’s chronically inconsistent defense gave up a 96 yard TD play while the offense went into a 4th quarter phone booth so as not to reprise the Colts debacle. Before you knew it, the Lions had pulled within a TD and the Texans were working the clock, which is not one of their strong points.

At any rate, the Texans pulled it out without too much trouble. Despite the lack of a killer instinct, the Texans now can win their third in a row for the first time in franchise history next week at Reliant Stadium against the hapless Bengals (0-7).

Continue reading

The shame!

lehman BrothersYou know things are really getting bad in the financial markets when FT.com’s always-lively Dear Lucy column (previous post here) receives the following letter from an investment banker:

"At a dinner party last Saturday I was asked by a fellow guest what I did and I said I was an investment banker. I might as well have said I was a paedophile. Suddenly the whole table – all friends of my wife from the art world – turned on me with such venom I was really taken aback. I tried to defend myself by saying that I had nothing to be ashamed of in the work that I do in M&A, but the more I argued the more hostile the other guests became."

"Next time this happens – and I fear there will be a next time – should I accept guilt for what isn’t my fault, or should I lie and say I’m a librarian?"

Investment banker, male, 42

Among the many entertaining reader comments to the letter were the following:

"Bit surprised you were invited to dinner in the first place."

"Confess and beg for another glass of wine."

"A sensitive investment banker……….. whatever next?"

The maturation of A&M football

One of the many endearing cultural characteristics of Texas is the devotion of most Texas A&M University alumni to the A&M football program.

Although the intensity of that interest has generated some rather awkward moments over the years, the A&M game-day atmosphere is one of the best in college football and an essential experience to gaining a thorough understanding of Texas culture.

Alas, the A&M football program has fallen on hard times over the past several years. Relative to the size of the football budget, the A&M program is currently among the poorest-performing in major college football.

Given that, the prospect of high-scoring Texas Tech invading College Station tomorrow probably to put up a record opponent’s score at Kyle Field would normally generate enormous trepidation among the Aggie faithful. However, as the video below reflects (H/T Jay Christensen), the Aggies are now fighting back as best they can — holding auditions to play the role of iconoclastic Tech coach, Mike Leach.

College football in Texas — you gotta love it!

Playing the Jimmy Carter card

jimmy-carter.jpgYou know it’s desperation time for McCain when Victor Davis Hanson plays the Jimmy Carter card against Obama:

A great many moderates and conservatives are worn out and tired of Bush and Bush hatred, the European furor, serial charges of racism and illiberalism, and finally, in their weariness, think that Obama will, in a variety of ways, just make all the ickiness go away-as if he will make all of us be liked abroad and end racial and red/blue fighting at home. They should ask themselves whether Jimmy Carter restored American popularity with his human rights campaigns, praise of left-wing dictators, dialogue during the hostage crisis (cf. "The Great Satan"), boasts of no more inordinate fear of communism, etc., or whether Obama, in his Trinity/Acorn/Pfleger years, brought racial healing and understanding to Chicago.

This post from four years ago surveys the disastrous effect that the Carter Presidency had on the Democratic Party, and here is an earlier Hanson broadside on Carter.

The playing of the Jimmy Carter card reminded me of the following portrait of Carter penned by his first Treasury Secretary, W. Michael Blumenthal. The description is included on page 338 of Robert D. Novak’s The Prince of Darkness: 50 Years Reporting in Washington (Crown 2007), which is a rollicking good read:

Continue reading

Hedging the Enron trial penalty

On the heels of this news, and given the mainstream media’s ubiquitous characterization of Enron as the harbinger of the current Wall Street financial crisis, it’s really not surprising that former Enron Broadband co-CEO Joe Hirko opted to cop a plea on Tuesday rather than face a draining re-trial of the notorious Enron Broadband case.

Although Hirko and his co-defendants overcame enormous odds to win acquittals and a hung jury in the initial Broadband trial, Hirko and his family have already endured over five years of uncertainty as the Damoclean Sword of a relentless federal prosecution hung over their heads.

Inasmuch as Hirko could have easily been looking at a decade behind bars if he were to be convicted in the re-trial, a probable sentence of 12-16 months in a plea deal is a reasonable hedge of what has become the draconian trial penalty for business executives.

Refracting Enron Myopia

One of the more entertaining aspects of the current Wall Street financial crisis has been reading how some of the business columnists have been interpreting it.

Take, for example, Houston Chronicle business columnist, Loren Steffy.

You may remember him from his acerbic coverage of the trial of former Enron executives, Jeff Skilling and the late Ken Lay, or his perpetuation of the Enron Myth regardless of the circumstances.

Dismissing me as an Enron apologist, Steffy regularly disputed my long-held theory that the run-on-the-bank that felled Enron could well happen to any trust-based business.

Apparently confused by the fact that what happened to Enron has now happened to Bear Stearns, Freddie and Fannie, Merrill Lynch, Lehman Brothers, AIG and any number of other trust-based businesses impacted by the current credit crunch, Steffy reaches for insight from one of the fellows who set the stage for this mess:

Investigators are poring over the failed firms, looking for signs that executives misled shareholders. Some evidence may be found, but Sam Buell, the former prosecutor who led the effort to indict Enron’s Jeff Skilling, doesn’t think we’ll see widespread prosecutions.

“It’s not a conspiracy if everybody’s in on it,” said Buell, who’s now a law professor at Washington University in St. Louis. “In order to have a fraud conspiracy, you’ve got to have some effort by one group to deceive another group.”

In this case, individual investors may not have understood what Wall Street bankers were doing with complex debt securities, but those charged with safeguarding the marketplace were certainly aware. Regulators knew and approved. So did credit rating agencies. And auditors, both internal and external.

With a mouse click, investors could find public documents that described the debt instruments with hundreds of pages of detail. [.   .   .]

“If everybody’s in a bubble mentality, if they’re betting the price of real estate will keep going up, disclosure doesn’t address the problem of what happens when all those assumptions turn out to be wrong,” Buell said. “Everybody knows what they’re doing. They’re just making bad decisions.”

Yes, you read that correctly. Buell implies that Skilling was guilty of criminal conspiracy because not “everybody” was “in on it” at the time Enron was making its supposedly opaque disclosures. However, since “everybody’s in on it” now, Buell doesn’t think there will be widespread prosecutions because “[i]t’s not a conspiracy if everybody’s in on it.”

With such reasoning, is there any doubt now why this outfit generated this record?

For the record, I actually hope Buell is right this time that few businesspeople are prosecuted for misjudging business risk. But for a more rational explanation of how financial regulation fits into the current crisis, check out these Larry Ribstein posts here, here and here and this masterful one by Arnold Kling.

2008 Weekly local football review

Eyes of Texas (Previous weekly reviews are here)

Texas Longhorns 45 Oklahoma 35

In the most entertaining college football game of the season to date, the Longhorns (6-0/2-0 Big !2) vaulted to No. 1 in the AP, Harris and Coaches Top 25 polls with their win over the Sooners (5-1/1-1 Big 12).

Texas prevented OU’s prolific passing offense from getting too far ahead for three quarters of the game and then eventually wore down the Sooners to pull the game out in the fourth quarter. Although QB Colt McCoy (28-35-0/277 yds/1 TD) and his receivers get most of the publicity, I thought that the Longhorns’ offensive and defensive line play in the second half — particularly in the fourth quarter — was the difference in this one.

The Horns better not rest on their laurels, however, as they face a killer schedule down the stretch — 11th-ranked Missouri (5-1/1-1 Big 12), 8th-ranked Oklahoma State (6-0/2-0 Big 12), 7th-ranked Texas Tech (6-0/2-0 Big 12), and 16th-ranked Kansas (5-1/2-0 Big 12) in four of the next five weeks. The Horns are solid, but I don’t see them going undefeated through that stretch.

Continue reading

Stone and the capitalist roaders

Don’t miss Larry Ribstein’s post on Oliver Stone’s financing philosophy in regard to his new movie about George W. Bush — W — the trailer of which is below: