Today is the 38th anniversary of Charles Whitman’s infamous sniper assault on the area around the University of Texas campus in Austin.
August 1, 1966
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Let’s rumble
This NY Times article profiles the latest popular fad in Austin: Texas women’s Roller Derby!:
Leave it to Austin, which prizes its weirdness, to foster this contagious blend of high performance sport and campy theatrics called not games but bouts, fought on traditional four-wheel skates. And to field the two feuding leagues – the Texas Rollergirls (www.txrollergirls.com) and the TXRD Lonestar Rollergirls, also known as Bad Girl, Good Woman (www.bggw.com).
This is, at the very least, extreme roller skating, heavy on attitude and light on attire, the better to bare breathtaking tattoos. Social scientists may scratch their heads over the emergence of a new form of staged violence by macho women, but to the players, who don’t get paid, it’s easy to explain: it’s fun.
“It’s kind of like hockey in lipstick and fishnet stockings,” said Lacy Attuso, 27, a computer publicist who goes by the rink name of Whiskey L’Amour. (Whiskey because she drinks it, she said, L’Amour from the Western writer Louis L’Amour.)
Pension Benefit Guaranty Corporation blues
Following this earlier post regarding United Airlines‘ decision to default on its obligations to its employees’ pension plans to attract capital to fund its chapter 11 reorganization plan, this NY Times article reports on some experts’ concern that the Federal Pension Guaranty Corporation that insures company pensions is facing a string of possible airline industry bankruptcies and pension defaults that could lead to another multibillion-dollar taxpayer bailout similar to the S&L bailout of the 1980’s.
This raises a rather interesting phenomenom. If United is not able to obtain a federal subsidy of its poor business practices in this way, then it will nevertheless obtain a federal subsidy through foisting a large part of its obligation to pay unrealistically large pension benefits on the federal government. Although not particularly creative, you have to admire United’s persistence.
As as Warren Buffett pointed out several years ago, if one tabulates all of the airline industry’s finances since the day the Wright Brothers in 1903, one would discover that, cumulatively, there has not been a single penny of profit? Mr. Buffett suggested famously that, in hindsight, shooting down the Wright Brothers on that beach would have been a reasonable financial, if not moral, move.
United has abot $13 billion in pension obligations that is secured by only $7 billion in assets. Inasmuch as the private capital that would fund United’s reorganization plan will almost certainly require that United terminate its pension plans in connection with that plan, United’s pension liabilities and related collateral will be assumed and administered by the Federal Pension Guaranty Corp. Absent a government bailout, United’s retirees will probably receive around a 50% dividend on their claims against United’s pension plans.
Although I have empathy for United retirees who thought that they were going to receive more in retirement than they will, there simply is no productive business purpose to be facilitated by the government contributing anything to United’s underfunded pensions.
Houston’s Donald Trump
At its irreverent best, this Houston Press article takes Landry’s CEO Tilman Fertitta and Houston mayor Bill White to task for the sweetheart deal that Mr. Fertitta cut in regard to his company’s downtown Houston Aquarium restaurant:
Houston city officials, apparently outraged at how they had fallen behind Galveston and Kemah in the heated race to service every little whim of restaurant-and-real-estate mogul Tilman Fertitta, took bold action a few years ago.
They gave Fertitta a sweetheart lease to the old downtown fire station and central waterworks plant — even in the year 2040, he’ll still be paying rent of only $12,500 a month for the prime location.
In its rush to bend over for Tilman, the city vacated the space even though it didn’t have a replacement site lined up for the fire station. Houston is currently paying more than $24,500 a month to lease an admittedly inadequate building on Milam.
All this allowed Fertitta in February 2003 to open the Aquarium restaurant, which features outrageously overpriced train rides, Ferris wheels and — he hopes — tigers. (Because nothing says “aquarium” like tigers.) Food is also served, apparently.
Apparently, other than paying below market rent to the City, one of the only requirements that Landry’s has under the deal with the City is to file an annual report explaining how the restaurant is doing and what the city is getting for its investment. But, according to the Press, there is one problem:
Fertitta can’t be bothered to do it.
The first report was due June 1, says Pete Radowick, spokesman for the city’s Convention and Entertainment Facilities. In the eight weeks since then, he says, the city has contacted Fertitta and asked if he would please file the thing. (For some reason, imagining this conversation brings to mind the Cowardly Lion approaching the great and powerful Wizard of Oz.)
The Press story even speculates as to the reason for the delay in the filing of the report:
Fertitta and his wife both gave $2,500 to Mayor Bill White this March; perhaps the paperwork involved in writing out those checks has delayed his filing the Aquarium report. Or maybe he’s just too busy with his tiger project.
Landry’s response to the Press’ inquiriies on the matter?:
Fertitta’s office, by the way, referred us to a PR agency that didn’t return phone calls.
Ouch!
Stros tread water in Cincy
First, the Stros blew the suspended game from last night to the Reds in 13 excrutiating innings 3-2, but then they came back to salvage Saturday afternoon’s game, 8-0.
The completion of the suspended game was pure agony. 13 innings, four hits, only one extra base hit (a double) against the worst pitching staff in the National League. Watching bowling or billiards would have been much more exciting than enduring that travesty.
And despite Darren Oliver‘s five inning, one hit, no walks, 6 K performance in replacing injured Andy Pettitte in Saturday’s regular game, the Stros had scored only 2 runs through eight innings in that affair. There is no better indictment of the Stros’ main problem this season — hitting generally and hitting with power particularly — than scoring just 4 runs in 21 innings against this Reds pitching staff. The last time I looked, the Reds’ staff had a negative 63 RSAA, which means that they have given up 63 more runs this season than an average National League pitching staff has allowed.
Beltran cranked a three run yak and Lamb followed with a two run toaster to run the score up in the ninth inning of the Saturday afternoon game. But make no mistake about it: If the Stros cannot score more than 4 runs in 21 innings against this Reds pitching staff, then the wildcard playoff spot will likely be out of reach for the Stros in about another week.
Roy O goes against Cincy’s most reliable starter this season — Paul Wilson — in Sunday’s rubber game. The way the Stros are struggling at the plate, I recommend highly that you keep the clicker close so that you can check out the golf tournament at frequent intervals.
John Edwards’ vision through the prism of John O’Quinn
In this American Spectator piece, New York Sun columnist William Tucker relates to his past interview with famed Houston plaintiffs’ attorney John O’Quinn in interpreting fellow trial lawyer and Democratic Party vice-presidential candidate John Edwards‘ world view:
When it came to defining his core vision, here’s what Edwards said:
“Tonight, as we celebrate in this hall, somewhere in America, a mother sits at the kitchen table. She can’t sleep because she’s worried she can’t pay her bills. She’s working hard trying to pay her rent, trying to feed her kids, but she just can’t catch up.
It didn’t use to be that way in her house. Her husband was called up in the Guard. Now he’s been in Iraq for over a year. They thought he was going to come home last month, but now he’s got to stay longer.
She thinks she’s alone. But tonight in this hall and in your homes, you know what? She’s got a lot of friends.
We want her to know that we hear her…
So, when you return home some night, you might pass a mother on her way to work the late shift, you tell her: Hope is on the way.”Let’s look at what’s going on here. First and foremost, we’ve got a lonely woman. There’s a passing reference to Iraq and her husband, but that’s basically to get him out of the house and out of the picture. (Remember, these are the same people who brought you the welfare system, also designed to get men out of the house and out of the picture.)
She has no friends, no relatives, no religion, no community, nothing to rely on. Her husband? Well, he doesn’t even seem to write anymore. And so she sits by herself at the kitchen table, waiting for someone to come along.
What a beautiful vision of America — a nation of lonely, isolated women, in dire need of help, abandoned by everyone, waiting for some handsome trial lawyer to come knocking on their door.
Hope is on the way.
Read the entire piece. Hat tip to Michael over at Southern Appeal for the link.
Stros-Reds’ game suspended
Bags singled home the tying run during a deluge in the top of the sixth inning and a third rain delay forced the umpires finally to make dinner reservations and call a suspended game between the Stros and Reds on Friday night in Cincy.
The game will resume Saturday at 11:30 a.m. with the score tied at 2 and two Astros on base in the top of the sixth. The regularly scheduled game for Saturday will follow, with Andy Pettitte seeing how many pitches he can throw in that one. The bullpen better be ready today.
Sex, Love and Voting
Ray C. Fair is a professor of economics at Yale University. In this Wall Street Journal ($) article, , Professor Fair’s new book — Predicting Presidential Elections and Other Things — is reviewed and it sounds like a winner:
How can you guess who might be having an extramarital affair? This is an important question, and it deserves to be treated with scientific rigor.
Start with a theory. As a first approximation, it seems reasonable to suppose that the likelihood of having an affair depends on income, age, number of years married, marital satisfaction and religiousness. Next, find some data — say, a sex survey published in a magazine like Psychology Today or Redbook. Now fit the data to the theory (which means having your computer run a line through a cloud of points — a technique called linear regression) and do a statistical test to see whether the theory is any good. And what do you know? It is!
Now comes the fun part: prediction. Using the results, you can guess which of your friends and neighbors might be straying from the matrimonial paddock. Likely candidates for an affair are those who (1) have a high wage rate, (2) have been married a long time, (3) are relatively young given the length of their marriage, (4) aren’t very happily married and (5) aren’t particularly religious. Want something more quantitative? Well, all else being equal, an extra 10 years of marriage increases the predicted number of adulterous encounters per year by about six. (Warning: Blackmail based on these findings is strongly discouraged.)
Predicting adultery is only one of the interesting subjects that Professor Fair addressed. However, during this political season, the most interesting subject is his model for predicting Presidential elections:
By trial and error, Mr. Fair comes up with a list of eight: the growth rate of the economy, inflation, the number of economic “good news” quarters leading up to the election, whether an incumbent is running, how long the incumbent party has held the White House, whether there is a war on and, finally, a “party variable” in case the electorate has an innate preference for one party over the other. As data, he uses election results from 1996 (when President Clinton beat Bob Dole) back to 1916 (when President Wilson beat Charles Hughes).
After fitting the data to the theory, Mr. Fair finds that all eight variables affect voting at greater than chance levels.
And applying Professor Fair’s model to the Presidential elections from 1916 through 1996 reflects that it is pretty darn accurate:
From 1916 to 1996, Mr. Fair’s theory only calls two elections incorrectly. In 1960 Nixon received 49.9% of the vote, but according to the theory he should have received a 51.1% — a relatively small discrepancy. More embarrassing to the author’s analysis is the 1992 election, in which President Bush’s predicted share of the major-party vote was a winning 50.9%, whereas his actual share was 46.5% — a whopping 4.4 percentage-point error.
Moving to the 2000 election, which lies outside the data set used to construct the theory and is therefore a good test of its validity, Al Gore should have received (a losing) 49% share of the vote that went to the two major parties, but he actually got (a losing) 50.3% share. Not bad.
So, how does the Professor size up the 2004 election?:
Mr. Fair’s analysis will be cheering to President Bush, who, as a Republican president running for re-election when the Republicans have been in power only one term, enjoys the best possible incumbency situation. The only way he can lose, the theory suggests, is if the economy suddenly tanks.
Looks like another book to add to my reading stack.
Enron Broadband defendant pleads guilty
Ken Rice, the former head of Enron?s broadband Internet business, became the 11th person to plead guilty to an Enron-related crime when he admitted to a single count of securities fraud this morning before U.S. District Judge Vanessa Gilmore in Houston.
The plea agreement requires Mr. Rice, who is 45, to cooperate with the government in ongoing investigations and trials and forfeit $13.7 million in cash and property. Mr. Rice faces a maximum 10 years in prison and a $1 million fine.
Mr. Rice faced charges of conspiracy, securities fraud, wire fraud, money laundering and insider trading in this multi-count indictment. Attorneys close to the case have been expecting Mr. Rice to reach a deal with prosecutors for several weeks. As a division head, Mr. Rice reported directly to former Enron CEO and COO Jeffrey Skilling, and may have had regular contact with former Enron Chairman Kenneth Lay as well. Both Messrs. Skilling and Lay have pled not guilty to a variety of Enron-related charges in another pending criminal case.
Mr. Rice’s plea deal centers on a Jan. 20, 2000 meeting with analysts where Rice and others at the company touted the current and future abilities of Enron?s broadband network. That same meeting was mentioned in the indictment against Mr. Skilling, which claims he made similarly false claims about the abilities of the network and the potential of the business. It?s certainly possible that Enron Task Force prosecutors will Rice as a witness in an attempt to corroborate the charges against Mr. Skilling.
According to the Enron Task Force, Mr. Rice sold 1.2 million shares of Enron stock for more than $76 million while he knew Enron Broadband Services was failing. The unit never generated a profit and was abandoned shortly after Enron’s bankruptcy filing in early December 2001. Mr. Rice quit the company in 2001 after his stock sale and several months before Enron went bankrupt. He had served as CEO of Enron’s trading unit — Enron Capital and Trade — from 1996 to 1999 before taking over the high profile broadband unit that Enron claimed was responsible for millions in profits. Enron’s share price spiked to $90 in August 2000 as Enron promoted the venture, among other ventures. Mr. Rice was indicted on April 29, 2003 — along with seven other former broadband employees — in a 218-count indictment that claimed the men lied about the value and capabilities of Enron?s internet business.
The remaining defendants in the Enron broadband case are Joe Hirko, another former broadband CEO; Kevin Hannon, former chief operating officer; Scott Yeager and Rex Shelby, former senior vice presidents; and Kevin Howard and Michael Krautz, former executives. Each one has pled not guilty to all charges. The trial of the case is scheduled to begin to begin Oct. 4. The first criminal trial involving former Enron executives will take place in the “Nigerian Barge case,” which is scheduled for trial beginning on August 16.
Shell reaches settlements on reserve overstatement
Royal Dutch/Shell Group, the world’s third-biggest public oil company, reached preliminary settlements with U.S. and British authorities to pay penalties of about $150 million for overstating its energy reserves. Earlier posts are here about the Shell overstatement controversy.
Shell announced the hefty settlements after months of negotiations with regulators. Shell ousted top executives, turned over millions of pages of documents and shared with the regulators the findings of an internal Shell investigation of the company’s overstatements of oil and natural-gas reserves. Shell essentially bet that cooperating with regulators would shorten the regulatory investigations and soften the blow from U.S. authorities, and the bet played out well.
Shell has agreed to pay a $120 million penalty to the Securities and Exchange Commission, which is one of the biggest penalties levied by the SEC on a foreign company in recent years. The agreement settles SEC findings that Shell violated the antifraud, reporting, record-keeping and internal-control procedures of U.S. securities laws and related SEC rules. Shell also said it agreed to pay £17 million ($30.9 million) to Britain’s Financial Services Authority, which had already found that Shell had violated British market-abuse regulations. As is usual in such settlements, Shell did not admit or deny the conclusions.
Although the announcements are clearly progress, Shell is not out of the woods just yet. The SEC must formally approve its settlement, and it can still bring civil charges against individuals involved in the fiasco. Moreover, the U.S. Justice Department is continuing its own investigation into the overstatement of reserves. Finally, Shell and its executives still could face costly civil settlements.