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March 31, 2004
O.K., but no golf bets
U.S. District Judge Sim Lake has released less than $225,000 of former Enron chief accountant Richard Causey's money that is subject to the court's previous order freezing substantially all of Mr. Causey's assets and $55 million of former Enron CEO Jeffrey Skilling's assets. Judge Lake released the funds to Mr. Causey on the condition that he not spend any of the funds on country club fees. Mr. Causey is a member of the exclusive Club at Carlton Woods in The Woodlands, which contains a Jack Nicklaus Signature Golf Course, one of the best tracts in the Houston metropolitan area.
Posted by Tom at 4:59 PM
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Southern District of Texas leads federal districts in percentage increase of personal bankruptcies
My old friend Judge Marvin Isgur handles the Harlingen, Texas courtroom as a part of his duties as a bankruptcy judge in the Southern District of Texas. I suspect that Judge Isgur already knows this, but this recently released Texas A&M University study reports that the Southern District of Texas leads all 94 United States federal judicial districts with the highest percentage increase in personal bankruptcy filings in 2003. Personal bankruptcy filings increased 5.3 percent in the United States, but they increased 23.2 in the Southern District of Texas.
Posted by Tom at 9:33 AM
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The economics of oil and gasoline prices
During the political season, my demagogue antenna becomes more sensitive, and John Kerry's recent public remarks blaming the Bush Administration for high gasoline prices rattled my antenna. Arthur Kling provides this timely post on the economics of oil and the poorly-named "Strategic" Oil Reserve. Pay special attention to Fred Singer's piece on the ill-advised policies implemented during the Nixon and Carter Administrations in response to perceived shortages of oil.
Posted by Tom at 8:14 AM
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David Warren on the Arab League
David Warren's newest piece comments on the news this week that the Arab League summit has been called off because of the desire of several participants to discuss further realignment of Arab states with the United States. Mr. Warren is his usual insightful self, and discusses George Shultz's excellent op-ed from earlier this week. In concluding, Mr. Warren observes:
The issue is more fundamental than democracy, and glib rhetoric about democracy (from Bush and Blair, among others) has helped to obscure it. In the present circumstances of the world, where a suitcase nuclear bomb or vial of anthrax can open the gates of hell, we cannot afford to ignore breeding grounds for terrorists. Failed or rogue states -- states unable or unwilling to deal with international threats as they form within their own territories -- must be replaced with states that are able and willing. Hence regime change in e.g. Afghanistan and Iraq.
Posted by Tom at 7:46 AM
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Seven companies apply for new nuke plant license
This NY Times article reports on a consortium of seven major nuclear energy-related companies applying for a license from the Nuclear Regulatory Commission to build a new nuclear power plant. The most recent nuclear power plant that was actually built received its license in 1973. Prospects for new reactor construction have recently become more encouraging because of persistently high natural gas prices stiff environmental requirements for coal power stations.
Posted by Tom at 7:34 AM
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Holman Jenkins on the sad case of Jamie Olis
As noted on this blog before, Holman Jenkins is one of America's most insightful commentators on business issues. In his Wall Street Journal ($) column today, Mr. Jenkins addresses the injustice that occurred recently in the 24 year sentence given to former mid-level Dynegy executive, Jamie Olis, whose sad case was previously discussed here and here. Mr. Jenkins decries the sledgehammer approach that the Justice Department now takes in white collar criminal prosecutions:
Mr. Olis did wrong, but it's hard not to see his sentence as punishment for insisting on his right to a jury trial. He didn't loot the company for his own enrichment. The deal at the heart of the conspiracy may have involved deceptive accounting but it apparently yielded a real gain to the company in the form of $79 million in tax benefits. More to the point, whether or not the sentence was just, the metric that produced it was downright fishy.
A year ago Mr. Olis would have done five-to-six, but in a post-Enron mood, Congress insisted on double-digit penalties in cases associated with large stock-market losses. Rolled forth during the trial, therefore, was a government expert witness who -- in exactly the kind of calculation that provokes eye-rolling when put forward by Wall Street analysts to "explain" stock prices -- determined that Mr. Olis had caused between $500 million and $1.4 billion in damage to Dynegy's 200,000 shareholders.
Mr. Jenkins' column contains a graph that shows how Mr. Olis' conduct had nothing to do with Dynegy's stock price, followed by an "unspeakable" observation:
The deal for which Mr. Olis was prosecuted had nothing to do with the run-up in Dynegy's stock price. Project Alpha wasn't born until March 2001, and was exposed only in April 2002, by which time investors had already given up the fantasy of riskless profits from trading energy on the Internet.
Indeed, it's a fine judgment whether such frauds were actually occasioned by pressure to protect unrealistic valuations awarded in the bubble market. What's more, an unspeakable but unavoidable thought is that, somewhere, thousands of investors who picked the right moment to sell have no beef now with any of this scofflaw behavior -- they benefited from it, to the tune of millions of dollars in some cases.
Then, Mr. Jenkins concludes by pointing out the injustice of forcing businessmen to choose between defending themselves and a life sentence:
Certainly in a system so addicted to plea-bargaining, some sort of safeguard is needed against extorted guilty pleas. Forget about white-collar convicts: One of these days, when reformers are done springing death row inmates with DNA evidence, they'll start scouring the jails for people who pleaded guilty to crimes they didn't commit because they feared the death penalty.
At this point, the only protection from the government's sledgehammer approach to white collar criminal prosecutions is the judiciary. Unless the trial judges balance the playing field by forcing the government to drop duplicative charges and resist putting on far-fetched damage calculations, injustices such as the Olis case will continue.
Posted by Tom at 6:54 AM
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Calvin Murphy P.R. campaign in full gear
As this Chronicle article reports, the public relations campaigns in the Calvin Murphy sexual molestation case are in full swing.
Murphy was interviewed live on Monday on KILT Radio's afternoon drive time sports talk show, in which he claimed that the charges are false and financially motivated. Meanwhile, Assistant Harris County District Attorney Lance Long weighed in with a public statement that the accusers were not attempting to shake Murphy down, and that many of Murphy's 14 children (from three different mothers) did not even know each other very well, confirming that Murphy's extended family will never be compared the Brady Bunch.
Finally, in this Chronicle piece, Murphy's attire while posting bond (a baggy, double-breasted white suit) is compared to the fashion displayed by other recent high-profile criminal defendants during their trials. Best line comes from long-time Houston defense attorney David Berg, who made the following comment on the clothes that Murphy wore while beeing booked:
"He looked like he was selling ice cream or more like an ice cream cone himself."
Posted by Tom at 6:28 AM
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March 30, 2004
The "no one told me I couldn't do it" defense
The Super Bowl streaker is relying on it.
Posted by Tom at 2:53 PM
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Polarized political discourse
Richard Clarke's book "Against All Enemies" that criticizes the Bush Administration's role in the war on terror is already No. 1 on the Amazon.com bestseller list. Does that spell trouble for Mr. Bush's re-election? Maybe not, says Alan Murray in this Wall Street Journal ($) column today:
The Amazon Web site says the Clarke book is being bought by the same readers who've already purchased titles like "Big Lies: The Right-Wing Propaganda Machine and How it Distorts the Truth" by liberal journalist Joe Conason, and "The Lies of George W. Bush" by liberal journalist David Corn. Those books, in turn, are sold to folks who've already read Michael Moore's "Dude, Where's My Country?" and Al Franken's "Lies and the Lying Liars Who Tell Them." This is a group that already believes George W. Bush is the nation's prevaricator-in-chief, that he plundered working families to fatten the wallets of his CEO cronies, and that his major contribution to the war on terror was secretly shuttling bin Laden's relatives out of the country. In comparison, Mr. Clarke's charge -- that the president didn't pay enough attention to terrorism before Sept. 11 -- is almost quaint.
Mr. Murray goes on to point out a disturbing trend in American political discourse:
To Mr. Hannity, all Democrats are "appeasers" and "moral relativists" -- members of a political party that "has become unhinged." Mr. Savage goes further, tagging Hillary Clinton and Howard Dean as the "modern-day descendants of Benedict Arnold." Al Franken labels Republicans as "Chicken hawks" and racists, while Michael Moore blames President Bush himself -- as well as those of us who drive SUVs -- for fomenting terror.
Why write such tirades? Because they sell. . .
The bipolar bestseller list is just one more symptom of the disease that now infects American politics. The nation is becoming increasingly polarized. The left and the right view each other with distrust and disdain -- even though their policy proposals often remain strikingly similar. Sane compromise in the center has become all but impossible.
The media -- defined broadly -- plays a big role in this unfortunate trend. The problem is not the power of "big media" -- as some would have you believe. Rather, it is the unprecedented power of consumers to choose exactly what kind of media they wish to receive. Conservatives can get their news by watching Sean Hannity's television show at night, listening to Rush Limbaugh's radio show during the day, and creating a customized Internet newspaper that caters to all their biases -- "The Daily Me," as computer guru Nicholas Negroponte calls it. Liberals can do much the same -- even more so after tomorrow, when Mr. Franken and friends launch Air America, a liberal radio network. Both sides have their prejudices constantly reinforced; neither has to confront the challenge of opposing views.
That leaves little tolerance for the kind of balanced, bipartisan inquiry that former Rep. Lee Hamilton and former Gov. Thomas Kean were trying to conduct last week. More power to them; they are members of a dying breed.
Posted by Tom at 6:53 AM
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Junk science in asbestos litigation
Professor David Bernstein has published this law review article on how to keep it out. Thanks to The Volokh Conspiracy for the link.
Posted by Tom at 6:24 AM
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Lyondell announces major acquisition
Houston-based Lyondell Chemical Co. on Monday announced that it is acquiring Hunt Valley, Maryland-based Millennium Chemicals in a $1 billion all-stock deal that includes assumption of $1.3 billion in debt. The transaction will make Lyondell the third-largest publicly traded U.S. chemical production company.
The deal combines two struggling commodity chemical producers that have combined revenue of over $11 billion. The theory behind the deal is that the larger company is necessary to compete in the increasingly difficult chemicals industry. High prices of natural gas -- which producers use as a key raw material -- have rocked the chemicals industry at the same time as it has been dealing with the dual problems of overcapacity and large debt acquired during the better days of the 1990's. Although the industry has rebounded moderately, the consensus is that the industry will not return to the glory days of the mid-1990s anytime soon.
Lyondell reported a loss of $302 million last year while Millennium had a net loss of $184 million, and Lyondell expects the deal to save the combined company $50 million. The combined company will keep the Lyondell name, maintain its headquarters in Houston, and employ about 10,000 people world-wide. Lyondell Chief Executive and President Dan F. Smith will keep that role in the combined company, while William T. Butler will remain chairman.
Posted by Tom at 5:03 AM
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March 29, 2004
Calvin Murphy charged with sexually assaulting five daughters
In a stunning development on the local Houston scene, former Houston Rocket and Basketball Hall of Famer Calvin Murphy was charged today with sexually molesting five of his own children in the late 1980s and early 1990s.
Murphy, who is 55 and has been the T.V. color commentator for the Rockets for many years, was charged with three counts of aggravated sexual assault of a child and three counts of indecency with a child. The charges involve five daughters of Murphy's (from three different women) who were under 17 at the time of the alleged assaults, but are now adults. Murphy has a total of 14 children!
Houston criminal defense attorney Rusty Hardin, who defended Arthur Anderson in the criminal trial arising from the Anderson's involvement in the Enron scandal, is Murphy's attorney and claims that the charges against Murphy are false. Murphy had no comment when he surrendered to authorities earlier today, where he posted a $90,000 bond and was released. The Rockets later granted his request for a leave of absence from his broadcasting duties.
Murphy was the subject of a criminal investigation several years ago in connection with allegations that he falsified payment records in connection with a position that he held with the City of Houston. The grand jury that investigated that matter elected not to issue an indictment against Murphy.
Posted by Tom at 9:20 PM
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The Uses of Failure
Lee Harris over at Tech Central Station has this interesting piece on Americans' distaste for failure. Mr. Harris notes as follows:
If Americans have one collective shortcoming, it is that we have no use for failure. Success alone is what counts for us; and though we are apt to applaud those who have given their best to come in at second or third place, we all tend to shrink back from complete and abject failure.
That is why, whenever a President looks around for men to be by his side, to guide him and to give him counsel, he will look to those who have been successful at everything that they have put their hand to. It is one of our cherished mottos that success breeds success; and we are confident that if we appoint only successful men to positions of prominence, any project undertaken by these men is bound to be successful, too.
This is our form of paganism, since underlying the American myth of success is the primitive belief that some people are just plain lucky -- just as certain numbers are, or certain days, or certain arrangements of the planets.
Mr. Harris goes on to discuss the Greek notion of hubris, which necessarily flows from success, and then recommends as follows:
Failure has lessons to teach us that are often far more valuable than those of success. Success all too often reassures us that we are right, and often with little reason. The man who sells everything he owes in order to buy lottery tickets, and who loses, becomes a little wiser. But the man who sells everything, and wins, will remain a fool forever.
Which is why I am hereby proposing a new department for the United States -- the department of human failure, whose secretary should be appointed purely on the basis of his lack of worldly success. He will be required to attend every cabinet meeting, and at the end of each discussion, all the successful men around the table must listen in silence for the fiftieth time as the Secretary of Failure tells them how he lost his business, or how he gambled away a fortune, or how his summer vacation in Florida turned into the worst nightmare of his life.
True, it would not ascend to the lofty heights of Sophocles and Euripides; but it would help.
Thanks to my friend Bill Hesson for the link to Mr. Harris' piece.
Posted by Tom at 8:55 AM
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An Essential War
Former Secretary of State George Schultz, now a distinguished fellow at Stanford University's Hoover Institution, is inarguably a great American. In this extraordinary Wall Street Journal ($) op-ed, Mr. Schultz uses his depth and experience to give us the big picture on why the decision to go to war in Iraq was the correct one. Mr. Schultz begins by pointing out the devastating effect that Islamic fascists have had on the state system, which is the bedrock of international relations:
Today, looking back on the past quarter century of terrorism, we can see that it is the method of choice of an extensive, internationally connected ideological movement dedicated to the destruction of our international system of cooperation and progress. We can see that the 1981 assassination of President Anwar Sadat, the 1993 bombing of the World Trade Center, the 2001 destruction of the Twin Towers, the bombs on the trains in Madrid, and scores of other terrorist attacks in between and in many countries, were carried out by one part or another of this movement. And the movement is connected to states that develop awesome weaponry, with some of it, or with expertise, for sale.
What should we do? First and foremost, shore up the state system.
The world has worked for three centuries with the sovereign state as the basic operating entity, presumably accountable to its citizens and responsible for their well-being. In this system, states also interact with each other -- bilaterally or multilaterally -- to accomplish ends that transcend their borders. They create international organizations to serve their ends, not govern them.
Increasingly, the state system has been eroding. Terrorists have exploited this weakness by burrowing into the state system in order to attack it. While the state system weakens, no replacement is in sight that can perform the essential functions of establishing an orderly and lawful society, protecting essential freedoms, providing a framework for fruitful economic activity, contributing to effective international cooperation, and providing for the common defense.
Mr. Schultz goes on to provide a compelling background to the Bush Administration's decision to use force in Iraq, noting Saddam Hussein's violation of the 1991 cease-fire and 17 U.N. Resolutions, and the consistency of the Bush Administration's decision with prior actions that the U.S. government had taken during the Clinton Administration. Mr. Schultz notes the highlights:
Where do we stand now? These key points need to be understood:
? There has never been a clearer case of a rogue state using its privileges of statehood to advance its dictator's interests in ways that defy and endanger the international state system.
? The international legal case against Saddam -- 17 resolutions -- was unprecedented.
? The intelligence services of all involved nations and the U.N. inspectors over more than a decade all agreed that Saddam possessed weapons of mass destruction that posed a threat to international peace and security.
? Saddam had four undisturbed years [from 1998 when he threw out the weapons inspectors to 2002] to augment, conceal, disperse, or otherwise deal with his arsenal.
? He used every means to avoid cooperating or explaining what he has done with them. This refusal in itself was, under the U.N. resolutions, adequate grounds for resuming the military operation against him that had been put in abeyance in 1991 pending his compliance.
? President Bush, in ordering U.S. forces into action, stated that we were doing so under U.N. Security Council Resolutions 678 and 687, the original bases for military action against Saddam Hussein in 1991. Those who criticize the U.S. for unilateralism should recognize that no nation in the history of the United Nations has ever engaged in such a sustained and committed multilateral diplomatic effort to adhere to the principles of international law and international organization within the international system. In the end, it was the U.S. that upheld and acted in accordance with the U.N. resolutions on Iraq, not those on the Security Council who tried to stop us.
Finally, with the depth of insight of one who has lived and studied an earlier dark time in the world's past, Mr. Schultz concludes as follows:
Sept. 11 forced us to comprehend the extent and danger of the challenge. We began to act before our enemy was able to extend and consolidate his network.
If we put this in terms of World War II, we are now sometime around 1937. In the 1930s, the world failed to do what it needed to do to head off a world war. Appeasement never works. Today we are in action. We must not flinch. With a powerful interplay of strength and diplomacy, we can win this war.
Posted by Tom at 6:47 AM
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March 28, 2004
Gordon Prather on Richard Clarke and the Vulcans
The always entertaining physicist Gordon Prather pens this piece on Richard Clarke and the "Vulcans" in the Bush Administration.
Posted by Tom at 1:41 PM
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American Hustlers
Gordon Wood is the Alva O. Way university professor at Brown University and one of America's foremost authorities on the history and philosophy of the American Revolution, reflected by his brilliant books "Radicalism of the American Revolution" and "Creation of the American Republic." Accordingly, when Professor Wood speaks about American history, we should listen closely.
In this NY Times Review of Books review, Professor Wood opines favorably on University of Pennsylvania professor Walter A. McDougall's new book -- ''Freedom Just Around the Corner'' -- that explains America's enormous progress during the period of 1528-1828 to be attributable largely to Americans' propensity to hustle. As Professor Wood observes:
This unusual book by Walter A. McDougall is the first of what will be a three-volume history of America. If this volume, which covers the period 1585 to 1828, is any indication of the promised whole, the trilogy may have a major impact on how we Americans understand ourselves.
''The creation of the United States of America is the central event of the past 400 years.'' Imagine, he says, some ghostly ship, some Flying Dutchman transported in time from the year 1600 to the present. ''The crew would be amazed by our technology and the sheer numbers of people on the globe, but the array of civilizations would be recognizable.'' China, Japan, India, Russia, the vast Islamic crescent, South America and Europe are not all that different now from what they were in 1600. ''The only continent that would astound the Renaissance time-travelers would be North America, which was primitive and nearly vacant as late as 1607, but which today hosts the mightiest, richest, most dynamic civilization in history -- a civilization, moreover, that perturbs the trajectories of all other civilizations just by existing.''
Professor Wood remarks further:
[Professor McDougall] unabashedly writes of Americans and assumes throughout that there is something called an American character. Only the character he describes may not be what many Americans would want to admit about themselves. Unlike other national narratives, which he says tend either to celebrate or to condemn America -- and in righteous seriousness -- his book aims to do neither. Instead, he wants to tell the truth about ''who and why we are what we are,'' and to tell it entertainingly. His is thus a ''candid'' history. Its major theme is ''the American people's penchant for hustling.'' We Americans, he claims, are a nation of people on the make.
. . . But we have more con men and hucksters than other nations not because we have a different nature or are worse than other peoples. It is just that ''Americans have enjoyed more opportunity to pursue their ambitions, by foul means or fair, than any other people in history.''
Of course, he admits that there are many hustlers in a ''positive sense: builders, doers, go-getters, dreamers, hard workers, inventors, organizers, engineers and a people supremely generous.'' These qualities are what justify Americans' faith in themselves and their destiny in the world. But the negative connotations of hustling and swindling are very strong and dominate much of our literary and popular culture, and, indeed, our entire history. ''If the United States . . . is a permanent revolution, a society in constant flux,'' then, McDougall writes, we would expect all periods of American history at all levels of the society ''to be washed by turgid, overlapping waves of old and new forms'' of what he calls ''creative corruption.''
Because our high and noble ideals of freedom and individual rights contrast so vividly with the often grotesque realities of American life, every period of our history, McDougall says, is marked by disharmony. He then quotes Samuel P. Huntington to clinch his point: ''America is not a lie; it is a disappointment. But it can be a disappointment only because it is also a hope,'' a hope expressed in Bob Dylan's words as ''freedom just around the corner.''
The price of all this hustling was high, and McDougall does not flinch from describing the violence created by the dynamism of white Americans, including the elimination of hundreds of thousands of native people, mostly from disease, and the enslaving of hundreds of thousands of Africans. Other historians have graphically described the chicanery and greed of white Americans in their scramble for power and profit in early America. But these historians have usually written out of anger and righteous indignation. Not McDougall. He cynically, or he would say realistically (since cynicism suggests a moral judgment that human nature might be different), accepts, even celebrates, all the bribery, land-jobbing and double-dealing as the consequence of Americans' having so much freedom.
Professor McDougall's observations particularly resonate with me. Houston has been a wonderful and generous home for my family and me over the past 30 years, and this great city was developed largely by the unwieldly entrepreneurial spirit that Professor McDougall identifies in his book. The freedom that we Americans savor invariably involves risks, and one of those unfortunate risks is the risk of being cheated. But as Professor McDougall reminds us -- just as Sir Thomas More did in this earlier post -- man's attempts to eradicate such wrongdoing often harbors the greater risk of eradicating our freedom.
Posted by Tom at 12:26 PM
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The ten-year anniversary of the Rwandan genocide
A decade ago, fresh from a disastrous intervention in Somalia, the Clinton Administration and the United Nations failed to intervene in Rwanda, and the result was one of the worst episodes of genocide of the 20th century. In 1994, Rwanda's president was mysteriously assassinated, and an existing civil war between the two main ethnic groups -- the Hutu and the Tutsi -- turned into a campaign of genocide, which the rest of the world largely ignored. An estimated 800,000 people (mainly Tutsis) were murdered in 100 days.
In this interesting post, Daniel Drezner addresses the long-term implications of the world's tepid response to the Rwanda genocide. Given the ongoing genocide currently taking place in Sudan, and the potential for it in places such as Iraq, one is certainly justified in asking: When will the world learn?
Posted by Tom at 7:36 AM
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Donald Trump: You're fired!
To those who know about his business affairs, Donald Trump has always been more successful as a self-promoter than as a businessman, particularly for those who invest in his projects. This NY Times article reports on the ongoing negotiations between Mr. Trump and the bondholders on his lagging Atlantic City casino properties. Unless Mr. Trump gives up control of the properties, it appears that they are headed for bankruptcy, which would almost assure that Mr. Trump would lose control.
Posted by Tom at 7:08 AM
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March 27, 2004
This is a cool research project. Update: the test was a success!
Posted by Tom at 1:34 PM
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The Richard Clarke Affair -- Where does the buck stop?
This NY Times article examines an American cultural phenomenon that several historians are noting -- that is, a national culture of shifting blame, which is reflected best in American politics.
Along those lines, several friends of this blog have asked why I have not commented on Richard C. Clarke's testimony earlier this week before the 9/11 Commission. Actually, there are several reasons. First and foremost, numerous other bloggers have already done an outstanding job in tracking the various issues raised by Mr. Clarke's testimony, notably Glenn Reynolds and Daniel Drezner. I could not improve on their efforts.
However, I must admit that I am somewhat frustrated by the way in which the issues that Mr. Clarke's testimony raised have played out in the mainstream media. I concede that much of the media storm is a byproduct of the 9/11 Commission hearings and the related television coverage. Regrettably, most folks do not take the time to research these issues on their own, so their impressions and views toward the issues are often formed through television viewing and commentary. That is unfortunate because television, for business reasons, tends to sensationalize news such as Mr. Clarke's testimony when, in reality, such testimony does not relate anything particularly new. Thus, people who evaluate such issues through the prism of television tend to believe Mr. Clarke is revealing something not previously known when, in fact, he is not.
The fact of the matter is that, long before Richard Clarke's testimony this week, the U.S. Government and intelligence community's failure to deal effectively with the actions and threats of Islamic fascists had been well-documented. Gerald Posner's excellent "Why America Slept: The Failure to Prevent 9/11" relates how the failure to prevent the 9/11 attacks was systematic and had its seeds for failure sown repeatedly in twenty years of fumbled intelligence investigations and misplaced priorities. Similarly, Laurie Mylroie's "The War Against America: Saddam Hussein and the World Trade Center Attacks: A Study of Revenge" and "Bush vs. the Beltway: How the CIA and the State Department Tried to Stop the War on Terror" both describe in excrutiating detail how the U.S. government's approach to dealing with Islamic fascism has been compromised by restrictions placed on the intelligence agencies and political wrangling. Finally, former CIA agent Robert Baer's "See No Evil: The True Story of a Ground Soldier in the CIA's War on Terrorism" insightfully relates from the "ground floor" how each administration over the past 25 years allowed the intelligence agencies to become a political football, which directly led to the substandard intelligence that facilitated the 9/11 attackers' success. These are just a few of the recent books that have examined the same issues that were raised during this week's testimony before the 9/11 Commission.
Inasmuch as I have read the foregoing books and several others on these issues, Mr. Clarke's testimony was not particularly insightful or noteworthy to me. I will read his book eventually to compare his insights to those contained in the books mentioned above, and I will post about it when I am through.
However, in the meantime, to the extent that Mr. Clarke's position is that the Bush Administration is more culpable for the 9/11 attacks than any one of the previous five (three Republican, two Democrat) administrations, his position is fundamentally flawed. America's intelligence failures over the past generation have been the result of a litany of bipartisan mistakes. If Mr. Clarke is suggesting that the Bush Administration's failures in this area are any more egregious than those of its predecessors, then he is doing his country a grave disservice and, in fact, is engaging in precisely the type of political posturing that has been so damaging to the intelligence community over the past 25 years.
Courtesy of Phil Carter and Mark Kleiman, the most insightful commentary that I have reviewed on the 9/11 Commission hearings to date comes from UCLA School of Public Policy professor Amy Zegart, author of "Flawed by Design" that deals with the national security process. Professor Zegart -- who had Condi Rice as her thesis adviser -- makes the following observations about the national security process, and what happens when government fails to establish clear priorities for the intelligence community:
. . . The [9/11] Commission asked the wrong question. Was terrorism a priority? Of course it was. The real question is how many other priorities both administrations were confronting. I'll tell you: too many.
Clinton wrote a Presidential Decision Directive in 1995 that sought to establish clear priorities for the intelligence community. There were so many in the top tier, they actually divided them into Tier 1A and Tier 1B. But it gets better (or worse). There was also a Tier 0, apparently for the very very very top priorities. Note to self: when you can't list priorities with regular numbers, you haven't really made priorities.
As time passed, priorities were added to the list but old ones were never removed. By 9/11, the National Security Agency had roughly 1,500 formal requirements, and developed 200,000 "Essential Elements of Information." I'm not making this up. See the Congressional Intelligence Committees' Joint Inquiry Report, December 2002, p.49. Intelligence officials told Congressional investigators that the prioritization process was "so broad as to be meaningless."
This is not new. For the past 50 years, there have been more than 40 major studies about the intelligence community. A common theme among them has been the spotty and fleeting attention policy makers have given to setting intelligence priorities. One former senior intelligence official told me that during the Cold War, he was asked about the state of the Soviet economy exactly once, when the Secretary of Defense wanted to convert rubles to dollars for a budget presentation to Congress.
Professor Zegar hits the nail on the head. Rather than finger pointing, the 9/11 Commission needs to recommend a basic procedure by which the government establishes clear priorities for the intelligence community. As Mr. Carter points out, if you prioritize everything, you effectively prioritize nothing. Hopefully, the Committee will rise above the usual political posturing and focus its recommendations on revamping and reinvigorating an intelligence community that we have allowed our political leaders to eviscerate. The success of the war against the radical Islamic fascists depends on it.
Posted by Tom at 1:21 PM
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SEC bears down on El Paso
Things have not been going well lately for Houston-based El Paso Corp., as noted earlier here, here and here. Accordingly, yesterday's announcement that the U.S. Securities and Exchange Commission has launched an investigation into El Paso's downward restatement in natural gas reserves earlier this year comes as no surprise.
El Paso's share price has slumped 23 percent since the company last month slashed its proven natural gas reserves by 41% and announced that a financial restatement going back to 2001 was likely. El Paso has already taken a $1 billion write-down with the possibility of an additional $1.5 billion looming. The audit committee of the company's board has launched an investigation by an outside law firm into the reserves cutback, and the outside investigation prompted El Paso two weeks ago to delay indefinitely the release of its fourth quarter results and annual report.
Posted by Tom at 10:38 AM
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Dr. Bart Smith on the Houston economy
The leading expert on the regional economics of the Houston metropolitan area is Dr. Barton Smith, University of Houston professor of economics and director of the UH Institute for Regional Forecasting. This Chronicle article reports on Dr. Smith's latest report, whose seasonal adjustment model of the Houston economy which predicts an annualized rate of job growth of 2.6 % that, if sustained for the next six months, would translate into about 50,000 jobs. That is the best job growth rate in Houston since 2000.
Twice a year, Dr. Smith gives an oral presentation over lunch regarding the state of the Houston economy at one of the Reliant Park hotel ballrooms. If you are interested in Houston economics or business, and you have not attended one of Dr. Smith's talks, you should make a point to attend one soon. Dr. Smith is a special talent, one of the many professionals who make Houston an enjoyable place to live.
Posted by Tom at 10:18 AM
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March 26, 2004
VDH: We are Finishing the War
Victor Davis Hanson's latest at NRO is here.
Posted by Tom at 6:39 PM
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Who's to blame for 9/11?
This Daniel Pipes post nails the answer.
Posted by Tom at 4:34 PM
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Latest Astros acquisition
The Astros announced a deal yesterday to pick up utility infielder, Mike Lamb. As usual, the Chronicle article portrays the deal as another key move by Astros' general manager Gerry Hunsicker to bring in a strong left-handed hitter that will shore up the depth of the team. On the other hand, the incomparable Baseball Prospectus 2004 has this to say about the newly-acquired Mr. Lamb:
Mike Lamb 3b/1B Bats:L Throws: R Born: 09-Aug-75 Age 28 [statistics deleted] The organization (the Texas Rangers) continued to sour on Lamb in 2003. You've heard the story hundreds of times before: A pretty good hitter who can't quite stay far enough right on the defensive spectrum to justify a major league spot. Players like this are drawn by force of nature to the Sacramento River Cats.
Posted by Tom at 3:45 PM
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Royal/Dutch Shell announces first deal with Libya
Royal/Dutch Shell finally was able to enjoy some good news yesterday with this announcement of a breakthrough deal with Libya's state oil company to explore for oil and natural gas that could give Shell access to as much as $1 billion worth of oil and gas in North Africa. The deal establishes guidelines for oil and gas exploration projects, including onshore exploration and the export of liquefied natural gas. It was the first time in 30 years that Shell had been invited to operate in Libya.
Libya, which is a member of the Organization of the Petroleum Exporting Countries, has production capacity of about 1.6 million barrels a day. However, Libya's reserve potential is far larger. Those reserves have been largely untapped because Libya's infrastructure suffered from a chronic lack of investment over the past decade after economic sanctions were imposed in 1992 as a result of the Libya's role in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland.
Posted by Tom at 6:48 AM
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Dr. Bill Fields dies
One of Houston's elite group of doctors who were integral to the development of the Texas Medical Center as one of the world's finest medical institutions has died.
Dr. William Fields, a long-time professor of neurology at both Baylor Medical School and the University of Texas Medical School in the Medical Center, died Sunday at his Houston home at the age of 90. Dr. Fields was a pioneer in medical research and testing of the role of aspirin in the treatment and prevention of strokes. In the late 1970's, Dr. Fields directed a major research project at 10 medical centers that established that aspirin may reduce minor stroke symptoms and also the likelihood of catastrophic strokes. Dr. Fields also was the first to assess the clinical value of carotid endarterectomy, which is the surgical removal of the lining of diseased or blocked arteries.
Dr. Fields was a colleague and dear friend of my late father, Dr. Walter Kirkendall, with whom he collaborated on many research projects. Through this friendship with my father, I had the privilege of knowing Dr. Fields, who was a wonderful and engaging man. Dr. Fields and my father were members of a generation of American doctors who revolutionized the purpose of medicine and health care in our society, and we all should pause and contemplate the magnificent contributions that this generation of doctors has given to each of us.
Posted by Tom at 6:34 AM
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March 25, 2004
Update on the Jamie Olis sentencing
Following up on this earlier post on the sad case of Jamie Olis, the sentence is in -- 24 years. Here is the NY Times article on the sentencing.
Posted by Tom at 7:21 PM
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D&O insurers cannot unilaterally rescind
In the wake of recent corporate scandals, several directors-and-officers ("D&O") insurance carriers have sought to rescind policies that were allegedly purchased on the basis of misrepresentations. This WSJ article ($) reports on a recent decision out the Eastern District of Pennsylvania holding that Aegis Bermuda Insurance Co. must pay the defense costs for several directors and officers involved in litigation over the collapse of Adelphia Communications. Although Adelphia's bankruptcy temporarily prevents Aegis Bermuda from taking legal action to rescind the policy, the court nevertheless held that the insurer was required to continue paying legal fees until a judgment permitting recission was obtained:
"'Insurance carriers do not function as courts of law,' U.S. District Judge Michael M. Baylson wrote. 'If a carrier wants the unilateral right to refuse a payment called for in the policy, the policy should clearly state that right. This policy does not do so.'"
Thanks to the 10b-5 Daily for the link to the WSJ article.
Posted by Tom at 10:02 AM
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The Players Championship
Here is an excellent preview of this weekend's Players Championship golf tournament.
Posted by Tom at 9:38 AM
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The favored religion of the IRS -- Scientology
This Logos post entitled "The chosen people of the IRS?" points to this New York Times article that reports on a California case that has uncovered a rather remarkable preference that the Internal Revenue Service has granted to the Church of Scientology.
Apparently, Scientology parents are allowed to deduct the cost of religious education as a charitable donation under an officially secret 1993 IRS agreement despite a 1989 Supreme Court decision prohibiting such a deduction. In the original case, the Ninth Circuit ruled against the plaintiff's request for a deduction for the cost of Jewish religious education, but when it did so, one of the judges suggested an alternative approach:
"Why is Scientology training different from all other religious training?" Judge Barry D. Silverman wrote in his opinion, adding that the question would not be answered just then because the court was not faced with the question of whether "members of the Church of Scientology have become the I.R.S.'s chosen people." Judge Silverman then recommended litigation to address whether the government is improperly favoring one religion.
"If the I.R.S. does in fact give preferential treatment to members of the Church of Scientology - allowing them a special right to claim deductions that are contrary to law and disallowed to everybody else - then the proper course of action is a lawsuit to put a stop to that policy," Judge Silverman wrote.
So, the plaintiffs filed another lawsuit, and during the course of discovery in that case, a subpoena was issued for a copy of the "secret agreement", but both the IRS and the Church of Scientology resisted producing it. Stay tuned.
As an aside, actor and director Steve Martin hilariously spoofed the Church of Scientology and its heavily Southern California clientele in his underrated comedy from several years ago, "Bowfinger."
Posted by Tom at 9:29 AM
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Calpers: Seperate audit from other services
When it blew up in late 2001, Enron was paying Arthur Andersen at a rate of about $1 million per week for various professional services, including audit services. Although the final chapter is yet to be written, a good case can currently be made that one of the primary reasons for the demise of Andersen in the wake of the Enron scandal was the firm's compromising of its auditing integrity for the benefit of Enron as a key customer of Andersen's other professional services.
Now, this interesting CFO Magazine story relates how the California Public Employees' Retirement System (Calpers) is opposing Freddie Mac's reappointment of auditor PricewaterhouseCoopers because the company has used PwC for non-audit services. This is a result of a new Calpers policy of withholding votes from audit committee members at companies that allow auditors to perform non-audit work.
The pension fund is also withholding its votes from director Michelle Engler, wife of former Michigan governor John Engler. The former Governor Engler is an executive at Electronic Data Systems Corp., which is a large vendor of Freddie Mac. The pension fund asserts that this business relationship between Freddie Mac and EDS could impair Mrs. Engler's objectivity.
In the small world department, I hired Mrs. Engler in her first job as an attorney out of law school when I was running a downtown Houston law firm back in the 1980's. Michelle was a fine lawyer and is a great person, and Calpers would be well-advised to adopt a more flexible position to keep conscientious and bright people such as Michelle on the boards of companies in which Calpers invests. Knowing Michelle, she would recuse herself from any action that the Freddie Mac board might take in regard to EDS, anyway.
Thanks to the BusinessPundit for the link to this article.
Posted by Tom at 8:49 AM
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Imports are good
This David Wessel column in the Wall Street Journal ($) makes some good points on the value of imports. Inasmuch as that value is often misrepresented during a political season, Wessel observes:
Let us now praise the virtues of imports.
Consider the clothes Americans buy for the four million babies born each year in the U.S. The typical family with a young child spends about $500 a year on those cute T-shirts, blue jeans and tiny socks. That's $2 billion a year.
Not so long ago, the U.S. had a ceiling on imports of baby clothes. That limit was lifted for most countries in 1998, and for China at the beginning of 2003. Imports of baby clothes more than doubled between 1997 and 2003, notes Ed Gresser, who labors to make the case for free trade for the centrist Democrats' Progressive Policy Institute. Wholesale prices at the ports dropped 28%.
Consumers saved. In the same years, the consumer-price index for all items rose 15%. But the retail price of infant and toddler apparel of all sorts fell 5.2%. Had the price of baby clothes increased as much as the price of everything else, parents would have had to spend about $400 million more to buy as many baby T-shirts, blue jeans and socks as they did last year.
Imports are the consumer's best friend.
You wouldn't know that to listen to public debate: Exports equal jobs. Exports are good. Imports kill jobs. Imports are bad. We must accept imports because only then will others take our exports. Imports are a necessary evil.
* * *
Politicians don't find the appeal to consumers a winner, though. As one Bush administration official confides, it's like telling a textile worker whose job has moved abroad: "Imports allow you to stretch your unemployment check further at Wal-Mart."
* * *
The case for free trade is flimsy without remembering that Americans are consumers as well as workers. It is as consumers that Americans benefit the most. Paying lower prices because of imports is as much of a benefit to American families as getting a raise, even though it never feels as good.
During this political campaign, your "demagogue antenna" should turn on anytime you hear a politician arguing against free trade. In the vast majority of circumstances, such drivel is directed at persuading a narrow interest group for political gain. As Mr. Wessel points out above, everyone else loses.
Posted by Tom at 7:57 AM
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Professor Balkin on Supreme Court review of Pledge of Allegiance case
Professor Jack Balkin, Knight Professor of Constitutional Law and the First Amendment at Yale University, posts this interesting overview and analysis on the issues involved in the U.S. Supreme Court case -- Elk Grove Unified School District v. Newdow -- in which Dr. Newdow, an atheist, argues that government officials' use of the phrase "under God" in the Pledge of Allegiance violates the Establishment Clause of the United States Constitution. Professor Balkin predicts that the Supreme Court will figure out a way to leave the words in the Pledge for primarily political reasons. Although Professor Balkin is much more knowledgeable on these issues than me, I still am not sure about that. With Justice Scalia's recusal, I think there is a real chance of a 4-4 deadlock on the Court, which would leave in place the Ninth Circuit opinion that government officials' use of the phrase in the Pledge violates the Establishment Clause.
On a related note, this transcript is now available of a very interesting and informative disucssion that the Pew Forum hosted last week on the Newdow case, featuring Doug Laycock and Jay Sekulow.
Posted by Tom at 6:43 AM
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David Warren on the assassination of Sheikh Ahmed Yassin
This typically insightful David Warren piece puts the recent Israeli assassination of Sheikh Ahmed Yassin into perspective within the Byzantine political landscape of the Middle East. Here are a few excerpts, beginning with the moral question:
On the moral question, whether it was right for the Israeli prime minister, Ariel Sharon, to order the assassination of Sheikh Ahmed Yassin, there is no difference from the question whether it would be right to assassinate Osama bin Laden. Bin Laden co-founded Al Qaeda, Yassin founded Hamas. These are organizations which exist for the express purpose of killing people; Qaeda being committed to killing "Crusaders and Zionists" plus bystanders; Hamas more specifically Jews plus bystanders. The question is not whether one should do it, but how.
The Israelis calculate Sheikh Yassin cost them 377 dead and 2,076 maimed -- including only a handful in military uniform. He was known to personally order the hits, and he ordered hundreds of them, both through Hamas and affiliates; culminating in last week's attack on the Israeli port of Ashdod, in which terrorists very nearly succeeded in blowing up large stores of toxic industrial chemicals. That was also the first successful "vengeance operation" (I use Al Jazeera's terminology) mounted from inside Gaza, since the Israelis succeeded in fencing the territory -- a "heritage moment" in Hamas propaganda. Yassin is the reciprocal Israeli heritage moment.
And then the pragmatic issue:
The Israelis are calculating that the advantages of disrupting the management of Hamas, which actually delivers the terrorism, outweigh the disadvantage of providing them with a recruitment tool. Most seasoned observers of the Middle East would guess they got it right. It is certainly the calculation the Bush administration has made, in going after Qaeda's senior management; and it appears to be working -- preventing more terrorist hits than it inspires.
And finally the political analysis:
Strange to say (and I can hear the guffaws of my numerous if inattentive leftwing readers) the assassination was a typically moderate act. Note [Ariel Sharon] killed Sheikh Yassin, and not Yasser Arafat, though the latter is also up to his ears in innocent Israeli blood, and the IDF know where to find him.
The unbelievable truth is that Mr. Sharon is trying to advance the "peace process", by giving Arafat's Palestinian Administration a leg up on Hamas, before their inevitable civil war. For despite all its butchery, even Arafat 's Fatah is the slightly more accommodating party. The only thing that keeps Fatah and Hamas together is their common target of Israel; with Israel removed, they become two scorpions in a bottle. There are big risks in weighing in so decisively, but even bigger ones if Hamas succeeds in its ambition of ruling Gaza after the Israeli departure.
Posted by Tom at 6:28 AM
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The Green Machine
It was noted in this earlier post that it is allergy season in Houston. As this Chronicle story relates, that means everything outside is covered with the green film of pollen. For some, though, there is a silver lining:
For Bill Lawrence, the green film on your hood is the color of money.
"We like to be people-friendly," said the president and chief executive of Bubbles Car Wash. "But I'll be honest. We love pollen. Nothing makes your car look worse than being covered in green and yellow dust."
Posted by Tom at 4:50 AM
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March 24, 2004
Supreme Court takes up important Texas managed care case
The Health Care Blog reminds that oral argument occurred yesterday in the U.S. Supreme Court in an appeal of this Fifth Circuit decision, which involves tort claims against HMO's under the Texas health care liability statute and the HMOs' contention that claims under the state statute are preempted by the federal ERISA statute. The Fifth Circuit previously rejected the HMOs' attempt to use ERISA preemption to remove the tort cases to federal court and upheld the plaintiffs' right to litigate their claims in Texas state courts, which are rarely as corporate-defendant friendly as federal courts. The Supreme Court's decision in this case will address a festering issue in ERISA law -- that is, whether an HMO's medical-necessity determinations are really benefits determinations that are completely preempted by ERISA.
As you might expect, the battered health care finance industry is closely eyeing the outcome of this case. The applicable ERISA provision provides a narrow basis for recovery against plans that withhold a requested level of care and a conservative measure of damages for successful plaintiffs. On the other hand, as is Texas' tradition, Texas tort law provides injured plaintiffs with a more liberal basis for recovery and thus, exposes health plans to far greater economic risk.
So long as HMOs and other managed care units are forced to make mixed coverage and treatment decisions against a backdrop of potential tort liability, opponents of managed care believe that the managed care units would be far less willing to risk limiting or denying care that physicians and patients request. On the other hand, HMO's and managed-care plans view an adverse result in the case as a threat to the financial security of employee benefit plans that extend health coverage to millions of workers and retirees.
Tom Mayo, the health care lawyer who is the author of the Health Care Blog, seems to think that the Supreme Court is leaning in favor of the managed care plans and federal preemption. However, the Supremes are notoriously difficult to read in cases such as this, so follow this one closely.
Posted by Tom at 8:43 PM
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Bill James is making the rounds
On top of this prior interview and article, the American Enterprise Institute interviews the baseball sabermetrician Bill James. A few excerpts:
TAE: Is Barry Bonds the best player of our era?
JAMES: By far.
TAE: Was Babe Ruth the finest player in the history of the majors?
JAMES: Yes. Mays may have been as good, Honus Wagner may have been as good, Bonds may be as good. But Ruth had more impact.
And another:
TAE: More American kids now play soccer than baseball. And on a Sunday afternoon in the middle of June you can, as I found last summer, go looking for baseball on TV and find everything but, from NFL Europe to women's golf. What, if anything, can be done to halt baseball's slide in popularity?
JAMES: I advocate a Constitutional amendment against playing soccer.
Seriously, the problem is that baseball is not a television game, and the television era has not been particularly good to baseball. To be fair, professional baseball tolerates an unconscionable amount of standing around and posturing, and this makes it less exciting than it ought to be and therefore less attractive to young people. I think there's a growing recognition of this, but the problem is that even when one recognizes the problem it's very hard to fix. People in baseball are working on it, however.
And on the issue of "team chemistry":
TAE: Should a team's racial composition ever be a factor when building a club, in terms of "chemistry"? The Florida Marlins reportedly signed Latin players quite consciously because they have a large Latin fan base.
JAMES: It's hard enough to make judgments about baseball players when you make them on the basis of: How fast does he run? How well does he throw? What's he like in the clubhouse? If you start building in irrelevant factors it makes the process not difficult but impossible.
Stated simply, Bill James is a national treasure.
Posted by Tom at 7:28 PM
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Floyd Norris on Microsoft
In my view, Floyd Norris is the best business writer for the NY Times. Today, Mr. Norris has this column in which he analyzes the dilemma confronting anti-trust regulators in dealing with Microsoft's bundling policies. Mr. Norris notes:
For antitrust regulators, the heart of the problem is the changing nature of the personal computer market. Consumers do want new features, as Microsoft says, and they do want them bundled in. Any nonexpert who has ever tried to download and install a program would much rather have it done by someone else.
But Microsoft's pattern has been to wait for others to pioneer a computer application and then to put out its own program. If that program is eventually bundled as part of the operating system in all new Windows computers, the first arrival screams foul, but in the end Microsoft wins.
Netscape pioneered Internet browsers but was left in the dust. RealNetworks, which led the way in music software, could face a similar fate. It is not easy to make money off a product that consumers must install themselves when the consumers already own Microsoft's version, which comes already installed.
In short, the issue is between simplicity and innovation. The public demands simplicity, which Microsoft provides for a generally reasonable price. But in doing so, Microsoft may deter innovation through its policy of bundling every concept into Windows and then, might we say gently, throttling threats to its dominant position.
Microsoft and others are pursuing the market for the "Multimedia PC" that integrates television, DVD player, stereo system, and other entertainment equipment. Microsoft is huge, so it's obviously a serious player in this competition. But proper application of antitrust law should neither prejudice Microsoft's development of the technology nor allow Microsoft to undermine its competitors, as it has shown that it is willing to do. Striking the right balance in that application is a formidable challenge.
Mr. Norris also makes another interesting observation:
. . . the risk is that Microsoft is becoming the functional equivalent of an old-style utility, with extensive government regulation that could even extend into determining what products it sells and at what prices.
There are worse fates than running a regulated monopoly. But such stocks are not the type that appeal to traditional technology investors, and the prospect of such an outcome may be one thing that has been weighing on Microsoft's share price, which has underperformed the market badly over the last 18 months.
Thanks to The Sports Economist for the link to Mr. Norris' article.
Posted by Tom at 6:59 PM
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Mike Price, litigation machine
Because of NCAA sanctions, the University of Alabama football team cannot go to a post-season bowl game for awhile. However, that sanction sure does not stop former UA coach Mike Price from getting it on with the current UA president. Priceless.
Posted by Tom at 5:41 PM
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UTEP Coach Gillispie accepts A&M basketball job
Billy Gillispie, coach at the University of Texas-El Paso, will be introduced as the new Texas A&M basketball coach this afternoon. Gillispie, 44, is a native Texan who coached at four high schools and a junior college in Texas before becoming a college assistant coach at Baylor, Tulsa and Illinois. He took over the head coaching job at UTEP shortly before the start of the 2002-03 season, and the Miners went 6-24. This season, UTEP was 24-8 and advanced to the NCAA Tournament, which was the biggest turnaround in the nation. The Miners lost their first-round game to Maryland last week in a close game.
Gillispie takes over at A&M from Melvin Watkins, who resigned under pressure after a 7-21 season. In six years under Watkins, the Aggies were 60-112. The Aggies have not been to the NCAA Basketball Tournament since 1987.
Given A&M's alumni support and its proximity to the Houston metropolitan area, it is puzzling that the Ags have not been able to establish a decent basketball program. My sense is that Gillispie is a good hire for the reason that he has deep Texas recruiting roots and the Ags desperately need to establish sound Texas recruiting pipelines. However, Gillispie has his work cut out -- A&M basketball has become a coaching graveyard, and that reputation is very hard to change.
Posted by Tom at 2:27 PM
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Like a good neighbor
This Chronicle article from yesterday reports on the deplorable grade the Port of Houston was given recently in a review released by the Natural Resources Defense Council, a nationwide environmental advocacy group. It was the lowest grade given to any of the nation's 10 largest ports. Here is a copy of the full report.
For as long as I can remember, the Port of Houston has had a lousy relationship with its neighbors in the eastern part of Harris County, and this report reflects one of the reasons why. "We are up against an opponent that not only has a bad local reputation but at this point also a bad national reputation," said Nancy Edmonson, mayor of Shoreacres. Public officials in Galena Park, another suburban community near the Port, have made similar public statements over the years.
Here's hoping that elected officials take notice of the mess that the Port of Houston has become and do something about it, like appointing some real reformers to the Port's Board. However, I will not hold my breath waiting for that to occur. As we have seen recently with several compliant corporate boards that have overseen disastrous judgment by management, it's easier to appoint friends and political hacks to these boards than people who will really roll up their sleeves and perform the hard work that is the duty of a board member.
Posted by Tom at 6:39 AM
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New York City announces ambitious stadium plan
This NY Times article indicates that New York City might finally have decided upon a viable deal to develop the long-awaited West Side football stadium.
Posted by Tom at 5:11 AM
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Yeah, but we can take it to the hoop!
The NY Times reports that only four of the Sweet Sixteen teams remaining in the NCAA Basketball Tournament ? Duke, Kansas, Vanderbilt and Xavier ? have posted graduation rates of 50 percent or better for their players.
That's what you get when you mask minor league basketball with the veneer of intercollegiate athletics.
Posted by Tom at 5:04 AM
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Will "The Alamo" be Eisner's Waterloo?
This NY Times article details the troubled development of Walt Disney Company's new movie, "The Alamo."
Although not mentioned in this article, I believe that the movie is based on the Stephen Harrigan's 2001 historical novel, "Gates of the Alamo," which is an enjoyable read. However, the best book on the Battle of the Alamo in the context of the Texas Revolution is "Texian Iliad," a 1996 masterpiece written by Stephen L. Hardin, a professor of history at Victoria College in southeast Texas.
Posted by Tom at 5:00 AM
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The sad case of Jamie Olis
This NY Times article reports on the sad case of a former midlevel executive of Houston-based Dynegy, the energy company that attempted to merge with Enron and then called off the deal shortly before Enron filed bankruptcy in December, 2001. Dynegy subsequently went into its own tailspin that cost its former CEO his job, but has to date avoided bankruptcy.
On Thursday, Jamie Olis faces a federal probation department recommendation that he serve 24 to 30 years in prison for organizing a scheme to falsify Dynegy's books. Mr. Olis and two former associates at Dynegy were found guilty last year of devising a secret project to disguise a $300 million loan as cash flow. Mr. Olis, a 38-year-old with an infant daughter, declined to strike a plea bargain, choosing instead to take his chances at trial, where he elected not to testify. As noted in earlier posts here regarding the Martha Stewart trial, the strategy of a white collar defendant choosing not to testify during trial is a risky move. In this case, Mr. Olis' lawyers were unsuccessful in their defense of portraying Mr. Olis as a corporate soldier doing as he was told and blaming his Dynegy superiors for the scheme.
If U.S. District Judge Sim Lake agrees with the probation department's sentencing recommendation on Mr. Olis, it would be the most severe prison term for a business crime in recent memory. The two other Dynegy officials convicted of taking part in the scheme struck plea deals before trial giving them maximum sentences of five years. Mr. Olis's lawyers are seeking a sentence of 5 to 10 years, arguing both that he is not responsible for all of Dynegy's losses and also that he has no previous criminal record.
Mr. Olis never rose above a position of vice president for finance at Dynegy after serving as the senior director of tax planning. Unlike defendants in other higher-profile corporate fraud cases, he never amassed a fortune from his time at Dynegy. The most money he made at Dynegy in any year was a salary of $162,000 and a bonus of $110,000, in addition to selling Dynegy stock worth about $200,000.
You can bet that more than a few criminal defense attorneys for former Enron executives will be watching the result of Mr. Olis' sentencing closely.
Posted by Tom at 4:36 AM
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John Cornyn and Barney Frank debate (?) gay marriage
Texas senator John Cornyn and Massachusetts congressman Barney Frank spiced a Senate Judciary Committee hearing yesterday by getting into it on the issue of gay marriage.
For what it's worth, I am not sold on gay marriage, but conclusory statements such as those made by Senator Cornyn yesterday do little to advance the political debate over gay marriage. What is his basis for the statement that gay marriage will undermine the institution of marriage? Statistical evidence? Scientific evidence? Or is his statement based on religious opposition to gay marriage? I do not know the basis for Senator Cornyn's opposition to gay marriage, but the only way to have a productive political debate is to support one's pronouncement on the issue with a persuasive (or even non-persuasive, if that is the case) basis for such pronouncement.
This related story deals with an issue that has the divorce lawyers salivating.
Posted by Tom at 4:11 AM
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Chronicle catching up on Shell story
The Chronicle leads with this Reuters News Service story today that Royal/Dutch Shell may face a Justice Department criminal investigation in connection with its oil and gas reserve writedowns over the past two months.
The Chronicle does not exactly have a scoop on this story. The Justice Department announced that it had opened inquiry on the matter on March 16.
Posted by Tom at 3:51 AM
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March 23, 2004
New Medicare projections
This NY Times article reports on the Medicare trustees' report today that Medicare will need to dip into its trust fund this year to pay increasing expenditures and that the program will become insolvent by 2019 unless changes are made in the program. The 2019 go-broke date for the Medicare trust fund is seven years sooner than what the trustees projected last year.
Here is a copy of the entire report.
The trustees report that Medicare's deteriorating financial condition is largely the result of the new Medicare prescription drug law that will increase costs by more than $500 billion over the next 10 years. The trustees also noted that projected lower tax receipts devoted to the program and higher expenditures for inpatient hospital care also are contributing to the growing financial problem.
Thomas Saving, a distinguished economics professor at Texas A&M University is one of the Medicare trustees who figures prominently in the report.
Posted by Tom at 3:11 PM
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Baseball Prospectus on the Astros' bench
Amid the mainstream media's mindless analysis of Major League Baseball in general and the Houston Astros in particular, Baseball Prospectus provides an objective, and less than encouraging, analysis of the Astros' bench players for the upcoming season:
We've put off discussing the Astros' bench options this spring since the outlook is, in a word, depressing. They basically have Jason Lane and a bunch of guys who are, um, alive. Technically, anyway. But it's time we got on with it.
Long-Time Farmhand, First-Time Backup: Speaking of the undead, someone has to be on hand in case Brad Ausmus is ever out of the lineup. With John Buck failing to develop at all, Raul Chavez has been tabbed for the duties this year. Unsurprisingly, PECOTA figures Chavez would likely out-hit Ausmus, but the latter's glove and organizational track record results in zero chance that he'll be pulled from the lineup until (and even if) Buck is ready.
Scrubs in the Infield: With Jose Vizcaino is entrenched as the fifth infielder for another year, and no obvious plan for the sixth spot, the competition would seem wide open, but most of the apparent candidates were eliminated from the get-go. Chris Burke and Tom Whiteman need to play every day at New Orleans to see if they'll finally amount to something, so have no business rotting on the big club's bench. David Matranga, who spent time in Houston last year, has long since been outrighted off the 40-man roster. That pretty much boils the situation down to Eric Bruntlett, who would most likely ride pine at either level, and the carcass of John Valentin, who was brought in to light a fire under a youngster to be named later, but has managed just a single in 21 at-bats this spring. Expect Bruntlett to emerge as a victor, as there's no reason for Valentin to force someone through waivers, even in an organization this veteran-focused.
Outfield Depth: As mentioned above, Lane will server as the fourth outfielder, inspiring fantasy players everywhere to hope for an injury to Craig Biggio. Since the internal options for fifth outfielder are even worse than for the sixth infielder, Orlando Palmeiro was hauled in despite an uninspiring glove and a projected .240 EqA. Was it really that important to give him $750K instead of keeping Colin Porter or Henri Stanley around to play for the minimum? It seems impossible to believe, but given the insistence on re-upping guys like Ausmus and Vizcaino, it seems pretty clear that the front office is using an evaluation system even more peculiar than the A's defensive system.
In this related Chronicle story, Astros' owner Drayton McLane publicly denies the persistent local rumor that he is negotiating to sell the club to Houston restaurateur Tilman Fertitta, CEO of Landry's, Inc.
Posted by Tom at 9:37 AM
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Methodist trial of lesbian pastor
My buddy J.D. Walt of Asbury Seminary passes along this NY Times article regarding the just concluded Methodist Church trial in which a jury of 13 Methodist clergy members found that a fellow minister did not violate Methodist church law by being in a lesbian relationship.
The prosecution had argued that the case for conviction was cut and dried, because the law of the Methodist church as set forth in the Book of Discipline has included a passage that says homosexuality is "incompatible with Christian teaching." The prosecution called only one witness. On the other hand, the defense team presented over 20 witnesses, including several Methodist legal scholars, who argued that the Book of Discipline and the Bible contain unclear and contradictory passages about homosexual relationships.
Although it appears that the prosecution may have thrown in the towel on this case before it ever started (one witness? no rebuttal witnesses?), the outcome nevertheless raises an interesting question on the related issue of gay marriage. That is, if Christian churches are allowing their leadership to be involved in gay relationships (note that the Episcopalians recently endorsed a gay bishop), and assuming that those same churches are not ready to endorse gay marriage, then are these churches going to support civil (i.e., non-religious) unions for gay couples?
Posted by Tom at 9:06 AM
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Allergies? Sinusitis? How to Tell the Difference
It's springtime in Houston. You need to know the difference.
Posted by Tom at 7:27 AM
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UH is hiring who?
The University of Houston will announce today that it hiring 58 year old, former University of Texas basketball coach Tom Penders as its new men's basketball coach.
This is one of the most puzzling coaching hires that I have seen in years, particularly for UH, which is famous for giving such coaching icons as Bill Yeoman, Guy V. Lewis and current baseball coach Rayner Noble their first head coaching jobs at a relatively young age and then sticking with them through thick and thin.
Penders was fired by the University of Texas in 1998, and UT couldn't have been happier getting rid of him despite the fact that Penders restored a winning tradition to UT's men's basketball program. UT released Penders when a scandal broke out over his coaching staffs' public release of a player's grades after the player decided to transfer to another school. Penders allegedly authorized the release of former UT player Luke Axtell's grades and then blamed it on others. After the ensuing scandal soured Penders' prospects at UT, Penders received a $900,000 going-away present and soon took the head coaching job at George Washington University, where he lasted two seasons before resigning amid revelations of players using his son's telephone account to make over $1,000 in telephone calls. Penders has recently been a color man on college basketball telecasts.
To give you an idea what type of fellow UH is hiring in Penders, one only needs to recall how Penders left his longtime assistant, Eddie Oran, who now sells cars in Bastrop, Texas, twisting in the wind when Penders left UT:
"If I had done anything illegal or wrong, you think they'd give me $900,000?" said Penders. "It's trumped up and bogus. I'm not going to say anything other than Eddie Oran has to live in Austin and sell cars."
Posted by Tom at 6:43 AM
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Investment firm to buy U.S. Oncology
Welsh, Carson, Anderson & Stowe, a New York-based leveraged buyout firm, announced Monday that it will pay $1.7 billion to acquire and take private Houston-based U.S. Oncology, a publicly-owned manager of cancer treatment centers across the country. U.S. Oncology treats approximately 15 percent of newly diagnosed cancer patients each year through a network of 875 physicians in 32 states.
Posted by Tom at 6:19 AM
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Well, this is an interesting way to try for a mistrial
Posted by Tom at 6:11 AM
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March 22, 2004
Cubbies, it's going to be one of those years
The Astros' archrival in the NL Central -- the Chicago Cubs -- announced today that their star pitcher Mark Prior may need to start the season on the disabled list due to an Achilles tendon injury and could miss 1 or 2 starts. After starting his career with a 3.32 ERA/9 RSAA (i.e., "Runs Saved Against Average") in 19 starts in 2002, Prior had an excellent 2.43 ERA/42 RSAA in 30 starts. He has 2.74 career ERA, compared to his league average of 4.23, and 51 RSAA in 49 games. In short, he is a stud and is the Cubs' best pitcher.
Posted by Tom at 3:28 PM
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Law Profs on Justice Scalia's recusal decision
This NY Times article has six law professors discussing Justice Scalia's decision not to recuse himself in the Sierra Club case. As one would expect from a half dozen academics, there is a substantial amount of disagreement.
Posted by Tom at 7:53 AM
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NFL and Union in negotiations over Clarett situation
The National Football League and the NFL Players Association have recently been involved in negotiations to insert language into their current Collective Bargaining Agreement that would require all draft-eligible players to be three years removed from their high school graduation. The proposed rule will not be agreed to in time to affect the draft status of former Ohio State tailback Maurice Clarett, USC receiver Mike Williams, or the six high school players who have entered next month's NFL draft. Rather, the proposed rule is designed to prevent future players who are not three years out of high school from entering the draft.
In my view, unless the NFL gives high school players the right to opt for professional football before being subject to the proposed three year rule in a manner similar to the current Major League Baseball three year rule, then it is likely to be struck down again. Earlier posts on the Clarett case may be viewed here and here.
Posted by Tom at 7:40 AM
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Rodeo sets attendance record
The Houston Livestock Show and Rodeo announced a new attendance record was set this year as the Rodeo closed Sunday. If you missed my earlier post about the Houston cultural phenomenom known as "the Rodeo," you can read it here.
Posted by Tom at 6:31 AM
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Forbes 500
This Chronicle article reports on the annual Forbes Top 500 business list..
Posted by Tom at 6:23 AM
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Qualities of a good football coach
Houston Chronicle sportswriter Mickey Herskowitz passes along this story about those two NFL coaching icons, George Halas and Vince Lombardi:
One recalls the story of George Allen, who was hired off the staff of George Halas in Chicago to coach the Los Angeles Rams.
Halas was furious that the Rams failed to ask for his permission and threatened to take Allen to court. At a league meeting after the issue was resolved, Halas used the occasion to vent his anger at his former defensive coach.
"George Allen," Halas said, "is a man with no conscience. He is dishonest, deceptive, ruthless, consumed with his own ambition."
At that point, Vince Lombardi leaned over to the owner of the Rams and whispered, "Sounds to me like you've got yourself a helluva football coach."
Posted by Tom at 6:17 AM
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March 21, 2004
An evening with John Dowd regarding Pete Rose
In this interesting piece, Will Young relates his evening with John Dowd, the Washington, D.C. lawyer who is the author of the report for the Commissioner of Major League Baseball that concluded that Pete Rose had bet on baseball games while managing the Cincinnati Reds. Nothing earth shattering here, but interesting reading nonetheless. Mr. Dowd's opinion that Commissioner Selig is attempting to find a way to reinstate Rose is, if correct, highly troubling.
Posted by Tom at 12:38 PM
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The intersection of drug policy and prison policy
This Brent Staples' NY Times Review of Books article that reviews "Life on the Outside, The Prison Odyssey of Elaine Bartlett," Jennifer Gonnerman's new book about how the government's criminalization of its drug policy has led to a large and growing portion of society that is chronically disenfranchised, at enormous societal cost. Ms. Gonnerman, who has wrote extensively about drug policy as a staff writer for the Village Voice, tells the story through the family of Elaine Bartlett, a young mother of four who received a sentence of 20 to life for her selling cocaine to an undercover cop in a motel near Albany, her first offense. As Ms. Gonnerman notes:
The United States is transforming itself into a nation of ex-convicts. This country imprisons people at 14 times the rate of Japan, eight times the rate of France and six times the rate of Canada. The American prison system disgorges 600,000 angry, unskilled people each year -- more than the populations of Boston, Milwaukee or Washington . . .
Ex-cons are marooned in the poor inner-city neighborhoods where legitimate jobs do not exist and the enterprises that led them to prison in the first place are ever present. These men and women are further cut off from the mainstream by sanctions that are largely invisible to those of us who have never been to prison. They are commonly denied the right to vote, parental rights, drivers' licenses, student loans and residency in public housing -- the only housing that marginal, jobless people can afford. The most severe sanctions are reserved for former drug offenders, who have been treated worse than murderers since the start of the so-called war on drugs. The Welfare Reform Act of 1996, for example, imposed a lifetime ban on food stamp and welfare eligibility for people convicted of even a single drug felony. The states can opt out of the prohibition, but where it remains intact it cannot be lifted even for ex-prisoners who live model, crime-free lives.
* * *
Mass imprisonment has not hindered the drug trade. Indeed, drugs are cheaper and more plentiful today than ever. In addition, many of the addicts who are held in jail for years at a cost of more than $20,000 per inmate per year could be more cheaply and effectively dealt with in treatment. What jumps out at you from ''Life on the Outside'' is the extent to which imprisonment has been normalized, not just for adults from poor communities but for children who visit their parents in prison. Spending holidays and birthdays behind bars for years on end, these children come to think of prison as a natural next step in the process of growing up.
Although both major political parties share blame for failing to address America's drug policy in a responsible manner, the Bush Administration's failure in this area -- coupled with its failure to address such major issues as health care finance reform, income tax reform, and environmental policy reform -- provides a solid basis for the Democrats to attack the Bush Administration in the upcoming election. Although the Bush Administration has performed admirably under difficult circumstances in prosecuting the war against Islamic fascists, its performance on domestic issues such as those mentioned above has been abysmal. If President Bush loses the election this November, that lack of leadership on those key issues will likely be the reason why.
Posted by Tom at 11:38 AM
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Rethinking how best to prevent heart attacks
This NY Times article reports on new studies that increasingly indicate that coronary bypass opearations and angioplasty procedures are not as effective in preventing heart attacks in high risk patients than non-invasive treatments such as giving up smoking and taking drugs to control blood pressure, reduce cholesterol levels, and prevent blood clotting. The research reflects that that just one of those treatments -- lowering cholesterol to what guidelines suggest -- can reduce the risk of heart attack by a third. However, only 20% of heart patients follow that approach. As the Times article notes:
But, researchers say, most heart attacks do not occur because an artery is narrowed by plaque. Instead, they say, heart attacks occur when an area of plaque bursts, a clot forms over the area and blood flow is abruptly blocked. In 75 to 80 percent of cases, the plaque that erupts was not obstructing an artery and would not be stented or bypassed. The dangerous plaque is soft and fragile, produces no symptoms and would not be seen as an obstruction to blood flow.
That is why, heart experts say, so many heart attacks are unexpected ? a person will be out jogging one day, feeling fine, and struck with a heart attack the next. If a narrowed artery were the culprit, exercise would have caused severe chest pain.
Heart patients may have hundreds of vulnerable plaques, so preventing heart attacks means going after all their arteries, not one narrowed section, by attacking the disease itself. That is what happens when patients take drugs to aggressively lower their cholesterol levels, to get their blood pressure under control and to prevent blood clots.
Yet, researchers say, old notions persist.
"There is just this embedded belief that fixing an artery is a good thing," said Dr. Eric Topol, an interventional cardiologist at the Cleveland Clinic in Ohio.
Posted by Tom at 7:42 AM
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March 20, 2004
Q&A with Victor Davis Hanson
Victor Davis Hanson is accepting email questions on his new website and answering them when he has the time. The following is an insightful answer to one of the current questions:
Question: The wealth and power that Rome accumulated within a couple of generations, it seems, led to two civil wars and the destruction of the Republic. I feel as though our political situation is becoming as partisan and could very well end in some type of civil strife within another generation. Am I way off base here?
Hanson: I can?t quite adjudicate all your comparisons, but I share your worry about polarization and think this next campaign will be the nastiest in some time. I didn?t really dislike personally Bill Clinton, although I felt he weakened the United States abroad. But there were many on the Right who did?and gave him no fair hearing, especially about his commendable though belated attack on Milosevic. Yet, their animus has been trumped by Bush-haters. And we are now in a spiral whose logical end is sort of frightening.
Posted by Tom at 7:20 PM
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David Warren: One Year Later
David Warren's latest is "One Year Later."
Posted by Tom at 12:52 PM
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Great article on the Martha Stewart saga
One of the most important -- yet most difficult -- things for an attorney to do in private practice is to advise a valuable client not to do something that the client really wants to do. As Jeffrey Toobin brilliantly relates in this New Yorker article on the downfall and trial of Martha Stewart, that dilemma was one of the primary reasons that Ms. Stewart's case went awry. Mr. Toobin details the questionable representation that Ms. Stewart received from Wachtell Lipton during, and in preparation for, her initial interview with the Justice Department, and the disastrous effects of her co-defendant attorney's cross-examination of the prosecution's main witness during trial:
On the scale of highly publicized misdeeds in the past decade, Stewart's trade must rank among the most trivial. She netted only about fifty thousand dollars more on the deal than if she'd held the stock for another day, and, as she told me, her ImClone holding constituted .03 per cent of her assets. It seems almost implausible that such a misstep could send Stewart to prison and lead her company to ruin, and that this happened with the help of the best and most loyal people that money could buy.
* * *
On February 4th, . . . [Wachtell Lipton partner John] Savarese and an inexperienced associate at Wachtell, Lipton accompanied Stewart to her interview at the U.S. Attorney's office in Manhattan. Confident that she could truthfully refute the charge that Waksal himself had tipped her, Stewart told investigators the fabricated story about the pre-existing agreement to sell ImClone at sixty. Worse, Savarese allowed a second interrogation, on April 10th, during which Stewart again lied about the sixty-dollar agreement and asserted, falsely, that she couldn't remember whether she was told on December 27th that the Waksals were selling. To be sure, it was Stewart, not her lawyer, who lied to the investigators, but Savarese had allowed his client to take an immense legal risk
* * *
Through the early part of the trial, Peter Bacanovic's lawyers generally deferred to Morvillo, much as their client did to Stewart. Bacanovic's lead lawyer, Richard Strassberg, a former Assistant U.S. Attorney in Manhattan, who is now with the firm of Goodwin Procter, presented Bacanovic's opening statement, but he shared substantial responsibility for the defense with David Apfel, a Boston-based partner at the firm. Apfel, who is fifty-one, had a distinguished career as a federal prosecutor in Massachusetts, where in 1997 he won the John Marshall Award, the Justice Department's highest award for trial work. In the late nineties, he turned to private practice, and, at the lectern on February 4th, he proceeded to give life to the courtroom adage that the best prosecutors do not always make the best defense lawyers.
Apfel organized his notes, stared down Faneuil on the witness stand, and snarled at him, "Mr. Faneuil, let's get a few things straight right away."
Thus began a catastrophically ineffective cross-examination. . .
I continue to agree with Professor Bainbridge that prosecutorial discretion should have mitigated against a prosecution of Ms. Stewart in this case. But as this article points out, Ms. Stewart and her advisers' failure to address her actions in selling the ImClone stock in a forthright and honest manner bears much of the responsibility for Martha's demise.
Thanks to Evan Shaeffer for the link to the New Yorker article.
Posted by Tom at 10:40 AM
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The Latest Coup
The New York Times has its faults, but it continues to be one of the best sources of international news reporting. Today, Times foreign correspondence Michael Wines writes this incredible story about the latest coup attempt in Equitorial Guinea, the poor Western African country that has been the site of an oil and gas drilling boom over the past decade. The entire story is the stuff from which entertaining movies are made, and the following will give you a flavor for it:
This malarial West African dictatorship quashed another coup attempt this month, which is like saying the corner 7-Eleven served up another Slurpee. Quashed coups (five since 1996) are a political staple here, so routine that some say the government stages and then quashes them to burnish its image of invincibility.
But the coup this month was different. Nobody could make this coup up.
The coup attempt of 2004 features a dysfunctional ruling family, a Lamborghini-driving, rap-music-producing heir apparent and a bitter political opponent in exile who insists that Equatorial Guinea is run by a gonad-eating cannibal. It is said to involve a Lebanese front company, a British financier, an opposition figure living in exile in Spain and some 80 mercenaries from South Africa, Germany, Armenia and Kazakhstan.
With such a polyglot cast, this whodunit has become almost a parlor game among Africa watchers. Not since Christmas 1975, when Moroccan palace guards shot 150 suspected plotters in the city soccer stadium to a band's rendition of "Those Were the Days, My Friend" has a botched takeover set tongues wagging so briskly.
* * *
. . . [t]oppling Equatorial Guinea's government would be no mean feat, because removing the president would barely scratch the surface. The military is peppered with Mr. Obiang's cousins and nephews. One of his sons is the natural resources minister. A brother-in-law is ambassador to Washington.
A brother, Armengol Ondo Nguema, is a top internal security official and, according to a 1999 State Department report, a torturer whose minions urinated on their victims, sliced their ears and rubbed oil on their bodies to lure stinging ants.
Finally, a second son, Teodoro Nguemo Obiang, is the infrastructure minister and his father's anointed successor. To the dismay of some relatives, he also is a rap music entrepreneur and bon vivant, fond of Lamborghinis and long trips to Hollywood and Rio de Janeiro, who shows few signs of following his father's iron-fisted tradition.
* * *
The entire plot, he said, was hatched by Severo Moto, an Equatorial Guinean opposition figure and longtime fomenter of quashed coups who lives in exile in Madrid. Mr. Moto's coup was said to be financed by $5 million from a British businessman, washed through a front company in Lebanon.
Mr. Moto makes no secret of his hatred of President Obiang: on Spanish radio this month, he called him a demon who "systematically eats his political rivals."
"He has just devoured a police commissioner. I say `devoured,' as this commissioner was buried without his testicles and brain," he said, adding that Mr. Obiang hungered for his body parts as well.
"We are in the hands of a cannibal," he warned.
Posted by Tom at 9:43 AM
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March 19, 2004
Putting with Tiger Woods
Tiger Woods is the best golfer in the world, has won 40 professional golf tournaments, and is worth several hundred million. Chris Riley is one of the best putters in professional golf, but has won only once on the PGA Tour and is worth several hundred thousand. Riley was asked this week about his bets with Tiger during their putting contests that they often engage in before rounds:
"When me and Tiger putt, I say, 'How much we putting for?' Tiger says, 'Whatever makes you nervous.' So, that's usually like $5.''
And when Tiger Woods says "whatever makes you nervous," he means whatever.
Thanks to Mr. Poon for the link to Riley's quote.
Posted by Tom at 9:15 PM
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Can't say that I ever really thought about that question
Why is Fleetwood Mac the least influential great band of all time?
Posted by Tom at 8:52 PM
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The Health Care Market
Arnold Kling at EconoLog carries on an interesting discussion of health care finance with Steve Verdon in which Arnold makes the following common sense observation:
A free-market but compassionate health care system would provide vouchers for catastrophic insurance coverage, but eliminate all other subsidies, including the tax-advantages for employer-provided health insurance.
Posted by Tom at 8:33 PM
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Spring, anyone?
I know more than a few lawyers from the Midwest and Northeast who relate to this week's Stu's View cartoon:
Posted by Tom at 1:00 PM
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Opinion continuing freeze on Skilling assets
Following on this post from yesterday, here is U.S. District Judge Sim Lake's opinion continuing the freeze on former Enron CEO Jeff Skilling's assets pending further order of the Court in Skilling's criminal case. Essentially, Judge Lake rules that the freezing of assets does not amount to a forfeiture, which can only be done after a conviction. Moreover, Judge Lake reasons that Mr. Skilling is free to make a motion that the frozen assets are not the ill-gotten gains of his alleged wrongdoing and are necessary to pay his defense and living expenses.
Posted by Tom at 10:09 AM
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VDH on the History of Democracy
Victor Davis Hanson's latest National Review Online op-ed is online. As usual, the entire piece is well worth reading, and Professor Davis concludes with the following observation:
Indeed, we are in one of the rare periods of fundamental transformation in world history ? as the United States has pledged its blood and treasure in both a dangerous and daring attempt to bring the Middle East, kicking and screaming, into the family of democratic nations and free societies. So while American soldiers fight, build, patrol, and sometimes die in Iraq and Afghanistan, the world at large ? the Saudi royal family, President Musharraf, Mr. Khaddafi, the mullahs in Iran, the young Assad, the kleptocracy on the West Bank, and the weak and triangulating Europeans ? wonders whether the strong horse will prove to be the murderous bin Laden and his Arab romance of a new Dark Age, or George Bush's idea of a free and democratic Middle East.
Posted by Tom at 9:49 AM
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Top Ten signs your Supreme Court Justice is on the take
From last night's show, David Letterman's Top Ten Signs that Your Supreme Court Justice Is On The Take:
10. Begins every case with, "We'll start the bribing at ten thousand."
9. His written opinions always have several mentions of the thirst-quenching taste of Mountain Dew.
8. Regularly convenes court at the dog track.
7. Asks, "Does either attorney plan on inviting me on any hunting trips?"
6. For a Supreme Court Justice he certainly is mentioned on "The Sopranos" a lot.
5. All the bling bling.
4. His last article in the "Law Journal" was about finding the right fence for your stolen goods.
3. When you have a meeting with him in chambers, frisks you for a wire.
2. He's on the Forbes 500 List between Bill Gates and Oprah.
1. Already declared Bush the winner of the November election.
Which reminds me of this old trial lawyer joke:
Taking his seat in his chambers, the judge faced the opposing lawyers.
"So," said the judge. "Each of you has presented me with a bribe."
Both lawyers squirmed uncomfortably.
"You, attorney Mohanty, gave me $50,000," observed the judge. "And you, attorney Venkat, gave me $60,000."
The judge reached into his pocket, pulled out $10,000, and handed it to attorney Venkat.
"Now that I'm returning $10,000 to attorney Venkat," exclaimed the judge proudly, "I'm going to decide this case solely on its merits!"
Posted by Tom at 9:06 AM
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11th Circuit excludes expert accountant's lost profits testimony
This Eleventh Circuit decision affirmed the trial court's exclusion of an accountant's testimony on lost profits, which is a common way in which business plaintiff's attempt to prove economic damages. In this particular case, the accountant's estimates were based gross sales and gross profits without any deduction for expenses (one wonders how he could have testified as to profits without deducting expenses?). At any rate, the trial court and the 11th Circuit ruled that the accountant's opinion was inconsistent with the law of lost profits under applicable Georgia law and that it relied on methods not generally accepted in the accounting community. Interestingly, the 11th Circuit upheld the trial court's exclusion of the testimony even though the defendant's Daubert objection was not raised until trial. Waiting until trial to raise a Daubert objection is risky and generally not a recommended strategy.
Posted by Tom at 8:41 AM
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The Cubs were lucky (or is Jimy Williams chronically unlucky?)
Allen St. John in this WSJ ($) article today analyzes Major League Baseball's top teams from last season with baseball statistician Bill James's Pythagorean Theory, which concluded that a team's run differential (runs scored vs. runs allowed) correlates closely with its winning percentage. Unfortunately, the 162 game MLB schedule does not provide enough games to even out all the bad bounces and bloop singles (i.e., bad luck). So, Mr. St. John calculates each team's Pythagorean winning percentage -- which largely eliminates the effects of luck -- by taking the square of the total runs they score in a season and dividing it by the sum of runs scored squared and runs allowed squared. Some of his observations:
Luck, it turns out, was a big factor in pennant races last year. In the world of P-Wins, four playoff teams -- including the World Champions -- would have watched October baseball from their Barcaloungers. The American League Central would have been taken by the White Sox (who had three fewer wins than their P-Win total would indicate, resulting in a P-Win differential of -3), not the Twins (whose real wins topped their P-Win total by five -- a differential of +5). The Mariners (-6) should have edged the As (+1) in the AL West. In the National League, the Phillies (-5) should have blown past the Marlins (+3) for the wild card. In the NL Central, the Cubs (+2) would have finished third, behind the Astros (-8) and Cardinals (-4).
This year, it's a new ballgame. That's because of a corollary to Mr. James's theory -- luck evens out. Teams that fall short of their P-Win total one season tend to bounce back the next year. Teams that exceed their P-Win total often slip back the following summer
What do P-Wins tell us about the coming season? Looking past the personnel changes, the numbers still tell an interesting story. In the AL East, the margin between the Yankees (+4) and the Red Sox (0) should wither. The Twins should find the White Sox in hot pursuit. In the NL West, Seattle seems primed for a playoff run, likely at Oakland's expense. And in the NL East, look for the gap between the Braves (+4) and Phillies to get very small.
The NL Central poses an interesting problem. While most of the P-Win differential is due to luck, that isn't the entire story. Cubs manager Dusty Baker has a career P-Diff of +18, i.e. his teams have won 18 more games than the numbers would suggest. Astros skipper Jimy Williams has a career P-Diff of -24, with just one season in which his team exceeded expectations. The NL Central this year may prove Branch Rickey's adage: Sometimes luck is the residue of design.
Meanwhile, this interesting MLB.com article describes how many MLB clubs are finally adapting sabermetrician principles to evaluation of baseball players.
Posted by Tom at 7:31 AM
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Seitel reorganization plan confirmed
Houston-based geophysical seismic company Seitel, Inc. obtained Bankruptcy Court confirmation of its chapter 11 reorganization plan in Delaware yesterday. Seitel filed a chapter 11 case last year after a change in accounting rules relating to valuation of its library of geophysical seismic resulted in a substantial writedown in the value of that library, which is the company's main asset. The case was also spiced by some colorful allegations regarding the company's former CEO, and Warren Buffet's failed takeover attempt during the chapter 11 case.
Posted by Tom at 6:49 AM
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Memorable Zoo trip
It must have been one wild zoo trip for those at the Dallas Zoo yesterday.
Posted by Tom at 6:38 AM
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March 18, 2004
Skilling assets remain frozen
U.S. District Judge Sim Lake refused today to lift a freeze order that the Enron Task Force had obtained on $55 million of former Enron CEO Jeff Skilling's assets pending further order of Judge Lake. I will be interested to review Judge Lake's opinion on this issue. Given the government's sledgehammer approach to the criminal case against Skilling, freezing his new worth while he defends himself appears to be an unfair restriction. On the other hand, Judge Lake is a very fair judge, so I expect good reasoning in this opinion. I will post it when I get a copy.
Posted by Tom at 9:22 PM
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Victor Davis Hanson on Spain, Europe, America and the Middle East
FrontpagMag.com interviews the always insightful Victor Davis Hanson regarding the recent events in Spain and the Middle East, and how Americans and Europeans have reacted to them. Thanks to Occam's Toothbrush for the link. The entire interview is a must read, but one sentence about what could defeat America stands out:
I am talking about a secular religion of anti-Americanism brought on by our very success that allows such utopianism and cheap caring-and it does weaken and tire our efforts to win this war.
Posted by Tom at 5:24 PM
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How low will Royal Dutch/Shell go?
In this stunning announcement, Royal Dutch/Shell today downgraded 250 million barrels in reserves to less certain reserve categories and decided not to book 220 million barrels that it had earlier classified as reserves. Although small in comparison to Royal Dutch/Shell's earlier writedown, the timing of this latest reserve writedown is certain to increase scrutiny of the company's management practices.
As noted here and here, Royal Dutch/Shell is already the subject of Justice Department and SEC investigations regarding its earlier reserve writedown.
Posted by Tom at 4:15 PM
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Who is Ken Venturi?
This post from awhile back addressed the dust-up that has occurred between Arnold Palmer and Ken Venturi over Venturi's recent allegation in his new book that Arnie had broken a rule (might we say, cheated?) on the 12th hole of Augusta National on his way to beating Venturi to win his first Masters Golf Tournament in 1958.
Well, Arnie's Tour event -- the Bay Hill Invitational -- is this week. And, as you might expect, a reporter asked Arnie during his annual pre-tournament interview about Venturi's allegations. The King's response was classic:
Reporter: "Mr. Palmer, what is your reaction to the issue at Augusta raised in Ken Venturi's new book?"
The King: "I don't know what book you're talking about. I don't know a thing about it. I really don't, and I'm not really too interested. That's my comment. Next question."
Posted by Tom at 11:33 AM
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Justice Scalia refuses to recuse himself
Here is Justice Scalia's opinion refusing to recuse himself in the Supreme Court case involving his hunting buddy, Vice-President Cheney. Here is the Sierra Club's motion to recuse that prompted Justice Scalia's opinion.
Posted by Tom at 10:50 AM
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The poor health of Russians
Tyler Cowan over at Marginal Revolutions has this interesting post about the Russian health care system, which has been in the news because of recent reports regarding the decreasing life expectancy of Russian men. Tyler's post contains several good links and solid analysis of the reasons for this crisis in Russian health care.
Posted by Tom at 10:24 AM
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Smart View at Yahoo Maps
Tom Mighell over at Inter Alia notes the new feature on Yahoo Maps that provides information on area businesses such as restaurants for any address that you plug into the map building service. A very nice feature.
Posted by Tom at 9:56 AM
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ChevronTexaco: Enough already
Clearly worn down by the prospect of dealing further with the Harris County Commissioner's Court, ChevronTexaco announced yesterday that it had closed the deal to buy the former Enron Building in downtown Houston. In light of the County's recalcitrance, I suspect that the seller threw come additional consideration to ChevronTexaco to get the deal done.
As noted in this earlier post on the matter, this closing frees Harris County taxpayers from having to deal with Commissioner Steve Radack's delusions about having the County buy the building.
Posted by Tom at 9:00 AM
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Medicare prescription drug controversy intensifies
The Bush Admininistration's conduct in promoting the Medicare prescription drug legislation last year is coming under increasing scrutiny. Already of dubious financial merit, this NY Times article reports on the opening of a House inquiry into bribery allegations that are based on a Republican congressman's public comments made immediately following the close vote last year over the controversial bill.
In related news, this WSJ ($) article and this NY Times article report on the controversy swirling around Richard Foster, Medicare's chief actuary. Mr. Foster was warned last year that he could be accused of "insubordination" if he shared information with Congress about the White House-backed prescription-drug bill without the approval of his politically appointed superiors, according to e-mails from the top aide to Thomas Scully, who was then the Bush Administration's administrator for the health-care program. A WSJ copy of the email can be reviewed here. The gist of the story is that Mr. Foster was pressured to reduce the estimated ten year cost of the Medicare prescription drug program by about 30% in order to make it more politically palatable. While Republican leaders say the allegations are overblown, no one doubts that release of the higher cost estimates last fall would have probably killed the prescription drug bill, which only passed by one vote after hours of arm-twisting in the House in November.
Again, my sense is that the Bush Administration's handling of health care finance issues is a major, and largely underappreciated (at least by administration officials), political problem for the administration in the upcoming election.
Posted by Tom at 8:35 AM
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UAL bankruptcy - Will it ever end?
This NY Times article and this WSJ ($) article report on the postponement of confirmation and consummation of United Airlines' reorganization plan in its long pending chapter 11 case. UAL has been operating under chapter 11 since December, 2002, and it's exit financing and debtor-in-possession financing commitments expire on June 30. Although UAL is probably too big for its institutional creditors simply to give up on it, this is clearly a business that is in trouble, and no sure bet to make it even after emerging from chapter 11.
A related NY Times story reports on the daunting problems confronting UAL competitor, American Airlines.
Posted by Tom at 7:56 AM
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Shelby Steele on gay marriage
Hoover Institute fellow Shelby Steele writes this Wall Street Journal op-ed in which he criticizes the notion that the gay marriage is a civil rights issue analogous to that of the struggle to end racial segregation in America. Mr. Steele, who favors civil unions for gay couples, nevertheless does not favor gay marriage. The entire op-ed is well worth reading, and here are a few of Mr. Steele's poignant observations:
But gay marriage is simply not a civil rights issue. It is not a struggle for freedom. It is a struggle of already free people for complete social acceptance and the sense of normalcy that follows thereof -- a struggle for the eradication of the homosexual stigma. Marriage is a goal because, once open to gays, it would establish the fundamental innocuousness of homosexuality itself. Marriage can say like nothing else that sexual orientation is an utterly neutral human characteristic, like eye-color. Thus, it can go far in diffusing the homosexual stigma.
In the gay marriage movement, marriage is more a means than an end, a weapon against stigma. That the movement talks very little about the actual institution of marriage suggests that it is driven more by this longing to normalize homosexuality itself than by something compelling in marriage. . .
But marriage is only one means to innocuousness. The civil rights framework is another. To say that gay marriage is a civil rights issue is to imply that homosexuality is the same sort of human difference as race. And even geneticists now accept that race is so superficial a human difference as to be nothing more than a "social construct." In other words, racial difference has been made officially innocuous in our culture, and its power to stigmatize has been greatly reduced. Evidence of this is seen in the steady, yet unremarked, rise in interracial marriage rates for all of our races. So if gay marriage, like race, is about civil rights, then homosexuality is a human difference every bit as innocuous. Thus, America should treat homosexuality like it treats race and give gays the "right" to marry as it once gave blacks the right to vote.
* * *
The civil rights movement argued that it was precisely the utter innocuousness of racial difference that made segregation an injustice. Racism was evil because it projected a profound difference where there was none -- white supremacy, black inferiority -- for the sole purpose of exploiting blacks. But there is a profound difference between homosexuality and heterosexuality. In the former, sexual and romantic desire is focused on the same sex, in the latter on the opposite sex. Natural procreation is possible only for heterosexuals, a fact of nature that obligates their sexuality to no less a responsibility than the perpetuation of the species. Unlike racial difference, these two sexual orientations are profoundly -- not innocuously -- different. Racism projects a false difference in order to exploit. Homophobia is a reactive prejudice against a true and firm difference that already exists.
Institutions that arise to accommodate these two sexual orientations can never be exactly the same. Across time and cultures, marriage has been a heterosexual institution grounded in the procreative function and the responsibilities of parenthood -- this more than in either love or adult fulfillment. Marriage is simply the arrangement by which humans perpetuate the species, whether or not they find fulfillment in it.
The true problem with gay marriage is that it consigns gays to a life of mimicry and pathos. It shoehorns them into an institution that does not reflect the best possibilities of their own sexual orientation. Gay love is freed from the procreative burden. It has no natural function beyond adult fulfillment in love. If this is a disadvantage when children are desired, it is likely an advantage when they are not -- which is more often the case. In any case, gays can never be more than pretenders to an institution so utterly grounded in procreation. And dressing gay marriage in a suit of civil rights only consigns gays to yet another kind of mimicry. Stigma, not segregation, is the problem gays face. But insisting on a civil rights framework only leads gays into protest. But will protest affect stigma? Is "gay lovers as niggers" convincing? Protest is trying to hit the baseball with the glove.
The problem with so much mimicry is that it keeps gays from evolving institutions and rituals that reflect the true nature of homosexuality. Assuming, as I do, that gays should have the option of civil unions that afford them the legal prerogatives of marriage, isn't it more important after that to allow quiet self-acceptance to lead the way to authentic institutions?
The stigmatization of homosexuals is wrong and makes no contribution to the moral health of our society. I was never worried for my children because they grew up knowing a gay couple that lived across the street, or because several family friends were gay. They learned early what we all know: that homosexuality is as permanent a feature of the human condition as heterosexuality. Nothing is gained in denying this. But neither should we deny that the two are inherently different. The gay marriage movement denies this difference in order to borrow "normalcy" from marriage. Thus, it is a movement born more of self-denial than self-acceptance, as if on some level it agrees with those who see gays as abnormal.
Meanwhile, in this Atlantic Monthly piece, Jonathon Rauch argues that principles of American federalism call for the gay marriage issue to be determined on a state-by-state basis.
Posted by Tom at 7:44 AM
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GOP, think this one over again
This Chronicle story reports on the comments of Texas GOP chairperson Tina Benkiser's statement Wednesday that Travis County District Attorney Ronnie Earle's (a Democrat) failure to investigate former Democratic Attorney General Dan Morales proves that Mr. Earle's current investigation into Republican House race financing is politically motivated. Earlier posts on this investigation can be reviewed here.
However, there is one big problem with Ms. Benkiser's allegation: Mr. Earle deferred to the Justice Department in Mr. Morales's case, which investigated, indicted, and convicted Mr. Morales.
This earlier post criticized the Texas Democratic Party chairperson's comments regarding Governor Perry. These statements by the GOP chairperson are just as bad. I know several Republican prosecutors in Texas, and they all have high regard for Mr. Earle. Ms. Benkiser should have checked with them first before making her disingenuous public statement.
Posted by Tom at 7:24 AM
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The cost of Skilling's defense
The Chronicle leads with a misleading headline today regarding the $23 million that former Enron CEO and COO Jeff Skilling has set aside to pay the cost of his defense in Enron-related matters. The Chronicle article suggests that the $23 million is absurdly high, which it is not. Mr. Skilling is the subject of a 35 count criminal indictment that could lead to effectively a life prison sentence if he is convicted. Moreover, Mr. Skilling is a defendant in dozens of civil cases arising from the ashes of Enron. The review of documents alone relating to his criminal case is a monumental task. And to make matters more complicated, the prosecution in Mr. Skilling's criminal case is attempting to constrict Mr. Skilling's ability to pay his defense team.
$23 million may be extraordinarily high defense costs, but Enron is an extraordinary case. This is an example of the Chronicle leading with a story where there really is not one. The Chronicle would be much better served by addressing the Enron Task Force's highly troubling "sledgehammer" approach to prosecuting former Enron insiders, in which the prosecution files so many duplicative criminal counts against the defendant that the defendant has to risk what amounts to a life prison sentence in order to defend himself. That approach raises important issues of fairness and due process that the media covering the Enron prosecutions have ignored to date.
Posted by Tom at 6:46 AM
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March 17, 2004
UT Prof and NRO: Things are not always as they appear
Earlier today, I blogged this post about this National Review Online op-ed by Hunter Baker, who is described in the preface of the article as a "Texas freelance writer." Mr. Baker's article is highly critical of UT Law Professor, Brian Leiter, for Professor Leiter's earlier criticism of the student author of a Harvard Law Review note that was complimentary of Baylor philosophy professor Francis Beckwith's new book, "Law, Darwinism, & Public Education." Professor Leiter subscribes to Darwin's Theory of Evolution, while Professor Beckwith is as proponent of what is known as the "Intelligent Design Theory," which is an outgrowth of creationism.
At any rate, my earlier blog was critical of Professor Leiter, not so much because of his views on evolution, which he presents very well. Rather, I was critical of the Professor's accusation that the student author of the Harvard Law Review note had engaged in academic fraud, which I did not think was clearly reflected by the note.
Well, the student reviewer may be pristine as driven snow, but Mr. Baker -- the author of the National Review Online piece -- is not. Turns out that Mr. Baker is a graduate student of Baylor Professor Beckwith! And to make matters worse, Mr. Baker did not bother to disclose his close association with Professor Beckwith in his NRO article.
In the last paragraph of his NRO article, Mr. Baker suggests that Professor Leiter owes the student author of the Harvard Law Review note an apology. I initially agreed with that sentiment. However, now I apologize to Professor Leiter for my earlier post, and suggest to Mr. Baker that he owes him one, too.
Posted by Tom at 5:58 PM
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It must be Bill James week
Following on this recent post, this MLB.com piece provides more background on Bill James, the original sabermetrician and the pioneer of statistical analysis of baseball. As noted in this prior post, the best current book published annually about baseball is the direct result of Mr. James' statistical analysis of baseball.
Posted by Tom at 11:08 AM
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District Judge Vela being treated for cancer
This San Antonio Express article reports that long-time U.S. Federal District Judge Filemon Vela, who has taken senior status, is waging a personal battle against stomach cancer at M.D. Anderson Cancer Center in Houston. Thanks to Bradley Clark over at the Texas Law Blawg for the pointer to this article.
Posted by Tom at 10:23 AM
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First Circuit sticks it to KPMG-Belgium
Anyone who has ever pursued business litigation against foreign companies or their advisors in a U.S. court knows that it's not a picnic. However, this recent First Circuit opinion provides some hope for weary plaintiffs.
KPMG-Belgium was the auditor for Lernout & Hauspie Speech Products NV, the Belgian software maker that collapsed in 2002 under allegations of accounting fraud. A securities fraud class action was filed against KPMG-Belgium and others in Masschusetts federal court.
KPMG-Belgium refused to comply with the plaintiffs' discovery requests on the grounds that producing the papers would violate Belgian law. The plaintiffs moved to compel the production of the documents, which the federal magistrate handling discovery matters in the lawsuit approved. KPMG-Belgium then mounted a collateral attack of that discovery order in the foreign court. They filed a ex parte petition with a Belgian court seeking to enjoin the plaintiffs from proceeding with the requested discovery, and requested a mere 1 million euros fine for each violation of the proposed injunction.
The plaintiffs fought back and persuaded the Massachusetts federal district court to issue issued an antisuit injunction enjoining KPMG-Belgium from pursuing the Belgian injunction action, which KPMG-Belgium appealed to the First Circuit. The First Circuit affirmed the district court injunction order, holding that when "a party institutes a foreign action in a blatant attempt to evade the rightful authority of the forum court, the need for an antisuit injunction crests."
As I write this, KPMG-Belgium has not decided how to respond to the First Circuit's decision. However, non-compliance could result in severe sanctions, such as entry of judgment or a fine. This will be an interesting case to follow.
Thanks to the 10b-5 Daily blog for the pointer to this case.
Posted by Tom at 10:05 AM
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UT Professor criticizes Harvard Law Review
Brian Leiter is the Joseph D. Jamail Centennial Chair in Law, Professor of Philosophy, and Director of the Law & Philosophy Program at the University of Texas at Austin. Professor Leiter advocates a Darwinian materialist vision of the world from his weblog, The Leiter Reports. Professor Leiter is also the author of The Philosophical Gourmet Report, which is a respected ranking of graduate philosophy programs in academia.
Hunter Baker reports in this NRO article, Professor Leiter recently criticized Harvard Law Review and Harvard law student Lawrence VanDyke for giving Baylor professor Francis Beckwith's new book, "Law, Darwinism, & Public Education," a positive review in the January 2004 issue of the Harvard Law Review. In the following passage, Professor Leiter accuses Mr. VanDyke of "scholarly fraud", which Mr. Baker reasonably interprets as an indictment if the student reviewer were ever to seek an academic position after finishing his education at Harvard:
The author of this incompetent book note . . . is one Lawrence VanDyke, a student editor of the Review. Mr. VanDyke may yet have a fine career as a lawyer, but I trust he has no intention of entering law teaching: scholarly fraud is, I fear, an inauspicious beginning for an aspiring law teacher. And let none of the many law professors who are readers of this site be mistaken: Mr. VanDyke has perpetrated a scholarly fraud, one that may have political and pedagogical consequences.
Mr. VanDyke is not backing off of his positive review despite Professor Leiter's criticism:
He defends the substance of his book note and charges that Leiter's attack represents "an effort to make sure all students recognize that if they step outside the bounds of Leiter's orthodoxy, their careers will be in serious jeopardy." He adds, "This is pretty amazing considering my book note actually talks about the 'hostility and censorship of the evolutionary establishment.' If anything, Mr. Leiter acts as if it his goal to prove me correct."
Mr. Baker closes his NRO article with the following observation:
Unless he gets his temper under control, Brian Leiter won't continue to have the influence in the academy he currently enjoys. Threatening the career of a young law student because he dared to differ is a sorry spectacle. Let's hope a chastened Leiter will get a lesson in freedom of inquiry and expression from his fellows and then will be man enough to apologize to the promising student whose destruction he proposed.
Subsequently, Professor Leiter has penned responses on his blog to criticism over his attack on Harvard Law Review and Mr. VanDyke, which can be reviewed here and here. To his credit, Professor Leiter's responses are well-prepared and contain many good links to the scientific basis for the theory of evolution, the lack of which is his main criticism of the Intelligent Design theory espoused by Professor Beckwith and others.
Thanks to Logos for the pointer to Mr. Baker's article.
Posted by Tom at 9:15 AM
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Odds are that God exists
Logos points us to this article that describes a scientist's calculation that concluded that there is a 67% that God exists. Actually, such scientific calculations have been around for quite some time. They are essentially the basis of 17th century French philosopher Blaise Pascal's "Wager Theory" on the existence of God, brilliantly presented in former Notre Dame philosophy professor T.V. Morris' 1992 book, "Making Sense of It All."
Posted by Tom at 8:14 AM
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The Ten Most Influential Businessmen of All-Time
The BusinessPundit points us to this Forbes article that lists Northwestern University economics history professor Joel Mokyr's (editor in chief of the "Oxford Encyclopedia of Economic History") ten most influential businessmen of all-time. Neither Ken Lay nor Jeff Skilling made the list. ;^)
Posted by Tom at 7:35 AM
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Watch out for the virus on that nickel slot machine
This NY Times article reports a virus outbreak linked to a Las Vegas casino hotel that sickened more than 1,000 people, most of them from Hawaii. The hotel casino involved is the California Hotel and Casino, a downtown Las Vegas property with a largely Hawaiian clientele.
Posted by Tom at 6:49 AM
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Justice opens inquiry over Royal Dutch/Shell's reserve writedown
Given recent disclosures at Royal Dutch/Shell previously discussed here, this announcement that the Justice Department has opened an inquiry into the oil company's recent restatement of reserves is no surprise.
Posted by Tom at 6:42 AM
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Holman Jenkins on Health Care Finance
Holman W. Jenkins Jr. is a member of the editorial board of The Wall Street Journal and is the author of the weekly Business World column. He is one of America's most insightful thinkers and commentators on the political implications of the most pressing business issues of the day. In today's column ($), Mr. Jenkins examines the relunctance of both political parties and their candidates to address meaningful reform in America's broken health care finance system. The entire article is a must read, and here a few nuggets:
[P]roductivity miracles don't descend from heaven but arise when companies choose to invest in new tools to make existing workers more productive rather than hire additional workers. Why? Listen to what business owners say every time somebody puts a notepad in front of their faces: Computers and machine tools don't create open-ended health-care liabilities. Human workers do.
General Motors, a company that has shrunk by 180,000 employees over ten years, reported last week that its long-term health liabilities now top an incredible $60 billion. GM spends $5 billion annually to treat 1.2 million workers, retirees and their dependents. That amounts to more than $14,000 per current employee, gobbling up what a worker would otherwise take home as cash pay.
. . . Indeed, we've pretty much come to the point where we're trying to do the economically impossible and give a subsidy to everybody. The average family of four now pays about $1,600 a year in taxes to cover the cost of a health-insurance subsidy to itself. No real gain to anybody occurs: We just push checks around to conceal from people the true cost of their health care.
How bad this has become is lost on most Americans. When you add the tax subsidy to Medicare, Medicaid and other federal programs, government now touches 60% of the dollars in heath care. The tax benefit alone comes to $120 billion a year. It's also grossly regressive: A family earning $100,000 a year gets $2,357 to help pay for medical insurance; a family earning $15,000 gets only $71.
The only reform that stands a chance is one that dismantles the nutty system of tax subsidies that fuels health-care inflation by commanding an unnatural urge to channel every ache, pain and prescription through a third-party payment bureaucracy.
Posted by Tom at 6:34 AM
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T.J. Ford in the wrong kind of news
Former Houston Willowridge High School and University of Texas basketball star, T.J. Ford -- now a point guard with the NBA Milwaukee Bucks -- had his condominium searched yesterday in connection with a criminal investigation into illegal drug distribution in the Milwaukee area. Last month, Ford was the first UT basketball player to have his number retired by the university.
Posted by Tom at 6:18 AM
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March 16, 2004
David Warren on Rotten Europe
David Warren has another compelling article, this time on Spanish capitulation to the Islamic fascists who are apparently responsible for the March 11th bombing that killed over 200 immediately before the Spanish national elections. The entire article is a well worth reading, but here are a couple of tidbits:
Analysis and homily must converge in what I have to say today. There is no ambiguity in what has happened in Spain. The rotten heart of Europe has been exposed. The best comparison one can make is to Europe in 1940, when the entire continent had capitulated to Nazism and fascism, leaving Britain alone to fight. It thus came to be known as "Churchill's war", rather than "Hitler's war", only to revert when the Allies had won it, and a generation of Europeans, who had not lifted a finger, decided retrospectively that they had been in the Resistance.
A good question might be asked of the Bush administration, in light of the Spanish election. It was articulated by an American friend yesterday: "Before we waste another drop of blood trying to create democracies in the Middle East, shouldn't we reflect a bit on how easily democracy in Spain was subverted by terrorists?"
One must not, under the present circumstances, sound an uncertain trumpet. All men of goodwill, regardless of nation, are fighting the Jihadists in Afghanistan and Iraq, as we fought the Nazis in Italy and France; and if the Americans must fight them alone, so be it. Then as now we made a lot of blather about "democracy". But screw democracy, we are fighting an enemy of civilization, an embodiment of real evil. There is no compromise with such an enemy, no capitulation to him, no way to avoid casualties, no easy way out. We defeat him, or he defeats us.
We do not retreat because our allies are cowards. We continue to fight, for ourselves, for our children, and for their children.
Posted by Tom at 7:20 PM
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El Paso jitters
As noted in earlier posts here and here, things have not been going well recently for El Paso Corp. Now, the company is making the rounds with its banks. Not a good sign.
Posted by Tom at 6:16 PM
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County continues to play hardball with Chevron over Enron Building
This previous post addressed Mayor White's premature announcement of ChevronTexaco's purchase of the former Enron Building in downtown Houston. Harris County Commissioners announced today that they are not inclined to grant the ad valorem tax abatement that ChevronTexaco was relying on in agreeing to the deal to the buy the building. Commissioner Steve Radack, hopefully in a fit of delusion, suggested that the County might step up and buy the building if ChevronTexaco backs out of the deal.
Posted by Tom at 5:44 PM
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Enron MDL Trial Date postponed again
This Chronicle story reports that Judge Melinda Harmon has postponed the trial of the consolidated securities fraud civil suits against former Enron insiders and and financial institutions that conducted business with Enron until October, 2006.
The number of depositions that are being scheduled in that case would chloroform a herd of cattle.
Posted by Tom at 7:29 AM
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MLB NL Central Race
If you prefer insightful analysis of the upcoming National League Central baseball race involving the Astros, Cubs, and others rather than the tired reviews that are typically trotted out in the mainstream media, then read this discussion over at All Baseball.com.
Posted by Tom at 6:50 AM
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Watch out for the killer popcorn!
Killer popcorn meets its match.
Posted by Tom at 6:36 AM
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This NY Times article describes the interesting life inside Saudi Aramco, Saudi Arabia's largest oil company, which retains its decided Western influence even after Saudi citizens have taken over its top management positions. As the Times article notes:
Try not to make too much of the women driving sport utility vehicles, the baseball diamonds, the thousands of Americans and Britons or the cul-de-sacs with names like Prairie View at the well-guarded headquarters of Saudi Aramco, the world's largest oil company.
. . . While Aramco's importance to the Saudi economy and the global energy industry is hard to underestimate, the company, like other Western-influenced areas of society, has been caught in the cross hairs of Islamic conservative objections to its American-style management approach.
For instance, while women nearly everywhere in Saudi Arabia are required by religious law to dress conservatively in black shawls and prohibited from driving, Aramco's female employees are allowed to wear Western clothing and drive on company property. Old-fashioned American business practices also persist at Aramco, down to the gold watch after 30 years of service.
And in a striking difference from many oil companies that were seized by governments in the developing world in the last century, Aramco never required its American employees to leave. Though its top executives are now Saudis, the official language remains English, making it easier for the 2,000 Americans who work for the company in Saudi Arabia, most of them living in this dusty city across the border from Bahrain.
The company still provides plentiful perks to attract American employees, who call themselves Aramcons. The benefits for Americans and other expatriates from rich countries include subsidized ranch-style suburban houses at Aramco's compound here, free health and dental care at the company's own hospitals, nearly 40 vacation days a year and free private education for children until high school, when the company will pay 80 percent of boarding-school costs in the United States.
Aramco, which produces about eight million barrels a day, generated an estimated $85 billion in oil revenue last year . . . The company's financial clout extends to other areas, like its fleet of jet aircraft used to travel inside and outside Saudi Arabia. All its pilots are trained in the United States or Britain.
"It feels almost normal here until you get outside the company and its compounds," said Richard Pattee, a native of Tacoma, Wash., who moved to Dhahran in October to pilot the company's new Boeing 737.
Posted by Tom at 6:32 AM
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INSCOM apologizes
This Austin American-Statesmen article follows up on an incident that occurred last month at the University of Texas Law School, as reported in this earlier post. The U.S. Army Intelligence and Security Command (INSCOM) officials said they would provide refresher training for all U.S. Army intelligence personnel as a result of their investigation after a Feb. 4 conference entitled "Islam and the Law: A Question of Sexism" at the UT Law School. INSCOM has concluded that military intelligence agents acted inappropriately when they requested a roster of people attending a conference on Islamic law at the University of Texas. Army investigators had not decided whether any of the agents or the commander involved would be reprimanded or disciplined.
Posted by Tom at 6:18 AM
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March 15, 2004
Plains Resources up for graps
As noted in this earlier post, Houston-based Plains Resources is the subject of an ongoing offer to purchase the company. As reported in this Houston Business Journal article, Plains received another unsolicited offer, which it has rejected for the time being. However, this is getting interesting. Stay tuned.
Posted by Tom at 3:20 PM
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Prosecutors get chummy with the Fastows
This Chronicle report indicates that the Enron Task Force and the Fastows are having some very interesting conversations of late, and the Task Force would like to continue the discourse.
Posted by Tom at 2:39 PM
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High schoolers and the NBA
This Sports Law Blog post discusses this interesting law review article that addresses the legal and economic implications of high school basketball players eschewing college basketball and going straight into professional basketball. As the Sports Law Blogger notes:
The most compelling statistic of the article, though, is that only 29 players have entered the NBA draft as high schoolers in the past 25 years. This tends to dispel the myth that the NBA is being overrun by players who have never experienced college. Of those 29, many have become "stars" or "superstars," while less than half are deemed "busts" or have been relegated to "minor league" basketball. Is the problem as bad as critics make it out to be?
Interesting post and article. Too much time is spent attempting to prevent high school athletes from turning professional prematurely. In America, we retain the right to make bad decisions.
Posted by Tom at 8:06 AM
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Doc, Let me get this straight . . .
This NY Times article delves into the confusion among doctors regarding HDL -- the so-called "good" cholesterol. Doctors have been saying that patients should pay attention to both the so-called bad cholesterol (LDL), and the good cholesterol (HDL) to prevent cardiovascular disease. As a general proposition, the doctors believed that the good cholesterol counteracted the bad. But now, some scientists say, new and continuing studies have called into question whether high levels of the good HDL cholesterol are always good and, when they are beneficial, how much. As the Times article relates:
In the meantime, doctors are calling researchers and asking what to do about patients with high H.D.L. levels, or what to do when their own H.D.L. levels are high, and patients are left with conflicting advice.
"There is so much confusion about this that it is unbelievable," said Dr. Steven Nissen, a cardiologist at the Cleveland Clinic.
In the meantime, as noted in this earlier post, the pharmaceutical companies are watching this development closely.
Posted by Tom at 7:28 AM
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Air Ball!
This Wall Street Journal ($) article describes the financial disaster that is the CBS contract with the NCAA for the right to telecast the NCAA Men's Basketball Tournament. CBS is entering the second year of an 11-year, $6 billion deal with the NCAA for the rights to carry the tournament games. That high price, coupled with declining viewership for the games, almost ensures that CBS will lose tens if not hundreds of millions of dollars on the event over the life of the contract. Even optimists think the best CBS can hope for is to break even on the contract. The article goes on to point out:
The NCAA contract is particularly onerous for CBS, though. Not only is it more than double what the network had been paying, but also the rights fees will rise dramatically over the 11 years. This year, CBS will pay the NCAA $389 million for essentially three weeks of college basketball, not much less than what it pays the NFL for five months of regular-season and postseason football. For the 2013 tournament, the last under the current agreement, CBS will pay $764 million, according to the NCAA.
. . . Making the high costs even more worrisome is viewership. The audience for the NCAA tournament has been on a steady decline since hitting 34.3 million viewers for the final game in 1992 (Duke vs. Michigan) The 2002 final between Indiana and Maryland drew 23.7 million viewers, according to Nielsen Media Research. Last year's audience for the Syracuse-Kansas championship game was 18.6 million. To be sure, the Iraq war hurt last year's tournament numbers, but even so, viewership has clearly been on a downward trend.
And the clincher:
The NCAA also gets final say on who can and can't advertise in the tournament . . . It also bans commercials for Viagra and other erectile-dysfunction drugs, bad news for CBS since pharmaceutical companies like to spend money on sports to reach older men.
Which leads to CBS' mantra upon the inevitable renegotiation of this albatross: "No Viagra, no way!"
Posted by Tom at 6:45 AM
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Kerry's Health Plan
This Wall Street Journal ($) article describes the Kerry Campaign's health care finance plan. The entire article is well worth reading, and includes the following summary of the plan:
Mr. Kerry has vowed to restore higher tax rates for those earning more than $200,000 a year, yielding about $300 billion in revenue over the next decade. Sweeping estate-tax changes and corporate subsidies are two more targets. But he also is betting -- some say unrealistically -- that his emphasis on better information technology and disease-management practices ultimately will yield big long-term savings.
. . .He also proposes to have Washington step in to reinsure high-cost patients, and thereby reduce premiums charged to private companies and their workers.
It already makes a striking contrast with Mr. Clinton's more controlling attempt to revamp the nation's health-care system 10 years earlier. At the time, nothing less than universal coverage was the president's goal, which forced the party into a set of employer mandates and cost caps that provoked huge resistance in the small-business community.
By comparison, Mr. Kerry chooses two core social principles: caring for poor children and better sharing the cost of the sickest patients. He never attempts to achieve universal coverage and devotes huge sums to help those trying to keep what they already have.
Posted by Tom at 6:24 AM
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March 14, 2004
Target defendant: The House of Saud
This NY Times Magazine article chronicles the massive tort case that South Carolina trial lawyer, Ronald L. Motley, has brought in connection with the 9-11 attacks on the United States. Mr. Motley thinks of terrorism as a depraved and ruthlessly efficient business that Saudi Arabians largely finance. As Gerald Posner persuasively showed in his book "Why America Slept", Mr. Motley believes that the 19 hijackers would never have been able to carry out their attacks without generous Saudi financial assistance. Accordingly, Mr. Motley has filed a lawsuit in Washington, D.C. federal court charging that a wide variety of Saudi parties sponsored the attacks by making donations to institutions that they knew fostered terrorism. Among the case's 205 defendants are seven Saudi charities, three Saudi financial institutions, dozens of prominent Saudi individuals, and several members of the House of Saud royal family. Mr. Motley's case is by far the largest civil case filed in connection with the 9-11 attacks -- the families of 1,667 people who died that day, as well as 1,197 men and women who sustained injuries, have signed on as plaintiffs. This is an interesting article about a case that will be fun to follow.
Posted by Tom at 12:55 PM
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Bill James Interview
This Home Plate interview with Bill James is a must read for all baseball fans. Mr. James is the original sabermetrician and the pioneer of statistical analysis of baseball. Mr. James' work has led directly to such excellent baseball books such as the annual Baseball Prospectus, which was touted in this earlier post. Mr. James is now a consultant for the Boston Red Sox, and it is no coincidence that the BoSox have become serious challengers to the Yankees for the AL East crown and for the American League pennant. Now if we could just get the baseball reporters for the Houston Chronicle and other newspapers that follow MLB teams to study Mr. James' work. It would dramatically improve the reporters' understanding of baseball, which is generally burdened by many traditional baseball myths that sabermetric research has conclusively debunked.
Posted by Tom at 12:17 PM
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Who is better for business -- Bush or Kerry?
This Big Picture analysis reflects that the question is a close call.
Posted by Tom at 7:21 AM
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Professor Bainbridge on new SEC "real time" 8-K Disclosures
Professor Bainbridge has this timely post on the SEC's announcement yesterday of its new 8-K "real time" reporting rules. Effective August 23, 2004, Form 8-K disclosures will need to be made within four business days rather from the current five business day-fifteen calendar day deadlines assigned to various 8-K items. A must read for corporate lawyers and executives in publicly-owned corporations.
Posted by Tom at 7:04 AM
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March 13, 2004
This NY Post article is the first that I have seen that points out that there were exactly 911 days between the Sept. 11, 2001 attacks and the latest bombing attacks in Madrid.
Meanwhile, the Iberian Notes blog has a helpful list of evidence that points to either the ETA or Al Qaeda being the perpetrator of the Madrid attack.
Posted by Tom at 9:29 AM
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Lewis: Avoid the Algerian Precedent
Occam's Toothbrush points us to this Jerusalem Post interview with Princeton University Professor Emeritus Bernard Lewis, America's preeminent expert on Middle East affairs (author of "What Went Wrong"), in which Professor Lewis comments on the present situation in Iraq:
Are you in favor of immediate elections in Iraq?
I don't want us to repeat what happened in Algeria, where elections quickly devolved into a massacre. We need to tread very carefully. Elections have to stabilize Iraq, not upset it. Otherwise, countries like Iran and other Middle Eastern dictatorships have an interest in seeing to it that democracy never takes root. Much of the funding and organizational support for terrorist groups comes from Iran.
Do you have faith that, in spite of everything, democracy will prevail?
Saddam Hussein, a Ba'athist-minority dictator, was nourished by Nazism first and then by communism, both European totalitarian ideologies. If anything, the risk of not succeeding in dismantling these fragile Middle Eastern dictatorships today lies more in the history of the rapport between the Muslim and the Western worlds than it does in Muslim roots. Islam, which has been weak for two centuries, has always sought backing to help it fight the enemy - Western democracy. First it supported the Axis against the Allies, then the communists against the US: two disasters. Today it is seeking the protection of Europe against the US, which it sees as its principal enemy. And Europe is facing a difficult debate between those who want to accept that role and those who don't. Please, I have no intention of comparing Europe to Nazi Germany or the USSR, I'm only talking about the position in which the Arab world is trying to put the old continent.
Posted by Tom at 7:48 AM
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March 12, 2004
Texans turn a sixth round draft pick into a third round pick
As noted in this earlier post, the Houston Texans chose former University of Michigan quarterback Drew Henson in the sixth round of last year's NFL Draft even though Henson was playing baseball at the time in the New York Yankees minor league system. The Texans' figured that Henson's mediocre baseball skills would eventually lead him back to football, and today their gambit paid off. The Texans traded their contract rights to Henson to the Dallas Cowboys for a third round draft choice in the 2005 NFL Draft. By focusing on preserving draft picks, the Texans are building a formidable foundation of good, young players. The third round draft pick that the Texans received in this deal will probably be much more useful for them next year when the team will likely be maturing into a playoff caliber team than the sixth round choice would have been for this season's team.
Posted by Tom at 8:43 PM
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The Durst Lawyer Annuity
The Chronicle reports on more developments in the ongoing saga of Robert Durst and his high profile defense team. Although the bail jumping charges appear to be legitimate, it strikes me that the other charges being pursued against Durst (abuse of a corpse?) appear to be quite strained. One gets the impression that the prosecution still cannot figure out how it lost its murder case against Durst. Earlier posts on the Durst case are here and here.
Posted by Tom at 6:10 PM
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The Saudi War on George Bush
Via Instapundit, Ed Lasky, a contributor to The American Thinker, posits in this article that Saudi Arabia has launched an undeclared war on President Bush in an effort to sabotage the long term success of America?s war on Islamic fascism. Mr. Lasky points out that President Bush has fundamentally altered the previous cozy relationship between the Saudi Royal Family and the Bush Family:
The terror attacks convinced George W. Bush that America?s approach to the Middle East needed to be drastically changed, to ensure America?s safety. His campaign to oust the Taliban from theocratic rule in Afghanistan and his defeat of Saddam Hussein sent a message to the Saudis that ?business as usual? was a thing of the past. In calling for liberalism throughout the Arab world and for the acceptance of other religions, Bush challenged the support structure of the Saudi royal family, whose legitimacy is predicated on their role as defender of Islam?s holy sites and propagator of the faith.
Much more importantly, in severing the ties that once bound, Bush II has declared that the ties of filial duty, which both animate and constrain the dynamics of the Saudi royal family, do not matter so much in his family. Not anymore, at least, no matter what the former appearances. In doing so, George Bush has become an apostate to the Saudis. It is not merely a matter of interests, but rather an issue of deep principle, fundamentally linked to their own way of life, and to their survival.
From the vantage point of the Saudis, Bush II is not just unreliable, but also a danger. He is a self-identified born-again Christian, and is closely allied with the religious wing of the Republican Party. In a theocratic nation which forbids the practice of Christianity, a leader linked to rival religion is anathema. In their eyes (as well as those of some of President Bush?s most ardent opponents) he may seem to be something of a theocrat himself, but from a longstanding historical rival religion.
When the President?s Christian moorings are combined with the exaggerated role that Jewish neo-cons supposedly have in the White House (once again the fevered imaginations of the Saudis bear some resemblance to those of the President?s most extreme domestic antagonists), trouble of the most fundamental sort looms for their regime. All along, the fanatic Wahabbi wing of the clergy has preached that a holy war exists with the West, and that accommodation with the infidels can only be a tactical pause in the eventual all-out war. From their perspective, it is easy to understand why George W. Bush -- the Christian ?puppet of the Jews,? and thus the embodiment of Wahabbi nightmares -- needs to be removed from office.
Mr. Lasky goes on to predict that the Saudis will attempt to use their power within the OPEC to increase energy prices that would create a lag on the U.S. economy, which would lead to voter disenchantment with President Bush in November. I am not convinced of the economic viability of that theory, but Mr. Lasky's views on the Saudi Royal Family's view toward President Bush appear to be on target.
Posted by Tom at 8:17 AM
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Professor Volokh on the basis of one's political position
The always insightful UCLA Law Professor Eugene Volokh has an interesting post on his blog in which he addresses the fallacy of the common argument in political debates that "we don't like the other side attempting to impose their beliefs on us." Professor Volokh points out:
. . . as it happens, many laws -- civil rights laws, for instance -- were motivated by religious opinions (it's the Reverend Martin Luther King, Jr., you might recall). But more importantly, all of our opinions are ultimately based on unproven and unprovable moral premises. For some of us, the moral premises are secular; for others, they're religious; I don't see why the former are somehow more acceptable than the latter. And the slogan "separation of church and state" hardly resolves anything here: Churches may have no legal role in our government, but religious believers are just as entitled to vote their views into law as are atheists or agnostics.
Of course, it's perfectly sound to disagree with people's views on the merits: If I don't agree with the substance of someone's proposal, whether it's religious or secular, I'll certainly criticize the substance. And naturally people will often find others' religious arguments unpersuasive -- "ban this because God said so" isn't going to persuade someone who doesn't believe in God, or who has a different view of God's will. (Likewise, many devout Christians may find unpersuasive arguments that completely fail to engage devout Christians' religious beliefs.) But there's nothing at all illegitimate about people making up their own minds about which laws to enact based on their own unprovable religious moral beliefs, or on their own unprovable secular moral beliefs.
Meanwhile, this Logos blog post points to a couple of interesting op-eds on the gay marriage debate, and includes the following passage on marriage and divorce from the late great Christian writer, C.S. Lewis, which includes a great observation from Mr. Lewis' "Mere Christianity" regarding his well-known affection for wine:
Before leaving the question of divorce, I should like to distinguish two things which are very often confused. The Christian conception of marriage is one; the other is the quite different question -- how far Christians, if they are voters or members of Parliament, ought to try to force their views of marriage on the rest of the community by embodying them in the divorce laws. A great many people seem to think that if you are a Christian yourself you should try to make divorce difficult for everyone. I do not think that. At least I know I should be very angry if the Mohammedans tried to prevent the rest of us from drinking wine. My own view is that the Churches should frankly recognize that the majority of the British people are not Christians and, therefore, cannot be expected to live Christian lives. There ought to be two distinct kinds of marriage: one governed by the State with rules enforced on all citizens, the other governed by the Church with rules enforced by her on her own members. The distinction ought to be quite sharp, so that a man knows which couples are married in a Christian sense and which are not."
Posted by Tom at 7:51 AM
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So, Professor Dershowitz, you want to rumble?
As noted here, Harvard Law professor Alan Dershowitz earlier this week in a Wall Street Journal ($) op-ed slammed Martha Stewart's criminal defense team's handling of the case.
Today, in a letter to the WSJ, attorneys Michael F. Armstrong, Skadden, Arps, Slate, Meagher & Flom's Robert S. Bennett, and Ronald P. Fischetti lay the wood to Professor Dershowitz. They note:
Alan Dershowitz's attack upon Robert Morvillo, led counsel in the recent trial of Martha Stewart ("With Lawyers Like These . . . " editorial page, March 8) is both superficial and scurrilous.
Prof. Dershowitz, an academic who doesn't try cases, demonstrates his lack of trial experience in his criticisms of Mr. Morvillo. For example, he derides Morvillo for not "introducing testimony by dozens of others ? experts, eye witnesses, character witnesses -- who may have strengthened Ms. Stewart's case." He gives no indication as to the subjects upon which such experts might have opined, or the events such eyewitnesses might have observed. Nor does he mention the elementary fact that by calling character witnesses a defendant can open the trial to hearsay testimony about rumors and gossip, otherwise inadmissible, that could be far more harmful to Ms. Stewart than the testimony of friendly witnesses would be helpful.
Prof. Dershowitz also criticizes Mr. Morvillo for the fact that Ms. Stewart did not testify. But Prof. Dershowitz provides no basis by which one could conclude whether that decision was made by Mr. Morvillo or Ms. Stewart. No one, certainly not Prof. Dershowitz, can know what Mr. Morvillo's advice was on this matter, and Mr. Morvillo cannot respond to Prof. Dershowitz's charges without improperly revealing communications between himself and his client. Unfortunately, Prof. Dershowitz's modus operandi here -- attacking another lawyer knowing that he cannot defend himself without revealing privileged communications -- is the same tactic he has employed to garner press coverage for his Monday-morning quarterbacking in other high-profile cases.
Far worse than his posturing, however, is his unsupported and almost casual attack on Mr. Morvillo's ethics. He strongly suggests that Mr. Morvillo's trial tactics were motivated by his desire to protect the lawyers who originally represented Ms. Stewart and who chose to allow her to be interviewed by the government.
Prof. Dershowitz charges that these lawyers and Mr. Morvillo were part of an "old boy network of former New York prosecutors who sometimes refer cases to each other." On this alleged fact -- and this alone -- Prof. Dershowitz feels free to suggest that the decision not to have Ms. Stewart testify was motivated by Mr. Morvillo's desire to avoid "potential embarrassment" to his friends and that the decision "may" have been influenced by "considerations other than the interests of his client." This serious accusation, lacking as it does the slightest shred of supporting evidence, is reckless and irresponsible. Anyone who knows Mr. Morvillo knows his longstanding reputation for zealous devotion to his clients. To imply that he would rather see his client convicted than subject prior counsel to outside criticism is simply ludicrous. Moreover, Prof. Dershowitz's promise -- that the former lawyers would have been exposed by Ms. Stewart's taking the stand -- is erroneous. The lawyers had already figured heavily in the trial evidence and one of them actually testified.
Robert Morvillo has a reputation among fellow practitioners as a trial lawyer of great expertise who has always adhered to the highest ethical standards. Prof. Dershowitz has been frequently criticized for his conduct in cases. He would be well advised to stick to what he knows and resist the urge to view every guilty verdict in a high-profile case as just another opportunity for further self-aggrandizement at the expense of others.
Your serve, Professor Dershowitz.
Posted by Tom at 7:28 AM
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Shell under the microscope
In the wake of its earlier write down of oil and gas reserves and resulting management purge, Royal Dutch/Shell Group is the subject of NY Times and Wall Street Journal ($) articles today regarding the management failures that led to the overstatement of reserves. The WSJ article is the better of the two articles, and makes the following observation:
. . .the big forces that helped humble Shell are already clear. The oil giant has been plagued by what was once a source of strength: a quirky, loose corporate structure bestriding its twin bases in England and the Netherlands. And it erred in overrelying for growth on its traditional prowess for finding oil, as new discoveries have grown harder to eke out. The revision has also painted a starkly different picture of the company's recent performance, showing Shell lagging behind competitors in key performance measures instead of just keeping up. The company has replaced reserves at a much lower rate than originally thought, and its costs are significantly higher.And somewhat more ominously for Shell, the WSJ observes:
A number of mysteries remain unanswered. How did Shell misjudge its reserve so badly? Why didn't anybody catch the mistakes before now? Why didn't Sir Philip disclose them sooner? Did Shell actively try to hide the problem? The company's current top executives -- including Shell's chief financial officer and the man who replaced Sir Philip as chairman -- are under pressure to disclose what they knew about the reserve problems and when. Shell's board signaled in a statement Tuesday that it is standing by them. *** The SEC and Shell's internal investigators are looking into whether the company's bonus system provided financial incentives to employees to overstate reserves, according to people familiar with both probes. Shell has acknowledged shortfalls in its reserve oversight and auditing processes, and has restructured its auditing process.
Meanwhile, in this related article, the WSJ reports on the absurdly understaffed nature of the Securities and Exchange Commission's staff that reviews the oil and natural-gas reserves that publicly-owned oil companies claim in their regulatory filings. The entire job is left to just two staff petroleum engineers.
Posted by Tom at 6:56 AM
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March 11, 2004
Skilling scheduling conference and other Enron-related news
The scheduling conference was held today in former Enron CEO Jeff Skilling's criminal case, and it doesn't sound as if it went all that well for the Enron Task Force. Federal District Judge Sim Lake agreed with the Skilling defense team's position that the Enron Task Force's sledgehammer approach to indicting Mr. Skilling and other former Enron executives makes this an incredibly complicated and document intensive case, and the defense will begin to pick the Enron Task Force lawyers to death with pre-trial motions relating to document production and the particulars of the dozens of criminal counts against Mr. Skilling. Judge Lake was an experienced trial lawyer before taking the federal bench, and he is one of the best trial judges on the Houston federal bench, so he will have empathy for the defense position resulting from the Enron Task Force's approach to the case. Contrary to popular perception, the Skilling case will not be an easy one for the Enron Task Force, which does not have much of a trial record in Enron cases to date. I expect this to be a very entertaining case to follow. Stay tuned.
Meanwhile, in other Enron-related news, this Chronicle article reports on yet another Enron-related civil lawsuit. In this one, a trust created in the reorganization of LJM2, one of Andy Fastow's infamous "off-balance sheet" partnerships that Enron used to mask debt, is seeking a mere $75 million from former LJM2 investors (i.e., banks and brokerage houses that wanted to curry favor with Enron during its better days) wrongfully ignored a capital call from the partnership in 2002 after Enron went into the tank in late 2001. The trust has sued 55 investors, including a Citigroup unit and Weyerhaeuser's pension fund.
At some point, I fully expect some enterprising financial institution to promote an ad campaign based on the fact that they are one of the few institutions in the United States that has not been sued in an Enron-related lawsuit. That is, if there are any left!
Posted by Tom at 5:42 PM
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The bizarre tale of C. Tom Zaratti
One of the recent stories from the soft underbelly of the Houston criminal scene has been the one about C. Tom Zaratti, a long-time fringe player in the Houston criminal defense bar. This Houston Press piece reports on the surprise that confronted Mr. Zaratti's ex-wife this past holiday season when she found Mr. Zaratti after he failed to show up to pick up his son for visitation.
Posted by Tom at 8:34 AM
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LA Times on Joe Barton
This LA Times piece profiles Texas Republican congressman Joe Barton the new chairman of the House Energy and Commerce Committee. Two of the revelations from the article -- Rep. Barton is not a "Hollywood-type guy" and he enjoys playing poker.
Posted by Tom at 8:08 AM
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UN oil for food scandal
Today's Wall Street Journal ($) contains this devastating op-ed by Therese Raphael about the corrupt United Nations' "Oil for Food" program that Saddam Hussein and his henchmen used to line their pockets during the final years of Iraq's fascist regime. The entire article is well worth reading, and concludes as follows:
There is no doubt that the U.N. relief effort in Iraq has been a global scandal. A monstrous dictator was able to turn the Oil-for-Food Program into a cash cow for himself and his inner circle, leaving Iraqis further deprived as he bought influence abroad and acquired the arms and munitions that coalition forces discovered when they invaded Iraq last spring.
A U.N. culture of unaccountability is certainly also to blame. And Security Council members share responsibility for lax oversight, no doubt one reason there is so little appetite for an investigation.
But Saddam's ability to reap billions for himself, his cronies and those who proved useful to him abroad depended on individuals who were his counterparties. These deserve a full investigation if the U.N.'s credibility is to be restored and its role in Iraq and elsewhere trusted. Especially now, with the U.N. taking a more active role in Iraq, it's time we knew more about how the Oil-For-Food scandal was allowed to happen.
Posted by Tom at 7:50 AM
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Perhaps they should approach John Daly with an endorsement deal?
The bankruptcy lawyers are already lining up for this rather odd enterprise.
Posted by Tom at 7:08 AM
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Houston attorneys probed in union kickback scheme
In connection with entering the guilty plea of a United Transportation Union officer in a criminal case involving alleged kickbacks, an assistant U.S. Attorney informed federal District Judge Sim Lake yesterday that the U.S. Attorney's office is currently investigating several unnamed Houston attorneys in connection with its probe of the union. The UTU website lists four designated counsel from the Houston area. It is unknown whether any of the four are targets of the investigation referred to above.
Posted by Tom at 7:00 AM
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El Paso preparing to restate earnings
In light of this earlier disclosure, this announcement by El Paso Corporation yesterday is no surprise.
Posted by Tom at 6:41 AM
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Watkins out as A&M basketball coach
Melvin Watkins announced his resignation yesterday as Texas A&M University's men's basketball coach. In six seasons at A&M, Mr. Watkins did not post a winning record, going 60-111. The Aggies lost 20 or more games four times in the last five seasons.
Mr. Watkins -- as with recently reassigned University of Houston basketball coach, Ray McCallum -- is one of the nicest men in the coaching profession. The lack of success that both Messrs. Watkins and McCallum experienced at their respective schools is further evidence that the age-old saying "nice guys finish last" applies to big-time college basketball. While Coach McCallum's failure at UH was attributable to his inability to recruit effective front court players, Coach Watkins was never able to establish the recruiting pipelines in Texas generally and in the Houston metropolitan area particularly that are necessary for success at A&M. The basketball program at A&M has now been in the tank for almost two decades -- it's most recent NCAA Basketball Tournament appearance was in 1987.
Posted by Tom at 6:32 AM
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March 10, 2004
Chevron-Texaco and Harris County continue to play hard ball
As this prior postreported, Chevron-Texaco is balking at closing its purchase of the former Enron building in downtown Houston because Harris County Commissioners have not approved a tax abatement in favor of Chevron-Texaco. This Houston Chronicle article reports that Chevron-Texaco has put off the closing until after the Commissioners consider the tax abatement.
Posted by Tom at 8:04 PM
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On Drunk Driving
Copy and paste the following URL into your media player
and then get ready to see the most gut wrenching commercial that you will ever see regarding the horrors of drunk driving. This site contains more information about the young woman who is the subject of the commercial.
Posted by Tom at 9:11 AM
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More on the Muslim World's Holy War
Following this post here from last week, Daniel Drezner has an excellent blog discussion contending that last week's attacks on Shiite Muslims reflect that Islamic fascists are becoming more desperate and less powerful.
Posted by Tom at 8:44 AM
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Energy price rise not having usual effect on national economy
The price of West Texas crude oil has climbed $10 in the last six months to its current level of $36.28, its highest level since the eve of the Iraq war. Meanwhile, the economy is expanding at a 4.1 percent annual rate, weathering the rise in oil and gas costs without the inflation and economic stagnation that occurred in much of the national economy after energy price spikes in the late 1970's and early 1980's. This NY Times article addresses the reasons for this reversal in the normal countercyclical effect that high energy prices have on the rest of the national economy, and the point at which even higher energy prices would likely slow the economy's expansion.
Posted by Tom at 7:56 AM
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$26 grand for kindergarten?
Posted by Tom at 7:36 AM
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NY Times on Lakewood Church - Compaq Center deal
This NY Times article describes Lakewood Church's long term lease on the City of Houston's Compaq Center, formerly the home of the NBA Houston Rockets, who have now moved to a new downtown arena, the Toyota Center.
Lakewood's acquisition of the lease on Compaq Center was not easy. Immediately after the deal was announced, Fort Worth-based Crescent Real Estate Equities Company, the owner of Greenway Plaza, the five-million-square-foot high-end office complex that surrounds the arena, threw ecclesiastic concerns aside and sued Lakewood, contending that its proposed lease on the Compaq Center would violate deed restrictions on the arena. Of course, the new office building that Crescent wanted to build on the Compaq Center site did not violate those same deed restrictions. At any rate, the suit was settled last year, after the city agreed to overpay and buy 5.5 acres of land from Crescent in front of the City's George R. Brown Convention Center for $33 million.
Posted by Tom at 6:46 AM
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March 9, 2004
Dick Cheney, Comedian
The Daily Standard has the highlights of Vice President Dick Cheney's remarks at Saturday night's annual Gridiron dinner in Washington. The ending of Vice-President Cheney's remarks are absolutely appropriate and his other comments are clever, such as this one:
"Lots of familiar faces here tonight. I always feel a genuine bond whenever I see Senator Clinton. She's the only person who's the center of more conspiracy theories than I am."
Posted by Tom at 2:59 PM
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But we have nice weather and good golf courses
Texas cities' Chambers of Commerce are not wild about this report.
Posted by Tom at 1:55 PM
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Obesity becoming major public health issue
This Rand Corporation study concludes that many of the improvements in health that medical advances have bestowed upon middle-aged and older Americans will likely be effectively erased over the next 20 years if Americans' weight continues to increase.
The proportion of health care expenditures associated with treating the consequences of obesity would increase from 14 percent in 2000 to 21 percent in 2020 for 50-69 year-old men, and from 13 percent to 20 percent for women in the same age group, according to the study to be published in the March/April edition of Health Affairs ($).
Absent changes in health behavior or medical technology and assuming obesity trends continue through 2020, the study predicts that the proportion of people 50-69 with disabilities (those who are limited in their ability to care for themselves or perform other routine tasks) will increase by 18 percent for men and by 22 percent for women between 2000 and 2020.
These statistics -- coupled with America's broken health care finance system and accelerating Medicare costs -- indicate that health care in America is headed for a day of reckoning soon. In my view, one of the Bush Administration's biggest political problems in the upcoming election is the perception of many Americans that the administration ignores major domestic issues such as these.
Posted by Tom at 1:38 PM
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VDH's finally has a website
As readers of this blog know, Victor Davis Hanson is one of my favorite commentators on America's position in the world and its war against Islamic fascists. Dr. Hanson finally has his own website. I suspect that this site will go on more than a few favorite lists over the several days.
Posted by Tom at 1:09 PM
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Arnie, about that embedded ball 46 years ago . . .
Former Tour player and longtime CBS golf color commentator Ken Venturi has written a book -- "Getting Up and Down: My 60 Years in Golf" (Triumph Books, April 2004) about his life in professional golf. Golf Magazine recently ran an excerpt from the book in which Venturi recalled how Arnold Palmer broke a rule on the historic 12th hole of Augusta National on his way to beating Venturi to win his first Masters Golf Tournament in 1958. Not surprisingly, that was interpreted by some in the golf community as Venturi saying that Palmer had cheated on his way to winning the Masters.
This NY Times article today has Venturi falling over himself publicly apologizing for what he termed a "misunderstanding" over his observation regarding Arnie's rule-bending. "Arnold played a second ball incorrectly," Venturi said in the statement. "This was due in part to Arnold not understanding the rule, which stipulates a player must declare playing a second ball prior to the playing of the original ball. This does not make Arnold Palmer a cheat."
With his second ball, Palmer saved a par-3 that the Masters rules committee upheld on appeal, in contrast to the double-bogey five that he would have had with his embedded ball. Those two strokes turned out to be the difference in Palmer's winning his first of seven major titles (and first of four Masters).
Note to Venturi -- Don't bash the King.
Posted by Tom at 8:01 AM
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This is definitely not a Rose Garden
Following this earlier post on the bankruptcy of the entity that owns the Rose Garden, Portland, Oregon's NBA basketball arena, this Oregonian article provides further background on the financial difficulties of the arena. Interestingly, a substantial drop off in attendance to Portland Trailblazer games is cited as the primary cause of the arena's financial problems.
Posted by Tom at 7:28 AM
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Bush v. Nixon pre-election spending
Daniel Drezner points us to a clever Foreign Policy article by Kenneth Rogoff, former IMF chief economist and professor of economics and Thomas D. Cabot professor of public policy at Harvard University in which Professor Rogoff compares the pre-election macroeconomic policies of President Bush against those of former President Richard Nixon and other world leaders. The entire article is a must read, but here is an excerpt to give you a flavor of the article:
Does all this election-year economic engineering pay? In the short run, yes, because voters sure like a booming economy and a free-spending government at election time. They don?t seem to question why anyone should reward a politician for artificially boosting an economy before elections, even if doing so produces serious long-term problems. Perhaps, like moviegoers who expect to be emotionally manipulated, voters just enjoy an election-year high.
Of course, U.S. presidents are hardly the only or the best practitioners of electoral economics. Mexico, for example, boasts a history of political business cycles that make the United States look fiscally Puritan. Mexican Presidents Jos� L�pez Portillo in 1982 and Carlos Salinas de Gortari in 1994 set benchmarks that few have surpassed. Former Russian President Boris Yeltsin gave away the country?s natural resource base (under the guise of ?privatization?) to ensure his reelection in 1996, a problem the country is still painfully sorting through today. In Italy, every prime minister seems to produce a fiscal splurge come election time?and Italy has a lot of elections. But then, a country does not achieve one of the world?s highest debt-to-GDP ratios (more than 100 percent) without effort.
Posted by Tom at 7:09 AM
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Pfizer's Lipitor pummels Bristol-Myers' Pravachol in study
Both the NY Times and the Wall Street Journal ($) have extensive articles about the results of a Bristol-Myers Squibb sponsored study that compared high doses of Pfizer's most powerful cholesterol-lowering drugs, Lipitor, with Bristol-Myers Squibb's less potent drug, Pravachol. Both drugs are statins, a class of medications that block a cholesterol-synthesizing enzyme and are often prescribed for patients with heart problems.
Much to Bristol-Myers' dismay, the study concluded that the patients taking Lipitor were significantly less likely to have heart attacks or to require bypass surgery or angioplasty than those taking Pravachol. The study is spurring discussion among cardiologists and the medical community that lowering cholesterol far beyond the levels that most doctors currently recommend can substantially reduce heart patients' risk of suffering or dying of a heart attack. This could greatly change how doctors treat patients with heart disease and will likely result in re-evaluation of how low cholesterol levels should be even for people without heart problems.
Posted by Tom at 6:33 AM
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Remember to vote!
Today is the Texas Primary election, so remember to vote. Here is the prior post in which I provide my recommendations in the Republican primary judicial races.
Posted by Tom at 6:10 AM
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Tom Hicks leaving Hicks, Muse
Thomas O. Hicks, chairman and CEO of Dallas-based private equity firm Hicks, Muse, Tate & Furst, announced Monday that he would retire a year from now to focus on his personal investments. Hicks, Muse & Furst is still attempting to recover from big losses that it suffered from investments in telecommunications and Internet companies. Mr. Hicks is majority owner of the Dallas Stars NHL hockey club and the Texas Rangers MLB baseball club, both of which have their share of financial problems at this point.
Posted by Tom at 5:16 AM
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Waste Management names new CEO reshuffles top management
Houston-based Waste Management named David P. Steiner to succeed A. Maurice Myers as chief executive officer. Mr. Myers will remain as chairman until November, when he will retire. Upon Mr. Myers' retirement, board Director John Pope, a former president and chief operating officer of UAL Corp.'s United Airlines, will become the company's nonexecutive chairman.
The company also named Lawrence O'Donnell III as president and chief operating officer. Previously, O'Donnell was executive vice president, operations support, and the chief administrative officer. Robert G. Simpson, formerly senior vice president and chief accounting officer, replaced Mr. Steiner as finance chief.
Mr. Myers was responsible for stabilizing Waste Management's business after a 1998 accounting scandal rocked the company and foreshadowed similar scandals at Enron, WorldCom, and other companies. The 1998 scandal resulted in Waste Management declaring a $1.2 billion charge against earnings, removal of the company's top executives, a Securities and Exchange Commission review, and dozens of shareholder lawsuits.
Posted by Tom at 5:00 AM
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Reliant subsidiary and employees target of probable indictment
Houston-based Reliant Resources announced late Monday that federal prosecutors in San Francisco have informed the company that its trading unit subsidiary -- Reliant Energy Services -- and four former and current employees are targets of an impending grand jury indictment stemming allegations that Reliant Energy Services engaged in price manipulation on two days in June 2000 by curtailing power plant generation in California. In January 2003, Reliant Resources reached a settlement with the Federal Energy Regulatory Commission regarding the same matter that is the subject of the expected indictment in which Reliant Resources agreed to pay $13.8 million without admitting or denying that the actions in question affected electricity prices in any market or violated any law or regulation.
Posted by Tom at 4:43 AM
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March 8, 2004
Houston Coach McCallum reassigned
One of the nicest men in the coaching profession -- Ray McCallum -- was reassigned earlier today from his duties as head basketball coach at the University of Houston. With three years remaining on his contract at about $350,000 per year, McCallum was reassigned to a new UH position as a fund-raiser in the development office. His teams were 34-73 overall, 24-40 in Conference USA.
Houston's once vaunted basketball program has become a coaches graveyard since legendary former Coach Guy V. Lewis resigned in 1986. Since Guy V., Houston has had four coaches and only one has left the program with a winning record. Coach McCallum's downfall was his inability to recruit effective post players, a necessity in the hard-knuckled Conference USA.
Posted by Tom at 7:56 PM
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Dierker back in the booth
The Houston Astros have announced that they are currently finalizing a deal with former Astros player, broadcast color man and manager Larry Dierker that will put Dierker back in the broadcast booth during the 2004 season. The Astros have arranged to have Dierker team with television play-by-play announcer Bill Brown to broadcast the Astros' 12 Wednesday home games on Fox Sports Net. Dierker pitched for the Astros from 1964-1976, was their color man on radio for 18 years when his playing career concluded, and then left that job to become the Astros' manager from 1997-2001.
Dierker is a marvelous talent in the broadcast booth -- bright, insightful, and engaging. After managing the Astros, he wrote this book about his baseball experiences. With his addition, the Astros now have two of the best color men working their televised games in Major League Baseball today. Jim Deshaies, another former Astros' pitcher, is the Astros' regular color man and is also outstanding. These two men make listening to play-by-play on Astros' televised games a highly enjoyable experience.
Posted by Tom at 2:42 PM
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Philip Jenkins on Gay Marriage
Dr. Philip Jenkins is a prolific author and an outstanding professor of history religious studies at Penn State University. Dr. Jenkins' 2002 book, "Hidden Gospels: How the Search for Jesus Lost Its Way", convincingly debunks the claims that recently discovered texts such as the Gospel of Thomas, the Gospel of Mary, and the Dead Sea Scrolls undermine the historical validity of the New Testament.
In this Dallas Morning News op-ed, Professor Jenkins addresses one of the many legal issues that must be addressed in connection with the societal drift toward gay marriage -- i.e., the age of consent. Interesting reading from a compelling thinker.
Posted by Tom at 7:24 AM
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Grounds for Martha's appeal
According to this Washington Post article, Martha Stewart's appeal is likely to challenge the trial court's exclusion of expert evidence that her stock trade wasn't illegal. It appears that the trial judge's the ruling excluding the expert evidence was based on the finding that the technical legality of the trade was not relevant to the question of whether Ms. Stewart had a motive to obstruct investigations into the trade. Presumably, the judge would have allowed Ms. Stewart to testify as to her belief as to the legality of the trade, which would have been relevant on the motive issue. Alas, as we all know, Ms. Stewart elected not to testify during the trial. Nevertheless, the excluded expert testimony represented one of the only ways through which the defense could present its case on the legality of the trade issue without waiving Ms. Stewart's right not to testify.
Meanwhile, Harvard Law Professor Alan Dershowitz excoriates the Stewart defense team's decision not to allow Ms. Stewart to testify in this Wall Street Journal ($) op-ed, which includes the following speculation:
One of the most intriguing aspects of the entire Stewart case was never addressed by either side: namely, that virtually every action for which Ms. Stewart was convicted took place after she had consulted with highly experienced and expensive lawyers. As legal ethics expert Stephen Gillers wrote before the trial in The American Lawyer, "defendants ordinarily retain lawyers after they commit their alleged crimes. In contrast, all the crimes charged against Stewart were allegedly committed while she was receiving the advice of excellent defense lawyers at Wachtell, Lipton, Rosen & Katz -- one of the nation's best law firms. Three times, in fact, the indictment's chronology refers gratuitously to Stewart's lawyers [though not by name]."
The job of these lawyers was to keep their client out of any further legal difficulties. In doing this job, no lawyer should ever accept a client's initial account, especially if it is not corroborated by hard evidence. As Mr. Gillers correctly observed, every lawyer knows that "many clients lie even when they have nothing to hide." Even if the lawyer believes his client is being truthful, he should not allow the client to relate an uncorroborated account to law enforcement officials, unless the lawyer is absolutely certain that the account will not be subject to challenge by the government. (One would think that every lawyer would have learned that painful lesson from Bill Clinton's lawyer, Robert Bennett, who allowed the president to be deposed about his sex life without corroborating his highly questionable account.) Yet Ms. Stewart's original lawyers allowed her to make the statements to law enforcement officials that formed the basis of her convictions. It was these lawyers who then recommended her trial lawyer, Mr. Morvillo. ("We decided to add him to our team.") According to several lawyers familiar with New York practice, Mr. Morvillo and Ms. Stewart's original lawyers are part of the same "old boy" network of former New York prosecutors who sometimes refer cases to each other. It was Mr. Morvillo who made the decision not to put on any case.
If the Stewart defense team had put on a more complete case, with or without her testimony, the entire story would have become a matter of public focus, to the potential embarrassment of her original lawyers. Whether this factor entered into Mr. Morvillo's decision not to put on a defense case will probably never be known. There were certainly other more traditional reasons for making that risky decision; but since it turned out to be the wrong one, legal and ethical experts will surely pick up on Mr. Gillers' perceptive observation by asking whether Mr. Morvillo's decision may have been influenced -- consciously or unconsciously -- by considerations other than the interests of his client, Martha Stewart.
Posted by Tom at 7:04 AM
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New Harris County Flood Control Maps
As this earlier post noted, the Harris County Flood Control District released its preliminary new flood plain maps for five Houston watersheds today. Here is the site at which you can check an address against this latest flood plain information. The new flood plain maps will have a major impact on real estate development decisions and on plotting better ways to protect Houston from catastrophic flooding similar to what occurred in 2001 during Tropical Storm Allison. Within the so-called 100-year flood plain -- the area with a theoretical risk of flooding once every 100 years -- flood insurance is mandatory and the City of Houston imposes development requirements such as elevating buildings or digging detention ponds. These measures can substantially increase the cost of development. The information released today is a draft version of the Federal Emergency Management Agency's Digital Flood Insurance Rate Maps, which are expected to be released in late spring. An appeals process will follow over the next several months before those maps become final.
Posted by Tom at 6:28 AM
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March 7, 2004
Southwest Airlines facing low-cost competition
This NY Times article describes the increased competition that Dallas-based Southwest Airlines is facing from other low-cost airlines and the steps that Southwest is contemplating to combat that competition.
A word to wise investors in airline stocks: Don't bet against Southwest.
Posted by Tom at 8:37 PM
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Interesting political analysis of Bush and Kerry
Dr. Keith Poole is a bright political science professor at the University of Houston. Daniel Drezner points us today to this Chicago Tribune article by Assistant Professor Jeffrey A. Jenkins of Northwestern University that concludes, based upon this methodology developed by Dr. Poole, that President Bush and Senator Kerry are both more moderate than their respective opponents represent. Professor Jenkins notes:
As it turns out, Bush is positioned near the dividing line between the center-right and right quartiles of the party. So, while clearly right of center, he is not part of the most conservative segment of the party, anchored historically by the likes of Sens. Phil Gramm and Jesse Helms. He is considerably more conservative than Dwight Eisenhower and Gerald Ford, somewhat more conservative than Richard Nixon, slightly more conservative than his father, George H.W. Bush, but less conservative than Reagan.
What about Kerry, the would-be president? Should he become president, what should we expect? How does this left-leaning moderate compare to other recent Democratic presidents? In fact, only Lyndon Johnson appears more conservative than Kerry; Jimmy Carter and Bill Clinton appear slightly more liberal; and John F. Kennedy, to whom Kerry is often compared, appears considerably more liberal than the Massachusetts senator trying to follow in his footsteps.
Posted by Tom at 2:49 PM
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7th Circuit reverses district court on exclusion of expert testimony
Since The Daubert trilogy of Untied States Supreme Court decisions -? Daubert, Joiner, and Kumho Tire, codified in Federal Rule of Evidence 702 -- established new rules for the admissibility of expert witness evidence in federal court, appellate decisions have been rare that overrule a federal district court's exclusion of expert witness testimony on Daubert grounds. However, in this decision emanating from an appeal in a legal malpractice case, the Seventh Circuit Court of Appeals has reversed the district court's Daubert-based exclusion of testimony from a civil engineering and human factors expert who contended that Cook County failed to maintain a road appropriately and that such failure caused the accident at issue in the litigation underlying the malpractice case. Although the Seventh Circuit remanded the Daubert issue for the district court to resolve, the Court criticized the district court's failure to explain how it applied the Daubert factors to exclude the expert's testimony and strongly intimated that the testimony was well-defended and should be admissible.
Posted by Tom at 8:36 AM
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Warren Buffett's letter to shareholders
Here is the link. Here a few pearls of Buffet wisdom from the letter:
Mr. Buffett, the chairman of Berkshire Hathaway Inc., said he was finding it difficult to identify undervalued investments to add to Berkshire's portfolio. Mr. Buffett suggested both stocks and bonds are overvalued, and he expressed regret about not dumping some of his holdings several years ago when the market peaked. "I made a big mistake not selling several of our large holdings during The Great Bubble."
"Overall, we are certain Berkshire's performance in the future will fall far short of what it has been in the past," wrote Mr. Buffett. "Nonetheless, [Vice Chairman Charlie Munger] and I remain hopeful that we can deliver results that are modestly above average."
Mr. Buffett criticized both excessive pay packages for corporate executives and compensation committees for not paying enough attention to the interests of shareholders. According to Mr. Buffett, directors of public companies and mutual funds need to have their interests aligned with rank-and-file shareholders "in a big way." He pointed out that all 11 directors at Berkshire are required to hold substantial amounts of the company's stock to keep their own financial interests consistent with with those of shareholders. Each of the directors purchased their stock in the open market because Mr. Buffett does not allow Berkshire to grant stock options or any other incentive-based compensation.
"The bottom line for our directors: You win, they win big; you lose, they lose big. We know of no better way to engender true independence," Mr. Buffett observed. However, Mr. Buffett admitted that the Berkshire approach does not always work, even conceding that he has sat on boards of companies in which Berkshire had invested and has "remained silent as questionable proposals were rubber-stamped" by the boards.
Finally, Mr. Buffett used his letter to accuse the Bush administration of pursuing tax cuts that favor large corporations and wealthy individuals. "If class warfare is being waged in America, my class is clearly winning,'' he observed. Mr. Buffett also pointed out that too few corporations and corporate executives were paying close to the 35% federal tax rate they should be. Aside from 1983, Mr. Buffett observed that the percentage of federal receipts from corporate income taxes last year was the lowest since data was first published in 1934. Mr. Buffett went on to contend that Berkshire pays its taxes and is almost certainly among the country's top 10 taxpayers, paying $3.3 billion in 2003 income taxes, 2.5% of the total 2003 U.S. corporate income tax.
Posted by Tom at 7:46 AM
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March 6, 2004
Portland Arena is in the tank
An old joke among insolvency lawyers is that hotels are such a bad investment that no owner makes any money on it until at least three prior owners have gone bust. This Portland Tribune article indicates that basketball arenas may have the same problem.
Posted by Tom at 9:33 AM
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Jenkens & Gilchrist settles class action over failed tax shelters
Dallas-based Jenkens & Gilchrist reached a $75 million settlement yesterday with investors who had filed lawsuits accusing it of designing and selling questionable tax shelters. As noted earlier here, the firm and its clients remain subject to a Justice Department investigation into alleged fraud involved in the promotion of the tax shelters.
Posted by Tom at 9:14 AM
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The Muslim World's Holy War
Some 140 Iranian and Iraqi Shiite pilgrims died earlier this week in suicide bombings in Baghdad and Karbala, and another 43 Pakistani Shiites were killed in Quetta, Pakistan. Moreover, yesterday, Shiite Muslims in Iraq refused to sign the U.S. sponsored Iraqi Constitution unless changes are made to strengthen Shiite power. These developments highlight a grave problem that confronts American foreign policy -- i.e., the conflict between Shiite Muslims and Sunni Muslims in Iraq threatens a religious war throughout Muslim regions of the Middle East and Asia. In this David Warren piece and in this Vali Nasr piece, Mr. Warren and Professor Nasr examine Wahhabi Sunni Muslim antipathy toward Shiite Muslims, and the growth of the conflict between those two factions of Islam over the past decade. These are excellent analyses of this primary barrier to stability in Islamic countries.
Posted by Tom at 8:32 AM
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Martha's defense strategy
As noted earlier here, the decision of Martha Stewart's defense team not to have Ms. Stewart testify was a risky one. This NY Times story confirms the downside of such a strategy, reflected best by this quote from one of the jurors:
One juror called the decision to not put the defendants on the stand "a serious mistake." "How could we tell anything about how smart either of them was if they never took the stand?" asked Amos Matthew Mellinger, 55, a freelance market researcher from Riverdale, the Bronx, who was Juror No. 4 in the trial.Similarly, this Reuters article refers to another juror's remarks:
Chappelle Hartridge, 47, a computer technician from New York's Bronx borough, said he and fellow jurors saw the domestic style-setter, who built a fortune on homemaking advice and interior decor, as a corporate bigwig. "Maybe she thought she was above everything and didn't have to do things other people have to do," he said.
Again, particularly in white collar criminal cases, jurors want to hear from the defendant. Accordingly, exercise the right not to testify with great care.
Posted by Tom at 8:13 AM
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March 5, 2004
Tony Blair's Speech
Tony Blair is the clearest communicator on the international political stage right now. This is his most recent speech defending the Iraq War.
Posted by Tom at 4:49 PM
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Victor Davis Hanson's latest
Victor Davis Hanson's weekly column takes a look at the big picture and calls for steady leadership in the face of change. Mr. Hanson will also be the guest on Book TV's March 7 In Depth program.
Posted by Tom at 4:42 PM
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Nuclear deal-making
Seymour Hersh has written an article in the most recent New Yorker entitled "Why is Washington going easy on Pakistan's nuclear black marketers?" According to Mr. Hersh, the answer is that the U.S. agreed to let Pakistani President Musharraf pardon a known dealer in nuclear-weapons materials so that President Musharraf would allow the U.S. to operate in a region of Pakistan that would facilitate the capture of Osama bin Laden. As usual with Mr. Hersh's work, fascinating reading.
Posted by Tom at 4:11 PM
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Jury finds Martha guilty
Martha Stewart was convicted today of conspiracy, obstruction of justice and making false statements in connection with the sale of her shares of ImClone Systems in 2001. The jury in Manhatten Federal District Court also found Ms. Stewart's stockbroker and co-defendant, Peter E. Bacanovic, guilty of the same charges and an additional charge of perjury.
Turns out that I was wrong in my prediction that Martha would be acquitted, although the decision to have Martha not testify was a risky move. However, as Professor Stephen Bainbridge explains here, this prosecution of Ms. Stewart was a stretch from the beginning. Indeed, if sound prosecutorial discretion had been used, the prosecution would never had been pursued. Unfortunately, Ms. Stewart's celebrity status worked against her in that regard.
Over the past several weeks, I have had many discussions with friends regarding my position that the Stewart prosecution is wrong. "Why shouldn't she be prosecuted," my friends observe. "She is a liar, she apparently is abusive to her employees, and she probably did something illegal. Why do you support her?"
In explaining my position, I have pointed my friends to an insightful scene from the wonderful 1966 movie, "A Man For All Seasons." In a scene from that great film, one of Sir Thomas More's apprentices -- Richard Rich -- confronts Sir Thomas while Sir Thomas is conversing with his wife, daughter, and his daughter's fiancee, Will Roper (an aspiring lawyer). Rich begs Sir Thomas for a political appointment, which Sir Thomas proceeds to refuse because he knows that Rich is prone toward corruption and would never be able to resist the bribes that he would be tempted to take in such an appointment (Sir Thomas thought Rich should be a teacher). After an embittered Rich leaves Sir Thomas and his family to take a political job with Thomas Cromwell, who has been ordered by King Henry to pressure Sir Thomas to take the King's oath forsaking Catholicism and the Pope, it is obvious to everyone that the resentful Rich will ultimately betray Sir Thomas, which indeed he does later in the story. That leads to the following dialogue:
Lady Alice (Sir Thomas' Wife): "Arrest him!"
Sir Thomas: "For what?"
Lady Alice: "He's dangerous!"
Roper: "For all we know he's a spy!"
Daughter Margaret: "Father, that man is bad!"
Sir Thomas: "There's no law against that!"
Roper: "But there is, God's law!"
Sir Thomas: "Then let God arrest him!"
Lady Alice: "While you talk he's gone!"
Sir Thomas: "And go he should, if he were the Devil himself, until he broke the law!"
Roper: "So, now you give the Devil the benefit of law!"
Sir Thomas: "Yes! What would you do? Cut a great road through the law to get after the Devil?"
Roper: "Why, yes! I'd cut down every law in England to do that!"
Sir Thomas: "Oh? And when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down--and you're just the man to do it, Roper!--do you really think you could stand upright in the winds that would blow then?"
"Yes," Sir Thomas concludes: "I'd give the Devil the benefit of law, for my own safety's sake!"
But for Martha Stewart's celebrity status, this case would not have been brought against her. That she is a celebrity should not have prompted the prosecution. I am hopeful that this conviction is reversed on appeal, not only for Martha's benefit, but for ours.
Posted by Tom at 3:36 PM
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Warren Buffet's annual letter to Berkshire investors
Tomorrow at around 10 a.m., Warren Buffett will publish his anxiously awaited annual letter to Berkshire Hathaway investors. This Wall Street Journal ($) article provides interesting background into the development of this annual event that literally can move markets, comments on Mr. Buffett's investment moves over the past year, and reveals Mr. Buffett's often pithy observations on the economy and the state of American capitalism, such as the following:
He looks for memorable phrases. In one annual letter, he complained that any director's questioning of lavish options awards to CEOs was tantamount to "belching at the dinner table." He moaned that misleading tax treatments have resulted in an "Alice in Wonderland outcome." Last year, before New York Attorney General Eliot Spitzer launched a probe of the mutual-fund industry, Mr. Buffett wrote: "A monkey will type out a Shakespeare play before an 'independent' mutual-fund director will suggest that his fund look at other managers." He called derivatives "weapons of mass financial destruction," prompting a rebuttal from Federal Reserve Chairman Alan Greenspan.
Posted by Tom at 10:28 AM
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A Kerry endorsement?
This endorsement is one that the Kerry Campaign could do without.
Posted by Tom at 10:07 AM
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Let's rumble!
Criminal cases are notoriously hard fought, but this is taking it a bit too far.
Posted by Tom at 9:12 AM
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Interesting use of a website relating to medical malpractice defense
This NY Times article discusses a doctor-owned Texas company that has been operating a Web site, DoctorsKnow Us.com, that compiles and posts the names of plaintiffs, their lawyers and expert witnesses in malpractice lawsuits in Texas and beyond. The Times article attempts to place a political spin on the service indicating that the website provides information on cases regardless of the merit of the underlying claim. However, plaintiffs' lawyers in medical malpractice cases have used the Internet for years in coordinating cases and expert witnesses, and there is nothing wrong with the defense teams in such litigation attempting to use the Web for similar information sharing.
Posted by Tom at 8:56 AM
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If Ebbers Masterminded the Fraud, Why Didn't He Sell More Stock?
Floyd Norris is one of the most insightful business reporters for the NY Times. In this column today, Mr. Norris raises the issue that, if former WorldCom CEO Bernie Ebbers really masterminded an elaborate fraud at WorldCom, why didn't he sell his WorldCom stock before the stock price collapsed? Rather than getting out rich, Mr. Ebbers went from being a billionaire to being so deeply in debt that personal bankruptcy appears inevitable. He borrowed against his wealth, lived well, and overpaid on other investments. When WorldCom stock began to fall, margin calls forced him to sell one big slug of stock, but then he got WorldCom's incredibly compliant board to approve WorldCom's guarantee of his loans. Now, with most of his liquid assets sold, Mr. Ebbers still owes the company more than $300 million.
Interestingly, a very similar situation pertains to former Enron Chairman and CEO, Ken Lay, who was purchasing Enron stock up until the company filed its chapter 11 case in December 2001.
Posted by Tom at 8:45 AM
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Landry's atop San Antone
Houston-based Landry's Restaurants $9 million remodeling plan outdueled a 35-year incumbent and hometown favorite Thursday to win a 15-year concessions contract for restaurant atop the Tower of the Americas, the 750 foot tower near the Alamodome in San Antonio.
Posted by Tom at 8:16 AM
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Why politics is not for the fainthearted
In this Austin American Statesman story, Texas Governor Rick Perry responds to and denies salacious rumors that have been circulating over the Internet for the past month that his marriage is on the rocks because of alleged infidelity and that Mr. Perry is preparing to resign. Although a couple of fringe magazines had alluded to the rumors earlier, this is the first major news media acknowledgement of the rumors despite the fact that several blogs -- notably The Agonist and the Burnt Orange Report -- have been irresponsibly reporting the rumors as virtual fact for the past several weeks, prompting Texas Democratic Party Chairman Charles Soechting to refer to the rumors at a Feb. 24 political rally in Houston.
I am independent politically and vote for Republicans and Democrats candidates in virtually every election. However, the response of Mr. Soechting to Mr. Perry's announcement reinforces my belief that the Texas Democratic Party's leadership in Texas is sadly misguided. Here is Mr. Soechting's response:
"What crosses the line of everything decent is the utter hypocrisy of Rick Perry injecting his mean-spirited politics into everyone else's personal life while insisting his own personal life is off limits. What is truly indecent is the state of children's health care, public schools and insurance rates under Perry's regime," Mr. Soechting said in a statement issued by the Texas Democratic Party.
In other words, "so long as we disagree with the Governor's political stances, it's O.K. to spread salacious rumors about the Governor's personal life." With that kind of judgment behind its political decisions, it is little wonder that the Texas Democratic Party has become an afterthought in Texas politics.
In fact, if the Texas Democratic Party had any remaining political savvy whatsoever, it would immediately fire Mr. Soechting as chairman and denounce the rumor campaign against Governor Perry. With the paucity of statesmen that exist in either state or national politics, how can the political parties expect to attract the men and women with the potential to become statesmen when the parties encourage this type defamation of public figures?
One other observation is in order for the bloggers who have been circulating these rumors. Many of these blogs contain interesting information and provocative insights. However, they undermine their most important quality -- i.e., credibility -- when they engage in the type of rumor mill that they have engaged in with regard to Governor Perry. Once you have lost your credibility, you have lost your ability to persuade, which means that you are left to discuss matters only with people who agree with you. That is a tremendously limiting experience.
Posted by Tom at 7:48 AM
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Did Mayor White jump the gun?
On Feb. 25, Houston Mayor Bill White announced to much fanfare that ChevronTexaco had agreed to buy the former Enron building in downtown Houston. But this Chronicle story today indicates that the deal apparently has developed an unexpected hiccup: Mayor White's eagerness to make the announcement of the deal may have undermined ChevronTexaco's ability to receive millions in ad valorem property tax breaks from Harris County that it assumed that it would receive in deciding to buy office building. Ooops!
Posted by Tom at 6:48 AM
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More Enron Grand Jury news
This Chronicle article reports that former Enron treasurer Ben Glisan, the right hand man of former CFO Andrew Fastow and the only former Enron executive who is presently serving prison time, has been testifying before the Enron grand jury in Houston over the past several days. Speculation is rampant that the grand jury is preparing to indict former Enron Chairman and CEO, Ken Lay.
Posted by Tom at 6:36 AM
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March 4, 2004
Dell Steps down as CEO of Dell
Michael Dell, 40. announced that he will be stepping down later this year as CEO of Round Rock-based Dell, Inc. . Kevin Rollins, Mr. Dell's longtime partner in running Dell Inc., will take over as CEO of the computer company in mid-July while Mr. Dell will remain chairman of the board. This new arrangement is similar to the one that Microsoft Corp adopted in 2000, when Bill Gates became chairman and chief software architect and Steve Ballmer took over as CEO. Mr. Dell founded Dell in May 1984 when he was a 19-year-old just finishing his freshman year at the University of Texas at Austin. When the company went public four years later, Mr. Dell kept the titles of chairman and CEO.
Posted by Tom at 3:17 PM
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No Mens Rea?
This NY Times article floats the proposition that Barry Bonds and other alleged customers of accused steroid dispensing BALCO were unwitting consumers of steroids.
Meanwhile, this Reason Online piece addresses the issues in the medical community regarding steroid use.
Posted by Tom at 7:48 AM
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Justice accuses Jenkens & Gilchrist of participating in a fraud
The NY Times reports here today that the Dallas-based law firm Jenkens & Gilchrist is the subject of a Justice Department motion in federal court that seeks to require the firm to disclose the identities of its clients who were sold abusive tax shelters. The government is contending that Jenkens & Gilchrist participated in fraud and should not be allowed to hide the identities of its tax-shelter clients from the Internal Revenue Service. The so-called crime-fraud exception to attorney-client privilege is most often applied to lawyers who represent organized-crime families and drug rings suspected of racketeering, not to tax lawyers suspected of civil or criminal tax fraud. The I.R.S. issued 25 summonses for the names of Jenkens & Gilchrist clients and other information, the firm refused to comply with any of the summons, and now the Justice Department is seeking an order to enforce the summons.
Posted by Tom at 7:41 AM
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Eisner Overdrive
As one would expect, the LA Times and the NY Times are all over the Walt Disney Company Board's decision to remove Michael Eisner as chairman of Disney's board, although he will remain as CEO for the time being. However, as usual, the Wall Street Journal's ($) coverage of the developments here, here and here is far superior.
What is ironic about this development is that it was spurred by Comcast's lowball takeover bid for Disney, which Mr. Eisner properly opposes and which has not gone well for Comcast (its stock price is down 10% since the takeover bid was announced). The bottom line is that the Disney board's failure to develop a succession strategy for top management is coming back to haunt them at a critical time for Disney.
Posted by Tom at 7:26 AM
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Heart developments in the The Medical Center
The Texas Heart Institute and the DeBakey Heart Center in Houston's Texas Medical Center are two of the best cardiovascular surgical care facilities in the world. Yesterday, the Texas Heart Institute announced that the 12th and only living recipient of an experimental, self-contained mechanical heart called the AbioCor replacement heart underwent surgery to implant the device on Feb. 20 at its facility in Houston. The recipient of the AbioCor replacement heart is in critical but stable condition. This is the fifth patient to receive the device at Texas Heart Institute under the care of Dr. O.H. Frazier, chief of cardiopulmonary transplantation and director of surgical research at the Texas Heart Institute and chief of transplant services at St. Luke's Episcopal Hospital. The AbioCor clinical trial began in July 2001.
In this related Chronicle article, several of Houston's leading cardiologists discuss the merits of the increasingly popular "off-bump" heart bypass procedure in which the operation is done "off-pump" -- i.e., without circulating the blood of the patient through a heart-lung machine. While some Houston doctors believe that the benefits of minimizing a patient's recovery time are so great that they use the procedure almost exclusively, other surgeons are skeptical about the procedure's ability to reduce the risk of stroke and other side effects.
Posted by Tom at 6:51 AM
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March 3, 2004
Motion filed requesting that Garden Ridge Chapter 11 case be transferred to Houston
Here is a motion filed recently in the Garden Ridge Corporation chapter 11 case that requests the Delaware bankruptcy court to transfer the case to Houston bankrupty court. A hearing on the motion is scheduled for March 17th. Although worth a shot, the motion will probably fail for the reasons discussed in this prior post. Houston attorney Kirk Kennedy filed the motion on behalf of his clients, the Fazio Family. Prior posts about Houston-based Garden Ridge are here, here and here.
Posted by Tom at 1:59 PM
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Heads roll at Shell
In a surprise to no one in the oil and gas industry, Royal Dutch/Shell Group's Board fired the company's two top executives today in the wake of the company's embarrassing announcement in January that it had significantly overestimated its oil and gas reserves.
Posted by Tom at 1:24 PM
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Health care rationing
As anyone who has ever had to oversee administration of an employer's health insurance program knows, America's health care finance system is in crisis. For those interested in the issues involved in this crisis, the Wall Street Journal ($) has put together a special health care finance section that includes links to a series of stories involving the issue of rationing in America's health care system. The stories include: "Six Prescriptions to Ease Rationing"; "Universal Care Has a Big Price: Patients Wait"; "Longer Dialysis Raises Hopes, but Poses Dilemma"; "Stark Choices at a Texas Hospital"; "Lilly Fuels Debate Over Rationing"; "An Invisible Web of Gatekeepers"; "Health Care's Big Secret: Rationing Is Here." This is a great resource for reviewing the problems and issues confronting our health care finance system, and is worth the price of a WSJ subscription alone.
Along these lines, Jack over at TigerHawk posts this instructive blog entry regarding allocation of health care costs.
Posted by Tom at 8:54 AM
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DA investigating Premiere Holdings
The Harris County District Attorney's major fraud division announced in this story that it is conducting a criminal investigation into the demise of Houston-based Premiere Holdings of Texas, which promoted itself as a high-yield investment fund to prominent Houstonian investors but spiraled into bankuptcy over two years ago amid allegations of Ponzi scheme-type activity. One of the principal owners of Premiere is David Lapin, who is related to prominent Houston attorneys Jack Lapin (father) and Bobby Lapin (brother). Premiere promoted itself as a high-yield investment fund to mainly wealthy and conservative Houstonians. Indeed, Mike Richards, the former conservative talk show host on Houston conservative Christian radio station KSEV, used to promote Premiere as hot investment opportunity on his radio show. The Premiere case involves some of the best attorneys in Houston's business litigation bar, so the D.A.'s investigation into Premiere could generate some interesting sparks. Stay tuned.
Posted by Tom at 6:55 AM
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March 2, 2004
Primary races for state judgeships
Texas' system of judicial elections is not a good way to choose judges. For over 20 years, I have been supporting a new system for appointing judges in the Texas state courts similar to the appointment process that is used in the federal judicial system. That process has produced a superior federal judiciary.
Although a growing number of Texans agree that elections are not the best way to choose judges, the tendency in Texas politics is for the party in control of the statehouse to support the current system because most of the elected judges are from that party. Inasmuch as the Republicans are now solidly in control of Texas state government, the GOP state leaders are in no hurry to change a flawed system that nevertheless produces judges mainly from their party.
That is unfortunate. Virtually no Texas citizen knows all of the best candidates for the various judicial positions. For example, even though I have an active civil trial practice in both Harris and Montgomery Counties, I rely on the opinions of friends who practice criminal law to advise me regarding the best candidates for the criminal judgeships because I do not practice much in the criminal courts. Moreover, most lawyers are not trial lawyers, so even they have no experience on which to base an informed judgment about the best judicial candidates. Generally, lay people do not have the foggiest notion of who to select in Texas judicial races. Most folks simply look for a familiar name or two, sigh, and just make the best guess possible under the circumstances. Not exactly a sterling example of democracy at work.
As a result of the foregoing, family members, friends, and clients often ask me for my recommendation on the best candidates in the various state and county judicial races. Most of these races will be decided in the upcoming Republican Primary because of the paucity of Democratic Party candidates for these positions in the fall election. Accordingly, the following are my recommendations in the upcoming Republican Primary races:
Statewide: Supreme Court of Texas, Place 5: Paul Green.
Court of Criminal Appeals, Place 2: Guy James Gray.
Court of Criminal Appeals, Place 5:Patricia Noble.
Court of Criminal Appeals, Place 6:Michael E. Keasler.
Harris County
14th Court of Appeals: Eva Guzman.
281st District Court: David Bernal.
334th District Court: Reece Rondon.
Appointed incumbents running for election for the first time, both of these judges are young and smart, and both possessed solid experience in private practice before taking the bench. We are fortunate to have young lawyers of this caliber on the bench.
177th Criminal District Court:: Adam Brown.
228th Criminal District Court: Clint Greenwood.
Montgomery County
1st Court of Appeals: Charles Kreger
410th District Court: Michael Mayes
This race is a good example of the flawed Texas judicial election system. Judge Mayes is a first rate trial judge, puts cases to trial, and thus promotes prompt resolution of cases in his court. Texas needs to be supporting good lawyers who are willing to make the sacrifices necessary to be a judge, not requiring them to incur the cost of a re-election campaign.
Early voting is going on right now, so get out and cast your vote!
Posted by Tom at 7:16 PM
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WorldCom's Ebbers indicted, CFO Sullivan plea bargains
Bernie J. Ebbers, the former CEO and and co-founder of WorldCom Inc., was indicted today on three criminal charges that accuse him of directing and participating in one of the biggest frauds in the history of American business. Although Scott D. Sullivan, WorldCom's former CFO, was named with Mr. Ebbers in the indictment, Mr. Sullivan pleaded guilty to the charges earlier in the day and said he was cooperating with federal prosecutors. Here is the indictment.
Posted by Tom at 4:49 PM
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Hogan's secret
Ben Hogan was one of the greatest golfers of all-time, and may have been the best pure ball-striker of all time. During his life, Mr. Hogan wrote a classic book about the golf swing -- "Five Lessons: The Modern Fundamentals of Golf" -- and then, at the peak of his popularity fifty years ago, he supposedly disclosed the key secret of his swing in a Life magazine article. Nevertheless, many golf swing analysts over the years did not believe that the notoriously competitive Hogan had fully disclosed his "secret" because he did not want his competitors to benefit from it, and Mr. Hogan did nothing to dissuade them from that belief. Accordingly, a virtual cottage industry has developed from various golf swing analysts speculating as to the true nature of Hogan's swing secret. Mr. Hogan died in 1997 without ever fully disclosing his secret.
This NY Times article tells about a new Hogan memoir, "Afternoons with Mr. Hogan" (Gotham Books, 2004) by Jody Vasquez, a Texas oil-and-gas executive, who contends that Mr. Hogan disclosed the secret to Mr. Vazquez in 1967 while Mr. Vazquez had a job shagging range balls for Mr. Hogan. Mr. Vazquez's short version of the secret is as follows:
"The Secret is the correct functioning of the right leg, with emphasis on maintaining the angle of the right knee on the back and forward swings. Combined with a slight cupping of the left wrist, it produces optimum balance and control, and allows you to apply as much speed and power as you wish."I'm going to go hit a bucket of balls over the lunch hour and try this. ;^) By the way, the best book on the complex and talented Mr. Hogan is Curt Sampson's "Hogan."
Posted by Tom at 10:59 AM
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Does the NY Times read Clear Thinkers?
This NY Times article addresses the government's questionable accounting for its future Medicare and Social Security obligations, an issue addressed in this prior post here over this past weekend.
Posted by Tom at 10:26 AM
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Higher fuel costs concern Continental
Houston-based Continental Airlines -- one of the Houston area's largest employers -- announced today that the airline's stated financial goal for break-even results in 2004 is "at great risk" due to the high price of jet fuel and oil.
Posted by Tom at 10:18 AM
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Houston Bowl attempts to go BCS
This Houston Chronicle story reports on the intent of Houston Bowl officials to bid on being the host for a fifth Bowl Championship Series college football game to be added after the 2006 season.
This is a new initiative for Houston, which has never had much of a college football bowl heritage. The old Bluebonnet Bowl had a rather uneventful run from 1959-1987 and always struggled for sponsorship support and attendance. The newer Houston Bowl has been around for the past several years, but has paid the minimum amount to the participant teams, so it has not moved above the lowest tier of bowl games. However, with the wide array of new facilities that Houston recently used in successfully hosting Super Bowl XXXVIII, Houston now has proven that it has the capability of hosting major events such as a BCS Bowl game. Given Texas' rich history and tradition in college football, Houston would be a logical choice for hosting one of college football's premier bowl games.
Posted by Tom at 10:11 AM
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Change at the top of the Enron Task Force
This Houston Chronicle article reports that Andrew Weissmann, the lead trial lawyer in the Enron Task Force's Arthur Andersen obstruction of justice prosecution, is replacing Leslie Caldwell as lead lawyer for the task force. Ms. Caldwell will soon leave the Department of Justice to enter private practice.
The Chronicle piece fawns over the accomplishments of the Enron Task Force, but my sense is that the Task Force has been much more heavy handed than successful to date. Although over two years old now, the Task Force has tried precisely one case. In that case, it obtained a controversial conviction of Arthur Andersen on obstruction of justice charges, and that conviction is currently under review by the Fifth Circuit Court of Appeals. The Task Force has entered into nine plea bargains with various ex-Enron employees, but all of those have come after multiple count indictments that left those defendants with a Hobsen's Choice of either risking trial and the prospect of what amounts to a lifetime prison sentence or copping a plea for a relatively light sentence. As noted in this prior post, this Task Force approach to the Enron criminal cases is troubling -- the government's job is to indict and convict wrongdoers, not to sledgehammer citizens into plea bargains out of fear of unreasonably long prison sentences.
Posted by Tom at 9:47 AM
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The new Breakfast of Champions
This San Francisco Chronicle article follows this earlier post here and reports that federal investigators have been told that San Francisco Giants slugger Barry Bonds, New York Yankees stars Jason Giambi and Gary Sheffield and three other major-league baseball players received steroids from a Burlingame nutritional supplement lab.
Posted by Tom at 9:12 AM
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Houston real estate
The Allen Brothers, who founded Houston in 1836, were real estate speculators. Almost since that time, Houston has been a hotbed of real estate development that has attracted a colorful collection of real estate speculators over the years.
No zoning laws and nominal barriers to entry into the real estate market are attributes that have traditionally made Houston an attractive venue for real estate development. On the other hand, Houston's flat, sea level terrain has made development of Houston real estate challenging, particularly given its tendency to flood during Gulf Coast rainstorms.
As a result, one of the most eagerly anticipated events in Houston real estate circles is the Harris County Flood Control District's release of new flood plain maps for Houston real estate. On Monday, the Flood Control District will release preliminary new flood plain maps for five watersheds, including the Brays Bayou drainage area, which includes the flood-prone area around the Texas Medical Center. The flood plain designations have major impact on real estate development decisions and on plotting better ways to protect Houston from catastrophic flooding similar to what occurred in 2001 during Tropical Storm Allison. Within the so-called 100-year flood plain -- the area with a theoretical risk of flooding once every 100 years -- flood insurance is mandatory and the City of Houston imposes development requirements such as elevating buildings or digging detention ponds. These measures can substantially increase the cost of development.
The information to be released Monday is essentially an unofficial, draft version of the Federal Emergency Management Agency's Digital Flood Insurance Rate Maps, which are expected to be released in late spring. An appeals process will follow over the next several months before those maps become final. You can rest assured that many Houston real estate owners will be lobbying hard during that process regarding whether their property should be included within the flood plain.
Posted by Tom at 9:02 AM
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March 1, 2004
The best book about Major League Baseball
I have had season tickets to Houston Astros' baseball games for going on 20 years now. My family and I have a great time going to the games, and I enjoy giving tickets to my friends and clients, who also love attending the games. Minute Maid Park in downtown Houston is also a wonderful place to watch a game.
At this time of the year, I traditionally purchase the annual edition of Baseball Prospectus, which I then take to each game that I attend throughout the baseball season. Bar none, Baseball Prospectus 2004 is the best resource available for understanding and analyzing Major League Baseball. Prepared by disciples of Bill James' statistical analysis of baseball, Baseball Prospectus 2004 includes a thorough analysis of each Major League Baseball team, its minor league system and front office operation. Also, the book includes a capsule profile of every Major League player and most key minor league prospects of each Major League team. The writing is sharp and witty, and includes none of the dense traditional writing about baseball that one has to endure in the sports pages of major daily newspapers. Indeed, Baseball Prospectus will debunk many of the traditional baseball notions that we all hear and read in traditional news sources and, in so doing, provides a far superior basis for understanding this grand game.
To provide a flavor for Baseball Prospectus' clever writing, the following is an example of one of the player profiles from last year's Baseball Prospectus:
Pat Meares Position: Insurance Scam; Born: 9/6/68 Age: 34 Bats: R Throws R [statistical analysis excluded] After conflicting medical opinions about Meare's hand injury, a bizarre farce ensued between the Pirates and Meares last year that could have served as a plot line on an episode of "The Sopranos." Meares actually filed a grievance in September, claiming he was healthy enough to play and wanting to be released so that he could find another team. Even if his hand really was healthy, the Pirates could have claimed that Meares was so delusional that it wasn't safe to allow him near sharp objects again, never mind on a baseball field. A negotiated settlement ensued: Meares will get his 3,750,000 claims in 2003 that he never deserved, and the club will keep him as a phantom on its roster to collect the insurance money on his contract.
If you enjoy baseball, then the best $12.57 you can spend is on Baseball Prospectus 2004.
Posted by Tom at 4:27 PM
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David Warren on "The Passion"
David Warren has not seen Mel Gibson's "The Passion" yet, but he nevertheless has penned the best review of the movie that I read to date.
Posted by Tom at 8:53 AM
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A great example of dedication
This Minneapolis Star-Tribune article explains that, after 15 years of litigation, attorneys' fees totaling $1.3 billion have been approved for the Minneapolis firm of Faegre & Benson and several dozen other law firms that represented 32,000 Alaskan fishermen and business owners who were harmed by the Exxon Valdez oil spill in 1989. Faegre & Benson was one of the lead law firms in involved in the lawsuit against Exxon Mobil Corp. which resulted in a 1994 award of $5 billion in punitive damages.
Although some practices of plaintiffs' lawyers in large tort cases are open to valid criticism, plaintiffs' lawyers are more often the unjust target of the demagouges of tort reform. The risk-taking and dedication of the type that the plaintiffs' lawyers in the Exxon Valdez case exhibited are not often noted in the debate over tort reform. At considerable risk, these lawyers provided a valuable service to thousands of clients who otherwise would have had limited or no means to any legal recourse. These lawyers should be congratulated for a job well done.
Posted by Tom at 8:14 AM
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Cousins Properties makes a play for Austin area property
A partnership controlled by Atlanta, Ga.-based real estate development firm Cousins Properties has submitted a $33 million cash offer to buy the 1,352 acre Heep Ranch property on I-35 between Austin and Buda, which is one of the most desirable commercial properties available in the fast growing Central Texas area. The offer is subject to Bankruptcy Court approval in the pending chapter 11 case of Hatsy Heep and husband David Shaffer.
Posted by Tom at 7:44 AM
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Martha's trial is winding up
Closing arguments begin today in Martha Stewart's criminal trial. What I find absolutely remarkable is that closing arguments are going to take two days in what should be a rather straightforward case. Apparently, the attorneys for the prosecution and Martha's co-defendant will give their arguments today, and then Martha's counsel will give theirs tomorrow, followed by the prosecution's rebuttal.
A key tip to the lawyers involved: Juries are generally asleep to what you say after about 20 minutes of closing argument. Hours of closing argument are much more likely to hurt your case with the jury than help it.
Professor Bainbridge provides a good analysis here of why this case should have never been brought against Martha. My bet remains that Martha will walk these charges.
Posted by Tom at 7:29 AM
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What to do about Michael?
This NY Times article and this Wall Street Journal ($) article describe the problems that The Walt Disney Co. board faces in dealing with the shareholder revolt against Chairman and CEO Michael D. Eisner. Although replacing Mr. Eisner would normally be an option after such a prolonged stretch of mediocre business performance, the recent lowball Comcast takeover bid for Disney is apparently helping Mr. Eisner among Disney board members, who are relunctant to make a change at the top in the face of such a bid. The board's failure to have Disney management develop a succession strategy for replacing Mr. Eisner is highlighted by the awkward situation in which Disney currently finds itself.
Posted by Tom at 6:43 AM
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Update on Iraqi oil and gas industry
This NY Times article describes the progress that Iraqi and American engineers and business executives have made in stabilizing and reviving Iraq's cash-strapped and chronically underperforming oil and gas production. Iraqi officials and American advisers are attempting to revive this key Iraqi industry from one that Saddam Hussein's government allowed to deteriorate from lack of investment and the looting of billions of dollars of oil sales while under United Nations sanctions after the 1991 Persian Gulf War. Iraq owns the third-largest oil reserves in the world (following Saudi Arabia and Canada), and its economy is almost solely reliant on revenue from oil exports. Accordingly, that revenue is a key component in financing Iraq's economic revival.
Posted by Tom at 6:27 AM
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