December 2, 2006

Weekend Question 2: When Will the US Initial Public Offering Market Dry Up?

Filed under: Economy,Taxes & Government,TWUQs — Tom @ 2:11 pm

ANSWER: Sooner than you might think, if something isn’t done about excessive regulation.


From an editorial at today’s

It won’t be news to readers of these columns that increased regulatory burdens and litigation costs are undermining the competitive position of America’s capital markets. But this week’s interim report from the blue-ribbon Committee on Capital Markets Regulation performs a public service by marshaling evidence of the decline that is hard to refute. (Indeed it does. Go here to find PDFs of the “Interim Report” [very big file] and “Interim Report Summary” — Ed.)

The committee, directed by Hal Scott of Harvard Law School and co-chaired by Glenn Hubbard and the Brookings Institution’s John Thornton, is a privately funded, bipartisan group of executives and academics who have put their heads together to assess the state of our capital markets. Its first report is detailed and analytical, which may explain why Eliot Spitzer immediately attacked it.

It’s well known that more large global IPOs are happening outside the United States, and the report notes this fact. But most regulators have chosen to explain away this trend rather than confront it.

….. Another warning sign is venture capital, long an engine of American economic growth. Traditionally, VC firms have used the U.S. IPO market as their exit strategy; in the 1990s, IPOs accounted for 90% of VC investment “exits.” Today, however, nearly 90% of those venture-capital-backed startups are sold to strategic buyers in private transactions.

….. U.S. capital costs are lower than elsewhere. But as the new report documents, that premium has been shrinking. What’s more, it’s been shrinking faster vis-à-vis other developed countries–such as Japan and the U.K.–than it has against developing-world markets.

This suggests that it is stiff competition from relatively well-regulated markets, not from shifty, nontransparent Third World markets, that is taking the biggest toll. This could mean that overseas regulation is improving, not that U.S. regulation is getting more onerous. But even if this were the case, it would not change the main point: Global capital markets are becoming more competitive, and the U.S. is now more likely to be punished for over-regulation than it was in the past.

….. the report’s best contribution is the seriousness with which it examines the evidence of U.S. competitive decline–evidence that defenders of the status quo should now be obliged to answer.

If the venture capitalists conclude that the IPO option is being closed off, they will fund fewer deals, either because:

  • They don’t believe they will be able to achieve their targeted rate of return by selling out to another company when exit time comes.
  • Some start-ups are only viable if going public is a viable exit strategy (i.e., there is no realistic chance that another company or group of private buyers would want it when the time comes).

The negative implications for future economic growth if deserving start-ups can’t get funded should be obvious. Not that Eliot Spitzer cares.

Weekend Question 1: What Really Happened on US Airways Flight 300? (Also with Larger Points and New Questions)

Filed under: MSM Biz/Other Bias,MSM Biz/Other Ignorance,TWUQs — Tom @ 10:16 am

ANSWER: It surely isn’t what what the media originally reported (examples: Associated Press, Bloomberg). Richard Miniter’s Pajamas Media’s report, other blog reports, and a Washington Times article get us as close as we’ll probably ever get to the full truth.


OVERVIEW: The larger lesson is this — As we have seen during the past two weeks in the reporting of incidents out of Iraq (the “Ramadi non-Airstrike” covered by Patterico, and the “Burning Six” assembled by Michelle Malkin), that the press will not wait to release a report that fits one of their templates (“Soldiers kill civilians,” “Iraq is an incurable mess,” “There is heavy bias against Islam,” etc.) if the limited facts at hand seem to support that template. By the time the full set of facts catches up, millions of readers and viewers have been misled (and, of course, influenced); corrections, if any, are limited; and the press has moved on to their next story. “Drive-by Media” indeed.

Richard Miniter (yes, the same guy who shredded the “no WMDs in Iraq” claim over a year ago) has a full report at Pajamas Media (HT Michelle Malkin), supported by the full text of an e-mail from “Pauline” and a copy of police report on the incident.

As a convenience to readers, I have converted Miniter’s PDF of Pauline’s e-mail to HTML, and it is here. It did not convert perfectly, but no text was lost; I strongly recommend a full read, as it makes additional points not raised in this post. The 3.8 mb police report PDF file is not readily convertible.

Here’s a portion of what Miniter wrote, (but DO read the whole thing):

Now new information is emerging that suggests it was all a stunt designed to weaken security….

Yesterday I spoke with a passenger on that flight, who asked that she be only identified as “Pauline.” A copy of airport police report, which I also obtained, supports Pauline’s account – and includes shocking revelations of its own. In addition, U.S. Airways spokeswoman Andrea Rader also confirmed much of what Pauline revealed…..

The passenger, who asked that she only be identified as “Pauline,” said she is afraid to give her full name or hometown. She is spending the night at “another location” because she does not feel safe at home. She credits reports that one imam is apparently linked to Hamas. “It is scary because these men could be dangerous.”

….. As the plane boarded, she said, no one refused to fly. The public prayers and Arabic phone call did not trigger any alarms – so much for the p.c. allegations that people were disturbed by Muslim prayers.

….. Contrary to press accounts that a single note from a passenger triggered the imams’ removal, Captain John Howard Wood was weighing multiple factors – factors that have largely been ignored by the press.

Another passenger, not the note writer, was an Arabic speaker sitting near two of the imams in the plane’s tail. That passenger pulled a flight attendant aside, and in a whisper, translated what the men were saying. They were invoking “bin Laden” and condemning America for “killing Saddam,” according to police reports.

Meanwhile an imam seated in first class asked for a seat-belt extension, even though according to both an on-duty flight attendant and another deadheading flight attendant, he looked too thin to need one. Hours later, when the passengers were being evacuated, the seat-belt extension was found on the floor near the imam’s seat, police reports confirm.

….. Finally, a gate attendant told the captain she thought the imams were acting suspiciously, according to police reports.

So the captain apparently made his decision to delay the flight based on many complaints, not one.

….. Other factors were also considered: All six imams had boarded together, with the first-class passengers – even though only one of them had a first-class ticket. Three had one-way tickets. Between the six men, only one had checked a bag.

And, Pauline said, they spread out just like the 9-11 hijackers. Two sat in first, two in the middle, and two back in the economy section. Pauline’s account is confirmed by the police report. The airline spokeswoman added that some seemed to be sitting in seats not assigned to them.

One thing that no one seemed to consider at the time, perhaps due to lack of familiarity with Islamic practice, is that the men prayed both at the gate and on the plane. Observant Muslims pray only once at sundown, not twice.

“It was almost as if they were intentionally trying to get kicked off the flight,” Pauline said.

Occam’s Razor says “BINGO.”

You will grow very old waiting for corrections to at least the following clear errors in the two original reports linked above:

AP via Seattle Times
- “A passenger raised concerns about the imams.” (no other justification for the handling of the situation is mentioned)
- “‘We did nothing’ on the plane, (North American Imams Federation president Omar) Shahin said.” (Yeah, right.)
- “‘If up to now they don’t know about prayers, this is a real problem,’ he (Shahin) said.” (Miniter sure nailed them on that one, didn’t he?)

- “after a passenger expressed concerns about their behavior.” (“the passenger” is also mentioned later in the article)

Other points:

  • Why didn’t AP or Bloomberg ask any passengers about what happened before publishing their first reports (they did follow up later)? AP does have a bureau in Phoenix, y’know. But see the “Overview” above.
  • Here’s a REAL interesting statement from Shahin in the AP report: “They entered individually, except for one member who is blind and needed to be guided, Shahin said.” That characterization is “legally blind” in this December 2 report at The International News, and in general, the “blind card” hasn’t been played much, if at all, since the earliest stages of the coverage. A review of the Police Reports indicates that only one of the six (Marwan Sadeddin) did not have a driver’s license, but instead had an “Arizona identificaton card” (see Page 14). It’s dreadfully obvious to most, but for the few who don’t know, legally blind people can’t drive. Sadeddin’s info is in the Police Report where he is identified as a “Suspect” (see bottom half of Page 6). Though there is a space on the form for identifying “Disability,” it is left blank and does not look like it has been covered up. Though some of the handwriting is difficult to decipher, I did not see any mention of any of the six being “blind” in any of the witness or officer statements. I’m not saying this proves that Sadeddin isn’t “blind” or “legally blind.” It just seems odd that that the “blindness” fell from the coverage so quickly, that no one seemed to notice its disappearance, and that there is no corroborration of any blindness.
  • The Washington Times counts seven witnesses who dispute the accounts of the six imams.
  • Powerline notes two blatant lies by Shahin in that same Washington Times piece. One is fully covered in the article, and is about a 20-minute conversation Shahin claims to have had involving the FBI that the agent involved says “never happened.” The other is where Shahin tells the WashTimes that “they were not led off the plane in handcuffs” — but this AP report quotes Shahin saying that very thing (“Six leaders in this country. Six scholars in handcuffs. It’s terrible.”).


UPDATE: Lest we forget, the day after the incident, Little Green Footballs was tipped off by a reader to a crucial point totally ignored by the Associated Press and others until the Washington Times noted it at the beginning of the “seven witnesses” article — “Omar Shahin, spokesman for the humiliated imams, is affiliated with Kind Hearts for Charitable Human Development… …a Hamas-linked organization whose assets were frozen by the Treasury Department earlier this year.” The Times reports that “Mr. Shahin says he cut ties to KindHearts after the Treasury Department began investigating the group,” and that he “had no clue what they were doing.” Uh-huh.

UPDATE 2, Dec. 6: Debra Burlingame nails it at (“On a Wing and a Prayer”) –

Given that Islamic terrorists continue their obsession with turning airplanes into weapons of mass destruction, it is nothing short of obscene that these six religious leaders–fresh from attending a conference of the North American Imams Federation, featuring discussions on “Imams and Politics” and “Imams and the Media”–chose to turn that airport into a stage and that airplane into a prop in the service of their need for grievance theater. The reality is, these passengers endured a frightening 3 1/2-hour ordeal, which included a front-to-back sweep of the aircraft with a bomb-sniffing dog, in order to advance the provocative agenda of these imams in, of all the inappropriate places after 9/11, U.S. airports.

….. The imams, experienced travelers all, counted on the security system established after 9/11 to kick in, and now they plan not only to benefit financially from the proper operation of that system but to substantially weaken it–with help from the Saudi-endowed attorneys at CAIR.

US Airways is right to stand by its flight crew. It will be both dangerous and disgraceful if the Department of Homeland Security, the Department of Transportation and, ultimately, our federal courts allow aviation security measures put in place after 9/11 to be cynically manipulated in the name of civil rights.

Positivity Saturday Bonus: Links to Three Life-Saving Stories

Filed under: Positivity — Tom @ 7:04 am

These all deserve notice, and might slip away if I don’t combine them into one post, which is why I did just that. Go to the links to read the full stories:

Hero driver used belt to stop severed leg bleeding

(from Scotland; Nov. 13, 2006)

A HERO lorry driver has spoken about how he used his belt to save the life of a man who lost his leg in a horrific road crash.

Brian Mulholland, 51, smashed the van’s windshield to rescue the driver after he lost control and crashed through a safety barrier on the M8.

He then used his trouser belt as a tourniquet on the man’s leg, which was severed below the knee.


Tennis instructor gets award for saving man’s life

(From Denver; Nov. 13, 2006)

On Wednesday, November 8, the South Suburban Parks and Recreation Board of Directors had a unique opportunity to celebrate the heroic efforts of a dedicated employee, Vicki Holthus, Community Tennis Coordinator. Last June 16, Vicki performed CPR on a tennis patron, Al Clerihue, at the Holly Tennis Center and he survived to share the honor bestowed upon her by South Metro Fire Rescue on November 8.


Man praised for rescue from burning car

(From San Bernardino County, CA; Nov. 13, 2006)

California Highway Patrol officials have declared Upland resident Guillermo Millan a hero. CHP Officer Sean Cooper said Millan risked his life to rescue Curtis Powell from a flaming car on westbound Interstate 10, west of Cherry Avenue, on Oct. 7.

Powell remains in critical but stable condition at Arrowhead Regional Medical Center in Colton. His family said Friday that Powell was taken off a ventilator and is breathing on his own.

There are plans to give Millan a certificate to honor his deed, Cooper said.

Millan, 44, does not see himself as a hero.

“When I got him out, he was dead,” Millan said. “It was nothing nice, let me tell you.”