As I stated in my previous article on the Ebola crisis, there is probably little risk of a major outbreak of the disease in the United States.

But there is a cost.

Just think of the resources that were devoted to dealing with the late Thomas Duncan. 76 staff members of Texas Health Presbyterian Hospital were involved in his care. One unfortunate provider was infected (fortunately, doing well according to reports). Her infection has triggered monitoring the other 75. If one of them comes down with it, another round of monitoring and possible infection commences.

A rate of one out of seventy-six does not sound ominous. However, do the math if the United States receives another unexpected carrier of the deadly disease. How about a few dozen?

British Airways and Air France, among other carriers, have already banned service to the countries suffering the wrath of Ebola.

The reason for Dr. Thomas Frieden’s objection to a United States flight ban to and from West Africa is evidence he does not want to admit his assessment of the medical establishment’s readiness to deal with this very dangerous virus was deeply flawed.

He is putting his personal image before public safety.

Regardless, the employees of the airline industry in the United States may decide otherwise. How long before flight crews, attendants and ground personnel decide they do not want to service routes in and out of the most affected nations?

No flight ban will be foolproof, but it makes no sense to increase the risk of spreading the disease through reckless disregard of human nature – people are going to want to get the hell out of West Africa, especially when WHO expects 10,000 new cases per week going forward. Undoubtedly, some of them will be asymptomatic carriers who will end up in our emergency rooms.

Dr. Frieden is suffering from Ebola of the brain. He needs to be removed and quarantined from formulating health policies.

We have other public health demands that will suffer as a result of redirecting valuable resources to combat Ebola.

Ron Galperin has added more value to the City Controller’s office than all of his predecessors combined (the last occupant actually decremented the office’s role).

It is not just opening up the books of the city to the average resident and standing up to the thug running the DWP’s IBEW Local 18, either. Galperin has changed how the city reports its performance to the public.

The preliminary financial report is a scaled down version of the final Comprehensive Annual Financial Report (CAFR). It is the closest thing to an aggregate summary the city has, yet prior preliminary reports were an encyclopedia of vast detail with poor graphical or tabular displays of key relationships. One would have to spend hours sifting through pages of bureaucratic vernacular to uncover relevant details.

Ron’s integration of bullet points in the sidebar and crisp charts displaying the most meaningful data are refreshing enhancements compared to the mind-numbing narratives prevalent in past reports. Not only do they facilitate a better understanding of performance drivers, but the points should spur some casual readers to delve deeper into the subject matter, perhaps searching the internet for related topics.

There is always room for improvement.

A summary similar to the preliminary report should be included in the final CAFR. While little should change in the time between the issuance of the two reports, there should be a summary that is a product of the audited financial statements.

Both the preliminary and CAFR should include more trend analysis with respect to key revenue and cost components. For example, property tax revenue is the largest single source of revenue (33%), but it is the least controllable. Assessed values have stayed relatively flat since the mortgage crisis. Oddly enough, it may have been Proposition 13’s automatic increases that prevented them from falling through the floor. Links to real property data and projections should be an integral part of the report. I would go so far as recommending an annual report on this subject alone.

The city’s share of pension contributions, just short of a billion dollars in 2013-14, represented 16% of the general fund. It was a mere 4% back in 2002-03 at $194 million. It will likely grow, especially if the Coalition of City Unions is able to halt the rather sensible reform measures Mayor Garcetti helped craft when he was president of the City Council.

The growth rate of the city’s contribution is unsustainable. Galperin should issue an annual report tracking the latest developments on this front and the potential impact upon future years. He can work in concert with Chief Administrative Officer Miguel Santana.

These are just three examples of important disclosures.

The voters elected the right person to the office. We now need to do everything possible to support and encourage Ron’s practical and informative approach to reporting the city’s financial position.

I am not fearful of an outbreak of Ebola in the United States as a result of the turn of events that landed an infected person in Dallas.

Public health authorities will not leave a stone uncovered along the trail of contacts left by the patient.

What I am concerned about is the assumption by public health authorities that the United States is fully capable of defeating an outbreak of the disease within our borders.

CDC Director Dr. Tom Frieden assured us in no uncertain terms that the medical establishment is up the challenge. Within days, his confidence has been repudiated.

Dr. Frieden might be the best physician in the world for all I know, but he lacks common sense when it comes to gauging human behavior.

You see, one cannot count on infected persons to share all of their pertinent, personal medical information. One cannot depend on trained medical personnel to connect the dots even when they are arrayed in front of them. Finally, one cannot depend on the government to make the lives of citizens and residents a priority.

The patient, Thomas Duncan, although he informed the ER at Texas Health Presbyterian he had traveled from Liberia, did not bother reporting he had been in contact with an infected person exhibiting full symptoms of the disease. Given the sorry state of knowledge about geography in our nation, it is possible Liberia’s location on a map did not click with the ER staff responsible for taking the patient’s information. And just why did our government allow anyone traveling from West Africa to enter without being quarantined? Taking someone’s temperature at the point of departure is ineffective screening for a disease with an incubation period as long as 21 days.

Other facts are equally disturbing regarding the dangers from this procedural breakdown.

The disease is spread by the exchange of secretions. Mr. Duncan was visiting his girlfriend. Need I say more?

He came in contact with children. Children are secretion machines both at home and in the play yard.

About 20 people had direct encounters with Duncan, no telling how many had indirect contact.

Public health workers will be hard-pressed to monitor the 20, not to mention search for other possible secondary or tertiary contacts.

The official death toll in West Africa is around 3,500, a marked increase from just a few weeks ago. All medical professionals acknowledge that the number is a gross understatement.

Would it be too much to ask our government to quarantine passengers from the afflicted areas, if not ban all non medical travel until the outbreak has burned itself out?

We have more than enough medical priorities here.

Thank you, Mr. November

The moment is still etched in my memory.

The Yankees trailed Arizona by one game going into game 4, and it looked as if they would be down by two.

It was only through gutsy pitching in game 3 that prevented the Bombers from reaching the brink of elimination in the 2001 World Series.

The Yankees were down going into the ninth inning of game 4, but a home run by Tino Martinez tied it and set the stage for the first major league baseball game ever to slip into November.

Game 4 started on Oct 31st – the baseball season shut down for a week after the terrorist attack on the World Trade Centers on 9/11, pushing back the playoffs. Derek Jeter was having a dismal time at the plate against Arizona to that point.

As Jeter came to bat in the 10th, the clock chimed 12 times over the PA system to herald the historic chronological milestone.

He worked the count brilliantly against Byung-Hyun Kim after being down two strikes with two outs. It was 3 and 2. An out would push the game into the 11th inning. Mariano Rivera would have had to take the mound again. The ace reliever had already saved game 3 with two innings of work and had one more this evening.

After fouling off a pitch hard down the right field line, he was ready for Kim’s next offering.

Jeter, a right-handed hitter, took it to the opposite field again. This time, he straightened it out and lifted it higher. It sailed several rows back behind the fence. Game over. The rest is history. Mr. November was born….and my primal scream of victory could be heard throughout Valley Village. Just ask my wife. She was ready to call 911.

Jeter was a career 300 hitter. His stats in post-season play were even better. He tops most of the offensive categories for all playoff levels combined, and fares well in those limited to the World Series.

His calm and professional demeanor ranks with the best.

I was privileged to have followed the fortunes of the Yankees from the Mantle-Maris-Ford years, through the successful, but turbulent, years defined by Reggie Jackson, Thurman Munson and Billy Martin, to the Jeter led class which included Mariano Rivera, Andy Pettite, Jorge Posada and Bernie Williams. The last group was one of the best to come up through the Yankee farm system. With the exception of Pettite, whose time with the Yankees was interrupted for a few seasons with Houston, the five played their entire careers in New York.

Jeter was named captain of the Yankees in 2003. He had the longest tenure of any in the franchise’s history. Don Mattingly preceded him, but had to retire in 1995 due to back problems. The position was vacant until Jeter was named to fill the role. One wonders how much better the Yankees would have been with both Jeter and Mattingly playing together into the late nineties.

It will be a few years before the Yankees can assemble another winning combination, but they will. History and tradition assures it.

And Jeter will serve as their model.


President Obama delivered some overdue tough and frank talk today at the UN.

He vowed to fight the ISIS “Network of Death” and urged Muslims to resist the call to Jihad. He backed his words up with another round of air attacks on ISIS assets. This came on the heels of attacks against the Khorasan group, a very small band of hardened terrorists virtually publicly unheard of until recently.

However, despite his hardened tone, the President may have over-delivered on his ambitions to destroy and degrade these perverse criminals.

ISIS is the closest thing to a terrorist nation in the world. It has a functional leadership hierarchy, infrastructure, an organized fighting force and money. Unlike other terrorist movements, it is a political and geographic entity which is in the business to secure territory and expand its control both psychologically and physically. It is not one content with operating out of caves and remote areas as al-Qaeda is.

This makes the current round of aerial assaults a viable tactic. Today, an oil refinery under the control of ISIS was hit, taking a bite out of the group’s revenue stream and fuel supply chain. It hasn’t been since World War 2 that an enemy’s industrial facilities have been primary targets.

But what happens after we have hit the brick and mortar assets?

Well, it is likely, then, ISIS will adopt the Khorasan model and operate out of small, but dangerously effective, cells. There is no shortage of suicidal lunatics willing to execute the most heinous attacks against people of goodwill.

With or without intervention of US ground troops, both ISIS and Khorasan will continue to operate with near impunity.

What Obama needed to say….no, demand….was that the Arab nations take the lead in relentlessly attacking every follower, every cell associated with these deranged fundamentalists. The destruction must come from within the region to be even somewhat effective.

More importantly, Arab governments need to emerge from the Dark Ages and introduce basic freedoms in their societies. Otherwise, there will always be willing recruits for new and deadly movements.

Bernie’s Big Spin

As with many of you, my Facebook news feed is splattered with exaggerated, if not false, claims. There is almost always a partisan political motive behind these memes.

The most common ones I encounter involve variations of the following:

- Planes did not crash into the World Trade Towers on 9-11.
– President Obama is a Muslim
– Vladimir Putin is the Antichrist

OK, the last one is probably true.

The latest rage is a quote from Senator Bernie Sanders.

“One out of four corporations doesn’t pay a nickel in (federal income) taxes.”

Is there some truth to this statement?

It depends on how you slice and dice the stats, and the Senator is performing some surgical slicing.

The data behind the seemingly stunning assertion include firms with legitimate losses; that is, after you subtract the cost of goods sold and overhead, such as salaries, office rent, professional services, etc, there was no profit to report. Understandably, when you have no profit, there is no tax. It works that way for small businesses as well.

The ratio might be closer to 1 out of 16, but no worse than 1 out of 6, according to an analysis by PolitiFact.com.

But the complexity of the tax code makes any analysis, including the one underlying Sanders’claim, sketchy.

For one thing, too much weight is given to rules that defer taxes. For example, accelerated depreciation merely reduces taxes in the early life of an asset, but the benefit turns around in the later years and results in a lower deduction. I would hardly call that tax avoidance.

The steady growth of S Corporations further muddies the waters as more corporate earnings are shifted to individuals. The S type became the most prevalent form of corporate entity in 1997. S corporations do not pay income taxes. Instead, the earnings from this corporate type are passed directly to the owners, who report them on their individual returns.

S corporation owners must either be citizens or residents, so all income is within reach of the IRS. Owners cannot be corporations or partnerships.

The impact of investment tax credits need special consideration. These credits are incentives for companies to reinvest in assets that improve productivity. They represent a permanent reduction to corporate taxes – the savings will never be reversed in subsequent years as deferred benefits are.

Credits are allowed for certain types of equipment, solar energy installations and even film production. The government assumes an economic benefit will be derived from such investment. To at least some degree, that is true. When analyzing whether corporations are understating taxable income, these credits need to be considered and effectively added back as if they were not used.

Even those corporations that truly bypass the IRS by funneling income overseas cannot avoid entirely shielding their income from United States income taxes. The dividends they pay are taxable to the shareholders.

The point I am making is that politicians can play it fast and loose with the numbers depending on the range of data they select, just as MSNBC and Fox dissect the news to support their opposing points of view.

So please think twice before you share out of context “truths” you receive on Facebook.

Remember, the more astonishing the assertion, the more likely it should be discounted.

Most people I know, including many in the Neighborhood Council system, would support an increase to the minimum wage.

But $13.25 or $15.00 per hour?


They, as I, realize it is not quite what the politicians make it out to be.
Increasing the minimum wage that dramatically will not be the beginning of the end to poverty, much less the end.

The effect will not be uniform; there will be winners and losers for both employers and employees. This will be very evident on the extremes – large firms who do not rely heavily on unskilled or low-skill labor will most likely absorb the additional costs with little effect on margins and employment.

Small businesses with modest margins will certainly reduce staff or perhaps go out of business. Not a good prospect for anyone.

Even those businesses who can handle the increased costs may gradually alter their hiring criteria. At $13 to $15 they will expect employees who can add to productivity, are flexible and have potential to advance and handle more complex duties. You may find some college grads who have heretofore been underemployed taking jobs they would have otherwise ignored, thereby displacing the most unskilled workers.

The effects will vary considerably by company and industry, but it is a certainty that a measurable number of unskilled workers will join the ranks of the unemployed.

The big question is the twilight zone of employers who will be able to cover most of the additional costs, but will not be able to remain as competitive. Fast food franchises come to mind, but any small business will face a challenge. Some will not have the option to raise prices, or even if they did, the increase will be limited by market forces.

In effect, we will see zombie firms staggering through an apocalypse of near failure – one that will ultimately lead to their final demise as sure as a bullet in the brain kills the undead in The Walking Dead.

One of the ways a profitable firm can meet its end is by technical default on its bank loans.

Lower margins can cause a company to miss making certain key financial ratios as required under lending covenants – this is an example of a common technical default.

Several years ago, I spent many months modeling debt workout scenarios for troubled fast food franchises whose profit margins were declining due to a problem with suppliers. Working closely with the franchisor, our team was able to formulate viable solutions for most franchises, but there was a cost. The least profitable locations were eliminated (along with the respective jobs), losses would usually result on the sale of stores or select assets. Everyone took cuts in pay. More restrictions were placed on the owners.

Refinancing terms would stretch payments out over a longer term, improving cash flow, but making the prospects for future expansion more difficult.

The alternatives were not good. Failure to eliminate the technical defaults would almost always lead to the dissolution of the franchise…… and there were those beyond any form of assistance.

So, while some minimum wage employees will enjoy a better life, many will have trouble scraping up money to buy a higher-priced burger and will be edged out of the employment market by more qualified candidates.


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