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Archive for March 2nd, 2009

Future of the NHL

Posted in Hockey on March 2, 2009 | Leave a Comment »

From Boston Sports Guy’s post about the NBA’s All-Star Break:

Looking at the big picture, the league won’t struggle even 1/10th as much as the NHL in years to come — of all the wildest predictions I heard in Phoenix, the craziest came from a connected executive who predicted that fifteen NHL teams would go under within the next two years (and was dead serious) — and Major League Baseball is about to get creamed beyond belief.

It made me look at the NHL’s attendance year-to-date and wonder:

Why are the Islanders still in business?  13,550/game, and that includes all the comped seats and unoccupied boxes?

The NHL has not been able to get out of its own way since the 1994 lockout – the 2004 cancellation was just a consequence of the rush to get back on the ice a decade earlier – but you might hope that high definition television would be the saving grace; while all sports look better in HD, hockey is absolutely transformed.

Unfortunately, the league made the short-sighted decision to expand dramatically in the good years.  Rather than lose teams to the vagaries of bankruptcy, why not retrench to the following:

The Islanders, Thrashers, Predators, Coyotes, Panthers and Blue Jackets go away.  This leaves four six-team divisions: Northeast (Boston, Buffalo, Montreal, Ottawa, Rangers, Toronto), Atlantic (Capitals, Carolina, Devils, Flyers, Penguins, Tampa), Southwest (Anaheim, Colorado, Dallas, LA, San Jose, Vancouver), Northwest (Calgary, Chicago, Detroit, Edmonton, Minnesota, St. Louis).

Each team plays each other team home and away (46 games), each other team in its division home and away twice more (20 games), and one more game against each non-division opponent with the venue to alternate in successive years (18 games).  Cut the Stanley Cup down to 12 teams, with the top four getting byes for the first series.  In the first series, instead of four home games for the higher seed and three for the lower seed, play the first game on neutral ice, then four home for the higher seed and two for the lower (N-H-H-A-H-A-H).  For the four neutral venues, pick Halifax, Quebec, Winnipeg, and the home ice of whoever wins the NCAA Frozen Four.

And for God’s sake, end the fighting.  It’s dumb.  Sure, there are folks who go to the games for the fights, just as there are folks who go to auto races for the crashes.  Those aren’t serious fans.  But they are a good excuse to show this oldie:

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Auction Management

Posted in China, Miscellaneous, Movies on March 2, 2009 | 2 Comments »

The buyer of two bronze animal heads at the Christies auction of Yves Saint-Laurent’s estate now says that he will not pay, and indeed that he made the bid in protest to break up the auction.

I can understand that the auction touches on some raw nerves in China; the pieces were looted from the Summer Palace in 1860, and, as with works stolen or sold under duress in Europe in the 1930s/1940s, there is a point where the statute of limitations rewards some terrible actors.

The story of the pieces gets particularly interesting with Pierre Berge’s comment that China could have the pieces back for free if they would let Tibet have its freedom; if something stolen in 1860 is not considered settled, what about something stolen in 1950?

Beyond the political, though, what is with an auction house not requiring some sort of deposit to bid?  What is the point of using a serious auction house if the house will let some random guy call in from China, bid €28mm and then walk away?  I expected that sort of thing from the Bush Administration, which was in such a rush to issue oil leases in Utah that it allowed a protestor to walk into a Bureau of Land Management auction and claim a dozen parcels before giving the game away by simply leaving his hand in the air.

For that matter, isn’t this approach a plot device with the Faberge egg in Octopussy?

In hundreds of years of auctions, how has this problem not been addressed yet?

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Should Be So Lucky

Posted in Abortion, Obama on March 2, 2009 | Leave a Comment »

Successful politics requires a great deal of luck, perhaps nowhere more so than in the talents of your adversaries.

Margaret Thatcher might have been a short-lived prime minister trying to pick up the pieces of a fallen Callaghan government if Leopoldo Galtieri had not made the staggering decision to invade the Falkland Islands, apparently failing to appreciate that it is inadvisable to invade a nuclear power.

Who knows what would have happeened with Ronald Reagan’s tenure had he not been able to make his bones breaking PATCO (who had endorsed him eight months earlier!) in 1981?

So I hope the religious right is serious about fighting Kathleen Sebelius’ nomination on the grounds that she vetoed laws restricting abortion in Kansas.  Kansas’ senators will vote for her – they want her out of the state and away from their jobs.  Add that to the Democrats, and it is already possible to break a filibuster – and that is before the few remaining moderate Republicans ask themselves whether this is really a winning cause.

Democratic leadership in the Senate – yes, you, Harry – has been awfully scared of Republican filibuster threats.  The threats are hollow – let them keep talking for months, they’ll give up sooner or later – and the sooner the aura is punctured, the better.  I suspect very few Americans find abortion the gravest challenge facing our legislature, and those who do will never find a Democrat who makes them happy.

This is a great field for a fight.  I hope the Republicans indulge.

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Definition of Value

Posted in Housing Crisis, Meltdown on March 2, 2009 | 1 Comment »

Excellent article by Tim Duy, with this observation about the behavior of our leaders:

Leaving aside those challenges, another problem is the one to which Yves alludes to – the persistent belief that current asset prices are currently “wrong.”  There appears to be little thought given to the likelihood that past prices were “wrong.”  Instead, policymakers appear to believe that prices have intrinsic values.  The trick is to get market participants to recognize those values.  The belief (delusion) that the current price is simply wrong is not limited to Bernanke; it is pervasive among policymakers.  James Kwak directs us to an interview with Treasury Secretary Timothy Geithner, commenting:

The idea that houses have a “basic inherent economic value” other than the prices they can fetch in the housing market is, I think, a fallacy. And so the idea that therefore houses will naturally return to some “basic inherent economic value” that is higher than current market prices is, I think, wishful thinking of the kind that has hampered responses to this crisis from the beginning. They could; but they could just as well not.

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Twitter

Posted in Miscellaneous on March 2, 2009 | 2 Comments »

The system was probably not designed with me in mind – 140 characters isn’t my quantum – but it seems to have caught on with some improbable folks.  Not sure which of these is more surprising:

The Big Aristotle

McLovin

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Probably Not the Best Idea

Posted in Foreigners, Meltdown on March 2, 2009 | Leave a Comment »

Canadians are wonderful.  They are just like us, only nicer, funnier, and with better beer.  In fact, they are so wonderful this is about as patriotic as they get:

However, with the breakdown of the American financial system folks are looking north.  And, while emulating their homicide rate may be a nice idea, this is definitely not:

This would entail building a national banking system based on a small number of large, broadly held, centrally and rigorously regulated firms. Imitating the Canadian model would require sweeping consolidation of American banks. This would be a very good thing. Washington had difficulty figuring out the magnitude of the financial crisis because there are so many thousands of banks that it was impossible for regulators to get into all of them.

Consolidation is a wonderful thing when things are going well.  Financial firms have a lot of duplicative costs (the entire expense structure would be called SG&A in a manufacturing firm), so putting them together generally makes for accretive transactions.  The end of the McFadden Act in 1994 allowed for the large commercial banking rollups we see today (Bank of America, JPMorgan, Wells Fargo).

Problem is, it is precisely these behemoths that pose an enormous risk to our system.  And that is with a restriction that no bank can have more than a tenth of the nation’s deposits, not the Canadian model of six.

The US has both a massive domestic market and international finance leaders.  In this respect it is different not only from the small domestic market/large international presence countries such as Britain and Switzerland and large domestic market/modest international presence countries such as China and Japan, but also from Canada, where finance is simply not as important a contributor to GDP.  Adopting the Canadian model would be a bit like salting our fields to avoid an agricultural panic; six stodgy banks are hardly going to make good use of the finance talent we have already accumulated.

Furthermore, imagine the regulatory capture that would take place if we only had six banks.  The massive, nationwide corporations would each be way, way too big to fail.  What are the chances that our regulators would really give them a hard time?  Do you think we are pushing Citigroup or AIG or B of A to come clean with their dirty laundry?  The regulators do not want a panic any more than the rest of the government.  No, a cozy world of high prices and low innovation would set in.  A Canadian firm looking for a serious international banking partner has always been able to make the short flight to NY.  It doesn’t work the other way around.

Instead, we should look to fragment the deposit base.  The growth of shared ATM networks and online banking mean that there is not much convenience to be gained from a huge branch network.  While bank failures are hardly independent, they are not perfectly correlated either; in a world of many banks, the government will be much better positioned to withstand what bank failures do take place.  And I suspect it is far easier to have robust regulation in a scenario where the regulator does not mind forcing a company out of business than one in which the regulator does not dare.

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Just Another $30bn

Posted in Meltdown on March 2, 2009 | Leave a Comment »

AIG said it needed more money and the government flinched:

Federal officials, who worked feverishly over the weekend to complete the restructuring, said they thought they had no choice but to prop up A.I.G., because its business and trading activities are so intricately woven through the world’s banking system.

It is always easier to keep throwing away other people’s money than to admit error, especially when the only people who understand what is going on are the people getting the money.  It has defined our agricultural policy since the Great Depression, and it seems to define our fiscal policy in whatever this crisis will ultimately be called.

A few financial institutions have massive exposure to AIG and are scared about what would happen in a bankruptcy.  We could let AIG blow up and then decide where to intervene, but it could be politically difficult if one of the exposed parties turned out to be, say, the government of China.  So instead we just shovel money into the black hole of AIG, and wherever it goes, well, no one can see past the event horizon anyway.

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