Monday, September 19, 2011

Kyle Bass on CNBC discussing the latest on the European Crisis

Kyle Bass from Hayman Capital was on CNBC's Strategy Room last Wednesday to discuss the European Crisis. He parses through the noise on the situation with how "the period we are going to go through, people are going to lose a lot of money." Flat out he doesn't believe that Greece and the PIIGS are not going to have an orderly default, but the world is not going to end. He does see a recession on the way as I do. The video is top notch:

Wednesday, September 14, 2011

NCAA Hypocrisy Exposed by the Mercs & South Park

NCAA major sports programs are a big business... no a huge business. I find the hypocrisy of the NCAA Division I sports stifling. My doubts started when College Football refused all common sense and the spirit of competition when they rejected a playoff system. The vested interests of the bowl system, TV rights, etc. were not budging. I am fine with folks making money, but when the NCAA wrap themselves up in academics and the tradition of the bowls I call hypocrisy! The more I looked into the more the whole system absolutely stinks.

The NCAA loves to espouse academics and will parade it out or hide behind it at the first sign of trouble. Truth being told when it comes to academics the graduation rates of the "student athletes" is extremely low. Especially for the players who come from the top programs. Overall and there is some debate with the statistics, but ESPN reports grad rates at 69% for Division I football. You can see where all the schools individually rank at For reference this year's current college #1 ranked team, Oklahoma, is at an embarrassing 45% graduation rate. When comparing the racial divide between graduation rates of whites to blacks the numbers are even worse. 59% was the graduation rate from last years champion, Auburn. However 94% of Caucasian players graduated compared to the 48% of African Americans. That's a -46% difference! So you better hope these kids have a chance at the NFL, right?? Yeah, hmmm, well at least 90% of the 2500 Division I football players that run out of eligibility never play a single down in the NFL according to this ESPN article. The article is full of NCAA hypocrisy and is a must read. NFL has been known to stand for "Not For Long" and most players don't even make it to "full career" of 5 years. If that isn't enough information for you the Huffington Post does a good job exposing some of the questionable data that NCAA puts together in its statistics about student athlete academics.

Now that we've proven the sham of NCAA Student Athlete academics. The NCAA likes to play upon most of our fond memories of college that most of us share. They constantly talk up tradition and the spirit of history. I love history! Well guess what? The NCAA could really care less with their most recent antics. They have been turning a blind eye to conference realignment for the sake billion dollar TV contracts that the players will never see a dime of. Rose Bowl champion Texas Christian University, TCU will be playing sports in the Big East Conference?!?! Texas A&M is looking to jump ship to South East Conference, SEC. Oklahoma & Oklahoma State are contemplating a jump to the already crowded PAC-12. Why? For the TV contracts of course! Guess what if you are player in one of the big powerhouse schools if you accept any form of payment or trade you are suspended or kicked out of the league. The latest (ESPN) is the star quarterback, Terrell Pryor, from Ohio State was suspended and forced to try the NFL because he received a couple hundred dollars and some tattoos for signing his own jersey of the school he plays for! Meanwhile one injury could've ended his career and his earning potential. He would have little to show for it. However the school would have made 10s of millions on TV contracts, tickets sales, video game sales, memorabilia, etc. I don't have time to rant about the coaches who make millions in the face of their unpaid players....

The more I have looked into it, the more disenfranchised I have become of big time college sports. Worse is I hate the rank hypocrisy that is thrown in your face as a sports fan. And I am a huge sports fan. I am as big of a capitalist as any out there and don't have any problem with any coach or school making money. When you use the government and "non-profit" institutions to manipulate & oppress others so they can't get the same opportunity that's when I have a problem! One of the reasons I am a sports fan and a capitalist at heart is I love competition. However there isn't a level playing field for those that risk it all, the kids/students/players. So let's call the situation what it really is: SLAVERY. South Park doesn't pull any punches when it mocks the whole sham. Enjoy and remember careful what you support when you spend your money and time watching collegiate athletics.

Tuesday, September 13, 2011

Epic Nadal vs Djokovic US Open Final

This is one of the greatest tennis matches I have seen in a long time. The score doesn't do justice to the pace of play and competitiveness of the match. Djokovic and Nadal played a knock down drag out fight of a match. The crowd was loud like a Davis Cup match and both players were going blow for blow like a pair boxers throwing haymakers at each other. This YouTube clips is one of many great epic points that seem to come at the biggest parts of the match, break points, set points, etc. One of the games lasted over 17 minutes and the total time of the match was close to 4 hours. Unbelievable Final! Enjoy:

Monday, September 12, 2011

Rob Arnott Discusses the Euro Crisis

Rob Arnott always has interesting insight on the markets and in this video from the Breakout Blog of Yahoo! Finance is no exception. Talking Euro crisis and potential effects with Jeff Macke:

Saturday, September 10, 2011

Inside 9/11 a Must Watch on the 10th Anniversary of the Attack

In my opinion this 2006 National Geographic released "Inside 9/11" documentary is one of the best out there. It tells the whole story from before and during the traumatic attack. The 10th anniversary of the attack is tomorrow and will be on everyone's mind. We should never forget about those that will do us harm, those who gave their lives that fateful day, and those who continue to protect us from terrorists. So if you haven't seen Inside 9/11 please make a point to watch it tomorrow on National Geographic Channel or buy the DVD.

Thursday, September 08, 2011

Swedish Model? Nope I'll go with the Icelandic Model

As much as I would like to debate the pros & cons of hot Swedish models vs hot Icelandic models. I will choose to bring to your attention to the bank crisis models of each country... so sorry to disappoint. I did however provide a photo.

To give you a brief overview for the links I will start with the Swedish banking model. In the late 1990s Sweden had a banking crisis. Instead of kicking the can down the road by bailing them out they put them into receivership wiped out stock holders & made the bond holders take haircuts. After the banks were recapitalized they recovered in relatively short order. Completely unlike our current crisis or please see Japan as the poster child. Barry Ritholtz over at the Big Picture blog has discussed this at length. Please follow the links to learn more:
Go Swedish, part 47
How-to Guide for Fixing America's Banks
Who Bears the Costs of Post-Crisis Recovery?

The Tiny Country of Iceland did the same as Sweden to the chagrin of the international banking community. The British & Dutch governments were also upset because their countries had the bulk of deposit coverage when they failed. In short Parliament via popular sentiment defied the Prime Minister and told the investors in these ridiculously leveraged banks to pound sand. The people of Iceland came out in force to demand that no unnecessary debt burdens would be put on their shoulders. After a short painful process of inflation through the resulting currency depreciation Iceland is on the road to recovery. Real recovery not some debt induced Keynesian short term recovery. The proverbial rip the band-aid off versus slowly pulling it off.. Basically the opposite of Japan, Europe, and the United States' solution. For further information definitely follow the Wikepedia link to learn more.

One more wrinkle to the Icelandic situation and why I will put them over the top on the "model" battle. They are prosecuting those in power that let the craziness of leverage & poor lending practices prevail. Rightly so!!! We still haven't prosecuted anyone of substance for the fraud and excess that went unchecked. Here is the link please read on!
Iceland tries ex-premier over collapse

Monday, September 05, 2011

Amazon's Blatant Bribery

Do I use/like Yes!
Do I think California taxes are too high? Yes!
Do I generally think businesses are taxed too much? Yes!
Do I think certain businesses should get special treatment? Absolutely not!

So it's unbelievable to me that Amazon would be so bold to try to "buy" a special tax deal from the state of California. Reuters is reporting that Amazon is offering up to 7,000 jobs if California drops its online sales tax for 2 years.

To me business/capitalism needs a level playing field where competition is key. The businesses are forced to compete by giving benefits to the end consumer of a better product or service. When businesses have an unfair advantage that skews the marketplace. In this instance Amazon has the ability to undercut brick & mortar businesses in California by about 9-10%. (Unbelievable state & local taxes are that high. We get so little for it too) This hurts a lot of small business too. And leads me to the point that is unseen by many. That of course is that large businesses have the unfair advantage of being able to negotiate special tax treatments or deals that small businesses just can't. They also have a vast team of accountants and lawyers that are able to expose the tax loopholes. Not withstanding a lot of the loopholes in corporate tax code is designed to be exposed by "privileged businesses" in privileged industries. The most notable example is all the special benefits and treatments for real estate & construction of late. (Not shocking a disproportional of resources & energy went to fueling that bubble) I feel strongly simplifying the tax code and yes, even reducing tax rates benefit business, job creation, and in particular small business. Many studies have proven that small business is the real driver of jobs, not larger businesses and especially not government.

A note to investors of Amazon. Be careful of the effects of these new tax laws on Amazon's bottom line. Margins are already thin and the share price is already at "explosive growth" valuation with P/E ratio of 92 based on the closing price on 9/2/11. Is Amazon an innovative company in retail & cloud computing? Yes. I will still continue to use them because I hate wasting time driving to the mall and shopping when I can do it from the friendly confines of home. This by no means is a recommendation to buy or sell AMZN. Just make sure to do your homework with this investment or other for that matter.

Thursday, September 01, 2011

Bank Regulators Cutting the Red Tape and Screwing the Rest of us

Caption: "June 3, 2003: Determined to cut red tape and reduce the regulatory burden are (l-r), Office of Thrift Supervision Director James Gilleran, Jim McLaughlin of the American Bankers Association, Harry Doherty of America's Community Bankers, FDIC Vice Chairman John Reich and Ken Guenther of the Independent Community Bankers of America"

Mentioned in William Black's: The Great American Bank Robbery

Hmmm I wonder if this will end badly??? This one you can chalk up to the Bush Administration & Alan Greenspan for leading the charge to make regulators useless. Greenspan was the most egregious by favoring "competition" between the regulators where banks had the ability to choose and change the regulators on a moments notice. So "regulators" jumped over each other to try to win business by being the most lenient. Well they won but America lost.

William Black: The Great American Bank Robbery

Dr. William Black a former regulator during the savings & loans crisis and white collar crime expert is discussing "The Great American Bank Robbery". I had seen this video a couple of years ago and should've posted it then, but it is just as important now as it was then. I recommend that if you have high blood pressure and get angry easy than please don't click the play button. I wish Black was in charge during the run up of the financial crisis or at the very least be there in 2008-9 to clean up the trash and throw a bunch of these banksters into the slammer. Again nobody from the major banks, brokerages, or mortgage origination companies have been thrown in jail from the pervasive fraud that was perpetrated on the United States & the world!! This is really the most troubling for me because it corrupts our market based economy. I am all for capitalism, but there needs to be a referee and consequences for crime and failure.

Watch the video and spread the word about the fraud!