“It’s not as much about the result, as it is about the journey.”
How true is that statement?? What a story that unfolded in France on Sunday!! For those of you who don’t follow tennis, history was made in a rainy afternoon in Paris. Roger Federer was crowned the 2009 French Open Champion while completing the career grand slam and, most importantly, won his record tying 14th career grand slam title. I never watched tennis growing up. In fact, it wasn’t until the Andy Roddick – Roger Federer match at the 2006 US Open that I started watching tennis (while I was waiting for a haircut). I was actually cheering for Roddick that day since I knew he was a fellow Austinite. But Federer was simply too good.
Fast forward a few years and I found myself riding along an emotional roller coaster that had him losing a heart-break at both the 2008 Wimbledon and the 2009 Australian Open to Nada, an up and coming tennis machine that is pretty much the human version of Pong. You can see from the first video (after the jump) that Federer wanted it bad – there was no question about it. And this is what made #14 so sweet (and #15 even sweeter if he redeems himself at Wimbledon against Nadal).
Congratulations Roger Federer for winning the 2009 French Open, completing the career slam, and winning your record tying 14th career grand slam!!! This one hasn’t come easy, enjoy it and get ready to capture #15 at Wimbledon!!!
First, in order to have an opinion of the solution, we must first try to understand the problem. Here’s a good, general visual explanation of how we got to where we are today (found via The Big Picture).
Correct me if I’m wrong, but in my opinion, this whole thing got out of hand with leveraging, so the problem now is how to sustain a flow of credit while during a deleveraging period. My problem with the Obama/Geithner plan are many:
1. The lack of details. A few weeks ago, Obama build Geithner up during his national address and set the expectation that Geithner would have details to the plan the next day… Except Geithner didn’t get the memo and pretty much came out and said, “We have a great plan, and you will see this great plan as soon as my magic wand arrives.”
2. What the hell does “through no fault of their own” mean?? The plan keeps saying that we (the taxpayer) will be helping people who’re in danger of losing their house “through no fault of their own”, I don’t understand that that means. Did someone force them to borrow that amount of money?? Did they misread the amount of money they were borrowing?? Or does it mean that it wasn’t their fault that the market price of their house is going through major correction and it doesn’t make sense to continue their payment?? Assuming it’s the latter, then…
3. The quick fix for this problem is NOT the way to fix this. I am not sure how the government plan on doing this (see #1), but by forcing a new mortgage (or adjusting the mortgage, depending on which side you’re looking at this from) between the homeowner and the lender is just another of keeping the price of housing artificially high (I might be using the term artificial loosely here, but I really believe that the housing market still has some room on the down side to move towards). I’m not sure why I, as a taxpayer who is not a homeowner, would want to use my money to subsidize someone else’s mortgage when it could be going to other things like schools & healthcare; Especially when, according to the free market, these people can no longer afford to stay in their house. So essentially the only thing we are doing is keeping status quo on the barrier towards homeownership. Maybe we should call our housing market the world’s biggest and most notorious ponzi scheme.
4. On behalf of the individual taxpayer, this is a horrible investment. Let’s say that all of this stuff works, and x years down the road, we’re well recovered and housing is rising healthily. I don’t see any mention of any provisions that would give the taxpayer ANY returns if the homeowner who took the help end up selling their property for a profit. So we’re forking them money now in return for nothing?? And these are the people who were irresponsible by getting themselves into a mortgage that they cannot afford?? And now we’re subsidizing them to live in a house that they cannot afford??
5. Our children will end up paying for this, mightily. There will come a point in time where the “full taxing power of the United States” government won’t mean anything to the countries we’re borrowing an ass load of money from. While (I know how bad this sounds) we should be glad that they also bought a lot of this “toxic assets” and that they’re also in the deep end of the pool like we are (right now at least). We are pretty much selling our children so that we can continue down this path.
6. We still don’t have any means of pricing these assets. If free market is not going to be determining the price of these assets, there needs to be some way for us, as taxpayers, to protect ourselves from sending free money to people.
While I might sound a little bit like the pessimistic jerk who is sitting in the back rejecting all the ideas. I do acknowledge that, at this point, something has got to be done. And whatever that something is, we will be passing or delaying a lot of the burden to the future. I just hope that we won’t be giving away too many free lunches.
While I would much prefer whatever legislation our government is on the verge on enacting be called a bailout plan rather than a rescue package, I think it’s pretty obvious that the bottom line is that something needs to be done.
Initially, I really wanted our government to do nothing and let capitalism stand true to itself – why should Americans pool our money together to cover a bet that we, as a country, didn’t make?? The market has enjoyed a very nice bull run, a recession – almost like a cleansing of the system – is healthy (if not necessary).
But there were events that unfolded last week that made me think twice about my decision to let things run. Things were starting to spill over into the board economy and it really started to look like we were starting to gain momentum towards a downward spiral. At the end, I do think that action by the government is necessary. But there are a few things of concern I should point out about this package.
1. I’m afraid that this won’t change the ways Americans live (more importantly, spend).
Even though we’re a good solid year in this mess, I still think that the media is portraying this as “greedy wall street took a gamble and got burned” scenario (which, to an extent, is true) and not as much as a “this is what happens when you spend $1.05 for every $1.00 you earn” situation (which is the other half of the story). For years, Americans have had a negative savings rate, we spend more than we save, import more than we export, consume more than we produce… because that’s the American way. This is indicative in the way household live, this is indicative in the way corporations leverage their business, and this is indicative in the way our government spends its money. So much of our economy is based on credit, if we continue down this path, it’ll only be a few years before we’re right here again.
2. I’m terribly afraid that the government will overpay for the toxic crap they’re about to buy.
Let’s face it, our financial system (if not our country) is run by Goldman Sachs. I can easily see a how a few people of influence can sway the government to pay a little extra to get this crap. I would really like to see some sort of mechanism where they can use the market to find a fair price for these things.
3. I think there’s a notion that this is getting marketed as an “investment opportunity” for the US.
Sure, the government can make money off of these debts – and sure, no one wants to lose their house. But the bottom line is, when you’ve bought a house that you can’t afford, you are going to lose your house. So just like any investment, there is a chance that this won’t work. Hank Paulson asked congress for the bazooka with the logic that if they know you have a bazooka in your pocket you won’t have to take it out. A few weeks later, not only did Paulson take it out and fired it – it didn’t work. We should also be prepared that this may not solve the issue (especially in the long run).
4. If the government does end up making money on this plan, I doubt you and I will see the pay off.
Let’s say that this whole thing works out, the government make money off of this. I am almost certain that the people won’t see much of the profit with the track record of the way our government spends our money. This is really a moot point now, but I’d really like to see a Presidential candidate who is going to make a priority to cut spending (as opposed to simply promising to cut taxes). I’m afraid that this is just going to give uncle sam a bigger bat to swing and we’ll be right back here again a few years later.
Hopefully this thing will get passed this weekend. Since it’s the end of the quarter coming up, it’s going to be NASTY if this thing don’t get passed by then.
While the headlines above would suggest a shear nightmare-ish bloodbath in the global equities market this week. That was not the case at all thanks to our government. While everyone holding equities in their portfolio or 401k is rejoicing, I should point out that the price we all paid is far too great – capitalism is dead.
While many recent accusations blamed the shorts for the tremulous run on the market (especially in the financial sector), one cannot ignore the fundamentals. It is INSANE to see how much leveragingsome of these firms are using. If a firm is going to, in the name of greed, participate in predatory lending practices and lend out money to people who cannot afford to repay it or run their business on this leveraging on steroids model, they (and eventually their shareholders) ought to be the ones paying for it – not the taxpayers. Granted, I have no doubt that manipulative shorting does go on in the market (there was an analogy of someone being able to buy his neighbor’s life insurance policy and then running them over with a car by buying a firm’s CDS and then shorting their stock, creating a nasty spiraling cycle of events) but banning short selling is not the solution.
By banning short selling, the government not only create a window for inflation and mispricing of securities, they also create a build up of short side demand. When this ban is lifted, the market is going to take a kick in the face. And guess what the headlines are going to read that evening?? “Shorts take over the market again.” This is just going to be nasty.
What the government should do instead is to regulate the CDS market better and reimplementing the uptick rule. By providing more transparency in the CDS market taking down manipulative short selling, we can still keep our free capitalistic market. A stock is not guaranteed to appreciate in value, I don’t understand what’s so awful about a long overdue correction.
A “free market” without the self-correcting mechanism of short selling is almost like Christianity without hell.
Congratulations to Roger Federer on his 13th career singles grand slam title. Only 1 more to tie and 2 more to top Pete Sampras’ record 14 grand slam title!!
I used to love watching NBA basketball. While I must admit that basketball has not been the same after a few heartbreaks from my beloved Mavs, I came to a shocking realization today – I actually enjoy watching basketball in the late 90s (when the Mavs sucked) than in the last few years. While I have previously voicedmy opinion on this controversy, I think this situation has come to a breaking point now. Credible or not, Tim Donaghy’s claims has received enough attention from the media to, in my opinion, seriously damage the league’s image. If Mr. Donaghy’s claims are absolutely baseless, as David Stern and Bob Delaney (whom I regard as one of the better refs in the league) asserts, then there shouldn’t have been any media coverage of this story. But after game 2 of this years finals, that was the perfect storm for this story to come out. And if the league wants to put away the slightest doubt in this PR nightmare, I have a solution.
Like Phil Jackson, I think it starts with an independent body that will be responsible for the refs. This body will have the authority to assign, review and, if necessary, discipline, the refs based on its own NBA-independent policies. This body would not have to provide complete transparency (in order to protect the refs), but enough transparency to give the PR image of integrity as opposed to complete blindness right now. A few PR events that shows how refs get ready for the game in the film room, how they review their performance, a few workshops, etc., etc. I don’t think that’s anything outrageous or impossible, just give the fans a few glimpse of how things work.
We’ll see what David Stern and Stu Jackson tries to do to put out this fire. Based on their decision history, they will probably just let this thing blow over and keep this cloud in the back of fan’s mind.
I’m sure you know that it’s out there. I just watched the WWDC keynote address from yesterday. Let me get this out in the open first – Instinctively, I want the iPhone 3G. There was little doubt in me whether or not Apple was going to deliver a great successor to the iPhone, but I am actually quite intrigued at some of their business decisions they’ve made with iPhone 3G and how it’ll affect the consumers as well as their partners.
On the consumer end, I think Apple has moved their marketing pitch from a genius innovation to a product package that provides simple, easy to use solutions to everyday users that are (most importantly) iPhone exclusive. I’m not a programmer and I’m not sure what programming an app for a BlackBerry or a Palm looks like, but I’m willing to bet that it’s not as easy to build and debug as it would be on the iPhone with the iPhone SDK. And while they’re keeping things easy and clean for the developers, they’re getting them to build iPhone exclusive apps. After seeing the eBay app yesterday, I don’t really want to know what browsing eBay would be like on my BlackBerry. Speaking of iPhone 3G envy, MobileMe (“Exchange for the rest of us”) is absolutely brilliant. Even though my Blackberry syncs with my MacBook Pro with no problem, I can only imagine how nice it would be to have all the updates pushed to all my devices (not to mention the awesome web interface). Simply put, the iPhone 3G will offer a vast array of iPhone exclusive products/services that will make it pretty much impossible for other smartphone makers to compete with Apple’s unique position both in the PC market and the smartphone market.
On the business end is when things start getting real interesting. With the iPhone 3G, AT&T (T) and Apple (AAPL) has reached a new agreement and under the terms T will see “that higher subsidization will negatively impact earnings in 2008 and 2009.” (T) “lowered their 2008 and 2009 EPS ests by $0.11 each due to a higher assumed subsidy loss, though the co. should benefit longer term from the greater associated data rev and device differentiation.” For the year 2008, they have estimated that their subside loss would be around $1bln. While under their new agreement, they have also did away with the revenue sharing model that was used with the original iPhone where Apple shared a portion of the wireless revenue. But even with this model, the company sees that the EBITDA for wireless service margins at 39-40% from 44+% realized in 2007 and prior guidance of 43-45% for 2008. Even with the rumored $10 increase in the price of the monthly data plan, I wonder if this is a price a little bit on the hefty side for T to pay. Also notable under this arrangement, in order to control the “unlocking” of the iPhone 3G, activation will not be at the convenience of your own computer anymore. Synchronoss Technologies (SNCR) confirmed that it won’t participate in on-site, retail store activations associated with the 3G iPhone (SNCR was down 17% in trading today). The good news is that the iPhone 3G launch day happens to be free slurpie day (7/11), so get a slurpie and have fun in line. =)
In the end, I think Apple’s business position will make itself look great while making some of it’s partners (read T) look like an ass. I’m really interested to see what position T takes with the Apple loyalists that own the original iPhone and still have a year left on their contract. Let’s see what happens as July 11th rolls near.
And in case you’re wondering you won’t see me with an iPhone anytime soon. I have no intention of paying the early termination fee on my current contract I signed when I got my BlackBerry. I hope that this pricing will put pressure on RIMM to make the Bold cheaper though. =)
I don’t know who was on, but a guest at CNBC today said that oil prices will continue to go up until the price is so high that it forces us to change the way we use oil. He specific points out that at the current rate, it won’t happen until states stop subsidizing gasoline to its citizens. Did you know that the people in Venezuela only pays $.12 for a gallon of gas?!? In Saudi Arabia it is only $.91.
While senators keep moaning and griping about hugh profits for oil companies, oil execs keep defending themselves with “supply and demand”. What’s funny is I don’t really think that there has been any dramatic supply/demand change in the last two years to justify the price of oil doubling. Unless we change the way we use oil as a planet (burning corn off isn’t a solution either), the price of oil is just going to continue to skyrocket.
Comments (0) 
News/Events, Videos
| 
goat, rf, roger federer, tennis 
