Archive for June, 2008

Are We Growing Up?

Hundreds of thousands of US soldiers returned from World War II to almost universal approval, parades, honors and public adulation. They were called America’s Greatest Generation. The general most identified with this war was elected President by a huge margin.

Hundreds of thousands of US soldiers returned from Vietnam to a very mixed reaction, a good deal of public scorn, and honor largely only among each other. They were called America’s Lost Generation. Nobody seemed to want to identify with this war, but among those that were publicly associated there was one President who resigned in disgrace, and one future unsuccessful presidential candidate whose Congressional testimony discussed participating in numerous war crimes.

Now we have Desert Storm, Desert Shield, and Enduring Freedom.

Well, the approval is back, and the honors are back. The adulation isn’t there much anymore, but if you talk to a WWII vet, they never understood the adulation anyway. They just went and did a job, did the best they could, and came home. That’s what our soldiers are doing now. There aren’t many big victories (there were, but only for about two weeks), at least none that get reported, but neither are there defeats, or worse, victories that get reported as defeats. It’s a workmanlike effort, a job that needs doing, so we do it.

It’s almost like we’ve grown up as a country.

You can see this very well in the movies. WWII era movies are bloodless, heroic fairy tales. They aren’t really about the war in any real sense. The war is a backdrop for John Wayne to make speeches. Not that these movies are bad, immoral, or fattening. They aren’t. But they do very well reflect the ethos of the time, that the war was a good thing, a noble cause, and those that fought in it were to be honored and admired.

Fast forward to the 70s and 80s, and you get movies like Apocalypse Now and Platoon, which seem to have as their central character the war itself. The actors are merely foils for the war, powerless to resist its insanity, maimed and disfigured physically and emotionally by the senselessness of it. This, too, reflects an ethos and a public perception. It also reflects the contempt of many for the men that fought in Vietnam, though I should say there are many places and many people that rejected this contempt and held the fighting men in great esteem despite an avalanche of negative press. Nevertheless, it is fair to say that the hopelessness of these movies was born out of a similar public hopelessness, and a rejection of the WWII sanitization of the war.

Today we have something very different. On our airport concourses, we have people applauding our soldiers as they return home. We have entire neighborhoods ablaze in yellow ribbons. We have bands and tributes again, as we once did.

And yet, am I the only one that feels there might be something different about it all? We have heroic war movies again, like before, but Saving Private Ryan and Band of Brothers, while inspiring, in no way gloss over the horror that war brings to those that endure it. And yet, they still do inspire, not in spite of the horror, but in an odd way because of it.

I offer yesterday’s church service as an example, that perhaps can illustrate what I mean. We had several addresses by former soldiers and the spouses of current ones. All said essentially the same thing, that they were proud of the service they rendered and were glad for the opportunity to serve their country. And all said something like this: “this is incredibly hard. It is extremely dangerous, and we don’t take for granted that we’ll be coming home. War is an awful thing, but there are things that are more awful, and ingratitude and cowardice are two of those things.”

What I hear from the tributes and paeans of praise for our troops in this day and age is an almost adult understanding of the true meaning of the sacrifice being made on our behalf. Oh, there’s still bravado and bombast in some quarters, as there is whining and self-pity, hopelessness and defeatism. But by and large, the majority of the country seems to have harnessed itself to the idea that there are noble deeds being done by ordinary men and women every day, and that those deeds should make us grateful that there are such men and women to do them.

America is home to not one great generation, but many. The first, perhaps, we took a bit for granted. The second we unfairly judged. This one, now, this one we see more clearly. They are heroes. Not Olympian heroes, without flaw or pain, but true heroes in the truest sense, men and women of extraordinary character and resolve, who make sacrifices on our behalf not out of necessity, as the previous generations did, but out of gratitude and a sense of duty. These are volunteers, not draftees. Is there any way to entirely comprehend the miracle of that?

We have grown up, as a people, and that is hopeful. I doubt we can ever appreciate in any completeness the miracle we witness every day. We benefit from it now in obvious ways, but we will reap the rewards of it for generations to come. This is an investment that will pay huge dividends for those that made it, and for the rest of us that are their comrades, if not in arms, then at least in spirit.

It is perhaps the most hopeful thing I’ve seen in my 40 years on this earth.

Happy Independence Week.

How Bad is the Offside Rule?

I promised Alison Wonderland that I’d post on this topic, so here we go:

the soccer offside rule is the stupidest rule in sports.

Honestly, folks, this isn’t even close.

First, no other rule in any sport requires the referee to be watching three things at the same time; in this case, the single ref on the playing field has to be watching the ball to see when it is played, the most-forward offensive player, and the entire opposing defense. Best-case, that’s three things in an area about the size of a basketball court; worst case, it’s three things spread over almost an acre.

Second, it’s the only rule in sports that penalizes one team for the actions of the opposing team. When the defense moves in football, the offense doesn’t get a penalty for it. Lots of sports have offside rules, including football and rugby, but in those sports, the defense cannot make the offense offside.

Third, and most damning, it’s a rule that makes no intrinsic sense. It’s just stapled onto a really good game for the purpose of restricting scoring. It’s exactly like adding a rule to basketball allowing the Celtics to stop Kobe from scoring by having all their players run off the floor when Kobe gets the ball, forcing him to shoot from 40 feet instead of passing the ball to Lamar Odom for a dunk. How stupid is this?

Purists say that getting rid of the offside rule would ruin the game, but they can’t agree on how. Some say scoring would skyrocket but fail to explain how that would be bad, except for the Italians. Others say that scoring would fall (not sure how that’s possible, really), because teams would put all their players in front of their goal. But both contentions are founded on nothing much but guesswork, since as far as I know nobody has ever tested it.

I think scoring would rise, and rise dramatically, but not because there would be a huge number of long-bomb goals to cherry-picking forwards. In the same way that a team’s scoring rises in football when it has a deep-receiver threat, scoring in soccer would rise. Even the best deep receiver doesn’t get more than one or two deep balls a game, but his presence allows a lot more play in front of him by expanding the area the defense has to cover. The best players on the field are usually the central midfielders (look for the number 10), who would all of a sudden gain much larger spaces to work magic in. What kills the game is that offside allows 8 defenders to congregate at the top of the penalty box and shut down Ronaldino with sheer numbers; getting rid of the offside rule would not allow them to do that. The magical, miracle moments we fans love so much would come every 5 minutes, not every half hour.

We’ll never see it. Even when Italy puts on a ridiculous display in a major international tournament, embarrassing themselves and international soccer, we’re not going to hear calls for getting rid of this cancerous growth on the beautiful game (the offside rule, not Italy itself).

Too bad.

Fed Holds Firm

  • The Federal Reserve tried to have it both ways yesterday, leaving
    short-term rates right where they were, but talking about getting tough
    with inflation. That leaves the Fed rate at 2%, making the Prime Rate
    6%. As you know, because you are a faithful reader, Fed Rates and
    long-term mortgage rates do not have that much to do with one another.
  • The long bond traders hated the news initially, but the stock
    traders hated it even more and by the end of the day we were back flat
    and repricing to the better.
  • So this morning we have the first tick down in certain rates we’ve seen in a month.
  • National Association of Realtors data this morning shows a 2%
    increase in month-to-month sales volume for houses, most of that in the
    markets like Vegas and the coasts, where house prices have dropped
    significantly. But again, it’s a sign of increasing activity.
  • My take? We’re on the housing bottom. There will not be
    significant national drops in home prices from here. It’s not going to
    get worse than it is. It is, however, going to stay bad for another
    nine months, so there’s a significant buying window here. Not that I’m
    a real estate expert, mind you.

Same recommendation today, if you’re going to buy, buy. Don’t
try to time the market. It’s a fool’s game.

First Day of Summer


  • Although it may have felt like it for a long time, today is
    actually the first trading day of summer. Everyone is watching crude
    oil prices, as the Saudis have indicated that they will increase
    production, possibly dramatically, by the end of 2009.
  • Problem with that is, markets were hoping for a bigger increase,
    and Saudi Arabia doesn’t have the kind of crude the world wants. Turns
    out the big producers of light, sweet crude are in Nigeria, Venezuela,
    and – get this – Iraq. Iraq is not entirely back on line yet,
    Venezuela is the home of one of the world’s last real tin-pot
    dictators, and Nigeria is in the middle of a civil war.
  • Markets are pricing in further increases in oil, and waiting for
    the Fed meeting which kicks off tomorrow. The Fed is virtually
    guaranteed not to do anything with rates, but you never know.
  • Bonds, on the open, are absolutely flat. It’s hard to see
    anything moving us dramatically today, given the flood of economic news
    later in the week.

For today, as we usually recommend, if you’re going to buy, buy. Don’t
try to time the market. It’s a fool’s game.



Thanks to those that came to the CJ Group BBQ this last weekend – it
was a hoot and a holler. Nice to meet so many RateWatchers, and we
look forward to seeing you again. And welcome to practically the
entire cast of Draper Arts Council’s You Can’t Take it With You,
a great show Jeanette and I caught on Friday. You wanna go, there’s
info here.
You won’t regret it if you do.

RateWatch Midday Update

This isn’t a big deal, because markets aren’t moving much, but it
illustrates one of the problems with market forecasting. The Philly
Fed number came in below estimates, but apparently the market estimates
weren’t real, because, and I quote from CNBC, “I think we all knew the
estimates were going to be wrong.”



What the heck is that about? If your estimates really aren’t your estimates, then what are they?



Related to this is the upcoming trial of two Bear Stearns hedge fund
managers, arrested today, that are accused of bilking their clients out
of millions by telling them that the subprime market wasn’t going to
collapse when they really thought it was. The prosecution’s evidence
for this is a couple of emails back and forth where these guys say
stuff like “man, this looks bad”. Well, it DID look bad. Turns out it
WAS bad. But I myself was saying as recently as February that there
were signs of recovery in credit markets. Last year I was saying that
any broker that made it to the first of 2008 was going to be fine, as
things began to turn around. Nobody knew the markets were going to be
this bad this long.



I want to underscore the difficulties here. Nobody actually knows what
the market is going to do. Nobody. Not Warren Buffet, not George
Soros, nobody. People guess wrong and lose money. It happens all the
time. Advisors screw up and cost their clients. I suppose that some
of them do it on purpose, but why, exactly, would you? Where is the
incentive to destroy your portfolio and lose your clients millions?
This seriously smacks of scapegoating, looking for someone on whom to
take out general frustrations. Maybe there’s real malfeasance here,
but boy, I’m having trouble seeing it.



My father has a saying that I really like: if incompetence is the
possible explanation for some action, it’s a waste of time looking for
another one.



Bonds are down.
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