2008 in Review

In the financial markets, 2008 was a year to forget; the worst year in (my) recent memory. But after seven good years, we're allowed to have one clunker, especially since this sets the stage for a rally in 2009. The resource stocks got hit just as hard as every other asset class, with the larger companies down as much as 40-50% and the exploration companies off 80-90%. Because of the credit crunch, some of the smaller companies may not survive, but this only creates opportunities for the better-capitalized survivors. The only asset that held up in 2008 was gold bullion, which actually managed a small gain, year over year. Even its cousin silver declined substantially from July through October. But the year end rally, in which a broad range of mining shares appreciated 100-200% is a portent of things to come.

2008 will be remembered in much the same way 1929 is remembered. It was the year in which the wheels started to come off. The government has already pledged $8.5 trillion in guarantees, bailouts, and assorted rescues, and there is no way even to borrow that much money. It will be created out of thin air, as will the funds needed to finance Medicare and Social Security some day. Bush has managed to delay until he can leave office the total collapse of the financial markets by means of overt manipulation that has gone unreported in the mainstream financial media. But when President Obama has to ratchet up spending another $1 trillion to make up for sharp declines in consumer spending and business investment, the game will be over. All that remains to be determined is which president gets blamed for it. If Obama is smart, he will get the bad news out of the way early.

In sports this may have been the best year ever. It started with the best Super Bowl ever, then the best U.S. Open (Tiger winning a playoff on one leg) ever, then the best tennis tournament ever (Nadal-Federer at Wimbledon) and then the best Olympic performance ever (Phelps 8 gold medals) so I doubt 2009 will measure up.

Leadhead, if you're out there, even you would have enjoyed watching sports in 2008.

So much for Dallas

OK, my prediction of Dallas over San Diego in the Super Bowl doesn't look so good. Today the Eagles beat the snot out of the Cowboys (final score 44-6) to send them home for the winter. Way back when, before the season started, I said the Cowboys only weakness was its coach, and I still feel that way. There were other problems, like losing their QB for a month, the offensive line getting old, injuries in the secondary, and so on. But if they had a good coach, they could have overcome these obstacles. New England has 14 guys on injured reserve, including Tom Brady, and they still won 11 games (which isn't good enough in the AFC) but then the Pats have a real coach.

There was a moment in today's game which highlighted the problem. The game wasn't completely out of reach yet, and Dallas faced a 4th-and-1. Wade Phillips sent the punting team on the field, and Tony Romo waved them off. He kept the offense out there, and they picked up the first down. Great initiative by Romo, but who is running that team? I don't know a lot of head coaches (most of whom are typically control freaks) letting their players make those decisions. It begs the question: why do they need Wade Phillips at all?

At least the Chargers are still alive, although just barely. As I write this, they are leading Denver, and they need this game to finish 8-8, which will qualify for the playoffs. Hey, somebody has to win the AFC West. It's the Chargers luck to play in the weakest division in the NFL, where 8 wins gets you in the playoffs, while New England wins 11 games and misses out.

Which brings me up on my soapbox again. It's time to do away with all of the division and conference concept with respect to wild cards. San Diego can make the playoffs with an 8-8 record, while a bunch of teams with 9, 10, or even 11 wins didn't make it. Therefore, if I were king (or at least NFL Commissioner) I would decree that the teams with the 12 best records make the playoffs. Period. If there's a tie, the appropriate tie-breakers can be used, whether head-to-head competition, strength of schedule, or whatever.

My point is that the AFL-NFL merger took place almost 30 years ago. It's over. If the AFC has most of the best teams in the league, then they should send 7,8 or 9 teams to the playoffs if they have better records. There's no reason some underserving weak sister team in the other conference should be in the playoffs just because it won a weak division, or qualified for a wildcard in a weak conference. And the chance of this suggestion being adopted? Don't hold your breath.

The SEC: Send in the clowns

Way back in the 1920's, corruption was rampant on Wall Street. The government's response was to create the Securities and Exchange Commission to regulate the stock market. In 1933, the Glass-Steagall Act prohibited commercial banks from investing in stocks, and brokerage firms and investment banks from getting involved in commercial banking (among other things.) The point was to establish the proverbial "Chinese wall" to separate commercial banks and investment banks.

This worked well for decades. But Wall Street's greed could not be contained forever. BTW, I may have mentioned this before, but it bears repeating: the real power in this country is in New York, not Washington. That said, in 2004 Treasury Secretary Henry Paulson was the head of the investment bank Goldman Sachs. He (among others) went to the goverment complaining that only being allowed to use 12-1 leverage was constraining his firm's ability to do business. That's like having 8 cents for every dollar you risk in the stock and bond markets. Goldman Sachs (and the other banks) could be more profitable if they were allowed to use leverage of 20-1, or 30-1, or 40-1.

And so it was done; Wall Street firms were transformed into gambling casinos. It wasn't as risky as all that for Goldman and JP Morgan Chase, since their government connections and inside information allowed them to know what would happen ahead of time. It's a lot easier to play the market that way. But some of the less privileged players made bad bets and fell by the wayside. Today I doubt there is one large financial institution that would be solvent if it had to liquidate all of its assets.

Where was the SEC when all of this is going on? Good question. They certainly weren't investigating Bernie Madoff. Madoff, if you haven't heard the news lately, was a distinguished 70-year old former chairman of the Nasdaq. But for the past ten years, he has been running a Ponzi scheme that stole $50 billion from investors. And it's not like the SEC actually caught him; his own people finally turned him in. The SEC had been tipped to investigate him over and over for the past nine years, and never looked into his operation.

As I have said before, people need to go to prison; not just in the failed banks and brokerage firms, but in the regulatory agencies as well. The SEC ignored naked shorting of stocks until it finally had to step in and prohibit the naked shorting of the 17 financial firms that had been doing all of the naked shorting in the first place. In other words, the SEC only protects the criminals. In this country, we don't take disgraced government officials out and shoot them, and that's really a shame where Christopher Cox is involved. Under his "leadership" for the past four years, our financial markets have been manipulated and controlled to a level the old Soviet politburo would have been proud of.

In 1805, the Battle of Trafalgar was fought off the Spanish coast, in which the British admiral Lord Nelson destroyed the combined French-Spanish fleet. The French admiral Villeneuve escaped with his life, and returned to Paris, where Napoleon reportedly was not happy with him. Shortly thereafter, Villeneuve was found dead, stabbed three times in the heart. The police ruled it a suicide. Ah, to live in simpler times, when disgraced leaders got what they deserved!

Quantitative easing

Quantitative easing: those are big words that mean, "Oh &*$#@!, we better start printing money like there's no tomorrow!"

Today the Fed cut interest rates by 75 basis points. The federal funds rate is now a Japanese-like 0.25%. It can't go much lower. So now one monetary weapon is out of ammo. Next, the Fed will begin purchasing Treasury bonds (if it hasn't already through covert means in the Caribbean.) Ever wonder why Caribbean countries own tens of billions of Treasury bonds? Are we buying lots of something from them that I don't know about? What do they export, anyway? I suppose it is possible that hedge funds domiciled in the Caribbean have been buying T-Bonds, but I am more inclined to think there is an arm of the US government doing at least some of the buying.

Whatever the case, the Fed is going to be buying A LOT of T-Bonds. More importantly, they will be monetizing the debt, which is a fancy way of saying they will simply print money to buy those bonds. Actually they don't print much money any more. Why kill all those trees, and waste all that paper? The money will be simply created out of thin air. I think the market has finally gotten wind of that in the past couple of weeks; that the deflationary scare was just that, a scare.

For the fist time in at least a couple of years, the mining shares are leading the bullion, providing the leverage they are supposed to. While silver has bounced off its lows of around $9/oz, Silver Standard has rallied some 160% off its lows in the past two months. Silver Wheaton has more than doubled. I think we will see more of this in the months ahead. The key will be the breakdown of the US dollar. I'm not a market technician, but the dollar chart looks terrible, with a head and shoulders top, followed by a move down through resistance around 84. More importantly, the fundamental reasons for dollar strength appear to have run their course, or nearly so. The hedge fund deleveraging is winding down, and there isn't going to be much rational selling of mining shares at these levels. More likely, given the huge moves they have made, momentum players could start jumping on board, followed by short covering, once the shorts realize this game is over.

The major sign of the coming apocalypse is that Bart Chilton, head of the CFTC has agreed to meet with Bill Murphy, chairman of GATA. Once Murphy presents ten years of evidence of market manipulation to Chilton, plausible deniability goes out the window. It will be impossible to look the other way once he's been presented with a mountain of documentation of fraud on the CRIMEX. I don't yet know whether the ongoing investigation will reveal anything, but the recent move in the metals may be an indication that all the smoke is finally going to yield some fire. I think the next few months are going to be the beginning of the next leg upward in the commodity bull market.

Stagflation or something more?

World War I ended in 1918. Of course they didn't call it that back then. It was simply known as "The Great War." To call it World War I would carry the ominous connotation that there would be more world wars. Then World War II occurred, and the formerly Great War was deemed to be not so great in comparison, so the name had to be changed.

Similarly, the economic upheaval that began in 1929 was named the Great Depression, a name that has lasted to this day. So far. But given the fiscal and monetary policies of the past few months, I am beginning to wonder. We could be on the road to what may be called "The Greater Depression."

At first the economists said the current economic downturn would be V-shaped. A brief spike downward, followed quickly by a recovery. Then they said it would be U-shaped. It looks like it might stay down for a while before it recovers. Now some are saying it could be L-shaped. it goes down and stays down, for a long, long time. They mention Japan, 1989 as an example. The 1990's were Japan's lost decade, a recession that lasted more than ten years. To put this in perspective, in 1989 the Nikkei average topped out at almost 39,000. Last week the Nikkei closed below 8,000. If you bought Japan at the top, you've lost 80% of your money, and nineteen years is a long time to be on the wrong side of a trade.

The real problem is that America's current situation isn't as good as Japan was in 1989, or America in 1929. Those countries were creditor nations, and we are a debtor now. Our manufacturing base is mostly gone, outsourced to countries where the labor is cheaper. The problem is that we have overspent, we have no savings to invest, and we are loaded with debt. So our government's solution is to spend more to keep the economy going.

There is a certain logic that getting drunk is a way to fight a hangover, but in the long run that doesn't work. But it hasn't stopped our government from committing $8.5 trillion (again, so far) that it doesn't have in bailouts and rescues. I used to think we were going down the road to 1970's style stagflation, a nasty mix of unemployment with high inflation. Now I am beginning to wonder is something more sinister is lurking. The dreaded hyperinflation, as practiced in Weimar Germany, and several years ago in Argentina.

A case in point is Zimbabwe, whose annual inflation rate is now more than 200 million per cent. The latest sign of the coming Apocalypse is that The Reserve Bank of Zimbabwe just commended the world's central bankers (including the US and UK) on their policies. This is the text:

Here in Zimbabwe we had our near-bank failures a few years ago and we responded by providing the affected Banks with the Troubled Bank Fund (TBF) for which we were heavily criticized even by some multi-lateral institutions who today are silent when the Central Banks of UK and USA are going the same way and doing the same thing under very similar circumstances thereby continuing the unfortunate hypocrisy that what’s good for goose is not good for the gander....As Monetary Authorities, we commend those of our peers, the world over, who have now seen the light on the need for the adoption of flexible and practical interventions and support to key sectors of the economy when faced with unusual circumstances.

So, if it's working this well in Zimbabwe, the rest of the world may as well try it. Hyperinflation - it's not just for banana republic any more!

So long, Plax

I think Plaxico Burress will be playing football again next year, but it won't be for the New York Giants. As I expected, the team severed relations with him, suspending him for four games (i.e. the rest of the season) and placing him on the non-football-injury list. The latter is critical, because that means they can go after his money.

As cold blooded as that seems, let me emphasize that the Giants have been more than fair with Burress. They are one of the league's flagship franchises, and their front office is respected around the NFL. They have a record of success, winning Super Bowls in the 80's, 90's and 2000's. What they don't do is place individuals ahead of the team, no matter how talented they are.

The Giants believe in giving athletes second chances. They draft players that no one else would touch. Last year they drafted Ahmad Bradshaw, even though he had been arrested a couple of times and expelled from college. They explained the situation to him, kept him on a short leash, and he contributed to their playoff run last year. This year they drafted Mario Manningham, who wasn't even off some teams' draft boards due to his off the field problems.

But they've already given Burress second, third, fourth, and fifth chances. If he had been a straight arrow (like Antonio Pierce) they would have sent him flowers in the hospital, and told him to rest up for the playoffs. But Burress has been nothing but trouble this year, and his production has been down as well. They think they can win without him, and maybe they can.

The simple fact is that Burress has always been an accident waiting to happen, and the Giants knew that when they gave him a $35 million contract just before the season started. The contract is heavy with incentives, as in a $100,000 bonus just for being active for a game. He doesn't actually have to play, just suit up. So with all of the incentive pay gone, the contract won't cost the Giants much, and it is salary cap-friendly for next year as well.

I expect the lawyers will find a way for Burress to avoid jail time. More problematical is the NFL stance toward him. I think other teams will want Burress, I'm just not sure when the NFL will let him play. Goodell is fed up with football players making headlines for the wrong reasons, and that should cost Burress at least part of next season, at best.

In the strange but true department, the NFL Players Association is appealing Burress' suspension. I should have expected that. I was a union representative, and it seemed like most of my job was to represent people who should have been fired. One day at work a supervisor told me something to the effect that it occurred to him that I always had to deal with the same bad people as he did. I told him it's worse than that: at least you get to punish them, I have to defend them. But like any good union, the NFLPA stands up for its members, claiming the team violated his rights. That was the same reason we always defended bad people, too. We didn't want to establish a precedent they could later use to punish good people. If I had been an attorney, I would have wanted to be a prosecutor, not a defense attorney. It doesn't pay nearly as well, but it would have been a lot more satisfying.

Knucklehead

Knucklehead - I don't know what else to call Plaxico Burress. What else CAN you call someone who had it all, and threw it away out of sheer stupidity. For those who have not followed this year's soap opera, he plays wide receiver for the New York Giants, and he is one of the best in the game.

Last year, he beat the Green Bay Packers almost single-handed, catching 11 passes against a Pro Bowl cornerback in frigid weather. It must have seemed even colder to Al Harris that day, because Burress undressed him. At one point, Burress turned to the Packers bench and yelled "he can't cover me!" Two weeks later he caught the winning touchdown pass in the final minute of the Super Bowl.

In the offseason the Giants rewarded him with a mega-million dollar contract, $11 million of it guaranteed. This year, Burress responded by causing one problem after another, and I won't list the number of fines he's received. He was suspended for two games, but that was nothing compared his latest escapade. Burress was inactive for today's game with the Redskins due to a hamstring injury. Having had all sorts of injuries in my life, I can tell you that the best way to heal these things is to rest. I'm not a doctor, and I have no medical background, but I'm quite certain that of all the ways you can help to heal a hamstring injury, going to a club and shooting yourself in the thigh is nowhere near the top of the list.

Think about how stupid this is. First you have to go out to a club while you're injured. And you have to bring along a gun. Then you have to fire the gun. Last, but not least, you have to shoot yourself. And for maximum effect, don't do this in Arizona or Texas or one of those right-to-carry states. Blast yourself in a jurisdiction where carrying a concealed weapon is a felony that carries a mandatory 3 1/2-year prison sentence.

The only silver lining in this episode is that somehow Burress was not seriously injured. The bullet missed his vital spots, and he was released from the hospital. He has spent the past two days lawyering up, and will turn himself in tomorrow. Let me be quite clear: Plaxico Burress does not belong in prison. He isn't a danger to anyone but himself. But for all of his prodigious football talent, he doesn't seem to have the common sense he was born with.

Last year he played through all kinds of injuries and helped the Giants win a Super Bowl. Opposing defenses are so concerned with him that he draws double coverage most of the game. As a result, the Giants are the best rushing team in the league, having already run for more than 200 yards in five games this year. But we are finding out week after week that the Giants are resilient enough to win without Burress. He didn't play against Seattle and they scored 44 points. Against Arizona, they scored 37. Today they beat Washington 23-7.

The Giants won the Super Bowl last year without Tiki Barber and Jeremy Shockey. This year, without Michael Strahan and Osi Umenyiora, they are 11-1. And even without Burress, they still have depth at wide receiver. The Redskins tried to stack 8 or 9 men on the line of scrimmage today, and Manning threw for 300 yards in the first three quarters.

Good luck, Plaxico, and I sincerely mean that. Somehow, those clever lawyers will find a loophole around a felony conviction. I hope you're back in the NFL someday, although I don't think it will be with the Giants.

Schadenfreude

I just learned a new word. I can't spell it, so I won't try to write it again, but it's the title of this entry. It's the shameful pleasure of enjoying someone else's misfortune. I normally don't go in for a lot of that, but in Richard Fuld's case it was well deserved. Fuld was the president of Lehman Brothers, who ran his company into the ground. He screwed up so badly that Lehman was the only bank that didn't get bailed out. Think how hard it is to accomplish that these days.

After wrecking a 158-year old company that had survived world wars, panics, and the depression, Fuld blamed everyone but himself. He went to the company gym to work out, and one of his employees punched him out. Yay! There is some justice after all.

http://www.freerepublic.com/focus/f-news/2099592/posts

As I see it, President-elect Obama has a huge mess to clean up, which is ironic considering that private industry is supposed to be more efficient than the government. Was Lehman efficient? Was Citigroup efficient? AIG? Wachovia? Washington Mutual? IndyMac? Merrill? GM, Ford, and Chrysler? It looks to me like a lot of efficient private companies have come to the government, hat in hand, looking for help. But I really have to hand it to the auto companies. Unlike the banks which messed up by overleveraging and gambling, the carmakers bankrupted themselves working in the industry they knew best. And then the Big Three CEO's flew to Washington in their corporate jets (separately of course) to ask for a $25 billion dollar handout. Which they will use to design and build cars that no one will want to buy.

That's why I like that big S-word feeling, when bad things happen to bad people. Those who are smarter than me added up the tab for the taxpayers, and so far it comes to $7.76 trillion. That is the amount now pledged by the federal government. To print that much money, Ben Bernanke would have to chop down every tree in America, and then go up north and chop down every tree in Canada.

But I have vented enough. The price of gold was trapped in the low-700's for weeks, until the November options expiration last Thursday. Every time gold climbed to $750, it was pushed back. On Thursday the options expired worthless, and the next day gold soared to $800. By now anyone with half a brain can see that this game is rigged, but that one-day move indicates to me that the game is almost over. Herr Paulson is using duct tape to try to hold the economy together until January 20, so Bush can leave town in time for Obama to take the fall.

Of course the silver market is worse. Silver is worth $10 in New York and London, and $14 everywhere else. I think I saw that once on the Twilight Zone, or maybe it was the Outer Limits. When all of this breaks down (i.e. next year) important people will be going to prison, and the average person will be wondering where his job or his pension went. This was not an unforseeable economic upheaval, like some kind of 100-year flood. Bernanke, Greenspan, and every economic planner in the Bush administration could have predicted this, if it had been in their interest to do so. Next year, let the finger-pointing begin.

Inflation ahead

The best news for the stock market (at least resource stocks) came from an unlikely source: 60 Minutes. Last night, they interviewed President-Elect Obama. BTW, effective January 20, I will be referring to him as "our president" not just President Obama. It's just a reminder of how the wingnuts always referred to Bush 43 as "our president" something they never did for Clinton. As Obama said, there aren't blue states and red states any more.

Once again I've gotten way off track. Back to matters at hand: Obama said he will do whatever it takes to get the economy moving again, and he's not concerned with what the budget deficit will be in the coming year OR the year after that. It sounds to me like Ben Bernanke can start revving up the helicopters right now.

Clearly Obama is correct, because if we take our medicine now the economy would spiral down into a 1930's-style deflationary depression, which must be avoided at all costs. His alternative will mean inflation; i.e. lots of inflation, but there are various ways he can fight that later. Of course you would never know this with silver trading below $10, gold below $750, and oil below $60. But that just demonstrates how rigged the commodity futures markets are.

What these low prices will accomplish is to ensure shortages in the months and years ahead by choking off exploration and even production. Mining projects are being delayed or canceled, which further reduces supply. The oil market is truly bizarre. Even OPEc can't make a profit with oil at $55, so they aren't going to give oil away at these prices. The big oil companies need at least $70 oil, and the Canadian oil sands are not economic below $85. All of the marginal projects will be shut down, and even T. Boone Pickens has delayed his wind farm project due to low natural gas prices. Unless our government finds a way to repeal the law of supply and demand, no one will produce oil and gas at a loss.

Of course the manipulation of the commodity markets has not gone unnoticed. The Saudis recently purchased $3.5 Billion worth of gold. The real kind, not the paper stuff they trade in New York and London. China now has nearly $2 trillion of foreign exchange, mostly invested in U.S. Treasury bonds. Since they need $546 billion to finance their own economic stimulus package, what better time to liquidate dollars that are as overvalued as they can get?

And one more thing: Our government denies that it has ever sold or lent out any of its gold, but it has now been confirmed that gold bars that have been traced to Fort Knox have surfaced in Dubai. What we are seeing is an enormous transfer of wealth from West to East. We are selling our assets to Asia and the Middle East at giveaway prices, while a few bullion banks (notably JP Morgan Chase) make obscene profits by manipulating the futures markets. I don't know whether it was Marx, Lenin and/or Stalin who said this, but here is the quote:

"We will hang the capitlaists, and they will sell us the rope to do it."

Monday Night Football

I had eagerly awaited tonight's football game, and not because I thought it would be a competitive game. I expected Arizona to defeat the Niners handily. What I was REALLY looking forward to was the next installment of Mike Singletary Theater, and on national television, no less.

This was their first game since Singletary threw his tight end (Vernon Davis) off the field, and also at halftime down 20-3, dropped his pants in the locker room and pointed to his butt to tell his team what he thought of their first-half performance. Mike Singletary is not subtle. Two weeks have passed, Singletary and Davis have made up, and the young player finally has his head on straight.

Tonight's game was a lot closer than expected, and late in the game the Niners had two chances to win. But each time their ineptitude on offense did them in, their last drive dying in the shadow of Arizona's goalposts as time ran out. The Niners are not a good team, or at least they aren't playing like one yet. But the game had its comic moments. There was an animated discussion on the sidelines between Singletary and Mike Martz when it was 4th-and-1. Martz wanted to go for it (surprise, surprise) and Singletary had to yell for the field goal team to go in.

But the most theatrical moment came when (of all people) Vernon Davis made a great catch for a touchdown, and then removed his helmet in celebration, earning a 15-yard penalty for unsportsmanlike conduct. You could almost sense an explosion about to go off. Davis went over to Singletary and tried to give him a hug, and Singletary pushed him away. But after a brief expression of tough love, Singletary congratulated him on the touchdown.

This is why I don't need to watch soap operas. The Niners may not be very good, but their subplots sure are entertaining. If they keep this up, I could even drop the NFL Sunday Ticket package next year and just watch the Niners. Actually, with the Giants finally looking like a perennial contender, I think DIRECTV and I will be joined at the hip for years to come.

Before I forget, in financial news it now appears that the "bailout" of Bear Stearns, which we all know was really a bailout of Morgan Chase (since Bear is out of business) had another purpose. Bear was the huge silver short on the COMEX, and had no hope of ever covering that short position. So Morgan Chase assumed it when Bear when out of business. They can't cover the short either, so it's going to explode sooner or later. They managed to keep a lid on it with huge additional short sales this summer, but the price of physical silver has stubbornly retained a large premium over the COMEX price. The pot continues to boil, and soon it will have to vent.

The nightmare is over

At 6:30 Pacific Time, they called Ohio for Obama, and that's all I need to see. There's no way McCain can get to 269 electoral votes, so I am calling the election for Obama.

When I look back at the last eight years, I find it hard to believe our country could have declined as it has. This didn't happen because we didn't work hard enough. It happened because we have had piss-poor leadership. Our banks were run by idiots. Our auto companies were run by idiots. Our airlines have been run by idiots. And most of all, our country has been run by an idiot for the past eight years.

Case in point is Elizabeth Dole. She was appointed to one important job after another, and never accomplished anything. Whether she ran the Red Cross, or she was Secretary of Transportation, she didn't know her elbow from her asshole. She even ran for president (briefly) and then dropped out, whining that she didn't have enough money. Somehow she got elected to the Senate, but then people in North Carolina used to elect Jesse Helms, too. Tonight, she was beaten badly by Kay Hagan, but not before her last desperate ploy of accusing Hagan of "godlessness." Senator Dole, good riddance. You won't be a senator much longer.

Our society promotes incompetent people to positions of authority in corporations and in government. How can bankers be stupid enough to invest hundreds of billions of dollars in worthless securities? Why is it that Toyota can make a profit by building cars in America, but our own auto industry needs another $25 billion bailout to avoid bankruptcy? Most ot all, how could 50+ million people have been stupid enough to vote for Bush, not just once, but twice?

I just went to see the Oliver Stone movie, W. The review said it presented a sympathetic view of him. I still can't understand what I was supposed to be sympathetic about. He was a drunken frat boy who quit or botched every job his father set up for him. When he was arrested for DUI, his father fixed it. When he got a girl pregnant, his father fixed that, too. Only Republicans can get away with that crap. As long as they say they're in favor of family values, it doesn't seem to matter what they've actually done.

Now we will finally have a president who earned his position in life based on merit. Obama, like Bill Clinton before him, didn't start life with every advantage possible. And while I'm on that subject, let me point out that Clinton started with nothing, came from a broken home, and made it all the way to the White House. He turned around a bankrupt economy, created 23 million jobs, and left a growing surplus in a country that was respected around the world. He would have gone down in history as a great president if he had kept his pants zipped.

It's Obama's turn now. I think of him as the Jackie Robinson of politics. It wasn't enough for Jackie Robinson to be a great player; he also had to have the temperament to let all of the insults and abuse roll off him. Obama is the same way; he has to be perfect. In the debates, McCain could snarl and glare all he wanted, and Obama just had to stand there and smile. Well, tonight Obama is going to be doing a lot of smiling.

On the one hand, Obama has a very small pair of shoes to fill, but on the other hand, Bush has left him an incredible mess to clean up. The budget deficit will be near $500 billion, and with the government spending needed to make up for the shortfalls in consumer spending and corporate investment, the following year's budget will be close to $1 trillion. The legacy of our foreign policy is Abu Ghraib and Gitmo, as well as two wars that Bush screwed up royally.

Fixing the economy is going to take a long time. The variable-rate mortgage resets will go on through at least 2011, so the housing market will be under pressure from foreclosures for some time to come. We will continue to see large budget deficits for several years to come, and the recent strength in the US dollar will be reversed. Now that the election is over, I expect the widespread government interference in the equity and commodity markets will be reduced, and resource stocks will resume their secular bull market.

New sheriff in town

Last week I mentioned that Mike Singletary, the new head coach of the Niners, would not tolerate underachievers. Unfortunately, Vernon Davis doesn't read my blog. Davis, if you don't follow football, plays tight end for the Niners. If you look up the word "underachiever" in the dictionary, you'll probably see his picture there. He is an amazing athlete, with a freakish combination of speed, strength, and agility. A couple of years ago, he was the Niners first-round draft pick, sixth overall. He signed a $23 million contract, with $15 million guaranteed, and that may be part of the problem.

His career to date has been mediocre. He's being paid like a star, but his performance has only been average. He got away with that when Mike Nolan was the coach, but now there's a new sheriff in town. Last Sunday, Davis drew a 15-year penalty for slapping an opposing player. Shortly thereafter, Singletary sent him to the locker room, telling him the team would be better off with him taking a shower and then coming out to watch the game from the bench, than if Davis were out on the field playing.

After the game, Singletary game an interview that will go down in history as an all-time classic. Better than Jim Mora's "Playoffs??" and at least the equal of Dennis Green's "They are who we thought they were!!" meltdown. You can find it here:

http://www.youtube.com/watch?v=QYaDJ-WuuSY

Anyone who is old enough to remember Mike Singletary's playing days could have seen this coming. He was a fixture in the Pro Bowl and the leader of the 1985 Chicago Bears, the best defense ever. He is the most intense, no-nonsense competitor out there, and the Vernon Davises on that team are going to change their ways or leave town. I predict there is a beer commercial in Mike Singletary's future. We will hear his "I want winners!" speech for years to come.

BTW, even though the Niners have a bye week coming up, and they won't be playing for two weeks, they just had their best practice of the entire season. I think Singletary's message might be getting through to them.

Another coach fired

On average, six NFL coaches are fired each year. They used to wait until the season was over, but not any more. The Rams and Raiders fired their coaches after four weeks, and the Niners just fired their coach, Mike Nolan. The Niners organization is not as dysfunctional as say, the Raiders, but this is one franchise that has fallen a long way.

Mike Nolan followed almost precisely in his father's footsteps. Dick Nolan played for the New York Giants, and became the head coach of the Niners. Mike was the defensive coordinator for the Giants before taking the top job in San Francisco. During his tenure, the Niners brought in some expensive free agents, and they have a fair amount of talent on both offense and defense. Far too much talent for their 2-5 record. Which is why they fired Nolan.

But it wasn't all Nolan's fault, and he's not the only one who deserves to be fired. He was a good defensive coordinator, and aside from his quirk of wearing a suit and tie on the sidelines, I thought his biggest failing was the non-development of Alex Smith. Therein lies the real problem with the Niners. Their quarterback is J.T. O'Sullivan, a journeyman who has played for more teams than I can remember, and wasn't very good on any of them.

When you have the first pick in the draft, and you select a quarterback, and invest mega-millions in him, he isn't supposed to get beaten out by a career backup. That's a personnel decision, and that is on the general manager, not the coach. Nolan and Smith came to San Francisco together, and it looks like they more or less left together, too. I think Nolan needed to have more patience with injuries and poor play to develop a young quarterback. When I look back at the first selection overall in the draft, it looks like a crapshoot. In 2003 the Texans took Carr, in 2004 the Giants took Manning, and in 2005 the Niners took Smith. Result: one Super Bowl MVP and two guys who got run out of town.

But I think there's plenty of blame to go around in San Francisco. The offensive coordinator is Mike Martz, who ran the Greatest Show on Turf when the Rams won the Super Bowl in 1999. The trouble is that he must still think he's in St. Louis. The Niners have traditionally been a passing team, and that works fine when you have Montana, or Young, or even Garcia at quarterback. It doesn't work so good with J.T. O'Sullivan at the wheel. The Niners have an excellent running back in Frank Gore, and he should be carrying the load to take the pressure off an inexperienced quarterback.

Instead, Martz has him throwing the ball all over the field, with predictable results. O'Sullivan is leading the lead in interceptions, and the Niners are losing one game after another in the fourth quarter. If no one can convince Martz to run the ball, he should be the next one to go. At last the Niners brain trust made one inttelligent decision. They bypassed Martz, and hired Mike Singletary to replace Nolan. If anyone can command respect, it's Singletary. He's only the interrim coach, but if he can get the players to respond, the job will become permanent (at least in NFL terms.) Singletary is a leader of men, and I don't think underachivers will last very long working for him.

With O'Sullivan at quarterback, this season is effectively over for the Niners, and since there is more housecleaning to do, the end of the year would seem like a good time to purge the front office as well. This organization has gone nowhere in four years, and it wasn't all because of Nolan.

The best team in the NFL!?

The end is near. For this blog location, anyway. AOL is terminating this service, so I am moving the blog to www.blogger.com. I thought about changing the name, since I haven’t actually been inside the Oakland Flight Service Station in a long time, and it hasn’t belonged to the FAA for even longer than that, and OAK will cease to be next year. But if I change the name, then people wouldn’t be able to find it. So the name stays, as anachronistic as it is.

Now where was I? Oh yes, the best team in the NFL!

Five weeks into the NFL season, the New York Giants were unanimously regarded as the best team in football. The defending Super Bowl champions were one of only two undefeated teams, and had not lost since last December. They were playing the Cleveland Browns, a group of underachievers they had routed in the preseason.

Of course preseason games don’t mean anything, but when both teams had their starters playing, the Giants were up 30-3, and they knocked out Derek Anderson and injured four other Browns. Meanwhile the Browns, whom many had picked to go deep into the playoffs, were underachieving, had lost three times, and were playing without Kellen Winslow.

And so, on national television, the mighty New York Giants laid an egg, losing by three touchdowns to a team that couldn’t even line up properly. The Browns had to set a record for offensive penalties by a team playing at home. I can only imagine how many false start penalties they would have had if they were playing on the road with crowd noise.

This game teaches us two things: 1) never bet on football, and 2) maybe all that talk about Eli Manning being better than his brother was a wee bit premature. This week there was a lot of talk about how Eli Manning is about to receive a contract extension that would exceed Peyton’s $99 million contract. I expect that will happen, but when people start saying Eli is actually BETTER than Peyton, it’s time to take a deep breath.

First of all, I have always liked Eli, always considered him to be the franchise quarterback, even when he was terrible. Dan Marino aside, all young quarterbacks go through growing pains. There were many games when Eli threw 3 or 4 interceptions, but I remember the same from John Elway, Bert Jones, and Joe Namath. The guys who said Eli was a bum, that he was adopted and his real name was Eli Leaf – they were wrong. Just as the pundits who jumped on the bandwagon this year and said he’s better than Peyton are wrong. Eli is a good quarterback who can have an occasional horrible game, but plays great when it counts. As far as I’m concerned, he can be the Giants quarterback for the next ten years, but he isn’t going to be Peyton. But that’s OK, because it took Peyton 9 years to win a Super Bowl, and Eli did it in 4 years, and with a lesser supporting cast as well.

The bottom line is that the Giants aren’t as good as they were made out to be, the NFC East isn’t as dominant as expected, and the NFL has achieved parity. The NFL season still has 11 weeks to go, and I expect to be watching my DIRECTV Sunday Ticket for all of them.

The day the Euro cracked

Today was the day the Yen carry trade started to unravel.  Once upon a time, you could go to the Bank of Japan (otherwise known as the U.S. Fed East) and borrow a bazillion yen at a very low interest rate, say none per cent.  Then you invest the money in Australian bonds that pay 6% interest, making an easy 5+% interest.  A bazillion times 5% is a significant amount of money.  But this scheme only works when the yen is stable or declining against other currencies.  If the yen starts to appreciate, the trade blows up.

 

Today the trade blew up.  BTW, it isn’t just the Australian dollar that suffered.  Institutions and hedge funds were using borrowed yen to speculate in stock markets all around the world.  Today virtually every currency outside Asia was down sharply against the US Dollar, which itself was off 4% against the Japanese yen.  With the yen approaching parity (1 US Dollar = 100 yen) all of those yen were on their way back to the land of the rising sun.  In doing so, they sucked all air out of the global stock markets.

 

Gold resumed its normal role as a hedge against catastrophe, and was up nearly $40 at one point today, as we had the unusual spectacle of gold and the US Dollar showing great strength at the same time.  The Euro suffered as gold is now approaching an all time high in Euro terms.

 

To make this even more ludicrous, the futures price of gold on the Comex was $840 while the price of physical gold in Asia was $960.  Bullion banks and investment banks have sold unlimited amounts of futures contracts on the commodity exchanges to depress the price of gold and silver, while the metals themselves have disappeared from the marketplace.  Coin dealers around the world have run out of inventory, and when transactions do take place (on eBay or anywhere else) they are at stiff premiums to the phony Comex price.

 

The only question now is when the US Dollar heads down again.  There will be another rate cut this month, either an emergency cut any day now, or at the month-end meeting.  A 50 or 75 basis point cut will be coordinated with the ECB, since their currency has to depreciate, too.  The only question is whether they can continue to manipulate the price of gold and silver until after next month’s election.

 

The latest rumor I have heard is that a consortium of Russia, European, Asian, and Arab countries have plans for a gold-backed currency.  It’s hard to imagine all of those countries agreeing on anything, but it is more likely the Russians could introduce a gold-backed ruble, or the Arabs a gold-backed dinar.  To compete with a real currency of that nature, the US would have to raise interest rates substantially, something our government desperately does not want to do.  In any case, gold and other commodities will appreciate strongly in Dollar terms.

Yippee! Bailout package fails to pass House!

A wise man said:

"These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel."

Why am I glad that the bailout package didn't pass, sending the market down almost 800 points?  Because it was a terrible bill, and we can do better.  This was like putting an arsonist in charge of putting out a fire.  This bill would not only have bailed out the institutions that deserved to fail, but also the failed executives that ran them into the ground.  Worse yet, it would have given near-dictatorial powers to an unelected official, the Treasury Secretary, whose actions would not be subject to Congressional oversight or judicial review.  A blank check for $700 billion, with no questions asked.

No thank you.  There will be another bailout package (and this won't be the last one, either, but that's a subject for another post.)  In the meanwhile the market went down 7%, but the companies with real assets and real balance sheets will come back.  Those who don't, like commercial banks, brokerage firms, insurance companies, investment banks - sorry, almost forgot, we don't have any more of them any more; one investment bank failed and the last two changed themselves into holding companies - will go out of business anyway.  I stopped adding up the total bailouts when they went over $1 trillion.  Lehman, AIG, the FDIC, the auto companies...there are a lot more to come with no end in sight.  The only reason the US Dollar hasn't gone off a cliff is that Europe and Asia have their own problems, and all currencies are weakening together.  Gold (and silver) should be soaring against ALL currencies, but those are kept under wraps on the futures exchanges. 

The answer is to buy physical metal, like coins and bars, but I think everyone else has figured that out now.  Coin dealers are generally sold out of silver, and don't have much gold left either.  When you CAN find silver, like on eBay, it sells at large premiums to the phony spot price.

The quote that opened this entry wasn't spoken this past week by some outraged taxpayer.  Some 90% of Americans were against this bailout, and I am disappointed that both McCain and especially Obama supported it.  The Congressmen who are assured re-election supported the bill.  Fortunately, there were enough Congressmen in tough re-election races that they were afraid of a public backlash in November, and voted it down.  For once they actually listened to their constituents.

So where did that quote come from?  Abraham Lincoln said it in a speech to the Illinois legislature in 1837.  The more things change, the more they remain the same.

For those who enjoyed seeing Hitler lose his shirt in the market, he managed to raise another stake and try again.  For another look at You-know-who's problems in the stock market, visit:

 http://www.youtube.com/watch?v=WfvIstgOugc

 

When in doubt, win the war!

I have been remiss from writing this blog, but I have a good excuse.  I have put the time to good use, and finished revising my third novel, which I call "When in Doubt, Win the War."  I shipped the manuscript to the publisher this week, and I will still have to review the galley proofs, but it is finally finished.  Only took me four years, too.  But in my defense, life kind of got in the way for a couple of those years.

Anyway, I meant to get back to writing about the economy, but so much has happened that I don't know where to start.  We are in the middle of a credit crunch that has knocked the stuffing out of silver, gold, and the related mining stocks.  Oil has gone down as well, but that was because of me.  I organized a one-man boycott and did not buy any gasoline in June, July, or August.  You can do stuff like that when you're retired.  The resulting demand destruction caused the oil price to collapse from near 150 to less than 100.

However, we are still in the midst of a secular bull market in commodities, and it is only government intervention on a scale the old Soviet Politburo would have been proud of that is restraining asset values.  The distortions in the market have become so blatant that even Hitler is angry about it.  Really, he is.  Just watch this video:

http://www.youtube.com/watch?v=eVB-SSkkLnY

That's what you get when you use margin.  Ol' Adolf didn't know that der trend iss your friend!  If only he had been able to hold on for a few more days, gold went up $85 on Wednesday.  Such are the fortunes of war.  Speaking of war, the lesson to be learned in times like these is that the time to buy is now, when there is blood in the streets.  Here is a lesson from history.

In 211 BC, Rome was at war with its ancient enemy, Carthage.  The great Carthaginian general Hannibal had already defeated the Romans in battle several times, and had slaughtered their armies.  In 211 he marched his army to the gates of Rome itself, throwing the city into a panic.  As luck would have it, the land outside the city happened to be up for sale.

Someone bought the property despite the fact that it was encumbered by having the entire Carthginian army camped on it.  The buyer must have been confident that Rome would eventually drive off the enemy.  And in the end, the Romans would sack Carthage, burn the city to the ground, and then dump salt in the earth so that nothing would ever grow there again.  The Romans took their wars seriously; no Marshall Plans for them.

But my point is that when things look bleak, that is the time to buy, not sell, as Fortune favors the bold.

Class and crass

Despite the disclaimer in the last entry, I'm going to write about the Olympics again, if only briefly.  The nice thing about being retired is that you can watch all the Olympic coverage you want.  And not just NBC and USA, even those weird DIRECTV channels I'd never heard of before.  Anyway, this is about volleyball.  Way back in high school, I had played volleyball in gym class.  And then again in college, so I knew the rules.  A match is 15 points, you have to win by 2, and only the serving team can score.  Or so I thought.

When I was watching the Olympic beach volleyball (remember the Silent Laciga Brothers?) I noticed that the rules were different.  A match went to 25 points, and they weren't using side-out scoring, either.  Either team could score a point.  I thought this was just due to beach volleyball being a spinoff of "real" volleyball.  But then on the final day, when USA was playing Brazil in "real" 6-on-6 volleyball, they were using the same crazy rules.

So I decided to look this up, and found that the rules had been changed in 1999.  That was three Olympics ago.  At this point I'm starting to feel kinda like Inspector Clouseau.  You have to get up pretty early in the morning to slip one by me, huh?  If you change the rules, I'll figure it out nine years later.  I blame this on work.  If I hadn't been spending so much time at that flight service station, I could have stayed on top of this other stuff.

Anyway, I miss the Olympics already.  And since it's over I had to search elsewhere for entertainment, so I went to see the movie Tropic Thunder.  It's hard to find a segue when you're going from the sublime to the ridiculous, but that's the difference between class and crass.

I will not actually review Tropic Thunder.  Let me first say that if you didn't find something offensive in this movie, you just weren't looking hard enough.  There was something in there to offend everyone, even when they weren't lampooning every Viet Nam movie ever made.  I'm not a big fan of political correctness, so that really doesn't bother me.  The problem is that while most of the movie was cleverly written, a lot of it could have been written by teenagers.

There are over-the-top performances by Ben Stiller, Jack Black, and Tom Cruise, among others.  Jack Blackis always over the top, but this time he was waaaaaay over the top.  Tom Cruise was uncredited, and this role supposed to be a secret, although the story leaked out on the Internet.  Not to me, of course, because I'm oblivious (see above, volleyball.)  And if it hadn't been pointed out to me, I wouldn't even have recognized him in his fat suit and balding wig.  Again, remember that I'm the guy who didn't pick up on the new volleyball rules for nine years.

The problem with the movie is that mixed in with all the inside references to other movies is a large amount of gross, sophmoric humor.  It's hard to pick out subtle clues when they keep hitting you over the head with a sledge hammer.  If I saw this movie three or four more times, I might pick up some of the stuff I missed, but I don't think anyone over the age of 18 could watch Tropic Thunder that many times and not suffer brain damage.

Lastly, here is an example.  I didn't know the movie had started, and thought I was watching an advertisement for an energy drink.  It was called Booty Sweat.  When I said crass, I meant it.  But if you want to see for yourself, you can actually buy it now.  Amazon sells Booty Sweat by the case.

http://www.amazon.com/Booty-Sweat-8-4-Ounce-Pack/dp/B001D3O9SW/ref=pd_bbs_sr_1?ie=UTF8&s=hpc&qid=1219996019&sr=8-1

Closing thoughts

OK, that's it for the Olympics for another four years.  Don't tell me about Vancouver.  I don't do snow.  People slipping and sliding around on ice and snow is not my idea of sports.  Looking back at the past two weeks, the Chinese put on a great show.  As far as memorable performances go, Michael Phelps, Usain Bolt, women's gymnastics, and Team USA basketball come to mind.  Soccer goalie Hope Solo is entitled to the biggest "I told you so" in recent memory.

I suppose the greatest controversy of the Beijing games is that 5 of their 6 gymnasts could be underage.  I don't care.  Setting the minimum age at 16 is purely arbitrary, and amounts to nothing more than age discrimination.  If we can change our voting age and drinking age, there is no reason the gymnastics federation can't change its minimum age.  If a 14-year-old diver can represent Great Britain at the Olympics, then 14-year-old gymnasts should be allowed to compete.  I want to see the best gymnasts in the world, not just the youngest or oldest.

On a related subject, I have to mention rhythmic gymnastics.  If I know next to nothing about "regular" gymnastics, then I know less than nothing about rhythmic gymnastics.  It's an obscure sport that I remember watching even twenty or thirty years ago, and I didn't understand it then, either.

It isn't very big in America.  As far as I can tell, all of the competitors come from former Soviet republics, and they're all named Ludmilla or Olga, or something like that.  I'm not sure, but I think when a girl grows up to be too tall to be a "real" gymnast, she goes into rhythmic gymnastics.  They perform their exercise routines with a piece of equipment like a hula hoop or a pair of batons.  Those don't interest me, but they also perform with a ribbon that must be about 20 feet long.

That's what caught my eye.  It's the image of a girl waving this streamer all over the place while she dances around inside it.  The color of the ribbon is coordinated with her leotard, and the visual effect can be mesmerizing.  They should dump the hula hoop and batons, and just have the girls wave that big, long ribbon thing around.  I can't tell a good performance from a bad one, but I actually recorded a couple of hours of it, and saved it on DVD.

As far as basketball is concerned, the 11-point victory over Spain shows that America needs its best players in the Olympics.  It would have been nice to have had Tim Duncan in that game, but he wasn't interested.

On the track, there was Usain Bolt breaking a world record without even trying.  Speaking of track, maybe they could design a new baton for relay races, something with a handle on it?

I missed seeing George F. Bush at the closing ceremony.  The opening ceremony was one of the most amazing shows ever staged, but it couldn't hold his interest.  The cameras caught him looking at his watch.  It reminded me of his father getting caught looking at his watch during a presidential debate.  Then he left the USA-China basketball game in the middle of the fourth quarter.  A billion people would have given anything for that seat, but they had to waste a ticket on him.  George F. Bush, in a few months, we will finally be rid of you.

That's all for the Olympics.  Now I will go back to writing about the boring and mundane matters of economics and finance.

USA 118, Spain 107, and all is right with the world

Second verse, same as the first.  Spain got its rematch with Team USA, and the game was a lot closer than I wanted it to be, but in the end Kobe, LeBron the rest pulled away to win by 118-107.

The first quarter looked more like a track meet, with the USA up 38-31.  With Kobe and LeBron in foul trouble, USA wasn't playing defense, but Wade came off the bench with a monster game, scoring 21 points in the first half, as USA led 69-61.

But the Americans could never pull away.  This was the first time their lack of size hurt them, as Pau Gasol scored about a million points, mostly on dunks and layups.  They had to keep Dwight Howard in the game for his defense, and his poor foul shooting kept things close.  How close?  With 8:13 left in the game, Team USA was clinging to a 2-point lead.

But then Kobe took over, making one big play after another to keep Spain at bay.  With 3:06 left, he hit a three, and was fouled to complete a 4-point play.  With USA ahead by 8, he put his finger to his lips to shush the crowd.  The game was finally decided when Chris Paul was fouled, and Spain committed a technical foul.  It didn't matter that Paul hasn't missed a free throw since he was 12 years old.  With the Olympic gold medal on the line, Kobe was going to take those two free throws, and Spain was done.

Throughout the tournament, it was TEAM USA that won every game, not a collection of stars.  Coach K went with an 8 or 9 man rotation that left stars like Carlos Boozer stuck on the bench.  All-Stars accepted being role players for the honor of representing their country, and that was the difference between this team and the one that played in Athens.  The 2008 version is a championship team, without the aloofness, arrogance, and poor sportsmanship of its predecessor.

There were a few more track and field events.  The Jamaican mens 4 x 100 relay team was heavily favored, especially since most of its competition forgot how to pass a baton, and didn't make it out of the prelims.  With Bolt and Powell running the last two legs, they demolished the world record.  Jamaica's women's relay team was also favored, but they couldn't figure out how to pass a baton, either.  In fact, they botched their baton pass so badly that they interfered with Great Britain, and knocked their team out of the competition too.  Lane?  What lane?  Maybe those track stars think all of those white lines are painted there just for decoration.

And now, since the basketball game kept me up half the night, I need some sleep.

Youth and skill defeat age and stupidity

I had an idea for a movie script.  It's a story about women's soccer.  The American team is playing in the World Cup, but in the semi-final they have to play Brazil, a traditional soccer powerhouse.  The American team has a chance, because they have a hot goalie, who has shut out their last three opponents.

But the coach decides to bench the young goalie in favor of an older veteran because...well, because the coach is an idiot.  Actually he wanted to go with a more experienced veteran who had already played against Brazil, but the real reason is that he's an idiot.

Brazil proceeds to shell the veteran goalie, and the rout is on.  Team USA gets blown out, losing to Brazil 4-0.  Here's where the story takes a twist.  The young goalie is irate at being benched after she had played so well, and vents her feelings to the press.  Among other things, she says she would have made those saves.

When the idiot coach hears about this, he is irate.  Surprisingly, incompetent people in positions of authority do not respond well to being told they are incompetent.  (This also applies to managers in corporations, government, and so on, but I digress.)  So the coach (did I mention that he's an idiot?) promptly kicks her off the team, and will not allow her to play in the consolation game for the bronze medal.

Her teammates are even worse, taking the cattiness to a new level.  Women being women, they completely ostracize her, refusing to eat meals with her, and don't even allow her to fly home on the plane with the rest of the team.

When the idiot coach gets home, he is fired because he's an idiot who benched the only player who could have given him a chance to beat Brazil.  A new coach is hired, and she's not an idiot.  It so happens that the following year is an Olympic year, and the new coach asks the players to take back the young goalie.  Some of them still don't like her, but they understand that they'll need her to have any chance of winning.

So the young goalie is on the Olympic team, and her teammates are professional enough to play with her even though they still resent her.  The team gets off to a rocky start in the Olympics, losing its first game.  But then they settle down, and actually make it to the finals, where they will play for the gold medal against...mighty Brazil!

Brazil is much better than Team USA, and they dominate the game.  They have two of the best attackers in the world, and they shred the porous American defense, firing one shot after another on goal.  The only thing Brazil can't do is score.  Because would you believe it?  The young goalie really DOES make those saves.  She turns back one shot after another, making great saves, making saves when she's screened by other players, almost single-handedly keeping America in the game.

Regulation ends in a scoreless tie, but six minutes into the extra time period, Team USA finally manages to score a goal, and they go on to upset mighty Brazil 1-0.  So one year after being booted off the national team, the goalie is now an Olympic champion, standing on the top step of the award platform with a gold medal around her neck, listening to the national anthem.

The problem with this script is that it's too far fetched.  No one would believe it.  If you brought this improbable story to a Hollywood producer, he'd throw you out of his office on your ear.  In fact, the only thing this story has going for it is that it's all true.  It happened this past week.  The goalie's name is Hope Solo, and the idiot coach's name is...well, he's an idiot, so he doesn't even deserve to have his name mentioned in my blog.

And that is why I watch the Olympics.  Every once in a while, justice is served.

Don't cry for me Argentina

Payback is a bitch.  Four years ago, Argentina eliminated Team USA in the semi-finals and went on to win the basketball gold medal.  Today Team USA returned the favor, winning 101-81.

The Americans took control early.  Argentina couldn't do anything right, and their leader Obi Wan Ginobili picked up two quick fouls in the first five minutes.  Then when it looked like things couldn't get any worse, Ginobili was injured and had to limp off the court.  Team USA had said they can't expect to blow teams out in the first quarter, but they ran up a 21-4 lead, and the quarter ended 30-11.

This looked like it was going to be the mother of all blowouts, with Argentina losing its best player.  But the second quarter was a strange reversal of fortune as Argentina went to a zone defense, and Team USA went to sleep.  The Americans held the ball, over-dribbled, and settled for outside jumpers, which they missed.  Argentina kept chipping away, and cut the lead to 6.  There was the usual strange international officiating, but basically Team USA stopped running, got no points off turnovers, no points in the paint...well, you get the idea.  At the half the USA still led 49-40, and that was only because of a ticky-tack foul that gave Camelo Anthony 3 free throws.

In the third quarter the Americans went back to basics, started attacking the zone.  It paid off as Argentina's big men got into foul trouble, and Team USA pulled away.  But even though Argentina didn't have much depth to begin with, and now they were undermanned, they were still in the game till the end, even though they never threatened again.  Before the Olympics started, I thought there would be some close games, and I guess this one qualifies, because it was a lot closer than it should have been.

The final game of the tournament will be a rematch with Spain, which Team USA pasted by 37 points last time around.  Spain has 5 or 6 players who have played (or will play) in the NBA, but this time it looks they may be missing their point guard Jose Calderon.  I think it's a good bet that Spain will be playing zone early and often.  But I don't think it will matter.

Gymnastics note:  even though the gymastics competition was over, some of the champions performed in a gymastics gala.  There were no judges, no scoring, and mercifully, no Bela.

I don't which sport has the smartest athletes, but I know which sport has the dumbest ones.  Track.  Hands down, with nothing else even close.  The US Mens 4 x 100 relay team was a medal contender, but failed to even qualify for the finals because they dropped the baton in their semi-final heat.  They DID manage to complete TWO of the three necessary passes, but Tyson Gay dropped the baton, and that was that.

Not to be outdone, THREE other relay teams were also disqualified because passing a baton around the track was too complicated for them, too.  Then in the other semi-final heat, two more teams were disqualified.  So a total of 6 out of 16 relay teams, including all three of the medalists at Athens, were disqualified. 

Then came the Womens 4 x 100 meter relay semi-final heat.  Again, Team USA was a medal favorite.  Again, Team USA did not make it into the finals, as they were disqualified, because...you guessed it!  They dropped the baton!  The damn thing only weighs 2 ounces.  How hard is it to pass a baton around the track without dropping it?

We also had the pleasure of watching Usain Bolt of Jamaica, who looks like a man running against boys.  Track needs more characters like him.  He had already won the 100 meter dash, breaking the world record despite slowing down in the last 15 meters to wave his arms and pound his chest.  Then he won the 200 meters, only this time he was serious and broke Michael Johnson's record, which had stood for 12 years, and looked unapproachable.

And on top of that, he didn't have a lot of competition.  Because BOTH the silver and bronze medalists were disqualified.  They didn't have to do anything complicated, like passing a baton, either.  All they had to do was stay in their lanes, but they couldn't manage that.  Sometimes I think their coaching sessions go something like this:

Runner:  Me run track.

Coach:  Stay in your lane.

Runner:  Me run fast.

Coach:  OK, but remember to stay in your lane.

Runner:  Lane?  What lane?

These are world class sprinters, and they're making mistakes you wouldn't expect to see at high school track meets.  I think I'm going to start rooting for Jamaica. 

 

 

Crikey! Australia loses by 31

In their first game of the medal round, Team USA ran into a very physical Australian team.  There were some hard fouls, as they tried to take the Americans out of their game.  At the end of the first quarter, the score was tied, but that was because Team USA couldn't buy a three, and they were shooting their free throws like Shaq.  Australia's shooting kept them in the game early, but the Americans were dominating inside, playing volleyball on the offensive boards.

By halftime Team USA was up by 12, and Australia's olympic experience was about to come to an end.  In every game so far, it has only been a matter of time before the Americans got their transition game going, and went on a big run to break the game open.  Against Germany, they started the game that way.  Against Australia, they started the second half that way.  Once they get out in the open court, good luck stopping LeBronze or Wade on his way to the basket.  The problem for the rest of the world is that there are some guys who can guard LeBronze, but they all play for Team USA. Four minutes later, Australia was down 23, Bucks' star Andrew Bogut was hobbling to the bench on a bad ankle, and that was all she wrote.  Final score USA 116, Australia 85.

On to gymnastics.  Thanks to Tivo, I can fast forward through everything else, and find womens gymnastics.  At least I thought I had when I saw a girl doing somersaults and bouncing up and down.  False alarm.  It was the Trampoline.  How about that?  Trampoline is an Olympic sport now.  Trampoline!  And in prime time, no less!  So what's next?  Origami?  Flower arranging?

The gymnastics came later.  The battle on the Uneven Bars came down to He Kexin of China, who looks like she's maybe 13 years old, and Nastia Liukin of the USA, the all-around champion.  They had identical scores, but He won on a tie-breaker.  My first thought was, oh boy - a controversy!  Think Bela will have something to say about this?

But first, someone needs to tell Al Trautwig the cold war is over.  His commentary reminded me of the 70's, where every athletic event was a life-or-death struggle between east and west.  At the awards ceremony, Trautwig said, "Does He Kexin really think she's won the gold medal?"

Yes, she does.  The  fact that she was standing on the top step might have given her a clue.  And the gold medal she had draped around her neck must have been a dead giveaway.  And for what it's worth, I thought she won it, too.  I can't comment on the accuracy of the judges because I'm not qualified.  Maybe the Australian judge woke up on the wrong side of the bed that day.  But they followed the rules, and that's all that mattered.

Of course this led to another Encounter with Bela, and I'm still not sure what he said.  Nothing like a controversy to make ol' Bela's blood boil.  I really wish I had one of those universal translators they used on Star Trek.  At the very least, NBC should have provided us with a Bela-to-English dictionary, or maybe English subtitles when Bela was talking.

Fortunately they had Tim Daggett explain the circumstances, which he did without a trace of a Romanian accent.  I looked at the raw scores of ALL of the judges, and when you added them up, the Chinese girl won.  But the rule is to throw out the high and low scores, which they did.  That's when it became a tie.  The tie-breaker is to throw out the next lowest score, and when they did that, He Kexin won.  You may say it's a stupid rule, but it's the rule.  It's not like swimming where they award duplicate medals in a dead heat.  Maybe they will change it for the next Olympics, and maybe they won't.  As for He's age, that doesn't matter to me.  I don't think there should be a minimum age, and if she's good enough to beat the other girls when she's 10 years old, give her the medal.

The final event was the Balance Beam.  Of all the events, this is the one that scares me.  The others all look like fun, but I'm amazed that more girls don't kill themselves falling off that thing.  This would be Shawn Johnson's last chance to win a gold medal.  She is a pixie with what they used to call a Pepsodent smile.  She holds the mythical title of America's Sweetheart, but she is emotionally and physically as tough as any athlete at the games.  She had been rock-solid all week, winning three silver medals, but minor mistakes in each event had kept her from winning the top prize.

Under the pressure of the final event, she gave her best performance of the games.  Next came her teammate, Nastia Liukin, and I found myself hoping she would fall off the beam.  Nothing against Nastia, but she already had the all-around gold medal (which is better) while all Shawn had was more silver than Tiffany's.  In the end, Nastia won the silver medal, and Shawn (finally) won gold.

Bob Costas interviewed her afterwards, along with her coach and...Bela!  Her coach was born in Beijing, and I found him easier to understand than Bela, but that's another story.  Bela described the balance beam as the purgatory of gymnastics...at least that's what I think he said.  He was engaged in Belaspeak, so it's really anyone's guess as to what he actually meant.  But at last there was a happy ending to the gymnastics competition.  And no more Bela.  I think.

 

 

 

 

Another nail-biter for Team USA

Today Team USA played its final game in pool play against Germany.  Let me say up front that German basketball isn't very good.  It's basically Dirk Nowitzki and a bunch of stiffs.  Team USA put the game out of reach early (I mean really early) by jumping off to a 20-3 lead.  For their part, Germany started off badly, and gradually went downhill from there.  The final score was 106-57, and if this game were a fight, they would have stopped it before halftime.

But now that pool play is over, everyone starts with a clean slate in the medal round.  As I mentioned in an earlier entry, Spain only lost one game in Athens and did not win a medal, finishing seventh.  Argentina lost twice, and won the gold medal.  Now it is a single elimination tournament, and every game counts.

The next opponent is Australia, and they aren't very good.  They had only an outside shot at a medal to begin with, and they didn't help themselves by drawing USA in the first round.  The draw is critical, and the Chinese coach understands that.  He is a Lithuanian, and wanted to play Lithuania, not Argentina in the first round.  China had already qualified for the medal round, so he only let Yao Ming play 18 minutes in the final game, which they lost.  The home crowd was not happy to see their superstar sitting on the bench while the team was losing, but the coach is the supreme overlord, and his rule is absolute.  The coach knows the Lithuanian team intimately, and if he knows something and wants to play them, he did what was right for his team, and not the player, even if he is a national icon.

In the end it won't matter, because Team USA looks unstoppable.  Unlike previous editions, this Team USA plays defense.  They have crushed the teams that were supposed to give them trouble, and have won their games by an average of 32 points.  A few weeks ago they played Australia in a "friendly" and won by "only" 11 points.  I predict that the next game will not be so friendly, and Team USA will roll over Australia.

They're showing gymnastics again.  The women, that is...who would watch mens gymnastics anyway?  This means lots of artistic, athletic young women doing all kinds of impossible exercises, sandwiched around my favorite segment of the Summer Games, the Bela Karolyi Interlude.

We were treated to hear from Bela after the vault competition, and again after the floor exercise.  Two helpings of Bela in one night!  My cup runneth over.  First, he directed his wrath at the judging of the vault competition, because Alicia Sacramone finished fourth, and missed out on a medal.  She is a talented gymnast who unfortunately had the worst night of her life in team finals.  If you watched the earlier team comptetition, then you saw Team USA lose the gold medal to China because first she fell off the balance beam, and then landed on her rear end in the floor exercise.  So I'm inclined to think she's actually lucky to make it out of Beijing with a silver medal instead of being covered with tar and feathers.  Actually that's being unfair.  Even if Sacramone had been perfect, the Chinese would have won anyway.  Much as I hate to say it, they were that much better than the Americans.

Bela probably has a point about the judging of the vault competition.  I can't say for sure because I don't understand the first thing about gymnastics.  I have a vague idea that falling down is bad, and costs you points.  Anyway, a Chinese girl who placed ahead of Sacramone nearly fell forward and landed on her face.  And the North Korean girl who won the gold medal landed out of bounds on both of her vaults.  I don't begrudge her the gold medal for doing two crappy vaults, though, because she's from North Korea.  She will probably be the only national hero they have, and she'll receive extra rations of gruel for the rest of her life.

After the floor exercise, Bela was a lot happier.  But then the top three places went to a Romanian and two Americans.  What more could Bela ask for?  I'm not saying he's a homer, but his reporting of gymnastics makes Fox News look fair and impartial.

Another day, another blowout

This time it was mighty Spain.  Undefeated in pool play, the Spanish basketball team ran into a buzzsaw today.  The final score was USA 119, Spain 82, and it wasn't that close.  Spain is one of the gold medal favorites, but they were not even competitive in the second half.  By the fourth quarter, their team's body language was obvious.  The coach looked disgusted, and the players were looking up at the clock and wishing the game were over.

Halfway through the tournament, if I had to pick the MVP, it would be LeBronze James.  He is everywhere on defense, getting steals and blocking shots, and when he drives the lane, defenders bounce off him like pinballs.

There is one more meaningless game in pool play against hapless Germany, and then Team USA will probably face Australia in the first game of the medal around.  Lithuania and Argentina have good teams, and it is still possible Team USA could see Spain again, in the finals.  If the Spaniards wanted the Americans to be overconfident in the event of a rematch, they did a real good job of sandbagging today.

One good feature of the Olympics is that you get to see obscure athletes in sports you'd never watch, or may never even have heard of.  Beach volleyball is such a sport.  Two on a side, on a sand court.  They're dropping baseball from the next Olympics in London, but beach volleyball is in.

Maybe that's just as well, or I never would have heard of the Silent Laciga Brothers.  Paul and Martin Laciga were the best pair of beach volleyballers in Europe, and represented Switzerland in the Olympics twice.  They should probably be called the Battling Lacigas because they hate each other.  They were a tandem for 14 years, and didn't speak to each other for the last 8, hence the name the Silent Lacigas.

It was actually their father's idea.  Instead of arguing and screaming at each other, he suggested that they not speak to each other.  Their results improved dramatically, and they enjoyed great success, winning more than $1 million in prizes.  They wouldn't speak to each other on the court, or off it.  They stayed at different hotels, and never ate meals together.

After the 2004 Athens Olympics, they brokeup.  The younger brother (Martin) found a new partner, and when asked if he got sick of Paul at the Olympics, he said, "No, I was sick of him long before that."  Paul retired, and now Martin has a younger partner that he can yell at.  Their opponents' strategy is to go after his partner early in the hopes that he'll make a few mistakes, and then Laciga will start screaming at him.  As entertaining as this sub-plot may be, I won't miss beach volleyball after the Olympics.

I won't miss Bela (the Madman) Karolyi either.  After the Womens All Around Gymnastics Final, they showed video of him watching the performances.  He doesn't bounce around quite as much as the girls, but one of these days he's going to hurt someone in the studio.  The way he was jumping around and flailing his arms, I thought he might actually come flying out of my TV set.

BTW, Michael Phelps won his seventh gold medal.  That's not really news as it falls into the category of "dog bites man."  It's expected.  Michael Phelps losing would be news, like "man bites dog."  But it was his closest race, winning the 100 Meter Butterfly by one-one hundredth of a second, the smallest margin possible.  I've played the finish back on my Tivo several times, and I still can't separate the two of them.  But the touch pad on the wall never lies.  Seven down, and one to go.

My Big Fat Greek Blowout

At last Team USA got another crack at the Greek basketball team that beat them in 2006.  Final score USA 92, Greece 69.  And it wasn't that close.  They pressured the Greeks all game long, wouldn't let them set up their pick and roll offense, and forced 25 turnovers.  The game was over by halftime.

Next up is undefeated Spain, one of the best teams in the tourament, led by Pau Gasol.  First, I think the Spanish shouldn't pose for any more team pictures until they're safely out of the country.  The crowd will be strongly pro-USA for this game.  Second, I think Gasol is about to find out that playing against Kobe isn't nearly as much fun as playing with him.

So far Michael Phelps is 6-for-6 in the pool, with 6 world records, and none of the races have been close except for the 4x100 freestyle relay (thank you again, Alain Bernard.)  He even broke a world record when his goggles filled up with water, something that's happened to me many times.  Goggles filling up, that is...not breaking world records, so I know how annoying that is.  Anyway, I don't think his last two races will be close either.

A word about gymnastics.  First of all, I don't know anything about gymnastics.  There have been some rumors that the Chinese women are under age.  Someone said when they posed for pictures with their gold medals they looked like they were wearing manhole covers.  And when they held up their hands together, they looked like a charm bracelet.

Point to remember:  China has 1.3 billion people.  When you have that many people, some of them are going to be as big as Yao Ming.  And some of them are going to be as small as those gymnasts.  Being young and inexperienced isn't usually an advantage, so I'm willing to give them the benefit of the doubt.  If they can do those routines at age 12 or 13, more power to them.

One last thought on gymnastics:  I'm not so sure having Bela Karolyi doing commentary is such a good idea.  I know he's trained lots of world and olympic champions, but when he gets excited, I can't understand a word he's saying.  I think he's speaking English, but not so you'd recognize it.

Finally, I was looking forward to a Federer-Nadal final.  Federer had to play James Blake in a  quarterfinal match, which should have been no problem since he's 8-0 against Blake lifetime.  Blake beat him in straight sets.  It's been that kind of year for Federer.  However in the overall picture, it was USA vs. Switzerland, so now Blake gets a shot at a bronze medal or better, and since he's been through enough grief in his life, he deserves it.

Sacre blew it!

It was a case of  "open mouth, insert foot." The swimming competition in Beijing is well underway, and Michael Phelps had already won one of the eight events he will enter.  This race, the 4 x 100 Freestyle relay would be his most difficult event.  The French team was favored to win gold. 

The Olympic Aquatic Center, or "Water Cube" as it is popularly known, is as beautiful in design as it is in function.  It is basically the Coors Field of swimming pools.  The Water Cube is where world records go to die.  Already in the competition, we have seen records broken by 2-3 seconds.  But things were about to go to an entirely new level. 

Phelps swam the opening leg for Team USA, and with 300 meters completed, the French had almost a full body-length lead on the Americans.  And their champion, the world record holder Alain Bernard, was going to swim the anchor leg.

Prior to the race, Bernard had said "we are going to smash the Americans.  That's why we're here."  Au contraire!  But I'm getting ahead of myself.  Jason Lezak was swimming the anchor leg for Team USA, and...Mon Dieu!  The American was gaining on the great Bernard.

Lezak went on to swim the fastest 100 ever.  BTW, it won't count as a world record since only the first leg of a relay race can qualify for some arcane reason.  Maybe there is some time dilation effect, and the time clocks don't work right once the race has started. 

With his final strokes, Lezak caught Bernard, who in the fine tradition of Jean Van de Velde (now there's a name you haven't heard for a while) was out-touched at the wall.  Americans gold, French silver, by less than a tenth of a second.  Many years ago I tried to explain (over and over) to a co-worker that live sporting events were the best drama on television, but his head was made out of lead, so he never understood.  I hope he was watching.

USA 101, China 70

At last the Olympics has started.  The opening ceremony is always something to see, and the Chinese put on an amazing show.  I like to watch the introductions, to see how each country is greeted.  The Chinese applauded just about everyone, including the even the US and France, but not Iran.  

That reminds me:  they REALLY need an alphabet.  For a country that invented gunpowder, the compass, and a million other things, you'd think that some time in the last two thousand years they could have figured out some system of writing that didn't depend on 50,000 little pictograms.

Anyway, due to some vagary of the Chinese written language, Japan entered the stadium right before Taiwan, or as they were forced to call themselves, Chinese Taipei.  Both countries' relationship with mainland China have been...uh...problematic, shall we say?  At least they didn't boo or whistle at Japan; I'm sure many in the audience would have liked to greet the Japanese with automatic weapons fire.  Next came Chinese Taipei, which was not allowed to use their flag, but had to carry something that looked like a placemat from a fast food restaurant.  But they received the warmest welcome of any nation, except for the home team itself.  Perhaps there is still some hope for re-unification.

On to basketball.  As luck would have it, the first opponent for Team USA was the host team itself.  Their superstar center, Yao Ming of the Houston Rockets, had broken his foot during the NBA season, and was far from 100%, but he would have found a way to play in this game even if he were in traction.  This would be the most watched basketball game in history, with an audience of more than 1 billion people.

It was a close game for one quarter, as the Chinese made one three-pointer after another, but they started getting ragged in the second quarter.  The Chinese don't have any depth, and the Americans continued to throw fresh bodies at them, like Dwyane Wade and Chris Paul.  It's a real luxury when you have the best point guard in the world as a backup.  So it started to look like the Harlem Globe Trotters against the Washington Generals.  Once Team USA got its transition game going, and the Chinese couldn't get into their set defense, it was an exhibition of one dunk after another.

By the third quarter the rout was on, but it's important to note that China is not a strong opponent.  They aren't expected to win a medal, and probably won't even make it out of pool play.  But Team USA played well enough to beat anyone, and the officiating was fair.  They actually called Yao Ming on a blocking foul when LeBronze James drove to the basket.  I expected to see some home cooking there.

Next up is Angola, but the real test won't come until the medal round.  Some of the games may be close, but I still don't see anyone beating Team USA.

 

Redeem Team

On 8-8-08 (in China, 8 is considered a lucky number) the Beijing Olympics will begin.  In between the 400,000 sports I've never heard of before, some basketball games will be played.  Enter the Redeem Team.

In 1992, there was the Dream Team.  For the first time, professional basketball players were allowed to play in the Olympics.  That team won its games by an average of about 40 points en route to a gold medal.

How the mighty have fallen.  In Athens (2004) a group of spoiled, arrogant multi-millionaires represented the United States.  Carmelo Anthony guaranteed a gold medal.  When they lost to Puerto Rico, LeBronze James said it wasn't the end of the world.  Then they lost to Lithuania, and they barely made it into the medal round as the last seed in the tournament.

The team that really had the right to be pissed off at this turn of events was Spain.  Along with Argentina and the USA, they were one of the gold-medal favorites, and they were the top seed in the medal round.  The top seed's reward is to play the lowest seed in the opening round.  Sounds fair, since that should be the weakest team in the tournament.  Except in this case, the last seed was the underachieving, but extremely dangerous Team USA.

Worse yet for Spain, the Americans had finally found a sense of urgency, and for once they woke up and played the kind of basketball they are capable of.  Spain was one and done, out of the tournament in the opening round with no chance to win a medal.  Then Team USA reverted back to form, and lost to Argentina in the semi-finals.  They managed to win a bronze medal, and they were very lucky to get that.

Typically Team USA is a collection of all-stars who spend two or three weeks playing together before the Olympics.  Their talent and athleticism has always been so much better than the rest of the world that they could get away with just about anything.  As Inspector Clouseau would say, "Not any more!"

The American team never bothered to learn that the international game is different, never listened to their coaches, knew how to play against zones, or that the international game is more physical, and so on.  It isn't much of a stretch to say theworst guy on the American team is better than the best player on anyone else's team.  And still they lost (three times.)  Prior to 2004, the American basketball team had lost two (2) games in Olympic competition, and in 2004 alone, they lost three.

Now they have a pool of roughly two dozen players who made a three-year commitment in 2005 to play together in the off season, and earn the right to represent their country.  They didn't get off to a good start.  In 2006 they lost the world championship to Greece.  Greece!  Unlike most other countries, there aren't any NBA players on the Greek team.  I didn't even know Greece had a national basketball team.  But they beat the Americans, so this year Team USA had to play in a qualifying tournament just to make it to the Olympics (and they deserved to, just because they lost to Greece.)

But Team USA is in China now, and much as I know better, I am picking them to go undefeated throughout the Games, and win the gold medal.  Why?  Because this time they're prepared, and if they lose again, there will be no excuses.