Archive for April, 2009

An Open Letter to the New York Mets

April 22, 2009 1 comment

Dear Mets,

I have officially had it. With each passing day I am getting more and more numb to what I am witnessing on the field. Looking back on the past three years, I am truly embarrassed to be a fan of your franchise. You have cost me hundreds of hours and dollars each year with zero payoff to show for it. I am twenty years old and already have a gray hair on my head – I attribute this to you. I guess I should take back my prior comment that you haven’t given me anything.

What we have lived through over these past few years has been unbearable. We watched our team crumble in the playoffs to a vastly weaker opponent. Largely this was not your own fault, as the injuries to El Duque and Pedro in 2006 were simply bad luck. This was the start of a run that I assume the entire organization would largely attribute to “bad luck.” I call it failure.

Over the last two seasons, how many runners on third base with nobody out have been stranded by this team? How many opportunities to get that clutch hit with RISP to break the game open have you squandered? How many games has the bullpen blown in agonizing fashion? How many times have you seen a team come into New York clearly wanting to kill the Mets, without so much as a fight from our players? Is it any great surprise that the team’s season has ended on the last day of the season two years in a row, at home? It has gotten to the point over the last couple of years where from the 7th inning on, most of the time I have been able to predict exactly what is going to happen, as friends who have watched games with me can attest. This sense of impending doom, of waiting for the next shoe to drop hovers over this team every single day. The only thing that changes is which shoe drops.

Management has been as complicit in this failure as the players. The executives completely botched the firing of Willie Randolph. The executives botched the signing of Derek Lowe. The executives botched the signing of Manny Ramirez (invest with someone other than Madoff next time, or at least admit to the fans that this is why you didn’t so much as talk to his agent about him). The executives pushed Ryan Church to return from a concussion early, potentially putting his cognitive functions at risk; that is, they put his effective livelihood in danger for no good reason. The executives to add insult to injury have constantly put Church down, with many questioning whether or not he can make it in New York, or even if he is a better hitter than Daniel Murphy (even if Murphy is better, why would you denigrate Church?). I guess it wasn’t enough that he played Gold Glove defense and was your MVP before he got injured last season; or that this year he is batting .350. Even a marginal player like Figueroa has been treated poorly when he has had success at the big league level. Why do you seem to hate all of the good guys?

You also managed to pick the worst of the investment banks to sponsor your stadium…you couldn’t quite think to do what the Yankees did of simply having your insolvent banking pals advertise all over the stadium while still giving it a name loyal to the history of the team. And while you built a beautiful stadium, outside of the pictures hanging from the outside, you wouldn’t even know the Mets played there. There are more quotes and pictures from Jackie Robinson than there are of Mets in the whole stadium. Your facade while beautiful is Ebbets Field, while your fence is Giants-colored. You would think the team was embarassed by its history. Even if it is, our fans revel in our history, however checkered. Show some respect to the people that are the lifeblood of the franchise.

Despite vowing coming out of Spring Training this year for this team to come back with a team-first attitude and focus, so far it has been a bunch of individuals putting up great numbers, while collectively remaining inconsistent, unclutch (look at the numbers) and lifeless. The Mets continue to lose one-run games. They continue to strand astronomical amounts of baserunners. They continue to fail in the most agonizing of fashions – two dropped fly balls, and Beltran who apparently doesn’t know how to slide.

You Mets lack all consistency on a day-to-day basis. When you get great starting pitching (see Johan Santana) you can’t hit. When you club the ball, it is usually only for a few innings, and even when it is for a sustained period, you fail to pitch. This team is totally dysfunctional. Most frustrating of all is the fact that in every loss thus far (besides perhaps the Josh Johnson game which was again, lost on an error), the team has never actually been outplayed by an opponent; the Mets are their own worst enemy, always beating themselves. This is perhaps the only thing consistent about the last 2+ years.

And another thing. If you went to war, would you prefer to do it with Chase Utley, Jayson Werth and Shane Victorino or Carlos Beltran, Carlos Delgado and Jose Reyes? To be sure, you have some pieces that are solid. Your bullpen seems to be much improved. You have a handful of guys that seem tough and willing to run through walls like Putz and Johan and Murphy and even Wright (though I still think he is softer than most of the Phillies guys). But you seem to lack the killer instinct as a group. Would you ever see the Mets go into a stadium like the Marlins have done on the last weekend the last two seasons and say, “We hate your team, and we are going to make your lives a living hell for the next three games.” Heck, watching David Eckstein hit against us last week, I was more scared of him due to his peskiness and pertinacity than I would be pitching to most of the Mets in a big spot, or fighting the Mets in a bench-clearing brawl. That little guy shows more heart than most everyone on our team combined.

What I am trying to get at is that while you have a few solid, hard-nosed players, the nucleus needs to be blown up. As a collective unit, this team continuously fails. They never put all of their talent together and play as a team. They are a bunch of talented individuals who cannot and will not ever gel. Unfortunately, the fans who want nothing more than for their beloved team to win have to live with this mediocrity, constantly stabbed in the back in the most painful of ways. We are sick of this. Fire the bums!


A disgruntled Mets fan


This Isn’t About Democrat vs. Republican Anymore

April 20, 2009 5 comments

In light of the recent Tea Parties, Janet Napolitano and her cronies labelled many people like myself as right-wing extremists. Now, I’m kind of used to hearing this by now given that I grew up in New Jersey and go to a university where only global-warming-fear-mongering, jihadist-appeasing (largely anti-Semitic), Marxistsympathizing, military-hating, sovereigntysacrificing chaps are considered moderate, but the fact that the people that defend the rights of these vitriolic parasites to protest against our right to exhale carbon dioxide and eat trans fats were labelled as threats to the peace is downright offensive.

Sure, most of the folks that came out that day might be registered as Republicans, but the line as to what determines a Republican and a Democrat to me at this point no longer exists. Practically all politicians in these parties are the same, differing only by degree of pathetic-ness (not a word according to Google, but it should be).

Thus, I have been thinking about how to describe the split between the two sides of the debate in America right now. The words that I think best summarize the political divergence are individualism versus statism or collectivism. Jonathan Hoenig lays it out pretty well here:

If you find yourself identifying with the values of the former word or phrase below, then you fall into the camp of the individualist, while if you find yourself identifying with the ladder, then you probably identify as a statist. The dichotomies that I see are as follows:

merit vs. favoritism
liberty vs. tyranny
individuality vs. the mob
personal responsibility vs. collective irresponsibility
your happiness vs. the happiness of 50%+1
free speech vs. censorship
strength vs. weakness
long-term planning vs. short-term wishful thinking
national sovereignty vs. internationalism
prosperity vs. impoverishment
freedom vs. control
property protection vs. plunder
city on a hill vs. Gulag in Siberia

To be sure, in this society, labeling anyone is touchy. At this point I don’t know if I would consider myself a Lockean, a Constitutionalist, a Goldwater conservative, a fiscal and social libertarian but strong on defense dude, or just a lover of my nation. Nevertheless, the split that I see that encompasses the most fundamental of beliefs is individualism versus collectivism. You be the judge as to which ideology is superior.

Market as Regulator

April 7, 2009 4 comments


We regulate any stealing of his property

And we damn good too

But you cant be any geek off the street,

Gotta be handy with the steel if you know what I mean, earn your keep!
Regulators!!! mount up!

The epic words of Warren G in many respects seem to sum up our government’s regulatory regime. Guys like Barney and Timmy clearly are “handy with the steel,” in their ability to influence businesses. They also in many respects do regulate stealing, ultimately robbing investors and businessmen in creating moral hazard for the bond and shareholders and all sorts of barriers to entry for the firms.

Yet recently amidst the market fallout there have been calls left and right for some sort of even more powerful “super-regulator.” After all, given that our regulatory architecture seems to have failed us this time, why not create an even bigger and stronger one to prevent the crisis next time?

Just like all government attempts to stop future crises, be it in healthcare or food and drugs, regulation always perpetuates the problems, creating greater ones down the road. In the financial system, we see perhaps the greatest case AGAINST regulation. Let us examine my seemingly counterintuitive claim.

The first and most obvious reason against regulation is that it creates a significant amount of moral hazard. If one has the SEC there to ensure that financial institutions are seemingly playing by the rules, or the FDIC there to ensure that even if a bank is insolvent, one will be able to receive his deposits (up to a point), then this encourages one to take far greater incremental risks than one otherwise would. After all, with the seal of approval of a government institution, why would you ever get your hands dirty in analyzing the institutions in which you entrust your money?

This problem is especially pervasive when it comes to the credit ratings agencies, namely Moody’s, S&P and Fitch, who are designated “Nationally Recognized Statistical Rating Organizations” by the SEC. Individual investors and institutional investors alike had become reliant on these agencies to gauge the risk of default of individual companies and securities, only for many of these companies and securities to blow up in their faces during this crisis. Had people actually gone in and done the risk analysis themselves, as opposed to relying on ratings assigned to companies largely by government decree, I would argue that people would have taken far more prudent positions with their capital.

Further, without this pseudo-cartel of agencies, I would imagine there would grow hundreds if not thousands of competing private firms to do independent analysis, greatly benefitting the investor without the time or knowledge to do financial analysis. Sure some of these companies might partake of fraudulent activities themselves, but they would either lose credibility and have to fix up their act to compete, or be prosecuted for the fraud they perpetrated. I admit that in this case, you do need law enforcement when it comes to fraud, but it is far more likely (given all of the times that private companies for example had uncovered the Madoff scheme before the regulators ever did anything) that the authorities would be able to react were market participants able to signal fraud to them. Still, at the very least the consumer would have far more choice in determining which analysis was best.

This brings us to another problem with government regulation – the fact that it is done by government monopoly. Government officials just like businessmen are prone to error. Unlike businessmen however, they lack a profit motive to work efficiently and prudently. To this end, if we see how ineffectual the DMV is, why should the SEC or FDIC or SIPC or any of these other alphabet-soup agencies be any more trusted? Sure, many of the people that work for these agencies previously worked in private industry, but remember that this in itself creates many a conflict of interest. Madoff himself had ties to the SEC, which may have helped him keep his Ponzi scheme alive for so many years.

Government regulators also create problems in that they make costly work for businesses and investors. SARBOX and other forms of compliance cost businesses small and large millions each year, while the regulators’ decisions to allow off-balance-sheet financing in many ways incentivized companies to hide the risks that should have been plain as day to investors. All of this is bad for transparency and efficiency, two things regulators are supposed to encourage.

On the other hand, there is the crazy idea of letting the market serve as the regulator. I would argue that discerning, self-interested investors have the best judgment when it comes to the valuation because they are responsible for their money. For it is the market that assigns a price to securities – riskier ones command a higher risk premium. Companies that make mistakes, be it through poor compensation standards that reward incompetence, poor investment projects, etc will face prohibitive borrowing costs and lower stock prices, and ultimately if the market so chooses be taken under. It is this playing field that ensures regulation. The mercy of the market will hold people accountable. Government regulators, government-empowered ratings agencies and others merely create the moral hazard that stops this system from functioning properly.

When government regulators set a precedent of bailing people out for bad behavior under the guise that a company is “too big to fail,” you further destroy the regulation of the market. You encourage excessive risk-taking; you encourage striving for short-term gains at the cost of long-term sustained profitability. You hurt the investors who are trying to signal through bond and share prices that a firm is in bad shape, and ultimately hurt taxpayers if you make the private problems of some investors into the public problems of all Americans. To let bureaucrats go in and say that a company is stable, often disingenuously, as opposed to letting investors speak with their money is as arbitrary as it is abominable.

The fact of the matter is that government doesn’t want to let the market work as it did in blowing up companies with worthless assets (even if it was the moral hazard built into system and intervention that caused creation and investment in these assets), because it will hurt the interests that prop the elected officials up, destroy their own wealth, undermine their power (wouldn’t want to waste a crisis) and further cause unrest amongst the populace.

But the short-term dislocation versus the long-run fiscal and moral decay of the country is incomparable. The former will lead to an economy and a nation made stronger; the ladder to tyranny. The problem in our nation is that if you are a politician and trying to get reelected, you make this calculation and hope that things don’t collapse at the wrong time, namely under your watch. Interestingly, this sacrifice of long-term sustainability for short-term gain is just the calculation made by many at the banks who played with essentially free house money (courtesy of the Fed), leading us to the crisis today. But let these same government officials who in large part mucked things up the first time around gain even greater control over the economy. I dare you.