Archive for the ‘unsolicited advice’ Category

Opening Day Lineup

Sunday, April 5th, 2009

TLR decided to amuse himself by releasing his opening day lineup today. And there was much wailing and gnashing of teeth:

1. Brendan Ryan, 2B
2. Rick Ankiel, CF
3. Albert Pujols, 1B
4. Khalil Greene, SS
5. Ryan Ludwick, RF
6. Yadier Molina, C
7. Chris Duncan, LF
8. Brian Barden, 3B
9. Adam Wainwright, P

That Schumaker isn’t starting comes as no surprise, he’s no more effective against LHP’s than the man he’s replacing. That Freese is out in favor of Barden will cause many to question whether Tony Really Does Hate Rookies. I’ll try my best to divine Tony’s strategy here. I think he’s expecting a low-scoring affair in the cold. I think he’s concerned that Freese’s achilles tendon might give him problems out in the field in said cold. I think he wants to have his core batters piled up 2-7, with good defense in the infield for all the ground balls. I think he’ll want to use his bench pretty aggressively once one of the starting pitchers gets knocked out.

I expect to see, at some point, Skip PH in the pitcher’s spot followed by Freese hitting for Ryan, with Skip taking over at second if the Cardinals hold a sizable lead.

I expect to see Razzle get his first MLB plate appearance. First hit would bring some beauty to an ugly day.

Of course, I expect to see the Cardinals win their home opener.

2009 Roster Prognostication

Friday, February 20th, 2009

Being that prematurely guessing how the roster situation will play out is one of my favorite things to BS about (see this bit of bad advice for evidence), I’ll stake out an early claim on how the opening day roster will shake out.

Starting Rotation

  • Adam “Wagonmaker” Wainwright
  • Chris “Carp” Carpenter
  • Kyle “No Nickname” Lohse
  • Todd “Colonel/Throw Them ‘bows” Wellemeyer
  • Joel “Sole Survivor of the Planet Krypton” Piñeiro

These guys are all set it stone, barring injury or continued panty-bunching.

Bullpen

  • Josh Kinney: RHRP
  • Kyle McClellan:RHRP
  • Ryan Franklin: RHRP
  • Jason Motte: RHRP
  • Brad Thompson: RHRP
  • Trever Miller: LHRP
  • Ian Ostlund: LHRP

Surprising prediction, is it not? I don’t think the Cards would want to cut Wonderbrad, and that’ll squeeze out one of Motte or Perez from the five-man group of RHRPs, unless they decide to keep stretching out K-Mac as a starter in Memphis, which I would think to be a poor use of resources. I think they’ll like what they see in Perez, but that his tendency to walk batters will keep him from stepping up and seizing the closer’s ring. They’ll send him to Memphis to work on throwing his breaking stuff for strikes and bring him up by the end of April. The staff goes with Motte because of his combination of velocity and accuracy—and also because he gives you a legitimate third option at catcher, allowing Tony to PH his bench left-handed batting OFs for his catchers with confidence. The ninth inning will be handled by working the matchups.

Trever Miller should have a great camp and is guaranteed the primary LHRP spot, barring the usual caveats, and Ian Ostlund narrowly wins a tight race for #2 LHRP on the strength of his refusal to walk batters.

(Non-Pitching) Infielders

  • Yadier Molina: C
  • Jason LaRue: C
  • Albert Pujols: 1B
  • Brendan Ryan: 2B
  • Skip Schumaker: 2B (OF)
  • Khalil Greene: SS
  • David Freese: 3B
  • Brian Barden: UT

I’m still skeptical about Skip moving to 2nd, but recognize that he’s always a fantastic Spring hitter and that he and the organization are dedicated to making it happen, so find it a little hard to believe that Joe Thurston will beat him out for the opening day gig. I think eventually Joe will get the call-up to take over as the lefty in the 2B platoon, but he’s on a minor-league contract, so the team will see how quickly Skip learns on the job. Both Brian Barden and Brendan Ryan are out of options, versatile in the field, and complementary in their offensive skillsets, so expect them both to make the team.

Outfield

  • Rick Ankiel
  • Ryan Ludwick
  • Chris Duncan
  • Joe Mather
  • Brian Barton

Leaving Colby Rasmus off this roster was a tough call, but it just makes so much business sense to wait until May to add him—and you get the benefit of another RH bat in either Barton or Mather. Ideally, Rasmus rakes the first few weeks at AAA and makes it easy to give him his debut—perhaps as early as the second homestand of the 2009 season.

In the meantime, your lineups could look like this:
Vs Left-handed Starter

Barton-Freese-Pujols-Ludwick-Ankiel-Molina-Greene-PITCHER-Ryan

Vs. Right-handed Starter

Schumaker-Duncan-Pujols-Ludwick-Ankiel-Freese-Greene-PITCHER-Molina

Roster Suggestions

Saturday, December 20th, 2008

John Mozeliak didn’t ask my opinion, but I feel strangely compelled to give it anyway.

The top priority for the offseason is apparently picking up type-A LHRP Brian Fuentes to close for the Cardinals in 2009. Fuentes is a very good pitcher who can get both righties and lefties out. He’s a three-time all-star. He’d also likely lose the closer role at some point during the season as he had in 2007 with Colorado. He’d prefer to pitch for the Angels, where I wouldn’t be surprised to see Scot Shields take over as closer.

The poop on the street is that Fuentes wants something in the area of 3/$33M.

I don’t want the Cardinals to sign Brian Fuentes. Too much money, too many years on the arm, too costly losing the first-round pick. I’m well aware that our bullpen last year had problems. We need another good lefthander: we’ve got Trever Miller on a very team-friendly contract. I’d like to see Dennys Reyes pitching for the Cardinals next year to solidify the left side of the ‘pen. Reyes is a type-B FA who was offered arbitration, so the Twins will get a sandwich pick when he signs, but the team signing him won’t lose anything. He wants a three-year deal, as does Fuentes, but Reyes is two years younger and is a (very good) LOOGY, not a closer, so the year-to-year cost wouldn’t be terribly high. (I’ve had an eye on Reyes since the 2006 season, when the Ricardo Rincon era ended prematurely.

There aren’t any established closers available on the FA market, unless you count Trevor Hoffman or Eric Gagne. It may sound a little hypocritical, seeing as he’s also a type-A FA who was offered arbitration, but I could see good things coming from signing Juan Cruz to a three-year contract at setup man rates, something in the neighborhood of 3/$12M, maybe more given the crappy Farnsworth signing. The downside to that is that you lose your first-round pick in the ’09 draft, of course, and also the ex-Cubs factor he brings. The upside is that he’s developed into a very good strikeout pitcher, a plague on the houses of all left-handed hitters, and is three years younger than Fuentes. In fact, he’s been one of the best relief pitchers in baseball over the past two years, striking out over 12 batters/9 over that span and putting up an ERA+ of 176 in 2009. That in spite of pitching half his games in the second most hitter-friendly stadium in the major leagues.

I suggest we sign Juan Cruz to a contract similar to the one we picked up Braden Looper on going into ’06 with incentives for IP targets. Juan Cruz starts out 2008 closing until, ideally, Perez is clearly ready for the ninth inning. Then Cruz moves into a set-up role or takes Piñiero’s spot in the rotation if Carpenter hasn’t already. (I suppose it’s a remote possibility that Jo-el could improve from last year, but I don’t see it happening.) Cruz profiles pretty similarly to Wellemeyer—hard thrower, good minor-league history as a starter, struggles at the major league level due to walks that landed him in relief. If he could put up a 3.68 FIP as a starter in 2009 and 2010, he’d almost certainly be worth the first rounder. (That’d require him to maintain the 0.87 HR/9, drop his BB/9 to 3, and keep his K/9 from going below 8.)

Another reason I’d like the Cardinals to sign Juan Cruz is that I’d very much like Ben Sheets to be a Cardinals in 2009 without giving the Brewers an absolutely knock-out draft next summer. The market looks spooked by the flexor muscle tear near the elbow that Sheets endured late last season, but I’m a believer that Sheets’ injury history is more flukiness than frailty. If the Cardinals sign both Cruz and Sheets, our first-round pick goes to Arizona and the Brewers get our second round pick for Sheets, since Cruz is ranked 16th among free agents by Elias, while Sheets comes in at 23. I’ve heard 2/$30M being bandied about for Sheets, with a lot of teams looking to cut payroll this off-season, I could see something even less. Over the next two years, Carp will be making 28.5 million, so that’s about the limit that I expect the Cardinals would be willing to offer.

Pretty much sacrifice next year’s draft (although you’ll always find some talent that’s unexpectedly dropped to the third round) and put together a great team without helping out the competition too much.

So here’s how I’d like to see our roster work itself out for next year:

Rotation

  • Wagonmaker
  • Sheets
  • Wellemeyer
  • Lohse
  • Piñiero/Carpenter

Bullpen

  • Cruz RHRP (CL)
  • Perez RHRP
  • Motte RHRP
  • K-Mac RHRP
  • Franklin/Kinney/Wonderbrad RHRP
  • Reyes LHRP
  • Miller LHRP

Starting Lineup

  • C: Molina R
  • 1B: El Hombre R
  • 2B: Kennedy L
  • 3B: Glaus R
  • SS: Spicoli R
  • LF: C-Dunc L
  • CF: Ankiel L
  • RF: Ludwick R

Bench

  • C: LaRue R
  • OF: Schumaker
  • OF: Barton/Mather/RazzleDazzle
  • IF: 2 of Brian Barden/Brenden Ryan/David Freese

Going off the most recent Roster Matrix at VeB, the payroll for that team would come in at around $111 million. They’d look like contenders on paper: if everything breaks right—healthy Carp and Sheets, resurgent Kennedy and Greene, solid bullpen, they’d be an excellent baseball team. With the Cubs planning on spending around $143M, we’d be fielding a comparably talented team without shooting ourselves in the foot for the future.

Go get ‘em, Mo.

Update/Correction: This is what I get for trusting ESPN, I guess. According to USA Today’s reporting on the Elias rankings, Ben Sheets scores a 79.038 on the FA list; Juan Cruz is lower at 76.627… The rankings are the same as reported on ESPN, sort of: Sheets is 23rd among NL pitchers and Cruz is 16th among NL relievers. I have to imagine that FA’s are lumped together, though. If you sign a starter and a reliever, both type As, whichever one scores higher should be considered the bigger loss by the old team, not whichever one happens to be ranked higher within his positional category. Bummer. I was wrong. It would’ve been nice to dramatically improve our team without providing the Brewers with our first-rounder.

Garbage

Wednesday, November 5th, 2008

I’d like to take this time to point out that Realplayer 11 is a piece of garbage, shitware of the worst sort. The Mac version is almost completely non-functional; the Windows version isn’t much better.

And Realnetworks makes it hard to find the older versions, the bastards. If you need to use RealPlayer for any reason, I highly recommend you downgrade to version 10, available here for Windows and here for Macs. I very rarely watch movies on my linux machines, but would guess that compiling an MPlayer would be a better way to go. The last version of Realplayer for linux wasn’t too impressive.

Last Chance

Thursday, October 16th, 2008

Viewership will be down for tonight’s debate, no doubt, but the number of Americans still seeking a candidate to best represent their priorities has dwindled down to some 7-8% of registered voters, if the polls are to be believed.

Media hype Expectations are that McCain will come out fighting “dirty”, he’ll continue to point out Obama’s long-standing, formative relationships with certain fools and blowhards who’ve dedicated their lives to subverting American interests like Bill Ayers and Tony Rezko (but not Wright, Khalidi, or Odinga ‘cuz that’d be divisive.)

I imagine he’ll mention Ayers as an aside—Obama may or may not take the bait. Something I’ve noticed about Obama is that he refuses to admit when he’s wrong—to this day, he attempts to justify his primary debate gaffe of committing to president-level talks with Iran’s (puppet) head of (mis-)government. In the first debate, he appealed to authority by claiming Henry Kissinger agrees with him—the logical fallacy backfired when Kissinger called BS. In this case, Obama isn’t wrong so much as he’s backed into a corner by telling contradictory stories about his relationship with Ayers.

That’d be a waste of time for McCain, though. He needs to defend his fiscal plans and his healthcare plan, both of which I think are good ideas. He does need to go on the attack though, particularly against Obama’s “95% of Americans get a tax cut” BS. He should quit working to distance himself from Bush and should instead distance Obama from Clinton and those happy days of a good economy and a friendly press. Obama’s tax plan essentially undoes all the (highly successful) welfare reform of the Clinton era by directly redistributing wealth via the IRS. If he doesn’t point out that somewhere around 40% of Americans don’t pay any Federal Income Tax, he will have failed, in my opinion.

I’d also like to see McCain give a quick, correct answer to a simple question and stop talking. That’s extremely unlikely.

8:09 — What the hell. I’ll crack a beer and liveblog this. Obama’s talking about the 95% tax cut thing. Jump on it, McCain.

8:11 — So far, he’s said that business owners should spread the wealth around instead of the government. Good, but not the swing he needs to take. Obama comes back with the 95% claim again and starts class-warfaring.

8:13 — Interesting obfuscation lexical choices just used and that I’ve noticed over the two-year campaign: Obama calls tax ‘n spend policy “investment”; McCain’s taken to calling the corporate income tax, “business tax”.

8:15 — Obama wants to go through the Federal Budget line-by-line and cut expenses to pay for his policy of a unicorn for every man, woman, and child. Unfortunately, or rather fortunately for balance of power reasons, congress didn’t pass the line-item veto bill back in the George H.W. Bush administration.

8:17 — McCain’s memorized sequence of “all of the above” energy sources is stale, man. He should be talking about electrical grid improvements by now.

8:18 — McCain suddenly wants a line-item veto, too. I’d much, much prefer genuine transparency in appropriations and legislation.

8:20 — McCain’s distancing himself from Bush. He doesn’t listen to me. Obama’s complaint was that Bush allowed the deficit to explode. I’ll be at the front of the line to ridicule Bush for failing to veto the ridiculous spending bills that he signed into law, but it’s not like his 8 years in office were normal 8 years. There was a lot of expensive work that had to be done oversees over those years and as we’ve learned lately, congress doesn’t do anything unless they’re bribed to do it.

8:23 — Unruly audience tonight. These kids have no self-control… Not the Hofstra students, but the press.

8:25 — McCain shouldn’t waste his time with distancing himself from Bush anymore. Nobody who’s still ready to be swayed is going to buy that argument at this point.

8:25 — Schieffer claims the campaigns are nasty, listing a series of terms the Obama campaign has thrown at McCain—leaving out the ‘dishonorable’ one that I find offensive. Schieffer wants McCain to tell Obama to his face that he’s friends of Bill Ayers. McCain took the opportunity to play the victim.

8:27 — I’m pretty disappointed McCain didn’t go after Obama’s tax plan, which would’ve been effective. Somebody in his campaign must know what a refundable tax credit is, since it’s the key of his healthcare plan.

8:28 — Obama claims 100% of McCain’s advertisements were negative. Law professors can’t do math.

8:30 — McCain throws much of Texas under the bus for a few Arizona voters. Points out the nation-wide negative attack ads. Obama’s running attack ads in freakin’ Illinois, man. We expect Obama to spend our money wisely?

8:32 — Obama’s playing to the NYT hype about McCain’s rallies gone wild and the twisted claims that McCain supporters want Obama to be killed. He complains that Americans have become too cynical about our politics. I’d prefer more cynicism. The Obamessiah fans who worship at this typical politician’s feet give me fear for the future of this nation. Of course, if he wins, they’ll be disillusioned out of politics until their thirties—when they’re decent taxpaying Joe twelve-packs. (Stolen bit)

8:35 — McCain just said, “Mr. Ayers… I don’t care about an old washed up terrorists.” Goes on about ACORN. Heh. Obama’s snickering into his notebook. Crazy old man, he thinks. And how about that, he took the bait. Now the press has to cover it.

8:37 — Obama thinks the Chicago Tribune is a Republican-leaning newspaper. And my butt can chew gum. At least that gives an indication of where he situates himself on the political spectrum.

8:39 — I think the point’s made, McCain. Obama’s lied about ten times in a row about some stuff that a lot of people may or may not care about. You got more important stuff to do. During his transition back to those issues, Obama snickers audibly. Guffaws perhaps.

8:41 — Joe Biden has never forgotten where he comes from. And Biden’s foreign policy chops are vastly overstated. He’s been wrong more often than not.

8:42 — A lot of people are going to flip out about McCain calling Palin a “role model for women.” I like her a great deal. She’s a talented politician and, as far as I can tell, a libertarian pragmatist with some strong socially conservative views that I imagine she’d only promote on a bully-pulpit basis if she becomes president someday. That’s what she’s been as governor of Alaska.

8:45 — McCain and I agree on something! Biden’s wrong more often than not on foreign policy issues.

8:47 — Energy policy, nice! Question: give me a number for how much we can reduce our foreign oil dependency. Yeah, right. McCain wants to quit buying oil from enemy states, does the alloftheabove sequence, wants to shift to nukes. Just say electric cars and trucks, man! The goal here is to get stuff into the press. People would like the idea of shifting some of the short-range trucking fleet into electric vehicles drawing from a nuke powered grid.

8:49 — It should be noted that Obama’s “use-em-or-lose-em” policy was swiped from the detested Sarah Palin… Then calls for the age-old increased energy efficiency mandates. Diversification, man. Gotta start there. Obama’s on his heels about free trade here. If McCain says, “Colombia,” I’ll be pleased.

8:51 — Cretins are going to call McCain racist for calling attention to Obama’s “eloquence.” If he would’ve said “nuance” it would have struck a more resonant chord. Code for BS, for foreign readers who came here instead of Obama’s $200 or less donations page.

8:53 — McCain said Colombia. I am pleased. Wiggle, Obama. Wiggle. He’s unknowingly defending FARC at this time. Or knowingly??? Obama remembered Detroit, wants to subsidize the car manufacturers into the Gore-Kerry fuel efficiency mandates. They should be making awesome cars. And electric cars. And we should be prepping the grid for them.

8:55 — McCain turned Colombia pretty deftly, in my eyes, on Obama. Obama saw Ahmedinijad coming and started snickering again. Still is. I don’t know what he thinks is going on in the region around Colombia. I hope he doesn’t.

8:58 — I hate these faux-Reagan anecdotes about regular Joe Winebottles. I did like McCain’s first one about Joe Wurzelbacher, because the dude’s great. Reminds me of a lot of the very smart people I knew in my previous life. Hey, there’s McCain talking up Joe again. How come McCain seems to be reading this everytime except when he needs to talk about cash tax rebates to non-taxpayers?

9:02 — I certainly hope that Obama and the democratic congress celebrate the dethroning of King George for the next two years instead of passing Obama’s healthcare plan. If he wins, of course, and McCain hasn’t landed the heavy body blows he needs to.

9:03 — McCain’s got his own 95% claim here. Talking about the interstate health insurance market. Obama will take the bait; will McCain have the counterargument this time? Being a good free marketeer in this answer. Good answer all around. Good to bring up the prospect of an all-Democrat DC. With apologies to the heroic Admiral Stockdale, Americans like gridlock. I know I do. [--"Coming to America" reference] (Obama didn’t take the bait.)

9:08 — Oops. McCain just said that he would impose a litmus test. Sorta. It was a good one. Sorta. Obama’s judges will be scary. Anti-2nd-amendment, internationalist, anti-constitutionist, poor judges. [Added later: McCain didn’t really have a litmus test there, what he did was say that he wouldn’t nominate a judge who openly championed Roe v. Wade. He basically said that would disqualify them as prudent judges who’d seriously interpret the constitution. That’s a perfectly sound position since judge’s shouldn’t weigh in on decisions beyond their scope or jurisdiction.

Obama supporter and Wisconsin lawprof Ann Althouse liked McCain in that round:

9:07: The Supreme Court. McCain notes his record of voting for judicial nominees based on their qualifications. This is a good point, because Obama has voted against highly qualified Supreme Court nominees, while McCain voted for Justice Ginsburg. They’re both against “litmus tests” (of course).

9:11 — For a second, I thought McCain’s would make the libertarian conservative policy position on abortion. Essentially, the same as Clinton’s: safe, legal, rare—with the addition of socially discouraged. He didn’t though, went after Obama for his vote of present on the Illinois legislature Born-Alive bill.

9:15 — “Eloquence,” again. “Nuance,” McCain!

9:15 — Education question, and I liked the question, essentially, “We pay the most per capita, get the worst results. Why? How to fix it?”

9:17 — I’m not a fan of Obama’s tuition for community service plan, nor his plan for a public activist institution that rivals the military in size and funding. Work-study is good, tuition rates need to go down, public school funding should be increased. I don’t know how to do it, but I’d start by cutting just about every department that ends in “studies” and merge them with other related departments. (Or merge them into a super-department called General Grievance Studies or call it a No-Rigor-Needed-Major.)

9:21 — John McCain and I are huge fans of vouchers. Obama doesn’t like them. Seems to think they can’t be paid for. Doesn’t know how they work or wants to obfuscate.

9:24 — I’m one of the few fans of NCLB. The plan was to test the schools and teachers, not the students. Schools adapted to save their skins and trash their students. Still a good idea. McCain calls it an important first step, I agree.

9:25 — Ub dub dub duhh dub uhh dub, aaaaaand, dub uh dub. Who uh who uh dub uh.

9:26 — Obama appeals to data. Looking forward to seeing the “Fact Checkers” skew this one tomorrow.

9:27 — Final statements. McCain goes first: new direction. I’m a reformer, I take on these thieving bastards in DC. Careful steward of your tax dollars. Health care plug. He would’ve won this debate, hands-down, if he could articulate what a refundable tax credit is. Why can’t he, by gum? Honored and humbled if given the opportunity to serve again.

9:29 — Obama up. Blames “the policy of the last 8 years” for the economic crisis. I won’t bet any money that the fact-checkers clarify that steaming loaf. Brighter days are ahead. Goverment needs to “invest” in America. Policies that’ll lift wages (he means minimum wage hikes, not corporate tax cuts, no doubt). I’ll work every single day, tirelessly on your behalf.

9:32 — Wrap up. Both candidates did better than in the previous debates. I guess they just needed to sit down. McCain missed a fat hanging curve that’s been sitting in his wheelhouse for the past two weeks. Obama pretended to be a moderate, showing a little of his leftism from time to time. (Although not as bad as in the last debate: nobody’s mentioned his talk about corporate tax cuts being money “out of the system” in that debate, a revealing perspective, I thought.) Both candidates presented a good front; McCain’s politics appeal to me a great deal more—if only he could better articulate the details of these competing tax and healthcare plans.

10:10 — Time for a few brews and a little karaoke. Think I’m in the mood to warble out some Gordon Lightfoot.

Next Treasury Secretary

Friday, October 10th, 2008

In the Townhall debate, both candidates were asked who they would pick as their Secretary of Treasury—who for the next year or so will be the most powerful government agent in the domestic areas. Neither candidate committed to anyone, wisely; but it was the first I’d heard that Paulson didn’t want to stay on, which gives one pause to how strongly he believes in the new powers awarded to him.

If I had my druthers, I’d want someone with a deep knowledge of the housing sector, extremely well-respected business smarts, and a libertarian bent. I’d pick Dick Kovacevich, former CEO and current Chairman of Wells Fargo. (Interviews here and here; Bio here; here called, “The best banker you’ve never heard of.”) He’s long advocated fully privatizing Fannie and Freddie, something that’s likely to happen over the next four to eight years if we our nation is not to sink into socialist mediocrity. He’s also said that the FDIC should be privatized, although I don’t see that happening. (Sheila Bair’s appointed to head the FDIC through 2011).

Fools

Monday, September 29th, 2008

I’m waiting for the floor to drop out with news of the credit rescue plan/RTCII dying in the house, 228-205.

Short-sighted, in my opinion, but it’s hard to blame the Representatives in the House. This bill is incredibly unpopular. I thought Bush did a good job explaining why it’s needed, but I guess the majority of people hate him so intensely that they laugh off anything he says at this point. That was the impression I got at a BBQ in the Lou on Sunday, at least.

A guy at this party was saying that the plan would cost $10,000 per household, which may be technically true but not of any immediate relevance—I guess that a large part of the public hostility to the plan is a belief that each and every Joe Taxpayer will be required to cough up ten grand to save the asses of a bunch of Wall Street jocks. That’s not the case: the rescue plan won’t be paid for out of tax revenues, but will be funded by the sale of treasury paper. That’s why a key part of the bill authorizes increased deficit spending. It may sound circular, but the treasury will be selling government backed, low interest paper in order to finance the government’s backing low value paper. As far as I see it, the longer congress muddles along with passing the plan, the fewer banks will be left standing to sell assets to the RTCII, and the less value there’ll eventually return to the treasury to pay off the debt that’s financing the rescue plan. Warren Buffett and I agree that this plan is going to end up a very positive net gain for the treasury down the road, that more government debt will be paid down out of this package than the initial investment, so long as Treasury isn’t hamstrung. In the current market, treasury bills are a pretty attractive place to squirrel away money, so Treasury shouldn’t have much trouble raising the capital they need to buy up the securities if this thing gets passed.

I blame Obama a bit for this:* he floated the idea that taxpayers should be issued checks for any funds returning to Treasury in future sales of the mortgage-backed assets they’re buying up. That idea was extremely popular at the BBQ and stupidly misleading—the very worst sort of populism (vote for me! I’ll pay ya!). If you believe what I’m saying about how this thing is to be funded, then you must agree that this idea is asinine and would be massively destructive, since in that scenario, future taxpayers would be paying off this debt plus interest. McCain hasn’t been much clearer on this as far as I can tell, either, but I’ve been out of the loop.

It’s pretty clear that someone other than Bush is going to have to make a case for this thing to the public, make it clear that it’s not being paid for by tax increases, and insist that any returns Treasury gets from it go towards paying down the national debt. I imagine the logical person to step up to make the case would be Obama or McCain, but they both seem to have dug holes for themselves on the issue by playing politics. It’s the right thing to do and I’ll give credit to whoever is able to provide a convincing case to the American people that it should be done and in a way that protects taxpayers today and down the road as much as possible. I think it’s good politics, too. Bush was careful not to promise that the RTCII or whatever you want to call it will pay for itself; a certain politician on the campaign trail beating the dusty fiscal responsibility drum can talk stability, renewed growth, and deficit reduction all in one issue.

* Just a bit, unless I hear that his campaign’s astroturfing bad information around to kill this deal, which wouldn’t surprise me at this point. An economic collapse would be in his best political interests. I’ve made an effort not to assign blame for this crisis, but in talking with Democrats over the weekend, it’s pretty clear that the popular consensus is that it’s Bush’s doing and has nothing to do with the mandated “affordable housing” movement pushed by politically connected buffoons at the GSE’s and elected buffoons on both sides of the aisle in Congress. The uniform nonsense that I’m hearing from people who don’t quite follow this stuff too closely is that de-regulation and the free market run amok is the cause. Not so… If with any primary factor, blame lies in government bullying of the market to create the appearance of a growing middle class—increased home ownership—instead of setting the conditions for a growing middle class—growth incentives to corporations and infrastructure improvements in the energy sector. (This essay makes the root-causes argument that I find compelling.)

Can’t believe Congress isn’t getting back to work until Thursday. Here’s hoping it doesn’t matter, but I put the likelihood of that very low. Glad my mortgage is within my means and owned by a properly run bank in Wells Fargo.

I’m pretty ticked off about this. Looking for the roll call from today’s vote. Might need to send off a letter to my representatives for the first time. Of course, my junior senator, who I voted for, is probably happy with today’s outcome.

Found it here. Tim Johnson voted against.

Later that night: Was out of town and deprived of news for the last four days. It looks like there was some junk in the bill that would’ve kept the thing from working as well as it needs to. Here’s hoping the next version is cleaner, although I fear the opposite—something that I’ll want vetoed. (Like Bush ever vetoes anything.)

Today’s News

Thursday, September 25th, 2008

I thought Bush’s address explained the issues pretty well and made a good case.

I even almost enjoyed Barney Frank’s reaction aired on CNBC afterwards, in which he basically claimed the thing would pass in the next few days with a few changes (most of which I think are sensible but not apparently exactly what I was thinking appropriate).

I’ve been diggin’ CNBC the past few days: no O’Reilly, Hannity, Olbermann, or Campbell Browns. For a long time I’ve said the only reliable news reporting can be found in the business and sports pages—not so on television for sports at least since ESPN jumped the shark, but apparently the business reporters on CNBC still take their credibility seriously enough. (Larry Kudlow and Jim Cramer are the only open partisans, but neither pulls much crap on their shows. Maria Bartiromo is spectacular. Then again, I could do without this Donny Deutsch character who just came on.

Other noteworthy news of the day: Change they need. Looking forward to hearing what the Kurdish parties think, if this gets any coverage.

Back to work.

(Break: Very funny rejected text.

About that Crisis Thing…

Wednesday, September 24th, 2008

First, a disclaimer: all the formal schoolin’ I’ve had in economics came in one semester of macro with the excellent Dr. Werner Sublette, who had a reputation for being a very difficult professor. He was one of my favorite teachers as an undergrad—the material was fairly difficult and he demanded you learn it well, which takes hard work. He didn’t assign busy-work or anything like that to make the class more difficult than it needed to be, but if you passed his class, you’d know the stuff well enough that you wouldn’t embarrass him in your future work (as I may do in the coming paragraphs). I haven’t even gotten around to reading Thomas Sowell’s Pop-Econ book, which I’ve heard is excellent and is in the queue.

All that said, I’ll go ahead and stick my thumb in the door hinge by giving an opinion on the “bailout” plan… (Some of this copy-and-pasted from my side of an email exchange earlier.) I’ve read quite a bit over the past week with my BS-detector set to DC and think I’ve got the idea. I’ve also talked to enough people to know that the severity of the crisis is lost on the majority of those in the circles I run. This column from today summarizes things pretty well, I think.

I think it’s essential to pass the bill quickly with minimal changes. The bill gives the Department of the Treasury authority to buy up to $700 billion dollars worth of mortgage-related assets from companies headquartered in the US. They’re required to report to congress three months after the law passes and every six months afterwards.

These are the “minimal changes” I’d like to see:

  • I’d definitely want to see a deadline for this subentity in Treasury, public corporation, or however it’s structured to finish buying up bad paper: the three months between the day the program gets off the ground until their first appearance before congress would be perfect.

    Make the banks decide quickly what they want to unload, make them unload it to get things moving fast, and make sure the monster doesn’t stick around forever. Three months of buying followed by a few years of restructuring the debts, followed by securitization and a sell-off period until the debt’s all gone: sold or defaulted. If Treasury needs more time to buy, they’d need congressional approval for an extension when they first report of either three or six months to the next report.

  • Congress wants oversight of Treasury’s moves, which I think would be a very, very bad idea; but I’d like to see the thing made more transparent. They should mandate a publicly accessible database to show how much paper was bought from whom and at what price, but treasury should be free and flexible to make those buys without waiting for congressional approval. (Transparency good; oversight bad.)
  • I’d like to see the price on the toxic debt set very low, some sort of market mechanism to be used to set the price—a plan floated for a reverse auction sounds reasonable, although has apparently been rejected already. The paper these banks need to unload would be ones worth nothing or next to nothing on the market today, so 25 cents on the dollar seems like more than a sufficient offering price to open up these firms’ balance sheets and get reliable credit flowing again. There should be some mandated cap on the price Treasury is authorized to pay, no higher than 50 cents on the dollar. Treasury shouldn’t be competing with other banks that’d want to buy these securities and other assets; and certainly should avoid deflating the market for any but the most toxic mortgage-related assets. The worthy goal, as I understand it: we’re not trying to bail out banks by infusing them with cash, we’re trying to stabilize their balance sheets by taking crappy loans off their hands. I’m not interested in punitive measures or anything, but the buying price for this sludge needs to be low enough that it’ll be a painful decision for firms to dump it and that the gov’t has a chance to not see ALL the paper default. Some of these companies will still fail–if they do, they were managed poorly enough that they should fail, but we can’t have it that almost all of them are failing.

    If they set that buy price right, this thing’ll work and they won’t need to spend the $700-trillion figure that Treasury’s asking for. If they set it too high: they’ll spend too much, never make it back for the taxpayers, and set a piss poor precedent in moral hazard terms. If they set it too low, they won’t drain enough crap out of the system to get things working again. I’d frankly prefer they err on the side of miserliness in this case. Some firms need to fail. Some people may need to go to prison.

  • I’m also not keen on Pelosi’s wish for taxpayer cash to directly bailout homeowners in mortgages they can’t afford. It’d make sense to give treasury wide latitude to restructure mortgages close to foreclosure in some way to get these homeowners on escalating payment plans to get some of the debt paid down. In other words, once Treasury owns some package of mortgages, they should de-securitize it, separate the wheat from the chaff, and rework the mortgage terms on the very bad loans to avoid foreclosure to the un-credit-worthy homeowners in creative ways. For example, refinancing a mortgage in foreclosure into a 30 or 40 year amortized mortgage where the monthly payment is initially set low and increases proportional with projected GDP growth, correcting along the way along with a low-cost program to strongly encourage these homeowners to pay extra principle down each month to incrementally pay the mortgage off the back-end. Ideally, you put together the right kind of programs like those and the loans rebuild value over a few years during which the Treasury could eat the short-term losses that a private bank may not have been able to ride out. If some of the homeowners can make their payments responsibly and keep up with the growth of the economy in terms of their own buying power, those mortgages would be greatly strengthened in value.

[Added later: I've read quite a few arguments from real economists for why the plan is terrible (notably this one. They all seem to assume that Treasury will be buying these assets at "inflated" or "premium" prices and my reading of the tea leaves suggests that's a mistaken assumption. I don't see this as a Treasury plan to directly capitalize these firms in exchange for worthless paper, but a plan to reduce firms' unmovable liabilities to let them get back to business a little wiser in the way described here. If that's what Paulson wants to do (pay market rates from two years ago for today's garbage), then yes, it would be stupid; and yes, I think his mandate should be clear that that is not how he may spend the taxpayers' money.]

I’m most nervous about who’s going to be running this thing next year and beyond. Don’t want it turned into anything it’s not meant to be; and the people running it are going to have to be some smart, creative people. Done right, this will be a gain for the taxpayer over the span of several years, even leaving aside the crippling damage that would be done by continuing to ignore the problem.

A few other comments, only peripherally related to the Big Deal: inflation rates need to be raised at some point soon. Treasury buying up these assets, even at discounted prices, are going to have an inflationary effect; the dollar’s weak; and we’re a spaz-out from an Ahmadinijad or a Chavez away from severe, continued energy-related inflation. I’m not advocating the sort of tight monetary policy that made the Great Depression so severe, but interest rates can’t be set lower than the rate of inflation for much longer. To counteract the anti-growth effect that’d have, I’d be tickled pink to see a corporate tax cut like McCain’s advocating. He’s campaigning (a little too quietly) for a rate cut of up to 10% on businesses. Even a more modest cut on the corporate tax rates would be a tremendous boost for job growth, give employees (especially unionized workers) excellent leverage to demand better health benefits with business expenses dropping that dramatically overnight, and disincentivize companies from moving their headquarters or pieces of holdings into tax havens overseas. With the kind of liabilities the federal budget will be taking on with the Big Deal and a Democratically held congress, that’ll be a hard sell. I, for one, wouldn’t cry foul if components of the Bush personal income tax rates were repealed to offset the costs (and, of course, would be glad to see reductions in spending outside of the military, infrastructure, and education budgets).

It’s pretty clear to me that one of the many reasons for this lousy economy we’re sitting in is the imbalance of profits in the financial sector as compared to the manufacturing and service sectors. I’d say we’ve been relying too much on the Fed to spur growth. It’s past time to get the broader economy working with a one-two punch of a business tax cut and a weak dollar to facilitate exports, while implementing policies to strengthen the dollar and get inflation under check.

[Later still: I swear I wrote all this before reading Kudlow's most recent column, which says most of the same things in the post-bullet portion of this post.

Also, this article by David C. John covers most of the things I wrote in the bullet-points, although more expertly than I did. A major difference is that he wants oversight by an independent board of financial experts with no ties to the Fed or Treasury. I still prefer my idea of absolute transparency and accountability to the "shareholders" also known as the American taxpayer. I think all government operations outside of the national security sector should be held to that standard. Another is that he doesn't mention any time limit for the acquisitions phase of RTC II, or whatever this thing'll be. I think that's an important requirement, both in ensuring that RTC II will go away eventually and in that it'll give it leverage in pricing—sell or die, to paraphrase Genghis Khan.]