The Vig

WSJ:

In the fall of 1907, it took J.P. Morgan just eight weeks to resolve a credit crisis similar to ours. Several years of buoyant growth and too much risk-taking in poorly understood investments led to needs for capital that could not be met. Morgan, then 70, locked the nation’s top bankers into the ornate library at his home for late-night confession sessions. He asked them to lay bare their balance sheets, keeping himself alert with endless Havana cigars.

The bankers reviewed one another’s assets and liabilities. Morgan then decided which financial institutions had to go and which would live, getting commitments from the survivors and from the U.S. Treasury for infusions of capital. This Panic of 1907 had rattled the New York Stock Exchange and the markets for gold and municipal bonds, ruined several banks and trust companies, and nearly bankrupted New York City. Share prices fell by half. But once Morgan was done knocking banking heads together, markets swiftly recovered.

And that’s how you solve a credit crisis. I was screaming about this six months ago. The problem here is banks know exactly how bad their own books look, so they can only imagine how everyone else’s books look too. If a JP Morgan, or a Henry Paulson, were to bring everyone into a room and force them to bare their souls, this thing could be solved pretty quickly and without $750 billion of taxpayers money.  Unfortunately I think current regulations probably forbid this type of solution, which sucks.  Instead Congress and the administration will continue to threaten and obfuscate.  I guess GWB is even going back on the tee vee in the morning to try and talk us into this deal again.  Watch him talk for 20 minutes without really saying anything.  Again.

I’m truly torn on this bill.  While I’m resigned to it eventually passing in some form and think it will probably accomplish what’s intended, I’m definitely rooting against it.  It’s putting off the reckoning.  I’ll be calling Representative Baird in the morning to voice my displeasure at his having voted for it.  Rather than drag this thing out another year or 18-months, we need to take the hit now.  While I don’t think we’re necessarily prepared for it, I think we’re willing to take it.  An interesting dynamic, to be sure.

One of the true pleasures of this space has been the number of folks who’ve put me in their blogrolls in the last year-plus.  I’m listed by everyone from Jack Bog to Dwight Jaynes to Gregg Drinnan to Andy Kemper to Casey Holdahl.  There are some serious heavy hitters in there and, with the exception of Jack, they’re all linking to me because I either talk about the Hawks or the Blazers.  I take both of those subjects very seriously and am honored that folks think that highly of me.

I wonder, though, when people click through to me from Drinnan or Andy, whether they’d rather come somewhere that just talks sports instead of all the other hooey that flows out of my brain and on to this site.  So I’m thinking about launching a new site with just Hawks and Blazers stuff.  I’ve got the URL, and I’m picking out the theme.  But I wonder if it’s really needed.

I know you’re out there, sports fans.  Let me know.  Do you like wading through my political and economic thoughts?  Or would you rather just go somewhere to read about local sports?

I grabbed a grip of magnet schedules at the Winter Hawks game Saturday night.  I like to pass them around the office and get people a little fired up to go see a game.  It’s the funniest damned thing in this town.  Anytime I mention the Hawks to someone I know, they tell me a story about the last time they went to a game.  The story is always the same…a bunch of friends, much beer, some stuff happens, and everyone promises to do it again.  It’s the same story over and over again.  There’s never a word about the team, in fact it’s assumed that the Hawks are a) good and b) NHL.  When they arrive at the arena, they’re momentarily shocked to learn there’s a city in Canada named Moose Jaw.  They’re even more surprised to learn it’s in a province called Saskatchewan. None of this matters once the puck drops. Then it becomes about cheering for the home team and drinking beer.

For whatever reason the Goldsmith group never figured this out.  Actually I’m convinced they did know it, but they didn’t care.  Jimmy wasn’t going to spend money to make money.  He could have drawn 7,500 a night in the Coliseum if he’d wanted to.  But he wasn’t interested in that.  He was going to fund his team from the other 300 available nights at the Coliseum.  He wanted to use profits from running the building to run his team.  He ran into too many road blocks and burned way too many bridges for that to pan out.  He got what he wanted down in Salem, but the league wasn’t going to allow that to happen.  Once it became clear this summer that he was out of options, he capitulated.  If you can call doubling your money in three years capitulation.

So as I sat there Saturday night looking for Dylan B., who was with his family, and John G., who was no doubt out living the G fantasy, I perused the schedule.  Saturday night would be my last game until November.  I’ll be in San Diego the 9th through the 13th for Betty with Sunglass’ wedding.  I read today on the O-Live forum that Saturday night was likely my last Goldsmith game.  Kind of fitting, I suppose, as I believe the first game under Goldsmith was also a 5-0 loss at the hands of Vancouver.  I could be wrong about that, but I think that’s right.

I’m definitely in the “anything is better than these clowns” camp, but at the same time, this does mean the end of an era.  Hodge is out.  Innes too.  It’s the end of the family era of the Winter Hawks, the only management style it’s ever known.  Coming in are some shrewd pros who will have some substantial backing from that other red, white, and black franchise in the Rose Quarter.  Now that the Blazers have effectively sold-out their season, the Hawks will give the Blazer ticket reps something to do between now and next July.  Hopefully they move a significant number of the Hawks remaining games over to the RG so the 9,000 of us who’ll be attending can feel somewhat comfortable.

Hockey is not a difficult sell.  It just takes someone to lead the way.  I think the Blazers will do that.  And when that happens, the recruiting will become so much easier.  Now suddenly a kid who was on the fence about coming to Portland (honestly, would you want to play in front of 2,000 people on a Saturday night in the Coliseum?) will want to come down and play in front of 9,000 screaming fans.  This town can be electric when it comes to hockey.

Some good things are coming.  The one concern, and it’s minor, is the old-time fans.  The folks who demand their face time with the players.  How will the new regime treat the G.O.A.L. Club and the other various elements of fandom?  Pizza nights and the sing for your dinner stuff.  I’m guessing they’ll still be around, but it will be interesting to see how they interact with the new regime and the hated Trail Blazers.  They all certainly had their moments with Goldsmith.  I guess we’ll find out soon enough.

Atrios:

CNN is telling me that “Biden’s Verbal Blunders worry some Democrats,” and keep putting up Alex Castellanos (R-Hack) to explain it.

…and now Karen Hughes and Mark Penn are going to come on to explain the world.

It would seem CNN is once again living up to it’s 90s “Clinton News Network” monicker.  Biden isn’t going anywhere, nor should he.  Especially now.  The guy is beyond smart and will make an excellent post-Cheney VP.

Both the Clintons and the Republicans are scared witless about Obama.  He is the Democrats Reagan and could mean the end to the Nixonian politics which were perfected by the last two administrations.  This is a good thing, and the polls are starting to show the public agrees.

Following Jack Bog’s lead:

A friend of mine who lives up the street from the Palins in Wasilla has informed me Bristol Palin will be getting married next weekend at her parents’ home church in Wasilla.  Sarah is on her way back to Alaska to help out with preparations.  An announcement cancelling Thursday’s debate is expected in the morning.

A big part of the reason for the nation’s distrust of this financial bailout thing is the fact that neither Congress nor the administration has come clean with what exactly the stakes are.  What is happening and where are we headed if we don’t do anything?

Treasury Secretary Henry Paulson (he wants us to call him Hank, like we’re buddies…I’m not going to do it) went on 60 Minutes tonight, I thought, to talk to the American people.  Instead, we got this.

With the opening question of the interview, Paulson completely lost my support.

“What if the plan doesn’t work, what if 700 billion doesn’t do it?” correspondent Scott Pelley asked Sec. Paulson.

“Scott, it’s gotta do it and we’re going to make this work, and we’re going to do what it takes to work,” Paulson replied.

Sorry, dude. That’s not good enough. That’s the same statement we heard when we started asking about a Plan B in Iraq, and we know how well that worked out.

Again, it’s this lack of information. Pelley gave Paulson another chance to tell us what’s happening, but again Paulson chose to pass.  And insult us along the way. (Emphasis mine).

What was the most difficult moment, what was the moment that put a knot in your stomach?” Pelley asked.”Scott, I’ve had a lot of knots in my stomach, but I would say last Wednesday night, when the capital markets froze, when there started to be a run on money markets, banks stopped lending to each other. And, I know people in America won’t understand what that means, but if money doesn’t flow freely between financial institutions, then it impacts everyone in the country,” Paulson explained.

Sir, we’re all adults here. You’re asking us to cut you one helluva check. You need to explain exactly what the problem is and exactly how this will solve it. If, for some reason, you cannot, then I cannot support you.

This is one of the few lessons I ever kept from my psycho fourth grade teacher: if you can’t verbalize your idea, then your idea doesn’t exist.  That’s how I feel about this $700 billion tonight.

I’ve been talking about the financial impact of home equity lines for a while  Irvine Renter talks about what’s happening in the OC right now.

Assuming this seller was employed, their house was likely earning more than they were. Graphix has done some great work on the problems with local employment figures, and others have noted the dropoff in income from non-W2 workers like realtors and some mortgage brokers. Another hidden impact on the local economy is all the houses that have been put out of work by declining prices. Calculated Risk has done extensive projections on the Mortgage Equity Withdrawal phenomenon. The charts and graphs are pretty and informative. However, it is seeing individual people with properties like today’s that bring these lofty concepts into sharper focus.

How many lost jobs, lost commissions, and lost equity extractions can our local economy take? IMO, we are already in a recession locally, and it will get much, much worse.

The loss of free money from home equity loans will be as devastating as any unemployment number.

Did you ever see that movie Jumpin’ Jack Flash with Whoopi Goldberg?  There’s a scene in there where Whoopi is trying to write down the lyrics to the song.  At one point she turns to the speaker and yells “speak English, Mick!”.  You sort of want to do this with poor Sarah, too.  Fortunately for us, Sullivan has the transcript here.  The words are in English, but everything else?

Unlike Jumpin’ Jack Flash, you can’t dance to Sarah’s tune at all.  I’ll give it a 37.  That said, Sarah Palin may have inadvertently saved Katie Couric’s career.

All signs point to the financial system collapsing by Monday, but tonight I don’t care.  Wow.