NBA: First Glance

Glance it was, and only a glance. My son got two shots for his 15 month checkup so he was unhappy and I was all too happy to give him attention last night. Nonetheless, the NBA season began anew. Here are my brief notes.

Cavs: I like the combo of LeBron, Delonte, and Mo. Delonte can score, but I always thought of him as a playmaker. He can guard the two. The only problem with this lineup is that it leaves the bench without a playmaker. If Mike Brown can keep either Mo or Delonte in the game at all times, though, this shouldn't be a problem.

Celts: KG reminds me of championship-era Wilt. Stats lacking, but wins abound. He could see his stats drop to about 16 and 7 this year, but those would be the most important 16 points and 7 rebounds in the league. Tony Allen and Powe are going to be electric off the bench. My only wonder was how Allen would recover from the knee injury -- athleticism is an important part of his game. He looked good.

Bulls and Bucks: Flawed teams. If each were to be reborn as presently constructed, but under different astrological signs, either could be a playoff team. Neither will do anything this year, though, not unless Rose has an unusually excellent season for a rookie point guard, or if Bogut finds his inner Moses Malone.

Lakers: As a long-time Laker hater, it pains me to admit that they intrigue me this year. I like the twin towers. I like the Farmar, Odom, Ariza bench. I like that they look like they're having fun.

Blazers: I only wish I had written it down. Oden got hurt. I knew from preseason that his road to ROY would be derailed by injury. I am a big fan of Oden, having marveled at his dominance with his dominant hand wrapped and useless during his solo year at Ohio State. It's not fair to compare him to Shaq or Dwight Howard. Those guys were gifted with imperviousness in their youth. If Shaq had been treated fairly by the refs all those years and had not needed to put on a layer of padding, I am sure he would not have had the serial injuries that have plagued him since toe surgery back in his LA days. Oden should emulate Duncan and let his skills, brains, and footwork define his game. It is not easy to appreciate, but the way Duncan moves his feet to keep a penetrating defender away from the basket is just amazing.

Tonight: NBA on ESPN. If Bill Walton is calling either game, I'm going to consult a lawyer about getting an injunction against the network on a public nuisance theory.

Thank You, Slate.com

Finally, the grand history of "socialism" (i.e., a well-ordered market economy befitting of a civilized society) is getting its due:

http://www.slate.com/id/2202950/

It is proper and sane to fear revolutionary communism. It's just crass to side with certain 'true conservatives" drunk on strong words like "liberty" and "freedom" and who see trees rather than a forest, cows instead of a herd, intent like Greenspan to ignore repeated facts about human nature and live with delusional optimism about humans' capacity to self-regulate and be unswayed by greed and powerlust. Libertarianism of that stripe is like bizarro Taoism, with an invisible hand instead of a Way, where water somehow defies gravity and flows up the mountain, and where striving is the supreme virtue.

(can you see my fingers making the "word in quotes" gesture?)

Championship Ingredients: The Bench

There are many factors to analyze when making NBA predictions of which team will win the championship. Who has the best player? Who has the best team? Who has the best chemistry? Who has the best defense? Who has the right mix of youthful athleticism and veteran savvy?

All of those inquiries can yield intriguing insights into the components of a successful NBA season. I was reading today about the Raptors’ lack of bench cohesion and it made me think of the importance of the reinforcements in deciding the outcome of a game. No one would underestimate the value of a strong starting five, especially when it features a Hall-destined scorer like Kobe or MJ. At the same time, however, the top six players on a team are the most heavily scouted and most heavily mocked in opponents’ practices. If you’re the Bucks, for example, you practice in expectation of neutralizing the jump shooters that litter the Bulls’ roster. You don’t ponder the intricacies of Thabo Sefalosha’s crossover or worry about Aaron Gray’s strongside rebounding position. Who cares? They only play for a few minutes each game, if at all.

Nonetheless, bench play can spark a rally, re-energize a discombobulated first team, or simply force the opponents out of their comfort zone. I think of last year’s Celtics with Posey, Powe, and House coming off the bench and instantly going on the attack. They played without ego or expectation, eager only to vie for the W. I recall Horry throughout his career doing the same thing, and also providing veteran leadership to keep bench malcontents from infecting team play. I think of the Pistons and the debt owed to players like Salley, Rodman, Edwards, Microwave, Hunter, McDyess, and Maxiell. I think of Thompson, Cooper, and Rambis keeping Showtime flowing even when the superstars were resting.

So, the question that emerges is which elite teams in 08-09 have the bench fury needed for the rise to the top.

Boston Celtics
Bench Stalwarts: House, Cassell, Big Baby, Powe, Tony Allen, Bill Walker
Analysis: If Cassell can actually play, this must be regarded as the cream of the bench crop. Walker and Allen are certifiably insane. You can’t coach against that. If these two are kept in check by Powe and veteran House, then collateral damage will be minimal. Strengths include confidence and scoring ability. This lineup would be better if it had a thirsty rebounder, though.
Grade: A (they won last year, ain’t that good enough for an A?)

LA Lakers
Bench Stalwarts: Odom, Farmar, Ariza, Walton the Younger
Analysis: This analysis is predicated on the assumption that the starting five somehow requires Vlad in order to appease Phil Jackson’s need to insert mental instability into the team’s chemistry. This bench lineup includes athleticism, scoring, and passing. If they jell, this could be a real difference maker in the Lakers’ quest for another banner.
Grade: A, but only if Odom learns to love the bench, otherwise a C.

San Antonio Spurs
Bench Stalwarts: who knows?
Analysis: Manu is injured for half the season. Presumably that means he will come back as a bench player. Will Horry even return? If so, can he play? The rest of the bench is nebulous. Bonner thinks he’s a gunner. Stoudamire thinks he’s still Mighty Mouse. Mahinmi is an unknown quantity. Either Oberto or Kurt Thomas will start, but neither alone is a game changer. Their strengths are best utilized around good players.
Grade: F. This pains me as a long time Spurs fan.

New Orleans Hornets
Bench Stalwarts: I don’t know.
Analysis: Julian Wright stands to improve on the flashes of brilliance he displayed last year. Bonzi Wells might decide he’s a basketball player this year. Either Mo Pete or Po-Z with start; the other will provide defense and shooting off the bench. Maybe Hilton Armstrong will develop. One thing that is certain is that Ely will prove to be a good second-string rebounder.
Grade: D (for now). If the bench rallies around the personality and leadership of Posey, I would expect that the Hornets will be strong contenders to unseat the Lakers.

Cleveland Cavaliers
Bench Stalwarts: Boobie, West, Andy, Wally.
Analysis: Assuming Pavlovic can round into starter shape and push World to the bench, the Cavs stand to have a strong second string attack. World and Boobie are excellent spot up shooters. Delonte West can run an offense as well as score. Varejao is one of the most annoying characters on the offensive boards. If Szszszszserbiack gets it into his head that he’s on planet Earth and not Wally World, this could be the year that LeBron gets his crown.
Grade: B+

Houston Rockets
Bench Stalwarts: Battier, Chuck Hayes, Carl Landry, Aaron Brooks, Brent Barry, Dikembe
Analysis: For some reason, I always think that Brent Barry looks like Robin Hood. His brother, on the other hand, looks like the Sheriff of Nottingham. I wonder if I could get a research grant to see if the ancient foes were also brothers. The Rockets could run a second line of Barry at the one, Battier at the two, and Hayes, Landry, and Mutombo all at the five. Is there a tougher second line in the NBA? Is there a better defensive squad than that? For some reason, I like it a lot.
Grade: A- (for lack of scoring on the second line, which would be fixed by starting Hayes/Landry and putting Scola in contention with Battier for 6th man of the year.)

Philadelphia 76ers
Bench Stalwarts: Williams, Smith, Evans
Analysis: First off, the Sixers are only here because of the strength of the starting five and the lack of another team worth mentioning in the East (sorry Detroit, Toronto, and Orlando). With Smith and Evans you get rebounding and intangibles. Louis can score. The question for the Sixers' bench will be whether they can get notable contributions from Ivey, AARP members Ratliff and Marshall, and the mercurial Kareem Rush.
Grade: C- (rated this high only because Williams is projected to be a contender for 6th Man)

Phoenix Suns
Bench Stalwarts: Barbosa, Diaw, Sgt. Barnes, Robin Lopez, Goran Dragic
Analysis: If Goran can just get the ball to Barbosa, and if Lopez can pull down the defensive rebounds, this is a great second team. Barnes, Diaw, and Blur could each contend for 6th Man. Plus, Blur and Barnes will be like Manu, de facto starters even though they come off the bench. Lopez might find himself in the same shoes when Shaq gets injured.
Grade: A

Portland Trail Blazers
Bench Stalwarts: Hold on, let’s figure out their starting five, first. Blake, Roy, Webster, Aldridge, Oden. Sounds reasonable through mid-December. After that, though, Bayless, Rodiguez, and Fernandez will all be pushing Blake to the pine. For now, though, the bench brigade will be: Bayless, Rodriguez, Fernandez, Pryzbilla, Frye, Outlaw, and Diogu.
Analysis: The bench could beat some starting fives (I’m talking about you, Charlotte and Sacramento). That’s why I’m including the Blazers even though I think by season end they’ll still be looking to lock up a playoff spot. Even when Blake gets relegated to the second team, there will be a lot of weapons. As an opposing coach, I think Portland would give me fits, especially once they come together as a team and accept Roy and Oden as their leaders. To that end, Roy is ready to be Le Roi, but Oden still has a lot to prove. If Oden can simply avoid injury and clog the middle, I think by the All Star break that the team will be finding its identity. The unknowns are how the foreign players will mesh. I think Outlaw, Pryzbilla, and Frye will all thrive in their auxiliary roles, but Sergio, Rudy, and Jerryd will all be approaching each game like they think they should be starting. A move that traded some of these young guys for a Championship-starved veteran would be a wise move.
Grade: B+ (because I have real doubts about chemistry, despite MacMillan’s cool hand)

Notably omitted: Dallas (put a fork in them), Utah (bench is too boring to discuss), Nuggets (not an elite team).

Do I Have the Right Not to Suffer? Some Random Thoughts on Health Care.

In the second debate, Obama said that access to health care is a right. If so, what does that mean for us? So it got me thinking. Of course, not all rights are the same. Some are inalienable, as recorded in the Bill of Rights. Others are by convention, such as the right of way given to pedestrians at crosswalks. If health care is a right, where does it fall on that spectrum?

Outside of the Anglo-American constitutional tradition, rights are seen differently. Socialist and Marxist constitutions will accord more rights to more people. For example, a right to education is enshrined in the constitutions of many countries, but no such language will be found in the US Constitution, where rights stand as pillars. The non-American constitution, however, will couple the right with an obligation. There may be a right to education in the Russian constitution, but it is incumbent upon the citizen not to impede the education of others and to support the school system.

Sounds good, right? Well, imagine what a strong-man government will do with free speech if citizens are obligated not to abuse the right. For certain authoritarian societies, such a paradigm would be pragmatic and morally acceptable. Americans are not like that, though. At least in principle.

America, the land of frontiers, regards any rights involving self-sacrifice for the good of others as dangerous. Some would argue it’s a slippery slope into communism once you start guaranteeing benefits. Maybe those critics are right, but maybe they have not accurately grasped what kind of slippery slope it is. Are we talking Alpine skiing likely to trigger a Maoist avalanche? Or is it more like a slip and slide (you know, that plastic strip you put down in your yard – you stream the garden hose down it) whereby all the kids in the neighborhood get to have a great day in the sun, complete with laughter, injuries, and Kool Aid?

So you have to ask yourself what health care means to us all and you yourself. What is the cost to you to know that children are not dying simply because they don’t have adequate health insurance. What is the cost to you if you can rest at ease knowing that if you lose your job, your family will still be able to get treatment from a doctor rather than an emergency room. What is the cost to you to know that people with cancer can’t get kicked off their insurance plan simply because their treatments affect the company’s profit margin.

Are we talking about communism? Or is this simple humanity, and the necessary cost to wear the badge of civilization?

This still doesn’t answer the question about whether access to health care is a right worthy of the name. At the same time, it exposes the fact that health care can be understood through many different lenses.

In the school of economics that dominates American industry, health care is treated as a good or service, not much different in principle than the market for soda or for legal services. If you can afford it, you can buy it. If not, then you have to rely on charity (or government charity). Quite clearly, based on the number of uninsured, and the number of people with preventable chronic diseases, the market for health care is broken. Even staunch conservatives (perhaps with the exception of radical libertarians) would admit that intervention is warranted in the case of market failure. No one, however, can write a general prescription for what the proper policy measure should be to fix a broken market. That’s why it’s always easier to just paint the government as the bad guy, rather than admit that we don’t know what to do, either.

Beyond the simple (simpleton?) economics of invisible hands, there is extensive analysis of specialty markets, and of goods that defy the laws of supply and demand. For example, there are so-called natural monopolies like for the manufacture of space shuttles, or certain countries’ airline industry. Also, not all goods are the same. Some defy monetary valuation. Some goods are illegal because of the harm they produce. Some goods are public goods, like roads and courts. Health care seems to fit in with some of these exceptional markets. It does serve a public good. The valuation of health tends to defy monetary value. For example, if I got attacked by someone with a chainsaw and I lost my leg, I could probably get a court to award me several million dollars. Does that mean I could go and trade my leg for the same amount of money? Certainly not. There is no weight of gold comparable to the fine sinew of my leg. If you steal my candy bar, however, I’d be made whole with about a dollar.

There is a religious or moral component, as well. Kantian ethics would formulate a maxim like this: "I will that all should be afforded adequate access to basic health care." There is no internal contradiction. Hume and other utilitarians would cite the benefit of legislatively mandated access to health care with an appeal to the greater good. Christians are supposed to embrace charity. Buddhists are supposed to be compassionate. Etc.

Lastly, there may be more pragmatic reasons to embrace so-called socialized medicine. The USA is falling behind our fellow nations in many health and lifestyle measures. If their more socialized systems work better than ours, we should be fools not to inquire further or at least test the waters. Either that or watch us slide from 28th to 29th or lower on the infant mortality scale. I mean, seriously, this is the richest and most powerful country the world has ever seen. There should be zero infant mortality. It's kind of embarassing when you think about it.

And maybe that's the most compelling reason of all to embrace health care as a basic right. Everyone's laughing at us.

The Economic Crisis. Part 2: The Solutions

This posting could really be called Part 2: More Problems. The law of unintended consequences has staked dominion over our lives for the past 15 months, and threatens to do so for the next several years until a proper regulatory system gets put into place, and the demons work their way through the broader world economy. By then, I’ll be writing about the next bubble, though.

There are three entry points, or nodes, for a solution to the economic crisis. The first is at the top, or the supply side. The second is at the bottom, or the demand side. The third is outside the financial system altogether, the so-called real economy.

Piddle Down Economics
The Treasury’s bailout plan (as modified by the Senate) is your classic supply side corporate welfare. Granted, there are some provisions that will punish the financial industry, but the solution will most directly assist financial institutions. By infusing cash into the banks (in exchange for shares of stock), the banks will then have enough money on hand to minimize their overnight borrowing needs. In theory, the banks could just not dip into their reserves and use the taxpayer’s money to develop more stable lines of cash flow. For example, instead of taking high risk measures in order to simply gamble on survival, Bank of Brokeback can instead concentrate on issuing commercial loans in the money market, develop a broad portfolio of prime mortgages, and work out lines of credit for businesses for bridge loans or long-term capital investment.

The other aspect to the bailout is the option to buy off the CDOs from the banks. That makes the banks’ balance sheets look better and gives them some cash. Their share prices should go up.

Piddle Down Pros: Relatively simple in that there are only a few actors who stand to get involved. Long-term gain to the taxpayer if the financial institutions remain solvent and the CDOs eventually return on their coupon.

Piddle Down Cons: Very little direct benefit to Main Street. Dilution of stock will hurt shareholders, especially those looking to retire. Long-term risk of taxpayer losses.

Hot Gasses Rise
McCain recently announced a solution that seemed to come from a common source of hot gas. Yet, despite the flatulence of it all, the demand side solution merits discussion. Here’s how it would work (in general, since McCain has not offered a concrete blueprint). The government would assist homeowners who are having trouble paying their mortgages by making payments on their behalf. This serves the double benefit of keeping people in their homes and restoring value to the toxic CDOs. Basically, the government would be replacing the mayo on the CDO sandwich with ketchup. On the other hand, though, it would be a big do-over for imprudent buyers and flippers who got ahead of themselves. Further, it serves the secondary unintended consequence of preventing the housing market correction. Each house that is foreclosed upon or sold at a loss helps the housing market come down to reasonable levels. People should eat losses on bad investments. That’s the way the market is supposed to work. If the government gives support to the bubble values of these houses, then supply of houses is artificially reduced. This keeps the prices on available houses higher than they would be if the market was allowed to correct itself. Thus, flippers and fools get a subsidy to reward their bad behavior while prudent would-be home buyers remain on the sideline, punished for others’ excess.

Basically, preventing foreclosures on houses that people can’t afford anyway prevents those houses from being sold to people who can afford them at an affordable price. So, I sit on the sidelines waiting to buy a house, not willing to put money down on a house that I know is overvalued, and which will remain overvalued as long as the market gives the illusion that the overvalued sale price is

Hot Gas Pros: Neighborhood salvation in keeping people in homes. Restores value to CDOs and thus restores interbank lending.

Hot Gas Cons: Prevents recovery of housing market for the next decade or longer. Complex to implement because there are hundreds of thousands of potential actors looking for a bailout.

Down on Main Street
While the banks and the housing market toil in pandemonium, the rest of the market it taking a beating. Entrepreneurs can’t find seed money. Consumers are taking credit rating hits because banks are taking away their credit cards (thus worsening the consumers’ debt to available credit ratio). Importers and other producers can’t find commercial paper (that’s why Treasury made a guarantee on money market accounts, to prevent the total collapse of our economy). Tax revenues are way down, thus threatening to bankrupt states, municipalities, and Iceland. Lack of consumer confidence is killing retail, even with the holidays around the corner. The panic sprint out of equity and into the commodity market has driven up the cost of everything from rice to oil (I bet Ron Paul thinks he’s scored some kind of coup with the chaos in the currency markets).

Ideally, it would be great to isolate the financial industry and housing market from the rest of the economy. You know, let them stew in their own juices. Tasty? Anyway, that is a difficult task. Again, there are supply side and demand side solutions for this. One way to manage the feat would be for the Fed to open up its lending facilities to every entity incorporated in the 50 states. Another would be to dump $700 billion into the wallets of consumers. That translates to roughly $2,300 for each American. The question then becomes, how would you spend two grand? If we all paid down debt, it would still cause a recession because of the impact on retail and manufacturing. If we all spent it on Christmas gifts, we would still be vulnerable to the next crisis because Americans’ debt levels are still dangerously high. Plus, the aggregate spending might not be enough to stave off a recession given the global meltdown in the markets.

I wonder what it must be like for Ben and Hank. Do they sleep at all, knowing that their actions may determine whether or not we see Depression II? Or, maybe the sleep just fine, knowing that the success of their actions will ultimately be determined by a fickle goddess. Fortuna gives in plenty, but she also robs without regard to Justice.

The Economic Crisis. Part 1: The Problems

The economic crisis – and given the latest figures on the so-called real economy (production orders, unemployment, etc.), this really is more than a financial sector crisis – actually has a rather simple breakdown. Unfortunately, the laws of physics and the law of unintended consequences prohibit a rather simple solution. I like to break it down in a manner similar to the logical proofs I used to do in Prof. Dolan’s (R.I.P.) freshman logic class.

“What we have here is a failure to communicate.”
Basically, the banks do not trust each other. They do not trust each other’s solvency, nor do they trust the collateral pledged for overnight loans is worth anything. Thus, they do not lend to one another. Banks therefore have to get their money each night from the Fed’s discount window. The Fed, unlike any sane commercial actor (are there any sane commercial actors left in the financial industry?), is willing to take CDOs (think of them as sandwiches of questionable freshness) as collateral. Yes, that’s right, the Fed is willing to take on other banks’ toxic bonds.

This should be enough, right? I mean, if the lender of last resort will take them at value, why shouldn’t we? Well, the banks remember that if the Fed fails, the Treasury will automatically bail it out. Thus, the Fed’s courage to hold onto the toxic bond waste is not reassuring at all. It’s like comparing apples to oranges, but where the oranges are backed by 300 million taxpayers and nearly infinite capacity from whom to draw debt. Commercial banks are not quite so lucky.

The other reason why the Fed opening up its treasure chest to hold the toxic CDOs is not a silver bullet goes to the nature of overnight lending. Overnight lending is meant to be one of the shortest loans in the market. Banks take out overnight loans so that they can meet their legal requirement to hold a cash reserve equal to 10% of their total assets. So, in practice, the banks are using as much cash as possible to try to make more money so that they can avoid failure. Well, how is that working right now? What lines of credit can a bank offer that can, in the aggregate, make up for exfusion (is that a word? Should be) of their cash. Think of it like this. Bank of Brokeback gives out a $1 million loan, with 10% interest. It might take a month for the first $100 thousand payment to come back in. If Bank of Brokeback exfused all of its cash reserves in similar loans, they would need to find an overnight loan equal to 90% (or thereabouts) each night until the loan payments start coming back in. Recently, Bank of Brokeback could just build CDOs and sell them off for a huge cash infusion each night. That’s dried up.

“You put what in that sandwich?”
So, the reason why the banks won’t trust each other comes down to fear of what’s on their books. Like Jaws in the water, those CDOs are out there waiting to eat up the banks’ balance sheets.

Here’s why the CDOs are a problem. Imagine building a sandwich. You get some tasty ciabatta. Some pickles. Some smoked chicken. Fresh tomatoes. Lettuce (or arugula, depending on your politics). Some salt and pepper. Looks like a AAA rated sandwich to me! But, wait. What’s the sauce? Well, what if I told you that the mayo had been left out overnight. How much would you pay for that sandwich? It could be just fine. Or, you could end up behind the uninsured people at the emergency room. Want to take that risk? Who wants to eat that CDO?

“The turd in the punch bowl.”
Or, to maintain the metaphor, I wonder who left the mayo on the countertop overnight. Strangely, though this is actually the least sophisticated aspect of the equation, it is the most complicated. Hence the lack of trust in the CDOs. Mortgage defaults are nearing or surpassing historic levels. This fact is not limited to subprime and Alt A mortgages. Prime 30 years are defaulting at about 3%, which is a staggering number of defaults given that most mortgages today fit that description.

There is a lot of blame to spread around for the defaults. First, buyers behaved as though the price values of houses would forever rise at 10% per annum. Enter stage left The Flippers. Enter stage right The Fools. But, really, it gets worse. There is a lot worse activity out there in the mortgage industry beyond imprudent purchasing by wannabe homeowners. The people charged with clearing up this mess have uncovered a disgusting amount of fraud on the part of the mortgage brokers. For example, Johnny Acorn went in to buy a house. He’s a self-employed community organizer. He claims he makes $60K per year and he can put down 5% on a mortgage. Somehow, he gets approved for a $500,000 loan. Do that math! Later on, the regulators get their hands on the CDO portfolio of a failed bank and they see that the paperwork submitted by the loan originator make it look like Mr. Acorn could afford to vacation every weekend in Hawai’i. Prediction: Acorn defaults within 90 days. Result: Acorn defaults within 90 days.

“The measure of injustice in a society is not what’s illegal, but what is legal.”
Eat that, comrade! Our people own their own homes. Your people are commie slaves. Oh, and, property law since the Magna Carta has supported the concept of freely flowing property to be put to use for economic means. Locke knew that. One more thing to consider in terms of the society-wide impetus that drove us to this crisis: free money. Mr. Greenspan made money so dang cheap, even poor people could afford it. Sounds great, right? But, not really. Not when there was a regulatory environment that permitted mortgage brokers and investment banks to operate outside the purview of the law, and beyond the reach of state legislatures due to federal preemption. A system ripe for abuse was abused. Duh. Can’t hardly blame ‘em. I want to make more money, too.