The Federal Reserve is responsible for zombifying the entire country. And it wasn’t a mistake. It was a choice made by those in power in order to maintain the status quo. The fateful day in March 2009 when the pencil pushing lightweight accountants at the FASB rescinded mark to market accounting rules gave birth to zombie nation. And not coincidentally, marked the bottom for the stock market. Wall Street banks were free to fabricate their earnings, pretend they didn’t have hundreds of billions in bad loans on their books, and extend the terms of commercial real estate loans that were in default. With their taxpayer funded TARP ransom, ability to borrow at 0% from Uncle Ben, and the $3 trillion of QE cocaine snorted up their noses in the last four years, the mal-investment, fraud, and idiocy of the Wall Street drug addicts has reached a crescendo.
Braves channel Art Modell
The most powerful emotion in pro sports? Jealously.
In a stunning move — one that baseball beat writers flatly disbelieved — the Atlanta Braves are bugging out of Turner Field in downtown ATL for the burbs. My burb specifically — Cobb County, on land flanked by interstates and much local government subsidized redevelopment. The Braves will almost certainly receive hundreds of millions in tax dollars to make a 42,000-seat, $672 million stadium a reality.
And that reality has me flashing back to Art Modell’s shakedown of Maryland and Baltimore in the mid 90s. Modell’s Cleveland Browns were stuck in an old stadium while former tenants the Cleveland Indians enjoyed shiny new, taxpayer provided Jacobs Field. Modell stewed and whined for a couple years, watching the city’s finite sports dollar flow in every increasing amounts away from him and to the Indians. He demanded that the city help fix up Municipal Stadium (which Modell owned) and the cash-strapped city was on the way to doing that for its beloved Browns.
But then Modell suddenly closed down talks about renovations and within weeks popped up in Baltimore with a $300m. bundle of goodies, including a new stadium. The Browns were gone. Cleveland never saw it coming.
Now the city of Atlanta is similarly gob-smacked. But shouldn’t be. City officials have spent the last two years steadily bidding up the cost of a new stadium for the NFL’s Atlanta Falcons. The price tag? An astounding $1.2 billion, plus millions to buy out local churches to make way for the football temple.
It is zero-sum deal, the more scarce land and public dollars are thrown at football, the less there is available for baseball. And although the Braves were playing a stadium less than 20 years old, it is no longer state of the art and not drawing at a top 10 rate, which is pretty damning for a franchise with the tradition and success of the Braves.
Meanwhile, Cobb County officials were saddled with their own problem — a white elephant of a Cumberland area redevelopment scheme. Despite tremendous subsidized overbuilding, including an underused performing arts center, vast expanses of real estate remained barren. Worse, the last attempt at goosing actual private investment in the corridor — a plan to run light rail to the site — was overwhelming rejected by local taxpayers at the ballot box. What to do?
How about poach a beloved local sports team, help build them a stadium, and tell taxpayers we need to run light rail to the complex to make it all work? Bank on it — that is what we will hear, and I doubt the price tag will be less than $300m.
Art Modell would be impressed.
Since the state (government) depends on the economy to generate its tax revenues, government cannot grow sustainably at a rate that exceeds the expansion of the economy. Thus we expect government to grow at around the same rate as the economy and productivity, i.e. around 60% to 75%.
But Federal government expenditures have risen by 317% and state/local government spending has leaped by 328% since 1990. In other words, government has expanded at roughly four or five times the underlying growth rate of the economy.
How can government expand 300+% while the underlying economy that supports it expanded by 75%? Answer: borrowing money, i.e. debt—lots of it. Federal debt has skyrocketed by 600% since 1990.
We didn’t understand why the government was able to tell us where to live when they don’t tell anyone else where to live.
An employee at the summer meeting, who spoke on the condition of anonymity out of fear of retribution from the company, said that the analysts were not told explicitly to relax their standards to win back business. But he said that the numbers made it clear that if the division wanted to stay afloat, the analysts would have to make changes. A few months later, they did exactly that, introducing modified standards that made it easier to give bonds higher ratings. The changes seemed to work. More banks began choosing S.& P. to rate the new bonds backed by residential mortgages. S.& P., in turn, faced criticism from industry participants who worried that the changes were allowing lower-quality bonds to make it into the market.