Wednesday, September 26, 2012

Hail Mary Pass now a Golden snatch? Or 1 obvious + 2 not so obvious = 3 uncalled penalties and the risks of framing…

Many who watched the now infamous Monday Night Football interception which two on-the-spot refs ruled inapposite; one interception and the other touchdown; which because of NFL rules like all TD’s, was not subject to challenge hence review.  And prior to that missed a V obvious penalty by the Seattle receiver for interfering by shoving a Packer to the ground and out of his way just before the ball arrived – those were the two much heralded botched calls.

However, because media attention laser focused on the receiver’s catch or defender’s interception – many may have missed, make that most all missed the other two penalties. The first not so obvious penalty occurred when the QB was tackled after releasing the pass, and the second not so obvious penalty was on another potential receiver, Seattle’s #14 who was knocked down / overwhelmed by several Packers. #14 was standing to the left of the Packer’s MD Jennings; the player who caught the pass most everyone agrees first (and therefore intercepted) or at least before Seattle’s Golden Tate got his claws around the ball (and was therefore ruled a touchdown).

The debate over these refs will no doubt continue, and let us agree that all refs are prone to mistakes, because as many professional fans and commentators have pointed out, the “game is too fast” for them to make correct calls. And also because of on the sideline, S-L-O-W motion video replay in High Definition television, in the stadium and on millions of screens in homes around the country that in many cases are 50 inches or more.

The media immediately focused us on the catch or interception – but if the roughing the QB penalty was called (correctly) and the catch was (correctly) ruled an interception would there have been another play run? Would some time have been put back on the clock? After all the play as I recall was run with only 8 seconds left.

My point in writing about the issues of framing is to connect it to our “economy” and “financial markets” and I’m going to borrow a Bernanke-ism – economic naturalists. If investors and savers alike would stop for a moment and think about where we are and why we got here – well it just might be a good idea now – to go back and roll the videotape.

The Fed is now on chapter 3 of QE, and this iteration is open – ended; indeed although the Fed has not spoken of their program this way – I believe most would agree that this and the previous facilities are the so called BAZOOKA.

The need for the bazooka – was a very concise one page summed up by Kyle Bass in January 2010 – it’s page 13. Page 13 shows, if you do the arithmetic, that a very few, certain banks and former investment banks (CSE’s) were $16T+ in the hole, as of the end of 2007. The $16T of asset value, in large part appears a figment of these banks proprietary computer models.

Today, many Monday morning quarterbacks have appeared on TV to promote their new books of solutions to the financial crisis both here in the US and the Euroland – the most recent being (sorry to pick on you) Mr William Rhodes. Mr Rhodes, former chairman of Citibank, was introduced on a recent talk show as being connected to the most powerful and influential policy makers. During the course of the interview Rhodes dropped the name a prime minister who he expected to meet and ask questions – baloney comes to mind. Why? As well intended as Mr Rhodes may be – he and most all others, with few exceptions should have zero cred – where were they when the bubbles were created from 2003 to 2008? Were his fingers broken?

The lesson that bears repeating is yes, pay attention to the media and also pay attention to your instincts NOW for stuff that the media is not laser focusing YOUR attention on…otherwise known as framing; specifically models are not markets and markets are not models...