Bank of America's Take on Cash for Clunkers

I love it when $3 billion in tax payer money goes to buy new cars for people. Here is Bank of America’s economists take:

Bad policy meet economic theory
Economic growth is usually defined as the expansion of a nation’s capability to produce the goods and services its people want. Therefore, growth depends on changes in the economy’s potential for production and the extent that capacity is utilized. This leads to the first problem with the Cash for Clunkers program. As the new vehicle is purchased, the trade-in vehicle is destroyed. In other words, under the CARS program, there is no addition to the capital stock. The investment undertaken is simply replacement demand. Secondly, while manufacturers will have to increase production to replace the sold vehicles, the boost to production will have only a temporary impact on the economy. The third problem with the Program is that the removal of the clunkers reduces the supply of vehicles for the used-car market. This will raise prices for those who can not afford a new vehicle. The fourth problem with the Program is that for the consumers who purchased new vehicles, their balance sheets are degraded. In many instances, the trade-in vehicle was fully owned by the consumer. To acquire the new vehicle, the consumer either borrowed the money, putting himself further in debt, or paid cash, losing out on interest earned. In either case, the consumer is poorer. For those that still owed money on their “clunker”, they likely swapped a small debt for a larger debt. As we highlighted earlier, the Cash for Clunkers program may be good for the environment, but it is not good for the economy or the consumer.

Cash for Clunkers and the Economic Outlook
On August 6th, President Obama signed into law a $2 billion extension of the “cash for clunkers” program. Whereas the original program was set to expire on November 1, with the extension, the program expires around Labor Day. As with any temporary program, the impacts will be short-lived. We now expect real consumer spending on durable goods to increase an annualized 12.0% in the third quarter and decline an annualized 4.5% in the fourth quarter. Previously, we were projecting annualized gains of 9.6% for 3Q and 3.5% for 4Q. (Recall that the original program expired in 4Q.) As for real GDP, we now anticipate 3Q annualized growth of 3.0%, up from the previous forecast of 2.6%. Fourth quarter growth is now projected to be 2.3%, down from the previous estimate of 2.8%. Not a lot of stimulus for $3 billion.

The Book is Out

The 2009 Football Outsiders book is out. Due to some publishing changes and contractual issues, it's not called Pro Football Prospectus this year. Although we had publishers interested in producing the book, the late decision by Plume to not publish the book left us with too tight of a timeline to get a new publisher. So instead, we self published. It allows readers to buy a $13 PDF version, or a $24 printed version. It's still listed on Amazon.

We got a great plug from Sports Illustrated's Peter King. Note item number five from “Ten Things I Think” in the Monday Morning Quarterback article on SI.com. A lot of stuff that he is quoting is my stuff.
http://sportsillustrated.cnn.com/2009/writers/peter_king/08/03/NFL.takes/4.html

Football Outsiders 2009 Almanac hit Amazon last week, and is the #3 best selling sports book (knocking off Thurman Munson thank you very much).

http://www.amazon.com/Football-Outsiders-Almanac-2009-Essential/dp/1448648459/ref=sr_1_1?ie=UTF8&s=books&qid=1249420792&sr=8-1
Amazon.com Sales Rank: #77 in Books (See Bestsellers in Books)
#1 in Books > Sports > Football (American)

Not that I’m soliciting you, but IF you were going to buy it, we do make more money if you buy it here (https://www.createspace.com/3392071 ) or a PDF version here (http://www.footballoutsiders.com/store ) since we avoid the Amazon sales fee. As an aside, I personally make very little per book so only buy it if you actually want to read it.

I didn't contribute any articles this year. I have been too busy with the new job. I did prepare a lot of the numbers, and some of the text in the Tendency Sections. I think it’s just cool to be a listed Author.

No More Tears No Mah

Nomar returned to Fenway after a five year absense. I was able to catch his first at-bat on mlb.com, and it was quite a moment. The room clearly got a little dusty, and I imagine even J.D. Drew felt an emotional twinge. The once face-of-the-franchise fully deserved the standing ovation he received, and it clearly meant a lot to him. For the most part, I'll remember Nomar fondly. I recall one specific instance in the late 90s. The Red Sox closed out their last home stand of the year - they may have lost, I don't recall - and they were not headed to the playoffs again. [Remember those years? They weren't that long ago.] The game had ended, and Nomar came out of the dugout after the game, and applauded the fans. He walk around the infield clapping his hands and pointing to the patrons. I do not remember a single other player doing the same. I thought at the time, 'that is a classy move. The team didn't do much, but here's a guy who understands that the fans are the reason he plays baseball for a living.'

Unfortunately, there's another indelible memory I have of Nomar - that of him sulking on the bench during a key Sox/Yankees game in 2004 refusing to play. He wants to rewrite history when it comes to how he left Boston. "I never left. I got traded... I never wanted to leave..." blah, blah, blah. Lest us not forget, Nomar ran himself out of Boston in 2004. Imaginary injuries, agent threats and uninspired performances ended his career. A number of his own teammates made comments about the negativity in the locker room that Nomar generated in that final season.

And now he's back. He made great comments about loving the fans and sad that he left; however, I would have liked to see him more contrite and bear some responsibility. Sure he's unhappy that he left. We won two World Series immediately including one before the door hit him in the rear end, and he's done nothing since. Here's what I would have liked to hear him say, "this is a business, and sometimes business gets messy. I let the business side effect the baseball side, and that was a mistake. With 20/20 hindsight, I'd have handled it differently, and I'm sure the Red Sox management would have too."

Really

We have the volume off, but CNBC is interviewing a guest who runs an "environmentally-friendly" fund. They flashed a stat on the bottom of the screen:

"Highest Carbon count in the atmosphere in 800,000 years"

My first reaction is: How could one possibly quantify that?

Second, there was apparently a high carbon count 800,001 years ago, and yet the earth somehow sustained life...

Better Late than Nevah

When the family went to the Metrodome to see the Red Sox play the Twins on this past Memorial Day, we arrived plenty early to watch batting practice.



We carefully watched Big Papi swing the bat. The guy was in the slump of slumps. I don't think he was hitting sub-.200 yet, but he was on his way.


Although Papi didn't play that particular game, he rocked some shots in batting practice. A number of balls landed in the upper deck of right centerfield. Let me say that the Metrodome is nothing if not cavernous. The place was built for football, and they don't even sell tickets for the that area because its too far away. Those were bombs. I understand it was just batting practice, but clearly he still had power.


In the next game, he played, and sent two balls 405 feet. Unfortunately, they were both to the same spot - the 408 foot part of centerfield. Either ball was 10 degrees one way or another, they were his first home run of the year.

I knew from that point that there was at least hope for Papi this season. Others probably knew it too. Throughout the stuggles fans both home and away were very un-Bostonian - they cheered him every at-bat. Very classy.

It probably hasn't gone unnoticed, but Papi is looking better. Yes, he is still batting .210, or something like that, but in the last 14 games (beginning shortly after the series in Minnesota), he is batting .326 with 9 runs, 4 HRs, 10 RBIs, and a .431 on-base percentage. I'll take that!


P.S., here is a picture from our seats during warm-ups at the first game. No, the camera did not use a zoom, those guys were right in front of us. I could have spit on Justin Morneau - not that I would.

Pssst ... Wanna buy a house?

After a couple months of preparations, we finally got the house on the market yesterday. If you click the above link on the post's title, it will take you to the Sotheby's website. I don't plan on linking directly to the house on a public website, but if you know what my house looks like, you can find it.

We priced it on the high end of what brokers quoted us, so it will be interesting to see what shakes out. My aren't pressured to sell. If you don't get a good price, we are looking at renting the place. If we don't get a good rental, we put the whole process on hold. Alison and the kids would very likely stay there until next Spring when we try again. First, we don't necessarily want to take the kids out of school midyear, and second, would you want to move to Minnesota in January?

Simultaneous to the house sale, we are also greiving our real estate taxes. Although we have listed the house on the high end, it's nothing compared to our town assessment! That number is absurd. So on one hand we are trying to put our best foot forward to pitch the sale, and on the other we are making a pitch book to why our house is worth as little as we can justify. Fun! Grievances were due on Tuesday. We shall see...

One Flight on Time

Thunderstorms in New York on Friday caused fairly severe air traffic delays. One flight left and arrived on time - and it was MINE! That's the good news, I guess. The bad news was that I missed it.

Starting as early as Noon, nwa.com listed my flight as late. 3:35pm was the scheduled departure time (vs. the 3:00pm original time). I checked the status every 20-30 minutes with the same results. Since I am only 20-25 minutes from the airport, and I check no bags, my goal is to get there 30 minutes before the flight.

At 2:35, I am getting ready to leave the office, and check the status of the flight once more. Scheduled Departure: 3:00 - ON TIME. What?!? Yikes! I made the airport in record time, and got to security 2:58/2:59pm, but ... I can't print a boarding pass and the flight leaves the gate at 3:07 without me. Apparently, Air Traffic Control deemed it ok to send the flight, and when Air Traffic Control says "go," you go. You need to be at the gate.

So I ask this question: what is the point of displaying the flight being late if 1) I have to be there on time anyway, and/or 2) the flight can change the fact that it is or isn't delayed at the drop of a hat?

I was rebooked on the 5:15 which is eventually 2 1/2 hours late.

Flyin the Friendly Skies

So all this traveling has finally yielded a small benefit. After about two and a half months of flying, I made it to Elite status on Northwest/Delta. I actually got in to the program earlier than expected. When I first moved out here, I made all the necessary arrangements to rack up airline miles as fast as possible. One of the first steps was getting a Northwest credit card. Every dollar spent = miles earned. There was a bonus feature. During the year, if you spent enough on the card, you got 25,000 miles toward the Elite program. However, Northwest and Delta are in the middle of merging, and Delta has a seperate American Express card relationship. Delta recently announced that they are canceling the Northwest relationship with US Bank Visa. And poof! there went my chance at 25,000 Elite miles. However, I wasn't one to give up. I called customer service, and they gave me 10,000 Elite miles due to my "inconvenience." With that, Bang!, my 19,000 miles jumped to 29,000 and welcome to Elite early.

Although it doesn't sound like much, now I can pick preferred seats and make nearer term reservations. I can fly Stand-by and change flights without paying for it, board the plane ahead of everyone else and get upgraded when First Class seats are open. I got upgraded last Friday, but unfortunately, the full plane had no space for me in the Upper Class on the way back this morning.

It's the little things....

New Post

Yes, very exciting post title. I've been meaning to post, but frankly have been surprised how little "down" time I've had. Part time life in Minnesota is going well. The job has been great so far. Although I haven't been to a lot of places, it's really pretty here. Last Thursday, we had a work event at a local restaurant with a deck overlooking Lake Minnetonka. It stays light up here to well past Nine o'clock. It was 81 degrees and just a perfect setting.

The family was out here for Memorial Day weekend. Although the apartment is tight for four of us, the weather was great, and we took advantage of it. The Red Sox were in town, so on Memorial Day proper, we attended the Sox/Twins. We had excellent seats - front row to the third base side, right next to the Twins bullpen. For those NESN viewers, you may have seen us. They took a nice close up of us ("there's a Red Sox family.") The kids were really hoping for a foul ball, but no luck.

I attended the next two games - tickets are real easy to get out here.

As for the New York front, we continue to try and figure out what to do with our place. Decision is immenent, but that's for another post.

I'm rambling, but I felt it was worth posting something.

The Weeks of Emily Birthdays

Emily's birthday is April 10 - during school vacation. So, she had a birthday celebration at school on the 2nd. Then they all flew here to Minneapolis, and on the 10th, we celebrated her birthday. At her suggestion, we spent the day at Nickelodeon Universe, the amusement park inside the Mall of America. We had dinner at her favorite restaurant - the Outback. No, she doesn't love Outback for the steaks, but rather ... the Mac & Cheese. It could be worse. Of all the Outbacks I have been to, most of your meal is filled with wait staff singing "Happy Birthday from the Outback." However, this Outback - no singing. In fact, we didn't even get a candle placed in the "birthday" Sundae. Therefore, we brought a cake to the dinner party we attended the next day - and everyone sang!

Then she went home, and celebated with local New York family. More cake! I attended by Skype. Very exciting, they watched me cook (and by cook, I mean heat up).

But wait, we aren't done. Next Saturday is her Birthday Party. We are attending the Hannah Montana movie with 10 +/- friends.

Here are some pictures from Minneapolis week:

'