Archive for November, 2010

AFC West Midseason Report 2010

Saturday, November 20th, 2010

NFL logoIn the immortal words of coach Dennis Green, “They are who we thought they were!”

Instead of my usual weekly Chiefs column, let’s look around the AFC West today. If you go back to my predictions before the season, I think we’ll find that these teams are pretty much who we thought they were. (I am going to the game this weekend, and am predicting a Chiefs win over the Cardinals, 27-13. The Cardinals are a bad road team, and the Chiefs will be angry after the beating they took in Denver.)

Kansas City Chiefs: Record 5-4, Preseason Prediction 7-9
The Chiefs are an improved football team. They’re well coached. For the most part they’ve avoided beating themselves. And we’ve seen improvement in almost every area of the team. The rookies have stepped up and filled some glaring holes. Having said that, this team lacks impact players. Much has been made of cornerback Brandon Flowers and linebacker Derrick Johnson. They’ve emerged as very good players. But great? I don’t think so. They aren’t game changers. The Chiefs are playing very well at home (4-0) and have struggled on the road (1-4). They’re tied for the division lead at 5-4, but it’s hard to think they’re going to become a better road team all of a sudden. It looks to me like the Chiefs will finish 8-8 or possibly 9-7. Definitely better, but probably not good enough to sneak them into the playoffs. Don’t be disappointed. Haley has this team pointed in the right direction.

Oakland Raiders: Record 5-4, Preseason Prediction 6-10
I struggled with my prediction for the Raiders more than any other team in the division. They have talent. And with the departure of quarterback JaMarcus Russell, this team SHOULD be better. Russell will go down as one of the biggest busts in NFL history. The emergence of Darren McFadden has really helped this team turn the corner. They’re tied with the Chiefs at 5-4, and will certainly outpace my prediction. However, the Raiders still commit a lot of penalties and make a lot of mistakes. They will lose a few games down the stretch that they’re capable of winning. It’s hard for me to see them getting past 8 or 9 wins despite some recent success. Much like the Chiefs, the Raiders are getting better, but will probably be on the outside looking in when the season finishes. They do have a chance of winning the division if the Chargers stumble.

San Diego Chargers: Record 4-5, Preseason Prediction 11-5
The Chargers seem determined to repeat history. Start slow. Lose winnable games. Then pull it together just in time to win the division. Norv Turner is an awful head coach, but he’s got the most talented team in the division. And it looks to me like they’re getting healthy at the right time. I still expect the Chargers to win this division despite sitting here today at 4-5. They’re only one game back, and they have a fairly easy schedule to finish the season. Would not be surprised if they finished the season 10-6.

Denver Broncos: Record 3-6, Preseason Prediction 5-11
The Donkeys drubbed the Chiefs last week. But this team is more likely to get drubbed than to be the one doing the drubbing. I’m very unimpressed with head coach Josh McDaniels. Kyle Orton is having a great season at quarterback, and the receivers are good. But other than that, this team is headed in the wrong direction. They’re 3-6 and sitting at the bottom of the division. They’ve already played the easiest portion of their schedule. They still have road games against all three AFC West rivals plus the Cardinals. And home games against the Rams, Texans and Chargers. I only see two or maybe three possible wins left for Denver. Don’t see them any better than 6-10 to finish the season.

Rationing and Death Panels

Wednesday, November 17th, 2010

Dr. ObamaThis last week I exchanged a series of emails with a friend of mine. He is a proponent of a single payer, government run health care system. He also thinks the right is crazy for their talk of death panels, rationing, and how ObamaCare takes us down the road to a single payer system. I attempted to explain how virtually everything in ObamaCare leads to higher prices and higher premiums, and that it’s all done on purpose. They purposefully ignored ideas like tort reform and competition across state lines that could help to control prices. Premiums will rise. Businesses will drop their coverage. Millions will become uninsured. And my prediction all along has been that within ten years we’ll be faced with a much bigger crisis than we face today, and the only “solution” will become government run health care. It’s already playing out right in front of us.

This really isn’t new news. Many on the right have warned us about this eventuality. Many on the left have bragged how ObamaCare will eventually create a single payer system (though the media largely ignores them).

But this is not the purpose of today’s post.

During this exchange we also discussed rationing and death panels. Those on the left have criticized the right for fear mongering about death panels. They say they’re not real. Decisions will remain between patients and their doctors. I’ve criticized the right for the use of the phrase death panels as being overly dramatic. But here’s my point.

In a free market system, insurance companies decide what they will pay for and what they won’t. They ration care. But if you don’t like the offerings from one insurance company, you’re free to choose another. Competition forces insurance companies to provide care, even when some may judge the care as less beneficial or too expensive.

In today’s world, the government makes these same decisions in regards to Medicare and Medicaid without competition.

With ObamaCare, the government has taken a much bigger role in the decision of what insurance companies will pay for and what they won’t. The bigger problem is down the road with a government run system. I attempted to explain that the rationing of care will now be dictated by the federal government, and that in particular the elderly will have their care rationed because of the cost (which is high) and the perceived benefit (which is low). The government will have no competition. And if you don’t like where they decide to limit or ration care, you’ll have no alternative.

It appears that leftist economist and columnist Paul Krugman agrees with me. And to Krugman, this is good news. On ABC’s This Week, Krugman said:

Some years down the pike, we’re going to get the real solution, which is going to be a combination of death panels and sales taxes.

Medicare is going to have to decide what it’s going to pay for. And at least for starters, it’s going to have to decide which medical procedures are not effective at all and should not be paid for at all. In other words, (the deficit commission) should have endorsed the panel that was part of the health care reform.

And in case this wasn’t clear enough, Krugman wrote this on the New York Times website:

I said something deliberately provocative on This Week, so I think I’d better clarify what I meant (which I did on the show, but it can’t hurt to say it again.)

So, what I said is that the eventual resolution of the deficit problem both will and should rely on “death panels and sales taxes”. What I meant is that

(a) health care costs will have to be controlled, which will surely require having Medicare and Medicaid decide what they’re willing to pay for — not really death panels, of course, but consideration of medical effectiveness and, at some point, how much we’re willing to spend for extreme care

(b) we’ll need more revenue — several percent of GDP — which might most plausibly come from a value-added tax

And if we do those two things, we’re most of the way toward a sustainable budget.

It’s always interesting to me that reducing expenditures is never part of Krugman’s solutions. And on a related note from IBD:

Sharing Krugman’s belief that such a system is just fine is Dr. Donald Berwick, President Obama’s choice to head the Centers for Medicaid and Medicare Services. Berwick has said: “NICE is extremely effective and a conscientious, valuable and — importantly — knowledge-building system.” No, NICE is a system of rationing through a bureaucratic formula defining “cost-effectiveness” that has rushed untold numbers of Britons to an early grave. (Note from Lee: NICE is explained earlier in the piece from IBD. Read the full article if interested.)

“The decision is not whether or not we will ration care — the decision is whether we will ration with our eyes open,” is what Dr. Berwick told a National Institutes of Health publication when he was just president and CEO of the Institute for Health Care Improvement.

The Obama administration’s health care reform is all about cost and little about care. Dr. Berwick has opined: “We can make a sensible social decision and say, ‘Well, at this point, to have access to a particular additional benefit (new drug or medical intervention) is so expensive that our taxpayers have better use for those funds.’ ” In other words, the government will decide whether treating you and extending your life is worth it.

Sounding more and more like rationed care and death panels to me.

Chiefs Need a Win in Denver

Friday, November 12th, 2010

Kansas City ChiefsA bit disappointed with the Chiefs’ loss to Oakland last weekend. The Chiefs uncharacteristically committed penalties, made mistakes, and turned the ball over. The Chiefs found it difficult to run the ball against the Raiders front seven. It was easily the Chiefs’ worst performance of the year. And it still took overtime for the Raiders to get the win in front of an enthusiastic home crowd.The Chiefs had numerous opportunities to make a play at the end, and just couldn’t do it. If the Chiefs convert just one of those opportunities successfully, it’s a win.

The loss has tightened things up in the AFC West. Instead of a comfortable 2.5 game lead in the division, the Chiefs at 5-3 are barely in front of the Raiders at 5-4 and the Chargers at 4-5. Other than the Broncos, this is anybody’s race. All of a sudden, this game in Denver becomes very important.

One more note before I get into this week’s game against the Donkeys. I typically like the work that Adam Teicher does for the Kansas City Star. He’s a fine reporter, and typically pretty balanced in his opinions. He’s certainly no homer for the Chiefs. But today he wrote a piece criticizing the special teams play of the Chiefs. It seems to me that while the return game has not been as dynamic as we had hoped, the coverage teams have been pretty good. I went to to checkout the stats. The Chiefs are #5 in the league in kickoff coverage (despite the TD they gave up to the Raiders), and #5 in the league in punt returns. They drop off a bit in punt coverage where they’re ranked #11, though that’s still above average. Their only weakness statistically is in kickoff returns, where the Chiefs are ranked #27. The stats seem to show that the Chiefs have been pretty darn good on special teams. They’ve typically been winning the battle of field position, which is what you want from your special teams.

Denver BroncosThe Broncos
Last year the Broncos started 6-0. New head coach Josh McDaniels was the wonder boy around the league. Since then? Well the Broncos have gone 4-14, including a crushing defeat at home by Kansas City to end the season last year. Chiefs ran all over Denver and won 44-24.

Enter this year. The Broncos are 2-6. They have virtually no running game (#32 in the league). And they can’t stop the run (#31 in the league). A devastating formula for a football team. Injuries on defense have forced Denver to switch out of their 3-4 defense to a 4-3 defense, but they don’t have the personnel to run a 4-3 effectively.

Looking for a ray of sunshine in Denver? Quarterback Kyle Orton has been very good. Why did Chicago want to dump this guy for Jay Cutler? And he’s got a nice group of receivers, in particular Brandon Lloyd who is having an excellent season.

The Chiefs just need to get back to mistake-free-football and they’ll win this game in Denver.

Prediction: Chiefs 27, Denver 19

QE2 and Devaluing the Dollar

Friday, November 5th, 2010

I’ve spent years reading about economics. Call me a nerd but I enjoy understanding how the economy works. But monetary policy? It’s pretty much voodoo to me. I’ve been doing a lot of reading to try to understand why the Fed is doing what it’s doing. Either I’m failing to understand it, or the Fed has put us on a collision course with high inflation and a worthless dollar.

The Fed is Printing Monopoly MoneyMonopoly Money
The administration and the Fed have been printing money like it’s going out of style. They believe that injecting cash into the economy will help stimulate it. Many experts disagree with this approach to stimulate the economy. And there’s risk with this policy. The more money you print, the less it’s worth. The dollar becomes devalued. And eventually, inflation sets in.

What happens when the dollar is devalued? Lots of things. One in particular that we need to pay attention to is the price of commodities. They’re on the rise. Have you noticed grocery prices lately? They’re going up. And they’ll likely to go up a lot more. Cereal prices are going up. The price of milk is going up. It’s all going up.

In the last year, the cost of manufacturing has risen tremendously. The price of the materials used to create products has risen substantially. This has not yet been apparent in retail prices. Companies have held their pricing as long as they can. Who wants to raise their prices during a down economy? But it can’t last. Companies cannot continue to eat these losses and survive. In our industry, dramatic rises in the price of cotton are leading to significant increases in the prices of apparel. It’s coming folks. It’s coming.

Monetizing Debt
When the fed buys toxic assets (like mortgages from Freddie and Fannie), we’re monetizing our debt. This week when the fed announced that we’re going to buy $600 billion in bonds from ourselves, this is monetizing our debt. This has been referred to as QE2. Like printing money, this devalues the dollar. It’s been estimated that within a couple of years, that the dollar will be worth 20% less. Do you have $1000 in the bank? Well guess what. In a couple years, that $1000 is only worth $800 in today’s money. Are you watching the stock market rise this week? It’s up. Seems like that would be good news. But all it means is that we’re treading water because the dollar is worth less.

The QE of QE2 stands for quantitative easing. The Wall Street Journal explains QE this way:

It’s the electronic equivalent of starting up the Fed’s printing presses to create money for buying financial assets in the market – in this case long-term U.S. Treasury bonds. Buying bonds pushes down their yields, and the interest rates across the debt markets that are closely tied to U.S. Treasury rates.

What are the possible ramifications of QE2? Again from the WSJ:

Printing more money tends to push down the value of the dollar. While that would tend to help U.S. exports, it also risks pushing up the price of oil and other commodities, threatening an inflation surge that could be difficult to stop if the economy picks up. The dollar already has fallen substantially, and the resulting flood of money to emerging markets with higher interest rates and more robust growth is pushing up their currencies more than some of their governments want. That has led some countries to intervene to resist the rise in their currencies, sparking tensions between the U.S. and emerging markets and talk of “a currency war.”

Why the 2? Because we’ve already tried quantitative easing once to help the economy to the tune of about $1.7 trillion. You should read this article from the Wall Street Journal.

And from Investors Business Daily:

…starting in 2009, the Fed embarked on what it called quantitative easing — a fancy term for creating money out of thin air. Over a little more than a year, it bought more than $1.7 trillion in assets, mainly U.S. Treasury and agency debt.

Today, U.S. bank reserves are close to $1 trillion — an enormous amount compared with the normal $4 billion to $8 billion.

On Tuesday, with the economy struggling and many Fed officials still worried about the specter of deflation, the Fed embarked on a second round of quantitative easing, dubbed QE2. The plan is to spend $600 billion to buy even more government debt, hoping to push down long-term interest rates to boost consumer spending, home sales and business investment.

We appreciate the Fed’s dilemma. Interest rates are already at zero, so there’s nothing left to cut. That leaves gimmicks such as quantitative easing as the only tool. But we’re also concerned about the unprecedented amount of money that’s being created — funds that won’t be easily taken out of the banking system once inflation takes off.

With its latest bout of quantitative easing, the Fed will have created $2.5 trillion out of the blue. Yet we’ve had no job growth since it began. So calling it “stimulus,” as some do, is simply false.

IBD goes on to explain:

What the Fed calls quantitative easing used to be called monetizing the debt — printing money to cover a profligate government’s debts. It was anathema to a generation of economists. But not today. Given our 9.6% unemployment and a fear of deflation, lots of smart people think QE2’s the right thing to do.

But how real is the deflation threat? Not very. Reuters quotes a San Francisco Fed study that puts the threat of actual deflation over the next three years at 5% or less. Others are in the 20% to 22% range.

As for inflation, it’s already here. The dollar has plunged in value, raising prices on everything we buy overseas. Commodity spot prices hit an all-time high in September and continue to rise. Gold? Also at record highs. Oil? It has doubled in a year to $83 a barrel.

Other common goods — from rubber to sugar to copper to rare earths — are surging, with some near all-time highs.

It’s only a matter of time before these prices are felt in the cost of consumer goods. At present, home prices are distorting inflation figures. Year over year, housing costs have fallen 15 straight months.

The risk? Once the economy takes off, inflation may spike. And once inflation gets imbedded in the economy, it’s tough to get rid of. If you don’t think so, go back and review the history of the 1970s.

Bernanke is as smart as they come. But adding another $600 billion to the $1 trillion the Fed has already stuffed into the banks does nothing to boost economic activity.

And if inflation returns with a vengeance to decimate the economy as it did in the 1970s, he’ll come in for tough questioning by a new GOP-led Congress that isn’t as enthusiastic about quantitative easing as the Democrats.

The world is concerned about our monetary policy. China is warning us that we’re heading down the wrong road. Why? Let’s say your friend loans you $100. But the value of the dollar drops by 20% from the time your friend loans you the money, and you pay him back. The repayment is now only worth $80 comparatively.

China and other countries have been loaning us a TON of money. And we’re going to be paying them back with a devalued dollar. How long do you think they’ll continue to loan us money? And if they do, what rate do you think they’re going to be charging us for the loan? What happens when they cut off the flow of their money?

Don’t you find it interesting that the Fed announced QE2 the day after the midterm elections? I do. You only hide announcements like this behind the “big news” when you’re hoping that it will get buried on page 44 of the newspaper.

What does it mean that the Fed wanted to bury this news as much as possible? I’m not sure.

But here’s what I do know. We must get our financial house in order. Devaluing the dollar is not a good long-term strategy to economic growth. Deficit spending and the national debt are much bigger risks to our nation right now than unemployment and a sluggish economy. And the only way we’ll turn around this economy, and create jobs, is to fix our financial problems.

It’s Raiders Week

Thursday, November 4th, 2010

So who would have predicted that the Chiefs would be atop the AFC West at 5-2, and that the Raiders would be in second place at 4-4? Who would have thought that the Chiefs would be leading the league in rushing at 190.4 yards per game, and that the Raiders would be in second place at 168.5 yards per game? It’s great to see these two teams ascending so that the old rivalry means something again. I love Raiders Week!

Oakland Raiders Darren McFaddenThe old adage is that to win in the NFL, you have to be able to run the ball, and you have to be able to stop the run. Both of these teams can run the ball. Jamaal Charles and Darren McFadden are among the league’s top running backs. Despite the fact that Charles shares the load with Thomas Jones, and McFadden has missed a couple games due to injury, both backs are among the top ten in the league. In the last two weeks since returning from his injury, McFadden has rushed for 276 yards and 3 TDs.

But which team can successfully stop the run? I don’t think it’s a stretch to believe that the team that stops the run will win this game. The Chiefs are ranked seventh in the league allowing only 96.4 yards per game. The Raiders are ranked 26th allowing 127.4 yards per game. This would appear to favor the Chiefs.

The Raiders are ranked much better than the Chiefs against the pass (#5 vs #23) and total defense (#9 vs #16). But I think more importantly, the Chiefs hold an advantage in points allowed, where Kansas City is ranked #5 in the league giving up only 17.4 points per game, and Oakland is ranked #15 giving up 21 points per game.

But ultimately, this game will come down to coaching. Marty Schottenheimer always said that if you play smart against the Raiders, that eventually they would make the mistake that costs them the game. And Marty won a lot of games against the Raiders. These Raiders still make mistakes. The Chiefs are among the best coached teams in the league. They make few mistakes. They commit few penalties. They don’t turn the ball over. They don’t make negative plays. They don’t take sacks. And they don’t give up many points.

Prediction: Chiefs 24, Raiders 21

Voting Time — What to Watch

Tuesday, November 2nd, 2010

I am ready for today to be over, mostly so I don’t have to watch all the stupid political commercials. For political junkies, here are a few things to watch for tonight.

Voter enthusiasm will dictate what happens tonight. I’m going to mention Dick Morris a few times in this post. He was the first person I saw who predicted significant gains by the Republicans. Keep in mind that Morris is backing the Republicans, and has been a loud opponent to the left’s agenda in Washington. But Morris understands the polls well. He’s been pointing out that the pollsters are using the wrong model to predict “likely voters”. He has said that if you see a Republican candidate up by three points in the polls, they’re probably really up by six or seven.

Is Morris right? We’ll know tonight. None of the polls have been predicting the types of numbers that Morris has been predicting. Until yesterday. Gallup came out with their updated results for what is typically called the “Generic Ballot”, and they now show the Republicans with a 15 point advantage. And Rasmussen Reports have the Republicans with a 12 point advantage in their Generic Congressional Ballot. These are unprecedented numbers, and much larger than the numbers prior to the 1994 midterm election when Republicans took control of the House and the Senate for the first time in many years.

The House
So what does this mean? Pollsters and pundits have been predicting that the Republicans will take control of the House and are likely to pickup 40 seats. Maybe 50 seats if everything goes their way. Morris has been predicting that the Republicans will pickup 60-80 seats, and more is possible. But as I said, he’s really been the lone wolf with his predictions until yesterday.

Here’s what Gallup had to say yesterday about this margin and how it affects the House face:

Taking Gallup’s final survey’s margin of error into account, the historical model predicts that the Republicans could gain anywhere from 60 seats on up, with gains well beyond that possible. It should be noted, however, that this year’s 15-point gap in favor of the Republican candidates among likely voters is unprecedented in Gallup polling and could result in the largest Republican margin in House voting in several generations. This means that seat projections have moved into uncharted territory, in which past relationships between the national two-party vote and the number of seats won may not be maintained.

The Senate
The common thought about the Senate is that the Republicans will pickup a half dozen or so seats, but not enough to control the Senate. Remember that the Republicans need 51 seats to control the Senate, where the Democrats only need 50 seats with Vice President Biden added to the mix. Rasmussen currently shows seven seats in play.

Right now I’ve got the Republicans at 49, and the Democrats at 48 (including independents who caucus with the Democrats), with three elections that will determine the balance of power in Congress. The key elections to watch tonight are Washington (Murray and Rossi are in a virtual dead heat), California (Boxer is up by about 3 over Fiorina) and West Virginia (Manchin is up by about 4 over Raese). It could easily end up 50-50.

If Morris is right and there’s a huge Republican tsunami tonight, then it’s possible that a couple more seats could come into play. Morris still holds out hope that Connecticut and Delaware could turn Republican. I don’t see it.

The Democrats’ Response
For months the Democrats have belittled the opposition. The President has referred to the opposition as their “enemies”. Democrats have called the voters fearful, uninformed, misinformed and misled. Some on the left have gone so far as to label the opposition as stupid and racists. Their conclusion is that no reasonable voter could oppose their vision for our country.

What have they accomplished? All they’ve done is galvanize the opposition.

Do you remember what ABC’s Peter Jennings said following the 1994 midterm elections?

Some thoughts on those angry voters. Ask parents of any two-year-old and they can tell you about those temper tantrums: the stomping feet, the rolling eyes, the screaming. It’s clear that the anger controls the child and not the other way around. It’s the job of the parent to teach the child to control the anger and channel it in a positive way. Imagine a nation full of uncontrolled two-year-old rage. The voters had a temper tantrum last week….Parenting and governing don’t have to be dirty words: the nation can’t be run by an angry two-year-old.

The response from Democrats will be telling. And it may take weeks or even months for it to completely unfold. I expect many on the left to explain this as ONLY about the economy and jobs. Some may even believe it.

Explaining Haley with Statistics

Monday, November 1st, 2010

Todd HaleyJust a quickie this morning. Happy that the Chiefs beat the Bills and are now 5-2. I mentioned last week that this game made me nervous. More nervous than the game against the Jags. The Chiefs needed a bit of luck but they pulled it off.

Head coach Todd Haley is taking heat from the media and even the fans about his decision making. His penchant for going for it on fourth down in particular. I had a theory about this, but have now changed my mind. Let me explain.

Original Theory: Haley understands that he’s got a team that’s still transitioning from a bad team to a good team. They’re certainly not a great team yet. The team is very well coached (I’ll be writing another post about this soon). The Chiefs have good players, but other than Jamaal Charles, I don’t think they have any great players. If the Chiefs lineup on Sunday and play everything by the book, they’re going to lose some games.  But because they make so few mistakes, it’s allowed Haley to be aggressive and roll the dice with some risky decisions.

New Theory: After reading a couple articles on the Kansas City Star’s site, I’ve changed my opinion. Haley may be unorthodox with his decision making (meaning that he has a different approach than most other NFL coaches), but the numbers seem to be on his side. These decisions statistically are not nearly as risky as conventional wisdom would lead you to believe. And often, Haley is on the RIGHT side of the statistics.

Article 1: Kent Babb was the first to offer a statistical explanation for Haley’s decision in the article Numbers Back Up Chiefs Coach’s Unorthodox Play Calls.

Article 2: Martin Manley writes a great piece here in the Star’s blog Upon Further Review titled Rolling the Dice. Even better than Babb’s piece.

It’s easy to do things by the book. Most of us who follow football know what the book tells us to do. As we can see, coaches come under tremendous scrutiny when they deviate from the book. Coaches like Haley, Bill Belichick and Sean Payton appear to be writing not only a new chapter, but a new book altogether.