The Odds at NFL Glory

According to NCAA research at ncaa.org there is a 1.8% chance that a Senior college football player will be drafted into the NFL. With those odds, you could fill a 50,000 seat capacity arena with excited senior players and only 900 of those men would make it into the NFL. That's about 1 in 50. That's a long shot. The good news is that a senior high school football player has a better chance of playing college football in the NCAA. It's not the best odds at 5.7% but it is better odds than making it into the NFL. There's over 61,000 college football players, that's a lot of scholarships (probably a bit lower because of walk-ons). These men do what many, many people in this country cannot afford to do, go to college. What's even better is that these guys are going to a university. They are attending some of the best universities in America, if not the world. At the odds of getting into the NFL, it would seem to be wise to get as much education as you can while you can. I will always feel the sorriest for that marginal student athlete that scrapes by and gets nothing from college. When that man doesn't make it into the league, the realities of life must come crashing down. I expect when one's only skill in life is football, and he can't even do that for money, life becomes very difficult. In economic terms, his labor goes from skilled to unskilled quickly. He goes from memorizing intricate plays and pushing himself to his physical limits to barely being able to sell his labor.

I am not saying that all NFL players are sentenced to this life. But, for many this must be an uncomfortable reality. These are not the stars that we see every day in our commercials, or even the ones we see playing on Sunday television. These are the back-ups that we never see, except those rare occasions that one must step in for an injured player. Even then, that's only star replacements. There are so many that we don't see, the marginal ones. For those who are only in the NFL one or two years then sent back to real life, I hope they got an education granted to too few. I hope they took advantage of a rare opportunity for anyone: Free College.

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Bye Bye BB

The assassination of Benazir Bhutto no doubt sent shock waves through the world as pictures of her bloody demise spread from newspaper to newspaper, channel to channel, eye to eye. This setback has given we Americans little hope for a country many people cannot point out on a map. But, the truly frightening aspect of this world event, is the knowledge that if Pakistan's current Musharraf regime falls in some sort of coup to the ultra-Islamic opposition, there will potentially be a very lethal consequence for other regional powers. The Taliban remnants and other forces (allegedly Al-Qaeda) now have created a power vacuum that only a charismatic leader can leave. There is potential for a nuclear-armed Islamic Extremist Government, the very scenario that the countries of the UN have fought, and most failed at deterring with North Korea and Iran.

But a further inspection will reveal why Benazir Bhutto (sometimes called 'BB") was not the key to giving Pakistan back a democracy. She had left the country under corruption charges, and her successor, Nawaz Sharif faced similar accusations. It is unfortunate that these were the faces of the "new" Pakistan. Eight years ago, then General Musharraf overthrew Sharif to clean up an accused corrupt government. After countless shootouts with Islamic opposition, a state of emergency declaration, firing Supreme Court Justices and Constitutional violations, Musharraf looks no cleaner. Like in Palestine, people don't vote for Islamists because they necessarily share their beliefs, but because they prefer religious Islamic politicians to the dishonest secular leaders.

Bhutto, for all her charisma had a cloud over her head for years before returning from exile. No one person can save democracy. When the secular leaders become more transparent and less prone to malfeasance, then they will find a grateful populace will reward their efforts with votes. Until then, citizens will vote for someone who promises purity, something holier and hopefully less corrupt than the last guy.
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Guitar Hero?

Since my wife has the unfortunate burden of not only working the night shift, but also working on Christmas we decided to open our gifts early. So I got Guitar Hero for Xmas, and I've been playing this game non-stop all weekend. It's no wonder this Guitar Hero has become such a trend in gaming. I never realized until I played it. For those who might read this who have no idea what Guitar Hero is, to be simple you use what looks like a toy guitar and press buttons to simulate like you're playing the guitar, you get points and so forth, but the buttons are situated in such a way as to look like you're playing the guitar.

I know I'm not the only guilty party who spent teenage nights ditching homework and head-banging to "Bang Your Head"(Quiet Riot) and air-guitaring to "Radar Love"(Golden Earring). For us, this game is a dream come true. I find myself acting like an 80's hair metal guitarist, jumping about and acting like I'm playing for an audience. Usually, the only audience is my wife and dogs, and usually she says she's resting her eyes; even the dogs shake their heads. That's okay if you don't want to look, I'll just be here in my rock-star imagination, rocking out for my thousands of admiring (albeit imaginary) fans. It's nice to have a boost in your ego, even if it is all in your head.

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On a Housing Crisis

I've read quite a bit about the recent credit crunch, and it usually leads me to contemplate the state of the US economy (I hear much of the same is happening in Western Europe, but I can only really account for what I see and know). I've studied the most on what is happening (on a macro scale) in the US housing market. Every time I see that the Federal Reserve lowers its discount rate to stave off some recession, I just have to shake my head. So much of what is happening now is a result of the unbridled growth in the Housing Market thanks to very cheap money.

What tinkering Central Banks seem to not realize is that the very things we are fighting to stop a recession were the result of low-cost money through low-interest and eventually unwise investing. Many forget that interest rates are the product of a free market, and that tinkering with that interest rate can have serious consequences. An interest rate is the bargaining equilibrium between savers and spenders. That rate represents the crossroads between future preferences versus present preferences. The savers (who have future preferences and must be paid to lend that money--interest rate.) and the spenders who pay that interest rate so that they may have their money now. When this interest rate is manipulated, mainly through Central Banks, this can throw a market off-balance to favor either the buyer or the seller.

We can see just why housing prices rose the way they did from the availabilty of many loans with little collateral to ensure a good investment loan. With different sorts of lending packages and investment vehicles, the last few years saw a very quick rise in house prices due to availability of money, cheap money that is. The interest-only loan, which only demand payments on the interest, not the principal, gambles that the price of the house will increase to profit from the purchase. For years, those housing prices increased with little abatement. Now that the credit machine of the United States (and a lot of Europe) has seized up, these homeowners can no longer count on a quick turnover of their investment. The problem with interest-only loans is that they mature and after a said amount of time demands payment of both interest and principal, something many homeowners cannot afford. This crowding up of sellers means now prices must fall.

As the Economist so adroitely pointed out, housing prices tend to be very sticky. Homeowners are not very quick to drop the price of their homes, many times because of stubbornness, but unfortunately also because they simply cannot afford to take the loss, that is if there is a buyer to sell to. We were able to sell our condo before this housing market went so sour. My wife and I had purchased a home, with no money down and with a nice mortgage payment from an interest-only loan. After a few months, we found we could no longer afford to live there presently, and we would certainly have foreclosed if our payment had included principal. We were lucky enough to sell our place and actually still made a nice profit. Many who are in the same circumstances now are not as lucky as my wife and me.

The Fed can lower interest rates, and there may be somewhat of a recovery, but that does not mask what has really happened: inflation in the housing market. When housing prices stop rising, there is less of an incentive to get an interest-only loan, so we should see less of those. As houses sit on the open market, a downward correction must occur to bring the housing market back to an equilibrium. Treasury can delay many loan maturities, but those loans have to mature sometime. What are we going to do then? These prices cannot stay this high and continuing to artificially inflate those prices, it just means that we have that much further to fall. A correction is needed, the longer it is delayed, the worse it will get. Let's wait and watch.
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Human Action

I think I should start this off by introducing to you the way I think, how I see things and how I used to see things. After graduating from college this last spring, I felt like I was illuminated. I was able to learn about Austrian Economics and it seemed like the world was turned on its head. I didn't realize then, but I used to be very ignorant in my analysis of everyday scenarios, I would rarely try to look at both sides of an argument. I would simply take a side and not see another point of view. From learning about Economics and the behavior of people, I was able to see not only people's action, but why they act the way they do. I could now see why Electric Companies, Water Utilities, Gas etc. charge the prices they do and provide the poor customer service they do. I see the same thing with Cable TV. Those are just the fine tip of the iceberg. Now that I've discovered Economics, I can see why these things happen. It's a very interesting world when it's looked through several points of view. I think I've found that I've been wrong on my first impression more than I thought. Remember, just because a story is easy to swallow doesn't make it true:

Simply stated, there is no doubt that Saddam Hussein now has weapons of mass destruction. There is no doubt he is amassing them to use against our friends, against our allies, and against us. And there is no doubt that his aggressive regional ambitions will lead him into future confrontations with his neighbors -- confrontations that will involve both the weapons he has today, and the ones he will continue to develop with his oil wealth.-Dick Cheney, August 26, 2002.

-But economics is a jealous mistress, and you ignore her at your peril. -Jagdish N. Bhagwati -
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