Thursday, March 27, 2014

NLRB ruling is a tempest in a teapot

By now, everyone has learned of the National Labor Relations Board regional director’s opinion that Northwestern University athletes are employees of the institution and therefore eligible to unionize, if they so desire.

The ensuing uproar and bandwidth consumed by the media coverage is much ado about nothing. Here’s why.

First, this was a ruling by a lower level administrative law judge, whose jurisdiction stops at the borders of his region. It has no effect whatsoever on schools in the Pacific Northwest, East Coast or Southeast. When Northwestern appeals to the entire NLRB in Washington, DC, then that board’s decision will have national consequences.

Even then, Northwestern or the would-be player’s union has the right of appeal to a US Federal District Judge, whose decision is certainly to be appealed to the Circuit Court of Appeals. That decision is then subject to review by the US Supreme Court.

We are looking at years of litigation, so don’t expect to see groundbreaking on union halls on college campuses anytime soon.

Second, the NLRB has jurisdiction over private organizations. Northwestern is a private school in Illinois. The ruling has absolutely no effect on public schools, regardless of their location. Northwestern and Notre Dame are in play. But Illinois is not. The Big 10 is not affected in any way, either.

Last and most importantly, the ruling has no effect on NCAA rules, either. If a player receives extra benefits not provided to the student body as a whole—consisting of anything of value—that player’s eligibility is revoked and the relationship between the institution and the player ends right there.

Summing it all up: We have a 20-page decision by a single administrative law judge that will be subject to years of litigation and appeals. It affects the small percentage of private schools in college athletics and regardless of the eventual outcome of this process, it will have no effect on the overarching governance of the NCAA rulebook.

I don’t see what all the ruckus is about, do you?

Wednesday, February 12, 2014

The Rashaan Evans Firestorm: Quotables

Have y'all lost your damn minds?

I'm not talking to all Auburn fans—I'm not even talking to most Auburn fans. But too many Auburn fans apparently need to have another talk about fan civility. So here it is: harassing athletes you don't like doesn't make you a better fan. It just makes you an asshole.

The local villain du jour in Auburn, Alabama is not a murderer, not a criminal of any sort, nor a man of deep moral turpitude. No, the target of local scorn is Rashaan Evans, a consensus five-star outside linebackerfrom Auburn High School who chose to go to the best football school in the nation, instead of to the closest. It was a surprise choice, but it was his choice.

For that grave insult, Evans reports that he and his family have been the subject of persistent harassment from some of the townspeople who wanted to see him in navy blue and burnt orange.

* * *

"I understand that people in this state take football very seriously and that's part of what makes it exciting, but when you start trying to hurt other people because of this game, you need to take a step back and think about what's going on. I guess the thing I would ask most of the people writing these hurtful things is how would you feel if this were your child? Why do you feel the need to heap all this negativity onto a young man who is just beginning his life? I think if people asked themselves those questions, they might think twice before writing some of these things they've written. You can do a lot of harm with the words you put out there and I hope people think about that."

Evans said the silver lining of the situation has been the outpouring of support from the Alabama community.

"I'm so glad that where thousands of Auburn fans have thrown my family away and ridiculed and scandalized our name, called us everything but a child of God, thousands of Alabama fans have embraced us and welcomed us to the Capstone," he said. "They have called us and let us know personally that they stand behind Rashaan and his family and awaiting his arrival to the University of Alabama."

* * *

"It's getting worse," Evans said on Monday evening. "Someone actually put out an article about my family's business telling all Auburn fans not to go there. We are going to eventually start losing money. People are telling restaurants in the town not to serve us.

"It's hard for me to go out and chill with my friends like I have always done because people keep coming up to me telling me I made a bad decision. It's grown men. They are asking me why I did this to them. I told them I had to do what is best for me.

"You know I knew this would happen. I knew people would be mad and say stuff. I didn't think it would be like this. It wasn't a complete shock to me, but I guess that's just how fans are.

"It's just crazy right now. What's getting crazy is people are going to the board at my school trying to get me in trouble. They are telling my teachers I am a bad kid and all this stuff. It's just bad right now.”  

* * *

The recruitment of Evans was a hotly contested one up until signing day. Both Auburn and Alabama coaches were in attendance at his grandfather's 80th birthday, and to many, his commitment to the Tide was a coup for coach Nick Saban.

And the process Evans went through is another example of recruiting in 2014. The e-accessibility of recruits makes it incredibly easy to tweet dumb messages to those teenagers deciding on a future school. Add in the hometown angle in the football-crazed south and it's quite ridiculous.

* * *

Taking aim specifically at the Wild West that is Internet message boards as well as social media in an interview with al.com, Alan Evans boiled down the treatment of his son specifically and his family in general to one simple question: “how would you feel if this were your child?” Of course, in a perfect world those responsible for such juvenile behavior toward Evans’ son would be incapable of procreating, but his overall point is understood.

The elder Evans also called it “shocking and hurtful” that some in the community in which he lives would encourage a boycott of his business, an act that threatens to have “a negative impact on our livelihood.”

While understanding “that people in this state take football very seriously and that’s part of what makes it exciting,” the level of backlash against his son’s decision and the viciousness involved has taken the father by surprise.

* * *

Exit question: If the roles had been reversed, would the result have been similar?

Tuesday, February 11, 2014

Dude… is it 1929 all over again?

History has a way of repeating itself, as the common wisdom goes. If that old adage holds up, you’d better hold on.

There are eerie parallels between the stock market’s recent behavior and how it behaved right before the 1929 crash.

That at least is the conclusion reached by a frightening chart that has been making the rounds on Wall Street. The chart superimposes the market’s recent performance on top of a plot of its gyrations in 1928 and 1929.

The picture isn’t pretty. And it’s not as easy as you might think to wriggle out from underneath the bearish significance of this chart.

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Before you stock up on gold, guns and ammunition in preparation for a coming Great Depression Part Deux, there are a few things to keep in mind.

One is that contrary to popular belief, the 1929 stock market crash didn’t cause the Great Depression. That economic calamity was caused by a myriad of factors—an economic perfect storm, if you will. There were growing problems in the agricultural sector that drastically cut production in the heartland of the US. There was a failure by monetary policy authorities in the Fed to understand that liquidity is the mother’s milk of financial stability. In a 1963 landmark book by Milton Friedman and Anna Schwartz, the authors make a case that the Fed caused a rapid and catastrophic contraction in the money supply. Accepted economic principles state that as the money supply grows or shrinks, so do commodity prices and the value of capital. Kill the money supply, kill the economy. Explode the money supply, explode the economy.

Second, there are a number of structural and institutional controls in place now to prevent the sudden evaporation of calm and confidence that together slaughtered financial markets in 1929. Trading rules are exquisitely better defined now, such that a runaway collapse on the NYSE and NASDAQ are automatically halted before they begin (that’s an oversimplification, but I’m trying not to bore you).

Three is the fact that the Fed now takes seriously its role as the “lender of last resort,” which you saw in play during the financial crisis of 2008-09. The Fed will keep the spigot on in any crisis that might manifest itself in 2014, just as it did in 2008.

But don’t breathe a sigh of relief just yet. From 2009 through June of last year, the Fed began a program known as quantitative easing, in which it purchased trillions in the short term obligations of financial institutions. Those institutions used the cash to invest in capital markets as well as extending loans to businesses and individuals at historically low real interest rates. Stocks recovered steadily, despite anemic growth in the broad economy. In June 2013, the Fed started tapering off on the policy, reducing the flow of money through the system and causing a nearly 700 point drop in the Dow. Chairman Ben Bernanke then decided to slow the pullback of the easing policy, but it restarted a few months later.

This is similar to what happened with the money supply in 1928-29, which could be why there is such a scary correlation between Wall Street in 1929 and Wall Street in 2014. Remember: kill the money supply, kill the economy.

In short, there’s no sustainable way to continuously pump money into the economy. Although the Fed can create money out of thin air, at some point, a massively easy credit policy can only do so much. There also has to be a responsible fiscal policy that allows the private sector to grow and recover the traction it had before the crisis began.

What’s your hope for a responsible fiscal policy with this administration?

Friday, February 7, 2014

World War II, every day

I can’t not share this. I’m a history buff, you see. Despite knowing that I needed a business degree to get ahead in the world, I still followed through with the requirements to also get a degree in History. As a kid, I tagged along with my dad to the local branch of the public library. While he checked out biographies of Kennedy, Onassis and JP Morgan, I checked out stacks of kids’ books on World War II.

EmperorTigerstar has created an animated map showing the world on a daily basis during the conduct of the world’s most devastating conflagration. He used nothing more than ordinary online and library resources, Microsoft Paint and Movie Maker.

Despite these crude tools, the map is remarkable in displaying how the Allied and Axis territories changed during the course of the war.



Use the full screen version to get the best effects.

By the way, he also has an animated map of the US Civil War.

Monday, February 3, 2014

Another palate cleanser: What if face-to-face meetings went like conference calls?

Here’s a nice Monday palate cleanser for you. After a surprisingly crushing Seahawks victory and an impending recruiting haul for SEC (and certain ACC National Champ) teams, here’s something you’ll probably find eerily familiar.

To set the scene: A group of white-collar professionals assemble in an ordinary conference room, in order to hold a meeting on something that sounds important enough to warrant real time discussion. But in today’s distributed work environments, a lot of these real time discussions require conference calls.

Hilarity ensues. We have a guy who can’t (or won’t) stay on the connection, the barking dog from the work from home dude, echo problems and what not.

Over the last six months, I have been on dozens of conference calls. More than a few featured some of these annoyances. To have them all together in one well-made video: Priceless.

Enjoy!