Friday, July 19, 2013

My View

Random ruminations from your resident curmudgeon...

We all know about the law of unintended consequences- where one action has a surprisingly unexpected reaction, most often in the negative. Congress is a case study of the law of unintended consequences, and  one of the most glaring and painful examples of unintended consequences has been the reaction of small businesses to Obamacare. Ostensibly, this program of socialized medicine was designed to provide healthcare coverage to all Americans (it didn't in its original design or its final version) and one of the ways to do that was to require small businesses to cover their full time employees. Seems simple enough- small business have to have employees to keep their doors open so make them provide healthcare coverage. Obamacare rules state that any employee that works more than 30 hours weekly (instead of the nationally accepted 40 hours) is considered a full time employee. So small businesses have reacted to this massive expense that has been thrust on them by doing what is necessary to survive. And what is necessary is to reduce the number of full time (over 30 hour per week) employees. According to a survey by the U.S. Chamber of Commerce, 74% of small businesses (by definition, a company that employs up to a maximum of 50 workers) plan to either cut their full time work force; move more employees to part time status; or will freeze hiring. Now you and I both know that this is not what the administration wanted as a response to Obamacare. It is that dreaded unintended consequence that is having a dramatically negative impact on the creation of jobs and is reducing wages and hours for the existing work force. What looks good on paper or in the halls of Congress often does not translate well to the real world. Now that Washington is seeing the negative effects of the unintended consequences of this horrific law, it is time to undo and re-think how we provide health care coverage using real world experience and perspectives. Maybe then we would not be experiencing such negative unintended consequences.

The furniture store keeps calling me to come back and buy more furniture, but really all I wanted was a one night stand.

How about this for unintended consequences? We all know the Federal Reserve has been printing money and pursuing a zero interest rate policy in a vain attempt to stimulate the economy. While those extremely low rates have benefitted individuals that are buying or refinancing a home, there are some seriously negative effects to those low rates. In June, the Social Security Administration saw $94 billion in bonds mature with an average yield of 5.25%. Those bonds were replaced with Treasury bonds that had an average yield of 1.75%, which costs the SSA $3.3 billion per year in lower interest income. Now consider this: more bonds will be maturing in the near future as the SSA has varying maturities of bonds. Those higher yielding Treasuries will be replaced with significantly lower yielding bonds, costing the SSA even more in annual income. It is estimated that by the time the SSA re-prices their bond portfolio (going from the redeemed higher interest rate bonds to lower interest rate bonds), the annual loss of income will be over $300 billion from current levels. Also consider that the SSA is facing a massive demographic group- the baby boomers- who are beginning to move into the "pay me" years where they are no longer paying into the system but will be drawing out of the system their benefits. The unintended consequence of the lowest interest rates in the history of our nation is the hastening of the cash shortfall for the Social Security trust fund. And the longer we wait to fix the problem, the more difficult it becomes.

I have a good friend who is an optometrist. Unfortunately, he fell into his lens grinder and made a spectacle of himself.

Of all the scandals that plague the Obama Administration, the one that should worry every American the most irrespective of their political leanings is the use of the IRS to target individuals and groups that have a differing view from the administration in power. As we are finding out, the IRS was directed by higher ups in Washington to make life difficult for conservative groups through an unduly rigorous application and now we are finding out that private files have been accessed and security breached. Christine O'Donnell, who won the Republican primary for a Senate seat for the state of Delaware, was informed that her records were accessed on the very day that she planned to run for the Senate seat. If we have a government agency that has the capability of making life miserable for anyone in this country, who has access to our most private financial information, and which is being used by incumbents to punish their political opponents or perceived enemies, then we have made a giant stride toward becoming a more totalitarian nation. This bears watching by every citizen, and justice must be sought in this situation.

I asked my wife why she spends so much money on food. She said, "Well, you and the kids won't eat anything else." She has a point.

And that, my friends, is my view.

Friday, July 12, 2013

My View

Random ruminations from your resident curmudgeon...

Last Friday, the non-farm payroll report was released by the Labor Department, and there were hosannas from the talking heads and various government types when the report showed the economy created 195,000 new jobs in June. Recall that it takes 150,000 new jobs per month to keep the unemployment rate from going up. This is great news, right? Well, as you know, I am here to cut through the spin and present reality to you. While the initial number for new jobs created was good, a closer look reveals some disturbing trends. The UNDER-employment rate jumped 3.6% to 14.3% in June. This number tracks the people that have quit looking for jobs or are working part time jobs even though they want to work on a full time basis. The Gallup Organization now reports that 17.2% of the Americans that have jobs are underemployed. The jobs being produced by the economy now are jobs that are part-time or entry level, and those that have experience and skills that take those jobs join the ranks of the under-employed. The Labor Department also reported that the number of those working part time jobs for economic reasons grew to 29.3% of the work force and the number of discouraged workers that have stopped seeking employment grew by 25% on a year over year basis to 1.027 million people. While the headline numbers get a lot of attention, it is instructive to look into the numbers, and when one does, you see a labor market that is far from healthy and is producing lower wage jobs. The long term effect of this trend is a lower standard of living for those that are working and more people that rely on government assistance. Neither trend is good for our nation.

Cannibals like to meat people.

Digging into the employment numbers provides some even more troubling data. The unemployment rate for African Americans is 23.7%; for Hispanics, it is 13.2%; and 11.6% for women. These numbers point to a growing underclass of unemployed and to the societal divide that it creates. Those that are chronically unemployed have a dependence on the government for their survival. Those that are struggling to make ends meet and working several jobs feel a growing resentment toward the government and those that receive federal assistance. This fracture in our societal structure makes long term solutions more difficult to craft and walls off segments of our society from each other. It is time that we realize that if we as a nation cannot continue on this path. We have saddled future generations with unsustainable levels of debt and poor employment opportunities. Honest discussion about these problems must be conducted. Throwing more money at the problem will not solve it. Until we address the underlying structural issues that have made the job market so weak (and there are many) and our citizens unable to compete effectively in a global marketplace, we will continue to see horrific numbers like these.

I have a friend that is a dentist. He married a manicurist. It wasn't a happy marriage. They fought tooth and nail.

Taxes are skyrocketing and the government wants more. Our national deficits are getting bigger. We cannot control runaway entitlement spending. Underlying these problems is a mindset in government that the supply of money is unlimited and that the leaders in Washington know best how to spend our money. There is a disconnect to fiscal reality in Washington. Don't believe me? Here are some examples from the Federal Register, presented without comment:

U.S. Agency for International Development- $27 million for Moroccan pottery classes

NASA- $947,000 to study what food astronauts could eat on Mars

Department of Energy- $15 million to help the Russian Weapons Institute recruit new scientists

State Department- $402 million to train Iraqi policemen with no formal program/objectives in place

Department of Transportation- 35.6 million to build a street car line in St. Louis that duplicates  existing light rail service

Internal Revenue Service- Medicaid providers have unpaid taxes totaling $330 million, yet are allowed to keep their full Medicaid reimbursement from Washington.

And the list goes on and on. And on. Spending other peoples money (read: OUR money) is fun. You can buy a lot of fun things and votes. Our fiscal situation in this country is bad and getting worse, and it is time that we at taxpayers and citizens demand accountability and fiscal restraint from our elected officials. The frivolous spending at the national level is symptomatic of the lack of restraint and appreciation of financial reality by our elected leaders.

I thought I wanted to be a computer salesman, but I lost my drive.

And that, my friends, is my view.

Friday, July 5, 2013

Predators Add Five in Free Agency and What It Means For the Team

The Nashville Predators have not usually been active in free agency, but they broke their pattern at the start of the 2013 free agency frenzy, signing five players that will change the look of this team.

The Predators signed Viktor Stalberg from the Chicago Blackhawks to a 4 year, $12 million contract that will pay Stalberg $2.5 million in each of the first two years and $3.5 million in years three and four.

Matt Cullen was signed to a two year, $7 million contract that pays $3 million in the first year and $4 million in the second year. Cullen played with the  Minnesota Wild last year.

Matt Hendricks was signed to a 4 year, $7.4 million contract that pays $1.85 million each year. Hendricks was originally drafted by the Predators in the 2000 Entry Draft in the 5th round and was on the Washington Capitals roster last season.

Eric Nystrom was signed to a 4 year, $10 million contract that will pay him $2 million in each of the first two years and $3 million in the last two years. Nystrom was with the Dallas Stars last year.

With the Predators not re-signing Chris Mason, the team was in need of a back up goaltender. They signed Carter Hutton from the Chicago Blackhawks system to a one year, two way contract that pays him $550,000 at the NHL level and $100,000 at the AHL level. Hutton appeared in one game for the Blackhawks last season, and posted a 26-22-1 record for the Hawks AHL affiliate in Rockford. Hutton had a .908 save % and a 2.72 GAA last year for the Icehogs.

So what are we to make of these signings?

When the Predators parted ways with Marty Erat, they lost their leading scorer, a talented and somewhat enigmatic winger who was a streaky scorer. There was no doubt that the team needed to replace and hopefully improve upon his scoring and talent.

In Stalberg, the Predators get... a talented and somewhat enigmatic winger that has shown flashes of potential but lacked consistency with the Hawks. Stalberg brings speed, which the Predators love and that a player has to have to play for this team, and the potential for offensive upside. Stalberg at times seemed to get lost in the shuffle with the talent of the Hawks, and saw the ice only 14 minutes a game on average. If he plays the same minutes that Erat played (nearly 19 minutes a game), one would have to believe that his production would increase. Stalberg brings an explosiveness to the forwards that the Predators have lacked for the most. Channeling that explosiveness and talent will be a challenge for Stalberg and for the coaching staff.

The Predators will give Stalberg every opportunity to settle into a top six role on the wing, and hopefully Stalberg will seize upon the chance to play a much bigger role with this team. If- and the jury is still out- Stalberg plays to his skill set and the potential that he has shown, this can be a significant add for the Predators. It will be interesting to see how he meshes with the other players on the Predators roster and the coaches. The adaptation to the Predators system should not be much of a challenge as the Blackhawks play a similar system to the Predators.

With the addition of Cullen, the Predators added a player that immediately becomes the most veteran player on the roster. Cullen has played in 1,073 regular season games in his career. Cullen adds a veteran presence to a squad that has a number of young forwards, and that experience will be good both on and off the ice. Cullen is good in the face off dot, winning 53% of his draws, a while he will not score a number of goals, he will add a solid presence in the offensive and defensive zone. Cullen provides experienced depth at center, something that the Predators need.

Matt Hendricks returns to the team that originally drafted him, and is another depth addition to the Predators roster. Hendricks has not been a prolific scorer but has surprisingly shown himself to be adept at shootouts, something the Predators need. Hendricks adds some size and grit to the Predators roster of forwards and is another player that is solid in all zones. Hendricks is durable, steady, and tough to play against.

Eric Nystrom brings grit and toughness to the forward corps of the Predators. Outside of Rich Clune this past season, this was something the Predators sorely lacked. Nystrom is certainly not going to add scoring, but he has been signed to be an agitator and a disruptor, roles that he can fill very well.

Carter Hutton is a project for Mitch Korn, the Predators goaltending coach. Hutton has the tools and potential to be good, and it will be up to Korn to develop him into a quality NHL goaltender. I have faith that Korn can do this, and the addition of Hutton gives the Predators the luxury of being patient with Magnus Hellberg, their netminder in Milwaukee. The Predators are high on Hellberg, but don't want to rush him into the backup role. The addition of Hutton sets up some serious competition for the role of backup to Pekka Rinne, and it will be interesting to see which of these young netminders can and will rise to the occasion.

So, the question still remains.

What are we to make of these signings?

Three things come to mind.

Potential, personality, and physicality.

The addition of Stalberg gives the Predators a potentially explosive an game changing top 6 forward. This is a change- a dramatic change- from the current composition of the forwards on the team. With the exception of Colin Wilson and the wildly erratic Craig Smith, the Predators have lacked the talented forward that can skate AND score. The question for the Predators and for Stalberg is can he fulfill that potential. if he can blossom into the player that can consistently be an offensive threat, then both sides win. This is the opportunity for Stalberg to be the offensive star on a team that desperately needs offensive stars.

Additionally, these free agent acquisitions set up the potential for additional roster moves. The Predators have already begun to re-shape their roster by releasing Brandon Yip and Mat Halischuk from the group of forwards that were on last season's roster. Jonathan Blum is gone from the blue line. With the addition of this depth, and with several talented youngsters waiting in the wings, there could be some additional roster moves via trade. It would not be surprising to see the Predators make trades to bolster the roster. These additions insure that there will be serious competition for roster spots, and that will be good for the team.

The personality of this team has also changed. The veteran presence of these additions will be a benefit to the locker room and especially to some of the younger players. The existing veteran leadership core will be augmented by proven veterans that are now on the roster. That experience in other programs will provide a fresh perspective and the proven voices of players that have been successful in the League. This is not only good for the players, but the coaches as well.

There was no doubt that the Predators needed to get tougher. The addition of Hendricks and especially Nystrom provide an element of physicality that makes the Predators a tougher team to play against. Adding the size and grit is a plus for a team that lacked both elements with their forwards last season.

The Predators did not pull off a mega trade, but they quietly made some very good additions to the roster that will change the face and character of this team.

And it will be for the better.