Archive for September, 2012

I have a distinct memory of that moment.  Sept 28, 1972.  I was in the Moosehead Tavern in Hamilton.  Barton St. if memory serves me, as I don’t think that fine establishment is any longer there.  We skipped class, I and many, I mean many other classmates.  The bar was packed.  Barkeeps and the bartender never asked for ID.  We were so totally underage, but it didn’t matter that day.  It was a nation of hockey  and coming together.  Quaffing 25 cent drafts by the tray.  I think there were two TV’s in the whole bar.  And one of them was a black & white.  The color monitor couldn’t have been larger than a 30″ screen.  But it seemed like we were there.  In Moscow.  Cheering on our nation.  And when Genderson scored that goal, the goal, the tavern erupted.  Beer glasses flying, a volcano of joyful celebration.

Yeah, I remember where I was.


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NFL left in shambles after latest replacement referee controversy

Bruce Arthur | Sep 25, 2012 4:58 PM ET | Last Updated: Sep 25, 2012 5:27 PM ET
More from Bruce Arthur | @bruce_arthur

REUTERS/Anthony Bolante

REUTERS/Anthony BolanteReplacement ref rage peaked Monday night thanks to the Seattle Seahaws; Golden Tate, and a bizarre touchdown call vs. the Green Bay Packers that will be debated, questioned and re-ignite frustrations over the locked-out officials.

Just think of everything that had to happen for the National Football League to break in just about the most public and humiliating way possible. Just take a minute and consider the sequence of events required, and how utterly perfect they were, how fitting. Perfection is difficult, but sometimes you get lucky.

For the NFL to break, Green Bay had to punt from inside its five-yard line on Monday night, thanks in part to a phantom pass interference call on Seattle’s previous possession, and Seattle had to burn 48 seconds to move to the 24-yard-line with eight seconds left. Fourth-and-10, down 12-7, one play, for the game.

Seahawks quarterback Russell Wilson had to throw a high rainbow from the 39 just before Clay Matthews smashed into his chest, and the ball headed for a cluster of two Seahawks and five Packers. According to Yahoo’s Mike Silver, Wilson actually called the wrong play in the huddle, something full of underneath routes, but enough receivers headed for the end zone anyway. Golden Tate was one of them.

Tate had to push Sam Shields to the ground with two hands in the back just before the ball arrived, which, perfectly, Tate later denied that he had done. And Green Bay’s M.D. Jennings had to jump the highest, and had to wrestle the ball out of the air instead of knocking it down, and Tate had to grab at it as they fell.

And that was the moment. The rule on subsequent possession requires that the two players catch the ball at the same time — “It is not a simultaneous catch if a player gains control first,” the rule reads — and a catch must be maintained all the way to the ground. Jennings never let go; Tate’s right arm grabbed Jennings’ forearm, then flailed at the ball. There is no question who had possession.

Replacement back judge Derrick Rhone-Dunn and replacement side judge Lance Easley ran to the spot at the same time. Rhone-Dunn, a former Arena Football League and occasional NCAA official, looked at Easley, the president of the Los Padres Basketball Officials Association in California and a junior college football referee. At the same time, Rhone-Dunn raised his arms to signal a touchback, and Easley raised his arms to signal a touchdown. According to ESPN, Easley was the only member of the crew with no pro experience whatsoever.

The head replacement referee, Wayne Elliott — the executive secretary of the Austin Football Officials Association, which offers to supply referees for your “varsity and sub-varsity games” on its website — upheld Easley’s ruling, and the non-replacement officials in the replay booth agreed it was simultaneous possession. The NFL did not overturn the call on Tuesday. All of this had to happen for the NFL to break. All of it did.

It was perfect. It was perfect that it happened to the Green Bay Packers, the only community-owned team in the NFL. It was perfect that the Packers are located in Wisconsin, where Governor Scott Walker — supported by Republican vice-presidential candidate Paul Ryan — stripped collective bargaining rights from public unions after being elected with 52% of the vote in 2010, and maintained that after getting 53% in a recall election in 2012. The law was declared unconstitutional by a circuit county judge about a week and a half ago, and will be appealed. Walker and Ryan, who has apparently never heard of irony, both called for the return of the regular referees on Tuesday. Wisconsin, where the people screw themselves.

It was perfect that Edmonton Oilers owner Daryl Katz was in attendance, kicking the tires in Seattle, clumsily trying to blackmail Edmonton City Council into further subsidizing an inordinately expensive arena. The owner as robber baron is always an instructive reminder on how this whole thing works.

It was perfect that replacement referees are being locked out over what is effectively US$3-million per year in a league that should generate US$9-billion in revenue this season. Perfect, and monstrous.

It was perfect that the Lingerie Football League posted a statement from commissioner Mitchell Mortaza on its Facebook page that read, “Because of the LFL’s perception it is that much more critical for us to hire officiating crews that are competent, not only for the credibility of our game but to keep our athletes safer. Due to several on-field incompetent officiating we chose to part ways with a couple crews which apparently are now officiating in the NFL. We have a lot of respect for our officials but we felt the officiating was not in line with our expectations.”

When the Lingerie Football League makes you look like a laughingstock, you have had a very bad day.

All this came about because the NFL has developed the arrogance of empires, the arrogance of Rome, leading to a staggering disregard for its fans, its players, and its product. That arrogance required the soaring TV ratings and revenues that buried stories of suicides, of concussion lawsuits from former players, and a growing understanding of the damage the game can do to its participants. And it required untrammeled greed for more.

This is a league that thinks it is too big to fail, and has not been shown a reliable financial metric that says otherwise, and is all of a sudden getting clowned by the guy who runs a league full of barely-dressed women that itself should probably be investigated by more than one Labour Relations Board. Rome never thought it would fail, either, but the barbarians came.

It took all of that for the NFL to break in front of everybody. This is the worst emptiness of corporate America, its disregard for people, the hollow place at its core. We all should have known that by the way the NFL has treated head injuries; we probably did know, all of us. But this pushed the vacancy out in front of everybody. Roger Goodell always talks about the integrity of the shield, but he is as empty as a football. Now the players are revolting, and the broadcast partners are howling, and as Packers tight end Tom Crabtree wrote on Twitter, “Imagine you make a painting. It isn’t perfect by others’ standards, but it’s your painting. You are proud. Then someone takes a s— on it.”

That’s the NFL’s slogan right now. Put it on a T-shirt, and sell it to the rubes.

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Wall Street doesn’t know what business it is in. Regulators don’t know what the business of Wall Street is. Investor/shareholders don’t know what business Wall Street is in.

The only people who know what business Wall Street is in are the high frequency and automated traders. They know what business Wall Street is in better than everyone else. To traders, whether day traders or high frequency or somewhere in between, Wall Street has nothing to do with creating capital for businesses, its original goal. Wall Street is a platform. It’s a platform to be exploited by every technological and intellectual means possible.

The best analogy for traders? They are hackers. Just as hackers search for and exploit operating system and application shortcomings, high frequency traders do the same thing. A hacker wants to jump in front of your shopping cart and grab your credit card and then sell it. A high frequency trader wants to jump in front of your trade and then sell that stock to you. A hacker will tell you that they are serving a purpose by identifying the weak links in your system. A trader will tell you they deserve the pennies they are making on the trade or the rebate they are getting from the exchange because they provide liquidity to the market.

I recognize that one is illegal, the other is not. That isn’t the important issue.

The important issue is recognizing that Wall Street is no longer serving the purpose that it was designed to. Wall Street was designed to be a market to which companies provide securities (stocks/bonds), from which they received capital that would help them start/grow/sell businesses. Investors made their money by recognizing value where others did not, or by simply committing to a company and growing with it as a shareholder, receiving dividends or appreciation in their holdings. What percentage of the market is driven by investors these days?

I started actively trading stocks in 1992. I traded a lot. Over the years I’ve written quite a bit about the market. I have always thought I had a good handle on the market. Until recently.

Over just the past five years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF. Combine that with the leverage of derivatives tracking companies, indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game that I feel increasingly less comfortable playing. It is a game fraught with ever increasing risk.

So back to the original question. What business is Wall Street in?

Its primary business is no longer creating capital for business. Creating capital for business has to be less than one percent of the volume on Wall Street in any given period. (I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason). It wouldn’t shock me that even in this environment that more money flows from companies to the market in the form of buybacks (which I think are always a mistake), than flows into companies in the form of equity.

My two cents is that it is important for this country to push Wall Street back to the business of creating capital for business. Whether it’s through a use of taxes on trades (hit every trade on a stock held less than one hour with a 10 cent tax and all these problems go away), or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for one year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than five years. However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy. It won’t come from traders trying to hack the financial system for a few pennies per trade.

And solutions won’t come from bureaucrats trying to prevent the traders from hacking the system. The only certainty when bureaucrats step in is that the law of unintended consequences will smack us all in the head and the trader/hackers will find new ways to exploit the system that makes them big money and even more money for the big institutions that develop products for the other institutions that are desperate to play the game.

Regulators have got to start to recognize that traders are not investors and vice versa and treat them differently. Different regulations. Different tax structure. Different oversight. Individual investors and the funds that just invest in stocks and bonds are not going to crash the market. Big traders who are always leveraging up and maximizing the number of trades/hacks they make will always put the system at risk. We need to recognize that they do not serve much of a purpose other than to add substantial risk to the global economy. That their stated value add of liquidity does not compensate the U.S. and world economy nearly enough for the risk of collapse they introduce into the system.

Wall Street as a whole needs to be in the business of creating capital for companies and selling shares to investors who believe they are shareholders. The government needs to create simple and obvious incentives for this business and extract compensation from the traders/hackers for the systemic failure risk they introduce.

There will be another flash crash, and probably a crash far worse than the May 2010 flash crash simply because there are too many players looking for the trillion dollar score. They can’t all win, yet how many do you think wouldn’t risk everything, even what is not theirs, for that remote chance to score big? Put another way, there is zero moral hazard attached to any trade. So why wouldn’t traders take the biggest risk possible?

There is value to trading automation. It is here to stay. There is absolutely NO VALUE to high frequency trading. None. We need to bring our markets back to their original goals of creating capital for business. It’s impossible to guess how many small to medium size companies have been held back from growing and creating jobs and wealth because of lack of access to capital from the stock market. It’s not impossible to know that our economy has suffered because Wall Street equity markets are no longer a source of equity for helping companies grow, it is not a platform for hackers and that needs to change. Quickly.

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It’s a never ending source of amusement, how wine writers find new and ever more superfluous (ie: stupid) ways to describe wine.  Here’s a sampling of the latest spin doctors descriptions of Bordeaux futures from Vintages, the Ontario “fine wine & premium spirits” division of LCBO.  A bit of background, quoted without permission from the Vintages magazine.  “Each year, Bordeaux wines – from up-and-coming producers and renowned chateaux alike – are tasted while they’re still in the barrel by vintages buyers and international wine critics.  Once the reviews are in, a large portion of the wine is sold in advance to consumers, then shipped after two years of ageing……the wines are sold in three bottle lots.  Minimum order is one lot.  Vintages requires a 25% non-refundable deposit of the total value of your order.  You pay the balance when the wine arrives in 2014.”  Nice business eh!  You give us your money for two years, you buy the wine on the basis of some wine snob’s tasting, and then we’ll deliver it “free” to your local LCBO store in 2014.  Oh they are so generous!  So here’s what the wine guys had to say.  I leave the writers names out to save them further embarrassment.


Chateau Ausone 1er Grand Cru Classe……Probably the wine of the vintage, the 2011 exhibits a murky, inky, blue/purple color as well as an extraordinary nose of crème de cassis, plum sauce, crushed rocks (primarily chalk), acacia flowers and hints of graphite, truffles and damp forest floor.  $3297 per 3 btls.


Lascombes 2e Cru……Made in a more modern style with plenty of toasty oak intermixed with blueberry and black currant fruit as well as hints of licorice and camphor, the wine’s textured lushness on the mid-palate, sweet, well-integrated tannins and full-throttle finish result in an impressive Margaux to drink over the next 15 years.   $282 per 3 btls.


Margaux 1er Cru……the wine offers an inky/purple color, barely noticeable sweet tannin, spring flowers and lead pencil shavings backed up by fresh acids and good overall structure.  This medium to full-bodied effort possesses tremendous personality and character.  $2565 per 3 btls.


Pavillon Blanc……Blazingly pure, with gorgeous honeysuckle, heather, green almond, green plum and verbena notes backed by a long macadamia nut-tinged finish.  There’s both tension and creaminess at the same time, delivering a beautiful expression of fruit and minerality.  $597 per 3 btls.


Branon…..this has a nice sappy core, showing lots of linzer torte and kirsch notes, with fresh, mouthwatering tasted spice hints chiming in on the finish.   Offers solid flesh and drive.  $312 per 3 btls.


Are these guys completely loaded when they write this drivel?  You get the picture eh?  I could quote several more hilarious excerpts but get a copy of the Vintages magazine yourself.  It’ll make you howl!  Cheers!

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“Too many liberal intellectuals – and now, unbelievably, the U.S. administration – seem to think it’s partly our fault when Western insults to Islam lead to riots in the streets. But maybe there’s a bigger cause. Although it’s deeply unfashionable to say so, maybe what we have here is a clash of civilizations.”

Margaret Wente of the Globe & Mail makes an excellent argument about the recent explosions in the Muslim world, allegedly over a stupid video that mocks Mohammed.  Check out the above link and it’ll make you, and hopefully any Muslims who also read it, think a lot more deeply about this most recent spate of anti-Americanism.  Good thinking Margaret, I applaud you.





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So the teachers of Ontario adopt a work-to-rule campaign and refuse to do any extra-curricular activity on Wednesday afternoon.  This is supposedly to send a unified message to the Ontario government about teacher solidarity?  And who suffers from this action?  The students!  Teachers deprive their students of all after school sports/clubs.  Hey teachers, do you think your students will respect you for this action?  You alienate every student in your classroom and demonstrate that your motivation is entirely selfish.  A more powerful message would have been to volunteer en masse to support your students and help them with their extra activity instead of denying your constituents the pleasures of attending sports practices and club activities.  Start questioning your union leaders about the consequences of their strategy instead of following like a bunch of mindless sheep!  I don’t agree with what the Ontario government is doing either, but your actions are so misdirected it is mind blowing!

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