It's been a strangely fortuitous fortnight, but now that the dust has settled on the red clay of Roland Garros, we're reminded of how strangely fulfilling this years French Open has been. Here's what I'll remember of the past couple of weeks:
1) Rafael Nadal is not just good on clay. He's scary good. No disrespect to Bjorn the legend but there's only one thing that beats this bull from Majorca on clay - his knees. Soderling didn't play particularly badly. He could have made a few more of those huge inside out forehands but those are high-risk shots and not making them regularly enough in no way implies that you're playing badly. As it stands, Nadal is still 24, his knees look good enough and he's only a single French Open away from equalling Borg's six. Plus, he's got the Number One ranking and barely any points to defend over the rest of the season. If you're an ATP pro, Rafael Nadal is the man you want to be right now.
2) What does it say about the WTA when Italian journey-woman Francesca Schiavone, who turns 30 later this month makes her way through the draw and then plays the match of her life against a powerful opponent who had taken down Henin, Serena and Jankovic? It tells you a couple of things. Women's tennis is still more unpredictable than the men and we're not likely to see these kinds of upsets in the next two slams. It also serves as a shining example on how to seize an opportunity. Ms. Schiavone ground her way through the fortnight playing quality opponents and found herself against an unexpected opponent in the final. She knows that at 30, she's never getting a chance like this again so she goes out on Chatrier and plays the match of her life. Now, she'll always be a Grand Slam champion. Heartwarming.
3) Future Champions? Diminutive Argentine Agustin Velotti (all of 1.64m tall) won the Boy's Singles beating American Andrea Collarini 6-4, 7-5 while Elene Svitolina became the first Ukrainian winner ever beating Tunisian Ons Jabeur 6-2, 7-5 in the Girl's Final. That being said, Junior Grand Slam success is anything but a guarantee to equivalent success on the Senior tour.
4) Spare a thought for Novak Djokovic after his latest 'Melzdown'. Ever since beating Roger Federer on his way to the 2008 title in Melbourne, Nole has failed to make it to a Grand Slam final. The poor bloke might have been inadvertently cursed by his mother when she prematurely declared "the king is dead" in reference to Federer. Djokovic is superbly consistent year-round and his game is as compact and solid as anyones, but unless he starts playing for Grand Slam titles, he won't have a legacy.
5) Ah! How can Grand Slam thoughts be complete without Roger Federer? Finally the streak ends but he lost to a better player on the day and one hopes that he'll be more than ready and hungry for another Wimbledon title after losing his Number One ranking. He finished in the top four (or better) in 23 consecutive major tournaments! The most number of times Tiger Woods did this was five times and for Top 10 finishes, he did it eight times! No comparisons but I'm just providing some context.
6) When's the next time an American gets to win the Men's title? Your guess is as good as mine. When the last American standing in the draw is Robby Ginepri you figure there might be something wrong with an American on clay. Roddick doesn't stand a chance and the Isner/Querrey duo both have games better suited to quicker surfaces. With no promising juniors in sight (not that we need another Donald Young), this wait could be a long one.
7) The brilliance of the Williams! Venus goes out tamely to Nadia Petrova and Serena gets upset by Stosur. No problem. They go on to win their fourth consecutive major title! It's a Serenus/Verena slam! Now that's a streak worth building on.
8) For all the talk about seizing opportunity and grabbing chances, here's one for Jelena Jankovic. She's playing good tennis, due to face Serena in the semis. Williams gets upset in a shocker, Jankovic runs through Shvedova and all she has to do is go past Stosur to give herself another shot at that elusive grand Slam title. Then she wins a total of three games! I used to be a fan of her error-free tennis but I'm starting to think the clock may have run out.
9) Raise your hand if you missed Messrs. Nikolay Davydenko and Juan Marteeeeenn at this years French Open. They're established players capable of exploding on any given day. Would have been nice to see them try and stop the runaway Rafa train. Hopefully they'll be back sooner than anticipated.
10) And finally, we can cross the English Channel and get the strawberries out in bunches! Expect inch-perfect grass and inclement weather - it's Wimbledon time! Follow the warm-ups as Rafa heads to Queens and Roger heads to Halle for the Gerry Weber Open. It'll be impossible to match the Men's Singles Finals of the past two years but hey, never say never!
Sunday, 4 July 2010
The Legend Of The Khan (Part IV)
Learning from the way his father Nasrullah had coached all-time great Jonah Barrington, Rehmat oversaw a singular and almost manic training regime that didn’t just propel Jahangir to the top of the Squash fraternity.
It propelled him miles and miles above the next best player.
There was nothing extraordinarily unusual about Jahangir’s skill level or shot making ability either. It was his fitness that stood head and shoulders above his competitors.
He didn’t just dominate squash for the next decade. He obliterated all available competition.
As part of the most hallowed streak in sports history, he won the 1982 International Squash Players Association Championship without dropping a point!
Starting with the 1981 World Open, (where he defeated Geoff Hunt at the age of 17 to become the youngest world champion), Jahangir embarked on an unbeaten streak of 555 professional matches spanning over five years!
From 1982 to 1991, he won all ten British Open titles, played only two North American and Canadian Opens each (winning them both) and in 1985, after thrashing Chris Dittmar in the British Open Final, 'concorded' across the Atlantic to win his first round match in the North American Open less than 24 hours from his time of victory!
Although he finally relinquished his hold on the British Open due to the arrival of another unrelated Khan from Nawakille (Jansher), Jahangir made a couple of more World Open finals before a decade’s worth of grueling training regimes caught up with his thirty year old body.
When people asked Jahangir how he was the fittest player in a sport that requires only the fittest to play, he downplayed his response. According to him, he never followed a strict training regime or a particular diet.
Apart from always ensuring that he drank two glasses of milk a day, his training usually began with a nine mile jog which he would complete in over an hour at a leisurely pace (aerobic).
Then he would do numerous sets of short, timed sprints (anaerobic). Later, he would weight train in the gym and finally cool down in a pool. Following this routine loosely for five days, he would match practice on the sixth day and rest on the seventh.
Sometimes, he would run on custom-built tracks or asphalt roads, grass fields or sea shores and knee deep water. Often enough, he would head up to higher altitudes where the oxygen was lower.
And this was the training regime of one of the world’s fittest athletes!
Former Pakistani President Pervez Musharraf, in his autobiography, stated that “If Hollywood only knew his (Jahangir’s) story of tragedy, grit and determination; it would make another movie like Chariots of Fire. Many of those who know him consider him the best athlete that ever lived.”
Without the help of the British, the Pashtuns or Pathans would have continued to herd cattle near the breathtaking retreats of the Khyber Pass.
Many of them still do.
Descendants of the defenders of the pass themselves, to be a Pathan is to have an innate sense of pride and fierceness in one’s self.
None exemplified these traits more than the entire dynasty of Khans that ruled the squash world for decades. Each one of them was a special, accomplished squash player in their own right and could claim to be the best of his era.
What of the sickly boy that wasn’t allowed to play as a child? He can gloriously state that he was simply the best of them all.
And that would be more than enough; for if you are the best of the Khans, you must be the best of the best.
It propelled him miles and miles above the next best player.
There was nothing extraordinarily unusual about Jahangir’s skill level or shot making ability either. It was his fitness that stood head and shoulders above his competitors.
He didn’t just dominate squash for the next decade. He obliterated all available competition.
As part of the most hallowed streak in sports history, he won the 1982 International Squash Players Association Championship without dropping a point!
Starting with the 1981 World Open, (where he defeated Geoff Hunt at the age of 17 to become the youngest world champion), Jahangir embarked on an unbeaten streak of 555 professional matches spanning over five years!
From 1982 to 1991, he won all ten British Open titles, played only two North American and Canadian Opens each (winning them both) and in 1985, after thrashing Chris Dittmar in the British Open Final, 'concorded' across the Atlantic to win his first round match in the North American Open less than 24 hours from his time of victory!
Although he finally relinquished his hold on the British Open due to the arrival of another unrelated Khan from Nawakille (Jansher), Jahangir made a couple of more World Open finals before a decade’s worth of grueling training regimes caught up with his thirty year old body.
When people asked Jahangir how he was the fittest player in a sport that requires only the fittest to play, he downplayed his response. According to him, he never followed a strict training regime or a particular diet.
Apart from always ensuring that he drank two glasses of milk a day, his training usually began with a nine mile jog which he would complete in over an hour at a leisurely pace (aerobic).
Then he would do numerous sets of short, timed sprints (anaerobic). Later, he would weight train in the gym and finally cool down in a pool. Following this routine loosely for five days, he would match practice on the sixth day and rest on the seventh.
Sometimes, he would run on custom-built tracks or asphalt roads, grass fields or sea shores and knee deep water. Often enough, he would head up to higher altitudes where the oxygen was lower.
And this was the training regime of one of the world’s fittest athletes!
Former Pakistani President Pervez Musharraf, in his autobiography, stated that “If Hollywood only knew his (Jahangir’s) story of tragedy, grit and determination; it would make another movie like Chariots of Fire. Many of those who know him consider him the best athlete that ever lived.”
Without the help of the British, the Pashtuns or Pathans would have continued to herd cattle near the breathtaking retreats of the Khyber Pass.
Many of them still do.
Descendants of the defenders of the pass themselves, to be a Pathan is to have an innate sense of pride and fierceness in one’s self.
None exemplified these traits more than the entire dynasty of Khans that ruled the squash world for decades. Each one of them was a special, accomplished squash player in their own right and could claim to be the best of his era.
What of the sickly boy that wasn’t allowed to play as a child? He can gloriously state that he was simply the best of them all.
And that would be more than enough; for if you are the best of the Khans, you must be the best of the best.
The Legend Of The Khan (Part III)
While Mo was related to Hashim by blood, Roshan Khan who married Safirullah’s (Hashim’s brother-in-law) sister was only related by marriage. As a result, he claimed he often experienced a feeling of exclusion from the rest of the Khans. Moreover, unlike his contemporaries, Roshan rarely left Pakistan and therefore had little opportunity to familiarize himself with the hardball version of squash across the Atlantic.
Nevertheless, he broke Hashim’s six year stranglehold on the British Open and added two Canadian Opens as well as a hat-trick of North American Open titles to his stellar resume.
What Roshan lacked in fitness, coupled with a recurrent knee injury, he made up for with his artistry and mercurial talent. Just like Hashim, he would go on to take his place in the Khan dynasty, more renowned for his parenting than his own squash legacy.
His two prodigious sons, Torsam and Jahangir had contrasting careers. The former was tragically a “what-might-have-been” and the latter turned out to be “what-was”.
Before Jahangir crowned himself as the single all-time greatest squash player, Sharif Khan spent over a decade dominating the American hardball circuit. As the eldest of Hashim’s twelve children, Sharif faced the additional pressure of a squash scholarship to Millfield School at the age of 11.
He adapted himself to a glittering junior career, winning every possible championship, including the prestigious Drysdale Cup. After reaching the British Open semifinals, he embarked on an unparalleled dominance of the North American Open, reaching the finals fifteen years in a row and winning all but three of them!
Furthermore, he dominated during a time when three brothers (Gulmast, Liaqat and Salim) were also peaking and winning tournaments by the dozen.
Once Roshan Khan’s squash days as a professional were over, he remained in Pakistan where he set his heart and mind towards turning his sons into world beaters. Jahangir was a sickly child and periodically suffered from bouts of hernia, as well as various other illnesses. As a result, he was not allowed to play as a child for fear that he would collapse.
Torsam, on the other hand, was the pride of the new Khan generation. By the fall of 1979, backed by his father’s devotion and coached by his family, he was ranked 13th in the world and had been elected as President of the International Squash Players Association.
Sadly, in November of that year, 27-year-old Torsam Khan—in the best of health and peak of his career—suffered a fatal heart attack during a tournament game. The loss shattered Jahangir, who had developed into somewhat of a prodigy, competing with the world’s top players and winning the World Amateur Championship as a 15 year old.
His father Roshan then decided to put Jahangir in the hands of his cousin, 29-year-old Rehmat Khan who agreed to sacrifice his career and took Jahangir into his home in London.
To Be Continued...
Nevertheless, he broke Hashim’s six year stranglehold on the British Open and added two Canadian Opens as well as a hat-trick of North American Open titles to his stellar resume.
What Roshan lacked in fitness, coupled with a recurrent knee injury, he made up for with his artistry and mercurial talent. Just like Hashim, he would go on to take his place in the Khan dynasty, more renowned for his parenting than his own squash legacy.
His two prodigious sons, Torsam and Jahangir had contrasting careers. The former was tragically a “what-might-have-been” and the latter turned out to be “what-was”.
Before Jahangir crowned himself as the single all-time greatest squash player, Sharif Khan spent over a decade dominating the American hardball circuit. As the eldest of Hashim’s twelve children, Sharif faced the additional pressure of a squash scholarship to Millfield School at the age of 11.
He adapted himself to a glittering junior career, winning every possible championship, including the prestigious Drysdale Cup. After reaching the British Open semifinals, he embarked on an unparalleled dominance of the North American Open, reaching the finals fifteen years in a row and winning all but three of them!
Furthermore, he dominated during a time when three brothers (Gulmast, Liaqat and Salim) were also peaking and winning tournaments by the dozen.
Once Roshan Khan’s squash days as a professional were over, he remained in Pakistan where he set his heart and mind towards turning his sons into world beaters. Jahangir was a sickly child and periodically suffered from bouts of hernia, as well as various other illnesses. As a result, he was not allowed to play as a child for fear that he would collapse.
Torsam, on the other hand, was the pride of the new Khan generation. By the fall of 1979, backed by his father’s devotion and coached by his family, he was ranked 13th in the world and had been elected as President of the International Squash Players Association.
Sadly, in November of that year, 27-year-old Torsam Khan—in the best of health and peak of his career—suffered a fatal heart attack during a tournament game. The loss shattered Jahangir, who had developed into somewhat of a prodigy, competing with the world’s top players and winning the World Amateur Championship as a 15 year old.
His father Roshan then decided to put Jahangir in the hands of his cousin, 29-year-old Rehmat Khan who agreed to sacrifice his career and took Jahangir into his home in London.
To Be Continued...
The Legend Of The Khan (Part II)
It began with the Head Steward of one of the clubs, Abdullah Khan, whose wife gave birth to Hashim, a naturally athletic child that spent the majority of his childhood playing squash with himself on cement courts barefoot in temperatures reaching 100 degrees Fahrenheit!
Although his father met with an untimely fatal accident when Hashim was 11, squash was already in his blood. He worked at the club until he was finally given a coaching position at the Air Force Officer’s Mess when he was 26.
Two years later he won the All-India Championship in Bombay and defended it twice before sports were suspended as a result of the bloody partition that ensued.
Once Pakistan was created, Hashim went on to win six consecutive British Opens and seven overall! He also won the North American and Canadian Open (hardball) thrice, adding five British Pro Championships for good measure.
Hashim Khan however, is remembered less for his own legacy and competitive record than for the forthcoming patriarchal role which he would occupy as the creator that set the Khan dynasty into motion.
It seems unfair that a man with so many professional accomplishments would ultimately take a backseat in the pantheon of players that was to follow, but this is precisely what Hashim did as squash gained slightly more exposure and popularity.
His brother Azam, younger by a decade, was a tennis enthusiast until he started practicing squash with Hashim under the scorching Peshawar sun. His progress was so rapid that he was a losing finalist to Hashim in the 1953 British Open. He then proceeded to repeat this feat twice more!
Nevertheless, by the spring of 1962 he was the proud winner of four consecutive British Open crowns, a pair of Canadian Opens and a North American Open before a ruptured Achilles tendon effectively ended his career as a professional.
One of Hashim’s contemporaries, Safirullah (himself a British Open semifinalist) married Hashim’s sister and produced two sons (Gul and Mohibullah) who by the time Azam’s career was over, were ready to step in and make the jump from "prodigious talent" to "indomitable champion."
While Gul was consistently in the Top-10, Mo captured the British Open in 1962 after losing to his Uncle Hashim thrice previously. By winning a North American Open, he would ultimately end up as one of only five men to have achieved this double.
After meeting JFK at the White House, Mo secured his assistance to become the squash pro at the Harvard Club in Boston and served there till 1995 when he suddenly collapsed fatally on court.
By then, he had put his shot making skills and volatility to good use in the North American version of squash—hardball. He won the North American Open four more times as well as five consecutive North American pro events!
To Be Continued...
Although his father met with an untimely fatal accident when Hashim was 11, squash was already in his blood. He worked at the club until he was finally given a coaching position at the Air Force Officer’s Mess when he was 26.
Two years later he won the All-India Championship in Bombay and defended it twice before sports were suspended as a result of the bloody partition that ensued.
Once Pakistan was created, Hashim went on to win six consecutive British Opens and seven overall! He also won the North American and Canadian Open (hardball) thrice, adding five British Pro Championships for good measure.
Hashim Khan however, is remembered less for his own legacy and competitive record than for the forthcoming patriarchal role which he would occupy as the creator that set the Khan dynasty into motion.
It seems unfair that a man with so many professional accomplishments would ultimately take a backseat in the pantheon of players that was to follow, but this is precisely what Hashim did as squash gained slightly more exposure and popularity.
His brother Azam, younger by a decade, was a tennis enthusiast until he started practicing squash with Hashim under the scorching Peshawar sun. His progress was so rapid that he was a losing finalist to Hashim in the 1953 British Open. He then proceeded to repeat this feat twice more!
Nevertheless, by the spring of 1962 he was the proud winner of four consecutive British Open crowns, a pair of Canadian Opens and a North American Open before a ruptured Achilles tendon effectively ended his career as a professional.
One of Hashim’s contemporaries, Safirullah (himself a British Open semifinalist) married Hashim’s sister and produced two sons (Gul and Mohibullah) who by the time Azam’s career was over, were ready to step in and make the jump from "prodigious talent" to "indomitable champion."
While Gul was consistently in the Top-10, Mo captured the British Open in 1962 after losing to his Uncle Hashim thrice previously. By winning a North American Open, he would ultimately end up as one of only five men to have achieved this double.
After meeting JFK at the White House, Mo secured his assistance to become the squash pro at the Harvard Club in Boston and served there till 1995 when he suddenly collapsed fatally on court.
By then, he had put his shot making skills and volatility to good use in the North American version of squash—hardball. He won the North American Open four more times as well as five consecutive North American pro events!
To Be Continued...
Friday, 4 June 2010
The Legend Of The Khan (Part I)
The North-West Frontier Province in Pakistan is infamous today for being a forlorn battlefield littered with the remains of missiles, bombs and fallen soldiers.
It represents the senselessness of man-made violence and a people trapped on the wrong side of a self-authored history.
Down the valley of the glorious Khyber Pass, representing the last path to the mountainous regions of the Afghan border, there lies a village called Nawakille which for decades sequentially produced and sent forth Pakistan’s greatest gifts to the athletic world.
Sporting dynasties are best characterized by two crucial tenets – longevity and dominance . They possess an aura of invincibility that is anything but sporadic.
The longer the dominance, the greater the lure and this is exactly why the legend of the Khans remains the greatest untold story of a dynasty in the history of sport.
Most sports require a precarious blend of various athletic attributes. Conventional sports such as football value the conventional characteristics such as speed, stamina and endurance.
Marathon runners prize endurance and stamina; sprinters need power and speed. Rugby players need speed as well as strength – a combination which defines an athlete’s “ability to explode.”
A Formula One driver requires lightning fast reflexes while golfers rely on immense mental strength as well as muscle endurance.
Squash, much like tennis, requires all of the above.
It requires aerobic fitness to survive two hours of scampering around a closed court at a frenetic pace.
It requires an unparalleled anaerobic ability to sprint forward, backward and sideways for minutes and then do it all over again.
It requires specific muscle endurance to hit the same shot repeatedly at a three second interval up to 20 times. And it requires a quality reflex mechanism to play a small ball travelling at speeds close to 200 kilometers an hour.
The British Empire gave the sporting world enough that we hold dear. They gave us Golf in 1502; Cricket in 1787, Tennis in 1859, Hockey in 1860, Football in 1863 and Rugby in 1871 just to name a few.
And though the French theoretically "invented" the game of squash, it was the British who developed it, popularized it and spread it to the world. Brazil would do well to gift them a Jules Rimet trophy, Australia could give up a Cricket World Cup with a few Ashes trophies thrown in as bonus and perhaps Sampras or Federer could donate a few Wimbledons.
No nation could ever be more deserving.
The story of the Khans however, does not begin with its most well known - Jahangir. It ends with him.
To delve deeper into the past and trace his lineage we must go back a century when India and Pakistan were one and the British had built squash courts to entertain their officers while they served the empire.
To Be Continued.....
It represents the senselessness of man-made violence and a people trapped on the wrong side of a self-authored history.
Down the valley of the glorious Khyber Pass, representing the last path to the mountainous regions of the Afghan border, there lies a village called Nawakille which for decades sequentially produced and sent forth Pakistan’s greatest gifts to the athletic world.
Sporting dynasties are best characterized by two crucial tenets – longevity and dominance . They possess an aura of invincibility that is anything but sporadic.
The longer the dominance, the greater the lure and this is exactly why the legend of the Khans remains the greatest untold story of a dynasty in the history of sport.
Most sports require a precarious blend of various athletic attributes. Conventional sports such as football value the conventional characteristics such as speed, stamina and endurance.
Marathon runners prize endurance and stamina; sprinters need power and speed. Rugby players need speed as well as strength – a combination which defines an athlete’s “ability to explode.”
A Formula One driver requires lightning fast reflexes while golfers rely on immense mental strength as well as muscle endurance.
Squash, much like tennis, requires all of the above.
It requires aerobic fitness to survive two hours of scampering around a closed court at a frenetic pace.
It requires an unparalleled anaerobic ability to sprint forward, backward and sideways for minutes and then do it all over again.
It requires specific muscle endurance to hit the same shot repeatedly at a three second interval up to 20 times. And it requires a quality reflex mechanism to play a small ball travelling at speeds close to 200 kilometers an hour.
The British Empire gave the sporting world enough that we hold dear. They gave us Golf in 1502; Cricket in 1787, Tennis in 1859, Hockey in 1860, Football in 1863 and Rugby in 1871 just to name a few.
And though the French theoretically "invented" the game of squash, it was the British who developed it, popularized it and spread it to the world. Brazil would do well to gift them a Jules Rimet trophy, Australia could give up a Cricket World Cup with a few Ashes trophies thrown in as bonus and perhaps Sampras or Federer could donate a few Wimbledons.
No nation could ever be more deserving.
The story of the Khans however, does not begin with its most well known - Jahangir. It ends with him.
To delve deeper into the past and trace his lineage we must go back a century when India and Pakistan were one and the British had built squash courts to entertain their officers while they served the empire.
To Be Continued.....
Thursday, 3 June 2010
Why Rockin' Robin beat Roger
There are many reasons why Roger Federer finally failed to make it to the semifinals of a Grand Slam. Foremost among these is the fact that all streaks which involve winning have to end.
And this wasn’t a “participating-in-a-major kind of streak”. It was more of a “beating-five-of-the-world’s-top-players-at-every-major-for-six-years” kind of streak!
Notice the difference in context .
This was a streak and it has accordingly been celebrated in the tennis world.
Leave talks of Federer’s demise aside, for he has been written off too often and made far too many people eat their words. I’m not falling for it.
If forced, I will only gratefully concede that Federer’s demise is relative. And that is to be expected.
But for people who think Robin Soderling is anywhere close to the sporting definition of a “cuckoo”, please think again.
He boasts the kind of game that is typical of what sport calls a “giant killer"— fearlessness, power and the most important factor of them all—the belief that he actually could win.
If you follow American sport, think Appalachian State, the Golden State Warriors and the New York Giants because they defined both fearlessness as well as the belief that they could win. And none defined it better.
Don’t get this wrong. Roger Federer did not lose because his semifinal streak had to end. It could have ended next month at SW19, the same way Sampras was stunned by Krajicek in 1996.
He didn’t lose because he had beaten Soderling 12 times in a row and therefore Soderling had to beat him once. Rockin’ Robin could have done that at a lesser tournament in the near future.
And strangely enough, Roger Federer did not lose because he played unusually badly. One couldn’t say the same about his final against Del Potro at Flushing Meadows or his French Open losses to Nadal.
He lost because he was outplayed.
Because Soderling played better than him.
He served better, returned better and flattened his forehand unleashing enough power to cause Federer more than just discomfort.
With his backhand he was consistent if not devastating and when he had opportunities, he grabbed them unlike in the past. I would never bet against Nadal on clay but if someone can beat him, I’d like to think it would be the Swede.
A monumental effort is required to beat Roger Federer in the latter stages of a Grand Slam. The opponent has to play out of his skin and Federer simply cannot be at his best. Del Potro did it at the US Open. Nadal did it at Wimbledon while Safin did it at the Australian Open five years ago.
But this time?
Federer played well. Not at his very best which is what we may have grown accustomed to, but he played good tennis.
Soderling played better.
Period.
And this wasn’t a “participating-in-a-major kind of streak”. It was more of a “beating-five-of-the-world’s-top-players-at-every-major-for-six-years” kind of streak!
Notice the difference in context .
This was a streak and it has accordingly been celebrated in the tennis world.
Leave talks of Federer’s demise aside, for he has been written off too often and made far too many people eat their words. I’m not falling for it.
If forced, I will only gratefully concede that Federer’s demise is relative. And that is to be expected.
But for people who think Robin Soderling is anywhere close to the sporting definition of a “cuckoo”, please think again.
He boasts the kind of game that is typical of what sport calls a “giant killer"— fearlessness, power and the most important factor of them all—the belief that he actually could win.
If you follow American sport, think Appalachian State, the Golden State Warriors and the New York Giants because they defined both fearlessness as well as the belief that they could win. And none defined it better.
Don’t get this wrong. Roger Federer did not lose because his semifinal streak had to end. It could have ended next month at SW19, the same way Sampras was stunned by Krajicek in 1996.
He didn’t lose because he had beaten Soderling 12 times in a row and therefore Soderling had to beat him once. Rockin’ Robin could have done that at a lesser tournament in the near future.
And strangely enough, Roger Federer did not lose because he played unusually badly. One couldn’t say the same about his final against Del Potro at Flushing Meadows or his French Open losses to Nadal.
He lost because he was outplayed.
Because Soderling played better than him.
He served better, returned better and flattened his forehand unleashing enough power to cause Federer more than just discomfort.
With his backhand he was consistent if not devastating and when he had opportunities, he grabbed them unlike in the past. I would never bet against Nadal on clay but if someone can beat him, I’d like to think it would be the Swede.
A monumental effort is required to beat Roger Federer in the latter stages of a Grand Slam. The opponent has to play out of his skin and Federer simply cannot be at his best. Del Potro did it at the US Open. Nadal did it at Wimbledon while Safin did it at the Australian Open five years ago.
But this time?
Federer played well. Not at his very best which is what we may have grown accustomed to, but he played good tennis.
Soderling played better.
Period.
Thursday, 27 May 2010
Barack Obama Courts LeBron James: The Impact of a Superstar
The most common barometer of sporting success lies in the ability to win.
It’s quite simple really - the ones who win are more remembered than the ones who do not.
Sometimes that might seem unfair but it’s the inherent nature of sport. The ultimate goal tends to narrow down to a solitary result – to get that elusive ‘W’.
This is precisely the reason why numerous NFL experts and fans would choose Tom Brady over Peyton Manning to build a team around.
Because Brady has won more than Manning has.
Now Lebron James is a winner.
A Winner.
Over the past seven seasons he has done more than just run up a few ‘W’s’ for the Cleveland Cavaliers. He turned the franchise around and gave it the respectability that it never had. The Cavaliers were always remembered for being Jordan’s buzzer-beating bunnies. Now they’re remembered for having Lebron James.
They still might have him.
The moment June ends, (crazy enough as it sounds), Lebron will garner twice the obscene amount of attention that he’s already receiving in the middle of the NBA conference finals!
The spotlight seems undeserved to a lot of basketball fans and a good bit of it has to do with the fact that James still hasn’t won an NBA Championship. But a lot of the attention is also due to the build-up.
Lebron James was built up.
The NBA has always needed a face. In Jordan, it got more than a decade’s worth of faces. Ever since then, there have been conscious attempts to find another star to elevate and there is little doubt that this is a seemingly dangerous and often futile exercise.
It leads to immense pressure on players who might not have had the calibre in the first place. More importantly, it ensures that players who would have been remembered as very good or great will instead be remembered for never living up to their ‘potential’.
For never getting that final elusive ‘W’.
I’m thinking Grant Hill (injuries), T-Mac, Vince Carter and a couple more.
The negativity behind James’ inability to win a championship for Cleveland is offset by his positive intangibles. NBA franchises don’t account for the fact that he failed to win in Cleveland. What they account for is the fact that he’s 25 years old.
That he’s hungry for championships.
That he’s a 6’8” 280 pound physical freak of a basketball specimen coupled with tremendous agility, speed and a basketball IQ the likes of which the league has never seen all in one person before.
Thus, James has the attention of most NBA fans.
Cleveland's because he’s theirs and they want him to stay, followed by the fans whose teams have the most likely chance of landing him – the Bulls, Knicks, Nets and Heat.
There’s another fan that seems to want a say in the matter - Barack Obama.
Obama, in an interview with Marv Albert, seemingly tried hard to insist that he wasn’t trying to meddle in the Lebron James free agency circus.
So hard that he managed to restrict himself to one line. And what a line it was!
“You know, you could see Lebron fitting in pretty well there (with Bulls Derrick Rose and Joakim Noah)”.
Obama’s trying to swing this and he knows a thing or two about swinging things. He’s interfering in the sweepstakes and he’s doing it while stating explicitly that he doesn’t want to “meddle in this”.
And he has every right to. It makes it that much more exciting while hyping James up even more.
Sure, Lebron has put up gaudy statistics; the likes of which we haven’t seen since the Big-O triple doubled the league a few decades ago. He’s an unselfish basketball player who seems to be a natural leader on court.
But he hasn’t won anything.
And it doesn’t matter whether he had an insufficient supporting cast or he didn’t.
He hasn’t won a championship.
So when the President of the United States of America says that he thinks Lebron James would look good in a Bulls uniform, that’s when you know how big Lebron James truly is.
All the televised high school games.
Shaq watching them, Kobe watching them.
The $95 million dollar Nike contract before he joined the league.
They were all parts and pieces of a singular intentional effort to make Lebron James the face of the NBA. He may validate it when he wins a championship. Or he may be remembered as an overhyped superstar if he doesn’t.
But he’s big. Presidentially big.
It’s quite simple really - the ones who win are more remembered than the ones who do not.
Sometimes that might seem unfair but it’s the inherent nature of sport. The ultimate goal tends to narrow down to a solitary result – to get that elusive ‘W’.
This is precisely the reason why numerous NFL experts and fans would choose Tom Brady over Peyton Manning to build a team around.
Because Brady has won more than Manning has.
Now Lebron James is a winner.
A Winner.
Over the past seven seasons he has done more than just run up a few ‘W’s’ for the Cleveland Cavaliers. He turned the franchise around and gave it the respectability that it never had. The Cavaliers were always remembered for being Jordan’s buzzer-beating bunnies. Now they’re remembered for having Lebron James.
They still might have him.
The moment June ends, (crazy enough as it sounds), Lebron will garner twice the obscene amount of attention that he’s already receiving in the middle of the NBA conference finals!
The spotlight seems undeserved to a lot of basketball fans and a good bit of it has to do with the fact that James still hasn’t won an NBA Championship. But a lot of the attention is also due to the build-up.
Lebron James was built up.
The NBA has always needed a face. In Jordan, it got more than a decade’s worth of faces. Ever since then, there have been conscious attempts to find another star to elevate and there is little doubt that this is a seemingly dangerous and often futile exercise.
It leads to immense pressure on players who might not have had the calibre in the first place. More importantly, it ensures that players who would have been remembered as very good or great will instead be remembered for never living up to their ‘potential’.
For never getting that final elusive ‘W’.
I’m thinking Grant Hill (injuries), T-Mac, Vince Carter and a couple more.
The negativity behind James’ inability to win a championship for Cleveland is offset by his positive intangibles. NBA franchises don’t account for the fact that he failed to win in Cleveland. What they account for is the fact that he’s 25 years old.
That he’s hungry for championships.
That he’s a 6’8” 280 pound physical freak of a basketball specimen coupled with tremendous agility, speed and a basketball IQ the likes of which the league has never seen all in one person before.
Thus, James has the attention of most NBA fans.
Cleveland's because he’s theirs and they want him to stay, followed by the fans whose teams have the most likely chance of landing him – the Bulls, Knicks, Nets and Heat.
There’s another fan that seems to want a say in the matter - Barack Obama.
Obama, in an interview with Marv Albert, seemingly tried hard to insist that he wasn’t trying to meddle in the Lebron James free agency circus.
So hard that he managed to restrict himself to one line. And what a line it was!
“You know, you could see Lebron fitting in pretty well there (with Bulls Derrick Rose and Joakim Noah)”.
Obama’s trying to swing this and he knows a thing or two about swinging things. He’s interfering in the sweepstakes and he’s doing it while stating explicitly that he doesn’t want to “meddle in this”.
And he has every right to. It makes it that much more exciting while hyping James up even more.
Sure, Lebron has put up gaudy statistics; the likes of which we haven’t seen since the Big-O triple doubled the league a few decades ago. He’s an unselfish basketball player who seems to be a natural leader on court.
But he hasn’t won anything.
And it doesn’t matter whether he had an insufficient supporting cast or he didn’t.
He hasn’t won a championship.
So when the President of the United States of America says that he thinks Lebron James would look good in a Bulls uniform, that’s when you know how big Lebron James truly is.
All the televised high school games.
Shaq watching them, Kobe watching them.
The $95 million dollar Nike contract before he joined the league.
They were all parts and pieces of a singular intentional effort to make Lebron James the face of the NBA. He may validate it when he wins a championship. Or he may be remembered as an overhyped superstar if he doesn’t.
But he’s big. Presidentially big.
Tuesday, 25 May 2010
Oh Africa!: Thoughts On The FIFA World Cup
It is often accepted that absence makes the heart grow fonder.
Therefore, when a particular event is absent for four long years, the comeback is inevitably built up and rightfully hyped to an almost deafening crescendo.
If you listen carefully, you can hear it and if you shut your eyes you can feel it.
Make no mistake about it; the greatest singular sporting event in the world is not the one that occurs annually on a gloomy wintry day in February. Neither is it the one that happens mid-year on meticulously prepared inch-perfect grass.
For a refreshing change, the 11th of June will turn the world’s focus positively towards Africa and in doing so might succeed in shifting the global football paradigm away from Europe in an insignificant way. As the 2002 edition proved, South Korea and Japan set new standards for hosting just as Beijing did with the Summer Games in 2008.
Put simply, when the spotlight turns towards you, it’s best to be prepared because you will be shining whether you like it or not.
The changes will be pervasive.
In less than three weeks our lexicon will expand.
We’ll talk Zakumi and Jabulani – the former being the green-haired anthropomorphized leopard mascot with the clichéd motto that “Zakumi’s game is fair play”, and the latter being Adidas’s eleventh World Cup match ball with (no surprise here!) new revolutionary technology.
Jabulani,(which means “bringing joy to everyone” in Zulu), will live up to its name just like Teamgeist, Fevernova and the Tricolore while Zakumi’s motto will hopefully hold true if one particularly talented bald Frenchman learns to keep his hands in his pockets.
The fans will arrive slowly and steadily, not for one moment letting it seem as if there is actually any sense of calm about the event.
Tournament organizers will breathe faster, voices will be raised and panic will set in.
And all the controversies that South Africa has had to endure ever since it won the bid over six years ago will come to the fore under the intense and often unbearable spotlight of the global media.
Once again, its crime rate, transportation problems and attitude towards evicting people will be questioned. Its stadiums may or may not look ready enough and perhaps the construction workers will make new demands.
And yet the country will continue to endure.
Johannesburg, Cape Town, Durban and six other cities will light up magically, their streets littered with the contagious passion of the average football fan and their airports abuzz with the imminent arrival of the most talented footballers in the world, each playing not for some fancy club or a gazillion dollars but for free – for their country!
There will be no Ronaldinho or Pato.
No Benzema or Del Piero either.
There are many others who should have made it but did not. Fortunately enough, for every missing star, there are five other bigger and brighter ones ready to stake their claim and cement their legacy at the pinnacle of the world’s only truly global game.
Messi, Ronaldo, Rooney et al will shoulder the burden of a nation and its crazed football fans. Yet, there is every possibility that none of them will succeed.
Reaching the semi-finals or finals is never enough. The infrequency and unpredictability of the FIFA World Cup ensures that for all the perennial contenders as well as pretenders, the only ‘W’ that matters is the one that will take place on the 11th of July.
That will be the day at the FNB Stadium (Soccer City) in Johannesburg when Jabulani changes to Jo’bulani and 95,000 people will become live witnesses to the polarizing climax of a month’s long saga of sleepless nights and heart-in-mouth moments.
And due to the inevitable nature of sport, there will be a winner and a loser.
The former will raise Silvio Gazzaniga’s golden FIFA World Cup trophy as high as possible with confetti raining down and fireworks exploding as far as the eye can see. The loser will keep his head low and perhaps accept the consolation medal with as much graciousness as the occasion allows.
And when the euphoria dies down and the excitement abates, the clock will start ticking in Brazil. If football ever had a home, it would be in the favelas of Rio where the greatest of the greats continue to find and retain their unfathomable love, passion and skill for the game.
There will be issues, controversies and numerous inconceivable reasons why Brazil will not be ready in time, but after four more years everything will return to normal.
The greatest sporting show in the world will present itself to the world and continue to endure.
Just like it always has.
Therefore, when a particular event is absent for four long years, the comeback is inevitably built up and rightfully hyped to an almost deafening crescendo.
If you listen carefully, you can hear it and if you shut your eyes you can feel it.
Make no mistake about it; the greatest singular sporting event in the world is not the one that occurs annually on a gloomy wintry day in February. Neither is it the one that happens mid-year on meticulously prepared inch-perfect grass.
For a refreshing change, the 11th of June will turn the world’s focus positively towards Africa and in doing so might succeed in shifting the global football paradigm away from Europe in an insignificant way. As the 2002 edition proved, South Korea and Japan set new standards for hosting just as Beijing did with the Summer Games in 2008.
Put simply, when the spotlight turns towards you, it’s best to be prepared because you will be shining whether you like it or not.
The changes will be pervasive.
In less than three weeks our lexicon will expand.
We’ll talk Zakumi and Jabulani – the former being the green-haired anthropomorphized leopard mascot with the clichéd motto that “Zakumi’s game is fair play”, and the latter being Adidas’s eleventh World Cup match ball with (no surprise here!) new revolutionary technology.
Jabulani,(which means “bringing joy to everyone” in Zulu), will live up to its name just like Teamgeist, Fevernova and the Tricolore while Zakumi’s motto will hopefully hold true if one particularly talented bald Frenchman learns to keep his hands in his pockets.
The fans will arrive slowly and steadily, not for one moment letting it seem as if there is actually any sense of calm about the event.
Tournament organizers will breathe faster, voices will be raised and panic will set in.
And all the controversies that South Africa has had to endure ever since it won the bid over six years ago will come to the fore under the intense and often unbearable spotlight of the global media.
Once again, its crime rate, transportation problems and attitude towards evicting people will be questioned. Its stadiums may or may not look ready enough and perhaps the construction workers will make new demands.
And yet the country will continue to endure.
Johannesburg, Cape Town, Durban and six other cities will light up magically, their streets littered with the contagious passion of the average football fan and their airports abuzz with the imminent arrival of the most talented footballers in the world, each playing not for some fancy club or a gazillion dollars but for free – for their country!
There will be no Ronaldinho or Pato.
No Benzema or Del Piero either.
There are many others who should have made it but did not. Fortunately enough, for every missing star, there are five other bigger and brighter ones ready to stake their claim and cement their legacy at the pinnacle of the world’s only truly global game.
Messi, Ronaldo, Rooney et al will shoulder the burden of a nation and its crazed football fans. Yet, there is every possibility that none of them will succeed.
Reaching the semi-finals or finals is never enough. The infrequency and unpredictability of the FIFA World Cup ensures that for all the perennial contenders as well as pretenders, the only ‘W’ that matters is the one that will take place on the 11th of July.
That will be the day at the FNB Stadium (Soccer City) in Johannesburg when Jabulani changes to Jo’bulani and 95,000 people will become live witnesses to the polarizing climax of a month’s long saga of sleepless nights and heart-in-mouth moments.
And due to the inevitable nature of sport, there will be a winner and a loser.
The former will raise Silvio Gazzaniga’s golden FIFA World Cup trophy as high as possible with confetti raining down and fireworks exploding as far as the eye can see. The loser will keep his head low and perhaps accept the consolation medal with as much graciousness as the occasion allows.
And when the euphoria dies down and the excitement abates, the clock will start ticking in Brazil. If football ever had a home, it would be in the favelas of Rio where the greatest of the greats continue to find and retain their unfathomable love, passion and skill for the game.
There will be issues, controversies and numerous inconceivable reasons why Brazil will not be ready in time, but after four more years everything will return to normal.
The greatest sporting show in the world will present itself to the world and continue to endure.
Just like it always has.
Wednesday, 19 May 2010
The Evolution Of Tennis: Of Roger, Rafa and Rackets
The precipitous rise in the level of professional tennis can be attributed most conveniently, to the influx of 'technology'. The utility of such a loose and ubiquitous descriptive term is that it encompasses everything that we want it to - new coaching machines, training methods, healthier nutrition and above all, better equipment.
Better equipment is a debate with almost no chance at neutrality. Over the past 20 years, the average athlete's physicality has changed significantly. I simply cannot bring myself to believe that Borg was as fit as Nadal. And even if one argues that he was and I accept your argument, I can still further support myself by claiming that the Monfils, Ferrers and Verdascos of the Seventies merit no comparison to their counterparts today.
This is where equipment plays its role.
A racket is crucial enough to warrant consideration because it is the biggest overall variable factor that determines the balance of the game. If tennis comes down to a game where the player who hits the ball hardest wins, it will inevitably die.
Power tennis is undoubtedly exciting but there is a Catch-22 situation that accompanies it. If the points become too long over an extended period of time, the sport becomes boring. And if they remain short (think Sampras at Wimbledon), then tennis loses its fine balance of sweat, elegance and attrition.
No modern ATP player exemplifies the impact of technology as much as Rafael Nadal. In fact, it is far easier to believe that Nadal is a product of his own generation rather than the other way round. This doesn't appear to be the case with Federer.
Imagine Federer with a wooden racket or the T2000 metal stick that Connors popularized—He would, in all likeliness, still be as fluid, artful and graceful to watch. Less effective? Certainly. But only because of the expected decrease in spin and power that would accompany the switch.
Somehow, Nadal does not fit into this vintage picture of Federer in white pants and a wooden racket.
Making him play with a wooden shaft would be disrespecting the game that we have come to identify him with. For one, his open shouldered stance would generate little power and end up falling well short of the base line. The bounce that he generates with that motion-defying topspin uppercut forehand of his would be relatively minimal.
Even his two handed backhand (which appears to be as risk-free a shot as there is), would be affected. This is because when Nadal swings on the backhand, he doesn't appear to hit through the line in one fluid linear motion as the textbook advises. Rather, he tends to improvise on the spot, muscling the ball through wherever he wants it to go.
His open shouldered stance is as technically flawed as one can get. The only successful players that avail of it are ones who have been coached personally, i.e. by a family member. Apart from Nadal, the Williams sisters have employed this technique to the most devastating affect.
Conventional wisdom assumes that at the split second moment when racket strikes ball, your upper and lower body have to be in a state of momentary balance with the torso imparting momentum to the shot by leaning slightly forward. The reason why Nadal and the Williams sisters have been so successful is more easily explained not by the rightness of their technique but rather by the self (and externally instilled) mental belief that they can execute the stroke coupled with countless of practice hours of actually doing so.
The unorthodoxy of this style of play is one that requires forgiveness. Your racket has to be forgiving of the nuances that can accompany the imbalance of the shot and the irregularity in the motion of the swing. This is not to take away anything from Nadal or his like but simply to claim that modern racket technology coupled with the improved physique and fitness of the average tennis pro have successfully maximized its effectiveness to a large effect.
Today's top of the line rackets are best sold by rocket science-like explanations. While titanium is still popular, it is no longer the selling point as it was when it first breached the market at the turn of the century. A modern racket may have an eclectic and complicated combination of carbon fibers, glass fibers and thermoplastic filaments such as nylon, epoxy resins, as well as other exotic metallic alloys.
The Head Liquidmetal model range, developed at the California Institute of Technology supposedly imparts more power and momentum to the ball due to the amorphous state of its atomic structure. Gimmicky? Sure, but what player wants to take the chance of seeing his competitor with an external advantage?
Wilson modeled its latest line along the existence of the "K-Factor," which combined various fibers in specific directions so as to maximize the hitting spot and provide extra control. Prince chose the "larger-holes-in-the-frame" tactic as its USP and changed its stringing patterns to seemingly make its rackets more forgiving.
Micromanaging the legality of materials is an exercise that is futile at best and horribly inconvenient. It is akin to performance-enhancing drugs in the sense that the moment it is discovered (which would be difficult to do), another one would perhaps already be in the pipeline.
The detractors that raise the point of both players having the same advantage are overlooking this simple fact: While rackets may not have a ceiling, the human body does. A Roddick serve at 150 miles per hour requires a reaction time of approximately 0.3 of a second. A good 10-15 miles faster and it would be physically impossible to bring the racket down in time.
Watching a flurry of aces is entertaining but not when it extends beyond a game and supersedes the beauty of a modern tennis rally.
And just as Federer is a unique and prodigious talent, so is Nadal. But they are different kinds of talents, each one as effective in their own way—one maybe a bit more than the other. Furthermore, they are in no way representative of this generation of tennis.
That responsibility is shouldered by the average tennis professional ranked in the top 100 or 200 that never grabs the limelight and yet still has the ability to amaze the knowledgeable spectator watching him play. You couldn't say this a couple of decades ago.
Tennis has come a long way and its rise in quality has been near meteoric but there maybe a threshold somewhere down the line which should never be crossed for fear of redundancy.
The problem is that we don't quite know how far we are from it.
Better equipment is a debate with almost no chance at neutrality. Over the past 20 years, the average athlete's physicality has changed significantly. I simply cannot bring myself to believe that Borg was as fit as Nadal. And even if one argues that he was and I accept your argument, I can still further support myself by claiming that the Monfils, Ferrers and Verdascos of the Seventies merit no comparison to their counterparts today.
This is where equipment plays its role.
A racket is crucial enough to warrant consideration because it is the biggest overall variable factor that determines the balance of the game. If tennis comes down to a game where the player who hits the ball hardest wins, it will inevitably die.
Power tennis is undoubtedly exciting but there is a Catch-22 situation that accompanies it. If the points become too long over an extended period of time, the sport becomes boring. And if they remain short (think Sampras at Wimbledon), then tennis loses its fine balance of sweat, elegance and attrition.
No modern ATP player exemplifies the impact of technology as much as Rafael Nadal. In fact, it is far easier to believe that Nadal is a product of his own generation rather than the other way round. This doesn't appear to be the case with Federer.
Imagine Federer with a wooden racket or the T2000 metal stick that Connors popularized—He would, in all likeliness, still be as fluid, artful and graceful to watch. Less effective? Certainly. But only because of the expected decrease in spin and power that would accompany the switch.
Somehow, Nadal does not fit into this vintage picture of Federer in white pants and a wooden racket.
Making him play with a wooden shaft would be disrespecting the game that we have come to identify him with. For one, his open shouldered stance would generate little power and end up falling well short of the base line. The bounce that he generates with that motion-defying topspin uppercut forehand of his would be relatively minimal.
Even his two handed backhand (which appears to be as risk-free a shot as there is), would be affected. This is because when Nadal swings on the backhand, he doesn't appear to hit through the line in one fluid linear motion as the textbook advises. Rather, he tends to improvise on the spot, muscling the ball through wherever he wants it to go.
His open shouldered stance is as technically flawed as one can get. The only successful players that avail of it are ones who have been coached personally, i.e. by a family member. Apart from Nadal, the Williams sisters have employed this technique to the most devastating affect.
Conventional wisdom assumes that at the split second moment when racket strikes ball, your upper and lower body have to be in a state of momentary balance with the torso imparting momentum to the shot by leaning slightly forward. The reason why Nadal and the Williams sisters have been so successful is more easily explained not by the rightness of their technique but rather by the self (and externally instilled) mental belief that they can execute the stroke coupled with countless of practice hours of actually doing so.
The unorthodoxy of this style of play is one that requires forgiveness. Your racket has to be forgiving of the nuances that can accompany the imbalance of the shot and the irregularity in the motion of the swing. This is not to take away anything from Nadal or his like but simply to claim that modern racket technology coupled with the improved physique and fitness of the average tennis pro have successfully maximized its effectiveness to a large effect.
Today's top of the line rackets are best sold by rocket science-like explanations. While titanium is still popular, it is no longer the selling point as it was when it first breached the market at the turn of the century. A modern racket may have an eclectic and complicated combination of carbon fibers, glass fibers and thermoplastic filaments such as nylon, epoxy resins, as well as other exotic metallic alloys.
The Head Liquidmetal model range, developed at the California Institute of Technology supposedly imparts more power and momentum to the ball due to the amorphous state of its atomic structure. Gimmicky? Sure, but what player wants to take the chance of seeing his competitor with an external advantage?
Wilson modeled its latest line along the existence of the "K-Factor," which combined various fibers in specific directions so as to maximize the hitting spot and provide extra control. Prince chose the "larger-holes-in-the-frame" tactic as its USP and changed its stringing patterns to seemingly make its rackets more forgiving.
Micromanaging the legality of materials is an exercise that is futile at best and horribly inconvenient. It is akin to performance-enhancing drugs in the sense that the moment it is discovered (which would be difficult to do), another one would perhaps already be in the pipeline.
The detractors that raise the point of both players having the same advantage are overlooking this simple fact: While rackets may not have a ceiling, the human body does. A Roddick serve at 150 miles per hour requires a reaction time of approximately 0.3 of a second. A good 10-15 miles faster and it would be physically impossible to bring the racket down in time.
Watching a flurry of aces is entertaining but not when it extends beyond a game and supersedes the beauty of a modern tennis rally.
And just as Federer is a unique and prodigious talent, so is Nadal. But they are different kinds of talents, each one as effective in their own way—one maybe a bit more than the other. Furthermore, they are in no way representative of this generation of tennis.
That responsibility is shouldered by the average tennis professional ranked in the top 100 or 200 that never grabs the limelight and yet still has the ability to amaze the knowledgeable spectator watching him play. You couldn't say this a couple of decades ago.
Tennis has come a long way and its rise in quality has been near meteoric but there maybe a threshold somewhere down the line which should never be crossed for fear of redundancy.
The problem is that we don't quite know how far we are from it.
Thursday, 13 May 2010
Cleveland Bruising, Boston Cruising: Where Is Number 23?
When you are a High School junior that has his face plastered on the cover of Sports Illustrated with "The Chosen One" next to it, you could be forgiven for realizing that people would immediately begin to expect too much of you.
If you don’t buy into this media hype about yourself and instead set about improving your game quietly with a low profile then you could almost be forgiven for every singular achievement that you fail to accomplish. And if you actually buy into all this hype surrounding yourself and make every attempt to build it up even more (while also improving your game)?
Well, then you’re Lebron James – The King Of Cleveland and the one we are all supposed to be a witness to.
A witness?
A WITNESS??
With my eyes barely open in the morning, I was witness to King James not making a single field goal till the third quarter!
I was witness to some insipid defense and a total lack of energy and desire.
And I was witness to the worst playoff loss at home in franchise history.
Yes, I was witness to 120-88 at the Q.
And now, I’ll be witness to a Game 6 in Boston with the season on the line and James’ legacy at stake.
Make no mistake about it. This IS the first call for Lebron James.
Game 6 is his "Game of Reckoning". You can’t join a lottery team and immediately start reeling off championships (Ask Chicago’s Number 23). It’s like a jigsaw puzzle—except you already have the biggest piece and the clearest picture. All you have to do is complete it with the perfect smaller pieces.
Last year, James was forgiven for running into a Magic team whose center and sharpshooting they had no answer too. Nevertheless, he still stuffed the stat box and iced it with a phenomenal buzzer beater at home.
This year? The Cavaliers have made significant acquisitions designed more to improve the quantity of their weaponry rather than the quality. They are supposed to have an answer to anything and everything and if (and when) they don’t, they have the superstar of all superstars to step up and carry them like he’s always done.
Keep the elbow out of this. Jordan played with the flu and willed his team to win. For crying out loud, Nash closed out the Spurs in San Antonio with one eye and Stoudemire! And yes, Kobe has his team in the Conference Finals with a banged up everything. It’s one of those lessons that you keep hearing in life and it applies to sport as well. If you really want something badly, the whole universe will seem to conspire in your favor.
That’s what has to happen in Boston at the Garden. Lebron has to picture himself in the most hostile of atmospheres.
He has to picture Mo Williams and Anthony Parker missing three pointers from both flanks.
He has to picture Shaq missing easy baskets in the paint and imagine Rajon Rondo creating open looks for Allen and Pierce.
He has to picture Kevin Garnett anchoring the defense and blocking the paint and then, most importantly, he has to picture himself making enough layups and jumpers, dishing enough dimes, grabbing enough rebounds and blocking enough shots so that when the game is over, they will leave Boston with a "W" and a chance to close it out at the Q again.
July’s exalted free agency will have a bitter taste in the mouth if Lebron’s season ends in Boston. If he wants to be known as the best basketball player on the planet, he needs to realize that a 60 win season does not matter if he falls short in the postseason.
He has brought this upon himself.
The Chosen One needs to arrive and he needs to arrive NOW.
Shelve the past and blur the future, because at the moment, the present is all that will matter. Nothing less will suffice.
I believe in Lebron and you may too but this is about Lebron believing in himself.
Cleveland doesn’t need another Ehlo.
If you don’t buy into this media hype about yourself and instead set about improving your game quietly with a low profile then you could almost be forgiven for every singular achievement that you fail to accomplish. And if you actually buy into all this hype surrounding yourself and make every attempt to build it up even more (while also improving your game)?
Well, then you’re Lebron James – The King Of Cleveland and the one we are all supposed to be a witness to.
A witness?
A WITNESS??
With my eyes barely open in the morning, I was witness to King James not making a single field goal till the third quarter!
I was witness to some insipid defense and a total lack of energy and desire.
And I was witness to the worst playoff loss at home in franchise history.
Yes, I was witness to 120-88 at the Q.
And now, I’ll be witness to a Game 6 in Boston with the season on the line and James’ legacy at stake.
Make no mistake about it. This IS the first call for Lebron James.
Game 6 is his "Game of Reckoning". You can’t join a lottery team and immediately start reeling off championships (Ask Chicago’s Number 23). It’s like a jigsaw puzzle—except you already have the biggest piece and the clearest picture. All you have to do is complete it with the perfect smaller pieces.
Last year, James was forgiven for running into a Magic team whose center and sharpshooting they had no answer too. Nevertheless, he still stuffed the stat box and iced it with a phenomenal buzzer beater at home.
This year? The Cavaliers have made significant acquisitions designed more to improve the quantity of their weaponry rather than the quality. They are supposed to have an answer to anything and everything and if (and when) they don’t, they have the superstar of all superstars to step up and carry them like he’s always done.
Keep the elbow out of this. Jordan played with the flu and willed his team to win. For crying out loud, Nash closed out the Spurs in San Antonio with one eye and Stoudemire! And yes, Kobe has his team in the Conference Finals with a banged up everything. It’s one of those lessons that you keep hearing in life and it applies to sport as well. If you really want something badly, the whole universe will seem to conspire in your favor.
That’s what has to happen in Boston at the Garden. Lebron has to picture himself in the most hostile of atmospheres.
He has to picture Mo Williams and Anthony Parker missing three pointers from both flanks.
He has to picture Shaq missing easy baskets in the paint and imagine Rajon Rondo creating open looks for Allen and Pierce.
He has to picture Kevin Garnett anchoring the defense and blocking the paint and then, most importantly, he has to picture himself making enough layups and jumpers, dishing enough dimes, grabbing enough rebounds and blocking enough shots so that when the game is over, they will leave Boston with a "W" and a chance to close it out at the Q again.
July’s exalted free agency will have a bitter taste in the mouth if Lebron’s season ends in Boston. If he wants to be known as the best basketball player on the planet, he needs to realize that a 60 win season does not matter if he falls short in the postseason.
He has brought this upon himself.
The Chosen One needs to arrive and he needs to arrive NOW.
Shelve the past and blur the future, because at the moment, the present is all that will matter. Nothing less will suffice.
I believe in Lebron and you may too but this is about Lebron believing in himself.
Cleveland doesn’t need another Ehlo.
Friday, 23 April 2010
Tested Positive: The Fall Of Olympic Gold Medalist LaShawn Merritt
In the five minutes that it takes me to write this, I should presumptuously be able to get my point across.
For all the joys of athletic wonder that we have witnessed, for all the staggering sporting feats that we never imagined would be attained; there are equally devastating ditches that lie in wait - for the wrong athlete, at the wrong time.
To all those who follow the world of Athletics with a passion, (quite simply because it remains the most divine and purest form of sport), rewind your memory a couple of years back when Jeremy Wariner seemed destined to clinch his second consecutive Gold medal in the 400 metres Men's event in Beijing.
There is a reason why the 400 meters event is arguably considered the most difficult to run and this is primarily because it qualifies as a 'sprint distance'. Therefore, while it doesn't take 10-20 seconds like the 100m or 200m, it also isn't long enough to maintain a constant and quick pace. The 400 brings out the truest of athletes and this is precisely why some of the most famous 400 meter runners in history are widely respected as some of the greatest runners ever. Otis Davis, Butch Reynolds and of course Michael Johnson.
Wariner, by all means was a prodigy and in many circles was talked about as being able to challenge Johnson's magical 43.18 mark set at Seville in 1999. At the Athens Olympics as a 20 year old, he won Gold in the 400m and in Osaka 2007 at the World Championships, he clinched Gold with a dazzling personal best of 43.45 seconds!
And at the 2008 Beijing Games? Wariner set another record. He came second to LaShawn Merritt by the largest margin (0.99 seconds) in Olympic history between any Gold and Silver medalist! Merritt simply seemed too strong down the stretch and at one point of time, it appeared as if he was running twice as fast as a badly fading Wariner. Merritt went on to win the 2009 World Championships in Berlin as well. Wariner came a comfortable second yet again.
Newsflash! - The 400 metres Olympic and World Champion LaShawn Merritt has failed a doping test and accepted provisional suspension. His statement said that he had used an over-the-counter product containing DHEA and pregnenolone (endogenous hormones) following the 2009 season. Till the case is decided, he remains in line for a standard two year ban.
Furthermore, he hopes his "sponsors, family, friends and sport will forgive him for making such a foolish, immature and egotistical mistake".
Now Merritt doesn't grab the limelight quite simply because (a) he isn't Michael Johnson (b) he isn't Usain Bolt either. However, this doesn't stop the announcement from leaving a bloody bitter taste in one's mouth. We've seen 'mistakes' like this by the dozen, proceeded to criticize them with a disapproving shake of our heads and apparently we move on, leaving the door open without perhaps sending the message strongly enough.
The message that there is NO place for a drug inside a sportsman's body. And more importantly, there is NO place for such a sportsman inside our hearts.
For all the joys of athletic wonder that we have witnessed, for all the staggering sporting feats that we never imagined would be attained; there are equally devastating ditches that lie in wait - for the wrong athlete, at the wrong time.
To all those who follow the world of Athletics with a passion, (quite simply because it remains the most divine and purest form of sport), rewind your memory a couple of years back when Jeremy Wariner seemed destined to clinch his second consecutive Gold medal in the 400 metres Men's event in Beijing.
There is a reason why the 400 meters event is arguably considered the most difficult to run and this is primarily because it qualifies as a 'sprint distance'. Therefore, while it doesn't take 10-20 seconds like the 100m or 200m, it also isn't long enough to maintain a constant and quick pace. The 400 brings out the truest of athletes and this is precisely why some of the most famous 400 meter runners in history are widely respected as some of the greatest runners ever. Otis Davis, Butch Reynolds and of course Michael Johnson.
Wariner, by all means was a prodigy and in many circles was talked about as being able to challenge Johnson's magical 43.18 mark set at Seville in 1999. At the Athens Olympics as a 20 year old, he won Gold in the 400m and in Osaka 2007 at the World Championships, he clinched Gold with a dazzling personal best of 43.45 seconds!
And at the 2008 Beijing Games? Wariner set another record. He came second to LaShawn Merritt by the largest margin (0.99 seconds) in Olympic history between any Gold and Silver medalist! Merritt simply seemed too strong down the stretch and at one point of time, it appeared as if he was running twice as fast as a badly fading Wariner. Merritt went on to win the 2009 World Championships in Berlin as well. Wariner came a comfortable second yet again.
Newsflash! - The 400 metres Olympic and World Champion LaShawn Merritt has failed a doping test and accepted provisional suspension. His statement said that he had used an over-the-counter product containing DHEA and pregnenolone (endogenous hormones) following the 2009 season. Till the case is decided, he remains in line for a standard two year ban.
Furthermore, he hopes his "sponsors, family, friends and sport will forgive him for making such a foolish, immature and egotistical mistake".
Now Merritt doesn't grab the limelight quite simply because (a) he isn't Michael Johnson (b) he isn't Usain Bolt either. However, this doesn't stop the announcement from leaving a bloody bitter taste in one's mouth. We've seen 'mistakes' like this by the dozen, proceeded to criticize them with a disapproving shake of our heads and apparently we move on, leaving the door open without perhaps sending the message strongly enough.
The message that there is NO place for a drug inside a sportsman's body. And more importantly, there is NO place for such a sportsman inside our hearts.
Thursday, 22 April 2010
GET IN THE HOLE!: Are You Cheering for Tiger this Weekend?
Tiger Woods tees off in less than 20 minutes. By the time this gets published, he'd have probably whacked that first ball off the tee with millions of eyes watching.
Billy Payne's eyes too. Billy who?
It was wrong of Payne to voice his opinion on Tiger in that manner. Sure, in his defense, Woods' actions have warranted universal scrutiny and more importantly, universal judgment. But come on Billy, take the high road. All you had to do was say that it was good to see Tiger back at the Masters, because let's face it—It IS good to see Tiger back on a golf course!
We're all human right? We make mistakes. We do the crime, we do the time. We live a life based on faith and when our faith fails us, we tend to react abnormally. Clearly, Woods' transgressions, while being perfect tabloid fodder, are horrendous. They reflect on a man who failed in his duty as a father and a husband. THEY DO NOT, however, reflect on a man who failed as a golfer!
The price of stardom ensures that privacy no longer remains a word with meaning. It ensures that once the cat gets let out of the bag or one skeleton out of the closet, more are likely to follow. And it ensures that for the rest of his life, Tiger Woods will never be allowed to forget the past year even on the golf course.
Well. Too bad! Suck it up!
If you want to be one of those hypocritical moms in Sunday hats or those distinguished looking fine gentlemen who claim that they'll never cheer for Tiger again because he let them down and their kids can no longer look up to him then that's alright. You cheer for whoever you want to. Pick that Phil guy or whoever he is.
Me? In about three minutes, I know what I'LL be shouting.
GET IN THE HOLE!!!!!!!!!!!!!!!!!
Billy Payne's eyes too. Billy who?
It was wrong of Payne to voice his opinion on Tiger in that manner. Sure, in his defense, Woods' actions have warranted universal scrutiny and more importantly, universal judgment. But come on Billy, take the high road. All you had to do was say that it was good to see Tiger back at the Masters, because let's face it—It IS good to see Tiger back on a golf course!
We're all human right? We make mistakes. We do the crime, we do the time. We live a life based on faith and when our faith fails us, we tend to react abnormally. Clearly, Woods' transgressions, while being perfect tabloid fodder, are horrendous. They reflect on a man who failed in his duty as a father and a husband. THEY DO NOT, however, reflect on a man who failed as a golfer!
The price of stardom ensures that privacy no longer remains a word with meaning. It ensures that once the cat gets let out of the bag or one skeleton out of the closet, more are likely to follow. And it ensures that for the rest of his life, Tiger Woods will never be allowed to forget the past year even on the golf course.
Well. Too bad! Suck it up!
If you want to be one of those hypocritical moms in Sunday hats or those distinguished looking fine gentlemen who claim that they'll never cheer for Tiger again because he let them down and their kids can no longer look up to him then that's alright. You cheer for whoever you want to. Pick that Phil guy or whoever he is.
Me? In about three minutes, I know what I'LL be shouting.
GET IN THE HOLE!!!!!!!!!!!!!!!!!
Of Barcelona and Messimania
Take this from a Manchester United supporter.
Football has never seen a team like Barcelona PERIOD.
We’ve seen attacking football; the kind that looks good and the kind that’s played to win by simply scoring more goals than the other team. We remember Eusebio’s Portugal, Cryuff’s Holland and the Brazilian National Team at nearly each and every World Cup. At the club level, we remember (statistically at least), Di Stefano’s Madrid, Arsenal’s ‘Henry’-Era and the advent of the Galacticos. Ironically, we also remember a Barcelona team of not too long ago – Ronaldinho’s Barcelona.
It’s entirely unfair of me to comment on teams that I haven’t visually witnessed play so I won’t dwell on them. Football however, is an eleven man game. Over the past couple of decades, the team that has the reigning Player of the Year has never been guaranteed club success, especially when it has been awarded for International brilliance and consistency. And this is precisely what makes the Barcelona story so alluring.
While praises continue to be sung about Messi and Messi alone, we must ask ourselves when the last time was that a Football club, at almost each position, had one of the Top 5 players in the world at that position. Or ask yourselves this: Pick the Top 10 players (irrespective o f position) in football today. I did, and without thinking (in no particular order), I came up with Messi, Ronaldo, Rooney, Kaka, Torres, Ribery, Iniesta, Xavi, Aguero and Villa/Drogba/Gerrard/Lampard etc. Three of those players play for Barcelona and they’re heavily involved in controlling the game and setting up (as well as scoring) goals! Anyone who watched both the Barcelona-Arsenal Champions League legs probably found themselves asking when the last time was that the gulf between two premier clubs was ever so wide.
For some, Bendtner’s goal might have sent shockwaves through Camp Nou and may have had even the most devout of Blaugrana fans wondering whether this was one of those dreaded nights when frustration would overcome brilliance. Ah! Therein lies the difference between the Barcelona of today and all the great club teams of the past. The latter had ‘off-days’, days when they just couldn’t seem to find the back of the net or days when the defense would erroneously concede goals that they would never dream of conceding. This team doesn’t really go through ‘off-days’, and when they do, it’s not entirely that ‘off’ after all.
And just like they did in last year’s final, Barcelona succeeded again in playing the beautiful game the way it’s meant to be played. Those short, crisp one-touch passes at a dizzying pace, the careful and patient build up towards a run down the flank or penetration through the middle and above all, clinical and comprehensive finishing evidenced by one man alone.
The only stage where they can be upset (and since it’s in the Bernabeu it’s highly unlikely), is in the Final where everyone would like to believe that anything can happen. Over two legs? Sorry. Even with a four goal deficit I would never bet against them.
FC Barcelona is here to stay.
Football has never seen a team like Barcelona PERIOD.
We’ve seen attacking football; the kind that looks good and the kind that’s played to win by simply scoring more goals than the other team. We remember Eusebio’s Portugal, Cryuff’s Holland and the Brazilian National Team at nearly each and every World Cup. At the club level, we remember (statistically at least), Di Stefano’s Madrid, Arsenal’s ‘Henry’-Era and the advent of the Galacticos. Ironically, we also remember a Barcelona team of not too long ago – Ronaldinho’s Barcelona.
It’s entirely unfair of me to comment on teams that I haven’t visually witnessed play so I won’t dwell on them. Football however, is an eleven man game. Over the past couple of decades, the team that has the reigning Player of the Year has never been guaranteed club success, especially when it has been awarded for International brilliance and consistency. And this is precisely what makes the Barcelona story so alluring.
While praises continue to be sung about Messi and Messi alone, we must ask ourselves when the last time was that a Football club, at almost each position, had one of the Top 5 players in the world at that position. Or ask yourselves this: Pick the Top 10 players (irrespective o f position) in football today. I did, and without thinking (in no particular order), I came up with Messi, Ronaldo, Rooney, Kaka, Torres, Ribery, Iniesta, Xavi, Aguero and Villa/Drogba/Gerrard/Lampard etc. Three of those players play for Barcelona and they’re heavily involved in controlling the game and setting up (as well as scoring) goals! Anyone who watched both the Barcelona-Arsenal Champions League legs probably found themselves asking when the last time was that the gulf between two premier clubs was ever so wide.
For some, Bendtner’s goal might have sent shockwaves through Camp Nou and may have had even the most devout of Blaugrana fans wondering whether this was one of those dreaded nights when frustration would overcome brilliance. Ah! Therein lies the difference between the Barcelona of today and all the great club teams of the past. The latter had ‘off-days’, days when they just couldn’t seem to find the back of the net or days when the defense would erroneously concede goals that they would never dream of conceding. This team doesn’t really go through ‘off-days’, and when they do, it’s not entirely that ‘off’ after all.
And just like they did in last year’s final, Barcelona succeeded again in playing the beautiful game the way it’s meant to be played. Those short, crisp one-touch passes at a dizzying pace, the careful and patient build up towards a run down the flank or penetration through the middle and above all, clinical and comprehensive finishing evidenced by one man alone.
The only stage where they can be upset (and since it’s in the Bernabeu it’s highly unlikely), is in the Final where everyone would like to believe that anything can happen. Over two legs? Sorry. Even with a four goal deficit I would never bet against them.
FC Barcelona is here to stay.
LBJ, Darko, Melo, CB4, D-Wade: Revisiting the 2003 NBA Draft
It's hard to believe that barely seven years have passed and already the 2003 NBA draft class looks like one of the best of all time. While this is largely due to the depth of the top five, we must not forget others such as David West, Mo Williams, Chris Kaman, Leandro Barbosa and Josh Howard.
Where are the Top Five now? How many points, assists and rebounds have they totaled? More importantly, with four out of the top five being quintessential "franchise players", what would have happened to Darko Milicic had the Pistons not had the Vancouver trade and some other lottery team had picked him?
In six and a half seasons, this is what the Top Five have statistically accomplished in the regular season:
Games Played (Minutes Played)
Lebron James: 539 (21,763)
Carmelo Anthony: 500 (18,202)
Chris Bosh: 498 (18,426)
Dwayne Wade: 458 (17,228)
Darko Milicic: 357 (6,127)
===============================================
For the Points, Rebounds, Assists I standardized everyone to 539 games (Lebron's Tally) and simply extrapolated the numbers based on the player's career average.
Points Rebounds Assists P+R+A
Lebron James: 14,997 3,794 3,734 22,525
Dwayne Wade: 13,678 2,618 3,577 19,873
Carmelo Anthony: 13,317 3,329 1,676 18,322
Chris Bosh: 10,835 5,060 1,182 16,627
Darko Milicic: 2,921 2,171 386 5,478
===============================================
The other two famous draft classes (1984 and 1996) had a Top Five of (Olajuwon, Bowie, Jordan, Perkins, Barkley) and (Iverson, Camby, Abdur-Rahim, Marbury, Allen). In terms of the first seven seasons, the only comparison is between '84 and '03. Bowie = Darko = Bust and Barkley = Bosh. The difference? Jordan had Six rings, Olajuwon had Two. Whereas only Dwayne has tasted championship success.
Still, it's scary to think where the four might end up statistically if each gets to play a full career (another 8-10 seasons). Sure shot Hall of Famers undoubtedly.
Where are the Top Five now? How many points, assists and rebounds have they totaled? More importantly, with four out of the top five being quintessential "franchise players", what would have happened to Darko Milicic had the Pistons not had the Vancouver trade and some other lottery team had picked him?
In six and a half seasons, this is what the Top Five have statistically accomplished in the regular season:
Games Played (Minutes Played)
Lebron James: 539 (21,763)
Carmelo Anthony: 500 (18,202)
Chris Bosh: 498 (18,426)
Dwayne Wade: 458 (17,228)
Darko Milicic: 357 (6,127)
===============================================
For the Points, Rebounds, Assists I standardized everyone to 539 games (Lebron's Tally) and simply extrapolated the numbers based on the player's career average.
Points Rebounds Assists P+R+A
Lebron James: 14,997 3,794 3,734 22,525
Dwayne Wade: 13,678 2,618 3,577 19,873
Carmelo Anthony: 13,317 3,329 1,676 18,322
Chris Bosh: 10,835 5,060 1,182 16,627
Darko Milicic: 2,921 2,171 386 5,478
===============================================
The other two famous draft classes (1984 and 1996) had a Top Five of (Olajuwon, Bowie, Jordan, Perkins, Barkley) and (Iverson, Camby, Abdur-Rahim, Marbury, Allen). In terms of the first seven seasons, the only comparison is between '84 and '03. Bowie = Darko = Bust and Barkley = Bosh. The difference? Jordan had Six rings, Olajuwon had Two. Whereas only Dwayne has tasted championship success.
Still, it's scary to think where the four might end up statistically if each gets to play a full career (another 8-10 seasons). Sure shot Hall of Famers undoubtedly.
Tuesday, 1 December 2009
The #15 Pick
If you don't follow the NBA or sport, you might as well stop reading now.
To be fair, I've never been a basketball player simply because i'm just too bad.I think it's the only sport where I don't think I can play to even save my life. But I love playing it and watching it and there's a reason for that.
The most cliched reason. A role model.
When Steve Nash was selected as the 15th pick in a star-studded draft that included AI, Kobe and Ray Allen among others, he was booed by Suns fans simply because he was from an unknown college team. Today, I don't think there's a single Suns fan out there that isn't thankful that:
(a)they drafted him, but more importantly
(b)they signed him from the Mavs years later and
(c)they resigned him to another 2 years
It's difficult to appreciate the genius of Nash especially if you're not a Suns fan. His career stats are far from jaw-dropping and at the end of the day, there are no monster dunks or blocks and his defense has often been termed as non-existent.
The problem is that Nash made fans out of basketball followers in general as well as the cynics who deemed the NBA too boring and preferred college hoops instead.
In truth, the Phoenix run-and-gun/7-seconds-or-less system under D'Antoni worked because of Nash and not the other way round. It was basketball played like never before and it was basketball played with winning in mind.
And it reminded us that every once in a while, professional sport goes through a phase that revolutionizes the sport itself and essentially ends up proving that there is an exciting/entertaining way to play the game and still end up winning. Gilchrist did it as a keeper, first the Rams did it in '99 then the Patriots in '07 in the NFL. The Dutch did it in the 70's on the football field and the Brazilians have been doing it forever. Federer and Woods have been doing it for years.
Put simply, it's when you make winning look good.
Nash isn't even the best player in the league. In fact, there's no doubt that the best overall player in the NBA today is Lebron James.He's both the present and the future. Ray Allen might have the best shot and Kobe might be the most talented offensive player ever but Lebron can do anything and everything which includes winning. Chris Paul is probably a more preferred point-guard than Nash.
However, if the NBA were to have an artist, the one who could paint and bring things to life and make it seem as if the simplest could be the most beautiful, it has to be Steve Nash. He made Nowitzki and Juwan Howard look good (which wasn't that hard). But he also turned Marion into an All-Star and made Stoudemire temporarily look like an unstoppable offensive force. Barbosa, Bell and Diaw all looked better with Nash spreading the offense and distributing the ball.
And then, everything seemed to have been broken, the dream snuffed away and the prospect of a ring further away than it had ever been.
In hindsight, the acquisition of Shaq was the biggest mistake that a high octane team like the Suns could ever have made. Frustrated by not being able to reach the finals, the move stank of desperation and the introduction of Terry Porter turned an exciting team that won far more than they lost, into an ordinary team that won just a bit more than they lost. And it seemed that there was no hope.
That Stoudemire would never be the same.
That the explosiveness and energy of Marion couldn't be substituted.
That most importantly, Nash was 35 and certainly over the hill, the back-to-back MVP's long since forgotten and critically even unfairly referred to as anomalies.
Think again.
(1) Stoudemire back. Certainly not to his S-T-A-T best but BACK.
(2) The talented and injury prone-turned-injury free Grant Hill playing like a true veteran.
(3) J-Rich posting career bests in shooting accuracy.
(4) CHANNING FRYE!! nailing threes like it's nobody's business when last year he was rotting away in Portland or somewhere.
(5) Steve Nash averaging 12 assists a game and shooting above 50-40-90 yet again for the umpteenth time in his career.
(6) The Phoenix Suns currently having the best record in the league.
This isn't to say that the Suns are the best team in the league. They're far from it. But they'll make the playoffs and they'll make the playoffs in style.
And yes, once again, they're far and away the most exciting team in the league.
And it's the same man running the show.
The same guy who was never given a chance in the NBA.
The same guy who publicly spoke out against the Iraq war inviting the wrath of other misguided and 'patriotic' American professionals.
The same guy who suffers from spondylolisthesis which causes muscle tightness and acute back pain.
And yeah, the same guy who was once called "The Poor Man's Stockton".
To be fair, I've never been a basketball player simply because i'm just too bad.I think it's the only sport where I don't think I can play to even save my life. But I love playing it and watching it and there's a reason for that.
The most cliched reason. A role model.
When Steve Nash was selected as the 15th pick in a star-studded draft that included AI, Kobe and Ray Allen among others, he was booed by Suns fans simply because he was from an unknown college team. Today, I don't think there's a single Suns fan out there that isn't thankful that:
(a)they drafted him, but more importantly
(b)they signed him from the Mavs years later and
(c)they resigned him to another 2 years
It's difficult to appreciate the genius of Nash especially if you're not a Suns fan. His career stats are far from jaw-dropping and at the end of the day, there are no monster dunks or blocks and his defense has often been termed as non-existent.
The problem is that Nash made fans out of basketball followers in general as well as the cynics who deemed the NBA too boring and preferred college hoops instead.
In truth, the Phoenix run-and-gun/7-seconds-or-less system under D'Antoni worked because of Nash and not the other way round. It was basketball played like never before and it was basketball played with winning in mind.
And it reminded us that every once in a while, professional sport goes through a phase that revolutionizes the sport itself and essentially ends up proving that there is an exciting/entertaining way to play the game and still end up winning. Gilchrist did it as a keeper, first the Rams did it in '99 then the Patriots in '07 in the NFL. The Dutch did it in the 70's on the football field and the Brazilians have been doing it forever. Federer and Woods have been doing it for years.
Put simply, it's when you make winning look good.
Nash isn't even the best player in the league. In fact, there's no doubt that the best overall player in the NBA today is Lebron James.He's both the present and the future. Ray Allen might have the best shot and Kobe might be the most talented offensive player ever but Lebron can do anything and everything which includes winning. Chris Paul is probably a more preferred point-guard than Nash.
However, if the NBA were to have an artist, the one who could paint and bring things to life and make it seem as if the simplest could be the most beautiful, it has to be Steve Nash. He made Nowitzki and Juwan Howard look good (which wasn't that hard). But he also turned Marion into an All-Star and made Stoudemire temporarily look like an unstoppable offensive force. Barbosa, Bell and Diaw all looked better with Nash spreading the offense and distributing the ball.
And then, everything seemed to have been broken, the dream snuffed away and the prospect of a ring further away than it had ever been.
In hindsight, the acquisition of Shaq was the biggest mistake that a high octane team like the Suns could ever have made. Frustrated by not being able to reach the finals, the move stank of desperation and the introduction of Terry Porter turned an exciting team that won far more than they lost, into an ordinary team that won just a bit more than they lost. And it seemed that there was no hope.
That Stoudemire would never be the same.
That the explosiveness and energy of Marion couldn't be substituted.
That most importantly, Nash was 35 and certainly over the hill, the back-to-back MVP's long since forgotten and critically even unfairly referred to as anomalies.
Think again.
(1) Stoudemire back. Certainly not to his S-T-A-T best but BACK.
(2) The talented and injury prone-turned-injury free Grant Hill playing like a true veteran.
(3) J-Rich posting career bests in shooting accuracy.
(4) CHANNING FRYE!! nailing threes like it's nobody's business when last year he was rotting away in Portland or somewhere.
(5) Steve Nash averaging 12 assists a game and shooting above 50-40-90 yet again for the umpteenth time in his career.
(6) The Phoenix Suns currently having the best record in the league.
This isn't to say that the Suns are the best team in the league. They're far from it. But they'll make the playoffs and they'll make the playoffs in style.
And yes, once again, they're far and away the most exciting team in the league.
And it's the same man running the show.
The same guy who was never given a chance in the NBA.
The same guy who publicly spoke out against the Iraq war inviting the wrath of other misguided and 'patriotic' American professionals.
The same guy who suffers from spondylolisthesis which causes muscle tightness and acute back pain.
And yeah, the same guy who was once called "The Poor Man's Stockton".
Wednesday, 12 November 2008
W
Georgie Porgie pudding and pie,
Messed up the world by telling a lie.
You name it, he’s screwed it, there’s nothing else to do,
But there’s 60 days left so don’t think that we’re through.
Born with a long silver spoon up his arse,
It’s the reason why he was at the bottom of his class.
But that’s just the start and it doesn’t even compare
To the policies he promoted, and his audacity to dare.
Voters got it wrong, they just didn’t realize,
But they did it again! Damn you buckeyes.
What they did was allow another four years of idiocy,
Im not questioning their beliefs, I’m questioning their literacy.
Kyoto be spurned and the UN be damned!
We’ll give the Middle East our own helping hand.
Global Warming’s natural, you scientists are crass,
Let’s consume more oil and guzzle more gas.
Forget about the debt, there’ll be no defaults,
We’ll keep borrowing more as the economy halts.
We’ll deregulate them markets, let the greedy get greedier.
We’ll keep cutting taxes, let the needy get needier.
You had major ‘daddy issues’, now the whole world will pay,
You’re liable for impeachment, it's what the Democrats say.
Will you stop being ignorant and do something nice?
Which moron advises you? Is it Condoleezza Rice?
You played to the right wing, making abortion an issue,
You ignored Darfur and you ignored Mogadishu.
We all think it’s time you stopped your politics of fear,
In any case, the end of your presidency is near.
Georgie Porgie, now take your pudding and run,
Nothing more you can screw up, that you haven’t already done.
Don’t ignore the polls, for they tell a sordid tale,
Of the pathetic eight years, and the presidency that you failed.
Messed up the world by telling a lie.
You name it, he’s screwed it, there’s nothing else to do,
But there’s 60 days left so don’t think that we’re through.
Born with a long silver spoon up his arse,
It’s the reason why he was at the bottom of his class.
But that’s just the start and it doesn’t even compare
To the policies he promoted, and his audacity to dare.
Voters got it wrong, they just didn’t realize,
But they did it again! Damn you buckeyes.
What they did was allow another four years of idiocy,
Im not questioning their beliefs, I’m questioning their literacy.
Kyoto be spurned and the UN be damned!
We’ll give the Middle East our own helping hand.
Global Warming’s natural, you scientists are crass,
Let’s consume more oil and guzzle more gas.
Forget about the debt, there’ll be no defaults,
We’ll keep borrowing more as the economy halts.
We’ll deregulate them markets, let the greedy get greedier.
We’ll keep cutting taxes, let the needy get needier.
You had major ‘daddy issues’, now the whole world will pay,
You’re liable for impeachment, it's what the Democrats say.
Will you stop being ignorant and do something nice?
Which moron advises you? Is it Condoleezza Rice?
You played to the right wing, making abortion an issue,
You ignored Darfur and you ignored Mogadishu.
We all think it’s time you stopped your politics of fear,
In any case, the end of your presidency is near.
Georgie Porgie, now take your pudding and run,
Nothing more you can screw up, that you haven’t already done.
Don’t ignore the polls, for they tell a sordid tale,
Of the pathetic eight years, and the presidency that you failed.
Tuesday, 30 September 2008
Ajax
Mahmoud Ahmadinejad must enjoy being in the limelight for the extended period of time that he has been. It's probably not his fault although domestic criticism has escalated in response to his over emphasis and aggressiveness towards America and its ideology (read: capitalism, christianity etc.)
The odd thing is that in Iran, the highest elected official is not the President. Rather, that honor rests with the 'Supreme Leader' - Ayatollah Ali Khamenei and it makes him, in simple words, the most powerful man in the country.
I can't think of another nation that hates America more. I really can't. Iran has repeatedly expressed its disdain, disregard and yes, hatred for America and unarguably deserves that status.
We hear a lot of things about Ahmadinejad. Poor guy, America must hate him so. One of the foremost reasons is certainly the fact that it's impossible for the average (and severely limited) American tongue to pronounce his name.
As if Moo-ham-mud wasn't tough enough for them.
Face it, his name makes John Mccain look like a kid trying to recite that crazy tongue twister that none of us could ever do. That's not all. It seems as if Ahmadinejad is a far cry from the man that did his doctoral studies in civil engineering and made it to the world mayor shortlist during his stint in Teheran. He seems far away from his campaign promises of populism and economic initiative.
Bottom line: Petrodollars have not been managed properly. Growth has stagnated and the usual macroeconomic indicators - unemployment, inflation, GDP are seen as half empty and not half full.
That's not the point. I detest religious extremism to the core and it doesn't matter what the religion is.I have no sympathy for fundamentalists. But there's a reason for this volatile relationship that the two countries share. Everyone loves conspiracy theories and there are more than enough to go around. Some are just downright disrespectful while others are downright truthful.
Operation Ajax is as blatant as it gets.
Madeline Albright, as a holder of that infamous position of US Secretary of State, is most well known for her "the price was worth it" remarks when asked what she thought of the fact that 500,000 Iraqi children may have died as a direct and indirect result of US economic sanctions. This shouldn't disparage her statement in March, 2000 when she said, "In 1953, the United States played a significant role in orchestrating the overthrow of Iran's popular prime minister, Mohammed Mossadegh. The Dwight D. Eisenhower administration believed its actions were justified for strategic reasons, but the coup was clearly a setback for Iran's political development and it is easy to see now why many Iranians continue to resent this intervention by America in their internal affairs. Moreover, during the next quarter century, the United States and the West gave sustained backing to the Shah's regime."
There's no flip side to the narrative. The CIA used one of its most qualified and skilled operatives, Kermit Roosevelt (Teddy's grandson) to organize an overthrowing of the Democratically Elected Iranian government.
Mohammad Mossadeq is still viewed by many as a person who tried to implement unacceptable radical and secular policies. To a majority, arguably, he remains the hero of Third-World Anti-Imperialism. As the Prime Minister of Iran, it seems logical that he acted in the interests of his country and in doing so committed the gravest of errors which led to his downfall and subsequent house arrest till his death in 1967.
The Anglo-Persian Oil Company was created in 1908 and was renamed the Anglo Iranian Oil Company in 1935. Like any multi-national corporation, its focus was undeniably on maximizing its profits and eventually, it led to a conflict with the Iranian government. In 1947, for example, after reporting after tax profits of 40 million pounds, Iran was paid 7 million, little under 18%. Apart from the financial downside, dissent continued to rise as a result of the company's treatment of its local labour.
A Director of Iran's Petroleum institute noted. "Wages were 50 cents a day. There was no vacation pay, no sick leave, no disability compensation. The workers lived in a shanty town called Kaghazabad, or Paper city, without running water or electricity, ... In winter the earth flooded and became a flat, perspiring lake. The mud in town was knee-deep, and ... when the rains subsided, clouds of nipping, small-winged flies rose from the stagnant water to fill the nostrils .... Summer was worse. ... The heat was torrid ... sticky and unrelenting - while the wind and sandstorms shipped off the desert hot as a blower. The dwellings of Kaghazabad, cobbled from rusted oil drums hammered flat, turned into sweltering ovens. ... In every crevice hung the foul, sulfurous stench of burning oil .... in Kaghazad there was nothing - not a tea shop, not a bath, not a single tree. The tiled reflecting pool and shaded central square that were part of every Iranian town, ... were missing here. The unpaved alleyways were emporiums for rats."
Eventually, negotiations resulted in a hostile situation and led to the Abadan Crisis, where foreign countries refused to buy Iranian Oil. Britain was incensed and lobbied hard for American support. Truman found himself in a Catch-22 situation because although he opposed intervention, he needed Britain's support in Korea. Finally, under a new Eisenhower administration, America called in the CIA and worked with Churchill to fund a coup d'etat. Steven Kinzer narrates the details in his book, "All the Shah's Men: An American Coup".
Armed with a swollen budget and the complete backing of the governments of two of the most powerful nations in the world, Kermit Roosevelt did not have to work hard to slowly work his way through process. By bribing members of parliament and parties that formed Mossadeq's coalition, he sowed the initial seeds of unrest. When the coalition started splitting apart, he focused on the media, gaining control of important newspapers, columnists and reporters. By the time he moved onto the religious leaders, the coup was primed for success. Kinzer claims that Roosevelt even hired gangs of criminals to create a sense of lawlessness on the streets of Teheran. After a failed attempt on August 15th, 1953, Roosevelt staged another attempt 4 days later this time succeeding amidst heavy artillery and human casualty. Mossadeq was arrested, the Shah was reinstated and, as every story should have a happy ending, the Shah's did too at the time.
He flew back to Tehran, and a couple of nights later received Kermit Roosevelt on the last night that Roosevelt spent in Iran before returning to Washington. The two of them toasted each other with vodka, and the shah said, “I owe my throne to God, my people, my army, and you.” He was quite right, although he might have gotten the order a little mixed up.
Kermit returned to the Oval Office a hero, future pin-up boy for the American Gestapo and Sesame Street. Okay, poor humour.
Operation Ajax was seen as a HUGE success but it can also be viewed as a HUGE disaster. Until the 1979 revolution, the Shah's regime brutally oppressed any political uprisings and oversaw a disgusting human rights record as Washington turned a blind eye with the odd thumbs up.
Operation Ajax should not justify anything but the least it can do is serve as a reminder that people may forgive but may never forget.
The Anglo-Iranian Oil Company changed its name in 1954, barely a year after the coup.
Till today, it is known as British Petroleum.
The odd thing is that in Iran, the highest elected official is not the President. Rather, that honor rests with the 'Supreme Leader' - Ayatollah Ali Khamenei and it makes him, in simple words, the most powerful man in the country.
I can't think of another nation that hates America more. I really can't. Iran has repeatedly expressed its disdain, disregard and yes, hatred for America and unarguably deserves that status.
We hear a lot of things about Ahmadinejad. Poor guy, America must hate him so. One of the foremost reasons is certainly the fact that it's impossible for the average (and severely limited) American tongue to pronounce his name.
As if Moo-ham-mud wasn't tough enough for them.
Face it, his name makes John Mccain look like a kid trying to recite that crazy tongue twister that none of us could ever do. That's not all. It seems as if Ahmadinejad is a far cry from the man that did his doctoral studies in civil engineering and made it to the world mayor shortlist during his stint in Teheran. He seems far away from his campaign promises of populism and economic initiative.
Bottom line: Petrodollars have not been managed properly. Growth has stagnated and the usual macroeconomic indicators - unemployment, inflation, GDP are seen as half empty and not half full.
That's not the point. I detest religious extremism to the core and it doesn't matter what the religion is.I have no sympathy for fundamentalists. But there's a reason for this volatile relationship that the two countries share. Everyone loves conspiracy theories and there are more than enough to go around. Some are just downright disrespectful while others are downright truthful.
Operation Ajax is as blatant as it gets.
Madeline Albright, as a holder of that infamous position of US Secretary of State, is most well known for her "the price was worth it" remarks when asked what she thought of the fact that 500,000 Iraqi children may have died as a direct and indirect result of US economic sanctions. This shouldn't disparage her statement in March, 2000 when she said, "In 1953, the United States played a significant role in orchestrating the overthrow of Iran's popular prime minister, Mohammed Mossadegh. The Dwight D. Eisenhower administration believed its actions were justified for strategic reasons, but the coup was clearly a setback for Iran's political development and it is easy to see now why many Iranians continue to resent this intervention by America in their internal affairs. Moreover, during the next quarter century, the United States and the West gave sustained backing to the Shah's regime."
There's no flip side to the narrative. The CIA used one of its most qualified and skilled operatives, Kermit Roosevelt (Teddy's grandson) to organize an overthrowing of the Democratically Elected Iranian government.
Mohammad Mossadeq is still viewed by many as a person who tried to implement unacceptable radical and secular policies. To a majority, arguably, he remains the hero of Third-World Anti-Imperialism. As the Prime Minister of Iran, it seems logical that he acted in the interests of his country and in doing so committed the gravest of errors which led to his downfall and subsequent house arrest till his death in 1967.
The Anglo-Persian Oil Company was created in 1908 and was renamed the Anglo Iranian Oil Company in 1935. Like any multi-national corporation, its focus was undeniably on maximizing its profits and eventually, it led to a conflict with the Iranian government. In 1947, for example, after reporting after tax profits of 40 million pounds, Iran was paid 7 million, little under 18%. Apart from the financial downside, dissent continued to rise as a result of the company's treatment of its local labour.
A Director of Iran's Petroleum institute noted. "Wages were 50 cents a day. There was no vacation pay, no sick leave, no disability compensation. The workers lived in a shanty town called Kaghazabad, or Paper city, without running water or electricity, ... In winter the earth flooded and became a flat, perspiring lake. The mud in town was knee-deep, and ... when the rains subsided, clouds of nipping, small-winged flies rose from the stagnant water to fill the nostrils .... Summer was worse. ... The heat was torrid ... sticky and unrelenting - while the wind and sandstorms shipped off the desert hot as a blower. The dwellings of Kaghazabad, cobbled from rusted oil drums hammered flat, turned into sweltering ovens. ... In every crevice hung the foul, sulfurous stench of burning oil .... in Kaghazad there was nothing - not a tea shop, not a bath, not a single tree. The tiled reflecting pool and shaded central square that were part of every Iranian town, ... were missing here. The unpaved alleyways were emporiums for rats."
Eventually, negotiations resulted in a hostile situation and led to the Abadan Crisis, where foreign countries refused to buy Iranian Oil. Britain was incensed and lobbied hard for American support. Truman found himself in a Catch-22 situation because although he opposed intervention, he needed Britain's support in Korea. Finally, under a new Eisenhower administration, America called in the CIA and worked with Churchill to fund a coup d'etat. Steven Kinzer narrates the details in his book, "All the Shah's Men: An American Coup".
Armed with a swollen budget and the complete backing of the governments of two of the most powerful nations in the world, Kermit Roosevelt did not have to work hard to slowly work his way through process. By bribing members of parliament and parties that formed Mossadeq's coalition, he sowed the initial seeds of unrest. When the coalition started splitting apart, he focused on the media, gaining control of important newspapers, columnists and reporters. By the time he moved onto the religious leaders, the coup was primed for success. Kinzer claims that Roosevelt even hired gangs of criminals to create a sense of lawlessness on the streets of Teheran. After a failed attempt on August 15th, 1953, Roosevelt staged another attempt 4 days later this time succeeding amidst heavy artillery and human casualty. Mossadeq was arrested, the Shah was reinstated and, as every story should have a happy ending, the Shah's did too at the time.
He flew back to Tehran, and a couple of nights later received Kermit Roosevelt on the last night that Roosevelt spent in Iran before returning to Washington. The two of them toasted each other with vodka, and the shah said, “I owe my throne to God, my people, my army, and you.” He was quite right, although he might have gotten the order a little mixed up.
Kermit returned to the Oval Office a hero, future pin-up boy for the American Gestapo and Sesame Street. Okay, poor humour.
Operation Ajax was seen as a HUGE success but it can also be viewed as a HUGE disaster. Until the 1979 revolution, the Shah's regime brutally oppressed any political uprisings and oversaw a disgusting human rights record as Washington turned a blind eye with the odd thumbs up.
Operation Ajax should not justify anything but the least it can do is serve as a reminder that people may forgive but may never forget.
The Anglo-Iranian Oil Company changed its name in 1954, barely a year after the coup.
Till today, it is known as British Petroleum.
Sunday, 7 September 2008
Sir DGB
It's always fun but never correct, to compare sportsmen over different eras. It's even worse then, to compare sportsmen from different sports.
I don't have anything original for you though, just bits of information from here and there to provide some perspective on Don Bradman.
Charles Davis, a statistician from Melbourne, wrote a book titled, "The Best of the Best" almost a decade ago. Being the statistician that he was, he reverted to the ol' standard deviation method to see what he could come up with (obviously it's a little bit more complicated than that). Many people rightly question the veracity of results such as these. The factors that come into question are endless. How many countries play cricket and baseball as compared to football. Duh.
That shouldn't be the point here.
Anyway, picking the most dominant sportsman of his sport is hard enough so we'll do it spontaneously. When you see the name of the sport, just say the first name that comes into your head and we'll leave it at that. Ready?
1. Baseball
2. Cricket
3. Basketball
4. Golf
5. American Football
6. Football
So what did you say?
1. Babe Ruth would be a likely answer. The fact is, a true baseball fan might equally consider Ty Cobb for the enormity of his stats. The 'Georgia Peach', over the course of his career, set 90 Major League Records and still owns the highest Career Batting Average at .367, a hallowed statistic for Baseball.
2. Don Bradman? You should have said that if you answered without sentimentality. There's no possible way one could think of an argument for a Tendulkar/Lara, the reason being that there's no argument against that kind of consistency.
3. Michael Jordan? Good. Although Wilt Chamberlain still has the most unbelievable records, it is a measure of Jordan's impact on the game (not to mention his scoring average of 30.12) that makes him the first basketball name on everybody's lips.
4.Jack Nicklaus? The majority of you would be thinking Tiger Woods and justifiably so. I'm a big fan. Until, he gets to that magical mark of 18, we'll leave it at Nicklaus.
5. Did you say Joe Montana? I couldn't think of anything else. Dan Marino for the stats but Brett Favre's right up there as well. Maybe Brady and Manning will be around there once retired but Montana's a perennial favorite. No disservice to non-QB's like Jim Brown or Jerry Rice.
6. This is tricky because there's so much heart involved. There's no more than two choices, Pele and Maradonna, and the argument is record v/s (i dunno) skill? Either way, i'll let the goals speak for themselves and we'll leave it at Pele for now.
Alright so we've got our names. Cobb with a batting avg. of .367, Bradman with a famous but infamous average of 99.94, Jordan with a scoring average of 30.12 (no disrespect to the six rings and innumerable clutch plays), Nicklaus with the 18 majors, Montana with the 4 superbowls (Personally i would have preferred a stats guy like Favre or Marino) and Pele with his 1280 goals in 1363 games.
Those are some crazy statistics right there. The good thing is that the hard work is already over. Davis's findings revealed a final standard deviation mark which proved how ahead each of them were beyond their contemporaries. Again, this is where the problem comes in because you have to ignore crucial factors such as opposition, popularity of the sport etc. There are just too many intangibles. Nevertheless, here's what it looks like.
Joe Montana stood at 3.1 which is not bad at all, considering the fact that he's not famous for his yardage. Jordan was at 3.4 (Chamberlain's is almost as much but the rest of the data are way behind).Jack Nicklaus was 3.5 (Obviously a lot less now considering Woods' charge up the major list). Cobb was 3.6 and Pele was a 3.7. These are all pretty close even though they're simply measures of the deviation.
And Sir Donald George Bradman? He was 'calculated' to be 4.4!
To provide a picture of the difference, it was statistically proven that with such ratings as the basis, Jordan would need to have scored 43 point per game to have a 4.4 rating!! It's impossible to imagine any basketball player achieving that. Furthermore, Nicklaus would have required 25 majors and Ty Cobb would have needed a batting average of .392, an unthinkable mark for any player.
We needn't remind ourselves of the uselessness of comparisons and speculation. We're all aware that it's impossible to assign a 'number' or 'rating' on certain perfomances and statistics. In spite of all that, Bradman's legacy is a strong one and will hopefully remain that way.
It's quite simple really. I wouldn't be surprised if some (some???) golfer won 18 majors , a baseball player averaged .367 or a basketball player averaged over 30 points per game. I wouldn't even mind putting money on it (for an unlimited time period, that is).
I would bet everything i had, however, on the fact that no cricketer will ever, ever come close to breaking the 99.94 mark that has long since become part of cricketing folklore.
I don't have anything original for you though, just bits of information from here and there to provide some perspective on Don Bradman.
Charles Davis, a statistician from Melbourne, wrote a book titled, "The Best of the Best" almost a decade ago. Being the statistician that he was, he reverted to the ol' standard deviation method to see what he could come up with (obviously it's a little bit more complicated than that). Many people rightly question the veracity of results such as these. The factors that come into question are endless. How many countries play cricket and baseball as compared to football. Duh.
That shouldn't be the point here.
Anyway, picking the most dominant sportsman of his sport is hard enough so we'll do it spontaneously. When you see the name of the sport, just say the first name that comes into your head and we'll leave it at that. Ready?
1. Baseball
2. Cricket
3. Basketball
4. Golf
5. American Football
6. Football
So what did you say?
1. Babe Ruth would be a likely answer. The fact is, a true baseball fan might equally consider Ty Cobb for the enormity of his stats. The 'Georgia Peach', over the course of his career, set 90 Major League Records and still owns the highest Career Batting Average at .367, a hallowed statistic for Baseball.
2. Don Bradman? You should have said that if you answered without sentimentality. There's no possible way one could think of an argument for a Tendulkar/Lara, the reason being that there's no argument against that kind of consistency.
3. Michael Jordan? Good. Although Wilt Chamberlain still has the most unbelievable records, it is a measure of Jordan's impact on the game (not to mention his scoring average of 30.12) that makes him the first basketball name on everybody's lips.
4.Jack Nicklaus? The majority of you would be thinking Tiger Woods and justifiably so. I'm a big fan. Until, he gets to that magical mark of 18, we'll leave it at Nicklaus.
5. Did you say Joe Montana? I couldn't think of anything else. Dan Marino for the stats but Brett Favre's right up there as well. Maybe Brady and Manning will be around there once retired but Montana's a perennial favorite. No disservice to non-QB's like Jim Brown or Jerry Rice.
6. This is tricky because there's so much heart involved. There's no more than two choices, Pele and Maradonna, and the argument is record v/s (i dunno) skill? Either way, i'll let the goals speak for themselves and we'll leave it at Pele for now.
Alright so we've got our names. Cobb with a batting avg. of .367, Bradman with a famous but infamous average of 99.94, Jordan with a scoring average of 30.12 (no disrespect to the six rings and innumerable clutch plays), Nicklaus with the 18 majors, Montana with the 4 superbowls (Personally i would have preferred a stats guy like Favre or Marino) and Pele with his 1280 goals in 1363 games.
Those are some crazy statistics right there. The good thing is that the hard work is already over. Davis's findings revealed a final standard deviation mark which proved how ahead each of them were beyond their contemporaries. Again, this is where the problem comes in because you have to ignore crucial factors such as opposition, popularity of the sport etc. There are just too many intangibles. Nevertheless, here's what it looks like.
Joe Montana stood at 3.1 which is not bad at all, considering the fact that he's not famous for his yardage. Jordan was at 3.4 (Chamberlain's is almost as much but the rest of the data are way behind).Jack Nicklaus was 3.5 (Obviously a lot less now considering Woods' charge up the major list). Cobb was 3.6 and Pele was a 3.7. These are all pretty close even though they're simply measures of the deviation.
And Sir Donald George Bradman? He was 'calculated' to be 4.4!
To provide a picture of the difference, it was statistically proven that with such ratings as the basis, Jordan would need to have scored 43 point per game to have a 4.4 rating!! It's impossible to imagine any basketball player achieving that. Furthermore, Nicklaus would have required 25 majors and Ty Cobb would have needed a batting average of .392, an unthinkable mark for any player.
We needn't remind ourselves of the uselessness of comparisons and speculation. We're all aware that it's impossible to assign a 'number' or 'rating' on certain perfomances and statistics. In spite of all that, Bradman's legacy is a strong one and will hopefully remain that way.
It's quite simple really. I wouldn't be surprised if some (some???) golfer won 18 majors , a baseball player averaged .367 or a basketball player averaged over 30 points per game. I wouldn't even mind putting money on it (for an unlimited time period, that is).
I would bet everything i had, however, on the fact that no cricketer will ever, ever come close to breaking the 99.94 mark that has long since become part of cricketing folklore.
Saturday, 6 September 2008
GOP
Okay. This is not a liberal blog.
I'm not a Republican.
I'm not a Democrat.
I'm not even a citizen of the United States of America.
So hear me out as i offer an opinion on the Grand Old Party.
Who is Sarah Palin?
She's a 44 year old mom of five.
Fine.
She's a pentecostal born-again Christian.Bible-believing.
Fine.
Strong social conservative, anti-abortion, for the death penalty.
Fine.
She'd rather kids be taught abstinence than safe-sex.
Wait a minute. No, that's alright. She believed in it, and naturally ensured that what she preached to her citizens, she preached to her children. Before you say kids are off-limits you must remember that I'm not Barack Obama and I'm not a Democrat. Very conveniently then, I'm going to take a pot-shot here.
Bristol Palin is a 17 year old who is five months pregnant; there's a chance that five months ago she was still 16. Irrelevant nonetheless.
Obviously she couldn't abort 4-5 months ago, in spite of the fact that her mom claims she had a 'choice'. So she decides to marry the father, Levi Johnston. As a side-note, one must note that Sarah Palin vehemently opposed funding for teen mothers.
Levi Johnston describes himself as 'a fuckin redneck'. He also claims/claimed, through MySpace that he'd kick anyone's ass that tried to mess with him or something like that. Irrelevant. He also stated that he didn't want kids. Hmmm...wonder when he stated that.
There's nothing wrong with Bristol Palin being pregnant. It's simply the fact that all these conservative values preached but not practiced don't make the GOP look very good.
By the way, this is what Sarah Palin thinks of the war in "Eye-rack".
"Pray for our military men and women who are striving to do what is right. Also, for this country, that our leaders, our national leaders, are sending [U.S. soldiers] out on a task that is from God," she exhorted the congregants. "That's what we have to make sure that we're praying for, that there is a plan and that that plan is God's plan."
WHAAAAAAAAT.
So those radical islamic terrorists kill in the name of God. Despicable.
US troops are sent out to war to "carry out God's plan????"
Where's the difference?
Furthermore, Palin's Church (Wasilla Assembly of God) has a pastor and his name is Ed Kahlins. Here's what he had to say about Iraq.
"What you see in Iraq, basically, is a manifestation of what's going on in this unseen world called the spirit world. ... We need to think like Jesus thinks. We are in a time and a season of war, and we need to think like that. We need to develop that instinct. We need to develop as believers the instinct that we are at war, and that war is contending for your faith. ... Jesus called us to die. You're worried about getting hurt? He's called us to die. Listen, you know we can't even follow him unless you are willing to give up your life. ... I believe that Jesus himself operated from that position of war mode."
SHIT! ARE YOU SERIOUS? (and to think Jeremiah Wright got all the attention)
I saw the DNC and the RNC and was appalled at the latter. Rudy Giuliani deserves to be censured. Of all the things, he chose to take a low blow aimed at Obama's community organizing?? Come on, that's cynical to the core.
There's a nice comment i found on the internet after Giuliani's speech. It reads,"yeah! damn hippies. i love it when rudy shows those punks how to practice real christian virtues and shows em the value of a good solid marriage. oh wait, shit... ooops"
By the way, Giuliani has three wives.
I think I'm going to stop now. I'm not an Obama fan. He's a brilliant orator but if he's elected, he's going to have to prove it. I know one thing though.
I don't think America is the same country it was. It's been heading in an unfavorable direction of late and there's no doubt about that. The way i see it, voters have two choices this election. Go with McCain but believe me, i don't think he's going to change shit.
Other option? Take a chance on Obama. So it might not work, but since when has the thought of failure ever dissuaded us from doing something?
The GOP should never change its name. Because that's exactly what it is.
The GRAND OLD Party.
I'm not a Republican.
I'm not a Democrat.
I'm not even a citizen of the United States of America.
So hear me out as i offer an opinion on the Grand Old Party.
Who is Sarah Palin?
She's a 44 year old mom of five.
Fine.
She's a pentecostal born-again Christian.Bible-believing.
Fine.
Strong social conservative, anti-abortion, for the death penalty.
Fine.
She'd rather kids be taught abstinence than safe-sex.
Wait a minute. No, that's alright. She believed in it, and naturally ensured that what she preached to her citizens, she preached to her children. Before you say kids are off-limits you must remember that I'm not Barack Obama and I'm not a Democrat. Very conveniently then, I'm going to take a pot-shot here.
Bristol Palin is a 17 year old who is five months pregnant; there's a chance that five months ago she was still 16. Irrelevant nonetheless.
Obviously she couldn't abort 4-5 months ago, in spite of the fact that her mom claims she had a 'choice'. So she decides to marry the father, Levi Johnston. As a side-note, one must note that Sarah Palin vehemently opposed funding for teen mothers.
Levi Johnston describes himself as 'a fuckin redneck'. He also claims/claimed, through MySpace that he'd kick anyone's ass that tried to mess with him or something like that. Irrelevant. He also stated that he didn't want kids. Hmmm...wonder when he stated that.
There's nothing wrong with Bristol Palin being pregnant. It's simply the fact that all these conservative values preached but not practiced don't make the GOP look very good.
By the way, this is what Sarah Palin thinks of the war in "Eye-rack".
"Pray for our military men and women who are striving to do what is right. Also, for this country, that our leaders, our national leaders, are sending [U.S. soldiers] out on a task that is from God," she exhorted the congregants. "That's what we have to make sure that we're praying for, that there is a plan and that that plan is God's plan."
WHAAAAAAAAT.
So those radical islamic terrorists kill in the name of God. Despicable.
US troops are sent out to war to "carry out God's plan????"
Where's the difference?
Furthermore, Palin's Church (Wasilla Assembly of God) has a pastor and his name is Ed Kahlins. Here's what he had to say about Iraq.
"What you see in Iraq, basically, is a manifestation of what's going on in this unseen world called the spirit world. ... We need to think like Jesus thinks. We are in a time and a season of war, and we need to think like that. We need to develop that instinct. We need to develop as believers the instinct that we are at war, and that war is contending for your faith. ... Jesus called us to die. You're worried about getting hurt? He's called us to die. Listen, you know we can't even follow him unless you are willing to give up your life. ... I believe that Jesus himself operated from that position of war mode."
SHIT! ARE YOU SERIOUS? (and to think Jeremiah Wright got all the attention)
I saw the DNC and the RNC and was appalled at the latter. Rudy Giuliani deserves to be censured. Of all the things, he chose to take a low blow aimed at Obama's community organizing?? Come on, that's cynical to the core.
There's a nice comment i found on the internet after Giuliani's speech. It reads,"yeah! damn hippies. i love it when rudy shows those punks how to practice real christian virtues and shows em the value of a good solid marriage. oh wait, shit... ooops"
By the way, Giuliani has three wives.
I think I'm going to stop now. I'm not an Obama fan. He's a brilliant orator but if he's elected, he's going to have to prove it. I know one thing though.
I don't think America is the same country it was. It's been heading in an unfavorable direction of late and there's no doubt about that. The way i see it, voters have two choices this election. Go with McCain but believe me, i don't think he's going to change shit.
Other option? Take a chance on Obama. So it might not work, but since when has the thought of failure ever dissuaded us from doing something?
The GOP should never change its name. Because that's exactly what it is.
The GRAND OLD Party.
Friday, 27 June 2008
Fall Street
Even though it has not yet been compared to infamous financial crises in the past, the recent credit crunch fuelled by the US subprime housing crisis certainly shows no signs of slowing down. Many on Wall Street are of the opinion that far from being over and averted, the subprime crisis is still largely ahead of us. Though there are numerous factors that have contributed to the current situation, it is imperative that we set a strong foundation of understanding the role of investment banks in order to better comprehend the magnitude of the risks that lie ahead for the global economy.
It is well known that investment banking and other financial services firms have a large number of highly compensated individuals. Their primary role however, is to perform a variety of services which include underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations and also acting as a broker for institutional clients.
Historically speaking, investment banks have always been a source of debate to many and have been the sole contributor to the lure of Wall Street. In the modern global economy, in spite of strict government regulation in many countries, numerous investment banks have branched out across the six continents, constantly looking to expand their practices and involvement in the economic business cycles . Perhaps the most well known investment bank, The Goldman Sachs Group, Inc has its regional headquarters or offices in New York, Sao Paulo, Melbourne, Mumbai, London and Singapore to name a few.
Even to a layman, it is evident that although the margin for error is little, the profit margins of all established investment banks are most often unusually high. Why is this? What exactly are the qualities of the services offered that lead to such high rates of return? Over the last twenty years, there has been an increase in the amount of money allocated by institutional investors and wealthy individuals to alternative assets. Of these alternative assets, the most pertinent ones are hedge funds, venture capital funds and private equity or leveraged buyout funds. The fees typically paid to any of these funds consist of a management fee that is based of a percentage of total or committed capital and a share of profit or the interests of the fund profits. Today, the typical compensation of a hedge fund is 2/20, which is 2% management fee and 20% of the profits on the total capital.
However, this should only serve as a statistical example to shed some light on specific practices undertaken by investment banks. As far as profit margins are concerned, there is clearly a cut-off line for all banks. For the year ended 2007, Goldman Sachs reported a 25.2% profit margin. Deutsche Bank reported an increase to 21.7% for the year ending 2006. Though investment banking services such as underwriting and corporate advisory do play a large role in these high values, a significant cause can also be attributed to other asset and securities management services that are now proving to be their undoing. Furthermore, an overall expansion in the fixed income market as well as an overall rise in trading revenues also adds to these high profits.
In fact, a thorough analysis of the financial statements of a sample bank (Goldman Sachs) informs us of the three main sources of revenue: Investment Banking, Trading and Principal Investments and Asset management and securities services. In addition, an analysis of their cash flow informs us of the key factors that contribute to the final net income. These are components such as proceeds from sales of property, investments, available-for-sale securities and earnings from various unsecured short term and long term borrowings. Also, the fair value statements of certain instruments are a key indication to the amount invested and the risk that they find themselves in. Of these, the maximum are equities and convertible debentures together with derivative contracts.
Nevertheless, the primary source of income and networking occurs in the Mergers and Acquisition department, where banks are hired to provide advice on a deal while also acting as the underwriter for the entire transaction. Although the fees might seem nominally insignificant, they are immediately inflated when we consider the bigger picture. For example, considering that the total number of deals in 2006 was $3,900 billion, a simple half of a percentage as the ‘average’ fee would yield a colossal $18.8 billion as profit.
Even in the wake of the housing crisis and immense pressure on numerous securities backed and invested in by financial services firms in America, the general consensus on the list of top investment banks, whether they are classified by revenues, volume or simply reputation has more or less remained the same.
In the US, the Goldman Sachs group continues to occupy a slightly elevated place with their higher profit margins, greater liquidity and more recently, risk control qualities in the wake of the credit crunch. Before the housing crisis, Morgan Stanley (which handles the maximum assets), Merrill Lynch, JP Morgan and Lehman Brothers were equally competent and able in securing the handling of major underwritings and security issuances in the capital markets. Globally, apart from the aforementioned banks, UBS AG (Union Bank of Switzerland), Credit Suisse First Boston and Deutsche Bank are some of the names that immediately come to mind for their specialized reputations.
Now that we have briefly been familiarized with descriptions of a few various facets of investment banking, we must analyze the role of macroeconomic factors in determining the state of an economy. In addition, certain definitions must be clearly explained so that we better comprehend the meaning of terms such as recessions, slowdowns and a mortgage crisis.
In numerous magazines, newspapers, websites and news channels, we often hear politicians and economists debating the possibility of a recession. Currently, amidst reiterative statements made by the Federal Reserve and the Treasury, the possibility of a recession has not been ruled out in the near future. However, since it is also claimed that we are already in the midst of a minor recession, it is imperative to clarify the causes and effects of a modern economic recession experienced by a nation.
In the early Greenspan era of the Federal Reserve, fluctuations and risky speculation contributed to a crunch in the economy. In hindsight, many blamed it on the failure of monetary policy since nothing was done to prevent it. Thus, as time wore on, the economy was gradually overwhelmed with repetitively poor management decisions and price rises due to increases in pay. The consequences proved to be moderate but similar to what we are witnessing today.
During the course of a recession, there are normally major financial losses in the banking, insurance and property sectors. Ensuing bankruptcies and liquidity problems tend to affect a part of the basic money supply. The economy can be forced to contract and insufficient purchasing power can make it difficult to maintain the de facto standard of living. As a direct result of this, inflation becomes more susceptible and unemployment simultaneously rises causing many to blame the high interest rates which are thought to bring inflation down. Even conservative economists point to three main groups that always stand a chance of contributing to the prevention of a recession.
(1) Employers: Firstly, during the course of a recession, surplus employees are sometimes released to the labor market. Instead of cutting remuneration and keeping savings up through costs in their prices, the lay-off rate tends to rise and employees are normally not given a chance to save their jobs at all.
(2) Banks: Inflation has a weakness in that it has to be financed in a free market economy. Consequently, most pay increases are necessitated by bank borrowing. However, sensible banks with cautious risk management procedures normally provide additional finance for businesses but not for increases in pay. If banks do not finance it, employers automatically have an answer to an inflationary pay claim before them.
(3) Government: It is theoretically always possible to eliminate inflation. This can be done by legally ensuring that employers be obliged to cut all forms of remuneration and take the savings in costs from prices. Since inflation can be cured, albeit other fluctuations in key macroeconomic factors, it cannot be wholly viewed as a monetary problem or phenomenon to some economists.
Unarguably, a recession is an extremely strong economic term that implies dire consequences and an immediate need to act. This is precisely why the current term that economists prefer to use is an economic slowdown. Although a slowdown does have negative implications, the definitive difference between the two is exposed when the semantics of each are considered. Essentially, a slowdown is characterized by slow economic growth.
The important aspect is that there can be growth nonetheless but obviously at a slower rate than expected. A recession contrastingly is sometimes specifically defined as two fiscal quarters (six months) of negative growth. For further comparison, a depression is often characterized as a severe recession, either in terms of highly negative growth or perhaps negative growth sustained over a considerable period of time.
All definitions considered, where does this help us place the current situation in economic terms? A depression is definitely too strong primarily because apart from the infamous 1930’s Wall Street ‘crash, the US economy has not witnessed a clear cut depression. Through careful analyses of statements made by the Treasury Secretary and various members of the Federal Reserve including the Chairman himself, one would be inclined to think that both Main Street and Wall Street are definitely witnessing a slowdown along with the possibility of a recession in the near future if proper measures are not taken.
Clearly, it is evident that when a crisis looms or has passed, the most important things to consider are the factors that are causing or have caused it. We do this in order to prevent it from further happening and on this note, it would be wise to analyze in detail, some of the factors that contributed not only to the subprime housing crisis, but also to the enormous losses that many top investment banks faced on their balance sheets.
Preceding a look at the causes, we must clarify why it is logically equivalent that a subprime crisis is what is fuelling a slowdown. A subprime loan, to a layman, is simply a loan made at a rate higher than the prevailing interest rate. It is done so because the borrower is a ‘subprime’ customer, which means that he/she is not credit worthy and is generally considered to be risky in terms of bankability. Thus, some estimates claim that people with credit ratings of less than 620 or 600 would tend to fall in this category. It is not an ambiguous fact that a process with maximum risk compared to the alternative would be responsible for creating structural problems in the economy. In any case, it is still surprising that there are so many factors behind the mortgage problems.
For starters, nothing was helped by poor underwriting and in some cases; fraudulent and abusive practices as far as investment and advisory services were concerned. Though not a direct trigger, this partially contributed to the high rates of delinquency that we observe in the adjustable rate mortgages (ARM) market for subprime loans.
Yet, this reason, according to Ben Bernanke’s early January testimony was altogether based on a flawed premise, which was to presume that house prices would continue to rise rapidly in the bubble that had been created for them. In fact, during the time when house prices were witnessing double digit rates, subprime borrowers in the ARM market quickly built equity in their homes where they had paid a low introductory mortgage rate. With sufficient accumulated equity, refinancing proved viable in order to avoid incremental payments on the reset of the rate on the mortgage itself. Though this proved to be a comfortable situation, it all changed when people were no longer able to afford mortgage payments and the demand for homes and hence house prices, suffered.
No longer able to bank on appreciating home values for an increase in equity, refinancing failed where it had previously succeeded and subprime borrowers found themselves locked in their ARM contracts with no place to go. Consequently, not able to pay the introductory rates much rather the post adjustment rates, delinquencies and foreclosures slowly began to rise and have now reached a state of heightened worry.
The impact of the housing crash and apparent economic slump is far from uniform. Based on various studies, Western States have seen the sharpest decline in sales and prices of existing homes as well as the most repossession. The Mid-West has also been suffering from pockets of high unemployment. A careful breakup of the study reveals that among metro areas, the highest unemployment rate for January turned out to be 8.2% witnessed in Detroit. However, based on regional dissection, we clearly observe that in the West, sales have decreased down -29% and -13% in prices.
An important development has also occurred on the macroeconomic front. Increasing oil prices have had nothing but a negative influence on growth by lifting consumer prices and contributing to core inflation. In 2007, food prices also increased rapidly by the standard contributing to further consumer price inflation. Related to all this is the crucial and underestimated depreciation of the dollar which affects the import-export balance and relevant prices. With an increase in inflation, unemployment is naturally affected and consequently, all these factors come into play as the Federal Reserve plans its next rate cut.
Worrisome inflationary problems creates additional hesitancy to alter interest rates because quite simply, lowering the interest rates implies that money can be borrowed more cheaply than before and this improves the liquidity situation in the market. However, a direct result of this if not done carefully is that it causes inflation and other necessary prices to rise.
However, another crucial reason in which it is relatively easy to point fingers is the process of rating risky securities. In retrospect, it is far easier to sit back and fault the overestimated predictions of rating agencies, but criticism has continued to be strong in particular towards the underwriters and rating agencies of volatile packages such as collateralized debt obligations (CDO’s). The argument is that rating agencies should have partially foreseen the high default rates for subprime borrowers and should have rated these far lower than the AAA ratings provided to the higher quality tranches. Perhaps if the ratings had been more accurate, these securities would have lured fewer investors and hence, the losses on them would have been automatically cut down.
A good reason for this turns out to be a possible conflict of interest between rating agencies primarily due to the fact that they receive fees from the original creator of a security. Logically, this might affect their ability to calculate the risk with an unbiased opinion, but the results clearly do not affect the premise.
Since structured products are highly complex, the values of most of these related underlying assets proves difficult to analyze. Thus, investors are inclined to use rating agencies as a means of determining whether to invest or not. Even as subprime mortgage losses rose to levels that threatened highly rated tranches, investors hesitated to question the reliability of credit ratings before they finally became unwilling to hold these products.
Evidently, in order to continue receiving fees, some rating agencies might have been tempted to maintain their high rating standard or else face the risk of their underwriter turning to a different agency. Regardless of this theory, the fact of the matter remains that throughout 2007, underwriters and rating agencies together brought questionable bonds to the market simply based on market demand and without carefully analyzing their worth.
Related to the aforementioned factor was also the underestimated role of asset backed commercial paper (ABCP). When various institutions use special purpose vehicles to help fund different assets (private mortgage backed securities, structured credit products and other long maturity assets), they are enticing primarily because commercial paper is far more liquid than other securities. In addition, commercial paper is also viewed to be ‘safe’.
Unfortunately, concerns about these credit products and mortgage-backed securities by investors made them reluctant to roll over their commercial paper holdings especially at maturities of a few days. This in turn, left the investment vehicle sponsors scrambling for liquidity and hence, they were gradually forced into selling their assets in a highly illiquid and unreceptive market.
Before we move on to the crucial role of banks and other financial intermediaries, a quick note should be made on the role of hedge funds. In 2005, Fitch Ratings claimed that, “Hedge funds have quickly become important sources of capital to the credit market,” but “there are legitimate concerns that these funds may end up inadvertently exacerbating risks.” Looking back now, there is no doubt that the collapse of some reputable and well established hedge funds triggered further weaknesses in the overall financial structure of the US economy.
The cause of this becomes apparent when we consider the characteristics of hedge funds. Investing in largely high-risk ventures, the most important aspect is that a hedge fund is not a transparent entity. This means that their assets, liabilities and other trading activities are not publicly disclosed and they are often highly leveraged, using derivatives or large borrowed amounts of money. Furthermore, as a result of this quality, investors and regulators possess limited knowledge of their activities and because of their leverage, their “impact in the global credit markets is greater than their assets under management would indicate.”
Although hedge funds can deeply cripple a bank through its excessive losses, it is the imbalances on the balance sheet of a bank that are crucial to further credit weakening in the market. In short, most large banks underwrote numerous loans and actually created the structured credit products that were sold onto the market. Additionally, they supported various investment vehicles in more ways than one, by serving as advisers and providing liquidity and credit enhancement facilities.
As their problems compounded, the onus of rescuing the vehicles that had been backed fell on the banks themselves. This was done by either providing liquidity or more popularly, taking the assets of the off-balance-sheet onto their own balance sheets. Also, their own balance sheets welled up further by non-conforming mortgages, leveraged loans and other securities that the banks had extended but for which the secondary markets no longer existed.
However, this expansion of balance sheets had adverse affects on their financial stability. Banks began to report large losses while simultaneously reporting sharp declines in the values of mortgages and other assets. By doing so, they ended up subjecting themselves to valuation uncertainty and sharp drops in their share prices coupled with unsatisfactory quotes on credit swaps painted a bleak picture of things to come in the future. Key indicators such as stock quotes and capital ratios floundered, forcing several institutions to raise capital as an alternative response to combat liquidity.
In doing so however, banks overall have become extremely protective of their liquidity and balance sheet capacity resulting in an unwillingness to fund other participants in the market. With additional pressure on overnight funding rates, the spreads have gradually increased. Lending to firms and households has considerably reduced and this has created a strain in the market.
While the role of banks is still being discussed, a prime component of the subprime mess (Collateralized Debt Obligations) should be discussed briefly. Popular views claim that CDO’s are a major part of the mortgage crisis. However, what exactly is a CDO? When subprime mortgages sense impending debt, the key to a safe passage through the market is found by logically dividing up the risk, creating low-risk investment grade segments and higher-risk (lower rated) segments from the relevant pool of mortgages. The method to do this is by creating a Collateralized Debt Obligation, first done in 1987 for the purpose of financing junk bonds of leveraged buyouts. When mortgages are pooled accordingly, the securitized claims on the overall payment are classified according to the risk that they possess. These risks are referred to as “tranches”. Technically, they are no different from their predecessors in that they also pay the basic principal and interest.
An example of this can be discussed by considering three tranches from a mortgage pool. The highest tranche (the least risky), has the highest credit rating (sometimes AAA) and thus has the first claim on the payments. For this purpose, the interest rate is also lower than the others. Next, the middle or ‘mezzanine’ tranche receives its payments. These represent a far greater risk and usually receive below investment-grade ratings and a high rate of return. The lower most tranche, known as the equity trance, can only receive payments if the other two tranches are paid in full. In doing so, it suffers the first losses of the overall pool. It is highly risky and usually unrated, offering the highest rate of return. All these securities are sold separately so that they can be traded in the secondary market enabling their prices to be discovered in accordance with their level of risk.
In a CDO, approximately eighty percent of the debt on the subprime loan can be resold to institutional investors as senior tranche and investment grade assets. Lower tranches are deemed attractive by some investors in search of high yielding instruments. These can include, but are not limited to hedge funds. Looking back to our brief analysis of hedge funds, it is of significant importance that some press reports have indicated that typical hedge fund leverage while purchasing high yield tranches was 500 percent!
Loosely speaking, this translates to a real world example of stating that if $100 million is present as capital, it would be as an addition to $500 million in borrowed funds to a $600 million investment in equity or mezzanine tranches of a subprime CDO. If these tranches were even 10% (a low percentage) of the total debt obligation, then the other 90% would be sold as investment grade debt to the institutional investors and that $100 million in hedge fund capital would allow private mortgage backed security firms to move $3 billion through the secondary subprime market, $2.7 billion as investment grade securities and $300 million as high-yield junk!
In theory, the outlook for financial intermediaries does not look extremely promising and the effects are being witnessed as 2008 moves along. Now that we have briefly looked at some of the factors considered responsible for the subprime crisis, it is necessary that we look at their effects, keeping in mind the effects they have had on investment banks. After providing a general picture of less than favorable situations across the country, I will consider individual case studies to elucidate my point further.
As far as investment banks are concerned, only a couple so far, have avoided unfavorable media attention by cutting their losses. Not among these is foremost the case of Bear Stearns. As of 2007, the company, one of the largest global securities firms, reported a decrease of over 40% in their net profit margin (for the last quarter) and almost 70% on their operating margin. Their net income fell by almost a billion dollars for the quarter amidst an unfavorable period where they were forced to pledge a few billion to bail out a couple of their bankrupt hedge funds.
Citigroup experienced annual losses of almost eighteen billion dollars. To compound the turmoil that the bank went through, (being the largest bank in the world by revenue), their CEO Charles Prince stepped down in a move that saw Vikram Pandit take his place (December 11th, 2007) , vowing to cut costs and reduce the company’s exposure to subprime risk. Perhaps it is ironic that Mr. Pandit had earlier founded a hedge fund which he sold to Citigroup after thirteen months for $800 million.
For a while, Merrill Lynch was also in the news for all the wrong reasons. Since June 2007, the company saw a 36% drop in its share price, from $84 to $54. Initially announcing that they would write down approximately $4.5 billion in subprime losses (for the third quarter of 2007), Merrill shocked investors and analysts just three weeks later by announcing an eight billion dollar deficit! In June itself, their exposure to subprime loans was $41 billion and an eight billion dollar write down translates into a 19% loss on the bonds that they had been dealing in. By the end of the year, the company had ousted its CEO, Stanley O’Neal in the wake of reporting a loss of over $14 billion.
Perhaps the most recent of all Wall Street shakeups, UBS AG (Union Bank of Switzerland), though not based in the US, announced the resignation of their chairman Marc Ospel while simultaneously reporting a first quarter loss of $12 billion and expecting further write downs upto a possible $19 billion. For the past nine months, the bank’s write downs have totaled $37.4 billion, the largest of any financial services firm so far. Deutsche Bank AG, another of the world’s top financial services firms, accompanied UBS AG to a far lesser extent, announcing write downs of upto four billion dollars for the first quarter of 2008.
To summarize the write downs of the banking industry and put statistics into comparative perspective, a look at the 2007 write downs of the country’s top investment banks yields staggering results. Led by Merrill Lynch with $22 billion, the write down list is completed by Citigroup, UBS, Morgan Stanley and Bank of America with respective write downs of $20.4, $13.7 (fourth quarter), $7.8 and $4 billion.
In contrast to the majority of their counterparts or rivals, Goldman Sachs (and to a lesser extent Lehman Brothers), appear to have minimized damages through their tight oversight and shrewd hedging practices. Still, analysts are of the opinion that the traders at Goldman Sachs especially must have taken huge gambles to raise profits for the third quarter of 2007. Despite a $1.5 billion write down, experts claim that their skill is probably accompanied by an equivalent amount of luck. Their share price is up by 24% this year but still trades at only ten times their earnings, conservative standards by Wall Street expectations.
In an individual case study of Bear Stearns, perhaps the only positive that can be drawn is from the dire consequences of reiterative exposed risk to unsafe markets. It took only a week for everything to vanish. Its decade’s old reputation, corporate culture and identity along with the savings of 14,000 of its employees traumatically vanished at a rate faster than most can imagine. To further put it in perspective, the company was worth twenty billion dollars hardly a year ago. However, on March 14th, it was worth just $3.6 billion (18% of its original valuation) and desperately fighting for survival. Two days later, on March 16th, JP Morgan Chase, headed by Jamie Dimon, put forward a $236 million offer to purchase the 85 year old investment bank for $2 a share. Since this was viewed by most as blatant opportunism, the offer was quintupled to $10 a share making the overall value $1.2 billion.
To most, it didn’t really matter whether the purchase price was two dollars or ten dollars. In one instance, newspapers reported that the morning after the announcement of the deal, a real estate broker stood outside the headquarters of the company and offered his services to those needing to sell their homes quickly! For the most part of its existence, Bear Stearns has always been considered an outlier although it is the country’s fifth largest investment bank. Regardless, its sudden demise has made it impossible to pinpoint the responsibility of an event of this magnitude.
Over the course of the next month, lay offs are expected to occur with JP Morgan already in the process of providing details of retention bonuses and severance payments. In fact, the company’s woes led to further scrutiny of the Securities and Exchange Commission’s role in the collapse. On March 11th, the chairman of the commission, Christopher Cox claimed that he was “comfortable” with the amount of capital held by five of the largest investment banks, including Bear Stearns. Only two days later, Bear sought emergency funding in an incident that would transpire to results of a much greater magnitude as the month would wear on.
Facing even greater scrutiny is the role of the Federal Reserve in the Bear Stearns saga. Many claim that JP Morgan Chase was “egged” on by the Fed. This was further compounded by a statement made by Treasury Secretary Henry Paulson claiming that, “At this time, the Federal Reserve’s recent action should be viewed as a precedent on for unusual periods of turmoil.” The Fed effectively calls it a $29 billion loan, issued in order to finance JP Morgan Chase’s purchase of Bear Stearns. To some, it looks more like a $29 billion investment in securities owned by Bear.
The upside is the opinion that by intervening in March to bail out the investment bank, the Fed may well have prevented an impending series of cascading failures that could have had a severe effect on the financial system and economy. On March 26th, Senator Chris Dodd (D-Conn) announced an April 3rd hearing to explore this “unprecedented arrangement”. Top executives in all three entities are likely to be grilled about the deal. To further shed light on the deal, we must consider what the Fed is actually getting in exchange for supplying $29 billion to JP Morgan Chase. In essence, this deal is far from a standard loan. This is because strangely enough, even though the money goes to JP Morgan, the firm is not the borrower. It means that if Bear Stearns assets turn out to hold less than their calculated or estimated value, then the Fed cannot theoretically demand repayment from JP Morgan. Astonishingly, in the event that there is excess money after the loans are paid off, the Fed gets to keep the residual value for itself.
Essentially, the timeline went like this. When JP Morgan refused the two dollar per share offer(largely because the majority of Bear’s assets were worth almost zero), the Fed set up an irresistible arrangement to provide JP Morgan with the full appraised value for some of Bear’s assets upon their acquisition of the company. The process for this would be as follows. Using a Delaware based Limited Liability Company, the Fed would hand them Bear holdings worth $30 billion. In turn, they would pass on that amount to JP Morgan, the new owner who would lend a billion dollars back to that company. Upon paying back the loans by liquidating the Bear assets that they held, the company would act as a middle man to seal the deal.
The Merrill Lynch study yields similar causes, yet effects that are starkly different from those of Bear Stearns. Presently, Merrill’s balance sheet still has about $90 billion of dicey loans along with other derivatives. This would surely guarantee further write downs as the year progresses. Analysts claim that if it weren’t for the subprime disaster, the company would have raked in over seven billion dollars in pretax earnings.
Their back to back quarterly losses in 2007 (which exceeded their previous two years’ net income) were clearly forced by their subprime dealings. Although their 2006 10-K report hardly mentions the word ‘subprime’, the fact is that the firm was probably heavily reliant on them, treating it as raw material for CDO’s that it could package and sell for rich commissions. To feed this spurt, Merrill purchased subprime originator First Franklin for $1.3 billion at the height of the bear run. It shut down the unit in March, incurring rough $200 million in charges and cutting 650 jobs instantaneously.
However, with the ousting of their CEO Stanley O’Neal, insiders are far more optimistic of the crisis in the coming months. Most still hold him responsible for taking the dive into the subprime market in an effort to shore up the balance sheet and raise profits. Recently, on the heels of their eight billion dollar write down, new CEO John Thain has proceeded to cut the value of Merrill’s securities and related hedges by another $14 billion.
Last December, in an effort to strengthen the bank’s damaged balance sheet, Merrill agreed to a $6.2 billion cash infusion from Singapore’s Temasek Holdings and Davis Selected Advisors. This additional and much needed raising of capital was expected by around mid January and has gone some distance in calming investor fears that the bank would collapse under liquidity pressures. Although Merrill is trading at one and half times its book value and at half the levels it hit at the turn of the century, its investors remain optimistic in the new leadership and impending recovery of the markets.
Citigroup, the most diversified of all banks that generates more than half its revenue from its consumer banking services should theoretically have been hit less than its rivals. Since October 2007, its write downs have mounted gradually to colossal proportions. From its 52 week high of $57, Citi shares are currently being traded at approximately $24 a share, far greater than half a drop in stock value. Its fourth quarter profit has been wiped out by their bad subprime mortgage investments and some analysts project that in spite of the change at the top, another few billion in write downs could be in the offing.
Having also announced a capital raising move to sell 4.9% equity stake to the Abu Dhabi investment authority, Citigroup exemplifies the fact that in the current hour, liquidity is the safest bet. However, the company’s recent struggles have done nothing to allay fears that their diversified business model and risk management practices are actually a recipe for success. In reality, there have been bad bets at its investment bank, souring mortgage and credit card loans in its highly touted consumer division and bloated costs across the company.
Now that we have individually considered the cases of some of the top investment banks in the country, it would be wise to turn our attention to the global economy keeping in mind the monetary policies of the US government. By doing so, we will better understand how such a small segment of the economy (the subprime market) can trigger global panic repeatedly. Of prime importance, simply because it affects almost every commodity globally, is the status of the US dollar.
Against the Euro, the dollar has slipped up 5% this year touching record lows in the process. Since the beginning of 2005, there has been a 23% dip. Simultaneously, the dollar also touched its weakest level against the Japanese yen in eight years. This predictable dip can easily be traced back to flagging US economic growth and reduced global demand for US dollars. As a result of the repeated rate cuts by the Federal Reserve, investors automatically earn less on US bonds than on foreign debts because other Central Banks have not followed suit. Joseph Brusuelas, Chief Economist for Singapore-based IDEAglobal, believes that, “The Fed has cut rates repeatedly and we think they’ll cut another percentage point before it’s all done. That is profoundly dollar negative.”
The negative impacts however, are also long term. The U.S trade deficit currently stands at $712 billion which means that American dollars outside America have increased. A falling dollar can negatively affect inflation by increasing import prices as investors may snap up commodities to bet against the dollar. On the other side, a weaker dollar makes American products cheaper overseas thus boosting U.S exports. To some analysts, the turning point in this six year old bearish dollar market could occur with a change in the relationship between U.S and European interest rates. However, many strategists suggest that the dollar will act as a direct function of the state of the housing market. Therefore, until the economic slowdown shows signs of bottoming, the dollar will remain under pressure.
The subprime crisis unfortunately, is not limited to the U.S alone. The reverberations from this crisis have basically left no region of the world untouched. From Germany to Japan and India to Iceland, stock markets around the globe have repeatedly fallen and experienced their worst quarter in years. In fact, the two fastest growing economies in the world of India and China have seen this year’s worst falls with shares in both countries down more than 20%. The Nikkei, Japan’s stock index, feel equally deep into the mire down 18%. Europe has not missed the gloom either and benchmark indices in the UK, France, and Germany have each fallen more than 10%. If anything at all, such incidents only illustrate the fact that far-flung markets have become highly correlated as time progresses.
With extended ranges of global investors, connections between various markets have deepened. Thus, when markets get more volatile, they all tend to move in the same direction. However, this broad dip in global markets is contrary to the state of expectation for global economic expansion outside the U.S. Still, one factor that has remained constant to the start of 2008 has been the slide of the US dollar, as mentioned earlier. While shares rose across the world, the weakening of the dollar provided an impetus to investors while simultaneously increasing their rate of returns. The constraint is that there are mounting fears that the super charged Euro, on the other hand, will make life difficult for companies that export services and goods overseas.
So is it over? A terse analysis of the first quarter is perhaps the key for future predictions. The Dow Jones Industrial Average finished March 7.6% down from where it started the year. This has been its worst quarter since the dotcom bust at the turn of the century. Shares have been driven to all time lows and the bond markets have witnessed turmoil that climaxed with the collapse of Bear Stearns Co. Over the past three months, the Dow has lost over a thousand points, the largest first quarter point decline ever. The five month consecutive losses on the Standard & Poor’s 500-stock index are its longest loosing streak since the 1990 crisis.
Apart from all these startling figures, the general outlook is that things will turnaround sooner than later. The Federal Reserve has been aggressive in its policies and they, in turn, have been reflected in the Fed’s actions. The reduction of short term interest rates is believed to be a right step in easing the liquidity strains on the economy and help stabilize the financial system. The pessimistic side contends that the job losses have barely begun and declines in home prices appear to be accelerating. The cost of raw materials remains high and this will lead to a dip in consumer spending while also crimping corporate profits.
Renowned economist Paul Krugman has a distinct set of beliefs regarding the status of the economy as a whole. He treats the current situation as a combination of the 1990 and 2001 slowdowns, albeit a little more threatening. He maintains that there is financial disruption which is greater than the Savings and Loan crisis and when compounded with the wealth erosion from the housing bust (greater than the dotcom bust), the current situation is not one to be treated lightly. Furthermore, supporting the rate cutes of the Fed, he maintains that Japan’s zero-rate interest policy could be a reality should the situation demand it of the Fed. Keeping in mind the $200 billion bailout by the Fed, Krugman warns that though it may seem like an aggressive action, the amount is still relatively small in comparison to the securities market that is currently at risk.
In conclusion, we have two options to determine our opinions. The first is to further consider statistics related to the current state of the housing economy. The two crucial barometers of the nation’s housing market have worsened considerably. Towards the end of 2007 (fourth quarter results), the number of American homes entering foreclosure rose to the highest level of record. Contrastingly, homeowners’ share of the equity on their homes fell to an all time low since World War II. It is this contrast that also indicates how the drop in home prices is weighing on consumers directly and indirectly. Rising mortgage debt (faster than home prices) has ensured that equity as a percentage of home values have been falling from its high back when World War II ended.
The second option is to consider the broader outlook. For months, economists have debated whether the United States is headed towards a recession. Introducing a $150 billion stimulus plan and cutting short term interest rates may not be the solution to the entire problem that keeps the economy from sliding. Severe liquidity problems remain and the subprime mortgages have produced a serious credit crunch to consumers across the nation. Oil is still hovering around the $100 mark and unemployment, as evidenced by Mr. Bernanke does not paint a promising picture. To further clarify, it is worth noting that American consumers spend about $9 trillion a year; while China’s and India’s combined spend well under $2 trillion. Even in wealthy European households, global insecurity and low income growth have caused households to save more than usual. Since countries such as China rely on their exports to sustain their economic growth, the pinch to the US consumer could have a telling effect on the trade balance between the two countries.
It is not hard to see why an American financial crisis could increase global worry financially. After all, America accounts for approximately 25% of the world’s Gross Domestic Product. Thus, apart from China, other countries such as Canada, Mexico, South Korea and the rest of South-East Asia may be at risk since they are reliant on their exports to the United States. Other factors of concern include the weakening US dollar, falling commodity prices faltering financial confidence worldwide and speculative opinions that the US isn’t the only nation that has witnessed a housing bubble.
In hindsight, it is far too early to deem the current situation as a recession. However, the status of the economy is precarious and only the coming two or three years will let us know whether the hit can be negated or softened as much as possible.
It is well known that investment banking and other financial services firms have a large number of highly compensated individuals. Their primary role however, is to perform a variety of services which include underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations and also acting as a broker for institutional clients.
Historically speaking, investment banks have always been a source of debate to many and have been the sole contributor to the lure of Wall Street. In the modern global economy, in spite of strict government regulation in many countries, numerous investment banks have branched out across the six continents, constantly looking to expand their practices and involvement in the economic business cycles . Perhaps the most well known investment bank, The Goldman Sachs Group, Inc has its regional headquarters or offices in New York, Sao Paulo, Melbourne, Mumbai, London and Singapore to name a few.
Even to a layman, it is evident that although the margin for error is little, the profit margins of all established investment banks are most often unusually high. Why is this? What exactly are the qualities of the services offered that lead to such high rates of return? Over the last twenty years, there has been an increase in the amount of money allocated by institutional investors and wealthy individuals to alternative assets. Of these alternative assets, the most pertinent ones are hedge funds, venture capital funds and private equity or leveraged buyout funds. The fees typically paid to any of these funds consist of a management fee that is based of a percentage of total or committed capital and a share of profit or the interests of the fund profits. Today, the typical compensation of a hedge fund is 2/20, which is 2% management fee and 20% of the profits on the total capital.
However, this should only serve as a statistical example to shed some light on specific practices undertaken by investment banks. As far as profit margins are concerned, there is clearly a cut-off line for all banks. For the year ended 2007, Goldman Sachs reported a 25.2% profit margin. Deutsche Bank reported an increase to 21.7% for the year ending 2006. Though investment banking services such as underwriting and corporate advisory do play a large role in these high values, a significant cause can also be attributed to other asset and securities management services that are now proving to be their undoing. Furthermore, an overall expansion in the fixed income market as well as an overall rise in trading revenues also adds to these high profits.
In fact, a thorough analysis of the financial statements of a sample bank (Goldman Sachs) informs us of the three main sources of revenue: Investment Banking, Trading and Principal Investments and Asset management and securities services. In addition, an analysis of their cash flow informs us of the key factors that contribute to the final net income. These are components such as proceeds from sales of property, investments, available-for-sale securities and earnings from various unsecured short term and long term borrowings. Also, the fair value statements of certain instruments are a key indication to the amount invested and the risk that they find themselves in. Of these, the maximum are equities and convertible debentures together with derivative contracts.
Nevertheless, the primary source of income and networking occurs in the Mergers and Acquisition department, where banks are hired to provide advice on a deal while also acting as the underwriter for the entire transaction. Although the fees might seem nominally insignificant, they are immediately inflated when we consider the bigger picture. For example, considering that the total number of deals in 2006 was $3,900 billion, a simple half of a percentage as the ‘average’ fee would yield a colossal $18.8 billion as profit.
Even in the wake of the housing crisis and immense pressure on numerous securities backed and invested in by financial services firms in America, the general consensus on the list of top investment banks, whether they are classified by revenues, volume or simply reputation has more or less remained the same.
In the US, the Goldman Sachs group continues to occupy a slightly elevated place with their higher profit margins, greater liquidity and more recently, risk control qualities in the wake of the credit crunch. Before the housing crisis, Morgan Stanley (which handles the maximum assets), Merrill Lynch, JP Morgan and Lehman Brothers were equally competent and able in securing the handling of major underwritings and security issuances in the capital markets. Globally, apart from the aforementioned banks, UBS AG (Union Bank of Switzerland), Credit Suisse First Boston and Deutsche Bank are some of the names that immediately come to mind for their specialized reputations.
Now that we have briefly been familiarized with descriptions of a few various facets of investment banking, we must analyze the role of macroeconomic factors in determining the state of an economy. In addition, certain definitions must be clearly explained so that we better comprehend the meaning of terms such as recessions, slowdowns and a mortgage crisis.
In numerous magazines, newspapers, websites and news channels, we often hear politicians and economists debating the possibility of a recession. Currently, amidst reiterative statements made by the Federal Reserve and the Treasury, the possibility of a recession has not been ruled out in the near future. However, since it is also claimed that we are already in the midst of a minor recession, it is imperative to clarify the causes and effects of a modern economic recession experienced by a nation.
In the early Greenspan era of the Federal Reserve, fluctuations and risky speculation contributed to a crunch in the economy. In hindsight, many blamed it on the failure of monetary policy since nothing was done to prevent it. Thus, as time wore on, the economy was gradually overwhelmed with repetitively poor management decisions and price rises due to increases in pay. The consequences proved to be moderate but similar to what we are witnessing today.
During the course of a recession, there are normally major financial losses in the banking, insurance and property sectors. Ensuing bankruptcies and liquidity problems tend to affect a part of the basic money supply. The economy can be forced to contract and insufficient purchasing power can make it difficult to maintain the de facto standard of living. As a direct result of this, inflation becomes more susceptible and unemployment simultaneously rises causing many to blame the high interest rates which are thought to bring inflation down. Even conservative economists point to three main groups that always stand a chance of contributing to the prevention of a recession.
(1) Employers: Firstly, during the course of a recession, surplus employees are sometimes released to the labor market. Instead of cutting remuneration and keeping savings up through costs in their prices, the lay-off rate tends to rise and employees are normally not given a chance to save their jobs at all.
(2) Banks: Inflation has a weakness in that it has to be financed in a free market economy. Consequently, most pay increases are necessitated by bank borrowing. However, sensible banks with cautious risk management procedures normally provide additional finance for businesses but not for increases in pay. If banks do not finance it, employers automatically have an answer to an inflationary pay claim before them.
(3) Government: It is theoretically always possible to eliminate inflation. This can be done by legally ensuring that employers be obliged to cut all forms of remuneration and take the savings in costs from prices. Since inflation can be cured, albeit other fluctuations in key macroeconomic factors, it cannot be wholly viewed as a monetary problem or phenomenon to some economists.
Unarguably, a recession is an extremely strong economic term that implies dire consequences and an immediate need to act. This is precisely why the current term that economists prefer to use is an economic slowdown. Although a slowdown does have negative implications, the definitive difference between the two is exposed when the semantics of each are considered. Essentially, a slowdown is characterized by slow economic growth.
The important aspect is that there can be growth nonetheless but obviously at a slower rate than expected. A recession contrastingly is sometimes specifically defined as two fiscal quarters (six months) of negative growth. For further comparison, a depression is often characterized as a severe recession, either in terms of highly negative growth or perhaps negative growth sustained over a considerable period of time.
All definitions considered, where does this help us place the current situation in economic terms? A depression is definitely too strong primarily because apart from the infamous 1930’s Wall Street ‘crash, the US economy has not witnessed a clear cut depression. Through careful analyses of statements made by the Treasury Secretary and various members of the Federal Reserve including the Chairman himself, one would be inclined to think that both Main Street and Wall Street are definitely witnessing a slowdown along with the possibility of a recession in the near future if proper measures are not taken.
Clearly, it is evident that when a crisis looms or has passed, the most important things to consider are the factors that are causing or have caused it. We do this in order to prevent it from further happening and on this note, it would be wise to analyze in detail, some of the factors that contributed not only to the subprime housing crisis, but also to the enormous losses that many top investment banks faced on their balance sheets.
Preceding a look at the causes, we must clarify why it is logically equivalent that a subprime crisis is what is fuelling a slowdown. A subprime loan, to a layman, is simply a loan made at a rate higher than the prevailing interest rate. It is done so because the borrower is a ‘subprime’ customer, which means that he/she is not credit worthy and is generally considered to be risky in terms of bankability. Thus, some estimates claim that people with credit ratings of less than 620 or 600 would tend to fall in this category. It is not an ambiguous fact that a process with maximum risk compared to the alternative would be responsible for creating structural problems in the economy. In any case, it is still surprising that there are so many factors behind the mortgage problems.
For starters, nothing was helped by poor underwriting and in some cases; fraudulent and abusive practices as far as investment and advisory services were concerned. Though not a direct trigger, this partially contributed to the high rates of delinquency that we observe in the adjustable rate mortgages (ARM) market for subprime loans.
Yet, this reason, according to Ben Bernanke’s early January testimony was altogether based on a flawed premise, which was to presume that house prices would continue to rise rapidly in the bubble that had been created for them. In fact, during the time when house prices were witnessing double digit rates, subprime borrowers in the ARM market quickly built equity in their homes where they had paid a low introductory mortgage rate. With sufficient accumulated equity, refinancing proved viable in order to avoid incremental payments on the reset of the rate on the mortgage itself. Though this proved to be a comfortable situation, it all changed when people were no longer able to afford mortgage payments and the demand for homes and hence house prices, suffered.
No longer able to bank on appreciating home values for an increase in equity, refinancing failed where it had previously succeeded and subprime borrowers found themselves locked in their ARM contracts with no place to go. Consequently, not able to pay the introductory rates much rather the post adjustment rates, delinquencies and foreclosures slowly began to rise and have now reached a state of heightened worry.
The impact of the housing crash and apparent economic slump is far from uniform. Based on various studies, Western States have seen the sharpest decline in sales and prices of existing homes as well as the most repossession. The Mid-West has also been suffering from pockets of high unemployment. A careful breakup of the study reveals that among metro areas, the highest unemployment rate for January turned out to be 8.2% witnessed in Detroit. However, based on regional dissection, we clearly observe that in the West, sales have decreased down -29% and -13% in prices.
An important development has also occurred on the macroeconomic front. Increasing oil prices have had nothing but a negative influence on growth by lifting consumer prices and contributing to core inflation. In 2007, food prices also increased rapidly by the standard contributing to further consumer price inflation. Related to all this is the crucial and underestimated depreciation of the dollar which affects the import-export balance and relevant prices. With an increase in inflation, unemployment is naturally affected and consequently, all these factors come into play as the Federal Reserve plans its next rate cut.
Worrisome inflationary problems creates additional hesitancy to alter interest rates because quite simply, lowering the interest rates implies that money can be borrowed more cheaply than before and this improves the liquidity situation in the market. However, a direct result of this if not done carefully is that it causes inflation and other necessary prices to rise.
However, another crucial reason in which it is relatively easy to point fingers is the process of rating risky securities. In retrospect, it is far easier to sit back and fault the overestimated predictions of rating agencies, but criticism has continued to be strong in particular towards the underwriters and rating agencies of volatile packages such as collateralized debt obligations (CDO’s). The argument is that rating agencies should have partially foreseen the high default rates for subprime borrowers and should have rated these far lower than the AAA ratings provided to the higher quality tranches. Perhaps if the ratings had been more accurate, these securities would have lured fewer investors and hence, the losses on them would have been automatically cut down.
A good reason for this turns out to be a possible conflict of interest between rating agencies primarily due to the fact that they receive fees from the original creator of a security. Logically, this might affect their ability to calculate the risk with an unbiased opinion, but the results clearly do not affect the premise.
Since structured products are highly complex, the values of most of these related underlying assets proves difficult to analyze. Thus, investors are inclined to use rating agencies as a means of determining whether to invest or not. Even as subprime mortgage losses rose to levels that threatened highly rated tranches, investors hesitated to question the reliability of credit ratings before they finally became unwilling to hold these products.
Evidently, in order to continue receiving fees, some rating agencies might have been tempted to maintain their high rating standard or else face the risk of their underwriter turning to a different agency. Regardless of this theory, the fact of the matter remains that throughout 2007, underwriters and rating agencies together brought questionable bonds to the market simply based on market demand and without carefully analyzing their worth.
Related to the aforementioned factor was also the underestimated role of asset backed commercial paper (ABCP). When various institutions use special purpose vehicles to help fund different assets (private mortgage backed securities, structured credit products and other long maturity assets), they are enticing primarily because commercial paper is far more liquid than other securities. In addition, commercial paper is also viewed to be ‘safe’.
Unfortunately, concerns about these credit products and mortgage-backed securities by investors made them reluctant to roll over their commercial paper holdings especially at maturities of a few days. This in turn, left the investment vehicle sponsors scrambling for liquidity and hence, they were gradually forced into selling their assets in a highly illiquid and unreceptive market.
Before we move on to the crucial role of banks and other financial intermediaries, a quick note should be made on the role of hedge funds. In 2005, Fitch Ratings claimed that, “Hedge funds have quickly become important sources of capital to the credit market,” but “there are legitimate concerns that these funds may end up inadvertently exacerbating risks.” Looking back now, there is no doubt that the collapse of some reputable and well established hedge funds triggered further weaknesses in the overall financial structure of the US economy.
The cause of this becomes apparent when we consider the characteristics of hedge funds. Investing in largely high-risk ventures, the most important aspect is that a hedge fund is not a transparent entity. This means that their assets, liabilities and other trading activities are not publicly disclosed and they are often highly leveraged, using derivatives or large borrowed amounts of money. Furthermore, as a result of this quality, investors and regulators possess limited knowledge of their activities and because of their leverage, their “impact in the global credit markets is greater than their assets under management would indicate.”
Although hedge funds can deeply cripple a bank through its excessive losses, it is the imbalances on the balance sheet of a bank that are crucial to further credit weakening in the market. In short, most large banks underwrote numerous loans and actually created the structured credit products that were sold onto the market. Additionally, they supported various investment vehicles in more ways than one, by serving as advisers and providing liquidity and credit enhancement facilities.
As their problems compounded, the onus of rescuing the vehicles that had been backed fell on the banks themselves. This was done by either providing liquidity or more popularly, taking the assets of the off-balance-sheet onto their own balance sheets. Also, their own balance sheets welled up further by non-conforming mortgages, leveraged loans and other securities that the banks had extended but for which the secondary markets no longer existed.
However, this expansion of balance sheets had adverse affects on their financial stability. Banks began to report large losses while simultaneously reporting sharp declines in the values of mortgages and other assets. By doing so, they ended up subjecting themselves to valuation uncertainty and sharp drops in their share prices coupled with unsatisfactory quotes on credit swaps painted a bleak picture of things to come in the future. Key indicators such as stock quotes and capital ratios floundered, forcing several institutions to raise capital as an alternative response to combat liquidity.
In doing so however, banks overall have become extremely protective of their liquidity and balance sheet capacity resulting in an unwillingness to fund other participants in the market. With additional pressure on overnight funding rates, the spreads have gradually increased. Lending to firms and households has considerably reduced and this has created a strain in the market.
While the role of banks is still being discussed, a prime component of the subprime mess (Collateralized Debt Obligations) should be discussed briefly. Popular views claim that CDO’s are a major part of the mortgage crisis. However, what exactly is a CDO? When subprime mortgages sense impending debt, the key to a safe passage through the market is found by logically dividing up the risk, creating low-risk investment grade segments and higher-risk (lower rated) segments from the relevant pool of mortgages. The method to do this is by creating a Collateralized Debt Obligation, first done in 1987 for the purpose of financing junk bonds of leveraged buyouts. When mortgages are pooled accordingly, the securitized claims on the overall payment are classified according to the risk that they possess. These risks are referred to as “tranches”. Technically, they are no different from their predecessors in that they also pay the basic principal and interest.
An example of this can be discussed by considering three tranches from a mortgage pool. The highest tranche (the least risky), has the highest credit rating (sometimes AAA) and thus has the first claim on the payments. For this purpose, the interest rate is also lower than the others. Next, the middle or ‘mezzanine’ tranche receives its payments. These represent a far greater risk and usually receive below investment-grade ratings and a high rate of return. The lower most tranche, known as the equity trance, can only receive payments if the other two tranches are paid in full. In doing so, it suffers the first losses of the overall pool. It is highly risky and usually unrated, offering the highest rate of return. All these securities are sold separately so that they can be traded in the secondary market enabling their prices to be discovered in accordance with their level of risk.
In a CDO, approximately eighty percent of the debt on the subprime loan can be resold to institutional investors as senior tranche and investment grade assets. Lower tranches are deemed attractive by some investors in search of high yielding instruments. These can include, but are not limited to hedge funds. Looking back to our brief analysis of hedge funds, it is of significant importance that some press reports have indicated that typical hedge fund leverage while purchasing high yield tranches was 500 percent!
Loosely speaking, this translates to a real world example of stating that if $100 million is present as capital, it would be as an addition to $500 million in borrowed funds to a $600 million investment in equity or mezzanine tranches of a subprime CDO. If these tranches were even 10% (a low percentage) of the total debt obligation, then the other 90% would be sold as investment grade debt to the institutional investors and that $100 million in hedge fund capital would allow private mortgage backed security firms to move $3 billion through the secondary subprime market, $2.7 billion as investment grade securities and $300 million as high-yield junk!
In theory, the outlook for financial intermediaries does not look extremely promising and the effects are being witnessed as 2008 moves along. Now that we have briefly looked at some of the factors considered responsible for the subprime crisis, it is necessary that we look at their effects, keeping in mind the effects they have had on investment banks. After providing a general picture of less than favorable situations across the country, I will consider individual case studies to elucidate my point further.
As far as investment banks are concerned, only a couple so far, have avoided unfavorable media attention by cutting their losses. Not among these is foremost the case of Bear Stearns. As of 2007, the company, one of the largest global securities firms, reported a decrease of over 40% in their net profit margin (for the last quarter) and almost 70% on their operating margin. Their net income fell by almost a billion dollars for the quarter amidst an unfavorable period where they were forced to pledge a few billion to bail out a couple of their bankrupt hedge funds.
Citigroup experienced annual losses of almost eighteen billion dollars. To compound the turmoil that the bank went through, (being the largest bank in the world by revenue), their CEO Charles Prince stepped down in a move that saw Vikram Pandit take his place (December 11th, 2007) , vowing to cut costs and reduce the company’s exposure to subprime risk. Perhaps it is ironic that Mr. Pandit had earlier founded a hedge fund which he sold to Citigroup after thirteen months for $800 million.
For a while, Merrill Lynch was also in the news for all the wrong reasons. Since June 2007, the company saw a 36% drop in its share price, from $84 to $54. Initially announcing that they would write down approximately $4.5 billion in subprime losses (for the third quarter of 2007), Merrill shocked investors and analysts just three weeks later by announcing an eight billion dollar deficit! In June itself, their exposure to subprime loans was $41 billion and an eight billion dollar write down translates into a 19% loss on the bonds that they had been dealing in. By the end of the year, the company had ousted its CEO, Stanley O’Neal in the wake of reporting a loss of over $14 billion.
Perhaps the most recent of all Wall Street shakeups, UBS AG (Union Bank of Switzerland), though not based in the US, announced the resignation of their chairman Marc Ospel while simultaneously reporting a first quarter loss of $12 billion and expecting further write downs upto a possible $19 billion. For the past nine months, the bank’s write downs have totaled $37.4 billion, the largest of any financial services firm so far. Deutsche Bank AG, another of the world’s top financial services firms, accompanied UBS AG to a far lesser extent, announcing write downs of upto four billion dollars for the first quarter of 2008.
To summarize the write downs of the banking industry and put statistics into comparative perspective, a look at the 2007 write downs of the country’s top investment banks yields staggering results. Led by Merrill Lynch with $22 billion, the write down list is completed by Citigroup, UBS, Morgan Stanley and Bank of America with respective write downs of $20.4, $13.7 (fourth quarter), $7.8 and $4 billion.
In contrast to the majority of their counterparts or rivals, Goldman Sachs (and to a lesser extent Lehman Brothers), appear to have minimized damages through their tight oversight and shrewd hedging practices. Still, analysts are of the opinion that the traders at Goldman Sachs especially must have taken huge gambles to raise profits for the third quarter of 2007. Despite a $1.5 billion write down, experts claim that their skill is probably accompanied by an equivalent amount of luck. Their share price is up by 24% this year but still trades at only ten times their earnings, conservative standards by Wall Street expectations.
In an individual case study of Bear Stearns, perhaps the only positive that can be drawn is from the dire consequences of reiterative exposed risk to unsafe markets. It took only a week for everything to vanish. Its decade’s old reputation, corporate culture and identity along with the savings of 14,000 of its employees traumatically vanished at a rate faster than most can imagine. To further put it in perspective, the company was worth twenty billion dollars hardly a year ago. However, on March 14th, it was worth just $3.6 billion (18% of its original valuation) and desperately fighting for survival. Two days later, on March 16th, JP Morgan Chase, headed by Jamie Dimon, put forward a $236 million offer to purchase the 85 year old investment bank for $2 a share. Since this was viewed by most as blatant opportunism, the offer was quintupled to $10 a share making the overall value $1.2 billion.
To most, it didn’t really matter whether the purchase price was two dollars or ten dollars. In one instance, newspapers reported that the morning after the announcement of the deal, a real estate broker stood outside the headquarters of the company and offered his services to those needing to sell their homes quickly! For the most part of its existence, Bear Stearns has always been considered an outlier although it is the country’s fifth largest investment bank. Regardless, its sudden demise has made it impossible to pinpoint the responsibility of an event of this magnitude.
Over the course of the next month, lay offs are expected to occur with JP Morgan already in the process of providing details of retention bonuses and severance payments. In fact, the company’s woes led to further scrutiny of the Securities and Exchange Commission’s role in the collapse. On March 11th, the chairman of the commission, Christopher Cox claimed that he was “comfortable” with the amount of capital held by five of the largest investment banks, including Bear Stearns. Only two days later, Bear sought emergency funding in an incident that would transpire to results of a much greater magnitude as the month would wear on.
Facing even greater scrutiny is the role of the Federal Reserve in the Bear Stearns saga. Many claim that JP Morgan Chase was “egged” on by the Fed. This was further compounded by a statement made by Treasury Secretary Henry Paulson claiming that, “At this time, the Federal Reserve’s recent action should be viewed as a precedent on for unusual periods of turmoil.” The Fed effectively calls it a $29 billion loan, issued in order to finance JP Morgan Chase’s purchase of Bear Stearns. To some, it looks more like a $29 billion investment in securities owned by Bear.
The upside is the opinion that by intervening in March to bail out the investment bank, the Fed may well have prevented an impending series of cascading failures that could have had a severe effect on the financial system and economy. On March 26th, Senator Chris Dodd (D-Conn) announced an April 3rd hearing to explore this “unprecedented arrangement”. Top executives in all three entities are likely to be grilled about the deal. To further shed light on the deal, we must consider what the Fed is actually getting in exchange for supplying $29 billion to JP Morgan Chase. In essence, this deal is far from a standard loan. This is because strangely enough, even though the money goes to JP Morgan, the firm is not the borrower. It means that if Bear Stearns assets turn out to hold less than their calculated or estimated value, then the Fed cannot theoretically demand repayment from JP Morgan. Astonishingly, in the event that there is excess money after the loans are paid off, the Fed gets to keep the residual value for itself.
Essentially, the timeline went like this. When JP Morgan refused the two dollar per share offer(largely because the majority of Bear’s assets were worth almost zero), the Fed set up an irresistible arrangement to provide JP Morgan with the full appraised value for some of Bear’s assets upon their acquisition of the company. The process for this would be as follows. Using a Delaware based Limited Liability Company, the Fed would hand them Bear holdings worth $30 billion. In turn, they would pass on that amount to JP Morgan, the new owner who would lend a billion dollars back to that company. Upon paying back the loans by liquidating the Bear assets that they held, the company would act as a middle man to seal the deal.
The Merrill Lynch study yields similar causes, yet effects that are starkly different from those of Bear Stearns. Presently, Merrill’s balance sheet still has about $90 billion of dicey loans along with other derivatives. This would surely guarantee further write downs as the year progresses. Analysts claim that if it weren’t for the subprime disaster, the company would have raked in over seven billion dollars in pretax earnings.
Their back to back quarterly losses in 2007 (which exceeded their previous two years’ net income) were clearly forced by their subprime dealings. Although their 2006 10-K report hardly mentions the word ‘subprime’, the fact is that the firm was probably heavily reliant on them, treating it as raw material for CDO’s that it could package and sell for rich commissions. To feed this spurt, Merrill purchased subprime originator First Franklin for $1.3 billion at the height of the bear run. It shut down the unit in March, incurring rough $200 million in charges and cutting 650 jobs instantaneously.
However, with the ousting of their CEO Stanley O’Neal, insiders are far more optimistic of the crisis in the coming months. Most still hold him responsible for taking the dive into the subprime market in an effort to shore up the balance sheet and raise profits. Recently, on the heels of their eight billion dollar write down, new CEO John Thain has proceeded to cut the value of Merrill’s securities and related hedges by another $14 billion.
Last December, in an effort to strengthen the bank’s damaged balance sheet, Merrill agreed to a $6.2 billion cash infusion from Singapore’s Temasek Holdings and Davis Selected Advisors. This additional and much needed raising of capital was expected by around mid January and has gone some distance in calming investor fears that the bank would collapse under liquidity pressures. Although Merrill is trading at one and half times its book value and at half the levels it hit at the turn of the century, its investors remain optimistic in the new leadership and impending recovery of the markets.
Citigroup, the most diversified of all banks that generates more than half its revenue from its consumer banking services should theoretically have been hit less than its rivals. Since October 2007, its write downs have mounted gradually to colossal proportions. From its 52 week high of $57, Citi shares are currently being traded at approximately $24 a share, far greater than half a drop in stock value. Its fourth quarter profit has been wiped out by their bad subprime mortgage investments and some analysts project that in spite of the change at the top, another few billion in write downs could be in the offing.
Having also announced a capital raising move to sell 4.9% equity stake to the Abu Dhabi investment authority, Citigroup exemplifies the fact that in the current hour, liquidity is the safest bet. However, the company’s recent struggles have done nothing to allay fears that their diversified business model and risk management practices are actually a recipe for success. In reality, there have been bad bets at its investment bank, souring mortgage and credit card loans in its highly touted consumer division and bloated costs across the company.
Now that we have individually considered the cases of some of the top investment banks in the country, it would be wise to turn our attention to the global economy keeping in mind the monetary policies of the US government. By doing so, we will better understand how such a small segment of the economy (the subprime market) can trigger global panic repeatedly. Of prime importance, simply because it affects almost every commodity globally, is the status of the US dollar.
Against the Euro, the dollar has slipped up 5% this year touching record lows in the process. Since the beginning of 2005, there has been a 23% dip. Simultaneously, the dollar also touched its weakest level against the Japanese yen in eight years. This predictable dip can easily be traced back to flagging US economic growth and reduced global demand for US dollars. As a result of the repeated rate cuts by the Federal Reserve, investors automatically earn less on US bonds than on foreign debts because other Central Banks have not followed suit. Joseph Brusuelas, Chief Economist for Singapore-based IDEAglobal, believes that, “The Fed has cut rates repeatedly and we think they’ll cut another percentage point before it’s all done. That is profoundly dollar negative.”
The negative impacts however, are also long term. The U.S trade deficit currently stands at $712 billion which means that American dollars outside America have increased. A falling dollar can negatively affect inflation by increasing import prices as investors may snap up commodities to bet against the dollar. On the other side, a weaker dollar makes American products cheaper overseas thus boosting U.S exports. To some analysts, the turning point in this six year old bearish dollar market could occur with a change in the relationship between U.S and European interest rates. However, many strategists suggest that the dollar will act as a direct function of the state of the housing market. Therefore, until the economic slowdown shows signs of bottoming, the dollar will remain under pressure.
The subprime crisis unfortunately, is not limited to the U.S alone. The reverberations from this crisis have basically left no region of the world untouched. From Germany to Japan and India to Iceland, stock markets around the globe have repeatedly fallen and experienced their worst quarter in years. In fact, the two fastest growing economies in the world of India and China have seen this year’s worst falls with shares in both countries down more than 20%. The Nikkei, Japan’s stock index, feel equally deep into the mire down 18%. Europe has not missed the gloom either and benchmark indices in the UK, France, and Germany have each fallen more than 10%. If anything at all, such incidents only illustrate the fact that far-flung markets have become highly correlated as time progresses.
With extended ranges of global investors, connections between various markets have deepened. Thus, when markets get more volatile, they all tend to move in the same direction. However, this broad dip in global markets is contrary to the state of expectation for global economic expansion outside the U.S. Still, one factor that has remained constant to the start of 2008 has been the slide of the US dollar, as mentioned earlier. While shares rose across the world, the weakening of the dollar provided an impetus to investors while simultaneously increasing their rate of returns. The constraint is that there are mounting fears that the super charged Euro, on the other hand, will make life difficult for companies that export services and goods overseas.
So is it over? A terse analysis of the first quarter is perhaps the key for future predictions. The Dow Jones Industrial Average finished March 7.6% down from where it started the year. This has been its worst quarter since the dotcom bust at the turn of the century. Shares have been driven to all time lows and the bond markets have witnessed turmoil that climaxed with the collapse of Bear Stearns Co. Over the past three months, the Dow has lost over a thousand points, the largest first quarter point decline ever. The five month consecutive losses on the Standard & Poor’s 500-stock index are its longest loosing streak since the 1990 crisis.
Apart from all these startling figures, the general outlook is that things will turnaround sooner than later. The Federal Reserve has been aggressive in its policies and they, in turn, have been reflected in the Fed’s actions. The reduction of short term interest rates is believed to be a right step in easing the liquidity strains on the economy and help stabilize the financial system. The pessimistic side contends that the job losses have barely begun and declines in home prices appear to be accelerating. The cost of raw materials remains high and this will lead to a dip in consumer spending while also crimping corporate profits.
Renowned economist Paul Krugman has a distinct set of beliefs regarding the status of the economy as a whole. He treats the current situation as a combination of the 1990 and 2001 slowdowns, albeit a little more threatening. He maintains that there is financial disruption which is greater than the Savings and Loan crisis and when compounded with the wealth erosion from the housing bust (greater than the dotcom bust), the current situation is not one to be treated lightly. Furthermore, supporting the rate cutes of the Fed, he maintains that Japan’s zero-rate interest policy could be a reality should the situation demand it of the Fed. Keeping in mind the $200 billion bailout by the Fed, Krugman warns that though it may seem like an aggressive action, the amount is still relatively small in comparison to the securities market that is currently at risk.
In conclusion, we have two options to determine our opinions. The first is to further consider statistics related to the current state of the housing economy. The two crucial barometers of the nation’s housing market have worsened considerably. Towards the end of 2007 (fourth quarter results), the number of American homes entering foreclosure rose to the highest level of record. Contrastingly, homeowners’ share of the equity on their homes fell to an all time low since World War II. It is this contrast that also indicates how the drop in home prices is weighing on consumers directly and indirectly. Rising mortgage debt (faster than home prices) has ensured that equity as a percentage of home values have been falling from its high back when World War II ended.
The second option is to consider the broader outlook. For months, economists have debated whether the United States is headed towards a recession. Introducing a $150 billion stimulus plan and cutting short term interest rates may not be the solution to the entire problem that keeps the economy from sliding. Severe liquidity problems remain and the subprime mortgages have produced a serious credit crunch to consumers across the nation. Oil is still hovering around the $100 mark and unemployment, as evidenced by Mr. Bernanke does not paint a promising picture. To further clarify, it is worth noting that American consumers spend about $9 trillion a year; while China’s and India’s combined spend well under $2 trillion. Even in wealthy European households, global insecurity and low income growth have caused households to save more than usual. Since countries such as China rely on their exports to sustain their economic growth, the pinch to the US consumer could have a telling effect on the trade balance between the two countries.
It is not hard to see why an American financial crisis could increase global worry financially. After all, America accounts for approximately 25% of the world’s Gross Domestic Product. Thus, apart from China, other countries such as Canada, Mexico, South Korea and the rest of South-East Asia may be at risk since they are reliant on their exports to the United States. Other factors of concern include the weakening US dollar, falling commodity prices faltering financial confidence worldwide and speculative opinions that the US isn’t the only nation that has witnessed a housing bubble.
In hindsight, it is far too early to deem the current situation as a recession. However, the status of the economy is precarious and only the coming two or three years will let us know whether the hit can be negated or softened as much as possible.
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