PNatCity

Game Over. The purchase of Cleveland banking staple National City Corp. by PNC was approved by shareholders today. The NCB name will eventually go the way of Euclid Beach Park, Sohio and Cleveland Trust but, we're use to this type of thing by now.

PNC's purchase of Nat City was made possible by the largess of the Treasury TARP program. This has called into question the motive behind allowing the acquisition to go through considering that Nat City was denied TARP funds resulting in the PNC takeover.

As much as the circumstances around PNC's purchase have rankled local members of Congress the short lived Save NCB Movement was no match for the forces of creative destruction. I am of course being cynical about the creative destruction part. The TARP and the resulting thumbs up and thumbs down are government sponsored financial engineering at its finest. So much for an invisible hand on the tiller.

Regardless of the way NCB was getting the shaft in this deal there are two inescapable facts that should be considered. One, NatCity was for sale with or without the government backed infusion that pushed PNC over the edge. The private equity investment NCB received in May was not enough to prevent a future sale. I've had people from NCB tell me as much. Two, the sorry condition of Nat City is the direct result of the bank's management team betting that the subprime cash conveyor belt would never shut down. It did and now the local banking landscape is a changin'.

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A Fitting Send Off From The Iraqis

It took a shoe lobbing journalist to remind us what a failure the Iraq "war" has been.

Of course there are other ways of showing one's disdain for turning a country of 25 million into a failed free market laboratory. Nothing says it quite like a pair of size ten loafers hurtling toward your head.

The Las Vegas Browns

Each year around this time we have to ask ourselves the question, does Northeast Ohio really need an NFL team?

Come on man you know it's true. This return of the Cleveland Browns thing that started in 1999 is a failed experiment. The team has been burning through coaches, quarterbacks, money and respect at an unsustainable rate. There's no end in sight to this misery and bringing in another coach won't make a difference. Bill Cowher left the league on top of his game. Why would he want risk his legacy by coming this "coaching graveyard", the Diamond Shoals of the AFC North?

Our massive investment in public dollars and human capital has not yielded a return on investment worthy of continuing the tradition of Cleveland football. It doesn't take Roldo writing the same article thirty-seven times to get that point across. There must be some large metro area drooling over the prospect of having an NFL team. They can have ours if the price is right. The agreement between the City and the Browns would have to be changed and the outstanding debt on the stadium would have to be retired.

It will not be easy letting go but the decision will give us all a clean break and the gift of starting over. There will be no team here but the Cleveland Browns diaspora has always been robust in all parts of the country so it doesn't really matter where they end up. What we'll be left with is the world's largest Browns Backers Club.

Maybe we can lure the Columbus Crew to our city. We'll have a natural turf stadium available.

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Ohio's Election Disconnect

The 2008 election is in the history books but Ohio's election troubles are not. Let's just say it's a blessing in more than one way that the presidential race was not close.

Dennis Willard calls out the politically motivated Ohio Supreme Court as well as the Republican leadership in the General Assembly. He aptly labels the never partisan interference as Ohio's insane season (worse than silly season)and offers a blunt remedy:

Then, everyone involved should put down their crayons and read Election Law for Dummies before attempting to fix the many flaws in Ohio's election law.

Step 1: Set aside vanity mirror and remove such silly technicalities as you must sign and print your name or your provisional ballot doesn't count.

Finally, for once in your political careers, heed your own rhetoric and place the needs of the voter and citizenry first.

What I can't figure out is why GOP legislators and jurists turn a blind eye to the fact that election insanity hurts voters of all political stripes. None of this critique even factors in the buffoonery on display by the Ohio Republican Party (Bennett, et al) every election cycle.

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Cleveland's Doppler Cartel

My childhood hero Dick "wooly bear man" Goddard, friend to all dogs and cats, is in the global warming denier camp. So says an extenisve expose into Cleveland's television weather guys that was given front page space in Wednesday's Plain Dealer. The list goes on to other well know purveyors of the Doppler such as Mark Johnson, Andre Bernier, John Loufman and Mark Nolan, (no longer doing weather). Oddly enough I didn't see any women on the list.

The concept of the story is actually kind of humorous. At first it would seem that this position would contradict the duties that local meteorologists fulfill on a daily basis. If you take a step back and consider that there is one glaring fact that exempts the Doppler cartel from being rational about global warming, they are not scientists. Sure each of the weathermen carries a seal form the AMS but, aren't they really giving a glorified weather Power Point presentation every night?

What would be really interesting is to see what the correlation is between the views of members of the weather underground that aligns their views on global warming. Such an investigation woudl be fodder for the guys at Freakonomics. There are a variety of explanations for their skepticism given, from complete denial the earth is indeed heating up to the thesis presented in Michael Crichton's book State of Fear.

Bernier said local meteorologists "are just more practical" and not swayed by the opportunity for more grant money to do more research proving climate change.

Using Crichton's work to refute global warming is common among a certain persuasion of political minds. The only problem is that Crichton was not a scientist. Scientists submit their work to peer review which Crichton did not do. This article gives the impression that the large sample of weather broadcasters in Cleveland and across the country are in the same camp ideological camp. Their focus on presenting the very short term outlook of weather as opposed to long term climate has apparently swayed their opinions, almost like a badge of honor. Next up, does too much time in front of a chromokey impact human logic?

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Feel Free To Panic

"You better get on your knees and pray,
panic is on the way"
- Oasis

It's official, we are in a recession. So says the NBER, the organization that is assigned the noble duty of charting the boom and busts of the U.S. economy.

I'm only playing up to the hype that permeates the media and internets, there's no reason to panic yet. We just went through one of these recessionary periods seven years ago, no big deal. Anyway, economists say that recessions happen on the margins so most of you may end up doing fine. There is plenty of reporting on how the economic downturn is impacting our lives and fleshing out just where those margins are. A small sample of what I've found interesting over the last twenty-four hours.

It's Raining Bad News in Columbus
A follow up to my earlier post on the extreme duress being placed on State finances by lagging tax collections. Articles on GONGWER and the Plain Dealer add more information about the precarious position the Strickland administration is in. They are looking at another round of cuts followed by a new budget process that will require seismic changes in program spending to stay afloat. Ted can't even think about having the General Assembly freeze the final phase on cuts to the income tax lest he be branded "tax hike Ted". That ambitious plan to reform school funding is becoming more of a challenge every day.

Credit Market Bummer
Ignore the stock market for now and pain it is inflicting on your 401k. Market volatility is up so the wild swings in market value are becoming common place. The Volatility Index (VIX) has been averaging 40 as compared to the once normal 20. The real problem has been with the more pertinent credit markets. The untouchable ether where all financial activity comes to being.

Calculated Risk has continued to follow several key indicators and the news in the past few days is disconcerting. Credit markets are still exhibiting troubling signs including what CR called a "stunning flight" to Treasuries on Monday. This trend combined with other bad news (TED Spread up), indicates the problems that were caused by the collapse of the financial system have not gone away.

Portable Alpha, Sinkable Pension
The WSJ had a very interesting but short article on the plight of the Pennsylvania State Pension Fund. It looks like that fund and some others are taking huge losses from market downturns. Now, one would expect a pension fund to see a decrease in earnings and value considering the current market conditions. Unfortunately the managers at the PA pension fund had been imbibing the same elixir that other financial risk takers were drunk on. Using a hedging strategy called portable alpha the pension fund managers asserted they could beat the market and never pay the price for excessive risk taking. That decision hasn't worked out to well, they've lost billions in the last quarter alone.

The scope of problems and extreme difficulty the current financial crisis has created for public finance is impressive. There will most likely be more stories such as this one in the coming months.

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