Posts Tagged ‘business’

#Northwestern Winning Right to Unionize is a Game Changer

Posted: March 28, 2014 in Excess and Algorithms
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sportsroll

by @anarchyroll
3/28/2014

Whether you know it or not, college athletics changed forever this week.

Northwestern University’s football players were found to be employees of the school, not merely student athletes, by the National Labor Relations Board in Chicago. This means the players now have collective bargaining rights with the school. That means the players now have a say in terms of monetary compensation for their time and effort on the football field beyond an athletic scholarship. Why is this a big deal?

The student athlete paradigm has been crumbling over the past decade. EA Sports no longer puts out it’s NCAA Football or Basketball video game franchises. Why? Because former student athletes filed multiple class action lawsuits and won (one) because they were not being royalties (residual checks) for the use of their likenesses. EA settled but the NCAA is vowing to take the case(s) to the Supreme Court. The NCAA is also saying they will take the NU case to the highest possible court/governing body. Why? Money.

The NCAA is exposing itself for what it is, a money laundering operation. They exist solely to make money off the time, energy, effort, blood, sweat, and tears of 18-21 year old men and women at Division I universities in the United States of America. They care nothing about graduation rates of the players. They care nothing about their health and medical costs. They only care about how much money they can make off of television contracts for the Bowl Championship Series and March Madness.

By exposing themselves as money hungry pigs, the NCAA is losing it’s battle in the court of public opinion. Rather than evolving and paying the students who are making NCAA and the universities billions of dollars (with a B) each year, they are trying to keep them as scholarship slaves. Scholarships are fine for athletes and universities that aren’t on national television on a daily and/or weekly basis. Scholarships are fine for academics. But NCAA Division I athletics is about money, nothing more, nothing less. If it wasn’t then ESPN and CBS wouldn’t be allowed to make anything more than enough money to cover operational costs to broadcast the sporting events.

But that’s not the way it is. It’s not 1960 anymore. Sports equals business in America. So pay the employees what they earn by destroying their bodies in the primes of their lives for the glory and admiration of their parents and peers. The times they are a changin’. You don’t want to pay students who are on national TV every week? Then;

  • Take the games off national TV.
  • Revoke all contracts outside of local public access.
  • Force all coaches to make the same as the professors.
  • Don’t allow schools to travel out of state to play away games.
  • Disperse all funding equally between all sports played at each school.

Don’t want to do any of those? That list is unrealistic and naive? Yeah, no shit. So pay the players. Don’t give them straight cash homey. Pay them in gift cards so they can buy;

  • food
  • clothes
  • tutors
  • laptops
  • plane tickets to go back home during breaks

If the students can afford these things themselves they won’t be dependent on their parents, boosters, or shady gamblers who get them into point shaving schemes. No one is saying pay the quarterback of Notre Dame $1 million a year. But how about you give the kids some money to have fun on the weekends so you can stop putting schools on probation, stripping wins, taking down banners, and expunging winning records?

Why is NU winning union rights important? It changes the face of college athletics forever. How? Because students will be looked as employees. The tide has turned on this issue. Much like gay rights and marijuana legalization, there is no going back, only forward. It is only a matter of time before all major universities are affected by this. That will affect scheduling, coaches contracts, television contracts, merchandise rights, and tuition costs. The college experience as a whole can and will be changed by this going forward. We have just witnessed the tip of the iceberg.

#QE Continues to Taper

Posted: March 23, 2014 in Excess and Algorithms
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eanda logoajclogo2

by @anarchyroll
3/22/2014

Janet Yellen chaired her first Fed meeting this past week. Afterwards she announced Fed policy going forward regarding her baby, quantitative easing. She helped construct QE at the height of the economic downturn several years ago, a topic written about repeatedly on this website. Yellen announced that QE will continue to taper down at a rate of $10 billion per month until the end of the year.

That is good, QE needs to end, the sooner the better. The problem is the economy has become somewhat dependant on it. The markets took a small but sudden dive at just the announcement about anything QE related. Yellen also said that QE coming to a total end will depend partially on unemployment numbers.

If you haven’t noticed the unemployment problem is a deeper wound in the economy and in the country not seen since the Great Depression. Not only are a huge number of people out of work, but even more are underemployed and wages have been stagnant for over a decade. When the  markets react negatively to even the mention of QE ending, which it does every time there is an official announcement on the subject, employment numbers are likely to take a hit.

Why? Because the 1% who employ the other 99 have their assets all up in the casino stock market. So if/when those numbers go down unemployment goes up, underemployment goes up, wages stay stagnant or go down. So tying QE to the employment numbers is an out to keep QE going indefinitely since the unemployment crisis could be indefinite. What will the effect of a possible government mandated rise of the minimum wage? All these moving parts will affect whether QE ultimately comes to an end.

The minimum wage debate will be the subject of the next Excess and Algorithms article.

Student Loan #Debt & The #Education Bubble

Posted: March 6, 2014 in Excess and Algorithms
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eanda logoajclogo2

by @anarchyroll
3/5/2014

A lot has been written about student loan debt, but apparently not a lot of research has been done into the subject. The Department of Education releases default rates once a year, but that is just about it. Are you surprised at this? So was the New York State Federal Reserve Bank. Two analysts working their essentially had to do a bulk of the research that is now often cited by the media and protest groups.

They found that the percentage of 25-year-old college graduates with student loan debts essentially doubled while the average loan balance increased 91% from 2003 to 2012.

Economists are looking at education borrowing as the next bubble that could burst and drag down the US economy along with it. Much like the housing bubble, there are a lot of government backed loans being given away with a rubber stamp to large amounts of people who are unable to immediately if ever repay. Government officials are openly comparing student borrowing to the mortgage-backed security crisis of 2008. And remember, this article opened with the fact that there has been little study and even less data available on the subject.

Mortgage backed securities, credit default swaps, and derivatives trading are all complicated things. Let’s keep the education bubble concept simple.

Student loan debt in America = $1.2 trillion (with a T) more than any other form of consumer debt.

Much like the series of articles written about quantitative easing (QE), there will be multiple articles written about student loan debt as well as the debate over raising the minimum wage. These are the three economic issues I feel most passionately about and wish to shine light upon. Let those numbers listed above wash over you for a bit. Do you know anyone dealing with student loan debt? How are they doing? What is their quality of life?

It’s not just the loan or the interest, it is the unemployment, underemployment, or complete non-existence of careers in the fields thousands if not millions of students are graduating with each year. It’s not just the monthly payment on the loan(s). It’s the monthly payment on the loan plus rent, utilities, food, transportation, etc.

The Education Bubble and the student loan debt crisis are one and the same. They are intertwined, they are two terms describing essentially the same thing.

How is higher education a bubble akin to the dot-com, real estate bubbles, and other asset bubbles? We’ll cover that in part 2…

#TaxCode Changes Put on the Table

Posted: March 1, 2014 in Excess and Algorithms
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eanda logoajclogo2by @anarchyroll
2/27/2014

There are very few things that can actually change the American and/or global economy. The reason there are few things is because each one is not just big but gigantic in scope, nature, and application apparatus. A overhaul of the US tax code has been proposed by Michigan Republican David Camp of Michigan.

The banks hate it, retailers love it, Democrats say it’s dead on arrival, and Republicans aren’t really saying anything since it involves raising taxes on top earners. But it is a start, it is a physical, tangible bill, put on the table. The White House has acknowledged at least that much.

Many tax exemptions and tax breaks would be eliminated. Taxes would go down for individuals but go up for companies and corporations that earn X number of dollars. Income earned from investments would be taxed more which is very important. But there are multiple aspects that will prevent it from going anywhere, but it’s a start.

979 pages, which is the length of the bill, doesn’t exactly scream…simplified. But there must be a starting point on this issue, there must. The tax code in the United States is ridiculous and causes more problems than it solves. It favors the rich and hurts the poor. Too much money is hidden, sheltered, and shipped offshore, all of which must end.

Warren Buffet has famously said he should not pay a lower marginal tax rate than his secretary. The fact that is currently the norm, tells you all you need to know about the current tax code and tax policy in the United States. David Camps starting point is truly nothing more than a starting point but you can’t walk before you crawl. Camp’s bill begins the crawl forward, and forward is always the way to go.

#MoneyVelocity ; The Economic Recovery’s Gas Pedal

Posted: February 21, 2014 in Excess and Algorithms
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eanda logoby @anarchyroll
2/20/2014

What is money velocity? It is the speed at which the M2 money supply moves from one transaction to another.  What is the M2 money supply? It is all the liquid cash assets in the country from cash, savings accounts, mutual funds, certificate of deposits (CDs), checking deposits, or basically any kind of money stored in any kind of account, or mattress if you’re old and senile.

How can money velocity be used to gauge economic strength? Because money velocity ends up being the ratio of the size of a country’s economy to the size of the money supply. So there shouldn’t be more cash than there is gross domestic product (GDP) or less than. If there is more/less, then inflation/deflation occurs as a market correction.

I may sound very smart with the above explanation, but a recent article in Bloomberg Businessweek did all the heavy lifting for me. The article is short, quick, to the point, and keeps everything in plain language, as I try to do with this blog.

The concept of money velocity fascinated me because; I had never even heard or come across the term before, was unaware it is a relatively accurate economic indicator, and was surprised that the slower money moves the safer we are from inflation or another recession. Why is that? Hasn’t the Fed been flooding the markets with freshly printed money for over three years? They have, but people and businesses aren’t spending it, they’re saving it. Which is good for now because inflation could stop the economic recovery in its tracks.

But the money will have to start flowing sooner than later. Especially as QE gets tapered off over the next 18 months. Fading out QE and fading in inflation wouldn’t do much damage to the economy. It would be like getting autumn before winter or spring before summer, our bodies acclimate to the changing weather because of a gradual transition. This could be the case with money velocity. It was refreshing to learn that the low money velocity we are seeing now is historically normal, and has in the 60s and 80s preceded boom periods.

But those booms were just bubbles. We all must keep one eye on Wall Street to make sure that our country isn’t held hostage by a bursting bubble again. That is why they teach consumer ed in high schools folks, it’s not just to give an elective teacher a pay bump.

So now you know what money velocity and M2 money supply are. It’s used as an economic indicator because of its ratio to GDP. Lower velocity means lower prices and deflation while higher velocity means higher prices and inflation. Drop those in conversation at the cocktail lounge but not the night club, depending on how fast you want to move the cash in your wallet to keep the other parties interested…

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