Thursday, February 24, 2005

I'm currently taking a course on Monetary Policy taught by a former Governor of the Federal Reserve Board, Dewey Daane. He has brought several prominent speakers into the classroom, but none was more interesting than yesterday's speaker, Congressional Budget Office (CBO) director Douglas Holtz-Eakin. His job is strictly non-partisan and he did a superb job explaining the current situation with Social Security. Basically, SS will grow from 4% of current GDP to 6.5% in 2030, after which it steadies out until the SS trust fund runs out and benefits have to be cut (in 2052 or so). These cuts are mandated by currently existing policy (circa 1983), not by any Bush administration directive or policy change.

So, the director posed the question to the class: is Social Security currently in crisis? Most everyone, 25 students or so, acknowledged the problem; I was one of just a handful who say the system is in crisis. Here's why: if you acknowledge a problem exists and have the ability to enact a solution, you have a moral obligation to act immediately. Now, President Bush wants to make changes that will fundamentally change American retirement 10, 20, and 50 years hence. Pre-funding of Social Security - through partial privitization - will definitely change this. Still, things will have to happen in the meantime to fix the social insurance part of any new system, which will be accomplished through some combination of borrowing, higher taxes, or selling California.

The scarier part of the equation is Medicare/Medicaid. Whereas SS should grow no larger than 6.5% of GDP, it levels off. Medicare's growth function is exponential. It currently is 4% of GDP - based on growth rates in health care, that number rises to 20% and beyond very, very quickly. Social Security Reform will be a test case, because the numbers at least seem reasonable. Medicare is an entirely different animal that cannot continue to exist in its current form, and therefore the reform will be much more difficult.

Wednesday, February 23, 2005

After busting out of a home game very early, I commenced with Tuesday night drinking down out Mafiaoza's with my buddies Will, Derrick, and Anderson. Now, we are beer special chasers, and I for one appreciate the release in pressure that Mafiaoza's has taken off of Sam's Place in Hillsboro Village on Tuesday night. Even better, Mafiaoza's seems to have attracted the 26-32 set of young professionals which lets Sam's take the Vandy and just-out-of-school crowd. The atmostphere, the two-for-one pizza and beer, the set, and the outdoor patio have made Mafiaoza's my preferred spot on Tuesday night. They serve really good pizza, by the way, and they serve it until 3 am on weekends.

Conversation mostly centered around the new Josh Rouse album, Nashville, which like all his other albums is just amazingly good. For one, you will be hard pressed to find a singer-songwriter with two or three good albums, but Josh has delivered five. I've not listened to it enough to call it his best, but it is really good. The first five tracks will be familiar to recent concertgoers and the addition of some pedal steel to the melodies is a good turn for Josh. He ends the Nashville tour in Nashville, naturally, on April 29th at the Exit/In.

Tuesday, February 22, 2005

In an amazing bit of serendipity, the NY Times has an article regarding the subject matter below. Seems Tennessee isn't the only state with these issues. The situation is a lot murkier when there is actually no money at stake.

Bars Test Laws on Gambling With Moneyless Poker Games
Poker is here to stay. Why Tennessee should wise up and benefit from it.

Many a naysayer say “nay” to the idea that the current torrent of interest in poker in the United States is anything more than a fad. Yet, I’m willing to gamble that poker will continue its roll through the American landscape. Nashville’s local news sources – though amazingly adept at exaggeration – have straddled the fence on poker’s popularity and its perspicuity, the latter with regards to the law. Yet few articles in the mainstream press have treated poker as anything more than the fashion of the day. Yet I believe its potentially much more than that – here’s why:

1. Poker has found its game – Texas Hold ‘Em, in both its Limit and No Limit form, has added layers of strategic dimension to the game. The old home game of 5-Card Draw was basically a game of catching cards and bluffing; Seven Card stud added the element of remembering cards that have been folded. Texas Hold ‘Em and other community-card-based games like Omaha introduced concepts like pot odds and putting your opponent on a hand. Calculating both requires considerable skill (in math and in reading people) and are far more important than luck towards long-term performance.

2. Poker has a fairy godmother – Her name is ESPN and her adopted child with Las Vegas is the World Series of Poker. ESPN loves the rating – far better than bowling or billiards – and the WSOP brand is being heavily pushed by the world’s second largest casino company in Harrah’s/Caesar Palace. The WSOP and the World Poker Tour and their many competitors have created a few recognizable poker superstars. From a sports and gaming marketing standpoint, having strong brands and familiar faces are critical elements for longevity.

3. Poker is gambling – Therefore, poker falls into the same category as crack rock, Jack Daniels, Camel Lights, and strawberry blondes. These things all make our neurotransmitters go click, click, click; so, we get hooked on them just the same. Nevadans were the first to figure this out (without wires and CAT scans) and so Las Vegas was born.

4. Poker is all about money – Americans like to bet. In the past week, I’ve made bets ranging from the Commodores’ W-L record to whether or not there is an “’s” in Ruth’s Chris Steakhouse. With poker games, however, there is no house edge – it’s just you versus your opponent. There’s balance, no tipped scales, unless you put the time in and practice. In a game of luck, practice will help no one. In a game of skill, practice will. With increasing skill comes increasing ability to make money, and the money will always bring people back to the table.

I could easily continue the argument; suffice it to say, poker is here to stay. Tennessee has the right – and some would say responsibility – to regulate its economy to the benefit of its citizens. Clearly, demand is being met by an underground economy which police action will do little to prevent. Thus, Tennessee needs to bring it above board – license card rooms, regulate them, and then take its cut. The system works well in California, where games of skill like poker are sanctioned, regulated, and taxed. Tennessee officials speak often of the need to diversify its revenue stream; legalized gambling has become a haymaker for dozens of states.

There are, however, many arguments for and against. I’d definitely like to see some dialogue begin in the press simply to know that legislators are considering all their options with regard to the future of the Tennessee economy.
Monday was a slow news day in Nashville and I didn’t make it any more exciting by staying in most of the day and doing homework. The Titans shakeout was confirmed to what I can only say was a positive reaction on the talk radio show. “Doing what they had to” was the most common response; a lot of people seemed to be encouraged that single game tickets will be easier to come by.

Monday, February 21, 2005

Tennessee Titans cutting 6 veteran players, maybe more

The Tennessee Titans announced that they are going to cut six of their most veteran and popular players: Derrick Mason, Fred Miller, Robert Holcombe, Joe Nedney, Kevin Carter, and Samari Rolle. This is the link to the Tennessean story: Titans Story . The economics of the NFL may have sealed the Titans’ fate for the 2005 season, but this decision should help the Titans in the long run. Here’s what the Titans are losing:

Derrick Mason, WR – $4.7 million cap hit – A 1000-yard receiver four years running, D-Mase has anchored the underwhelming Titans receiving corps. Mason has long been Steve McNair’s favorite target, but I’m not sure that Mason is irreplaceable. He has been a consistent, hard-working receiver that would probably be a second receiver on most teams. Titans need to rebuild this position through the draft, and Norm Chow will no doubt put a couple of them on his April 23 wish list.

Fred Miller, OT – $9.32 million – Good riddance, Fred Miller. Miller was flagged for three false starts in the 2001 Super Bowl against the Titans so someone decided that it would be a good idea to sign him as a free agent the following year. Miller, while a veteran lineman at an important position, is replaceable by several lineman that would be at half the cap hit or less. And he still has to average a false start a game. Draft – build – teach. This pickup was really the start of the Titans’ cap problems.

Robert Holcombe, FB – Not reported – It’s hard to dislike Robert Holcombe, who has been a steady presence in the Titans backfield. I think that his cap hit is comparatively small to his offensive brethren, but the fact is that the backfield blocker need not be a specialist’s role. Tight ends, second tailbacks, and the occasional linebacker can fill that role when needed so it’s best to jettison that roster spot.

Joe Nedney, K - $1.4 million – Zero points in the last two years on the roster. Granted, he’s been injured twice (on the same calendar day, no less) but the kicking game hasn’t been that bad the past two seasons and, well, every million counts.

Kevin Carter, DE - $13.97 million – I really, really, hate to see Kevin Carter not a Titan next year, so I’ll cross my fingers and see if they can magically turn his $14 million hit into $5 or $6 million with no future trouble. But I don’t think that’s how the cap works, so Tennessee will lose its defensive leader and most active member in the community. Many Titans are popular but none are so genuinely good as Carter, who gives a lot of time, money, and talent to charitable causes in the Nashville area. He’s got a lot left to offer a football team, but one can only hope when he retires he’ll come back to Tennessee.

Samari Rolle, CB - $9.81 million – Rolle is definitely one of the top 5 corners in the NFL and the best player in Tennessee’s secondary. He’s had some recent legal trouble but Samari’s mostly been a good citizen and popular player. I could easily give you 5 reasons to keep Rolle around, but for each of those, the Titans have two million to let him go. Unfortunate for the Titans to be in this mess, but this is the tough decision that needs to be made.

Like I said earlier, this should help the Titans in the long run. I hope that the Titans have learned from some of their free agent mistakes and instead strive to be a team like the Patriots, who use a system guided by their head coach and then find the right players to fit that system. Moreover, if the ideal player for that system is over-priced, then New England will find the best player for the value they are willing to pay. Those ideals make them good year after year. Let’s hope that Jeff Fisher and the Titans in 2006 will resemble Bill Belichick and the Pats today.