Posted by: Bruce Allen | December 4, 2014

Colts’ Running Game: Blow It Up

Colts linemenThree quarters of the way through the 2014 season, it’s time to get real about the Indianapolis Colts and the running game they will need, someday, to compete for a Super Bowl.

The Colts are, at this time, pinning their hopes on Boom Herron to carry them to the promised land.  Herron, who is the kind of back they need, is, in turn, one solid tackle away from a season-ending injury. Trent Richardson was a beast in college who lacks the body type to be successful in the NFL.  It has taken this long to discern this owing to a list of events, changes and excuses that go back to his rookie season with the Browns.  It is possible that Richardson could be successful with some teams–teams that actually create holes in the opponents’ defensive line–but his talents, such as they are, are mostly wasted with the Colts.  He is a great pass blocker and can catch the ball out of the backfield.  He just can’t convert on third and short, and with his build that should be virtually automatic.

The Colts’ running game relies, in large measure, on our offensive linemen going straight up against their guy and moving him off the line of scrimmage.  In Lucas Oil Stadium, that simply has never worked.  The Colts’ scheme, such as it is, requires extraordinary backs who can produce only mediocre results within a scheme that doesn’t work.  (In some other town, Edgerrin James would have accumulated half again as many yards with the same effort.)  Our offensive lines can pass block–sort of–but cannot run block in the way they are being coached.  Can’t, and never have been able to.  Again, as we enter The Luck Years, he makes a weak pass-blocking line look better than it is with a quick release, willingness to get hit, and running ability.Edgerrin James

Watch the New England TV broadcast again, and see the announcers using the Telestrator to show how the Patriots’ running game, relying on down blocking, with either a back or receiver coming across the formation to block, created huge lanes for the back, in our case some obscure rookie who set some kind of record simply following his blocking.  This whole diagonal scheme, compared to the Colts’  vertical approach, mano a mano, is easier on the linemen and the backs, and susceptible to the stretch play as well as play action.

The Colts need to re-examine their offensive line and their entire approach to running the ball.  Things would look better at this point had Vick Ballard not gone down for the second year in a row, a brutal indicator that he may never reach his potential with the Colts.  Bradshaw may be done.  Richardson can’t do it on this level.  Otherwise, there isn’t anyone.

The Colts need their center, #72, to become the talent the entire staff tell us he will be.  The guard situation is troubling, as we’ve devoted several high draft choices and trades that, at this point, haven’t worked out at all. (Grigson was an offensive guard; he should be better at identifying and signing guys at that position who can move their guy off the line of scrimmage. ) Costanzo is everything you could ask for at left tackle, while Cherilus has perhaps a few good years left.  Otherwise, the offensive line gets pushed around every week, and any running game at all is generally the result of heroic effort by Herron or Luck or a mistake by the defense.  Getting Allen #83 back will help the running game.

The Colts will win the South again this year, probably finishing at 11-5.  They will host a divisional game in week one of the playoffs that they are likely to lose, unless Herron and the offensive line are healthy and at full strength.  In high school we had a series of plays we called “crossbucks” which, theoretically only, would produce running lanes allowing the back to run against the grain, so to speak, and produce solid results.  The Colts are built to run such a series on second and third downs.  Even Richardson could probably give 5 yards a carry with such a scheme.

The Colts have other problems, notably their inability to stop the run against good teams.  It looks like they have the players to make plays, but they give up a lot of rushing yards and a lot of big plays.  Time of possession, for the defense, is an issue, as they rank next to last in red zone defense, permitting touchdowns at something like a 70% rate. They are tough on 3rd down.  Lots of defensive backs who are near plays but not necessarily breaking up plays. Nothing approaching a pass rush as in years past.  34 Sacks thus far in 2014 vs. 42 sacks 2013.      23rd in team defense in 2014 vs. 13th overall in 2013.  They are way easier to score on than they were in 2013.

The fact that Luck has more tools and is something of a budding genius does nothing to obscure the fact that the Colts are unable to reliably run the ball and have trouble stopping the run against good teams.  They have exactly the make-up of a team that wins its first playoff game at home and goes on the road in week two to cold weather and gets hammered, either in Denver or New England.

Choose your poison, or just win out and see what happens.  The set-up is the same as that very old joke that ends with the words, “Good.  But first, chi-chi.”  Beat one, and your reward is going on the road to play the other.  Teams that do that make it to the Super Bowl all the time.  Um, no.

The Colts need to get real about their running game and their play on defense when the opponent is running the ball.  That they have enough to win the division is obvious.  The challenge for the Colts is to demonstrate they have what it takes to go on the road in the winter and play at night in cold weather in the proverbial hostile environment.  With a running game that demands offensive lineman simply push their guy out of the way and run the ball and is delusional in its belief that it can succeed doing so.  Or that Herron will have a long shelf life if he’s earning 20 carries a game, starting in Cleveland.

After the season’s over, let Richardson choose his own team and make his own deal.  Get what you can in exchange.  He is a nice guy and deserves a chance to do well.  It was not a good fit for him here in Indianapolis, not his fault.  He does lots of other things well that don’t show up in the charts.  He will continue in the NFL, as his health is surprisingly good. Go with God.

The Colts and especially Grigson need to fix both lines and refine the way they attack the line of scrimmage on offense to succeed in cold weather.  They need to increase the pressure on opposing quarterbacks coming from the middle of the line of scrimmage at all times.  They need to allow the linebackers to play in the secondary more and rush the passer less.  They need to occupy the clock and move the sticks to succeed in cold weather.

They need to run the ball.  Other than Boom Herron, they have proven unable to run the ball.

Heading into the playoffs, the Colts have reason to celebrate and reason for concern.  They have one of the best quarterbacks in football whose career is still very much ascendant.  They have a growing number of offensive weapons.  They have enough of an offensive line to allow Luck to do much of what he does, but does not produce any significant rushing yards.  It is a team built to lose in the second round of the playoffs, despite Luck, despite having perhaps the top offense in the league.  They will run into a Pittsburgh or a Denver or a New England on the road and find themselves outgunned and out-schemed.  And, if somehow they should prevail in the second round, they would need to repeat the feat, on the road, to advance to the Super Bowl.  In the winter.  At night.  And on the road.

Gronk

 

 

 

Posted by: Bruce Allen | November 20, 2014

The Colts Give Us Reason for Concern

cropped-099indianapolis-monumentcircle.jpgHaving watched 10 Colts games this season, I am officially concerned.

I am officially concerned that a team built to run the ball and stop the run can consistently do neither.

I am not concerned about Andrew Luck, whom we expect to drag us out of every mess we put ourselves into, forgive the dangling preposition. He is very good and will become brilliant, perhaps transcendent, as he matures. It is the defense’s inability to stop the run, and the running game itself that have me worried.Indianapolis Colts Logo

Observe how the Patriots beat us this past week. The announcers illustrated over and over how the New England OC used angle blocking, crossing WRs, slanting blocking backs, slanting pulls, to create running lanes, through which an obscure running back could amass 200 yards that would have been more had it not been, in the immortal words of Kravitz, for those pesky end zones. They don’t simply put our big guys up against your big guys and start pushing away, and tell Richardson or Bradshaw to run at the inevitable opening, which is simply rarely there. The entire NE run blocking scheme was superior to our own, and was the reason we lost the game.

Three years into the Grigson regime and we are unable to stop the run nor run the ball after having invested Lord how many millions of dollars in players and draft choices. Our players LOOK like the type we want—broad, very big, but we’re unable to create running lanes on offense and putting any meaningful pressure on opposing QBs, overlooking two singularly poor decisions by Brady, both of which resulted in interceptions, and both of which were the reasons this didn’t become an uglier rout than it was. This was about being overmatched along both lines and outcoached.

It is cold comfort to state the obvious, that Brady is 37 and Luck 25, but for now there is no comparison. There is little reason to expect much more from this team than to win the punchless AFC South. At this stage, the stage at which people want to start blaming other people for the things that aren’t happening on the field, like being 8-2, for example, that the candidates include Pagano, Grigson and Christiansen. As for the latter, it’s true the Colts have been leading the league in accumulating yards and scoring, but most of that has resulted from Luck himself, especially in the un-kept statistic of avoiding sacks, while still taking more than is healthy. Again, making the O Line appear more competent than it, in fact, is.

Why does the defense get routinely pushed around by the opposing team’s ground game? Sure, they throw a shutout at the Bengals, but the fact remains that good teams can run on the Colts at their leisure. Is it injuries, the guys that aren’t in there? Not really, because every team in the soft-tissue-destroying league says the same thing.

Either these players are not as good as they look, or else they’re being improperly coached.

Any conversation that this is a championship team needs to stop at this time.

This is a team that needs to win 5 of its last 6 games to have any right making the playoffs. Going into the playoffs with a 10 & 6 record is not an ascendant strategy, playing at home perhaps once, and going on the road for the duration, only, in the prettiest scenario, to meet a Green Bay or an Arizona or those damnable Cowboys in an imaginary Super Bowl. Sure, let’s amuse ourselves and put the Colts in the Superbowl, in Glendale, against Bruce Arians and the Cardinals.

The bad karma would be thick as the local well water.

cropped-099indianapolis-monumentcircle.jpgThe Colts, for whatever reason, are not yet good enough to compete for a title. Three full years in the Grigson era and we look like a championship team, but don’t play like a championship team. For every Baltimore, there is a Pittsburgh. For every Jacksonville there is a New England. This team can only beat teams that are, bluntly speaking, not good, or during periods where they’re not good. Baltimore back when we played them was not as good as Baltimore now, with whom we would have trouble.

Until this team can consistently hold good teams, including Dallas, to under 140 yards rushing they will never give Luck and Company the time they need to go methodically down the field in the absence of any kind of meaningful running game which is—let’s be honest for just a moment—terrible, no threat whatsoever, Josh Herron the only bright light in the bunch. Trent Richardson giving it his all but never having any daylight to run to, which he had in abundance at Alabama and he needs, given his build and inertia of rest, his difficulty in getting it going quickly at the start of the play. Bradshaw is now unavailable. Everyone wanted to see Ballard run the ball this season, but that hope was dashed early. What we’ve seen since training camp, in fact, has been occasional bursts of brilliance hidden among long periods of mediocrity, good enough, once again, to beat the bad teams, but unable to get it done against good teams. A team built, it seems, to win the AFC South, generating a banner and little else.

What were, in retrospect, amazing seasons were 2012 and 2013, when Luck showed why he was the number one pick, when he carried the team on his back and managed consecutive 11 win seasons without much help. This year, his improvement has, seemingly, been more than matched by deterioration in both the middle pass rush—spare me the Mathis talk—and the play of the offensive line, which generally does not create holes for backs to run through, its express purpose for existing at all. This is an offensive line incapable of moving good defensive lines out of their lanes. This is an offensive line, at its best, capable of playing at a B minus level.

This is an offensive line that simply is not getting it done. Blame the players, the coaches or the scheme—I’ll take the latter—this is a team that cannot run the ball nor stop the run. The two components that make the successful playoff teams successful. We lapse into the Junior Manning syndrome, of trying to get through the playoffs due primarily to the exploits of our quarterback and always coming up short, other than the one year when we started playing incredible defense IN the playoffs and won the Super Bowl. Up until that time, the defense that year, and most years was a liability. For three weeks, they became a force to be reckoned with. Not the least of reasons being the play of Antoine Bethea who, it seems, contributed more to the defense than we suspected.

For Grigson and Jimmy Irsay, much is on the line. Irsay has bought heavily into Grigson and Pagano as the hope of the future, the direction the club is wanting to go. But though the intent is there, the results are not trending well. The team cannot reliably be expected to win when it can’t run the ball and can’t sto the run. Perhaps the Colts were lucky to finish 11-5 the last two seasons, but one figured this year they should easily earn it and perhaps exceed 11 wins. Which now means, of course, running the table through December.

Six games of which the team can reasonably expect to win 5, the exception being Dallas at Dallas on December 21 at 4 pm. That game will determine whether 11-5 is possible this year, and, if so, whether it will be more luck, more Luck, or something else. So far, it hasn’t been much running the ball, and we haven’t seen run-stopping in the bad losses at home to New England and on the road against the Steelers.

The modern model of the Super Bowl offense will always include some version of The Triplets, named for Troy Aikman, Emmitt Smith and Michael Irvin, who led the team into three titles, with a traditionally strong NFC East-type defense behind it. Today’s Colts don’t have the triplets. They have Luck. They have TY Hilton, who is too small to be a real triplet good for, say, 1800-2000 yards of total offense for a season. And they don’t have the kind of defense that can withstand the efforts of a quality offensive team.

One game does not make a season. They will likely bounce back this week in Jacksonville. They should have no serious matchup problems with Washington. Cleveland is looking increasingly problematic. Having to beat both Dallas and Cleveland to gain some momentum leading into the playoffs pretty much guarantees an early exit therefrom. And what would that mean?

Big contract year for Luck on the horizon, in addition to others. Years 4, 5 and 6 are going to be the best Luck has to offer, and we want him working for us. Grigson should have one more year to produce high quality players, and enable a viable running game, before feeling the heat. The Colts, it was felt, would be better by now than they are. This kind of relative disappointment—plenty of fans would like to have a home team at 6-4—is bad for a group constantly being told they have the potential to be champions.

For Luck, the next 3-5 seasons will seal his reputation in the league. He will be at his peak physical and psychological best during these years, before he takes the kind of beating the NFL dishes out to physical quarterbacks over the course of their careers. As a community, we owe it to Andrew Luck to surround him with a set of triplets, an astute front office, and a defense that can help keep him on the field. We’ve all thought these came along with Grigson and Pagano. The next six games will tell us much about who they are. The next five years will tell us much about who WE are.

Posted by: Bruce Allen | November 20, 2014

Livin’ the Dream in Kensington, Maryland, circa 1967

Albert Einstein HSBack in the late 1960’s, middle class white teens living in the Maryland suburbs enjoyed rich fantasy lives. We fantasized about playing professional baseball. We fantasized about having sex with actual girls, and theorized at length about what a female breast might feel like. We were the generation that first applied baseball metaphors to sex. Thus, I could boast of having been on the Ski Club bus coming home from a trip to southern Pennsylvania when Patrick let’s call him “Phillips” made it to third base with Kathy let’s say “Taggart.”

[Patrick, as you can probably guess, was a star pitcher on the high school baseball team who, as he proved that night, could also hit with power. Kathy was a budding slut a year younger than we were, getting an early start on her likely career. This was possibly the first instance of what could be called a sit-down triple.]

One of the other fantasies that occupied more of our frontal lobes than it probably should have was finding money, money that was just lying around, maybe in a paper bag, unclaimed. While it had been years since we went around collecting soda bottles for the 2 cent deposits, we were always looking for money—by the side of the road, in payphone change slots, Coke machines, etc. My friend Deke Kaiserski led the league in looking for money, and routinely could be found with his hand, wrist and forearm stuck up a vending machine of some kind.

None of us ever had any of what my dad referred to as “folding money.” Nor were we sufficiently enterprising to get dopey part-time jobs, as doing so would have interfered with our after-school routine of goofing off, three-on-three hoops, and shoplifting at the Kensington Pharmacy. All that would change, for awhile anyway, during the fall of our junior year.

There was a group of six or eight of us that were pretty tight. Included in our un-exclusive group—we were mostly dorks—was Bobby B, DK the pop machine bandit, Ike, and Pick.

Somehow, during that year, Bob and I and Maybe Barkdoll got involved with what had to be some kind of scam involving a classmate named Tom Moffitt*, Class of ’68, his father (a notorious lowlife), and the U.S. Office of Economic Opportunity. Back in the day, many of you recall, it was at least as easy as it is today to separate the federal government from its money in the ostensible pursuit of truth, justice, and the American Way. In our case, it involved delivering OEO press release packages to the various House and Senate offices of the then-current elected occupants, scallywags all.

*Tom Moffitt died in Viet Nam while he was still a teenager.

Not that these Representatives and Senators gave a rat’s ass about releases coming out of the OEO. Pols had far weightier concerns back in 1968—Ho Chi Minh, domino theories, military-industrial complexities, SNCC, Sino-Soviet tensions, Curt Flood, draft dodging commie pinko fags and the like. OEO was one of those hapless civilian agencies statutorily engaged in the systematic conversion of taxpayer dollars into Xerox copies.

Anyway, Moffitt’s dad was The Contractor, and Tom, Bob, Bobby and I were The Grunts. Mr. Moffitt would pick two of us up after school in this large, loud beater of his, and we would take off at startling speeds toward our designated appointments On The Hill. Mr. Moffitt claimed to believe the idiotic assertion that driving in traffic was dangerous, and that the best way to alleviate the danger was to minimize the time spent therein, which meant driving as fast as his car would freaking go getting us downtown. Those rides were terrifying, unless they occurred with Pick, who didn’t have the sense to be frightened and seemed to laugh the entire way.

Miraculously, we made it to the OEO every time, picked up our packets of Important Releases, hoofed over to the Hill, and delivered them in a conscientious and workmanlike manner to almost every office on the list. Given our overall levels of personal responsibility those days, surprisingly few of the packets got trashed prior to being delivered, probably because there were never that many to begin with on any one day.

One did tend to run into important people in the halls. I think I took a piss next to the young punk freshman Senator Ted Kennedy on one of those days. However, in that we, the Grunts, were grunts, the pols had better things to do than mess with us, or even acknowledge our existence. On the congressional food chain, we were even lower than the pages, who, when they weren’t being sexually harassed, were volunteers. At least we were getting paid. Generally we tossed the envelopes on the receptionists’ desks and beat feet.

By the time we were done, Mr. Moffitt was usually unavailable, likely in his cups somewhere. We would grab a bus to Chevy Chase Circle, and transfer there to one that would take us out Connecticut Avenue to our homes in Kensington, Maryland, [Motto: A Good Place to be From]. It was at the Chevy Chase Circle bus transfer station that I had Fun with Bob.

As we waited for the bus, I checked my pockets, and found that I had one bus transfer, one dollar and one cent to my name. It was early spring, maybe 6:30 in the evening, and I was, as usual, starving. There was a row of candy and cigarette machines in the shack, the old style mechanical ones, but, without even a nickel, there was nothing there for our BruAl. Vending machines didn’t accept dollar bills in 1967. Homework loomed, and Barbara had undoubtedly served and cleared dinner. Woe was BruAl. Pick, who, I suspect, also had an effective net worth of less than a nickel at that moment, brooded. We were the only two people in the station/shack.

For reasons known only to boys, I decided to see if I could get one of the candy machines to “bite” on my penny. My friend Deke, who was always doing this, as well as checking vending machine and pay phone change slots, would have been proud of me.

I dropped the penny in the slot, pulled the handle under a Snickers bar, felt the handle engage the latch, and pulled the handle out, CHING, at which point the Snickers bar fell into the whatchacallit, the poorly-designed slot you reach in to get your candy, often skinning a knuckle or wrist in the process. And when I pulled the handle again, this time without even bothering with the penny, once again it engaged, released, and dropped a second Snickers bar into the hamper CH-CHING! Another pull, another candy bar. CH-CH-CHING!!! I was in The Zone, and this was way before there even WAS a Zone. I was living the dream, facing the prospect of virtually Unlimited Chocolate and Corn Syrup, when Pick got into the act.

Bedlam.

Bob starts in, frantically pulling handles, laughing his ass off, braying on the inhale, sounding more like a distressed mule than a euphoric teenager. Between us, we probably ended up with 50 candy bars. We were jamming them into our coats, shirts, pants, hats, wherever we had a place, when the thought occurred to us—what if someone should come into the station and see us, collapsed amidst a pile of ill-gotten confections? Were we subject to prosecution? Worse yet, could someone make us give the stuff back? Was this the seminal idea behind the 2000 Film Chocolat?

We had to split.

In the next scene, picture our two heroes, trying desperately not to drop their loot, half-running, half-staggering down the median strip on Connecticut Avenue, making for the next stop on the line. Crying, laughing, and cursing. After a brief wait, our bus arrived, and we clambered aboard, trying our best not to look felonious. We had just put one over on The Man, we had the spoils to prove it, and we were, for the moment, invincible. I believe we had also crossed a state line, rendering us Immune from Local Prosecution, although perhaps subject to some minor Federal statutes. We ate all the junk we couldn’t stash in our clothes, and grinned back at the commuters glaring at us.

Crime did pay! You could steal and get away with it. And if you ate the evidence, no jury on earth could convict you. So our experience, far from being a simple gastronomical orgy was, in fact, an important life lesson: If you’re going to steal, steal food. No one ever went to the slam over a Payday. Not even 50 Paydays.

And if you’re going to steal food, steal it with Pick. If Pick’s not available, call Louie or Showzie. Crime is more fun when your accomplice makes noises like a hyena and has stuff shooting out his nose.

Posted by: Bruce Allen | February 3, 2013

The “Long Stock” Effect = -2.25% of 15% Return

This February 2013 post should have read that long positions work against you, even when markets are stable.  The 2.25% quote here assumes a 15% rate of return.  The effective rates will be determined by assumed or actual rates of return.

Nick Murray, formerly a Big Deal at Bear Stearns, when there WAS a Bear Stearns, used to teach that the way to get rich in the stock market was by doing what most people don’t, because most people aren’t rich.  He used to serenade us with visions of an S&P at 10,000 and a 30,000 Dow, and he was telling us to expect this by 2005.  In addition to a myriad of other things, Nick was apparently unaware of what I choose to call The Long Stock Effect.

Here’s the problem.

Let’s say I’m an investor with $100,000 to invest and no strong feelings about the market, other than it’s hard to beat the indexes.  Let’s say I decide to put my money in a no-load, low expense S&P 500 index fund.  I’m going to buy the large cap market, and stick with it for the next 20 years or so.  No commissions, no research, no advice, just a $100,00 bet on the S&P.

s-and-p-500-history-chart

History of the S&P 500 since 1960.

Let’s also say I’m a freelance writer, and am relying on my instincts more than my intellect when it comes to investing.  (The joke here, of course, is that there is a freelance writer somewhere with $100,00 to invest.  But I digresss.)  My instinct tells me that some years the market will be up, and some down, but over a long period of time there will be more upside than downside.  Until the 21st century, that had been true for a hundred years.  Buy and hold for a long time and make money.

The paradigm seems to have shifted around 2001 with the busting of the tech bubble.  Since then, the S&P has been flat, and the variance in annual returns far higher.  Major swings up and down, with the index in early February 2013 at about the same point it was in 2001.  Undaunted, our freelance writer figures to buy today, rather than wait for the next dip.  After all, he’s a long term investor.  With good common sense, and fairly high risk tolerance.

To illustrate the problem facing our freelancer/investor, and the millions of long investors like him, let’s take a simple scenario and do the math:    The market goes down 15% this year and up 15% next year.  Will you be better off, even, or worse off in two years? (Less commissions, and in nominal dollars, in which case inflation is working against you.  If you have $100,000 in two years, you’re worse off than you are having it today to the extent that inflation has eroded its buying power.  Time value of money and all that.  But inflation has been mild, and you don’t care about that either.)

So, here’s the math.  You start with $100,000 and lose 15% coming out of the gate.  Nice going.  Now you have $85,000.  Luckily for you, the following year the S&P goes up 15%, and you’re thinking, “YES, I’m back to even again.”  Except that, um, you’re not.

Your $85,000 has indeed risen by 15%, but that leaves you with only $97,750.  So, while you felt you were breaking even, you lost 2.25% of your investment, plus commissions, plus any taxes on the gains, plus being on the wrong side of inflation.

You’re hosed.  Keep doing this for 20 years and you’ll make a small fortune the hard way–start with a LARGE fortune and follow your instincts.

Now you’re thinking, fine.  So I lost some of my capital.  The problem is that the market went down the first year, and up the second.  Surely, if you reverse the assumptions, I’ll come out ahead by that pesky 2.25%.

Let’s do the math.  Year one is a winner, and your $100,000 grows to $115,000.  Alas, year two is a bummer, and the S&P gives up 15%.  15% of $115,000 is $17,250 which, subtracted from your $115,000, leaves you with the same stinking $97,500.  STILL down 2.5%.  Plus the blah blah blah.

Up&down chart-MainYou’re hosed either way.  What does this mean for the long term investor?  Think of it as a cover charge.  The “price of admission” to investing in the stock market, ceteris paribus, is 2.25%.  Comparable to the expense ratios in expensive managed money funds and the charges inside variable annuities, with all of their guarantees.  (Wait.  This is becoming a commercial for annuities.)  Expensive mutual funds hit you with a lot of fees, but this does not negate the “long stock effect” described above.  It adds to it.  So, if your managed money account with your broker costs you 2% of assets for their expertise, you are down over 4% before you start.

No, wait.  This is becoming a commercial for short sellers.  If the long buyers are paying a 2.25% vig, then perhaps the short sellers have something going on.  We’ll have to think on that one and save it for a later date.

Posted by: Bruce Allen | November 10, 2012

Romney voters less educated than Obama voters?

I thought it would be interesting to take Tuesday night’s election results, by state, and compare them to several indices of education attainment compiled by the U.S. Census Bureau.  We already know that Romney supporters tended to be older, wealthier, more male, and whiter than Obama supporters.  What we had no idea about—until now—is that they were, across the board, less educated.

The Census Bureau annually ranks states according to education achievement, by measuring the proportion of residents that have graduated from high school, graduated from college, and earned graduate degrees.  The three graphs below show those rankings.  The states in blue went for Obama; the states in red for Romney.  The median for the 51 states (for the purpose of this analysis, the District of Columbia is considered a state, not a colony) is 25.5 which, in order to avoid partitioning states for the convenience of this analysis, has been rounded down to 25.  Thus, the top 25 states are above the median, while the bottom 26 sit below.

  1.  High school graduates

Of the three indices, this is the least informative, because a high school diploma no longer carries with it the assumption of basic competence in anything except texting on cell phones.  Compared to the other two, however, Romney voters fared best in this measure.  In the states that went red on Tuesday, 38% sit above the median, 62% below.  For Obama, 59% of the blue states sit above the median, 41% below.  Thus, of the 25 states with the highest percentage of high school graduates, 16 went for the Democrats, 9 for the Republicans.  For the GOP, it gets worse from here.

  1.  College graduates

A college degree is still a fairly reliable indicator of achievement, although it, too, has been diluted over the past several generations.  Seven of the 25 states above the median went for Romney, including none of the top 16.  Pretty remarkable, if you ask me.  25% of the red states sit above the median, 75% below.  70% of the blue states sit above the median, 30% below.  And of the bottom 15 states, 12 are red, only 3 blue.  College graduates voted for Obama in a big way.

  1.  Holders of graduate degrees

If there is any reliable indicator of educational achievement left, certainly graduate and professional degrees retain some meaning.  The results in this index would be shocking, had we not just looked at the numbers for undergrads.  Only 13% of the red states sit above the median, 87% below.  And again, of the bottom 15, 13 favored Romney over Obama.  81% of the states above the median are blue, with 19% below.  And of the 18 states with the highest percentage of graduate degrees, every one went for Obama.  18-0. If the President were an NFL team, we could finally stop watching those smug old broken-down Miami Dolphins guzzling champagne every few years.

Put differently, of the states with the highest percentage of high school graduates, 64% are blue, 36% red.  For college graduates, the break is more dramatic—80% to 20%.  And for those holding graduate and professional degrees, 87% of the states went for Obama, 13% for Romney.  These numbers, crude though they may be, are statistically significant.

If one is willing to assume a correlation between educational attainment and income, the numbers are even more surprising.  Wealthy voters could be presumed to be more highly educated, which would tend to increase Romney’s popularity among folks who have graduated from college at least once.  Yet nothing could be farther from the truth.

I’m not anxious to try to interpret these figures.  But some of my rightist friends are.  Here’s a sample:

I need this kind of taunt like I need bunions, but am assuaged by considering the source.

Anyway, the list of challenges facing the Republican party going forward just got a little longer.  They must find a way to appeal to a younger, browner, poorer and more female cohort.  Add to that the need to appeal to more highly educated voters, historically more liberal than those with less formal education, and the goal becomes even more daunting.  If they are to maintain their base during this process, it means becoming the party of choice for the young and the old; brown and white; male and female; rich and poor; dropouts and doctors.

Good luck with that.

Posted by: Bruce Allen | October 28, 2012

2012 MotoGP Phillip Island Results

An edited, slightly less entertaining version of this article appears on Motorcycle.com.

Stoner wins!  Pedrosa crashes!  Lorenzo clinches! 

In the 41 minutes it took to run the 2012 Australian Grand Prix, a number of pressing questions were resolved.  Would Repsol Honda top gun Casey Stoner be able to make it six wins in a row at his home crib?  Could teammate Dani Pedrosa make it four in a row for 2012?  Would factory Yamaha mullah Jorge Lorenzo pick up the three points on Pedrosa he needed to clinch the 2012 championship?  And, finally, would one of the local wallabies hop through the infield prior to the race as a reminder we were on the other side of the planet?  In order, the answers were:  Yes.  No.  Yes, and Yes. 

In front of 53,000 delirious fans, Casey Stoner, as is his wont, ran away from the field for his sixth consecutive premier class win in Australia.  Being the fastest rider on the fastest bike at the fastest track on the tour, there was little question that Stoner would go out in grand style in front of his homeys.  He was at the top of every single timesheet all weekend and never seriously threatened during the race itself.  Although he didn’t enjoy a great start, he oozed past Lorenzo on a decisive second lap into the lead and ended up winning by some nine seconds. 

Want a good definition of the word “dominant”?  Over the last six years at Phillip Island, Casey Stoner led 160 of 162 laps.  Does that constitute perhaps the greatest home field advantage in the history of sports?  Tough question.  But the only good news about Stoner’s impending retirement—I read he’s moving on to automobile racing starting next year—is that someone else will have a chance to stand at the top of the podium next year at Phillip Island. 

Pedrosa Finally Cracks

Dani Pedrosa came into the race today needing to make up 23 championship points in two races, an almost impossible task unless Lorenzo were to make some kind of uncharacteristic gaffe.  Despite having won five of the last six races, Pedrosa was unable to gain much ground on his consistent countryman.  As Pedrosa kept winning, and the deficit to Lorenzo shrank ever so slowly, pressure continued to build on the diminutive Spaniard.  Today, it found its release. 

Starting from the front row, the three Aliens had good starts, with Stoner settling into third position while his tires warmed up.  Pedrosa put the pedal to the metal (?) and went through on Lorenzo into the lead midway through the first lap.  On lap two, Stoner went through on Lorenzo, and was dogging his teammate when Dani lost the front in a slow, arcing lowside that looked eerily like Simoncelli’s crash last year at Sepang.  Although he was able to re-mount his damaged bike, he entered pit lane moments later, his day, and year, suddenly over. 

On the back nine of his MotoGP career at age 27, the brooding, introspective Pedrosa appears to be on his way to becoming one of those eternal runners-up.  Entering today’s race, he, Stoner and Lorenzo each had 44 career wins, a statistical anomaly of the first order.  But Stoner and Lorenzo have now each won two world championships, while Pedrosa has a fourth, three seconds, two thirds and about a pound of titanium plates and screws to show for his efforts since 2006.  I’m reminded of Fran Tarkington and Jim Kelly, both stellar NFL quarterbacks with 0-4 records in Super Bowls.  I’m thinking of Karl Malone, who played second fiddle to Michael Jordan all those years; in terms of championship rings, it ended up Jordan 6, Malone 0.  The difference between being a great athlete and a world champion often comes down to timing, luck, and karma, none of which Pedrosa seems to enjoy to any great degree. 

From the Department of Idle Speculation, we believe next season may be his last to capture a world championship.  He will have Lorenzo and Valentino Rossi to deal with on the factory Yamahas—ugh—as  well as his new teammate, Alien-in-waiting Marc Marquez, who himself clinched the Moto2 title today.  Pedrosa should be able to contain Marquez during his rookie season, but the New Kid in Town looks ready to start winning premier class titles sooner rather than later.  And Lorenzo, hard as nails and regular as a piston, is two years younger than Pedrosa, who will turn 30 during the 2014 season. 

Winning a title is not going to get any easier for Dani Pedrosa. 

 

Image

2012 MotoGP World Champion Jorge Lorenzo

Jorge Lorenzo—First Spanish Double World Champion 

As dominant as the Spanish riders in all three classes are these days, it’s surprising to me that Lorenzo is the first to win two premier class titles.  The secrets to his success are, in my opinion, consistency and a crystal clear understanding of what he is capable and incapable of doing on a Yamaha M1.  He has matured greatly since joining the premier class in 2008, and in mid-career is at the top of his game.  Assuming he podiums in Valencia, he will set a new MotoGP record by recording 17 podium finishes in one season.  That, folks, is consistency. 

In several respects, Lorenzo’s Yamaha has some disadvantages compared to the Repsol Honda RC213V, most notably the Honda’s superior acceleration coming out of turns.  This is not to say that the factory Yamaha is a tortoise compared to the Repsol hare.  But it does back up the assertion by many knowledgeable MotoGP people that grand prix racing is 80% rider and 20% bike. 

Congratulations to Jorge Lorenzo on a stellar 2012.  I’m pretty sure this will not be his last world championship celebration. 

Sidebars 

Cal Crutchlow, who had failed to finish four of the last six races, spent a lonely, productive day in third place for his second career premier class podium.  His post-race comments about the inadvisability of going after Lorenzo today were a hoot…Andrea Dovizioso spent his day fighting with satellite Honda pilots Stefan Bradl and Alvaro Bautista, finally going through on both simultaneously late in the last lap for a well-earned fourth place finish…Two of the best battles of the day were intra-team affairs.   Valentino Rossi and Nicky Hayden played grab-ass all day long, with Rossi prevailing for another ho-hum seventh place finish.  And Power Electronics’ Aleix Espargaro essentially clinched the imaginary CRT championship by out-racing teammate Randy de Puniet for an 11-point lead heading back to Spain.  De Puniet would have to finish, like, sixth at Valencia for any chance to outpoint his teammate, and THAT’s not going to happen. 

On to Valencia 

And so the grid heads back to Europe for the annual Valenciana Anti-Climax, with nothing on the line, as usual.  Rather than running another meaningless season-ending parade, I think Dorna should organize Valencia as a series of three lap match race heats, with the winners facing off for a five lap finale: 

  • Stoner vs. Lorenzo vs. Pedrosa
  • Crutchlow vs. Dovizioso
  • Hayden vs. Rossi
  • Bautista vs. Bradl
  • Barbera vs. Abraham
  • Espargaro vs. de Puniet 

Let the winners of each heat compete for a big cash prize, and start them on the grid in the reverse order of their finishing times in the heats, handicapping the field so even Abraham or de Puniet might have a chance to win.  Something like this, it seems, would be a more interesting way to spend a Sunday afternoon on the Iberian peninsula than watching 21 guys compete for a title that has already been decided.

Posted by: Bruce Allen | October 28, 2012

MotoGP 2012 Phillip Island Results

An edited, slightly less entertaining version of this article appears on Motorcycle.com.

Stoner wins!  Pedrosa crashes!  Lorenzo clinches! 

In the 41 minutes it took to run the 2012 Australian Grand Prix, a number of pressing questions were resolved.  Would Repsol Honda top gun Casey Stoner be able to make it six wins in a row at his home crib?  Could teammate Dani Pedrosa make it four in a row for 2012?  Would factory Yamaha mullah Jorge Lorenzo pick up the three points on Pedrosa he needed to clinch the 2012 championship?  And, finally, would one of the local wallabies hop through the infield prior to the race as a reminder we were on the other side of the planet?  In order, the answers were:  Yes.  No.  Yes, and Yes. 

In front of 53,000 delirious fans, Casey Stoner, as is his wont, ran away from the field for his sixth consecutive premier class win in Australia.  Being the fastest rider on the fastest bike at the fastest track on the tour, there was little question that Stoner would go out in grand style in front of his homeys.  He was at the top of every single timesheet all weekend and never seriously threatened during the race itself.  Although he didn’t enjoy a great start, he oozed past Lorenzo on a decisive second lap into the lead and ended up winning by some nine seconds. 

Want a good definition of the word “dominant”?  Over the last six years at Phillip Island, Casey Stoner led 160 of 162 laps.  Does that constitute perhaps the greatest home field advantage in the history of sports?  Tough question.  But the only good news about Stoner’s impending retirement—I read he’s moving on to automobile racing starting next year—is that someone else will have a chance to stand at the top of the podium next year at Phillip Island. 

Pedrosa Finally Cracks

Dani Pedrosa came into the race today needing to make up 23 championship points in two races, an almost impossible task unless Lorenzo were to make some kind of uncharacteristic gaffe.  Despite having won five of the last six races, Pedrosa was unable to gain much ground on his consistent countryman.  As Pedrosa kept winning, and the deficit to Lorenzo shrank ever so slowly, pressure continued to build on the diminutive Spaniard.  Today, it found its release. 

Starting from the front row, the three Aliens had good starts, with Stoner settling into third position while his tires warmed up.  Pedrosa put the pedal to the metal (?) and went through on Lorenzo into the lead midway through the first lap.  On lap two, Stoner went through on Lorenzo, and was dogging his teammate when Dani lost the front in a slow, arcing lowside that looked eerily like Simoncelli’s crash last year at Sepang.  Although he was able to re-mount his damaged bike, he entered pit lane moments later, his day, and year, suddenly over. 

On the back nine of his MotoGP career at age 27, the brooding, introspective Pedrosa appears to be on his way to becoming one of those eternal runners-up.  Entering today’s race, he, Stoner and Lorenzo each had 44 career wins, a statistical anomaly of the first order.  But Stoner and Lorenzo have now each won two world championships, while Pedrosa has a fourth, three seconds, two thirds and about a pound of titanium plates and screws to show for his efforts since 2006.  I’m reminded of Fran Tarkington and Jim Kelly, both stellar NFL quarterbacks with 0-4 records in Super Bowls.  I’m thinking of Karl Malone, who played second fiddle to Michael Jordan all those years; in terms of championship rings, it ended up Jordan 6, Malone 0.  The difference between being a great athlete and a world champion often comes down to timing, luck, and karma, none of which Pedrosa seems to enjoy to any great degree. 

From the Department of Idle Speculation, we believe next season may be his last to capture a world championship.  He will have Lorenzo and Valentino Rossi to deal with on the factory Yamahas—ugh—as  well as his new teammate, Alien-in-waiting Marc Marquez, who himself clinched the Moto2 title today.  Pedrosa should be able to contain Marquez during his rookie season, but the New Kid in Town looks ready to start winning premier class titles sooner rather than later.  And Lorenzo, hard as nails and regular as a piston, is two years younger than Pedrosa, who will turn 30 during the 2014 season. 

Winning a title is not going to get any easier for Dani Pedrosa. 

Image

2012 MotoGP World Champion Jorge Lorenzo

Jorge Lorenzo—First Spanish Double World Champion 

As dominant as the Spanish riders in all three classes are these days, it’s surprising to me that Lorenzo is the first to win two premier class titles.  The secrets to his success are, in my opinion, consistency and a crystal clear understanding of what he is capable and incapable of doing on a Yamaha M1.  He has matured greatly since joining the premier class in 2008, and in mid-career is at the top of his game.  Assuming he podiums in Valencia, he will set a new MotoGP record by recording 17 podium finishes in one season.  That, folks, is consistency. 

In several respects, Lorenzo’s Yamaha has some disadvantages compared to the Repsol Honda RC213V, most notably the Honda’s superior acceleration coming out of turns.  This is not to say that the factory Yamaha is a tortoise compared to the Repsol hare.  But it does back up the assertion by many knowledgeable MotoGP people that grand prix racing is 80% rider and 20% bike. 

Congratulations to Jorge Lorenzo on a stellar 2012.  I’m pretty sure this will not be his last world championship celebration. 

Sidebars 

Cal Crutchlow, who had failed to finish four of the last six races, spent a lonely, productive day in third place for his second career premier class podium.  His post-race comments about the inadvisability of going after Lorenzo today were a hoot…Andrea Dovizioso spent his day fighting with satellite Honda pilots Stefan Bradl and Alvaro Bautista, finally going through on both simultaneously late in the last lap for a well-earned fourth place finish…Two of the best battles of the day were intra-team affairs.   Valentino Rossi and Nicky Hayden played grab-ass all day long, with Rossi prevailing for another ho-hum seventh place finish.  And Power Electronics’ Aleix Espargaro essentially clinched the imaginary CRT championship by out-racing teammate Randy de Puniet for an 11-point lead heading back to Spain.  De Puniet would have to finish, like, sixth at Valencia for any chance to outpoint his teammate, and THAT’s not going to happen. 

On to Valencia 

And so the grid heads back to Europe for the annual Valenciana Anti-Climax, with nothing on the line, as usual.  Rather than running another meaningless season-ending parade, I think Dorna should organize Valencia as a series of three lap match race heats, with the winners facing off for a five lap finale: 

  • Stoner vs. Lorenzo vs. Pedrosa
  • Crutchlow vs. Dovizioso
  • Hayden vs. Rossi
  • Bautista vs. Bradl
  • Barbera vs. Abraham
  • Espargaro vs. de Puniet 

Let the winners of each heat compete for a big cash prize, and start them on the grid in the reverse order of their finishing times in the heats, handicapping the field so even Abraham or de Puniet might have a chance to win.  Something like this, it seems, would be a more interesting way to spend a Sunday afternoon on the Iberian peninsula than watching 21 guys compete for a title that has already been decided.

Posted by: Bruce Allen | October 18, 2012

MotoGP 2012 Sepang Preview

An edited version of this story will appear on Motorcycle.com at some point, complete with high rez photos.  In the meantime, enjoy it here.

The Hurrier Dani Pedrosa Goes, the Behinder he Gets

Even with Repsol Honda’s dogged Dani Pedrosa driving the RC213V like a world champion, trailing series leader Jorge Lorenzo by 28 points with three rounds to go, the 2012 championship race is not as close as it seems. 

A crash out of the points by either will decide the title in an instant or put it completely up for grabs. But if no one crashes, Lorenzo wins.

Those of us rooting for a gripping Game 7 in Valenciana in November will continue to send bad karma toward Lorenzo.  Those in the “Let the Best Man Win” school are hoping to see the two of them pull into the Ricardo Tormo Circuit within a half dozen points of each other, qualify on the front row, and let it rip all day, teeth bared, wheels touching, taking it down to the last turn of the last lap.

If Lorenzo can manage to appear on the podium each round for the rest of the season, he has clinched.  The worst he could do each week, assuming Pedrosa wins, is to give up nine points by finishing third.  Do that three times and you win the title by a one.

The point here, if there is one, is that Pedrosa can actually run the table and still lose the title.

I measure the margin in terms of “points per round” that Pedrosa has to make up.  Two rounds ago, he trailed by 38 points with five rounds left, a deficit of 7.6 points per round.  Two wins later, he trails by 28 points with three races left, a deficit of 9.3 points per round.  This is why the sub-headline at the top of the page is actually quite good:  Trail by 7.  Win twice.  Trail by 9.

Recent History at Sepang

For Jorge Lorenzo, the 2009 Malaysian Grand Prix was just one of those days.  The Yamaha up-and-comer qualified second, missed his wake-up call, arrived at the track late, had to start from 18th place on the grid, and eventually finished fourth. All in a soaking rain.  Meanwhile, Casey Stoner took his Ducati for a stroll in the park, hammering Dani Pedrosa by some 14 seconds, with Rossi third.  Rossi’s podium finish clinched the 2009 title for the Italian.

In 2010, it was Rossi, on the Yamaha, fighting his way back from injuries earlier in the year, edging compatriot Andrea Dovizioso on his Repsol Honda for the win.  Lorenzo closed out the podium, with Tech 3 Yamaha rookie Ben Spies finishing 4th.  For the second consecutive year, the third place finisher at Sepang clinched the world championship.  Last year Rossi.  This year Lorenzo.

2011 was, of course, the year the race was cancelled.  Casey Stoner had clinched the title the previous time out at Phillip Island, so there was really nothing to race for.  It is interesting to note that the track was in bad condition all through the weekend, with standing water in a number of corners.  Marc Marquez had difficulty seeing one of those in practice on his Moto2 bike and endured a brutal high side that left him with blurred vision for six months.  Yet Simoncelli’s crash appeared to have nothing at all to do with the conditions.  Just one of those things.

In a perfect world Simoncelli would still be with us.  And the sport, the entire premier class of MotoGP, is worse off for his loss.

The Big Picture

Pretty simple, really.  Lorenzo keeps his bike upright, stays on the podium each round, can’t lose.  Lorenzo crashes, all of a sudden it’s a dogfight between Pedrosa and Lorenzo.  Sepang and Phillip Island are Yamaha-friendly, while Valencia is Honda-friendly.

Stoner and Dovizioso slug it out for third place, the second in a row for Dovi if he can manage it.  Bautista appears safe in fifth place, while Rossi and Crutchlow will battle for sixth.  Rookie Stefan Bradl will outpoint former world champion Nicky Hayden.  Beyond that, no one really cares.

Although there are few interesting mathematical possibilities for the end of the 2012 season, it’s way better than in previous years when the title was a foregone conclusion two-thirds of the way through.  Lorenzo must do more than simply show up for the remaining three races of the year, which he will.  Pedrosa must continue to work like a dog and hope for the best.  God will sort out the rest.

Bautista Gets His Ride

It was finally announced this week that Alvaro Bautista will hold on to his San Carlo Gresini prototype Honda for next season, signing a new one-year deal with Fausto Gresini.  Once Dovizioso, Spies, Crutchlow and Andrea Iannone had committed for next year, there weren’t really many serious options left for Gresini.  The guy and his sponsor still desperately want a dominant Italian rider, but these days they’re not easy to come by.

For Bautista, two podiums in three rounds suggest he is coming to terms with the Honda.  Next year will be pivotal.  Have a great year—a win or two, four or five podiums—and he becomes a contender for Alien status.  Have a so-so year—one or two podiums, no wins—and he will be consigned to the second division of MotoGP for the duration.  The competition at the top next year may be slightly softer than this year, with the incomparable Stoner departing in favor of Rossi, who returns to the Yamaha M-1 after two years away.  It’s probably wiser to assume that Rossi will immediately return to winning form in early testing, in which case Bautista’s challenge won’t get any easier.

A Quick Peek Ahead at 2013

 

Now that all 12 prototype bikes have been assigned, we thought it was high time someone—us—ranked the 12 in order of their expected standing at the end of 2013, roughly 13 months in advance.

 

 

RANK

TEAM

MANUFACTURER

RIDER

NOTE

1

FACTORY

YAMAHA

LORENZO

Defending champion.

2

FACTORY

HONDA

PEDROSA

Bridesmaid again.

3

FACTORY

YAMAHA

ROSSI

He’s baaaaaack.

4

FACTORY

HONDA

MARQUEZ

Rookie is for real.

5

LCR

HONDA

BRADL

Best of the satellites.

6

TECH 3

YAMAHA

CRUTCHLOW

Two Brits at Tech 3

7

FACTORY

DUCATI

DOVIZIOSO

Uphill all the way.

8

SAN CARLO

HONDA

BAUTISTA

Must move up!  Must!

9

FACTORY

DUCATI

HAYDEN

Fading into the sunset.

10

TECH 3

YAMAHA

SMITH

#2 Brit at Tech 3.

11

PRAMAC

DUCATI

SPIES

C’mon Ben, surprise us.

12

PRAMAC

DUCATI

IANNONE

Just hang on, Joe!

The Weekend Forecast for Greater Kuala Lampur

The forecast for the weekend is typical for this part of the world—hot and sticky with a good chance of storms each day.  The air will be heavy with remembrance of the loss of the irrepressible Marco Simoncelli here last year.  This is a track where the Yamahas should do well.  If conditions don’t interfere, I see Pedrosa, Lorenzo and Crutchlow on the podium.  Personally, I would enjoy seeing the controlled pandemonium of a flag-to-flag affair, in contrast to the instantly out-of-control pandemonium that was the 2011 race.  A flag-to-flag race is the only thing likely to throw a spanner into the works of Jorge Lorenzo’s impending second coronation,

Personally, I’d like to see Lorenzo win the 2012 title.  In the last turn of the last lap at Valenciana.  THAT would rule.

Posted by: Bruce Allen | March 17, 2009

Re: AIG Executive Bonuses

big-moneyThere are dozens of ideas floating around out there on how to punish AIG for the impending payment of $165 million of U.S. taxpayer money in executive bonuses.  Tar and feathers have been mentioned.  The New York Attorney General has issued a subpoena, something usually done only for criminal misconduct.  Team Obama is jawboning like crazy.  The problem is, the bonuses are going to get paid, regardless of subpoenas, jawbones or tar and feathers.

So the Administration and Congress needs to do an Al Capone on them.  If you can’t nail them for bootlegging and murder, pin a tax rap on ‘em.  Better yet, do it in such a way that it is unfairly retroactive and puts AIG in a box from which they can’t escape without knocking down the entire string of dominoes.

The most satisfying solution at this point would be for Congress to pass legislation enforcing a 100% tax on monies paid out in executive bonuses in companies which have accepted TARP funds.  If the companies have a problem with that, let them return the TARP funds and go ahead with the bonus payouts.

Sure, it’s unfair, being retroactive and all.  Sure, it will probably get overturned some day in a U.S. Court of Appeals ruling, or perhaps even a Supreme Court case.  In the meantime, it will give the nation’s taxpayers a good feeling, and will mute the howling mob long enough for us to enjoy March Madness.

Posted by: Bruce Allen | September 30, 2008

What’s Wrong With This Idea? Fix the Mortgage Mess!

Let's Put a Stop to This Mess!

Let’s Put a Stop to This Mess!

I’m wondering about the practicality of the suggestion that homeowners who are under water and unable to keep up with rising/confiscatory mortgage payments be converted temporarily to leasees, with a local bank as the lessor.The monthly lease payments would be held at some formerly affordable level while the market bottoms out.Housing and employment markets will at some point in the foreseeable future stabilize at a point where the homeowner is again solvent and, one hopes, interest rates are suitable for converting to a new, affordable fixed rate mortgage.

A New Class of Mortgage – the Neutral Mortgage

Such a product could be seen as a way station between a conventional mortgage and a reverse mortgage, a new status of “neutral” mortgage in which the owner voluntarily becomes a tenant for a number of years while the markets stabilize.  An arrangement established as part of a federal housing market recovery program.

The idea is to incent banks to resume their former model of making, selling and servicing mortgage loans in their markets, the de-collateralization of the industry, complete with financial underwriting.Next, it intends to keep people in their homes until order returns to the real estate market.Finally, it provides for the tenant to become the owner again, with a new, smaller mortgage loan within, say, five years.It would specify insurance and property tax payment arrangements, etc.

How Would the Neutral Mortgage Work

  • The bank keeps the owner in the home, maintaining it, and securing positive cash flow.
  • The bank gets to sell the new mortgage at the time it becomes feasible.If the bank chooses to enforce an artificially high rate of interest, the owner is free to re-finance elsewhere at no cost within a year (?)
  • The plan allows homeowners cum tenants to continue to take the mortgage interest deduction on the loan.This would be Federal dollars at work, permitting those who comply with the regs to maintain an after-tax standard of living that makes sense.
  • The bank would purchase underwaterand foreclosed mortgages in its market area from wherever they currently reside, at a discount.The bank would then execute Federal Form leases, with standard language, with the owners.The houses would serve as the security deposits, and the monthly payments would be established per regulatory language.
  • Provision for default of lease terms would be needed; a number of families won’t be able to keep up with even an adjusted series of payments.The turmoil in financial markets is expected to reach employment markets very quickly, and job losses are expected to grow.Separate provision could be made for tenants who lose jobs and thus the ability to continue payments, etc. etc.

What would be the actual Federal costs involved?There would be a buydown of CMOs, reflecting the loss in home values, and writing down for usurious and predatory loan terms, execrable underwriting practices, and morally offensive behavior on the part of executives throughout the financial industry.For example, a home that was previously worth $300,000 and had a $290,000 mortgage is now worth $225,000.The difference between the $290K and the $225K is the buydown–$65,000 in this example.

Local banks become titular owners of these homes, making a new mortgage for $225,000.The former owners would pay “rent” equal to the interest payments only on the new loan, plus taxes and insurance.At that point, give the homeowner 5 years to assume the new mortgage, which is still $225,000.The point where that makes sense will be a function of interest rates and home prices.Given the behavior of markets during the recent bailout arguments, it is pretty clear that interest rates may be going up as soon as a deal is in place.Worst case, such a program forestalls another round of foreclosures for five years, while looking for other solutions.Such solutions might include subsidized interest rates on new FHA loans, etc.

The depth of the provisions will parallel the depth of the problems, which appear to be potentially extreme.The housing market is not behaving as though a bottom is imminent.I say this, in part, due to my regularly being wrong about this type of thing, and hoping that in the immediate case I am wrong.

Once the housing market bounces off its bottom, so to speak, the scope of the problem will be more clear.Until then it’s a devil we don’t know.And it may take a year or two to get to know this particular devil.

Keeping the devil from the door of working people seems to be a worthy expenditure of federal funds at this point in time.

Bailout: What’s in it for homeowners
How Much House You Can Afford?

Seeking Alpha Certified

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