More Stimulus and Household Net Worth

Obama is going to push for more fiscal stimulus before the year is over.  Here is what it could look like.

The Details Of Obama's Upcoming Push For More Fiscal Stimulus

Yesterday we had some choice words indicating why fiscal stimulus in a period of unprecedented monetary intervention (such as now) is about the worst thing that can happen to America, when not even 8 months ago Goldman based its completely wrong and now discredited call that the $100 billion payroll tax "stimulus" would lead to 4.5% 2011 GDP (since retracted). Today, we provide some additional information on just how Obama plans to further stimulate the economy by sacrificing the middle class at the alter of the "this time it's different" gods. From Bloomberg: "President Barack Obama plans to ask Congress for billions of dollars in fresh spending to boost the economy and reduce unemployment, with a new focus on helping the long-term unemployed, an administration official said." But as pointed out the humor is in the post script: "The president also will call for long-term cuts beyond the $1.5 trillion that Congress has charged a 12-member bipartisan “super-committee” of lawmakers to trim by late November, the official said." Preferably cuts that actually affect the US after 2016 when Obama's second term expires. Or even 2013, because according to the mainstream media Perry is now gaining, and who is that Ron Paul fellow?

The comedy continues:

The dollar amount of the additional long-term deficit reduction measures will exceed the cost of the short-term spending that he will propose, said the official, who requested anonymity because plans for the speech haven’t been completed. According to the official, Obama plans to unveil his priorities in a speech in early September and propose a mix of tax cuts and infrastructure spending, including extending two measures that expire at the end of the year: the two-percentage-point payroll tax cut for workers and unemployment insurance benefits.

He will also include new spending and jobs proposals, beyond the ones he has mentioned on his current Midwest bus tour, said the official, without elaborating on the new policies. As part of his jobs package, Obama is said to be considering two sets of ideas: ones that will require legislative action and ones that will can be done by the executive branch alone, without congressional approval.
And now, apparently, Obama is the budget cut warrior.

In an interview with CNN yesterday, Obama hinted at his plans to press Congress for another round of budget cuts, along with more spending.

“We missed an opportunity a month ago when we could have dealt with our debt and deficit in a serious, balanced way,” he said. “We’re going to take one more run at Congress, and we’re going to say to them, ‘Look, here is a comprehensive approach that gets our debt and deficits under control and also accelerates job growth right now.’”
Then again what else can one expect from a president who five years ago said the following vis-a-vis the debt ceiling:

The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
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Since it is almost football season, I thought I would add a new statistic you will see this year.

30 is the new 20

The red zone is so 2010. Introducing Value Drive, a new stat that reveals the real truth about every team's scoring power.

By Brian Fremeau
ESPN The Magazine
ESPN Insider

This story appears in the August 22, 2011 issue of ESPN The Magazine.

BEFORE THE RED ZONE became known as a deodorant, an NFL television station and an integral part of football's lexicon, the term was simply a motivational tool to get the 1981 Redskins out of last place. Their coach at the time, Joe Gibbs, coined the phrase after realizing his 0-4 team had the league's worst scoring offense inside opponents' 20-yard line. His philosophy, as he explained to his players, was simple: If you can't score deep in enemy territory, you will have a tough time winning. Not for nothing, Washington won eight of its final 12 games that season.

Three decades later, the red zone is hallowed ground, obsessed over by coaches and armchair quarterbacks. Few metrics are cited more by stat geeks than red zone scoring rate, which in college is the percentage of times an offense puts points on the board once it reaches the 20. (NFL teams enter the red zone once they cross the 20.)

Just one problem: The red zone isn't nearly as important as we've been led to think. In fact, when it comes to indicating how well a team closes out drives and keeps opponents from doing the same, red zone stats often deceive more than they illuminate.

So with apologies to a certain Super Bowl-winning coach, we created a new metric called value drive. It eliminates the red zone's fatal flaws while adding a few features that give it real predictive firepower. If you want to know which offenses and defenses have the goods to lead a BCS drive this fall and which are destined to come up short, this is your stat. Allow us to explain how value drive works -- and why it's better.

SHUTTING DOWN EASY STREET
Why is the 20-yard line so special anyway? It's not the dividing line between an easy scoring opportunity and a tough one. The 20 represents a 37-yard field goal, which FBS teams have converted 66 percent of the time over the past four seasons.

"I don't pay any attention to the 20-yard line," says new West Virginia coach Dana Holgorsen, the former Oklahoma State offensive coordinator who led the nation's most efficient red zone unit last season. "What I care about is where our field goal kicker can make it, whether it's the 31, 32, 34 or whatever." Virginia Tech coach Frank Beamer doesn't give any weight to the 20 either. "We've tracked the red zone for a number of years, and I've always equated it with the 30-yard line," he says. "That's where field goal possibilities begin."

For most offenses, the 30-yard line is the most significant cutoff point for various strategic options. On average in college football, a field goal attempted from the 30-yard line (a 47-yarder) is a 50-50 proposition. The 30 also represents the point at which punting is off the table. Last season, no punts were kicked from at or inside the 30, while 47 punts were kicked from between the 31- and 35-yard lines. So as the first step to creating our value drive metric -- to truly separate good offenses and defenses from bad ones -- we expanded the scoring zone from the 20 to the 30.

But distance isn't the only flaw of red zone stats ...



THE DRIVE TO DO BETTER
Early in the second quarter against Oregon State on Dec. 4, Oregon corner Talmadge Jackson picked off QB Ryan Katz and returned the ball to the Beavers' 12-yard line. On the ensuing drive, Ducks QB Darron Thomas threw incomplete on first and third downs, and running back LaMichael James lost seven yards on second down. Kicker Rob Beard nailed a 36-yard field goal on fourth down, putting Oregon ahead 9-7. That offensive possession (four plays, minus-7 yards, three points) counted as a successful red zone conversion for Oregon. Does that make sense to you?

The bottom line: Even the sorriest offense -- which, for the record, Oregon is most certainly not -- can usually convert three points when its defense or special teams places it on its opponent's doorstep. Likewise, even the stingiest D is mostly helpless in these situations. That's why value drive counts possessions that start on the offense's side of the 50-yard line only. In other words, the offense must move the ball from outside scoring range to inside scoring range to register a value drive.

So there you have it: A value drive is simply any possession that begins on the offense's side of the field and reaches at least the opponent's 30-yard line. Ahh, not so fast. After all, this sample Ducks drive revealed the folly of rewarding a team equally for a field goal or a touchdown, as red zone scoring rate does.

"I've been involved in a game where both teams scored on four first-half possessions, and the score at halftime was 24-12," says Mississippi State coach Dan Mullen. "So percentage of potential points is what we care about."


That insight pointed us to a whole new stat, points per value drive. It rewards offenses for closing drives with TDs rather than field goals, and defenses for the reverse.

          Hallelujah. We are full of genius. And it gets better.

BIG PLAYS MATTER TOO
On Oct. 30 against Texas Tech, Texas A&M lined up on its own 40-yard line, leading 24-14 in the third quarter. Running back Cyrus Gray carried it twice, gaining six yards on first down and exploding for a 54-yard score on second down. You can't close out a drive more emphatically than that. Yet the red zone conversion rate gives the Aggies no credit for that score. The stat would have, though, had the order of the two plays been reversed.

To value drive, the order of those two plays doesn't matter. If an offense scores on a methodical 65-yard drive or a 73-yard bomb, it gets credit for it. Likewise, if a defense can't stop its opponent from marching down the field or from sprinting down the sideline for a quick score, it gets punished equally.



THE FUTURE HAS SPOKEN
A quick scan of recent red zone leaders reveals the category's inherent flaws. In 2009, Alabama dominated during its undefeated title run, beating four top-10 teams (Virginia Tech, LSU, Florida and Texas) by an average of 13.5 points. Yet the Crimson Tide's offense ranked a terrible 107th in red zone TD percentage. The next year, 5-7 Cal ranked seventh among all FBS teams in red zone TD percentage yet was held to 14 or fewer points six times. Our value drive stats capture these two teams much more accurately. Alabama averaged 5.2 PPVD in 2009, the 22nd-best rate nationally. Cal ranked just 45th with 5.0 PPVD the next year.

Okay, maybe you think we're cherry-picking. But when we ran the numbers for every red zone opportunity and for every value drive opportunity since the 2007 season, it turned out that PPVD correlated more strongly with winning percentage than any red zone stat. There's a good reason for that: There's a larger sample of value drive opportunities than red zone chances in any season. As any statistician will tell you, the more data you have to crunch, the more likely it is that you'll see strong teams separate themselves from weak teams.

Not coincidentally, one of the most significant drawbacks of red zone success is its inability to provide quality projections. From season to season, teams' red zone production wildly fluctuates. Again, it's a sample size problem. While there is some variability with value drives, teams are much more consistent offensively and defensively in this metric.

So let's look at what value drive means for the 2011 contenders. We used Football Outsiders' season projections to calculate the expected offensive PPVD, defensive PPVD and net PPVD (offensive minus defensive) for each of the top 10 teams from the ESPN Power Rankings.

Our top three, Oklahoma, Alabama and LSU, should be mildly concerned with the results. The Tigers feasted on opportunistic short-field drives last season (24.3 percent of their possessions didn't qualify as a value drive); Bama couldn't get its opponents off the field, allowing two drives of 70 or more yards in each of its three losses; and the Sooners were good at creating value drive opportunities (44 percent of drives, 24th nationally) but must convert those into touchdowns more frequently.

Value drive also points to a couple of teams outside our top 20 that could end up in the BCS discussion. No. 24 Missouri and No. 23 Mississippi State rank eighth and 10th, respectively, in projected net PPVD. In fact, the Tigers (0.83) and Bulldogs (0.78) fare better than six teams in our top 10, including No. 1 Oklahoma (0.69). Utah (0.70) also bested the Sooners in this category yet failed to crack our experts' top 25. The Pac-12 should be afraid of its new member.

When it comes to judging our new stats, though, it's not how teams project that matters -- it's how they finish. That's why we'll be keeping tabs on value drive all year long, then do a final review in January.

If it's as good as we think it is, we won't be seeing red.

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Gov. Perry on Fed: 'They Should Open Up Their Books'

Republican presidential candidate Rick Perry on Wednesday called for more transparency from the Federal Reserve to show that the U.S. central bank was not engaging in unspecified "improper" actions.

Getty Images

Under Fed Chairman Ben Bernanke, the central bank has embarked on one of the most extended periods of cheap money in U.S. history in an effort to stimulate the American economy. The Fed has been criticized by many for opaque decision-making on monetary policy.

"They should open their books up. They should be transparent so that the people of the United States know what they are doing," the Texas governor said at a packed breakfast meeting in Bedford, N.H.

"It would go a long way to showing if there had been activities that had been improper," Perry said

Without such action, "there will continue to be questions about their activities and what their true goal is for the United States," he added.

It was a fresh attack on the Fed from Perry, who created a stir on Monday when he said he would consider it "treasonous" if Bernanke "prints more money between now and the election" in November 2012.

Perry had said Texans would treat Bernanke "pretty ugly" if the Fed printed more money ahead of the November 2012 presidential election.

But Perry's tone, in comments made to a non-partisan audience of local business people, was not as harsh on Wednesday. He said he was one of a number of Republicans who have questioned the Fed's transparency. 

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Add caption

On CNBC, China observer Stephen Roach argued that the US needs to heed the warnings of China, because the US can't fund its own debt domestically because it doesn't save.
This is just not true.
This chart shows the total net worth of households and non-profits in the US. It's basically the private sector's "book value" and it currently stands close to $60 trillion, far bigger than US government's debt.
Even if there were no foreign buyers of US debt -- a ludicrous idea, so long as foreigners run a trade surplus with the US that must be recycled -- the US has plenty of domestic savings.
This idea that we have to go begging to China to keep the government open is nothing more than dangerous nonsense that feeds into fears, stoking misguided political agendas.
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From Stansberry Research:

If the market won't listen to S&P about a declining America, maybe it will listen to the world's largest retailer – Wal-Mart. And unlike food stamps, Wal-Mart does "put people to work." It employs 2 million people around the globe.

In the latest quarter, Wal-Mart announced its ninth-consecutive quarter of falling sales at U.S. stores open at least a year. Comparable store sales in the U.S., excluding fuel and sales from Sam's Club, fell 0.9% from a year ago.

The retailer said its low-income customers are increasingly worried about unemployment. According to one Wal-Mart executive, unemployment has replaced high oil prices as their No. 1 concern.

Also, its low-income customers are relying more and more on government assistance… Wait… According to Mr. Vilsack, food stamps are a stimulus…

"We remain concerned about the economic pressure on our customers and the uncertain impact it can have on their shopping behavior," Wal-Mart CEO Bill Simon said.

 If low-income consumers aren't shopping at Wal-Mart, the bastion of low prices in the U.S., where are they going? Warren Buffett and hedge-fund manager Bill Ackman bet they're headed to "dollar stores."

According to Berkshire Hathaway's latest filing, Buffett purchased 1.5 million shares of Dollar General in the last quarter, a new position. And Ackman, founder of Pershing Square, increased his Family Dollar position by 92% in the quarter to 11.1 million shares.
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Anderson Cooper cracks up on camera...