The Daily Dish - August 16, 2011

It’s been a long hiatus for The Dish. While I feel semi-confident that I can now get back to writing this daily, I’ve broken more promises than the federal government making that claim over the last eight years of writing this thing. So no promises.

For those new to The Dish, it’s a Cleveland-centric, residential lending-centric morning look at the daily news headlines, what’s going on in the financial markets, and what’s happening in northeast Ohio. I try and keep it light with some humor, Cleveland sports takes, and pop-culture observations. And when talking about the economy and the markets, I try and cut through all the economist-speak and seven dollar words to write it in a way where normal people can make normal sense of what the heck is happening in this crazy world on a daily basis.

I know most people get a lot of these daily update emails every day. I try and make it relevant and worth the five minute time investment.

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In my typical post-layoff fashion, let’s start with some scattershot observations of popular Dish topics …

LeChoke – There are certain athletes that simply lack the intestinal fortitude to take their games to the next level when all the chips are in the middle of the table. Their fear of failure paralyzes them when their team needs them most.

Simply put, watching LeQuitter play hot potato with the basketball and completely disappear in the NBA Finals was one of the single-most non Cleveland-team related exhilarating sports moments in the 30 years I’ve been watching sports. If you asked me to write the script of how I wanted to see him fail, even my version wouldn’t have been as gratifying as how it actually went down.

Indians – It’s the second half of August, there are only 45 games left in the season, and the Indians are in a pennant race. Regardless of how this season finishes, I am a happy camper. While I was more optimistic than most in March, if you told me all this five months ago I would have been surprised. Then again, if you told me five months ago that I’d have songs by Katy Perry and Miley Cyrus on my iPod, that probably would have surprised me too.

I love Manny Acta for many of the same reasons I loathed Eric Wedge. Jason “We are all Kipnises” Kipnis is a future star and an easy guy to cheer for. The starting rotation has six viable arms in it, all of whom are under team control through 2013. The Tribe is ahead of schedule, and has all the makings of a team that is poised to continue to get better and contend in 2012 and 2013.

Browns – Another year, another reboot. A new coach, a new offense, a new defense. The team failed to make any moves in free agency despite a wealth of cap room, and appears set to adopt the Tom Heckert strategy of building through the draft and trades, not striking in free agency until the team appears poised to compete. Who knows what to expect? The Vegas over/under is 6.5 wins, and that seems about right.

Tressel – I still can’t believe this guy was forced into retirement.

Despite EXHAUSTIVE investigations by both Sports Illustrated and the NCAA … neither found anything other than some unpaid, high profile, college kids selling autographs, pins, and jerseys for tattoos and spending money. Tressel knew about it, failed to report it, and clearly should be punished for that. But with his job? While other schools are handing bags of cash to players, family members, agents, and high school scouting directors?

I fully expect major investigational fallout at several big football programs over the next year, and a push from the Buckeye Nation to rehire Tressel at the end of this season. Laugh now.

Pop Culture/Entertainment – The world lost two very talented musicians in Amy Winehouse and Clarence Clemons, and one evil man in Osama Bin Laden. Casey Anthony was improbably acquitted, and Jersey Shore is improbably, by far, still the highest rated cable TV show in America. Tiger Woods still can’t golf. Charlie Sheen is still insane. And production has FINALLY begun on season five of “Mad Men”.

Technology – Blackberry continues to lose market share to iPhone’s and phones with the Android operating system. Smartphone’s in general are becoming a massive industry, with the latest ones giving you the ability to do things with them none of us could have dreamed of five years ago. Tablet computers have become very popular, with Apple’s iPad leading the way, and almost every major tech company having a product in that space now. Facebook and Twitter continue to explode in popularity, and Google continues to try and enter the social media world … but just can’t figure it out. Their latest foray, “Google +”, appears to be as big of a failure as “Google Buzz”, which they debuted almost a year ago. Spotify, a Swedish based music streaming service, is now in the US and is the first real competitor iTunes has had … well, ever.

Quote of the Day …

“Our national credit rating was downgraded and it caused a nosedive on Wall Street. If I had any understanding of any of this, I’d be very nervous right now, but fortunately I don’t.” ~ Jimmy Kimmel

Market …

Where do we start here?

I’m definitely not an “I told you so” kinda guy, but I gotta say … everything I’ve been predicting in this section of the Dish the last couple years has come home to roost.

Every morning on the way into the office I listen to CNBC’s “Squawk Box” on my satellite radio. Every week, hearing these pie in the sky economists talking about this great growth expectations for ’11, ’12, and ’13. Sitting there in my car, thinking to myself how much smarter these people are than me, that they have to be seeing things I’m not seeing.

I’m not sure what they were seeing. The jobs market, the housing market, and the economy as a whole are all in a bad spot. And there’s no way out of this right now. Fed has had rates darn near zero for years. 1.1 TRILLION in stimulus pumped into the economy, and it’s actually made the economy worse. The US economy right now is like the B-List actor in a horror move that has fired all the bullets in their gun, now forced to hide and wait it out, pointing the unloaded gun in front of them like they can actually do something with it.

I don’t see a double dip, but it’s possible if the correct moves are not made by Congress in the next 12-18 months. I just see about 5-6 more years of what we got now. Unemployment between 8.5% and 10.0%. “Real unemployment” in the 15-17% range. Housing values stagnant at these levels until home inventories come way down.

The Dow Jones has gotten clobbered over the last month, losing close to 1,500 points. It ran up to over 13,000 as companies posted better than expected earnings throughout most of 2010 and early 2011. But those inflated earnings were primarily the result of companies cutting jobs and expenses and finding ways to increase employee productivity through better technology and other measures.

The reality of the matter is this – the American economy will not even begin to improve until American companies start hiring more employees. And this just isn’t going to happen any time soon. Local and state governments are broke and cutting jobs. Some businesses that are able to hire, won’t hire till they see proof the economy is coming back … and it isn’t. Other businesses are scared off by Congressional measures that have largely been anti-business. Additionally, technology has eradicated a lot of other jobs that are just never coming back. And there’s going to be a slew of mergers and acquisitions in the next 18 months, which always leads to job losses.

The housing market and housing values cannot improve until more people are working, and even then, it’s going to take years of working through the existing inventory of homes out there in the marketplace, with new foreclosures getting pumped into the mix each day.

We need to find a way to create jobs in America. The housing market will then eventually, and slowly begin to come back. Then we’ll have an economic recovery. It’s going to take a while though.

It is what it is.

News …

~ Sell-off Raises Stakes in Sarkozy-Merkel Euro Zone Talks

http://www.cnbc.com/id/44155104

~ Obama Says Debt Limit Battle Hurt Economy

http://www.bloomberg.com/news/2011-08-16/obama-says-washington-partisan-brinksmanship-boosts-economic-uncertainty.html

~ Umberto Fedeli Buys 8% Share in Lorain National Bank, Pushes for Big Changes

http://www.cleveland.com/business/index.ssf/2011/08/post_79.html

~ Fees on the Rise at Cleveland Area Banks, New Fees Expected

http://www.cleveland.com/business/index.ssf/2011/08/fees_on_the_rise_at_cleveland-.html

~ Fed Seeks Exit from the “New Normal” Economy

http://www.marketwatch.com/story/fed-seeks-exit-from-new-normal-economy-2011-08-16?dist=beforebell

~ Auto Sales Slow in NE Ohio