There is much brouhaha in major-league baseball about a critical mass of star players who have admitted or accused of taking steroids and other performance-enhancing drugs. The leading icons like Barry Bonds, Roger Clemens and Alex Rodriguez, just to name a few. Part of the consternation stems from baseball's fondness for statistics, and steroided outcomes have skewed those numbers such that some fans just dismiss them altogether. That may help their cognitive dissonance, but it doesn't solve anything officially. We are still left to ponder the validity of home run totals from modern boppers, and the trophy mantles of modern hurlers. Were these guys really this good? Do their stats truly reflect their value to the game?
In some sense, the steroid era could be thought of as a bubble in the baseball system, generating numbers far beyond historical norms. Unsustainable numbers, perhaps, once the depravity (if that is too strong a judgment for you taste, how about "shenanigans"?) is reined in by competent testing. As this bubble pops, measurements like the number of Home Runs hit, the league average Slugging %, and the # of players with 40+ HR will decrease to historical MLB norms.
Should we bailout the sluggers then?
For that is the government's approach to the steroid equivalents in the housing bubble. Those who dabbled in exotic mortgages – Interest Only, Neg-Ams, and the like – and leveraged to beyond-the-hilt, lured first by look-at-me-lust and later by keep-up-with-the-Jones-lust. And those who institutionally fomented the bubble, by using discredited, exotic risk formulas to securitize mortgage bundles in a high-stakes game of greedy-hot-potato, or by using political favoritism and out-of-their-depth Fannie Maes to pretend that the potato isn't really hot and that no one will really get hurt.
So many parties injected this poison into our housing market. Their metrics soared beyond reason and they got rich. When it all comes crashing down, shouldn't we let them lay in their own foreclosed made-beds, and let the market flush all this crap out? Let dumbly-run (really not so much dumbness, but as normalcy paved over by greediness) companies go out of business or scramble to reconstitute as something worthwhile. Let overextended homeowners scale-back, retrench, and bring some sanity to their budgets, with a multi-year scar on their credit scores.
p.s. I understand the differences between the two situations, one of which is that PED usage is more of a dichotomous variable, whereas overheating housing is more of a continuous variable.
1 comment:
Mike- agree with most of your comments; But I also know that the home companies and mortgage companies both practiced in deceptive and misleading practices. They were often putting people in stuff that confused the people and out right lied to them- doing the one stop shop where incentives like furniture, landscaping, insurance, and many other incentives were tied to the "lure" of getting out of rent.... There was no regulation nor was there any policing. It was the ultimate "turn your back" scenario and both Republicans and Democrats were to blame. It is history repeating itself because it is the very thing that Baseball did. They turned their back because they had just came out of a terrible strike and they needed money and they basically led the players to go right to the steroids and then - proclaimed how could this happen to our great game???? How could it be??? But they made 6 billion in the process and the owners got fat and the commissioner got fat; and just like home builders and mortgages that bought and sold liens- all got fat and we have become a society that not forgives now , but a society that compromises on everything.....The value system has gone out the door and we are all to blame....... We really are... Rodney Lawson
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