Why the NBA Salary Cap is Stupid

Despite the fact that I'm a big NBA fan, I haven't been paying much attention to the NBA finals. the main reason I haven't been watching (and it appears Lebron isn't either) is that it's boring and utterly predictable. There is no doubt that the Spurs will win the series.

Here is the fundamental problem. The NBA Western Conference is far superior to the Eastern Conference. With the development that both Greg Oden and Kevin Durant are heading West, the situation is looking even more bleak for the east. The salary cap ensures things will be like this for years.

Once upon a time, the NBA decided parity would be a good thing. How did they go about it? The NBA limits how much teams can pay their stars. This means that even if an eastern conference team, say the Knicks, wants to go pay a free agent $20 million/year, they can't, because they are over the cap. What's worse is that if they have made mistakes in the past, and believe me they have, they can't get out from under it for two reasons.

Contracts are guaranteed and count against the cap. This means that if you make a mistake, see Alan Houston, it lingers for the entire length of the contract. This is compared to the NFL who can cut a player who isn't earning their paycheck.

Well at least they can trade their way out of it right? Nope. NBA trade rules are very strict making blockbuster trades very rare. Baseball puts almost no restrictions on trades, meaning that teams like the Rangers can trade a huge contract like Alex Rodriguez and save some money in the process. The NBA doesn't allow teams to send out more salary then they get back.

So you get where we are today. All the good teams in one conference and none of them in the Major markets. The NBA was best when it was dominated by a few great teams like the Lakers, Celtics, and Bulls. The NBA tried to become more like the NFL, where parity works, but they failed to do so because they didn't understand that basketball is not football.

NBA needs to open up movement. If you must keep the cap, that is understandable, but change the rules so that trades become easier to make or teams can get out from under hideous contracts.

When is it not a good time to buy a house

How come Realtors always say it is a good time to buy a house?

House prices across the nation have been on the decline as of late. (By the way, I called the top) and look to be getting worse, not better. However, according to the president of the Realtors, it is a great time to buy.

It’s a good time to buy, in part, because home buyers are not pressured to make quick decisions,” Combs said. “We’re in a window of low interest rates with a plentiful supply homes on the market and flat prices in most areas. First-time buyers now have more power to negotiate with sellers for help on downpayment or closing costs.”

Of course in 2005, when the housing market was roaring the then President of the Realtors said

Low interest rates continue to offer opportunities to first-time buyers - a huge potential market given the generational bulge and who believe that housing is a good investment. They provide a ready market for existing owners wishing to make a trade, so there is strong demand in every sector of the housing market."

So let me get this straight. It's a great time to buy when prices are going up, because you will get all the appreciation, and its a great time to buy when prices are going down, because you will get a great value. Hmm. Is it ever not a good time to buy a house? If it's always a good idea all the time to buy a house, everyone should stop what they are doing and just become land barons. Better yet, real estate agents, I mean, it doesn't look like there are many qualifications (including honesty)

If this just goes to show you that your Real Estate agent is not your friend, I'm not sure what will.

Amazon Recommendations ... Spot On

The other day I was at the library and was looking for a book. Right on my way out, I saw something that caught my eye. It was a book called Blink by Malcolm Gladwell.

I logged into Amazon the next day and at the top they normally recommend you books based on what you bought there. I don't have a huge buying history from Amazon, and most of the stuff I have bought there has been for other people. But right there was there recommendation for that very same book. I was very impressed and decided to give Amazon its due.

Developing Alzheimers?

I was telling my girlfriend a story about how I thought I was a victim of racism when I was in Chicago. Basically, I went into a Walgreens to buy some stuff before getting on the plane back to Seattle. The store clerk was helping the customer in front of me, and I was just kind of looking around the store. She asked, "Can I help you with something?". I said, "No, just waiting to pay for my stuff". And didn't think anything of it.

I proceeded to pay, the bill came out to about $3.00, which I charged to my Amex. She asked me for my billing zip and I told her 08544. She said it wasn't working, and asked me again. I repeated, 08544. She said it didn't work. I was in disbelief, as there is no way my card is getting rejected for $3. But instead of figuring it out, I just paid in cash. Later that hour, I stopped by the gas station to get gas and my card worked just fine.

Like I said, I relayed the story to my girlfriend that night and was sure that the woman was up to something funny. I told the story EXACTLY like I did above. And then it dawned on me (much like it has already on Jenny) when my girlfriend looked at me funny. My zip code is not 08544, and it hasn't been in over 7 years.

Tax programs in Washington

I meant to post this earlier, but I never got around to it. But one thing I kept thinking to myself this tax season. Why on earth can you buy State Tax programs in Washington State. There is no state income tax, yet everywhere I go, I see the version of Turbo Tax State or Tax Cut State on the shelf.

Now, I could understand if it were just a few copies, but we are talking shelves and shelves. Sure, there are people like me, who work partially in another state for the year, who have to file state taxes somewhere else. But otherwise, for 99% of Washingtonians, there is no need to buy the state version of tax software.

Anyone have an explanation?

29

Even though I don't blog nearly as much as I want to, I nevertheless want to blog on my birthday. It gives me a chance to look back each year to see where I was the previous year and kind of take an assessment of where my life has gone.

My last year's blog seems almost prophetic. 28 was indeed a very good and very lucky year. It went by amazingly fast, I can't believe I've been in Seattle for a year, but it's been a good year. As unreal as it sounds, things are even better with my girlfriend. You would think that after almost two years together, we would hit some rough patches or get sick of each other, but I can honestly say that things are better now than they have ever been.

Bandit the Wonder Kitty is also fantastic. I think he misses Smokey at times but he seems to genuinely like being an only child. He is still fat, something I keep meaning to work on, but he is content to just sit on my lap even as I type this.

Job is good although my initial enthusiasm for the job has been tempered somewhat. Microsoft is a great place to work with wonderful benefits and some good opportunities. Like any job, it has its problems. There are times I'm frustrated, there are times I'm very frustrated. But I think back on what life was like before, and well I guess I don't have much to complain about. Do I see this as a permanent stopping point in life. No. But it has made a nice little waypoint

29. My last year to be in my twenties. Just seems odd. Am I where I thought I would be at this age? Probably not. I probably have some catching up to do, but I've been doing that all my life and I relish the opportunity to do it again. So far, I think I've taken the safe road and the road has been good to me. Should I continue to do that or should I use the last few years of my youth to take on some serious risk? The advantages of youth are a real lack of responsibility and the time to make up for anything in your life you screw up. Is it time to do it? If not now, when?

Smallville: Jumping the Shark

Last night, Smallville officially jumped the shark. In truth, the show probably jumped a while ago, but I stuck around because I'm a big fan of the Superman mythos. They kept it interesting this year by having a lot of the plot revolve around other Justice League members. Their take on it was pretty interesting.

But last night was just awful. The plot was pathetically predictable and reeked of desperation. At every point in the show I knew exactly what was going to happen next because it kept playing out as a bad soap opera plot. And sure enough, it ended with a fantastic thud. Seriously, what's going on with the show? Why on earth can't Clark fly yet? Where are the glasses? Lana Lang marries Lex?

Oh well, one less show I have to watch. Guess it's just Heroes now.

Costco Changes Its Policy

Costco has made a decision to change it's return policy on certain electronics. Most noticeably this affects people who buy televisions and other high priced electronics at Costco.

For those that don't know, Costco has always had a 100% satisfaction guarantee. This meant that at any time in the lifetime of a product, if you weren't happy with it, you could return it. This meant that if for any reason, say the TV just stopped working, you could return it back to Costco and they would refund the money back to you.

Of course, this policy is going to be abused by some people. You can see how easily it can be abused. I can buy a Plasma TV today and then 5 years later decide I want a new TV, return it, get my money back, and then buy another TV.

Of course, most people are probably not this unscrupulous. This is clearly one of those times that a few bad people ruin it for everybody else. I was seriously considering buying a new TV from Costco. I had in fact been visiting the store a lot recently checking out the TVs that they have. The biggest reason I wanted to buy from them was the safety net it would provide in case something did indeed go wrong. I would of course not abuse the system, I wouldn't return the TV just to get a new one, but I would return it if indeed it broke. Now that Costco has changed the policy, I will probably be looking elsewhere for a TV.

I totally get why Costco had to change the policy. But I also think they could have done something to mitigate the whole problem. If it were me, I probably would have amended the policy rather than completely revoke it. They could have been creative and say give you one return of $500 or more during the life of the product. This would limit their losses from people who are really abusing the policy, but still service the people like myself who would truly benefit and not abuse the system.

Bumper Sticker.

I was driving around today and saw a "I Love My Wife" bumper sticker.

Why on earth would anyone actually put this on their car? Nothing good can be implied from the sticker. If the guy put it on his car of his own free will that's just pretty pathetic. If his wife made him put it on, you know that marriage can't be headed for success. If its supposed to be a joke, it isn't particularly funny.

Capping Executive Pay

I was watching TV when the topic of executive pay came up.

There is a provision in the minimum wage bill before congress about effectively capping executive pay by taxing it. Now I admittedly don't know the full details of how they will try to limit executive pay, it seems they want to eliminate some loopholes in the tax code, but this post is not about the details.

The person who was arguing for caps on executive pay gave the usual rhetoric of how it isn't fair that CEOs make so much money, but I loved his reasoning of why government should do anything about it. He made the argument that it is government's responsibility to do something because they subsidize these corporations and rich people by making a tax code that essentially allows them to not pay taxes.

Oh, I see. So let's try and fix the loopholes, which are caused by adding more and more rules to an overly complex tax code, by adding more rules. It's like trying to dig yourself out of a hole. It's just simpler never to get in the hole in the first place.

Wii: Finally Got One

I had the day off this morning. I still got up at about my regular time and did my normal routine. I turned on the computer, and just to check I went to this site. And lo and behold there were Wii's available in my neighborhood.

I had seen some Wii's available in some other neighborhoods over the last few days, but like I said earlier, I had no intention of going out of my way to get one. So I got dressed and went down to the local Target. I had been following the Wii's availability all over the country using the above site. Not really because I wanted to get one, but more out of curiousity for how well Nintendo is doing. By following it I know when there are Wii's available they usually don't last very long. Lucky for me, I must have been one of the first ones there (nobody knows when these shipments normally drop, last time it was announced but it was a special circumstance). So I paid my money, and now I'm a proud owner of a Wii. Haven't played yet, but I'll update at some point with my thoughts.

I am very interested on how quickly my local Target sells out. I'll probably keep checking today and tomorrow to see if the shipment I was able to get one from sells out quickly.

Double Coupons in Washington

It may seem silly for someone like me, but I clip coupons. Why not? It doesn't take very long and I might as well save money on things I would buy anyway. I didn't always clip coupons, I used to be embarrassed that people would think I was poor or something. Ironically, it's when I started actually having money, and stopped caring what people thought, that I got over it and started clipping and using coupons.

I don't quite understand this, but nowhere in Washington state can you find a store that has double coupons. It confuses me because everywhere in California has it, but nowhere in the state of Washington can you find a place that doubles coupons. I've even looked online to see if it was just the Seattle area, but it seems pretty clear that nowhere in the state of Washington does this. I really wish I could find out why. Double coupons can be a great thing, you can actually end up with some items for free. But alas, its just not possible here in Washington.

If anyone finds a store in Washington that doubles coupons, please leave a comment.

Trying to get a Wii

Nintendo must be very pleased. Sony must be very sad.

So I had heard rumblings that Target stores, as well as Best Buy and Circuit City, would have some Nintendo Wii's today. They had it advertised in their weekly circular and there had been some post on various web sites.

Now I want to get a Wii. I prefer to get one over a PS3, which I think cost too much and doesn't offer anything compelling to me, or even an Xbox 360 which I should have an obvious bias towards (I will probably get a 360 if and when they cut the price). Even though I want to get a Wii, I will not go out of my way to get one. I definitely don't plan on waiting in line or fighting with my fellow consumers.

But I figure that its over two months since launch and that the Christmas season has passed so if I went early enough I would probably get one. Target opens up at 8:00. I showed up at about 8:45, and there were none left. The cashier told me there was a line when the store opened and that they had already sold out. Sold out in 45 minutes. Of course, sitting in plain sight were some PS3s, much like I observed before at Best Buy.

Sony has to be worried. It seems clear to me they are going to lose this round of the game wars. Microsoft has already sold 10 million units, that's a pretty big head start. With Xbox Live, they have, in my mind, many more compelling features than PS3 (since I have ZERO interest in a Blu-Ray player). Nintendo seems poised to take the 2nd position, and very likely might be able to catch Microsoft.

Barack

Today, Barack Obama announced he will be running for President. Unlike some people I know, I meet his announcement with mixed emotions.

I was very impressed with Obama's delivery when he gave his Keynote speech at the Democratic National convention. Notice the key word, "delivery". One of the things I look for in a Presidential Candidate is if they have a floor presence. I want someone who exudes confidence and inspires confidence in others. Barack definitely seems to have the quality.

But that being said, while I was impressed with the delivery of the speech itself, some of its contents worried me. Particularly one line.

It is that fundamental belief: I am my brother’s keeper. I am my sister’s keeper that makes this country work. It’s what allows us to pursue our individual dreams and yet still come together as one American family.

I am very much against the notion that I am my brother's keeper. I am very much against the idea that our economy works when we are obligated to help our fellow man. The idea that you are your brother's keeper is the very notion that makes Socialism fail. Yes, its selfish, but selfishness makes a free economy work. Not only does it work for people at the top, it works for people at the bottom. When I hear quotes like the one above, only one thing crosses my mind

"come together" = Higher taxes for all

And we all know how I feel about higher taxes. I haven't made up my mind yet about Barack. I definitely have no idea who I'm going to vote for in 2008. I guess we will just have to see how the next two years unfold.

Sony PS3 Availability

I was talking to a co-worker a few days ago and he was talking about how they had PS3s in a huge stack at Fry's. That kind of surprised me as I would still think the PS3 would be selling out. I then saw it for myself when I went to Best Buy, a stack of about 50 PS3s just sitting there.

I can't imagine that supply has finally caught up. The main reason I went there was to look to see if they had a Wii. I plan on getting a Wii, but have no interest in the PS3. No Wii, plenty of PS3s. Now you can't tell me that Sony can currently out produce Nintendo, so the only reason that I can't get a Wii and I can get a PS3 is that Demand for the Wii far outstrips the PS3.

I figured I was in the minority in this one. But I guess there are more people like me who think the Wii's playability and $250 price tag trumps the PS3's supposedly amazing graphics and $600 price tag. If this is true throughout the country, Sony is going to be seriously hurting.

Ohio Wine?

The bet between the Florida Governor and the Ohio Governor over the College Football championship game is that the Florida governor will send Florida Citrus if Ohio wins and the Ohio Governor will send Ohio wind and Chocolates if Florida wins.

Here is the thing. Who knew that Ohio even made wine? That just sounds odd to me. I've heard of French Wine, California Wine, Washington Wine, and even Argentinian wine. But Ohio wine? Who knew? Maybe tires or machine tools or something like that. But Wine?

Life without Power

Ever wonder what life would be like without Electricity? I got to find out first hand what it would be like this weekend. Seattle had a REALLY bad storm Thursday night. Winds reached 60-70 MPH in some places.

When I woke up on Friday, there wasn't any power. I still got up and decided to go to work. As I drove out to the street, I was greeted with non-functioning traffic lights and fallen trees and branches all over the street. This wasn't just some isolated street, EVERY street was like this.

I soon found out that Microsoft was afflicted with the same problem. But it wasn't just Redmond, it was most of the Puget Sound. Literally millions without power, and they had no idea how long it would take. I spent the night in the dark (and remember it gets dark early in Seattle) staring at my girlfriend while we sat close to the fireplace (had to use the fireplace, had no heat otherwise). It was crazy.

The aftermath is even stranger. We got electricity sometime early on Saturday morning. But it seems that most of the area doesn't have it, Redmond is one of the few cities with power. We spent the morning throwing out everything in the fridge, and then looking for a place to get some food. But Redmond is crazy. There are really long lines for everything. Most of the restaurants are packed, and the gas lines are crazy. Literally 50 cars deep at every gas station.
Most of these people are probably from the surrounding cities. The busiest place (besides the gas stations) was the library. There wasn't an empty seat in the place, and every outlet had something plugged into it, mostly cell phones. 2nd on the list? The Liquor store. I couldn't believe how many people were waiting to buy some alcohol. I guess if you have nothing to do, you might as well drink yourself silly.

I don't ever want to experience this again, I like modern life. Life without electricity is tough. Seriously, what's wrong with this city? First the crazy snow storm, and now this. Wonder how fast I can pack up and move back to L.A.

Blockbuster Total Access

Even though I've had my problems with Blockbuster, and swore them off, I decided to try them out one more time as I think the Total Access Plan is pretty compelling. In short, it works like Netflix, but I can go in and exchange my DVDs in store. I get a free in-store rental, and they ship the next DVD right away. In theory, you can get almost double the regular number of DVDs.

So far so good. It works without a hitch. The nice thing is that it is generally easier to get new DVDs from the store than online so you can use your in-store rentals to get the harder to get new releases and the online portion for everything else.

And now this. Blockbuster is opening up Total Access to all Netflix Customers. No need to sign up for Blockbuster Online, just need to have a Blockbuster in-store account. Pretty clever marketing ploy if you ask me.

First Snow

Today there was snow in Seattle. I haven't experienced snow in over 5 years, ever since I left NYC. While I think the virgin snow on the ground and trees is quite beautiful, I definitely don't miss walking through the sludge and the ice.

What's funny is how different your perspective can be if it is your first experience. My girlfriend lived in Southern California all her life, so she never has really experienced snowfall like this. She really seemed to enjoy it ... that was until this morning.

She woke me up this morning asking for the password to my work computer. I was groggy, so I didn't know why on earth she was asking for it. Was she a corporate spy? Was she going to try and hack in to commit corporate espionage and steal all of my company's secrets? I asked her why on earth she needed to know and she explained she needed to e-mail work because she couldn't make it in (our home computer doesn't work with her company's webmail). She then informed me that my company's campus was closed for the day. That got my attention and I got up to see what was going on.

It turns out that Seattle can't deal with snow very well. I guess it doesn't happen often enough for them to have good infrastructure to deal with it. When I was in NY and NJ, I would expect the streets to be clear and salted down by the morning. It was perfect safe to drive, as the streets were cleared well before it was time to go to work. Not the case in Redmond.

I even tried to get into work in the afternoon, expecting most of the ice to be clear off of the roads. Still not. At one point, on a hill, I hit the gas and my tires spun for a few seconds before they gripped and allowed me to move on.

Priced Out Forever

I had a conversation with someone the other day about housing. The person was describing to me why they wanted to buy a house. Part of the argument was that housing always goes up (which is wrong, and recent statistics bear that out) and that if they didn't buy now they would soon be priced out.

Now let's just look at the logic of that statement. There is little argument here that housing is quite expensive and out of the reach of many people. In the more popular areas in the country, house prices start in the 30oK - 400K range, which, by traditional measures, should require a six-figure income.

So if housing is that expensive, and housing always goes up, then logic would dictate that if you can barely afford it now, you better get in before its too late. But does that actually make any sense? Of course not. Just imagine what the world would be like if it were true.

Say that at some point housing becomes so expensive that all people who earn less than $50,000 (Slightly above the national Household average) are permanently priced out of the market and all people who can and want to buy have bought a house. Now someone who owns a starter home has a growing family and wants to move up, who do they sell the house to? By definition, they can't sell it to a family who is looking to own rather than rent. They can only sell to people who have previously owned a home. But people in general don't downgrade their home, so they have to sell to someone who is moving laterally (like someone moving into the city). So all that we get is stagnation, people just keep swapping houses, and nobody can move up because there is nobody below to sell to.

This of course implies that the supply of housing stays constant, which it isn't. It can be disproved by looking outside at all the cranes building high-rise condominiums or the construction crews putting up new housing tracts. I also highly doubt that home builders such as KB and Toll brothers plan on shutting their doors. New homes will be constructed, and these homes are going to have to be purchased by someone.

This is the key observation. All bubbles eventually end because supply catches up and surpasses demand. They don't end form a lack of demand. Builders willl see that there is an underserved market, this very large segment consisting of young middle class families, and cater to them by making affordable housing. It is next to impossible that you ever become "priced out forever" for an asset as common as housing.