Ctrl BG: A Shortcut to Financial News 10/3

I've decided to do my write up early this week- just in case something else happens right after I hit "publish."

After European banks started falling last weekend, everything else started falling apart when everyone realized that this credit crisis was not limited to the US. On Monday, Wachovia made a deal with Citigroup with the help of the FDIC to buy their bank deposit arm for $2.16 billion.

On Tuesday, Bailout plan #1 was rejected by Congress, and the Dow Jones fell over 700 points, hitting a record low since the October Market Crash in 1987. It was actually quite exciting- it is definitely not everyday that we see history in the making! This also served as a good shocker for congress members who voted against the plan. Many of them were worried about the "unpopularity" of Bailout plan #1 with their voters, since many people viewed this plan as a bailout plan for Wall Street (many nay-saying congress members are facing re-election this November). What did they think was going to happen if the bailout plan doesn't go through?

With this record crash in the market, people finally realized that this was a bailout plan for the people. This is not a time to place blame and punish those who did wrong (I mean, if we're really going to place blame, I think the people who borrowed the loans knowing they cannot repay them is equally to blame as the banks who made the loans to begin with). This is a time to take action before the effects of the credit crunch affects the rest of the economy. It would be irresponsible for the government to do nothing. Call me selfish, but right now, as a worker and member of the society, I'm more worried about the adverse effects this will have on my job (the just reported the biggest job lose in 5.5 years!), my 401K, my ability to get a loan (not that I'm planning to buy a car/house any time soon, but IF), and just my way of life in general. Even if you don't invest, have a 401K or have/need a loan right now, businesses you're linked to may close down because they are unable to get a short term loan to fund their business operations or their prices would go up because it will be more expensive for these businesses to get a loan and operate.

Good thing voters and congress members finally realized this on Friday, and voted 263 vs 171 for Bailout plan #2, which was created in record time. It is basically the same as Bailout plan #1, except with an extra $150 billion put aside for random tax packages (way to take the "load" off our future generations). They ramped up the FDIC insurance limit to $250,000, put more oversight on the execution of the $700 billion, gave the SEC authority to suspend the "mark to market" accounting standard (so firms don't have to mark down their assets just because the market is crazy these days) and a gazillion little tax breaks benefiting the environmental friendly, middle class, natural disaster hit states, homeowners,educators and businesses. Basically something for everyone- even people with mental health needs and the makers of "certain wooden arrows designed for use by children" (I don't even know what that is). It sounds like basically the same plan to me, except policy makers decided to take this opportunity for "quick action" to randomly put in policies they've been meaning and wanting to pass, to make it sound like a better plan. Oh well, I guess it works out for everyone in the end.

Unfortunately, now even the bailout plan isn't good enough to restore confidence and the market continued to fall after Bailout plan #2 passed on Friday. It's going to take a while for the bailout to take effect. At least there's hope. I'm thinking it is not a good time for Mr. Schwarzenegger to be asking for a $7 billion short term loan to weather CA out until tax comes in, in spring.

On the other hand, while the current economical situation is being compared to scary sounding things like the economic Pearl Harbor, the Great Depression and at the edge of the abyss, Mr. Buffet went on a shopping spree. After buying some of Constellation Energy for $4.75 billion and Goldman Sachs for $5 billion in September, this week, he also bought 10% in Chinese battery and automotive maker, BYD, for $230 million and more of GE for $3 billion. Even though this may sound shocking in this market, Buffet is actually a very sensible shopper. While fashion trends go in and out, the classics will never go out of style. Goldman Sachs and GE definitely qualify as classics, one being THE top bank on the street and the other being literally the backbone of the American economy, dabbling in a bit of everything. One is Hermes and the other is Bergdorfs. And the best part is that he's buying all these quality investments at a BARGAIN price. Another good shopping philosophy is to invest in emerging talents before they're famous and mainstream. BYD with its rechargeable green batteries and electric cars is definitely part of an emerging market. I'm not sure in which category Constellation Energy fits in, perhaps a bit of both? Either way, Buffet is a very sensible fellow shopper. As he said, "I like spending...The cheaper things get, the better I like it. This is a good period for us..go ahead." I can definitely relate to that. If only I knew the market classics as well as I know the fashion classics and had the capital to act on it. Another Buffet philosophy that I agree with, "there's no way a smart person can go broke except through borrowed money. All borrowed money does is help you get it a little faster, but (it also will) help you get poorer a whole lot faster." Credit card debts are definitely not pretty.

Buffet also made a deal with Wachovia this week, through Wells Fargo (which he owns a lot of). Yes, the same Wachovia that I said earlier in this post, that had just made a deal with Citi on Monday. Wells Fargo upended Citi's offer and offered to buy (the whole of) Wachovia for $15.1 billion without government help. Previous agreements and honor of word aside, this is definitely a better deal for Wachovia and the government since they don't need to help anymore. Wells Fargo is actually one of the few banks that is weathering this market out quite well, having had less exposure to bad debt (they have a much stricter credit requirement- as they should!). Citi, of course, is miffed that their government sponsored bargain deal has been thwarted and are thinking of suing them. Do I see a banking bitch fight coming? Probably not, the government would probably do something. This market doesn't need anymore drama... but it would've been fun to watch :P. It's no wonder that CNBC reputedly has had the best ratings these last two weeks since earlier this decade!

Auburn's offense might be bad, but don't call it the spread, the Airraid, or the Tony Franklin System

I recently wrote piece about the "Rise of the Terrible Spread Team," and while I didn't have this season's Auburn Tigers in mind, that's the connection a lot of folks made. And with some good reason: Auburn brought in Tony Franklin, a "spread guru," with the hype that the spread had come back to the SEC and that Auburn would light people up. And, it uh, hasn't happened that way. Hundred yard passing games seem like the norm, and the games Auburn has won have been on the strength of their defense. Most Auburn fans are fearful as the SEC season heats up, as everyone knows you need to be able to score to win games in that conference.

So public enemy #1 is now Tony Franklin. I might have bought into this, and agree that his offense has failed. Except they aren't even running his offense.

What do you mean, you might (reasonably) ask? They look "spread" to me (several wide outs on the field), they are in the shotgun, and they also suck. Yes, yes, and an emphatic yes.

But the system (or the "The System" with a trademark symbol) that Franklin was (supposedly) hired to run was the Airraid offense he learned from Hal Mumme and Mike Leach when all three coached together at Kentucky. (At the bottom of this post is an addendum explaining a bit more about the Airraid.) Franklin of course had a famous falling out with Mumme, as Franklin thought he had been thrown under the bus, that Mumme was either willfully blind to the cheating done at UK by one Claude Bassett, and as a result of it all - the bad pub, the book, etc - Franklin was blacklisted from coaching. So he reinvented himself as a spread offense consultant and he marketed Mumme's system to high school programs across the country. (His most prominent client was Hoover High School, which, with Franklin's system, went from mediocrity to the highest level of football success: a reality show on MTV.) Franklin later surfaced at Troy University, where his offense succeeded, and he was hired by Auburn, presumably to run what he'd been coaching and selling for over a decade.

Despite outward appearances, that assumption is wrong. Every coach I speak to says the same thing: I don't know what they are doing at Auburn, but it ain't the Airraid. So what's going on? I'm not an insider, but my best sense is that the other coaches on the staff (including Tuberville) never bought into the system - maybe because Franklin did a poor job selling it internally, or maybe he thought he didn't have to - and now their offense is simpl a muddle, a grab-bag of pseudo-spread garbage. This seems to be general sentiment among the smart money in football. For example, as one high school coach, who is also a client of the Tony Franklin system, said:

I live in Alabama and I attended the game between [Auburn] and Tennessee. I also am an offensive coordinator for a high school football team that runs the [Tony Franklin System]. From what I have seen this year from AU, this is not the system.

It seems to me that Franklin is getting told what to run on offense. Tubs wants to run the ball to set iup the pass and Franklin likes to set up the run with the pass. I never saw any hurry up offense from AU at this weeks game . . . . Franklin has said that to be sucessful in this offense you must be good at the screens, and get a lot of snaps (maybe like 80) on offense. I dont think I have seen but maybe four screens all year and I don't think they are close to getting 80 snaps.

I'm not ready to blame Tommy Tuberville; he's an extremely smart guy and coach. But I do wonder: why in the world would you bring a guy in who knows one system extremely well but one system only, and then not run what he knows? And even if the pressure was on from the AD or the boosters to go spread, why not pick a twig off the Rich Rodriguez or "running-spread" tree? Instead, they picked a guy whose background was in a pass-first spread, and then they shelve the passing concepts. It really boggles my mind.

Now, this is raw speculation, but here's my best guess: Franklin comes in, and does not bring in any other staff. The rest of the staff does not buy into this system. They didn't think it would work, and Franklin has not convinced them. They are convinced they don't have the players (more on that in a bit) and that either they can't go too spread too quickly, or they have to keep some other elements, or the play-calling is off, or something. Plus, since he didn't bring the rest of his staff in, Franklin had to coach the coaches in his offense, and at that he apparently did a poor job.

Once you start going in multiple directions on offense, you lose focus, and all the paranoia becomes a self-fulfilling prophecy. In college there is simply not enough time to try to do everything. It's the converse of Bobby Bowden's old quote about defense: If you try to stop everything, you stop nothing. Here we could say if you try to be everybody's spread, you're nobody's spread. And Franklin knows this. From an interview he gave over the summer:

The spread is a formation, not an offense: Some people spread the field to run it, like West Virginia. Others spread the field to pass it, like Texas Tech. It’s what you do after you spread the field that defines your offense. We spread it to figure out what is going to work in any particular game and then we just do that. At Troy we basically ran it half the time and threw it half the time. We just always took what the defense was giving us. [Note: Troy rolled up 488 yards in a 44-34 loss to Georgia last November.] Our plan at Auburn is to throw first and run second but if we find a running play that works, we’re going to do that. I’m not hung up on who gets the ball and how we do it. I just want to score points.

Yet they have clearly lost focus. Again I'm not blaming anyone. You could still plausibly argue that if Franklin came in to run a system and he can't convince the coaches and players, then he's failed at an important part of his job. That said, if someone hires me to run an offense at Auburn University of all places, I don't expect to have to spend most of my time convincing my colleagues of what I'm doing. But that's how it goes. Yet make no mistake, the rest of the coaching staff has not bought in. As Tuberville is now saying:

"We don’t run Tony Franklin’s spread offense,” Tuberville said. “This is Auburn’s offense. It’s like our defense. We’re going to run what works and what
we’re going to match up better with the other team. Everybody has to do that. You can’t put a square peg in a round hole. Why would you do that?"

Well, it's not like they ever tried. Setting aside whatever merit this statement has as a matter of diplomacy, it's bogus as a factual matter. Or at least bizarre. If you hire a guy to run a system, why can you then say, oh, after the fact, we don't have the talent. (But did in our bowl game?) Remember: the reason this guy was hired was because at Kentucky, the offense rolled up yardage and points in the SEC, and Franklin, while he was at Troy, rolled up yardage on big name schools (read: Georgia). Auburn has the horses, and when you're going to switch, you just switch.

But, what about QB? They don't have a QB, the critics say. Or they say that their guy Todd is noodle-armed, and you need the other kid, Burns in there. Now I really don't want to wade into a fan battle about who is the better QB (though I observe the rule of thumb that the backup QB for a struggling offense is always the most popular guy in town), but I will say that all you need for this offense is a game manager. Todd appears to be that, though, again, the offense itself just isn't being run correctly.

To highlight the absurdity of this situation, let's think of the last time a big name school hired an offensive coordinator to run the Hal Mumme offense: Bob Stoops, when he went to Oklahoma from the U of Florida, hired Mike Leach as his offensive coordinator. Why? Well as defensive coordinator with Florida, Stoops said that they only team that had an incommensurate level of success against them was Kentucky. Stoops noted that UF's talent level was far superior, yet stopping Kentucky was maddening for Stoops. So Stoops said: I want that.

Compare this to what is happening with Tuberville and Franklin. Back in 1999, Stoops hired Leach and gave him free rein to install his offense. (In fact, I have a coaching clinic talk where Stoops said that he ordered Leach not to change anything that first year, because he wanted exactly what he saw with Kentucky.) And who was Leach's QB at OU? A noodle-armed guy named Josh Heupel. And their receivers were a bunch of converted running backs and defensive backs. Yet I didn't hear the same cry that "Oh, we'll spread it out when we get the athletes." (News flash: if that's your approach, it'll never happen.) Now, I also observe that Stoops too wasn't entirely comfortable being a spread it all the time guy, and Leach happily went on to Texas Tech where he could be as much of a mad scientist as he liked. Yet OU stuck with the exact same system the next year with Mark Mangino as OC, and won a National Title. But Stoops knew what he was getting when he hired Leach, and most importantly he let him do it.

Which of course, again, draws us into questions about what the hiring process was like. What was Franklin told (or what did he ask?), and who wanted him to come to Auburn? Tuberville, or various boosters or administrators? I have no clue. Maybe in the end, this is beside the point: they aren't good at offense right now, so they need to do something the coaches buy into. If it's not the Tony Franklin system then it should just be whatever they can find that will help them score a touchdown every once in awhile.

Airraid Addendum:

As an addendum here I wanted to expound briefly on what I mean when I say that Auburn isn't running the Airraid system. The Airraid is basically two things:

First, it is a small collection of a handful of pass plays, largely derived from the Norm Chow/Lavell Edwards BYU offense of the 80s and early 90s. The most prominent of these are the mesh (see here under "62" for the read), the shallow (see also here), the stick, and then mostly screens.

Second, it is an approach. Specifically, it is a patient, analytic, probing approach to attacking the defense. You have a few formations, you have your base plays (which you have repped continuously), and each has a structure and individual routes but receivers are given enough freedom within each to get open, and QB's are allowed to check plays at the line. Since there aren't many plays, they are practiced over and over again; you might see Texas Tech run the same plays with only slight variations ten times in a given game, often back-to-back-to-back, and a different receiver might get the ball on each one. I can't stress the analytic, probing part enough. Often you don't know what the defense is doing or will do, but you take a piece of the field, you attack it with some route concept, and you take your completions where you can get them. In Hank Stram's phrase, you matriculate the ball down the field.

And what is Auburn doing? I don't really have a clue. They basically line in just a couple of formations, run the outside zone over and over again. They don't run the mesh, the shallow, or the stick concepts. They have some very basic pass plays, mostly based on the four-verticals concept or sometimes a smash pattern. But that's really about it. It's just a bizarre approach that hints at dissent among the staff. The irony is that the whole point of the Airraid was to take the Vince Lombardi approach - run a few plays exceptionally well - and apply that to a pass-first offense.

As a counterpoint, only some video can do justice to how different the approaches are. Compare Auburn this season:



With a cut-up of Kentucky against LSU (talent gap, anyone?) while Mumme, Franklin, and Leach were all there (and take note of how easy so many of these completions are - just short dump offs to the running backs, screens, and quick passes):



UPDATE: Franklin has been fired, and the spread experiment at Auburn ends. Just to clarify as I expect some further scrutiny of this post, I really don't mean to entirely absolve Franklin of blame. One possible hypothesis is that Franklin himself had done too much adapting of his offense - either at Troy before he got to Auburn or while he was there - that undermined its core. But I'm not sure if that's the most plausible solution. Seems me to like it was a tough situation for everybody, with quite possibly everybody getting into it not with their eyes wide open - head coach, offensive coordinator, and position coaches. Hopefully, for Auburn's sake, they can move on from here. As I predicted previously, the offense will probably improve some just by having less conflict amongst the staff. But it won't improve by too much, at least not this season.

The Puffer Trench

Every year when fall comes around, I am shocked by how cold it is. Summer and time does a good job of fading away memories of the bitter cold and biting wind. Walking around, people are pulling out their trench coats against the cold. But is that enough to keep us warm? It IS only made out of a layer of cloth (or two, counting layers) after all. I own one and I don't find it very warm at all. Maybe I'm just more easily chilled than others, but I'm thinking that something a bit more substantial is called for. Luckily for me, Burberry knew just what I was thinking.
I am loving Burberry's latest puffer trench coat. Lined lightly with down, it is most definitely warm enough for fall. Unlike other puff jackets however, it still has SHAPE. A very slimming and flattering trench coat shape at that. What more can you want? It will totally last you all the way through fall (plus or minus some layers) and maybe even winter (probably not for snow though, for snow you need the heavy duty stuff)!

Image Source: Burberry

Paris S/S 09: Nina Ricci

When I was a kid, I'd somehow got the impression that Nina Ricci was for old people (yes, I got started into fashion very early). I am definitely much wiser now (either that or Olivier Theysken performed a miracle), because the Nina Ricci collection this season was anything but old.
There were lots of tulles and leggings. The color palette was a nuetral cream, pale and nude. The shape of the skirts, short and modern in the front, but soft and overflowing behind them, were beautiful. There was also a big shoulder silohoeutte thing going on that contrasted well with the soft flows of the dresses. I especially loved the white big shoulder leather jacket (left) over the super feminine dress.
The rest of the runway was interesting. There were lots of shorts and t-shirts, and leotard looking outfits (left), that looked more like day to day home wear (or ballet costumes) than ready-to-wear. Then there were super heroe inspired ball gowns. Perhaps this is an extension of Christina Ricci's gorgeous red super heroe dress for the Met Costume Institute Gala this year?

Image Source: Style.com