Sunday, May 10, 2009


Can you remember something you wanted to be true so badly that you'd have done anything to make it happen. Perhaps a Christmas wish when you were eight, the outcome of a life-saving surgery on a loved one, or if only that girl in class would stop at your desk and say hi. Imagine now that you'd have had that power to make it so but by using that power you would've had to cross some moral boundary, be it lying, cheating or hurting someone else. Would you have used your power? Well, it seems we live in a world where most people will do whatever it takes to advance their cause, and sadly, we all seem more than willing to sit on the sidelines applauding their deception.

The results of the so-called stress tests on US banks were released last week, while across the pond here in Europe, Wednesday night Barcelona defeated Chelsea to reach the Champion's League final where they'll face Manchester United. Perhaps two unrelated events, yet both conform to a pattern of manipulation and deception. You need to reassure investors and the public that banks are safe to keep the financial world afloat, invent a 'stress test' to prove their solvency; you need a championship final that will ensure more interest and thus advertising dollars, fix a match.

In Washington you had US Treasury Secretary Timothy Geithner, a man who made his name being wined and dined by the big banks during his time as head of the New York Reserve Bank, announcing that these same banks need a few billion to stay afloat. Like Dorothy in the Wizard of Oz, "I think I can, I think I can..." the markets have reacted predictably by staging a rally, receiving the news that the banks are OK as an indication to continue to bid up prices on Wall Street. Even before the results were announced, Geithner had told us the results would be "reassuring". While the tests revealed a capital shortfall in the nations 19 biggest banks of $75 billion, the IMF declared recently that this number is closer to $275 billion (page 13) and folks like Nuriel Rubini have cast even more dire predictions. But on Wall Street, it seems like the more you believe, the higher the market.

European football is a confusing world for a Canadian transplant. However, the myriad of leagues and cups can be ignored when it comes the the Champions League where the best of the separate national leagues get thrown together in an effort to find one continental club champion. While North American sports have their Goliaths who always seem to be in the running, your Yankees, Patriots, Red Wings and Lakers, the last decade or so has brought a new buzzword, parody. Measures such as salary caps and reverse standing draft order have allowed unexpected challengers to emerge, notably the Tampa Bay Rays in baseball and the Arizona Cardinals in football last year. Meanwhile, in Europe, every year seems like a repeat of the previous, with the same teams qualifying over and over. This year was no exception as Barcelona, Manchester United and Chelsea made it to the semi-final round once again with the only change being Arsenal making it instead of Liverpool (who fell in the quarters). Predictability breeds boredom in sports and UEFA wanted to avoid a second consecutive final involving Chelsea and Manchester United.

It's hard to imagine that a banking system which was so broken but a few months ago, needing trillions of dollars to get credit flowing again could now only be $75 billion short. Supposedly, the test was meant to ensure that the banks could survive a 'worst-case scenario' economy, an unemployment rate of 10.3 percent next year, an economic contraction of 3.3% this year and a 22% further decline in housing prices — the losses by the 19 banks could total $600 billion this year and next, or 9.1 percent of the banks’ total loans, regulators concluded. That rate of loss would be higher than any other since 1921. While the adverse situation was supposed to be unlikely, it is not that much worse than what has happened so far, unemployment hit 8.9% this month as 'only' 539,000 non-farm jobs were lost, the smallest number since October. 5.7 million people have lost there job in America since December 2007. Of course the results could have meant something if the banks hadn't been allowed to dictate the terms of the tests, but we'd hate to have had the results mean something, that would have just caused investors to sell bank shares, wiping out the weaker banks and allowing capitalism to work its magic by making room for new, stronger players to rise up and take their place. Oh yeah, that's what should have been done ages ago, instead, Tim & Co. have kept their friends firmly in place at the head of world finance.

UEFA, the administrative and controlling body of European football, is run by Michel Platini, a man who has made no attempt to hide his contempt of English teams, going so far as hinting at banning teams such as Chelsea and Man U. But does his England hating mean that he would instruct the referee to help Barcelona get by Chelsea? Well, why was Norwegian referee Tom Henning Ovrebo even given the assignment? At least 2 non-calls were absolute no-brainers and a couple others were more than arguable. Adding fuel to the fire, it's come out that UEFA had posted a dummy match report on its website hours before kick-off, a report that correctly, as it turned out, predicted the final 1-1 score, that Barcelona would score a late equalizer and even predicted three of the four Chelsea players who would get booked, Ballack, Alex and Drogba. Or did the advertisers lean on Platini in a bid to avoid another Chelsea-Man U final which would have been anathema to the rest of the continent? Before the match, even English papers were abuzz with articles proclaiming that Barcelona needed to win "for the good of football".

So, here we are with the banksters controlling the economy and the advertisers controlling European football, what a lovely corporatist world we live in! All we need now is a little lithium added to our water supply and we'll be as cuddly as kittens. As usual, greed has been allowed to run amok, resulting in a fixed world where the outcome is decided before kick-off or the opening bell. Since the bank stress tests were first announced on Feb. 10th, the S&P 500 financial index has gone from 133.13 on February 9 to 96.18 two weeks later on apocalyptic nationalization fears, but through careful managing of leaks and results, the index has roared back, closing above 175 on Friday. Close your eyes, make a wish and all is good. Football, the beautiful game, seems no better, through luck or manipulation, we'll have our dream final come May 27th as Manchester United face Barcelona FC in Rome. Fans are happy and more importantly, continental advertisers are happy. Who needs a level playing field? Maybe I should just ignore it all and be happy with the masses.