Monday, January 31, 2011


A number of states are seriously under water financially (led by California, Illinois, Michigan, New York, Massachusetts---the usual suspects), and there has been speculation that Congress will add a provision to the Bankruptcy Code to allow states to go bankrupt. Currently, there is no such procedure, so if a state defaults on its obligations, it will remain liable for those debts into perpetuity. The magic of bankruptcy is that, by operation of law, it permits the debtor to discharge prior obligations and obtain a "fresh start."

The reason there has never been a provision for states in the Bankruptcy Code is that states retain many aspects of sovereignty under the federal system, and one traditional aspect of sovereignty is that THE SOVEREIGN CANNOT DISCHARGE ITS DEBTS except by paying them. Default is the end of the line, and the end of the sovereign. This has been the case, basically, forever. When the sovereign is truly broke, there's a revolution, or the country is taken over by another country, or Marie Antoinette gets beheaded, or the Weimar Republic disappears. Unlike the most destitute schnook in Manayunk, the sovereign can never say, "Sorry, guys, but I'm not going to pay." Other sovereigns have to give you a loan, or "restructure your liabilities" or agree to something similar, or you're dead.

But the campaign to provide states with a route to bankruptcy and discharge of their debts creates a Constitutional issue. (This is one of the amazing and beautiful things about our Constitution---that it pops up when you least expect it and makes you think about what you are doing.) The Contracts Clause, in Article I, Section 10, provides: "No State shall...pass any Bill...or Law impairing the Obligation of Contracts...." It is curious that the Contracts Clause applies only to states, but the explanation is fairly straightforward. There was no reason to place limits upon the federal government because the power to alter contracts is not among those enumerated in the Constitution. In other words, since the feds have no basis upon which to exercise such a power, there was no reason to explicitly bar them from doing so. (In addition, it would not have occurred to anyone in the 18th Century that a sovereign nation could default on its debts and continue to exist, so the power of the United States to renounce its debt was not an issue of any practical import.)

The powers of the states, however, were a different matter. Were they to be sovereign entities or not? This is the argument between the Federalists and the Anti-Federalists that is no more settled today than it was in 1887. The Contracts Clause embodies the Founders' resolution of the issue ---the states, just like the new federal government, were to be sovereign in at least this limited sense. The states, just like the feds, had to pay their bills.

So what will happen when California (for example) defaults? There are several possibilities.

First, the federal government might decide to bail them out. This would be a complete victory for the Federalists who, today, are called left-wing Democrats or Progressives. They HATE "state's rights," and this would be the end of them, at least where California is concerned. If the federal government were to keep California afloat, it would do so only on condition that the state consent to federal supervision of basically every state function. The sovereign (or quasi-sovereign) entity that is California would remain a "state" in name only. As other states fell under the weight of their debt, state sovereignty would begin to seem like a quaint and antiquated notion until finally it disappeared altogether.

Another possibility is amending the Bankruptcy Code to allow states a discharge of their debts. The thorny Constitutional issue is whether such a thing is permitted under Art. 1, Sect. 10. It is true that this would be a federal law and that the Contracts Clause, by its terms, applies only to state action. However, in order for California to take advantage of such a provision in the Bankruptcy Code, it would have to choose to do so, and that choice would be the equivalent of a "Bill...or Law impairing the Obligation of Contracts." That, in any event, would be the argument. If anyone tells you he knows how the Supreme Court would decide this question, he's lying.

If a state bankruptcy is permitted, the Federalists win again. Though a legal discharge of debt would not instantly make California a ward of the federal government (as would a bail-out), it would fatally undermine any claim California might make that it remains an independent entity. Again, sovereign states just don't do that sort of thing, and the only reason it could do so in this case is because it was permitted to by the REAL sovereign, the United States of America. At that point, it becomes hard to come up with a theory of government that would justify California in running its own police force or passing its own laws. Logically, final authority would reside in Washington D.C.

The other possibility is for states to do nothing, and simply default. This is what happened following the Panic of 1839 when 10 US states (out of 29) defaulted on loans from British and Dutch banks. Almost all of the debt was ultimately repaid, but the citizens of the defaulting states rejected all proposals for the federal government to assume their states' debts. Even though this meant their states would be cut off from the world's credit markets, the attitude of the citizenry appeared to be that a long period of downsized government and severe austerity measures was only proper punishment for sovereigns that run amok.

It is unlikely that the citizens of California in 2011 would take this attitude. With millions enrolled in entitlement programs and tens of thousands receiving $100,000-plus annual pensions from the state, there will be no stomach for cutbacks. Nevertheless, it is probably the most sensible solution to the problem, just as it was in 1847. Neither the bailout nor the bankruptcy would be pain-free for California, and will probably only delay slightly the day of reckoning. A little harsh medicine now might be the best prescription, but...well, that's the rub, isn't it? Nobody wants the harsh medicine right now.

And now, at last, I will get to the point. As one of the last remaining Anti-Federalists in America, I view federal bailouts or state bankruptcy proceedings with alarm. The growth of the federal government, with its ever-increasing power over our lives, our livelihoods and our freedom, is the primary cause for most of the problems the American people now face. We are ruled by an elite political class of smartest-guys-in-the-room who all went to Harvard or Yale, rather than a government of and by the people. Supporting them is a corrupt, politically-connected group of economically-powerful forces (Goldman-Sachs, Fannie and Freddie, Google, the SEIU, the NEA) who are never subjected to our laws no matter what they do. At the federal level, government is purely an insider's game, and look at the results. Over the last fifty years, America has lost wars for the first time in its history, the black family has been destroyed (and many white ones) by a government-created culture of dependency and victimhood, our currency has been debased and we now find ourselves on the brink of insolvency. And then, of course, there's "Jersey Shore."

State governments may be the only means we have left to push back against the embedded corruption, profligacy, and authoritarianism of the feds. Granted, they're not doing a great job of it now, but that doesn't mean they can't. In the past, states have been a powerful check on Washington, often just by standing together and saying, "NO!" State sovereignty remains a vehicle by which free Americans can assert themselves.

And that's why the prospect of federal bailouts or a new provision in the Bankruptcy Code is so dangerous, because either one would render the states powerless against the federal government. If these things happen, they happen, and it looks like one or the other are going to, but I would like to see real consequences for accepting a bailout or using the Bankruptcy Code. Any state that does so should be stripped of its statehood and revert to Territory status, like Guam or Puerto Rico, or Alaska in 1959.

A reclassification to Territory status would merely reflect the new reality since by taking a bailout or a bankruptcy discharge,a state would have given up any legitimate claim to sovereignty. Not only would this discourage a state from taking the easy road to solvency, it would separate the fake states from the real ones, and the real ones could still assert their powers of sovereignty to resist the takeover of America by the modern Federalists. The Territory of California, well, that would be one thing, but the State of Texas would be something entirely different. And it should be.

Copyright2011Michael Kubacki

Thursday, January 27, 2011

NFL UPDATE (The 2011 Superbowl)

Well, it's not like they don't belong here, is it? In point differential, Green Bay and Pittsburgh were second and third in the league (behind only the Pats). In the most meaningful measure of defense, points allowed, Pittsburgh was the best at 232, and the Packers were next, at 240. In Adjusted Yards/Pass, the Steelers were second and the Packers were third (again behind the Pats). In Defensive Adjusted Yards/Pass, Green Bay was the best in the NFL, with Pittsburgh right behind them.

If the Patriots were not going to be in the Superbowl this year, these are the two teams that should be. Baltimore and Atlanta (or even Philly), might have gotten lucky, but they didn't, and there are no other teams in the NFL that posted any legitimate claim to greatness. Pittsburgh and Green Bay both have very effective offenses, and superlative defenses. They are very similar teams that are equal in strength, and there is no reason to think one of them will fail to show up on February 6. There are probably guys out there who know about match-ups and game plans and other intangible nuances of football prognostication, and maybe they can identify a clear favorite here, but I can't. If they played this game ten times, my best guess is that each team would win five of them. That's what the numbers tell me. It's a toss-up.

The sane gambler passes a game like this, but of course, it's the Superbowl, so passing the game is not really an option, no matter how sane you are (or think you are). Therefore, I'm taking the Steelers simply because they are getting 2 ½ points in Vegas and they are not worse than the Packers.

Don't bet the house.


Friday, January 21, 2011


Well, I'm 4-1 on my picks against the spread, but the one was a doozy. Basically, I said the 2010-11 Patriots were the 1927 Yankees and, well, they weren't. They were more like the 1969 Seattle Pilots. (Or to put it another, more obscure, way: I said the Patriots were Secretariat and they turned out to be Jacques Who.) Shortly after the game concluded, I stepped into the backyard to ponder the question of how I could possibly have been so mistaken and whether my wife now would (or should!) leave me because I was so wrong, so very very wrong, about the Patriots. As I stood in the freezing wind, my tears crystallizing on my face, I could not help but address certain fundamental questions I have been avoiding for many years:

1) Have I lost it?
2) Did I ever have it?
3) Did I ever even know what “it” is?
4) Is it possible Bill Belichick is not the intellectual and spiritual equal of St. Thomas Aquinas?
5) Are the Jets really any good?

Suddenly, the forsythia bush in front of me burst into flames. Though I always seek, and welcome, the miraculous in life, I admit this surprised me. Over the crackling of the branches, a voice boomed out: “Michael,” it said, “you know NOTHING about football!”

So now it's official, I guess.

Nevertheless, I still have my numbers (and not much else). And based on that, I have to like the Steelers (-3 ½) against the Jets. We are talking here about (maybe) the 2nd best team in the NFL versus Mark Sanchez. I grant you that Sanchez just beat the (maybe) best team in the NFL, the Patriots, but that may well have been an any-given-Sunday kind of thing. Sanchez played well, but the Patriots dominated many of the offensive stats. In other words, my skepticism of the Jets is unabated. A team like this almost never gets to the Superbowl.

The Packers-Bears game is an easy choice as well. In the NFC, by my reckoning, the Packers were the best playoff team and the Bears were the worst.

In many ways, the Bears and the Jets are the same sort of team. They combine a medium-to-weak offense with a better-than-average defense, and hope to put themselves in close games where they can get lucky. This strategy can win games, but it rarely gets the ring.

Steelers. Packers.


Tuesday, January 11, 2011


Seattle @ Chicago (-10)

So let me get this straight. All Da Bears have to do to reach the NFC Championship game is beat Seattle? IN Chicago? Just who do you have to sleep with in the Commissioner's Office to get this kind of break?

These are the two worst teams in the NFC playoffs, but the Bears are better. Ninety days ago, however, the Seahawks visited Chicago and won the game 23 - 20. Seattle dominated the game, sacking Cutler six times, and the final score was close only because Devin Hester returned a punt for a touchdown in the closing minutes.

In short, I would not touch the 10-point line with a 10-foot hot poker. I have to pass this game, but I will be rooting for Seattle.

Green Bay @ Atlanta (-2)

On November 28, The Falcons beat the Packers 20 - 17, in Atlanta, on a field goal as time expired. I discount this result somewhat because Green Bay gained more yards in the game, beat Atlanta in various statistical categories, and was somewhat unlucky. Also, this game was played during Green Bay's mid-season fugue period, a stretch during which they lost three of four games including an ugly mess (7 - 3) in Detroit. I think Green Bay had the flu or something. They're better now.

Green Bay's passing offense is one yard better (per pass) than Atlanta's, and Green Bay's pass defense is one yard better, per pass, than Atlanta's defense. These are big margins, so I want the Packers. They should win outright.

Baltimore @ Pittsburgh (-3)

Two good teams, and they split their games during the season. However, if I believe my numbers (and I do), Pittsburgh's edge here is about the same as Green Bay's edge over Atlanta. The Steelers are better than the Ravens, by a meaningful margin, on both sides of the ball. I have to lay the points.

NYJ @ New England (-8 1/2)

Long before the Jets were embarrassed in New England on December 6 (final score: 45 -3), they actually beat the Patriots in Week 2 of the season. (Ever notice that the NFL uses Roman numerals for Superbowls but standard Arabic ones for the Weeks? Why? And did Andy Rooney beat me to this observation?)

But I don't care what happened in September. Plus, I hate the Jets, I find Rex Ryan almost transcendentally annoying, and I never liked Rex Ryan's daddy either. More importantly, the Patriots have the best passing game in the NFL (by far), and the Jets have the worst pass attack in the AFC.

The line is large, but I'm laying it. If Brady is knocked cold on the first play of the game, I suppose anything could happen. Otherwise, this game should be over by the 3rd quarter.

Copyright2011Michael Kubacki

Thursday, January 6, 2011


As you should know by now, my predictions for the NFL playoffs are based on the one factor that has been most reliable in predicting NFL playoff results in the past, which is yards per pass (with an adjustment for interceptions thrown, a huge negative). You may like a team with an effective running game, but it doesn't matter much in the playoffs. Neither does defense, largely because all the real contenders for the ring will have a decent defense and there won't be much of an advantage for anybody. The difference between Tom Brady and Mark Sanchez, on the other hand---well, it's big. It's really big. It matters.

Normally, I have three categories of teams-- the Contenders, the Could-Get-Lucky's, and the Pretenders. This year, I think there has to be a fourth division, occupied solely by the New England Patriots. In this greatest year of Tom Brady's put-him-in-the-hall-of-fame-without-even-checking-his-driver's-license career, it is unlikely that anyone can beat them. Much like the 2009 Yankees, the Patriots this year are one of the truly great teams in the history of their sport.

The other Contenders are Pittsburgh and Green Bay, either of whom, in a normal sort of year, could win it all. Pittsburgh's problem, of course, is that the AFC Championship game will be played in New England. Green Bay's is that they will have to win all their games on the road. However, New England, Pittsburgh and Green Bay (in that order) have the best yards/pass numbers in the league by a substantial margin. In addition, Pittsburgh and Green Bay have the two best defenses and have given up the fewest points over the season. These are very good teams.

On the Could-Get-Lucky list, there are three squads:

Philly. Based on the numbers, Philly might be the second-best team in the NFC. The bad news is that they have to play the first-best team right out of the box. The good news is that they get to do it in Philly. I am calling this wild-card game for the Packers, but it is entirely possible that the dog-torturer and his various Seans will do something magical and actually prevail. If so, they can win the NFC Championship.

Atlanta. Quick! Who's Atlanta's quarterback? In fact, his name is Matt Ryan, and while he is having as good a season as somebody like Matt Ryan can ever have, it's not good enough to win a Superbowl in a world that contains people named Brady and Manning and Rodgers and Brees and Vick. The good news is that Atlanta only has to win two games to get to the BIG ONE, and both those games will be in Atlanta. It's possible.

Baltimore. Another very good team with a bruising defense and an efficient offense. They will beat Kansas City easily but then they will probably have to go to Pittsburgh, where they won by three earlier in the year (they later lost by three to Pittsburgh in Baltimore). You will have to like the Steelers in that game, but the Ravens are not nothing.

The Pretenders this year are half the field, and some of the names may surprise you:

Seattle. Will get toasted in the first round, of course. The Seahawks were outscored by six points per game this year.

Kansas City. The best running game in the NFL this year. Goodbye, Kansas City.

Indy. They are still capable of beating anyone, but let's face it, it's not Peyton's year. He still racks up the yards (4700 this year), but there's nothing else on offense and the defense is thin. They might beat the Jets in the wild card, but that will be the end.

Jets. In yards/pass, they are 11th out of 12, and their pass defense is nowhere near as good as you think it is. This is a team that will have to ditch Sanchez and do substantial rebuilding before it can challenge for the Championship.

New Orleans. This is still a really, really good team, but Drew Brees (25 interceptions) is having the worst year he will ever have. It was never a great defensive team, and it still isn't, so without Brees clicking the way he is capable of doing, they have no shot.

Chicago. When I drilled down and looked at this team, I was surprised by how thin they are. Though they won eleven games (but lost at home to both Seattle and Washington), they show the worst yards/pass numbers of any team in the tournament. What tends to happen to teams like this in the playoffs is that they are eventually confronted with a situation where they MUST score, and they are unable to. Shortly thereafter, the players start calling for tee times.


New Orleans -8 @ Seattle PASS

Jets @ Indy -3 PASS

Baltimore -2.5 @ K.C. TAKE BALTIMORE

Green Bay @ Philly -2.5 TAKE GREEN BAY