Who needs cash now?
In a bit of a reverse of the curse that sent Babe Ruth from the Boston Red Sox to the New York Yankees for cash, it is New Yorkers who are now desperate for cash. The New York Times has sold a piece of its Red Sox stake.
The deal with Henry McCance for 50 of NYT's 750 units in New England Sports Ventures, which is the holding company that owns the Red Sox, reduces NYT's stake to 16.6 percent from 17.75 percent.
Terms of the deal were not disclosed, but NYT said it expects to record a pretax gain in the second quarter from the sale. The desperate to raise cash NYT also said it will continue to explore the sale of its remaining stake in whole or in parts.
The Bambino was sold by the Red Sox in the off-season of 1919-1920, in the middle (the calm period) of a double dip recession, as the then Boston Red Sox owner needed cash.
Will a second New York-Boston baseball deal, where one seller is desperate to raise cash, signal that we are again headed for a double dip recession? This ancedotal event isn't the signal, but it does signal that we are in very unusual times, probably as unusual as the 1919-1920 period where a baseball owner sold the great Babe Ruth.
Here's how the double-dip recession played out that time.
The National Bureau of Economic Research lists the period from Aug 1918 to March 1919 as a recessionary period followed by a rebound and then a return to recessionary conditions in Jan 1920 that continued until July 1921.
The first part of the double dip was noteworthy for its high unemployment. Sound familiar?
The second leg of the recession included the year 1920 which was the single most deflationary year in American history. The Dow Jones Industrial Average reached a peak of 119.6 on November 3, 1919, two months before the second leg kicked in. The market bottomed on August 24, 1921, at 63.9, a decline of 47%.
How serious should baseball indicators be taken in projecting economic events? Let me put it this way. Federal Reserve chairman Ben Bernanke in the middle of this entire economic crisis has been a season ticket holder to the Washington Nationals, and tries to see as many games in person as he can.
Of course, we had an administration and Fed at the time that kept their meddling to a minimum. Anyone really believe Hoenig, or that we won't see calls for more stimulus at S&P 950?
ReplyDeleteOh Puhleezee! NYT's need for cash has nothing to do with the general economic downturn and everything to do with poor management. Management's refusal to drop its progressive/liberal bias and focus on meeting the needs of the information market has resulted in massive losses. If this indicates anything its that the creative destruction of capitalism survives!!
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