A Mid-Summer’s Reflection
A personal note of reflection from Mike Farrell, CEO of Annaly Capital Management.
It had been a long time between vacations. Credit crunch, lending implosion, sovereign credits going into default, currency devaluations, government intervention. It was hard to break away while trying to keep our business growing and focused.
The coinciding events of my son graduating from college, a birthday and Father’s Day, as well as a period of relative calm in the markets around the July 4th holiday, led to a road trip. We have always enjoyed baseball together, as players, coaches, fans, so we planned a Great American Ballpark tour, featuring a ride across middle America. We went looking for the best parks, the best hot dogs, the best conversations. What we found was a nation that is best viewed through the prism of what is still ‘the national pastime,’ where some things are timeless and some are ebbing away thanks to the great recession, new technology and demographics.
Let me disclose right away that we are Yankee fans. For the record, I am a fan of the Derek Jeter Yankees. Not the A-Rod Yankees or the Roger Clemens Yankees. True fans understand the distinction. Home grown versus hired guns. I will also confess that I totally lost interest in baseball after the players’ strike of 1994. Within a year, however, my son dragged me back in. First by having me go through the box scores with him every day. Then tee ball, Little League, Senior Ball, junior varsity and then varsity. It’s a subject that binds us and allows us to discuss everything from strategy to skill sets. So my son, Mike, went on the internet to check schedules, buy tickets and plot our course for the road trip to baseball nirvana. Along the way, we had a chance to examine the current state of America.
Our trip started when we landed at O’Hare Airport in Chicago. We rented a 2011, 5.0 litre, 8 cylinder Mustang convertible. Let me just say this: If you get a chance to drive one, do it. Ford is doing America proud in a lot of ways these days, from re-engineering its balance sheet to re-engineering its products. It gets 26 miles to the gallon on the highway. This car marries muscle with mileage and technology.
We started in Chicago to visit the shrine—Wrigley Field. In many ways it reminds me of the Yankee Stadium of old. Beamed stanchions block some views, the ushers were all courteous, older and polite. The game that night was rain-delayed, so we had a chance to take the Red Line and sit in one of the pubs that line the entrance and enjoy the banjo players, drummers and street musicians competing for attention near the entrance. The usher showed us to our seats, dried them, smiled at us, declined a tip and said, “Welcome to the family,” then helped the next row get settled. Local basketball star, now NBA player, Shawn Marion, threw out the first pitch and during the 7th inning stretch stood near the picture of legendary broadcaster Harry Caray and belted “Take Me Out to the Ball Game.” The Cubbies beat themselves that night against the A’s, but the aura around the team was intoxicating for a fan.
Next we headed south on Route 55, top down, straight through Illinois towards St. Louis. I am also a fan of Abraham Lincoln, so we stopped in Springfield to see his tomb. It is an impressive, spacious venue and the staff and visitors were respectful and helpful. We arrived in St. Louis in time for the game that night against Seattle. Baseball here is a social, family event. Knowledgeable fans fill the seats and the streets. We had trouble finding our seats, so the usher escorted us from the gates of right field all the way to home plate, refused a tip, thanked us for coming to the game and walked back to his station. In Busch Stadium, the frame of the outfield profiles the famous Arch of the Gateway City.
The couple behind us were fun to talk to about baseball, traveling and whether or not women really enjoy the games. The stands were mostly full and when the crowd sang the National Anthem, I noticed military families saluting and almost everyone with their hats off and their hand over their hearts and singing. Cold beer and Midwestern hospitality overcame the fact that despite Albert Pujols parking one on top of the wall in left center, St. Louis lost a tight one to the Mariners.
On to Kansas City, where we had a chance to meet some friends, have some BBQ and get a quick tour of the City. KC is transforming itself into a technology and genetic research center via efforts like the Stowers Institute. While it is troubling to pass the closed GM plant and its industrial brethren around it, KC seems to be working its way through it. Warren Buffett threw out the first pitch, it was “Top Gun Promotion night,” there were country western songs between innings and the Royals caught some magic and beat Houston.
The next morning we were off to Denver. The drive across Kansas is a long ribbon of highway surrounded by giant agricultural farms, wind turbine farms and limited road services. For what it’s worth, we estimated Kansas is 14% of the width of the United States. We nearly ran out of gas because we passed exit after exit on Route 70 where there were no services. The mileage capabilities of modern cars have put lots of off ramp convenience stations out of business. Arriving in Denver on a Friday evening, it was disheartening to see the flood of people lining up at the Denver Rescue Mission downtown. We ate and strolled along the 16th Street Mall and saw more homeless people and police then we had seen in any other city so far. The Rockies beat the Brewers that night in a tense game where ex-Yankee Jason Giambi turned the tide with a pinch hit, opposite field sacrifice fly. We spoke with the young people around us, mostly transplants from other cities looking for a new start.
We made our way the following day over the Rockies and on to Las Vegas. Here the housing bust was clearly evident in the casinos. In top tier hotels, table after table was empty, occupancy noticeably low. Fewer jobs were evident in the restaurants, the pits and dealer positions. One dealer talked about throwing in the towel and moving to Guatemala. Apparently you can live there ‘like a king’ for about $1400 a month. For the record, there are no major league baseball teams in Las Vegas, even though we conducted an exhaustive search looking for one.
As we crossed the country, highway after highway was littered with traffic cones closing lanes for American Recovery Act work to be done. The only place where we saw road workers was in Las Vegas-pouring macadam at 9pm at night—apparently many states are taking the money, starting the projects and then diverting the cash to other municipal funding needs.
On the last leg of our trip, we drove to Anaheim to see the Angels beat the Dodgers, then over to Los Angeles to enjoy the Yankees beat the Dodgers and closed the loop with the Boston Red Sox beating the Giants in San Francisco. In California the presence of the homeless reminded me of visits I made in the 1970s. Walking around in downtown LA or along the Embarcadero in San Francisco after 9 pm is a sobering reminder of the social safety net breaking down nationally, especially in cash-strapped states.
So, in closing, an eclectic top ten list of this short, educational, once-in-a-lifetime father/son trip:
Best National Anthem: St. Louis. My heart swelled with pride singing along with all those people respecting the flag and each other.
Worst National Anthem: Los Angeles. I have no idea what the Red Hot Chili Peppers were playing, but they’re no Jimi Hendrix.
Best ball park food: Chicago. Both inside and outside Wrigley.
Worst ball park food: Los Angeles. Is sushi really necessary with your chardonnay?
Most traffic cones without workers present: Illinois, Route 55.
Most obvious real estate mistake: Las Vegas mixed use residential/commercial. What were they thinking?
Best ballpark: St. Louis.
Big Wow effect when you enter: San Francisco
Worst team mascot: Dinger at the Colorado Rockies. His antics behind the plate are a total distraction.
Biggest treat for a veteran baseball fan: Seeing 91-year old Monte Irwin’s number 20 retired as he stood next to Willie Mays, and drove off the field in a classic car.
The trip was great, but the big picture for me is the contrast of what is right and what is wrong with America. A little over a year ago, I asked the rhetorical question “Who is John Galt?” The question should have been, “Where is John Galt?” Well, apparently, he is all around us, especially at ballparks. Conversation after conversation focused on the economy, jobs, schools, lack of government effectiveness at the municipal and federal levels. There has emerged a genuine concern that we were far off course as a nation and I sensed a determination to set it right. Not to “Take Back America” but to set it right. Self-sacrifice, modesty, patriotism was everywhere. An open, genuine distaste for over-regulation, over-taxing and lack of accountability. All of this frustration is layered over the same fundamental issues that brought us to this place in time.
There is no playbook for America; it writes its unique history every day, and this time is no different. Somewhere in the United States there are two kids in a garage who are one thought away from figuring out the transition to new technologies that will solve our energy issues. They may be somewhere in the mid-west in the midst of those wind farms, or a few blocks from Chavez Ravine. Certainly, the independent American company, Ford, seems to pushing in the right direction. Somewhere else in the US, maybe in Kansas City, there are teams of researchers that will push adult stem cell research and genetic therapy to a level where we will control and eliminate diseases like cancer and dementia literally overnight. At Wake Forest, there are scientists growing body parts with Department of Defense funding. These elements will be game changers in the costs of building and running the new America. These miracles are erupting all around us even as we deal with the fallout of the financial debacle of the past ten years. The Americans working on these projects and sitting in these ballparks don’t label their leaders by party designation, they identify and judge them by their actions and they vote accordingly. By my informal reckoning after my trip across the country, I would say that incumbents from both parties are in trouble. Their actions have spoken louder than their words and alienated enough Americans to foster dramatic democratic action in the polling place this November.
I guess I would sum up the financial and social effects of all of the hurdles facing our people as daunting. Based on the vibrations I felt in our ride across the United States, I would reiterate the caution that was delivered to King George in another hot and steamy July 234 years ago: Don’t bet against America. When things are at their worst, we are at our very best.