The U.S. Men’s Hockey Team won the gold medal yesterday for the first time in 46 years.
And what really frustrated me was how EVERYONE missed the obvious implications this has for the mortgage market.
Hat tip to the U.S. women as well, who also took home gold. But A) They’ve won gold a bunch now, and B) I don’t have salary data for women, so I can’t draw irrational conclusions.
Obvious Reason the Men Won
The obvious reason the U.S. men won was that the cumulative NHL salaries of players on the U.S. team exceed the cumulative NHL salaries of the players on the Canadian team – for the first time.
Efficient Markets Theory implies that the team with the highest cumulative payroll will always win. Duh.
In previous Olympics (that included NHL players), the Canadians had a higher cumulative payroll – and they, of course, beat the Americans.
(SIDEBAR: Average mortgage rate is 5.99% today – a low we have not seen since 2022).
But What if the Government Protected Us From Unfair Hockey?
I have a friend who can never get enough government protection – and he was quite upset with me way back in 2010 when I assured him that Canada would win gold against the U.S. because of Canada’s higher payroll.
My friend: “Jay…markets are not that efficient, and you know it…”
So, I explained to him that markets ARE amazingly efficient unless government gets involved.
What if the Government Was as Involved in Hockey as It Is With Mortgages?
- Forcing Only One Team To Get Licensed? What if the government wanted to force only Canada to get Hockey Licenses to protect consumers from excessive hockey exposure? Canada’s poor players would have to spend time studying for their hockey licenses instead of practicing, and worse, many might flunk the test altogether.Welp, that is exactly what happened after 2008, when every loan officer (not employed by a commercial bank) had to get an NMLS license, but every commercial bank loan officer did not. Note: The commercial banks scored a lot more goals for years…
- Forcing Fans To Sign Complex Disclosures? What if each hockey team had to make its fans sign complex disclosures before every shot on goal? A) The games would last three weeks to a month, and B) The team that is better at quickly and accurately banging out disclosures will have a huge advantage.And yes, this happened in the mortgage industry as disclosure requirements became more onerous and changed markedly. The 2015 TRID changes are the best example, and this actually benefited the nimbler mortgage banks over commercial banks.
- Forcing Hockey Teams To Add More Norwegians (Disparate Impact)? What if the government decided that the hockey teams were not adding enough Norwegians to their rosters? Even if the hockey teams never once considered the ethnicity of their rosters, they would have to start doing so to avoid enormous fines. This, of course, would result in sub-par hockey.And yes, this happened repeatedly in the mortgage industry as firms were hit with huge fines and even put out of business if their marketing did not apply to all groups equally – irrespective of intent.
- Fannie and Freddie Financed Hockey Teams With 5% Down & Tax-Deductible Interest? There are 32 NHL teams with an average value of $2.2 billion. BUT, if Fannie and Freddie were allowed to finance NHL teams, there would be 500 teams and the quality of play would be awful. But – each team would still be worth $50 billion because the government would declare hockey a national treasure, and there would be numerous subsidies at all times to prop up hockey.There would, of course, be hockey bubbles, and the government would bail out everyone except for the fans who paid for season tickets for defunct teams.
- Trump Takes Equity In Big Puck? What if Mr. Trump had the government take an equity position in a puck manufacturer? The government would soon mandate that hockey be played with five pucks on the ice at all times – and puck prices would shoot up too as no other puck manufacturers would be allowed to compete. But then, when a Democrat takes back the Presidency, the pucks would have to be sustainable, solar-powered, and carbon-neutral too…pushing puck prices up to $10,000 each.
NOTE: Efficient Markets Theory does not work at all in Major League Baseball. Over the last 20 years, the team with the highest payroll only won it all twice. But, if I admitted that up front, I wouldn’t have had a blog…
