Month: April 2008

Economics Update

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It’s official, we’re in a recession, because Bush is denying that we are in a recession – Apr. 22, 2008.

For more direct evidence of a recession, we have American drivers cutting back on driving and gasoline usage. When Americans stop driving, it means that the recession is here…big time.

In energy, oil broke $119/bbl, $110/bbl now appears to be the new $100/bbl

Across the border, Canadian Central Bank cut rates by 50 basis points, but even so, the Canadian dollar is still above parity with the US dollar, but they are definitely seeing the fallout from the US downturn.

In other currency matters, the dollar weakened to above $1.60:€1.00, though it’s now about $1.5992.

At the beginning of the year, it was $1.48 or so.

In things related to banking and real estate, we have to start with the elephant in the room, that GSEs Fannie Mae and Freddie Mac are looking increasingly at risk, and a potential bailout would run to over $1 trillion, which might threaten the US government’s AAA rating.

Generally, bank profits are tanking, so it should come as no surprise that banks are retrenching.

Notably, Bank of America will be ending subprime operations, and tightening generally on mortgage standards, which makes it hard to understand why it’s buying Countrywide.

Citi needs more capital, so it’s offerring $6.2 billion in hybrid bonds, at 8.4%, with an A2 rating.

Hybrid bonds are….are….Ummm, a sort of hybrid between preferred stock and bonds…I’m confused, and they are described as “innovative”. I’ll try to get more information, but in the meantime, run away.

Finally, the Fed bailout of banks continues apace, reaching $360 billion with the sale yesterday.

No

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I believe that the Ken Silverstein’s analysis in Harpers Magazine, that “

The only way to reach a political settlement in the Middle East is for an American president to pressure Israel to make concessions.

” is deeply wrong.

Negotiations are an artifact of power, both current and future, and frequently neither side is completely sure of their power, particularly in the future.

By providing the realistic possibility of a deus ex machina, the intervention of the US, EU, and Russia actually make realistic negotiation less likely, because at their core, negotiations are an artifact of power, and by adding an external pressures, you distort the positions held by the principals.

One need only look at the “mediation” performed by Thabo Mbeki in Zimbabwe to see the downside of this.

Because the Palestinians and Israelis expect an external intervention, any, “last best offer” is likely to demand far more than they would otherwise, because both sides expect that a “road map” will favor the Palestinians, so an Israeli keep concessions in their back pocket, because they expect that they will be pushed beyond their final offer, and the Palestinians keep concessions in their back pocket for the same reason.

Certainly, the US (and EU, and Russia) can in some manner or another take upon themselves to act as guarantors of a final status agreement (a peacekeeping/border force, economic aid for an eventual Palestinian state, etc.), but when you have two negotiating that have an expectation of significant external intervention, it interferes with the basic function of negotiations.

I would also note that Carter’s trip comes exactly the wrong time. With 9 months left in the Bush regime, and the rest of the world considering Bush and His Evil Minions™ both disastrously incompetent and bellicose, nothing is going to move, because both sides in this dispute cannot see his successor as being any worse.

Senator, You are a Clueless Jerk, the Not-Lieberman Edition

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It’s not Lieberman, but it should come as no surprise that I am referring to the distinguished gentleman from Delaware, Joseph Biden….What the heck is it with Senators named “Joe”?

A prominent Senate Democrat on Wednesday said federal and local police should use custom software to monitor peer-to-peer networks for illegal activity, and he wants to spend $1 billion in tax dollars to help make that happen.

Of course, you have the obligatory screaming about Child Pr0n and terrorism, but it’s really about donations from the RIAA and the MPAA.

Additionally, the tracking method proposed, using MAC addresses, is fairly easily spoofed.

Moron.

A plea to both campaigns: Please do not select this blithering idiot as your Vice Presidential running mate.

Good Analysis of the Campaign

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Big Media Matt nails it, Hillary Clinton is a long shot, and so she will take some hail Mary’s.

When you consider the fact that Al Gore first raised the Willie Horton issue in 1988, and the shots that Gephardt took at Dean in Iowa, and the comments by Dean that Kerry was using Republican tactics, it’s still pretty mild stuff, but there will be some poo flinging.

That being said, every piece of poo flung by her is less likely to be a story in November, because it’s old news.

US May Prevent Shipments Eurofighter Typhoons to House of Saud

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It appears that the issue here is not technology transfer, but the corruption allegations swirling around the deal that have put the transfer at risk.

The Department of Justice has problems with the roughly $1 billion in “consultancy fees” to Prince Bandar, aka “Bandar Bush”. See here, here, here, here, and here for my earlier thoughts on this.

I don’t see anything happening to Prince Bandar until after January 2009, because of his remarkably close ties to the Bush clan, and truth be told, I don’t see anything beyond embarrassment happening to him until the violent revolution that seems inevitable in the lands of the House of Saud.

Tanker Update

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Here is some interesting scuttlebutt on the tanker challenge.

Two items, one is that the USAF has moved to have the GAO dismiss the challenge in its entirety, which is not unexpected, and the second is that USAF “Red Teamed” the bid process in response to the prior contract, the lease deal which imploded in corruption convictions and jail times for USAF and Boeing officials.

Well, the NorGrum official told me that for a month and a half, the Air Force convened a Red Team of the Army and Navy’s top procurement officers, staffers from Pentagon acquisition chief John Young’s office and Pentagon IG officials at Wright Patterson Air Force base. The team was tasked with poking holes in the contract process to make sure there could be no protest from either side on how the Air Force handled the competition.

I believe this report, because after the first tanker contract came down, and Boeing screwed it up by getting too greedy, which is what got the investigation going in the first place, I could see people from the top to the bottom of the chain of command having, “Don’t f&^% it up this time,” as an imperative

Great MoDo Takedown

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Maybe the best ever, but deconstructing the bitchy bitter and generally stupid woman that is Maureen Dowd is a very rich lode of material.

In any case, Kathy G., who describes herself as “A shrill feminist, bleeding heart liberal, hardcore policy wonk, political junkie, ardent cinephile, and lover of 19th century novels.” does a very good job in explaining what is wrong with MoDo. An excerpt:

But there’s another problem with the opening sentence of the Dowd column. “I’m not bitter.” Oh Maureen — who the hell do you think you’re kidding? The woman positively soaks in bitterness. Marinates in it. It oozes out of her pen and pours into just about every damn word she writes. Her bitterness has utterly corroded her soul. It’s turned her into a twisted freak whose chief pleasure in life seems lie in vicious, barking-mad attacks on the only people capable of ending our long national nightmare — the Democrats. Seriously, if there is any other single person in the media who’s been a more powerful enabler of Republican high crimes and misdemeanors than Modo, I don’t know who it is.

No go read.

And could someone explain to me how the hell she ever got a job as a columnist? Dowd writes about things like health care policy with all the depth of a girl who wants to be in the “in crowd” in high school talks about some lesser being’s choice in shoes at the prom.

Classics in Congressional Oversight of Defense Procurement

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I have no clue why I missed this the first time, but I came across Steve Trimble’s Flight International blog post, and I realized that this is a classic of its kind.

Truth be told, Congressional oversight of defense procurement is not a particularly broad category, but this classic. Keith Olbermann should be notified.

The background: the USAF and Army aviation are both purchasing same cargo aircraft to do transport to austere airfields, the Joint Cargo Aircraft (JCA), and the aircraft selected was the Alenia C-27J.

It’s basically to serve the role as the C-130’s little brother, see pic:

The problem is that their budgets Army is saying that it will cost $30 million a pop, and the USAF is claiming that it will cost $60 million a pop.

Obviously something is very very wrong here. While differences in cost between services can result from differences in how life cycle costs are viewed, with one service looking to assign more of the lifetime costs to the initial purchase price than the other, a difference of 100% simply does not pass the smell test.

There are two obvious reasons that this might happen:

  • That one service is attempting to bring unrelated budget items in the procurement.
  • That one service is attempting to kill or minimize the purchase.

Given that this is a joint program between the USAF and the US Army, my money would be on both. They like bigger planes, and the thought of their sharing a program with the Army must give them the hives.

So Neil Abercrombie (D-HI) notices this discrepency, and decides to ask the USAF acquisition chief, Sue Payton, about this.

In any case, here is the meat of the exchange:

REP. ABERCROMBIE: Ms. Payton, you are right on the edge of getting into the Blues Brothers.

MS. PAYTON: Sorry sir, I don’t mean to be there. I —

REP. ABERCROMBIE: That’s when — when Jake says, Bill, but you lied to us about the band. They lied to me when I was in prison about the band. You haven’t kept the band together. He goes, I never lied to you. I bullsh$#ted you a little bit, but I never lied to you.

MS. PAYTON: Sir, I would never give any misinformation —

REP. ABERCROMBIE: No, you are saying that the Army is doing that.

MS. PAYTON: No, sir. I believe that —

REP. ABERCROMBIE: You are trying to finesse us. You are telling me they’ve got a cost that they know about, but they are not telling us about it, and are trying to pretend their unit cost and given information to us is the same as your unit cost, and they know better.

(Emphasis mine)

Somewhere out there, John Belushi is smiling.

You can see the rest of the exchange here, and Ms. Payton gets the worst of the exchange.

OK, I Think That This is Wicked Neat

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But I’m an engineer, so a lot of the rest of you may not understand why I think that the chemical vapor deposition (CVD) diamond coatings on tools is neat.

It’s been “just around the corner” for some time, and the fact that we are seeing a commercial application (F-35 wing skin cutting), with tool life increasing by a factor of is interesting.

I’m wondering if we’re going to start seeing CVD diamond on heat sinks, as it’s the most thermally conductive substance on earth.

Off till Monday Evening

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Shabbos is coming up, followed by the two Yom Tovim for the first two days of Pesach, and since my Orthodox mother-in-law is here for the holidays, no use of computers…or cars…or light switches for the duration.

That being said, let me give both of my readers a piece of advice. If you take it, you will never regret it.

Buy kosher for Passover Coca Cola!

You can identify it by looking at the lid. They are typically yellow, though not always, but the non KFP stuff will simply have an OU on the lid (A U inside the O, a symbol of the Orthodox Union kosher cert), while the KFP stuff will have an OU-P on the lid (-P for Passover).

It is 100% cane sugar, none of that Corn Syrup crap.

Bush and His Evil Minions™ Break the Law….Again

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Why am I not surprised.

This time though, it wasn’t to spy on political opponents find terrorists, and it wasn’t to torture children gain important intelligence.

This time, it was to make sure that children did not get medical care, because the insurance companies contribute to Republicans.

The Bush administration’s limits on expansions of the State Children’s Health Insurance Program (SCHIP) are unlawful, according to Congress’s investigative arm.

The Centers for Medicare and Medicaid Services (CMS) unlawfully bypassed congressional review when it issued a directive to states in August alerting them that federal authorities would seek to restrict raising the income eligibility level for the program, the Government Accountability Office (GAO) concluded in a report issued Thursday.

**Sigh**

An Insight into the Clusterf%$# in Basra

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It now appears that Petraeus has had a plan of a massive US offensive in Basra for some time, and Nouri al-Maliki, fearful of the political blow-back from US operations there, launched his own campaign last month.

The last three paras reveal that the politics here are Byzantine:

Bush administration suspicions of al-Maliki’s intentions could not have been eased by the fact that a delegation of pro-government parties traveled to Iran to ask the commander of the Iranian Revolutionary Guard Corps (IRGC) to negotiate a ceasefire with the Mahdi Army. That ploy move, which did result in a tenuous ceasefire, raised the possibility that al-Maliki intended from the beginning that the outcome of the Basra operation would be a new agreement that would prevent the deployment of U.S. and British troops to fight the Mahdi Army during the summer.

Bush administration officials have been asserting that the most important thing about the Basra operation is that al-Maliki is now convinced that Iran is really an enemy rather than a friend. But al-Maliki’s Apr. 7 interview with CNN’s Robertson made it clear that he has not budged from his position that his government’s interests lie in an accord between Iran and the United States — not in taking sides against Iran.

“We will always reject the idea of any side using Iraq as a launching pad for its attack on others,” said al-Maliki. “We reject Iran using Iraq to attack the U.S., and at the same time we reject the idea of the U.S. using Iraq to attack Iran…”

Why the hell are we in there again?

Sadr City, Warsaw Ghetto, What’s the Dif?

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Any answer to my question?

U.S. Begins Erecting Wall in Sadr City
By MICHAEL R. GORDON

BAGHDAD — Trying to stem the infiltration of militia fighters, American forces have begun to build a massive concrete wall that will partition Sadr City, the densely populated Shiite neighborhood in the Iraqi capital.

The construction, which began Tuesday night, is intended to turn the southern quarter of Sadr City near the international Green Zone into a protected enclave, secured by Iraqi and American forces, where the Iraqi government can undertake reconstruction efforts.

This is what passes for moral leadership under Bush and His Evil Minions™.

I want my country back.

Economics Update

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Current position of Dollar with Regard to Euro

The rebels in Nigeria’s delta region just bombed an oil pipeline, and in response, oil hit $117/bbl before settling at $116.69.

In addtion to lower levels of employment, hours worked by those still employed are also down, so there are fewer people doing less work to produce goods and services.

Both Citi and AT&T are announcing big layoffs because of losses (Citi), and “increased competitive pressure (AT&T).

It’s a recession already.

The Fed just auctioned off about $25 billion for non-magic beans, as a part of its ongoing Wall St. bailout.

Yesterdya, I talked about new home sales falling, today, it’s existing home sales falling 13%, but north of the Border in Canada, which has generally had a better regulated loan market.

Finally, a picture, courtesy of Paul Krugman showing the increase in the LIBOR-OIS spread since this all started:


The second image is actually a bit scarier, because it shows a longer time frame, and it shows that the spread is completely outside of historical norms.

I Miss Molly Ivins

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Her take-down of Camille Paglia should be read by every person in the world.

All 6+ billion.

Tracing Paglia’s intellectual ancestry is a telling exercise; she’s the lineal descendant of Ayn Rand, who in turn was a student of William Graham Sumner, one of the early American sociologists and an enormously successful popularzier of social Darwinism. Sumner was in turn a disciple of Herbert Spencer, that splendid nineteenth-century kook. Because Paglia reasserts ideas so ingrained in our thinking, she has become popular by reaffirming common prejudices.

Go read.

I miss Molly. She was the best thing to come out of Texas since….maybe ever, and both my kids were born there.

A Train Wreck in Student Loans is a Good Thing™

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Alfred Lord, the CEO of Sallie Mae*, is saying that Sallie is looking at a potential “train wreck” in student loans, because no one is buying their repackaged debt, and because federal law has reduced the subsides

This is a good thing. The student loan business is a racket. It costs both the student and the taxpayer more than direct loans from the government.

These loans have special protections, they are not dischargeable by bankruptcy, and the juxtaposition of subsidies and government guaranties to the lenders make it a truly parasitic part of the financial system.

I should note that, God help me, I actually agree with David Frum’s position that the student loan/grant process is, and creates unconscionable costs to higher ed, because there is a federally maintained never-never land loan plan, which cushions the effects of inflation.

Where he and I differ is that he suggests, or at least strongly implies support for, ending the program with no replacement†, while I think that the government has sufficient power as lender for student loans to enforce some realistic price controls.‡

*Sallie is not a Government Sponsored Entity (GSE) like Fannie and Freddie. It was, but it found the student loan market so lucrative that it successfully lobbied Congress to privatize in 2004, which is why the name sounds like s GSE’s name.
†Something he would love as a former fellow atthe racist Manhattan institute. It would mean that his children would have a student body much more comfortable to him.
‡Oh yeah, while you are at it, do something about the inflation in college text books too.