Year: 2008

Evolutionary Aero Engine Concepts

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The May 12 issue of Aviation Week, has some interesting articles on various advanced engine technologies under development in Europe (Paid Subscription Required) under the sobriquet Newac (new aeroengine core technology).

As opposed to some of the other initiatives, such as P&W’s geared fan, this is focusing on increasing the efficiency of the core, not the fan.

A basic description of the technologies that they are looking at are very aggressive active clearance management between the case and the turbine blades to minimize losses, the use of intercooling (blue in picture above) and heat exchangers (green in picture above) increase turbine inlet temperatures while keeping flame temperatures lower (less NOx, also called “exhaust heat recuperation”), and aggressive management of cooling air to minimize losses.

The intercooling and recuperation are actually not new technology, they have been used in stationary turbines for years, but its application to aero engines is new.

More on the Thielert Collapse

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Daimond is looking at developing its own aircraft diesel engine as an alternative to the Thielert engine, as a result of of the Bankruptcy of the engine manufacturer, and Cessna has delayed its turbodiesel Skyhawk.

I’m still not sure what was involved, the founder of the company was terminated for some sort of accounting shenanigans, and I’m not sure what, though some of the comments in the various aviation fan boards there are indications that the company was getting hosed by warranty claims.

Freddie Mac Using Funny Accounting…Only I’m Not Laughing

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It appears that Freddie Mac has made some significant changes to its accounting system, to the tune of 2.6 billion dollars.

“They put a lot of lipstick on this pig including several accounting changes that have given them a one time step-up,” said Josh Rosner, an analyst at independent research firm Graham Fisher & Co. in New York.

Only they are implicitly backed by the taxpayers.

Once again, it’s, “Level 3 assets, a category that indicates the holdings are so illiquid that they can only be priced using the firm’s own valuation models.”

There’s that word again, illiquid. And it’s the valuation model for level 3 assets that got us into this mess.

They’ve just found a pile of crap, and concluded that there is a pony beneath.

Why Mortgage Lenders Don’t Negotiate With Distessed Home Owners

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The answer is because they actually have no contact with those homeowners.

Most interaction on the loan is being done by servicers who were hired to process payments, not the holder of the loan. It’s a fairly low margin business, 0.25% of the principal, and a lot of the profit is in things like late fees, etc.

They don’t negotiate because their skin is not in the game, and because it is more profitable for them not to negotiate.

Capitalism 101.

Future Combat System Facing Funding Cut

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The House Armed Services Committee is sticking with the 5% cut in funding recommended by the Airland Subcommittee, and it’s likely that the house as a whole will stick with the cut.

Good idea. While some of the technologies are intriguing, the program as a whole is bloated, over ambitious, over budget, and over schedule.

Full disclosure, I worked on FCS from 2003-2006.*

*Yes, I have worked everywhere. Maybe I can’t hold down a job, but more likely this has been my role as “technical hit man”, where you are parachuted in to take care of a specific need.

Finding a Solution, and Applying it to Narrowly

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In looking at the role of speculation on oil prices, a Senate committee is looking at increasing margin requirements:

“I think there’s an orgy of speculation that we ought to be deciding to do something about,” said Sen. Byron Dorgan, D-North Dakota.

He and others raised the idea of changing the margin or amount investors must pay up front in order to engage in oil speculation. It would be a hugely significant change in financial markets. Dorgan said stock speculation requires a 50% margin, but commodities like oil demand a much lower threshold, just 5% or 7%.

If you look at the credit crunch generally, the real problem is excessive leverage. Margins should be raised to the 75% range, where they were for stocks before the Fed cut them around 1980, and they should be applied to all investments.

More on the Inanity of US Inflation Statistics

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Barry Ritholtz notes that in addition to all the various hedonic ajustments, the CPI says that the average US consumer spends only 7.66% of income on food, as opposed to the numbers of 10% for the UK, 15% for the rest of Europe, and 18% for Japan, which is patently absurd.

Ritholtz states that the 4 bottom quintiles spend closer to 20%, which sounds about right.

According to Wiki, the median family income in the US in 2006 was 48,201.00, so let’s round to 50K.

8% of 50K would be $4,000, 20% of 50K would be $10,000. Assuming 3 meals a day and a 4 menber family over 50 weeks, we get $0.95 and $2.38 per meal respectively. The former is living exclusively on Kraft Macaroni and Cheese.

The fact is that when things like snacks, fresh vegetables, etc. are factored in, the per food cost probably gets closer to $5.00/meal for total food cost for a family of 4.

Is Canada Upgrading Its Military, Or Is Stephen Harper Downgrading Its Social Safety Net?

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Stephen Harper is is looking to double the Canadian Defense budget over the next 20 years.

While there are doubtless some needs driven by the wear and tear from operations in Afghanistan that need to be addressed, this proposal is far more ambitious, calling for extensive upgrades in weapons systems capabilities, most of which have very little correlation to any future needs, which would be in a peacekeeping/counterinsurgency scenario, where legacy systems with communications and networking upgrades could meet the needs of the conflict just as well as new equipment.

In all fairness though though in a counter insurgency scenario the roughly 10% increase in force size may make sense.

We already know that Mr. Harper is very much of the Western Province (Alberta) tradition, which by Canadian standards is rather wingnutty, so I wonder how much of this is driven by a real need to upgrade forces, since any foreseeable conflict would resemble Afghanistan, where the existing systems are more than adequate, and how much is an attempt to pre-allocate money so it won’t be available for things like the national health service and public education.

There is also a 3rd explanation, which is that if there is a common thread among right wing parties world wide, it is a fetish among the about the creation and maintenance of large military establishment, even when threats do not justify this.

It may also be a combination of all three.

A Good Article on Modern Strategic Camoflage

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In the Washington Post, of all sources. Basically, they describe the techniques used by Syria to conceal their nuclear site*, and make it clear that various nations are becoming increasingly savvy about satellite reconnaissance, and how to conceal large items from this.

They used techniques such as burying power lines in trenches, embedding cooling towers in walls, etc.

It’s a good read.

*Yep, it appears that I was wrong when I ruled this out.

Cablevision Buys Newsday From Tribune

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Cablevision outbid Rupert Mordoch on the deal, which was driven by the problems that Sam Zell had with the debt involved in picking up the media chain.

This is, I think, a good thing. Murdoch wanted Newsday as a financial backstop to the New York Post, which is in a real way his US flagship newspaper*, which would have been bad for its readers.

Newsday is a pretty good mid-market newspaper, and it would have been cannibalized by Murdoch.

*Yes, there is the Wall Street Journal, but it’s not in an philosophical sense a Murdoch paper, which is right wing tabloid.

Scrapping the Zumwalt

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Gene Taylor (D-MS), hairman of the House Armed Services Committee’s seapower subcommittee, is proposing scrap the Zumwalt class (DDG-1000), and replace it with an additional LPD and two resupply ships. The senior Republican on the subcommittee, Rosco “Neanderthal” Bartlett (R-MD), agrees.

I tend to agree. The Zumwalts are too large, too expensive, and too ambitious. They add nothing in overall capability, their weapons and sensor capability will not differ from their predecessors, so all their size gets is a larger store of weapons, at the cost of reduced coverage, since more smaller ships can cover different areas simultaneously.

They are also both pushing for more nuclear combatants, including a scheme to make the Arleigh Burke’s nuclear powered, which I’m rather dubious of.

Countrywide Shareholder Lawsuit May Proceed

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Gee, what makes you think that the people running the lender were more interested in lining their own pockets than running a business competently?*

Directors and officers of Countrywide Financial, the beleaguered mortgage lender, must answer shareholder accusations of insider trading and an overall failure to monitor lending practices that led to the company’s collapse, a federal judge in California has ruled.

Rejecting the arguments of Countrywide executives and directors that they were unaware of lax loan operations that led to ballooning defaults, Judge Mariana R. Pfaelzer of Federal District Court in Los Angeles ruled Tuesday that she found confidential witness accounts in the shareholder complaint to be credible and that they suggested “a widespread company culture that encouraged employees to push mortgages through without regard to underwriting standards.”

Plaintiffs also identified “numerous red flags” that would have warned directors of increasingly risky loans made by Countrywide, according to the judge, who rejected a motion to dismiss the suit. “It defies reason, given the entirety of the allegations,” Judge Pfaelzer wrote, “that these committee members could be blind to widespread deviations from the underwriting policies and standards being committed by employees at all levels. At the same time, it does not appear that the committees took corrective action.”

Hope that these folks are left completely destitute. They should spend the rest of their lives in homeless shelters and gutters.

*The interesting thing about this is how many people are shocked by this. Capitalism 101 is that people act for their own benefit, but somehow the senior executives are exempt from all this?