Year: 2008

GM to Use LiIon Batteries in Hybrid Car Models

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I think that it’s clear that the lithium-ion batteries chosen by GM are superior to the standard NiMH, they are more efficient and lighter, but there are problems.

The article mentions overheating, but they actually heat up less in use.

The real problem is what is euphemistically called “rapid disassembly” in battery manufacturing*, which occurs when batteries overheat or are overcharged.

Basically because of the chemistry of a LiIon battery, these can cause dendrites, basically metal whiskers, to form between anode and cathode, shorting out the battery and discharging all of its energy in a matter of seconds.

Think about the Dell exploding laptops on crack. It looks a lot like a flare going off.

Of course, this would not be a problem with a properly designed system, but we are talking about General Motors, the folks who used the same aluminum alloy as Mercedes Benz for its Vega engine, but but chose a coolant that corroded aluminum.

I’d wait for at least the 3rd model year before buying.

*I worked for a battery manufacturer for a while.†
†And now my regular readers, both of them, are wondering if there is any field of endeavor where I haven’t worked. Well, yes. High finance. If I had worked on that, I’d have the money to spare for a domain name.

GAO is on Juncket to Caymans

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They are actually going to the Cayman islands on legitimate business…no…really…I mean it.

Congress had decided to go after tax havens, and they have sent GAO investigators, and they will be visiting the infamous Ugland House, corporate headquarters for 12,748 companies.

Good for Congress, and good for GAO, it’s investigative arm.

If the Republicans were in charge, this would never have happened, because they believe that, “only little people pay taxes.”

FWIW, offering bounties for tax cheats, as German investigators did with records of trusts in Lichtenstein, would be a very good thing.

SAS Saying Old Fuel Guzzler Auircraft are Cheaper to Operate

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The Scandinavian airline SAS: is saying that its MD-80s would still be cheaper to operate, even if the cost of fuel doubled.

It doesn’t make a whole bunch of sense, given that the cost of oil is at an all time high, until you look at this quote:

n its newly-released annual report SAS Group says the effect of capital costs means the MD-80 is SKr5-10 million ($0.8-1.6 million) more profitable to the carrier than newer aircraft.

Capital costs for the type are SKr20 million lower, more than offsetting the SKr10-15 million in higher fuel and maintenance costs.

…

n its newly-released annual report SAS Group says the effect of capital costs means the MD-80 is SKr5-10 million ($0.8-1.6 million) more profitable to the carrier than newer aircraft.

Capital costs for the type are SKr20 million lower, more than offsetting the SKr10-15 million in higher fuel and maintenance costs.

(emphasis mine)

This is interesting not from an aviation perspective, but from a larger economic one.

It implies one of two things:

  1. That airlines going for the latest and greatest hardware are slitting their own throats, and that capital costs completely blow away operating costs.
  2. That the cost of capital today is high enough that upgradeing even with the historically high fuel prices, simply does not make economic sense.
  3. That they expect these planes to be used for surges in demand for seasonal and other reasons, and won’t the full utilization, and capital costs dominate.

The first reason is simply not credible. If it were, we’d all still be flying DC-3s, or at least upgrades 707s and DC-8s, since they take people to the same places just as fast.

That leaves reasons two or three, or reasons two and three.

From a macroeconomic standpoint, however, it’s reason 2, the cost of capital, that is most interesting.

This may very well be a major capital purchase that is being delayed because the capital markets have frozen up. That the increased risk premium that has resulted from the credit crunch simply make it too expensive to upgrade to better equipment.

That is how a credit crunch creates a recession, which makes the credit crunch worse.

It’s Getting Ugly Over Tanker Decision

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I do not doubt that the A330 was technically superior.

The airframe and avionics are newer, the manufacturing techniques are more advanced, and the airframe is larger.

The reason I did not expect it to win was because of the USAF generals who wanted sweet retirement packages with Boeing, and the inevitable outrage from Congress.

Well, the sh%$ storm is here, care of Eisenhower’s military-industrial complex.

You can get a good Cliff Notes version of what is going on here.

Basically, a few years back, Boeing offered a lease deal which was really pretty awful. This deal was negotiated by a Pentagon official who was also negotiating with Boeing for a job as a VP.

John McCain looked at the deal, and smelled a rat, and for once, and it’s rare for him, he was right, so the contract was canceled, and a new one was put out for bid.

And now EADS has won with a clearly better plane, one that is already on order from a number of countries.

This won’t stop the poo from flying.

Economics Update

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first, let’s start off by saying that Tom Toles is a bloody genius:

We have Citi on a path to cutting 30,000 jobs, and we have Dubai International Capital LLC, a sovereign wealth fund saying that losses will get worse, and they will need another infusion of capital.

FWIW, it was Abu Dhabi investors who just bailed them out a month or so ago, not Dubai.

In real estate, they’ve just discovered that
the real estate collapse is making first-time buyers less likely to buy.

In related news, water is wet, and the sky is blue.

In truth this is hardly surprising when even people like Ben Bernanke, who has done his best to avoid panicking the markets is saying that foreclosures will increase, and house prices will fall for a while yet.

Ratio of home ownership to rental costs are near a historic high, so why would someone want to buy into a depreciating asset?

Meanwhile, we are finding that the, “extra yields investors demand on bonds backed by assets from commercial mortgages to credit cards rose to records”, recently, despite the fed rate cuts, leading a senior managing director at an investment firm to quip, “People are calling it financial Ebola“.

Translated into language for ordinary people, this means that people are requiring a much higher markup on either the prime rate, or the Fed funds rate, before they make loans.

Yields on three-year, AAA rated credit-card bonds with floating rates rose to 75 basis points over the London interbank offered rate, up from 40 basis points at the start of the year, according to Deutsche Bank AG data. Spreads over three-year swap rates for three-year, AAA rated fixed-rate auto-loan securities rose to 140 basis points, up from 75 basis points. The average spread over U.S. Treasuries on AAA rated commercial-mortgage securities climbed to 364 basis points, from 167 basis points on Dec. 31, according to Lehman Brothers Holdings Inc.

A basis point is 0.01 percentage point.

People are increasingly unwilling to lend money, and demanding higher returns, because they have no faith that it will be paid back.

Speaking of being paid back, Fremont General just defaulted on $3.15 billion in subprime mortgage loans that it sold a year ago.

The creditors are demanding immediate repayment, because Fremont’s “tangible net worth” (assets minus liabilities) have dropped below $250 million, meaning that they have violated the terms of the original sale.

Finally, we have Jon Moulton, the head of private equity firm Alchemy Partners, pretty much guaranteeing that, “There will be large private equity failures this year“. From the context he means both deals and firms.

Consequences of the Supreme Court’s Redefintion of “Obvious”

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The people just won one, where the Federal District Court just struck down Bayer’s patent on Yasmin, a contraceptive.

The patent, which expires in 2020, is on a formula for the compound drospirenone in which the particle size was reduced so it could be absorbed by the body more quickly before it is exposed to stomach acid. U.S. District Judge Peter Sheridan agreed with Barr that the decision to reduce the particle size would have been obvious to any researcher.

Hell, it’s obvious to any cook too.

Why else would they sell powdered sugar. Smaller particles dissolve more quickly.

Judith Regan Sued By Her Lawyers

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Judith Regan, the woman who engaged in an affair with Bernie Kerik in the in an apartment overlooking ground zero, an apartment that was intended for use by the rescue workers, has been sued by her lawyers for non-payment of fees.

They were the ones who represented her after she got canned by Rupert Murdoch.

I don’t have much to add except for personal Schadenfreude. I just don’t have enough snark in me today.

With Friends Like These…..

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Specifically Penny Pritzker, Obama’s national campaign finance chair.

It turns out that she was chairman of the board, and from all accounts an engaged and active one at that, of the, “borderline shady and failed Superior Bank”, which collapsed in 2002.

It appears that these guys were the folks who created the so-called innovations that have led in large degree to the subprime mess, and it led to their downfall in the middle of the most bullish housing market in history.

See here, here, and here.

If there is one lesson to be had from the Bush administration, it is look at who the candidate keeps around him.

I agree with Earl Ofari Hutchinson’s assessment, “If Obama’s for real on the sub-prime crisis, he’ll dump his campaign finance chair“.

Melanie Morgan Gets Well-Deserved Boot

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Citadel Broadcasting, which owns her station, KSFO, had declined to renew Malanie Morgan’s contract, see here and
here.

I wish that it was a sign that there are going to be limits to how scummy you can be, but a more likely reason is that they were trying to save cash.

Citadel is losing money hand over fist, and is also cutting extensively at their Chicago station, WLS, in what is described as bloodbath.

Kibosh Kommitted on Kansas Kangaroo Kourt*

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Johnson County District Attorney Phill Kline, who was defeated as Kansas AG because of his jihad against planned parenthood, has failed to get a grand jury to indict the clinic in Overland Park, KS.

This guy is like 0 for 12 now, with hundreds of thousands if not millions of taxpayer dollars down the hole.

Perhaps its time for the voters to remove him from public life.

*Yes, it’s immature. And you are surprised by this?

“Just a Slip of the Tongue”

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Well, we now have a report of at least one call from a Clinton phone bank where the caller screwed up, either intentionally or not, Obama and Osama.

It could be an accident, it could be on purpose, but whoever did it needs some time off.

I have a similar story.

When I was phone banking Wisconsin for Howard Dean in 2004, and I had developed my own patter, about Howard Dean was not one of those “blow dried and focus grouped politicians”.

I thought that I was pretty clever, and then I was talking with a nice lady, and said that he wasn’t one of those, “blow jobbed and focused grouped politicians”.

As soon as it came out of my mouth, I started apologizing profusely, and this woman, bless her heart, said, “Hon, I know what you meant, but maybe you should take a little rest.”

I hung up the phone, put my head down, and giggled helplessly for about 15 minutes.

Another Twist in Goolsbee/Canada Saga

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It appears that the sequence of events was rather different from what I had originally thought. Spefically, it appears that the Canadian consulate contacted Goolsbee and asked him questions, to which he responded.

They apparently did the same with Clinton’s and McCain’s economics gurus, and then they wrote up the responses and forwarded them upstairs, but once they reached the political levels of government *cough* right winger Canadian PM Steven Harper *cough*, they were leaked to do damage, because Harper Bush’s other poodle.

Goolsbee is largely blameless in this, though I’m not sure how much that means in presidential politics in the US. He still needs to stay away from the media for a few weeks.

Wanker of the Day: John Aravosis of Americablog

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John, for those of you who don’t know, is the proprietor of Americablog, and he has a post on the election titled What will the Republicans throw at Hillary Clinton in the fall?

Generally, I highly recommend his blog, just not this post:

…. But I’m not going to detail those things today because I’m, surprisingly, still pulling punches with regards to what I write about Hillary. I don’t want to damage Hillary should she become our nominee, as increasingly unlikely as that appears. I don’t want to write about very real scandals in Hillary’s past, scandals that we will be forced to revisit for the next 8 months, and 8 years. I don’t want to write about the rumors about Bill that no one has written about to date, even though the rumors include lots of details which are at least just as true as Obama being a Muslim. While Hillary’s campaign is pushing known lies about Obama, such as the “Muslim” connection, most of the stories about Hillary are anything but lies. They’re real stories that she will have to discuss publicly, again and again and again, to her and our party’s detriment.

But I’m not going to be discussing the details of those stories today because I don’t want to make our candidate damaged goods in the fall. You will notice that neither Obama’s campaign nor Obama’s official, or unofficial, surrogates are talking about the Clintons’ past or present scandals, the Clintons’ negatives, what a Clinton run for the presidency will to Democratic congressional races and governor races across the country. The Clintons are counting on the fact that none of us will write about their negatives, because we’re too nice. So they can get as dirty as they want, with impunity.

He then goes on to say that he will unload if Clinton does not get 65%.

This is bull%$#@. I disagree on any number of levels:

  • The empirical evidence, specifically the long primaries in 1976 and 1992 when the Democrats won the elections, indicates that prematurely wrapping up the nomination process does not create wins.
    • Just look at 2004. John Kerry was consistently ahead of GW Bush until he had locked up the nomination.
    • For that matter, look at 2008, where the only way that John McCain gets any coverage, now that he’s pretty much nailed down the nomination, is when a right wing bigot endorses him.
  • Clinton’s and Obama’s attacks on each other are really pretty tame, that “3am phone” ad is rather mild.
  • I’d like to see the Pennsylvania primary used to build the party there, and that will happen only if the primary means something.
  • At this point, we are talking about a 5-6% difference in delegate count.

I don’t want a brokered convention, but the fat lady has not sung, though it does appear that she has started warming up.

I certainly have my disappointments about the nomination process, John Edwards pulled out before I could vote for him, but the fact that that the Democratic candidates and the Democratic agenda is getting additional coverage because the process is ongoing is a good thing.

Economics Update

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Let’s lead off with the dollar on it’s way down, it’s at a 3-year low vs. the Yen, and a new record low vs. the Euro, which is one of the things that has oil breaking another all time record, $104/bbl.

The value of the dollar is dropping, so the price of oil, which is sold in dollars, is increasing. One wonders how many countries are considering a Euro oil bourse other than Iran.

In real estate, we have the largest drop in residential and commercial construction in 14 years.

So much for commercial real estate being “immune” from this contagion.

The poster child for the real estate meltdown, Countrywide, is still hemorrhaging on its mortgages, with 90 day delinquencies at 5.6% (up 900% from a year ago), and this is threatening to torpedo the deal with Bank of America to buy them out.

FWIW, there are more foreclosures than sales in a number of the states in the West, and Florida.

On the macro level, we have Warren Buffett saying that the recession is pretty much all ready here, and the president of the Philadelphia Federal Reserve saying that inflation is not important, and that the first priority is keeping the economy on track.

When a central banker says, “Inflation, no big deal”, you know that you are up a certain creek sans paddle.

Further evidence of a slowdown is the fact that Ford and Toyota sales declined in February. Ford having declines is not a shocker, but when Toyota is not selling cars, no one is selling cars.

The happy news is that the FDIC doesn’t see there being a surge in bank failures, though it does make one wonder why they are calling back retirees and generally staffing up.

They expect to be as busy as a one legged man in an ass-kicking contest.

In the world of municipal bonds, which should be safe-havens in a time like this, it appears that the costs are increasing, and the ratings falling, for municipal bonds, because of the collapse of the auction security markets.

In bond insurance, we have a new, or at least new to me, bond insurer bleeding, Security Capital’s to the tune of $1.5 billion on various complex investments.

It’s already been downgraded.

Finally, Buffet is now saying that his offer to buy the muni business of bond insurers is no longer operative.

Berkshire Hathaway is aggressively bidding on municipal bond portfolios, and as other insurers are downgraded, their position can only get stronger.

France On Diplomatic Offensive in Africa

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Nicolai Sarkosy is intends to renegotiate its military relationships in Africa, along with changes in economic policies to better involve African nations in world economic negotiations.

This is an artifact of the collapse of US Diplomacy brought about by Bush unilateralism. It has created a diplomatic vacuum that France intends to fill, and is just one area, beyond Roberts and Alito, where the damage done by Bush and His Evil Minions™ will last for years.