Year: 2008

Reasons for Intercepting Crippled Satellite Do Not Hold UP

No Comments

We are now getting skeptical reports from media sources, such as BBC News and Wired that the administrations justifications for shooting down the dead surveillance satellite are a 6 pounds of fertilizer in a 5 pound bag.

The justification is that it carries 400 l of UDMH (unsymmetrical dimethylhydrazine) fuel for maneuvering is a threat to life and limb.

The fact is that UDMH is about as benign a propellant as is used in rocketry (it’s still nasty), and the effected area would be on the order of two football fields, but that is only for irritant, not life threatening effects.

One explanation is that the, “MDA [Missile Defense Agency] is always looking for ways to pimp their systems”, and another is that this is actually an anti-satellite (ASAT) test in response to the Chinese test last year.

My guess is a combination of both, and that Bush and His Evil Minions&trade intend to create an arms race in this area, so as to further constrain a future administration.

Economics Update

No Comments

After not receiving what they considered to be adequate bids, Britain is nationalizing Northern Rock Bank, which was one of the top home mortgage providers in the UK. The bids received, “failed to meet the government’s criteria for protecting taxpayers.”

I think that we will see more of this in the UK, which is suffering from the Anglo-Saxon contagion much as its American counterparts are. We won’t in the US, substituting instead ruinous (for the taxpayer at least) bailouts, because the American body politic will not accept this solution.

In a related note, it appears that there is a lucrative business developing aiding banks in finding people who have skipped out on mortgages. With the costs of foreclosures typically nearing $100K, it makes sense to find and cut a deal with these people, but they leave without providing a forwarding address.

From September 2005 to August 2007, 53 percent of the loans backed by Freddie Mac that went into foreclosure involved borrowers who could not be reached.

As an insight as to just how bad this has gotten, some lenders are allying with ACORN, an organization with a mission that is seriously at odds with those of banks, to find the mortgage holders.

In much higher finance, we have signs of trouble in credit default swaps, a complex derivative whose market is estimated to be twice that of the stock market.

These instruments are largely unregulated, to the degree that the exact size of the market is not known.

Basically, it’s an agreement between two parties. One pays the other a fee, and if something bad happens, such as a default, the second party pays off the default.

How flaky and unregulated is this market?

But during the credit market upheaval in August, 14 percent of trades in these contracts were unconfirmed, meaning one of the parties in the resale transaction was unidentified in trade documents and remained unknown 30 days later. In December, that number stood at 13 percent. Because these trades are unregulated, there is no requirement that all parties to a contract be told when it is sold.

One out of 7 people did not know who owed them money.

NLG Calls on Justice Antonin Scalia to Recuse Himself From Interrogation-Related Cases

No Comments

Following his disgraceful interview with the BBC, the National Lawyers Guild has requested that Antonin Scalia recuse himself from any torture related cases, as he has clearly prejudged this case, and shown himself not to be impartial in this matter:

Justice Scalia’s remarks inevitably pre-judge the issues in every case in which the Constitution might dictate suppression of evidence because of illegal police interrogation techniques, or the right to compensation of a person subjected to a violation of civil rights. We therefore call upon Justice Scalia to recuse himself from any case which comes before the Court in which such issues are at stake.

Increasingly, we have heard these outrageous statements from Scalia, the case of the obscene gesture in church comes to mind, and I’m wondering if we are seeing early onset Alzheimer’s.

Will Contractors Lose Iraq Immunity? – TIME

No Comments

Well, it appears that the US and Iraq are in the process of renegociating their security agreements, and the Iraqis consider the removal of immunity for contractors to be non-negotiable.

I think that this is the first time that the representatives of the Iraqi government are behaving in a way that is both beneficial to, and supported by its citizens regardless of ethnicity.

Good for them. As for the mercenaries, the rules in a foreign country are that if you do the crime, you do the time, in that country’s jails.

This is a Wise Woman

No Comments

From Eric Alterman’s reader mail:

Name: Julie Nelsen
Hometown: Salt Lake City

One reason to support Senator Clinton that I’ve not seen anywhere, (probably due to the high-minded notion currently in the air that we need to unite and avoid retribution), would be the video of George and Laura forced to greet Bill and Hillary at the White House on Inauguration morning next year. Since George is unlikely to be tried for his crimes, would not such a humiliation be at least a small down payment on the punishment he deserves?

Agreed, though I still want to see him in the dock at the Hague.

How a Primary Attack Ad Should Be Done.

No Comments

If the one of the Democratic campaign wants to do a real attack ad, against a primary opponent, in a perfect world, it should fulfill the following requirements:

  • It should be the truth.
  • It should address a real concern of Democratic voters.
  • It should not be something that the Republicans can use against the target if they win the general.

So I was just kind of writing stream of consciousness, and came up with a Hillary Clinton attack ads against Barack Obama

I’d like to see what my readers think, and what ideas my readers have, so I am post dating this to Saturday Afternoon, to get comments.

On to the Ad:

(Cue sinister music, go with spot of gray on the screen, which will slowly pull back as the ad progresses and reveal itself to be a scary black and white picture of John McCain)
In 2002, John McCain said that the ads accusing Max Cleland, who lost one arm and both legs serving in the military, were “Worse than disgraceful”.

Now John McCain has hired Bo Harmon, the man behind that ad campaign as his national political director.

We know that the Republicans will be throwing every lie and slander they can find against the Democratic Nominee, and we know that Barack Obama has never been in a seriously contested election against a Republican.

Over the past 16 years, the Republican swift boaters came after Hillary Clinton with accusations of everything except eating puppies, and she’s still standing.

The stakes are too high this November to take an audacious chance with your primary vote.

I’m thinking of trying to put this up on Youtube, after I improve the copy a bit.

You will notice that this is a devastating ad, but it gives the Republicans nothing to use in the general.

Economics Update: Real Estate Edition

No Comments

Swiss banking giant UBS is looking at a $26.6 billion exposure to toxic mortgates, in addition to whatever hit that they might take on subprime, so these are A and alt-A mortgages. It reported a loss of $11 billion in Q4.

In the Dallas-Ft. Worth Metroplex, foreclosure postings are up 27%, effecting 13,000+ residences, an all time record. The scary quote is, “Out of the homes posted, at least 20 percent are underwater and probably more” .

And everyone’s favorite subprime whipping boy, Countrywide Financial, has had delinquencies rise to 7.47%. That’s about one out of every 14 loans that is delinquent, which is clearly unsustainable.

If banks had to consider this rate of delinquencies as a normal cost of business, mortgage rates would probably be in excess of 12% just to break even.

It now looks like Royal Bank of Scotland is the latest institution in line to see significant losses from mortgage backed securities.

Economics Update: Insurance Edition

No Comments

Bond insurer FGIC has asked regulators to break it up into two separate divisions/a>, one which insures minicipal bonds, and the other that insures the structured finance deals (aka the big sh$#pile).

This is likely a reflection of their dire position following Moody’s down grade of them from AAA to A3.

UBS is saying that banks are at risk of an additional $203 billion in losses from the bond insurance crisis.

Government Shutting Down Economic Indicators Website

No Comments

Due to budgetary constraints, the Economic Indicators service (http://www.economicindicators.gov) will be discontinued effective March 1, 2008.

Economic Indicators.gov is brought to you by the Economics and Statistics Administration at the U.S. Department of Commerce. Our mission is to provide timely access to the daily releases of key economic indicators from the Bureau of Economic Analysis and the U.S. Census Bureau.

You may link to the most recent release by clicking on the report name in the table below. You may also subscribe to our *free Subscription Service to have these files emailed or faxed directly to you as soon as they are released.

Barry Ritholtz, of The Big Picture, rightly asks, “WTF? Feds Shutting Down Economic Data Site.”

He then suggests that, much like eliminating the release of the M3 Data, this was done because the data is inconvenient, and I agree.

Last Deliveries of Bell AH-1Z Use New Build Airframes

No Comments

The US Marines have had two programs to upgrade their nearly Vietnam era helicopters.

The upgrades are known as the UH-1Y and the AH-1Z.

In addition to changes to avionics, these also involve upgrades to the engines and rotor systems.

It now appears tatt the the final 40 deliveries will be completely new airframes, as opposed to rebuilds.

From a FMS (foreign military sales) perspective, this means that Bell will be able to sell new build AH-1 helicopters with 4 bladed rotors, and modern T700 engines.

This is good news for Bell, which makes the AH-1 Cobra, and bad news for Boeing, which makes the AH-64 Apache, which is much larger and much more expensive to purchase and operate.

Much of the utility in an attack helo is in its sensors and fire control systems, and the AH-1Z will be very close to the AH-64 in those capabilities, as well as in weapons load, though it will not carry the hideously expensive Longbow radar system.

Bush Administration is “Predatory Lenders’ Partner in Crime”

No Comments

Eliot Spitzer, current Governor of, and former Attorney General for, the state of New York, has an editorial today that says just that.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

I don’t who care who wins the election in 2008. I want Eliot Spitzer to win the 2012 Presidential election as the Democratic nominee.

Read the whole thing

Coast Guard Stops Payments to Eagle Eye UAV Program

No Comments

The US Coast Guard has shelved the Eagle Eye UAV Program.

It appears that Bell, the manufacturer of the aircraft, billed it as being nearly ready for production, and it clearly is not.

First flight, which is yet to occur, was supposed to be in 2006.

Yet another clusterf$%# associated with the Coast Guard’s Deepwater program, and another nail in the coffin for the Lead System Integrator (LSI) concept of government contracts.

It looks like the USCG will be going with an existing system.

House of Saud Threatened UK With Terrorist Attacks If Bribery Was Investigated

No Comments

The Guardian is reporting that the House of Saud threatened to help terrorists if the British government continued to investigate the bribes paid to Saudi Prince Bandar.

Saudi Arabia’s rulers threatened to make it easier for terrorists to attack London unless corruption investigations into their arms deals were halted, according to court documents revealed yesterday.

Previously secret files describe how investigators were told they faced “another 7/7” and the loss of “British lives on British streets” if they pressed on with their inquiries and the Saudis carried out their threat to cut off intelligence.

Prince Bandar, the head of the Saudi national security council, and son of the crown prince, was alleged in court to be the man behind the threats to hold back information about suicide bombers and terrorists. He faces accusations that he himself took more than £1bn in secret payments from the arms company BAE.

It should be noted that one of Bandar’s nicknames is “Bandar Bush”, because he is considered a sort of virtual member of the Bush clan by the family.

One of the future goals of any future US administration should be the removal from power of the House of Saud, and the imprisonment of those who held the reigns of power.

Economics Update

No Comments

Note that this has been, for whatever reason, a busy news day, so this does not include news related to real estate or to the bond insurance crisis. Those will be posted later.

We have downward pressure on the dollar, because additional Fed rate cuts are anticipated.

Basically, the thought is that Fed rate cuts lead to lower interest rates, which make the dollar less attractive, because rates of return are less.

If I had the money, I would bet against this, because, as the latest rate cuts have showed, the Fed can no longer move rates down. We are in a Japan style liquidity trap.

We also have a type of investment that I have never heard of before, auction rate securities, which were sold as being as liquid as cash. They work by regularly re-auctioning the securities on a fairly frequent basis, allowing for people to sell easily, and for the rates to adjust to suit market conditions.

These are now becoming increasingly illiquid, with thousands of auctions failing, and Goldman Sachs refusing to let investors withdraw money from their investments when auctions fail to attract buyers.

UBS has notified its 8200 US brokers that it will not support these securities if the auction fails either.

FWIW, Paul Krugman has a very good editorial, even by his own ordinarily high standards, describing what is going wrong, and the consequences of this failure in terms that a layman like me can understand.

Related is the news that Citigroup is suspending withdrawals from its CSO Partners hedge fund.

In terms of the real economy, as opposed to high finance, we have the New York Federal reserve reporting that its Empire State Manufacturing Index fell nearly 21 points, from +9.03 in January to -11.72 in February. It was expected to fall, but only to +5.75.

The Financial Times is reporting that banks are being advised to walk away from the private equity deals that they are funding, because the penalties are far lower than the potential losses.

This would stop private equity buyouts in their tracks.