Year: 2008

WSJ Saying that this Recession Could Be Nasty

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Though, of course, the author, Justin Lahart, hedges about whether we will actually have a recession (My take is that we’ve been in one for some time, and that we have been experiencing a recession like living standards, based on percentage of population employed, since 2001)

His Article uses terms like, “on track to be at least as bad as the five most catastrophic financial crises to hit industrialized countries since World War II”, and makes reference to Japan’s “lost decade” in the mid 1990s.

The idea that this is going to be a bad one is hitting the mainstream.

Military Clamps Down on Obama “Crypto Muslim” Email

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The Boston Globe has noted that the military is telling soldiers not to forward the dispicable “Obama is a Crypto-Muslim” email.

It’s against military and civil service regulations.

My guess is that someone in the military realized that this guy might be C-in-C in under a year, and it was ass covering time.

Anyone know what proportion of this spam is coming from military servers.

No Good Comes of Treating Insolvency as Illiquidity

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As the good doctor Roubini says, there is a difference between an illiquidity crisis, and an insolvency crisis.

A corollary is that dealing with insolvency as illiquidity simply throws good money after bad*, and the extensions that are being granted to ACA Bond Holdings to “unwind” its credit swaps, is an attempt to deal with insolvency as illiquidity.

ACA has lost 97% of its market cap over the past year, it’s been downgraded to CCC last month (12 steps all at once), and it’s currently being run by its regulator, the Maryland Insurance Administration, which, “extended an agreement that waives collateral requirements, policy claims and termination rights until Feb. 19, the New York-based company said in a statement on Business Wire late yesterday.”

It’s hit an ice berg, and it’s going down. Delaying this in the hope of finding stupid investors is going to help no one in the long term.

*To quote Roubini on the difference, “But the current market turmoil is much worse than the liquidity crisis experienced by the US and the global economy in the 1998 LTCM episode. Let me explain why. Economists distinguish between liquidity crises and insolvency/debt crises. An agent (household, firm, financial corporation, country) can experience distress either because it is illiquid or because it is insolvent; of course insolvent agents are – in most cases – also illiquid, i.e. they cannot roll over their debts. Illiquidity occurs when the agent is solvent – i.e. it could pay its debts over time as long as such debts can be refinanced or rolled over – but he/she experiences a sudden liquidity crisis, i.e. its creditors are unwilling to roll over or refinance its claims. An insolvent debtor does not only face a liquidity problem (large amounts of debts coming to maturity, little stock of liquid reserves and no ability to refinance). It is also insolvent as it could not pay its claim over time even if there was no liquidity problem; thus, debt crises are more severe than illiquidity crises as they imply that the debtor is insolvent, i.e. bankrupt, and its debt claims will be defaulted and reduced. In emerging market crises of the last decade, we had liquidity crises (i.e. a solvent but illiquid sovereign) in Mexico, Korea, Brazil, Turkey; we had debt/insolvency crises (a sovereign that was both illiquid and insolvent) in Russia, Ecuador, Argentina.”†

†You have to just love this, footnotes almost twice as long as my post.

Who Bombed the Buenos Aires Jewish Community Center (AMIA,) In 1994

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It certainly does paint the picture of an incompetently run investigation, with conclusions being driven by political believs, rather than the facts, which is a characteristic of Bush and His Evil Minions™.

That being said, that the finger being pointed at Iran significantly began with the Clinton administration, and the inclination to blame Iran for anything bad happening in the world dates to the late 1970s, so there is a bureaucratic imperative at work here in both the US intelligence services, and the State Department.

Gareth Porter’s article is interesting, but it raises more questions than it answers.

OK, Maybe I’ll Console My Self With the Rudolph Clown Show

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The Siena New York Poll has him behind John McCain by 12 points in New York State.

The Freddie Thompson Clown Show may be on its way out, but Rudy is doing a good job to pick up the pathetic humor in the presidential campaign.

After all, Rudy showed up to a NASCAR race, and begged to be allowed to drive the pace car, after making a circuit in his bus, but wasn’t allowed.

He’s a good substitute source of my minimum RDA of Schadenfreude.

Another Day, Another Obama Embrace of a Right Wing Meme

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Well, now Obama is declaring himself to be a “committed Christian”.

I understand that he is trying to answer a disgraceful internet rumor about his being a crypto-Muslim. I’m not exactly sure what the best response is, but this is is the worst response.

He is essentially responding to a demand of an oath of Christianity to qualify for public office. You shouldn’t capitulate to that, you should fight that.

You need to show the people who make this request are un-American, and they need to be removed from mainstream political discussion through ridicule and justified outrage.

Pandering is not the solution.


Norway Requests Bid From Sweden for F-16 Replacement

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Honestly, I think that this is a sham bid, and Norway intends to use this request to Sweden as leverage to get a better deal on the JSF.

That is what Eurofighter decided, when they withdrew from the competition.

Norway is arguably as hip deep in the JSF as any countries except for the UK, and (possibly) Italy.

Then again, if they are serious, Norway saves a lot of money, both on the initial purchase,the Gripen is the cheapest of the current generation, and over the life of the aircraft, since costs are roughly proportional to weight.

Classy Fans

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I really did not have a dog in the hunt in either NFL conference championship, though my wife is a Pats fan, but I came across the story about Packer fans, I was impressed. It seems that the Packers asked for help cleaning the snow off the seats in Lambeau field, and over 800 showed up.

True, they got paid $8/hour, but in Green Bay in January, I’d need a lot more than that to shovel someone else’s snow.

H/T Group News Blog

Economic Update

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[on edit]
The lead off news is that the head of the IMF. Dominique Strauss-Kahn, is calling the global economic situation “serious”.

As to what he’s considering, Strauss-Kahn, a Frenchman is meeting with French President Nicolas Sarkozy to see what a the French response must be.

It just feels so good to be rescued by the French, huh?

Well, we don’t have US quotes, because it is a holiday, but there was a lot of blood in the foreign markets, with the FTSE-100 fallint 5.5 percent, the CAC-40 6.8%, and the DAX 30 plummeting 7.2 percent in Europe, and in Asia, the Shanghai Composite fell 5.8%, the (Singapore) Straits Times Index fell 6% (15.8% for the year), and India fell 7.4%.

The “markets” don’t think that the stimulus package, which is to say GW Bush’s “no money for the working poor” package, which tanked the US markets on Friday, Sucks.

For what it’s worth, the US meltdown is beginning to hit Europe, where there is increasing pressure for the ECB to lower interest rates. (My guess is not right now. The ECB is charged with keeping inflation down only, no requirement on employment)

European banks are tightening up lending standards in response to the meltdown, so short term liquidity problems may be coming to Europe too.

We also have the Bank of China, the 2nd largest lender in that country, share price dropping by over 6% because of concerns over their subprime exposure. There are rumors that they will show a net loss in 2007 as a result.

Oil, however seems not to be spiking lately. Recession fears have a way of doing that.

Orwell Moment of the Day: MLK Memorial Outsourced to Paragon of Human Rights, China

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While I understand that the protests of the Vermont congressional delegation (see also here) is largely an issue of local pride and economics for them, the idea that we are outsourcing this to a government that routinely imprisons dissidents, suppresses free speech, and aggressively uses the death penalty boggles the mind.

This isn’t from The Onion. This is a real story.

Happy Martin Luther King Birthday Holiday everyone.

Canadian Conservatives Have No Balls

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Well, it appears that the Canadian Foreign Ministry will rewrite its training manual so that the United States will no longer be listed as a nation that tortures.

“We find it to be offensive for us to be on the same list with countries such as Iran and China. Quite frankly it’s absurd,” U.S. Ambassador David Wilkins told The Associated Press on Friday.

More absurd is that the United States does routinely torture people in its custody, and routinely sends people to other nations to be tortured.

I want my country back.

More on What the F-22 Can’t Do.

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Well, last night I discussed how the USAF is screwing the proverbial pooch in its efforts to get more F-22s, and this weeks issue of Aviation Week confirms this assessment. (paid subscription required)

In this case, they are discussing the capabilities of the F-35 in what the US military likes to call “battle space”, and they reveal something about the F-22.

Specifically, the F-22 is the roach motel of data. Data checks in, but it doesn’t check out.

The F-35, for example, it, “Already offers some capabilities that are not available on the F-22,” which, “for example, has no other way, other than verbally, to send the detailed electronic surveillance data it collects to other types of aircraft or to ground-intelligence facilities.”

The F-22 is designed for the end of the world scenario, with the Soviets attacking through the Fulda Gap. It was designed to operate while the rest of the military infrastructure around it was destroyed, though why the Soviets would not go after the air fields is beyond me.

The Raptor is an expensive anachronism…Though the F-35 is not likely to be much cheaper to buy at the end of the day, it will be more flexible and cheaper to operate, though neither are required for the most likely scenarios.

Other Governments Turn to Commercial Systems, and Get More for Less

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There are a couple of interesting articles (here and Portable Network Generates EW Attack Weapons in Aviation week(paid subscription required)about the increasing use of civilian tech in military electronic warfare equipment.

“The Chinese, like many countries without billions to spend on defense, are figuring out how to leverage all that commercial technology into their military capabilities,” says Rance Walleston, BAE Systems’ director of information operations initiative and information warfare. “We’ve spent a lot of time looking at Chinese technologies. They’re not building many unique devices. Their integrated air defense system [IADS] uses commercial standards,” such as GSM and voice over Internet protocols (VOIP).

The Syrian raid—which involved air-to-ground and network-to-network electronic invasion of a Russian-built IADS—is convincing some that custom-built, highly specialized and expensive air defenses with long development times are decreasing in deterrent value. In fact, they have become victims of their own uniqueness. Because they were hard to develop and field, they aren’t often modified. That gives electronic warriors the time to conduct analysis and build countermeasures.

We also discover that:

“The government historically procured single-use systems to go after signal X or Y,” Sinkiewicz says. “Now that’s unaffordable, and what they want is a multifunction capability with the same architecture and hardware that can go after many types of signals.”

I’m sure that some of the free market types would like to use this as an argument for the inherent superiority of the free market over government funded systems, but I would argue that the defense procurement infrastructure is among the most incompetent and corrupt segments of our governments, and that using this will not get good policy.

In fact, the Privatization of essential government services in the military (KBR/Halliburton, Blackwater, Triple Canopy, etc.) has proved to be an unmitigated disaster too.

The solution is to put adults in charge of the Military Industrial Complex, because we are currently reaping the consequences of not doing so for the past 60 years.