Month: March 2009

Economics Update

No Comments

Not unexpected, but the budget deficit jumped 10% because taxes have fallen to a 14 year low.

Like I said, the solution here is inflation to wipe out bad debts, and the deficits are going to do that sooner rather than later, because we’re not going to see a this resolve itself in the US, or overseas in the near future, as evidence by the cratering confidence numbers globally.

With Chinese exports falling sharply, 25.7% year over year, and the rest of the world seeing similar numbers, they are in no position to drive a recovery either.

Consumers are vanishing worldwide, and there is no sign of a recovery in the US, particularly in real estate, where S&P is warning of downgrades of, “9,430 classes from 1,077 U.S. first-lien Alt-A RMBS transactions issued in 2005, 2006, and 2007”, and builder loans threatening to take down banks that weren’t playing with funky financial instruments.

On the brighter side, it looks like the SEC might reinstitute the ‘Uptick Rule’ on short selling.

I’d like to see aggressive prosecution of market manipulation techniques like “naked” short selling too, but I am not holding my breath.

If Wall Street were investigated by Patrick Fitzgerald, I’m pretty sure that you would see tens of thousands of prosecutions.

In energy, the week economy has driven oil down.

Also, it appears that there are more stupid people than I thought, because the dollar fell as people left its safe haven, it appears that this was largely a result of Pandit’s delusional memo saying that Citi is going to rake in the bucks this quarter.

Fed Chairman Follies

No Comments

So, first Federal Reserve Chairman Ben Bernanke calls for some sort or über regulator to manage systemic risk, and it sounds to me like he wants to make the Federal Reserve the “One Ring to Rule Them All,” and then he flat out says that, “would not be allowed to fail.

This sounds an awful lot like what Alan Greenspan said, and did when was running the Fed, and bailing out any reckless speculators that crashed (see Long Term Capital Management).

If there is a lesson here about the Federal Reserve, it is that while its opacity and lack of response to political pressure may be necessary to tighten down on an economy when there is a serious inflation problem, it makes it spectacularly unsuited to anything else, because you never know when it will be run by some frothing at the mouth Ayn Rand acolyte who will run the economy into the ground.

When You Are In a Hole, Stop Digging

No Comments

You would think that after Jon Stewart’s merciless beatdown of him, and of CNBC, Jim Cramer would have the sense to know that he’d been beaten, and not get into a pissing contest with a comedian and what may be the best, and smartest, writing staff on TV.

But, you’d be wrong, and Mr. Cramer continues to call out John Stewart.

So Stewart, and and His Minions™ on the Daily Show respond.

So Cramer dressed himself up as a fish…..And jumped in a barrel……And handed Jon Stewart a gun.

This is shooting fish in a barrel.

Any questions?

Economics Update

No Comments

The Manpower hiring survey has fallen to its lowest level in its history, and the survey started in 1962.

Meanwhile, a survey of economists say that the U.S. economy set should start to recover in the 2nd half of the 2009:

“Consumer spending and residential investment are expected to turn positive and begin boosting GDP growth in the third quarter of this year,” the newsletter Blue Chip Economic Indicators said, summarizing its survey of private economists.

I want what the economists are smoking, because we are seeing no signs of either right now.

The fact the even previously overheated China saw deflation in January indicates to me that this will be longer and deeper than they think.

Additionally, while wholesale inventories fell in January, wholesale sales fell faster, and house prices fell 3.5% in January, according to the Integrated Asset Services index, indicating that the contraction is accelerating.

There is also the fact that the meltdown of the US megabanks has gotten worse, with us regulators looking at more bailout money for Citi, and the notification that the Federal Home Loan Bank of Seattle said it has fallen short of one of its capital requirements.

Note that the FHLBs are where the mortgages are being written right now, so this means that things are going pear shaped in the mortgage market.

With all this going on, it’s no wonder that the 3-month LIBOR spread is up, indicating a tightening credit environment.

Some good news, though it means short term pain, which is that the Securities and Exchange Commission remains committed to reality based accounting, and so it will not abandon mark-to-market.

We also have oil rising on reports of OPEC production cuts, and the dollar falling on US bank worries.

Naked Aggression

No Comments

The USNS Impeccable was conducting an “ocean mapping mission” in the South China Sea when she was confronted by Chinese ships, who maneuvered close to her and attempted to snag her towed sonar array:

The exposure came as the American vessel USNS Impeccable was attempting to defend itself against what the Pentagon claimed was co-ordinated harassment and aggression from five Chinese ships. Being unarmed, the Impeccable turned its fire water hoses against two of the Chinese vessels that had come within 50 feet in a threatening posture.

Then, the Pentagon records in the admirably restrained language of international diplomacy, “the Chinese crew members disrobed to their underwear and continued closing to within 25 feet.”

(emphasis mine)

OK, it’s not naked aggression, it’s semi-naked aggression, but still…..

It should be noted that the ship was actually on an intelligence gathering mission:

The U.S. Navy’s description of the incident states that “a civilian crew mans the ship, which operates under the auspices of the Military Sealift Command.” Yet as one of five ocean surveillance ships, the USNS Impeccable (T-AGOS 23) has the important military mission of using its array of both passive and active low frequency sonar arrays to detect and track submarines. The USNS Impeccable works directly with the Navy’s fleets, and in 2007 operated with the three-carrier strike battle group in Valiant Shield 07 exercise in the Western Pacific.

USNS Impeccable is equipped with the Surveillance Towed Array Sensor System (SURTASS), a passive linear underwater surveillance array attached to a tow cable. SURTASS was developed as a floating submarine detection system for deep waters, and the Navy wants to add an active Low Frequency Array (LFA) to improve long-range detection of submarines in shallow waters.

Note that the ship was only about 75 miles from the Yulin naval base, where the Chinese have based their most advanced SSN, the Shang-class (Type-093), and that the Impeccable does carry the Surveillance Towed Array Sensor System (SURTASS).

I’m not sure if they recording acoustic signatures, or recording operations, or both, but this was not just an ocean mapping expedition.

The US government is claiming illegal harassment in international waters, and the Chinese government is claiming a violation of their sovereignty.

It’s probably a bit of both.

Nutjob Liberal Praises Obama for Killing Embryos

No Comments

This would, of course, be Nancy Reagan:

“I’m very grateful that President Obama has lifted the restrictions on federal funding for embryonic stem cell research,” the former first lady said in a statement. “These new rule will now make it possible for scientists to move forward.”

“Countless people, suffering from many different diseases, stand to benefit from the answers stem cell research can provide,” said Reagan, who has long been at odds with other conservative Republicans over the stem cell issue.

“We owe it to ourselves and to our children to do everything in our power to find cures for these diseases — and soon.”

H/T Extremepreneur, who also supplied the title.

Banks Exposure to Risky Derivatives Surges

No Comments

So the latest regulatory filings show that the big 5 banks exposure to risky financial instruments has exploded, which means that their potential losses have exploded, and so the possibility of being insolvent has increased.

I’m particularly concerned about when the lines cross, which is JPMorgan, and Citi, though it probably applies to Bank of America too, because this graph does not include the derivatives and other financial time bombs that it acquired when it bought Merrill Lynch.

Of course, Geithner and Summers just think that these assets are “artificially” depressed, and so the banks really are solvent…..Tools.

Do Not Reward the Incompetent

No Comments

While I’ve heard complaints about the people who campaigned against Proposition 8 in California, I’ve not followed it closely, but the following is unbelievable. Anyone who had anything to do with the “No on 8” campaign should never be hired as a political consultant ever again:

At the forum, Kors said turning the campaign over to the consultants was “a huge mistake.”

Smith also acknowledged that the campaign should have used then-presidential candidate Barack Obama’s stated opposition to Prop 8. Instead, little use was made of Obama’s opposition in a letter last June to the Alice B. Toklas LGBT Democratic Club, and right before Election Day the Yes on 8 campaign sent out a mailer featuring Obama’s image and quotes that he is opposed to same-sex marriage.

“That was a close call,” Smith said. “Maybe we should have.”

Maybe you should have? Maybe you should have?

This is so phenomenally stupid it beggars the imagination.

Smith said that people outside the Bay Area wouldn’t know what the Alice Club was, but club Co-Chair Susan Christian spoke up and said that in fact, Obama’s letter to the club been widely reported, including in the New York Times.

Win or lose at the California Supreme Court, and the indications are that it will be a lose, this will be on the ballot as an initiative petition in 2010, and job 1 is to ensure that the folks who ran “No on 8” don’t get into positions of authority on this.

See here, here, here, and here for better written outrage.

Documentation of Turkish Knowledge of the Armenian Genocide

No Comments

The archives of the old Ottoman Empire are opening up, and fairly conclusive evidence of the direct knowledge of the authorities of the Armenian Genocide has been uncovered:

With his book, “The Remaining Documents of Talat Pasha,” Bardakci (pronounced bard-AK-chuh) has become, rather unwillingly, part of this ferment. The book is a collection of documents and records that once belonged to Mehmed Talat, known as Talat Pasha, the primary architect of the Armenian deportations.

The documents, given to Bardakci by Talat’s widow, Hayriye, before she died in 1983, include lists of population figures. Before 1915, 1,256,000 Armenians lived in the Ottoman Empire, according to the documents. The number plunged to 284,157 two years later, Bardakci said.

To the untrained ear, it is simply a sad statistic. But anyone familiar with the issue knows the numbers are in fierce dispute.

….

Hilmar Kaiser, a historian and expert on the Armenian genocide, said the records published in the book were conclusive proof from the Ottoman authority itself that it had pursued a calculated policy to eliminate the Armenians. “You have suddenly on one page confirmation of the numbers,” he said. “It was like someone hit you over the head with a club.”

Seriously, it’s reality, and it’s something that the Turkish people should acknowledge.

Suck on this Serdar Argıç.

Enough with the DINOs

No Comments

Specifically, Senator Max Baucus (DINO-MT), who thinks that making people pay income tax on their healthcare benefits is preferable to raising taxes on the well-to do:

Currently, the portion of health benefits that are covered by a person’s employer is tax-free income. Baucus said last week that taxing those benefits should be considered. That way, health care reform would be funded with health care dollars.

Baucus says taxing health benefits wouldn’t necessarily be harmful to lower- and middle-class Americans.

If it won’t be harmful, then I’m Karl Rove’s secret love child.

Of course this will harm “lower- and middle-class Americans”. That’s what its intention is: Tax the poor to keep a tax break for the rich.

I understand that you won’t find a flaming liberal representing Montana. I get that, and if he were low on the seniority totem pole, I might let it slide, but he’s 7th in seniority, and so is chairman of the Senate Finance Committee.

Unfortunately, his next election will be in 2014, but this guy needs to be kept away from the machinery of government to the maximum degree possible.

There is a reason that Baucus is whoring for rich people from one of the poorer states in the nation, as the Wiki notes, 91% of his donations in 2008 came from out of state, so his money comes from bankers, insurance companies, etc., and he is offering them a return on his investment.

Economics Update

No Comments

Calculated Risk’s semi regular review of credit conditions is showing a bit of a tightening. Nothing major, but when you start with awful, it’s worse.

That being said, it sucks to be Japan, as they just swung to their first trade deficit in a decade, and it’s a record too.

Meanwhile, the impending wave of impending loan defaults on commercial real estate appears to be starting in Cleveland and Detroit.

It is also looking like treasury bonds are falling, which means that yields are rising, implying that the markets are expecting interest rates to climb.

In energy, it appears that OPEC is looking at cutting production again, and it’s member states are not cheating on production quotas, or at least cheating on them less than is expected, so oil is up today.

In addition, the upward trend in gasoline prices over the past few months continues unabated.

In currency, we continue to see a flight to safety, which is driving the dollar up, and the Canadian dollar hit a 4½ year low against the USD.

STOVL JSF Range Same as AV8B Harrier

No Comments

Bill Sweetman looks up the current numbers for the JSF and the Harrier, and finds the following:

But the bottom line is this: with 2,500 pounds of weapons, plus the gun pod, the AV-8B has a hi-lo-hi operational radius of 508 nm. The F-35B’s design radius, with no gun, two 1,000-pound bombs and two AMRAAMs, is 450 nm: the most recent numbers (from 2007) show it exceeding that and just about equalling the AV-8B’s range.

Huh. Obviously, there are differences, a supersonic dash speed, some level of stealth, and a superior avionics suite, but it’s a less than impressive performance for an aircraft that will enter service about 30 years after the Harrier II.

We Finally Have a Price for the JSF

No Comments

The catch? Engines are not included.

So, it’s a $70 million (A-model) or $80 million (B-model) paperweight.

That’s clear.

As Bill Sweetman notes:

  • The Norwegians think it’s $52M.
  • The Israelis think it’s +$100M.
  • The Dutch think it’s €56M.
  • The Danes think it’s $82M with spares and training.
  • Davis thinks it’s $70M for an F-35A in 2014.
  • Davis thinks it’s $70M for a F-35C without engine in 2014.
  • Davis thinks it’s $80M for a F-35A in 2014.
  • The USAF budget says it’s $91M flyaway in 2013.
  • The GAO thinks it’s $104M

I’m inclined to believe the GAO at this point.

Shooting Behind You

No Comments

MBDA just demonstrated an over-the-shoulder shot with their ASRAAM IIR AAAM, using its using the lock-after launch mode.

It’s a neat trick, and one of the arguments that the ASRAAM people have used, suggesting that its relative lack of maneuverability off the rail is more than made up for by its superior end-game kinematics, but one wonders how the launch aircraft would get targeting data in a real combat situation, unless, of course, it has the small stinger mounted radar of the Su-27 series.