Month: May 2009

Suckers Rally

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So, we have Nobel Prize winning economist Paul Krugman saying that a rapid recovery is highly unlikely, and we have Andy Kessler, in the (web) pages of the Wall Street Journal noting the obvious, that, “You can have a jobless recovery but you can’t have a profitless one,” and saying that this sounds like a suckers rally.

One more bit of confirming data to support this is the fact that the main stream media, in the personage of ABC is writing stories saying that, “There is a growing belief among financial experts that the recession is over.”

It’s not just that these “financial experts” were generally the ones who were wrong about deregulation of the markets and the housing bubble. It’s that these “financial experts” are always wrong.

The cause of this recession is a rot at the core of our financial institutions, and I haven’t seen anyone chopping down trees to prevent “Wall Street Elm Disease” from spreading yet.

I’m not looking for a real turnaround until we start seeing “no end in sight” stories from these “financial experts,” so I call suckers rally.

Snake Oil?

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So, Barack Obama has gotten the medical industry to promise $2 trillion in health care savings over the next 10 years, by limiting medical inflation to “only” 4.7% a year.

I think that it’s clear that the medical industry is lying, but I have no clue as to what Obama is up to, except perhaps that this is a preemptive strike to prevent the public option from being discussed…I’m not smart enough to figure out another reason.

Me, I’d bank on the fact that almost everyone hates their insurance company, and wage Jihad against them, but that is just me.

Maybe there is some sort of Obam jujitsu going on here, and I just don’t see it.

Economics Update

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The US trade deficit rose in March, to 27.6 billion, on falling exports and the recent increases in oil prices.

Imports fell by $1.6 billion, but exports fell by $3 billion.

We will not be, as the Japanese did, exporting our way out of this trade deficit.

This is one reason why the American Express/CFO Research Services survey has 59% of CFOs seeing more layoffs.

Of course, the fact that nationwide, US home prices fell the most on record, 14% year over year, and the only markets where home sales are rising are where vultures are sweeping in to buy cheap foreclosure properties.

On the bright side, the National Federation of Independent Business’ monthly index of small business sentiment was up for the first time in 4 months.

It appears, however, that credit card company Advanta is not so optimistic. The company, which specializes in credit cards for small businesses, is shutting down its lending operations on June 10, after uncollectible debt exceeded 20%.

They are not shutting down, they are just shutting down all their credit lines, and just taking payments, which is awfully close to shutting down, so the credit cards just become so much plastic.

The deficit is not looking good either, with tax receipts so low that the federal government ran its first April deficit since 1983.

In energy, oil was up today, briefly breaking $60/bbl for the first time since November, before settling at $58.85/bbl.

This, along with banking changes and interest rate increases, is why the ruble is on a tear right now, and the US dollar fell to a 4 month low on comments by a number of experts that the recession is bottoming….Yeah….sure…

Economics Update

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It appears that the Fed’s best efforts to revive the housing market through low interest rates may be reaching their limits as mortgage rates and long term bonds climb higher.

Additionally, it appears that the Obama administration is seriously looking at winding down and liquidating Fannie Mae and Freddie Mac in the long term, which would generally push up mortgages issued after that point.

In the long run, I see this as a good thing. Home ownership as a goal in and of itself has driven much of the ills in our society whether it is the housing bubble, or the suburbanization of our society and out energy consumption levels,

In energy, oil fell on inventory growth, but that has not lowered retail gasoline prices, which are up 9% over the past 2 weeks.

In the mean time, the dollar and the Yen both rose, as the stock market decline pushed investors into safe havens.

Commander in Afghanistan Fired

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This is odd, but General David McKiernan has been fired as commander in charge of the Afghan theater, and replaced by General Stanley McChrystal.

The claim is that McChrystal, with a special ops background, is better suited to the conflict, but this has unfolded very quickly.

Note that McChrystal is hip deep in the Pat Tillman friendly fire coverup, as well as allegations of torture in Iraq.

No clue as to what is going on here.

Yet Another Auto Industry Update

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First and foremost, it looks like GM will be dropped from the Dow Jones Industrial average, no surprise with GM trading at around a buck and a half.

For the same reason, GM is looking at a 1-For-100 reverse stock split, which is no surprise, as the troubled automaker was trading at over $50 a share just 2 years ago.

Seeing as how GM bled $6 billion in the last quarter, the reverse stock split is prudent.

Meanwhile, the Chrysler bankruptcy is proceeding rather smoothly, see here, and here.

The judge has generally ruled against the sanctimony of the “non-TARP lenders,” whose numbers has dwindled, and the fact that their names will be revealed has made think twice about being jerks.

Meanwhile Fiat has been busy after having taken a stake in Chrysler, and is now looking to purchase GM Europe, aka Opel, and spin off its own auto manufacture in Italy to incorporate in their new larger auto manufacturing concern. (See also here)

Elections Have Consequences: Who Hoo!!!!!!!!

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Barack Obama’s new budget eliminates abstinence-only funding and a kick back program to churches.

From Page 491 of the budget (PDF):

The 2010 Budget proposes a new Teen Pregnancy Prevention Initiative to support community-based and faith-based efforts to reduce teen pregnancy using evidence-based and promising models. In addition, a new Strengthening Communities Fund will help build the capacity of non-profit organizations and State, Local and Tribal entities to better serve low-income and disadvantaged populations. This Budget also proposes funding for (1) a new child welfare initiative, and (2) a human services case management system for Federally-declared disasters. This Budget eliminates funding for Community-Based Abstinence Education, the mandatory Title V Abstinence Education program, the Compassion Capital Fund, and Rural Community Facilities.

The items in bold are two abstinence only education programs, aka the Bristol Palin teen parent plan, and the Compassion Capital Fund is a slush fund for churches set up by Bush and His Evil Minions™.

Wicked cool!

Latest Blogosphere Sh$# Storm

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So, the liberal part of the Blogosphere is all in a tizzy over the article written by CBS sports analyst, and former pro golfer, David Feherty on Bush moving back to Dallas, which contained this bon mot

From my own experience visiting the troops in the Middle East, I can tell you this, though: despite how the conflict has been portrayed by our glorious media, if you gave any U.S. soldier a gun with two bullets in it, and he found himself in an elevator with Nancy Pelosi, Harry Reid, and Osama bin Laden, there’s a good chance that Nancy Pelosi would get shot twice, and Harry Reid and bin Laden would be strangled to death.

Really, really classy, but I’m not outraged. Instead I’m perplexed.

This is what qualifies for humor in the conservative mind?

Seriously, for all the conservative complaints that humorists are biased against them, and the repeated abortive attempts by Fox News to come up with some sort of conservative political news-humor show, it all comes down to the fact that this sh%$ simply isn’t funny.

As Pablo Neruda said, “Laughter is the language of the soul,”* and conservatives are apparrently speaking pig-latin.

*Unlike Bart Simpson, I am not familiar with the works of Pablo Neruda, I just got the quote from the best Simpsons episode ever, Bart Sells His Soul.

OK, This is Mind-Bogglingly Stupid

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If you’ve been following the saga of the delays of the EADS A400M military transport program, it’s clear that the main thing holding up the testing of the aircraft is problems with its massive (10,000+ hp) turboprop engines.

It has now been revealed that this holdup is primarily the result of a bookkeeping error:

Although the A400M program has generally been running late, the pacing item since last year has been the engine – and the principal problem was a failure by Europrop International (EPI), the consortium behind the TP400-D6 engine, to recognize, until little more than a year ago, that the software in the full authority digital engine control (Fadec) did not meet European civil aviation standards.

EPI was basically working to military standards, in which Fadec software is considered to be validated by testing. Civil authorities additionally require a tightly disciplined software development process, in which every change, from the first line of the first version, is documented and traceable. Once the problem surfaced, there was nothing to be done but to go back and start again.

While I generally find system engineering, where you have some anal-retentive bloke going over the specs with a microscope, to be a pain in the ass, I acknowledge that they are needed now and again, but there don’t appear to have been any on this project.

Army Now Looking at FCS Replacement

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And externally, at least, it will look an awful lot like the canceled FCS manned ground vehicle family of vehicles. (FCS-MGV)

After all, if you are looking for something smaller and lighter than existing systems, you still have a box on treads.

That being said, there are some lessons learned here, and hopefully they will be fixed:

  • There was too much focus on commonality among vehicles. If you want a tank(ette) version, there is no reason to put it on the same wheelbase as an infantry combat vehicle or command vehicle. The M8 Armored Gun System, which I saw up close in my time at BAE systems,* was much smaller and lighter, and had a lower height, and hence better concealment. Going with a completely common platform costs more than you save.
  • Abandon the lead system integrator (LSI) concept of program development. This contracting concept has failed EVERY time it has been used, and there are already bills out there to ban the practice. It gives lunatics (defense contractors) the keys to the asylum.
  • A better understanding on what the program is for. On the FCS-MGV, for example GD was responsible for propulsion and suspension, and BAE Systems was responsible for the track, not because of any special technical abilities of the respective companies, but because of a deliberate policy to spread the money around evenly.
  • Implement technologies that are more mature.

*Full disclosure, I worked on the Future Recovery and Maintenance Vehicle, FRMV, “wrecker” variant of the FCS-MGV† from 2003-2006 at United Defense (later BAE Systems after the Carlyle Group sold me to buy Dunkin Donuts).
†Future Combat Systems-Manned Ground Vehicle. These are the ones that are the tanks and APCs. As opposed to the various unnmanned vehicles, networking technologies, etc. that form the full FCS along with the MGVs.‡
‡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.

Israel Has Maintenance Access Issue with F-35

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Israel has just been denied access to the computer systems of the F-35 JSF that would be required to maintain the aircraft.

Israel maintains that they need they need access to these systems, because in a wartime scenario, that they would need to repair the systems in real time, while the US maintains that there will be spares that can be replaced under those circumstances.

So Israel is now making noises about looking at the F-15 Silent Eagle upgrade as an alternative to the JSF, which I think is just blowing smoke.

I also think that both sides are talking around the real issues, the first being sticker shock, with a reporter $20 billion for 75 aircraft giving a $266 million price tag, but the second one, and perhaps the one that the Israelis are more concerned with, is the ability to independently integrate their own weapons and their own systems into the aircraft.

There is also the concern, at least amongst those of us who watched the recent Battlestar Galactica series, that there may be an “off” switch somewhere in those millions of lines of code.

Dude, What Did You Expect, an Education

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Sam Keller, a former quarterback for Arizona State University, is suing Electronic Arts and the NCAA over their licensing his image for their college sports game:

Electronic Arts Inc. and the National Collegiate Athletic Association were sued by a former college football player who claims athletes’ images are used in video games without their permission and in violation of NCAA rules.

Electronic Arts, the second-largest video-game publisher, circumvents the rules by allowing customers to upload player names directly into games and creating images that closely resemble student athletes to increase sales and NCAA royalties, according to the complaint filed by Sam Keller, a former quarterback for Arizona State University.

Normally, I fall on the side of rather open use of such things, and in the case of statistics for things like fantasy, I would do so anyway, but the fact that thee NCAA is a revolting organization does color my view here.

The equation here, at the top levels of sport anyway, is that the schools will pretend to provide an education, and in exchange the athletes will provide their services for free, and have no part in the billions that the schools rake in for the privilege.

When people complain about things like the lack of a playoff system in college football, they ignore the slave labor upon which this system is built.

Are You Wondering Just How Corrupt the Stress Tests Were

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Well, wonder no more. Treasury negotiated the results of the tests with the banks.

Of course if you were a student, and attempted to browbeat your teacher into improving your grade, they would just laugh in your face or demand a bribe, but if you are Ben Bernanke and Timothy “Eddie Haskell” Geithner, they can do it for you for free, or as Joe Btfsplk wrote in the comments section of this story, “Maybe next time, they could give the banksters multiple choice tests,” because they certainly failed the true-false test:

The Federal Reserve significantly scaled back the size of the capital hole facing some of the nation’s biggest banks shortly before concluding its stress tests, following two weeks of intense bargaining.

Bargaining?

This is supposed to be a test administered by the Treasury and Federal Reserve, not a negotiation.

The banks are in hock to the Treasury and FDIC for hundreds of billions of dollars, and to the Federal Reserve for Trillions, and they negotiated with the banks?

Whiskey Tango Foxtrot?

In addition, according to bank and government officials, the Fed used a different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits.

Again, this is not grading on a curve, this is is everyone getting a gold star.

Yes, Wells threatened a lawsuit, but that was an empty threat, because of the response of the market to their suing the FDIC, Treasury, and Federal reserve would have turned their shares into penny stocks.

Defense Budget Finally Out

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So, the details are out, and we have a big, confusing, and sprawling story from a big confusing, and sprawling building, the Pentagon.

Here are some links, and some things that I find noteworthy.

Specific programs:

With $439 million budgeted, the USAF is definitely going full speed on the tanker replacement bidding.

The Next Generation Bomber and the F-136 alternate JSF engine are on the chopping block, and the Gerald Ford class aircraft carrier has been delayed a year to work out the bugs on its electric catapults.

Star Wars takes a hit, with both the multiple kill vehicle and the airborne laser being canceled.

UAV’s did very well, with the Raven (shown) getting over 700 orders.

Aviation:

The DEW Line has a rundown.

Classified:

The Pentagon classified budget is now, up above $50 billion, which, on its own, makes the black programs something like the 3rd largest military budget in the world.

US Army:
spending on Helos is up, as are both unmanned vehicles and the number of active duty soldiers.

Navy:

We already know the story, cancellation of the DDG-100, restart of the Brukes, and continued procurement of the LCS, more here, here, and here.

Short version, it’s a generally down, but the Navy has done OK.

USAF

Basically, talk to the deer.

The USAF did not fare well, with the end of the F-22 and C-17 production lines, underfunding of the Air Force One replacement, the Joint Dual-Role Air Dominance Missile (JDRADM), and the follow on to the Predator drone, and the cancellation of the TSAT satellite system.

Cost Guard:

Not the Pentagon, it’s technically in the Department of Commerce, but its budget is up by about 3%.