Year: 2009

I Think That These Financial Machinations Qualify as Financial Terrorism

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It appears that there is a reason why Lawrence Summers seemed to capitulate to AIG’s bonus contracts for its financial products division, as I mentioned yesterday: They specifically wrote the contracts so that the counter-parties could consider it a default and demand an immediate payment if they did not get their bonuses.

So, basically, they wrote blackmail terms into their contract, which seems to me a awful lot like a sysop writing a back door into the computer network, and at least as illegal.

With the Serious Fraud Office in the UK investigating them, as well as New York Attorney General Andrew Cuomo investigating their bonus, I think that the best alternative at this time is for American authorities to seek their extradition under the terms of the recent treaty.

I think that though of facing the United States generally inhumane prison system will have them folding like overcooked broccoli for the privilege of spending a few years in a British prison.

Likud and Israel Beiteinu Sign Coalition Deal

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This is the first deal signed, and it takes Netanyahu to 42 of the 61 seats needed to govern.

About the only bright side on this is the possibility, however slight, that Israel Beiteinu rather militant secularism will to some degree inform the political discourse regarding the Heredim* Schnorers.†

But that still does not excuse IB’s rather militant racism.

*Ultra-orthodox.

†A beggar who would chide a donor for not giving enough.

On Receiving the Largess of the House of Saud

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I have followed the entire “rent-a-crowd” hysteria regarding Charles Freeman’s appointment as chair of the National Intelligence Council, but I really haven’t had anything to add, but in commenting on this Ken Silverstein of Harper’s Magazine asks the following:

So why is the Middle East Policy Council any more intellectually corrupt than AEI or WINEP? And why is employment at the former a bar to government employment, but a job at the last two is not?

The answer here is not is not that the MEPC is in any way more corrupt, either legally or intellectually than the AEI or WINEP.

Rather, it is that Saudi money is perceived as dirty, while the money going to the AEI and WINEP is largely domestic wingnut, which is perceived as “cleaner”.

As corrupt as domestic wingnuts are, and they are very corrupt, their history of selling opinions to big bucks backers has long been document, but the House of Saud is a poster child for bad governance, bad policy, and bad governmental structures, being one of the few remaining absolute monarchies in the world, and even by that standard it is remarkably venal and corrupt.

I think that the hit on Freeman was wrong and stupid, but the idea that Saudi money should be viewed as both corrupt and corrupting is very close to the truth of the matter.

If an organization wants to be taken seriously, it should steer clear of Saudi money.

Self-Important Wankers

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It appears that the members of the Washington, DC press corps are miffed because Barack Obama won’t be attending their annual Gridiron dinner:

But some Gridiron veterans make clear they don’t understand. Chicago Tribune columnist Clarence Page said, “People feel uncommonly saddened, miffed and burned.

“I don’t think he understands the implications of not coming to the club in the first year. It’s not your ordinary state dinner. I think it would be helpful for him and his relations with the Washington establishment to come to the club.”

Mr. Page, by “some people”, you mean “Chicago Tribune columnist Clarence Page,” and you need to get over yourself.

Beyond bruised feelings among the pundit class, Obama’s snub is a revealing cultural moment.

Gridiron has for decades been an inner sanctum of Washington’s political press corps. The club’s mostly aging members were considered highly prestigious because they said so — and because they had the ability to summon the capital’s political elite to a spring frolic of skits and songs.

But if a young and glamorous president decides he can afford to blow off an august and tradition-bound institution, one has to at least entertain the possibility that this institution may not be quite as august as its members assumed.

It never was anything but a mutual masturbation society.

Obama decided that spending spring break with his girls was more important, so good for him.

Economics Update

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Scary production graph courtesy of Calculated Risk

Industrial production has fallen for the 4th straight month, and the year over year decline is the largest since 1975, and the New York Fed’s Empire State Manufacturing Survey fell to a record low, so no one is manufacturing much of anything.

What’s more, the port of Los Angeles import traffic fell 27.3% year over year, so no one is buying imports either. (Note that this number does not include the port of Long Beach)

Also, the Builder Sentiment Index is unchanged, and so it remains near its record low, so real estate is still dead.

At least people are still willing to buy US government debt at reasonably low interest rates.

In energy, OPEC kept production targets unchanged yesterday, and so oil rose today.

In currency, the dollar fell on the poor manufacturing numbers.

Angela Merkel Simultaneously Stupid and Wise

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First, it appears that she continues to buy into Hoovernomics, refusing to implement a new stimulus package, and then, shockingly, she mentions the elephant in the room, noting that the EU expanded too quickly, and needs to get its sh%$ together before adding more countries.

I think that the first opinion comes from two places, her early days as a citizen of the DDR (East Germany) makes her dubious of anything that sounds remotely like socialism, and also the institutional German memory of hyperinflation 1919-23, which afflicts Germans on both sides of what was the Berlin wall.

As to her statement that the EU needs a “consolidation phase” before any new members join, which is both correct, and a significant departure from the conventional wisdom in Europe, this is something that is easy for an outsider to recognize, like Paul Krugman, but not for members of the European equivalent of the “Beltway villagers”.

So props to the Chancellor on getting this right.

Not Enough Bullets, AIG Yet Again

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This time it appears that AIG is paying either $165 million, or $450 million to senior employees of their financial products division, the one which bankrupted the firm through their credit default swap (CDS) business.

It appears that the treasury, who, you know, manages AIG on behalf or the taxpayers, who now own of 80% of the bankrupt in everything but name only firm, were told by AIG president Edward Liddy that these were contracts, and so they had to honor them:

[Obama economic guru Larry] Summers said the government would examine its options, but he acknowledged it might not be able to terminate prior bonus agreements.

“We are a country of law. There are contracts. The government cannot just abrogate contracts,” he said in an interview Sunday on ABC’s “This Week.”

AIG is already scheduled to pay $121.5 million in incentive payments for 2008 to senior executives and 6,400 of its employees. And AIG is laying out another $619 million for 2009 in retention payments to more than 4,000 employees.
Total expected payments amount to almost $1.2 billion.

Somehow, the contracts signed with auto workers must be renegotiated, but those signed with failed and incompetent financial executives must be supported.

Seriously, the US government claim of impotence in the face of a contract is a reflection of the fact that Mssrs. Summers and Geithner are creatures of the corrupt financial industry on Wall Street, and cannot see beyond this.

If I had to choose between Vladimir Lenin and Timothy Geithner at Treasury, I would be very hard pressed to choose.

Gripen NG AESA Radar in Flux

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Originally, SAAB had contracted with Thales for its AESA antenna to be integrated with the Gripen NG, and while this will happen, Thales is refusing to make this available for production variants, because they are heavily tied into the Dassault Rafale, so far winless in export competitions, and the Gripen is competing against it for the Indian MMRCA and the Brazilian fighter competition.

This is further complicated by the fact that while the Thales system is compatible with the existing signal processor from the Saab PS-05 MSA radar already flying on the JAS-39 C, some of the successors would likely require that that this be changed, increasing integration costs.

So SAAB is casting about for another radar, hopefully one that is US content free, so as to avoid US export restrictions.

Well We Know Where Were Goin, But We Dont Know Where Weve Been*

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So, it appears that we have yet another aspect of NASA’s Orion moon program, the heat shield, where the original material, Phenolic Impregnated Carbon Ablator (PICA) has been replaced with an updated version of Avcoat, which was used in the original Apollo capsule.

The PICA heat shield was delivered late, and looked to be overkill for what should be the primary mission of the spacecraft, low earth orbit, with a focus on servicing the space station.

This is a reversal from the decision made in 2006 by both NASA and Lockheed-Martin, the prime contractor, to go with PICA, and that should have been the end of the story, only the preliminary design review (PDR) also scheduled for that year has still not been held, and Avcoat showed lighter weight than the original, along with significant reductions in the toxic substances used in its manufacture.

Confused? So is NASA, so it seems.

*The first two lines of the Talking Heads song Road to Nowhere. It’s a metaphor for NASA.

Ceramic Composites Starting to Find Way Into Engines

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Production verification ceramic matrix composite vane

Well, we now have another reason to support a 2nd engine for the JSF, it appears that the GE/Rolls-Royce F-136 alternate engine will be the first production engine to use ceramic composites. (paid subscription required)

Right now, they are looking at using it on stationary parts of the engine, “vanes, shrouds, combustor liners,” though there is investigations of using it on rotating parts too.

There is both a significant weight savings (Nickel is heavy), and a reduction and/or elimination of the need for cooling air.

We Forgot How To Make Trident Missile Warheads?

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It appears that someone neglected to properly record how to make a super-secret, and highly toxic, substance called “Fogbank”, which is thought to be a, “thought by some weapons experts to be a foam used between the fission and fusion stages,” of the warhead.

Not only was the old facility to make Fogbank demolished, but, “Vital information on how Fogbank was actually made had somehow been mislaid”, or perhaps never recorded, because the stuff is so super-secret.

Un-dirtyword-believable.

Big River

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So, it’s finally opening night for the Reisterstown Theater Project’s production of Big River, a musical based on Mark Twain’s classic Huck Finn.

My wife is not up to going to the theater today, so we will see it tomorrow.

My daughter is in the chorus, and she has one line, and she loves being in the play, though I think that if she wants to do this again, we will wait until school is out, because with rehearsals, homework, etc. she is running herself ragged.

It’s an amateur production, though it’s fairly well done, with the strongest actor playing the runaway slave Jim.