Year: 2009

Boeing’s Looks to Uprated Engine for Super Hornet

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As a results of GE’s work on the Integrated High Performance Turbine Engine Technology (IHTET) research program, GE has managed to increase the thrust of the F-414 engine by 20%, which would take it from its current 22,000 lbs to about 26,400 lbs of thrust, and Boeing is looking to using this engine as an inducement to sell more of it’s F/A-18E/F Super Hornet and EF-18G Growler on the export market (paid subscription required). (See also here).

Basically, there is a new core, which the US Navy wants to increase durability, and reduces fuel consumption by about 3%, and a new fan, which can be used to increase thrust, and which the navy does not want.

Boeing is offering the 2nd option to other customers, which is a sort of acknowledgement that the “market” finds the F/A-18 E/F (and G) to be a little bit poky compared to the competition.

It might also make SAAB’s Gripen NG, my fighter obsession du jour, more attractive, as the increased durability engine would save costs and give it somewhat longer legs, and the 20% increase in thrust, which might require a new inlet, because mass flow increases, would offer a very significant increase in performance.

One Solution to Piracy

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There is s conflict between merchant ships being generally forbidden under international maritime law from carrying weapons, and how to deal with the the upsurge of pirates.

One interesting solution is the electronically controlled water cannon, which comes with a remote control joystick, so that the operator can be away from the turret, and the returned fire, an automatic system to track small boats, the ability to also shoot pepper spray, and, at 5000 liters a minute, it can, “send an 85 kg barrel flying end over end at 75 meters”, which is well probably at the accurate fire limit for someone shooting you at a small boat.

Best of all, it’s not a weapon, it’s “fire fighting equipment,” and so is not subject to things like port restrictions.

Gives New Meaning to the Term “Standing for Election”

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A Sex Party has been formed in Canada, which is committed to the liberalization of sex laws and regulations and to to combat the stigmatization of sex in the political process in North America:

The monster in question is ‘erotophobia‘. “Running amok through the North American psyche – like a deranged yet invisible King Kong – are deeper antisex attitudes that produce stale marriages, anti-prostitution legislation, laws against public nudity, government classification of pornography, cautionary – not positive – sex-education classes, media censorship, homophobia, and the biggest bugaboo of all: guilt.”

This follows the formation of similar political organizations in Australia and the UK.

I actually think that puritanical attitudes about sex, and the alarmist attitudes about the juxtaposition of sex and race in the United States, have created a truly delusional mindset on the part of the right wing, and the emergence of a truly pro-sex movement in the US would therefore be a good thing.

Economics Update

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So, the bank failures come later today, it’s Friday, but Calculated Risk’s Credit Crisis Indicators are generally positive, though it appears that there are a lot of bears on Treasuries, with the 10-Year note falling sharply.

Then, we have a return of the monoliner insurers, with Moody’s looking at cutting ratings on a whole passel of them.

Meanwhile, all the concern about treasuries and the USD pushed the dollar down today, which in turn pushed oil above $61/bbl.

On the brighter side, this led OPEC to decide against a production cut.

Heck of a Terrorist Plot You’ve Got There

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You know, those highly trained terrorists who were planting bombs.

You know, the ringleader, David Cromitie, who admitted to being stoned while planting what he thought were bombs.

And you have the full rundown of the “Newburgh 4”, which includes a cocaine addict, a schizophrenic who is borderline retarded, and the government informant, was facing deportation for what amounts to forging immigration documents, who ran a similar sting a few years back, allegedly attempted to pay another member of his mosque to join his merry band, and was described by independent observers as “the boss.”

I have no doubt that they will be convicted, that’s what happened to the folks down in Florida, but this does nothing for anyone, except perhaps the police and prosecutors who use unreliable informants for career climbing.

Let There Be No Kings

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So, one of the proposals in Barack Obama’s speech is a proposal for permanent preventive detention on the say so of the President:

“But even when this process is complete, there may be a number of people who cannot be prosecuted for past crimes, in some cases because evidence may be tainted, but who nonetheless pose a threat to the security of the United States. Examples of that threat include people who’ve received extensive explosives training at al Qaeda training camps, or commanded Taliban troops in battle, or expressed their allegiance to Osama bin Laden, or otherwise made it clear that they want to kill Americans. These are people who, in effect, remain at war with the United States.

Let me repeat: I am not going to release individuals who endanger the American people. Al Qaeda terrorists and their affiliates are at war with the United States, and those that we capture — like other prisoners of war — must be prevented from attacking us again. Having said that, we must recognize that these detention policies cannot be unbounded. They can’t be based simply on what I or the executive branch decide alone. That’s why my administration has begun to reshape the standards that apply to ensure that they are in line with the rule of law. We must have clear, defensible, and lawful standards for those who fall into this category. We must have fair procedures so that we don’t make mistakes. We must have a thorough process of periodic review, so that any prolonged detention is carefully evaluated and justified.

I know that creating such a system poses unique challenges. And other countries have grappled with this question; now, so must we. But I want to be very clear that our goal is to construct a legitimate legal framework for the remaining Guantanamo detainees that cannot be transferred. Our goal is not to avoid a legitimate legal framework. In our constitutional system, prolonged detention should not be the decision of any one man. If and when we determine that the United States must hold individuals to keep them from carrying out an act of war, we will do so within a system that involves judicial and congressional oversight. And so, going forward, my administration will work with Congress to develop an appropriate legal regime so that our efforts are consistent with our values and our Constitution.”

This is contemptible.

If they are prisoners of war, then treat them as such, and grant them the rights therein, including the Geneva conventions, which among other things, prevent their transfer to 3rd countries (Bagram and the CIA gulags).

If they are not, then try them by jury.

This was also the reaction of civil libertarians who had an off the record meeting with him at the White House.

I’m sure that Barack Obama has read the Declaration of Independence, and amongst the grievances given by the founding fathers were, “depriving us in many cases, of the benefit of Trial by Jury,” and “transporting us beyond Seas to be tried for pretended offences,” which sound a lot like what he wants to do.

His argument is that unlike Bush, he can be trusted.

This is a lie. Any agency of government who wishes the grant or extraordinary power on this basis is inherently untrustworthy, and the same goes double for his successor.

Sorry, but, “Because I’m so awesome,” is not a reason.

His speech frightened me more than Dick Cheney’s, because Dick Cheney no longer has the power to do what he wants.

FASB Rule Will Force Banks to Move Assets Onto Books

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Effective for reporting periods after November 15 of this year, the Federal Accounting Standards Board (FASB) is requiring that the assets of Qualifying Special Purpose Entities (QSPEs) be reported “on the books”.

Yes, I know your first question, “Can I have that translated please?”

The quick translation is that these are “off balance sheet entities,” which are used to conceal losses and risk.

Here is a snapshot:

Lenders recorded profits before the U.S. subprime mortgage market collapsed in 2007 by selling pooled loans to off-balance- sheet trusts, which repackaged the pools into mortgage-backed securities. Banks then sold those securities to other off- balance-sheet vehicles they sponsored, concealing from investors that the securities were backed by deteriorating mortgages.

As to the next obvious question, “What does this all mean?”, it means that significant losses and risks which, until now, have not been a part of many financial institutions reporting, will be reported, and significant losses will result.

How much?

Well, the article says about $900 billion, but my guess is that this is low, because one is always shocked when one turns over a rock.

Let There Be Contested Primaries

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Barack Obama must be listening to Rahm Emanuel again, because he just successfully pressured Rep. Steve Israel to drop out of the New York primary race against Kristen Gillibrand.

I guess we see yet another case of incumbent protection.

I do not know whether or not Gillibrand would win in a real contested primary. She probably would, she is a prodigious fund raiser.

What’s more, she seems to be moving a little to the left now that she is representing the state of New York, as opposed to just her Neanderthal district.

But none of that earns her, or any candidate, the right to a primary without a meaningful challenger.

“Move Quickly” Means that the Taxpayer Getting Boned By the Banks

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So, Timothy “Eddie Haskell” Geithner is saying that the Treasury will move quickly to sell the warrants it got for the TARP money.

The warrants, basically stock options, were there to ensure that taxpayers would share in the upside, as well as the downside, but now he’s looking to “move quickly” to sell them.

The devil is in the details:

Big banks may value their warrants at an amount that is hundreds of millions of dollars below the prices that other models might generate, the Treasury official said. That range makes it hard for the government to find a price that protects taxpayer funds without penalizing the banks.

…

Geithner today reiterated that the government can sell the warrants back to the bank or to a third party.

Translation: How do we cut a sweetheart deal for the banks?

Because if the Treasury actually believes that the banks are truly solvent, and will survive, then the warrants are worth tens, if not hundreds, of billions more than what we the taxpayer will get for them.

This Article Makes Me Feeling Queasy

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A New York Times financial reporter describes how he got tied up in the foreclosure crisis.

I guess the article is a good description of the mania that gripped the nation,* but it makes me feel like a peeping Tom, so I let it percolate in my mind for a while.

It’s informative, but it made me feel like I was intruding to read it.

*Well, not so much me, I bought a house in 2004 with a 30 year fixed rate mortgage and 20% down, at only about a 15% greater payment than the half a duplex I was renting, I had to move, and so I bought, even though I though houses were overpriced.

Morons Trying to Drum Up Billable HOurs

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So, two lawyers specializing in IP litigation have proposed changes in copyright and anti-trust law to bolster newspapers.

Unsurprisingly, their proposals would create an explosion of litigation, which would mean that they could buy that yacht that they have their eye on.

What they propose:

  • Ummm….Making search engines indexing web sites a copyright violation?
    • The idea here is that creating an index is a copyright violation, which means that things like the old index of periodicals in the library, an essential research tool, would be illegal.
  • And allow newspapers to price fix, so that they can all start charging for online content.
    • Let’s note that newspapers are not in the business of selling the content called “news”, they are in the business of selling advertising. The cost of purchasing a paper only covers the cost of the ink, paper, and printing. That’s why, when the chains started buying up newspapers, and cutting newsrooms about 2 decades ago, they could generate those 20%+ margins on a much crappier product.
    • The threat to newspapers is not people reading their news online, it’s Craig’s List. It’s the loss of classified ad revenue that has put these institutions behind the financial 8-ball
      • Oh, yes, there’s also the issue of accumulating insane levels of debt to build these chains in the first place.
  • Federalizing the “hot news” doctrine.
    • This one is just plain stupid. It’s a 1918 decision which says that a news service cannot take a story from another, rewrite it, and pass it off as it’s own, which is a good idea, but they want to make the reporting that a news source broke a story, like, “The Wall Street Journal reported today that sources in the Treasury have determined

As Timothy Karr notes

But consider this. Just a few years ago, the average profit margin for newspapers was 20 percent — with some raking in twice as much or more.

“Did they use these astronomical profits to invest in the quality of their products or to innovate for the future?” asked Free Press’ Craig Aaron on Thursday. “No. They just bought up more newspapers and TV stations.” (On May 12 Free Press released a National Journalism Strategy that outlines forward-thinking policies to save journalism, and not merely prop up the creaking old guard.)

(emphasis mine)

I am not concerned about the future of news papers, I am concerned about the future of journalism……Scratch that…I am concerned about the present of journalism, because the professionals out there, whether covering George W. Bush, the housing bubble, or just publishing this bit of crap, seems to be in a state of incompetent free fall.

Professional journalism today in the United States is a captive of those that they cover, and so people like me go to foreign and not-for-profit sources to find our news.

It’s About Bloody Time

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There are indications that the government is pressuring Bank of America to make major changes in the composition of its board.

Basically, they want people who actually understand banking to be the directors of a bank, imagine that.

When juxtaposed with FDIC Chief’s Sheila Bair’s comments saying to expect that some bank CEOs will be given their walking papers, though the FDIC walked backed from the statement later, is a good sign.

We own the banks, now lets fire the rat bastards who broke them.

Bank Failure Friday on Thursday

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BankUnited, FSB, Coral Gables, FL, which is no surprise. BankU has been dead man walking for at least 2 weeks.

It’s the biggest failure of the year, and 2nd biggest ever, only exceeded by the failure of Indymac last year.

It’s the 34th bank failure of the year.

The closure will cost the FDIC $4.9 billion, almost doubling the amount of money that it has shelled out so far this year.

As to why do this on Thursday, probably because they have a very busy Friday planned.

Before the President’s Day weekend, there were 4 bank closings, the most this year, and my guess is because they had an extra day to straighten things out before the banks had to open their door, so I would expect this 3 day weekend to be very busy.

Full FDIC list.

Another New Word Learned in Real Estate

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Courtesy of Calculated Risk, I come across the term “loan recast.”

It’s similar to a “loan reset“, in that it means that your mortgage payments are increasing, but instead of being an increase in interest rates, it is a change in terms.

So, for example, if you have an interest-only or negative amortization mortgage, when the time comes to catch up, and make payments on principal, you have a recast.

They are in some ways much more worrisome than resets, because if a mortgage resets during a time of low interest rates, the payment may not change by much, but when a mortgage recasts, the payments go up regardless of the interest rates.

The yellow are recasts, and they look like a tsunami.

The graph on the right

A Battle Obama Needs To Lose

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And hopefully, he already might have lost.

There was every indication of a knock down drag out fight inside the Democratic party over the Panama free trade agreement, dealing with the fact that it did nothing about Panamanian money laundering or labor and environmental protections.

Well, after over 50 Dem Representatives sent a letter on this matter, Obama agreed to hold back on submitting the Panama free trade deal until there is a “framework” for protecting labor and the environment.

One of the unspoken consensuses in Washington, DC is that a bad free trade deal is better than no free trade deal, because free trade, raises living standards, spreads democracy, prevents rain on picnics, and keeps your daughter from dating the guy with the studs and tattoos.

I don’t believe that this pause is real. It is merely a ploy to get the votes he needs to pass the deal(s), which also include Columbia and Korea.

When you look at the people around him, like Austan Goolsbee, it’s pretty clear that these folks are free trade (except when it comes to IP) fanatics, and they keep coming back until they either win, or are slapped down firmly.

What Josh Said

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I don’t have much to say on Obama’s speech, I’ve only read the transcript, and Obama needs to be watch, but Josh Marshal finds the reality on Richard Bruce Cheney when suggests that Cheney is at best a figure of mockery and derision:

This is someone who not only organized and seemingly directed a policy of state-sponsored torture. He did it in large part to get people to admit to crankish conspiracy theories he got taken in by by a crew of think-tank jockeys in DC whose theories most even half way sensible people treated as punch lines of jokes. So it’s Torquemada or 1984 but only after getting rescripted by Mel Brooks.

This is an extremely gullible man who has just come off being the driving ideological force in an administration that most people can already see produced more fiascos and titanic, self-inflicted goofs than possibly any in our entire history. By any standard the guy is a monumental failure — and not one whose mistakes stem in some Lyndon Johnson fashion from tragic overreach, but just a fool who damaged his country through his own gullibility, paranoia and bad judgment. Whatever else you can say about the Cheney story it ain’t Shakespearean.

Indeed.

Economics Update

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The Economic Downturn and Contemporary Art Sales, courtesy of Felix Salmon

Well, Thursday is jobless claims day, and weekly initial jobless claims fell by 12,000, to 631,000, and the 4 week moving average fell to 628,500 from 632,000, but continuing claims hit yet another new record, hitting the number of the beast, 6.66 million.

Meanwhile, more GDP data from more countries has come out, and it is almost uniformly grim.

Additionally, the Philadelphia Fed manufacturing index is showing further contraction, though it did rise, from -24.4 to -22.6.

Of course, the press is touting the fact that the April leading economic indicators rose, but this is a volatile index, and is not supposed to mean anything until you have 3 straight months up or down.

Meanwhile, Treasuries fell, and yields rose, on reports that the Fed will be buying less of them, and on an announcement that the government would be selling an additional $162 billion of them next week.

Basically, it’s inflation concerns, which also drove the dollar to a 4 month low.

Oil rose, largely on profit taking from yesterday’s high.