Year: 2010

Senate Appropriations Committee Pulls F136 Alternate Engine Funding

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In addition to zeroing out the alternate engine, they also cut 10 production aircraft from the FY 2011 for failure of the program to execute per schedule.

This implies to me that neither cut could have gone through on its own, but together, both those who have concerns about the JSF, and those who don’t want the engine got enough of what they wanted to support each other.

Meanwhile GE/RR is ramping up efforts to reverse this decision, noting, among other things, that the budget numbers that the Pentagon is putting forward on the F136 engine are sketchy at best.

H/t ELP Defens(c)e Blog

Brazil to Delay Fighter Acquisition Decision

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Brazilian President Luiz Inacio Lula da Silva will now make the decision after elections but before he leaves office:

President Luiz Inacio Lula da Silva will decide who gets Brazil’s multi-billion dollar contract to build jet fighters after the October elections but before he leaves office on Jan. 1, his defense minister said Sept. 7.

The finalists now battling it out in the final stages of the tender are France’s Rafale made by Dassault, Sweden’s Gripen NG by Saab, and the F/A-18 Super Hornet manufactured by U.S. giant Boeing.

Da Silva favors the Rafale, because he thinks that there are more opportunities for technical transfer and other cooperation with the French, while the military favors the Gripen, which will be the least expensive aircraft over its life time, having half the engines, and half the weight of the two competitors.

As to the F/A-18, tech transfer is rather iffy, but the unit price is likely the lowest, and it might help with cooperation with any US military operations in Latin America.

My guess is that he will choose the Rafale, he has already expressed a strong preference for the aircraft.

At this point, there is no intention to use it on Brazil’s aircraft carrier, but that possibility might push them towards either the Rafale-M or the F/A-18 E/F, both of which are carrier capable.

People With Way Too Much Free Time

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The Terran Research Ensemble, who are putting on an Opera in Klingon:

On Friday in The Hague, Netherlands, the Terran Research Ensemble raised the curtain on “U,” the first Earth opera performed entirely in Klingon. “U” is the Klingon word for “universe” or “universal,” and the opera tells the story of Kahless the Unforgettable, said to be the first Klingon emperor.

“Klingon are known as passionate opera lovers but at the same time very little was known about Klingon opera here so as far as I was concerned that was a very interesting challenge to try and make an authentic, or as authentic, something out of that as possible,” U co-creator Floris Schonfeld told Reuters and The BBC.

I will say that is only the 2nd most absurd juxtaposition of art and language, after the effort by South Africa in the Apartheid days to translate Shakespeare into Afrikaans:

Hamlet: Mein Papa der schpook!

Vote For Me You C@cksucking Losers Is Not a Good Campaign Slogan…

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But it is the apparent strategy of Barack Obama and His Stupid Minions™ for the mid terms.

Here’s the story, a group of activists lobby the Obama administration to put Jimmy Carter’s solar panels back on the White House. They do a tour with a panel, and get people to sign a petition, and the panel gets on Letterman.

Truth be told, this is precisely the sort of guerrilla theater agitprop that I hate, but you know, whatever floats their boat.

So, they get their meeting at 1600 Pennsylvania Avenue, and what what happens next is illustrative: They meet with a couple of low level drones, who try to filibuster the meeting by reading Washington Post articles to them about how pro-environment they are, and then they refuse to have their pictures taken with either the panel or for the presentation of the petition.

When asked why, their response is, “If reporters call and ask us, we will provide our rationale,” and then they, “pass out Xeroxed copies of a 2009 memorandum from Vice President Biden,” and end the meeting.

So, here is your pamphlet, now get the f%$# out.

You know, whoever decided on this response, because it is clear that the drones were just following orders, are as Ronald Reagan, Jr. said about Dick Cheney, “[Not] a mindful human being. That’s probably the nicest way I can put it.”

Economics Update

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It’s jobless Thursday, and the initial claims numbers are out, with initial claims falling to 450,000, the 4 week moving average falling to 464,750 last week’s 478,250, continuing claims falling 84,000 to 4.49 million, and emergency claims fell by over 500,000, which is all a good thing, though the story also mentions that the Federal Reserve Bank of Philadelphia’s general economic index missed expectations, remaining in the contractionary range, while the New York Fed’s Empire State Index fell but remained in positive territory.

In terms of other general measures, we have conflicting data, with inventories rising strongly, retail sales rising in more sedately, and the NFIB’s small business confidence rising modestly to an anemic 88, while on the other side we see industrial growth slowing in August.

Real estate, on the other hand is pretty grim in the post-tax credit days, with home repossession spiking, and CoreLogic’s home price index showing no year over year gain for the first time in five months, and home mortgage applications fell this week.

On the inflation front, the Producer Price Index came out, and while there is still little inflation in the core rate, but food and energy costs are rising more sharply, though still well below a 6% annual rate.

Why is the Federal Reserve Freaking Out?

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It appears that the Federal Reserve is putting out signals that it will be engaging in more quantitative easing (printing money) toward the end of this year:

The U.S. Federal Reserve could announce a new program of asset purchases to support a weak economy as early as November, according to Goldman Sachs Group Inc.

“We don’t expect this at the Sept. 21 meeting, but in November or December there’s certainly a possibility that it will be announced,” Jan Hatzius, chief economist at the bank, said Tuesday. He added the Fed is likely to buy U.S. Treasurys worth around $1.0 trillion to kick-start the economy.

Maybe I am being alarmist, but I as Ben Bernanke and the rest of the Fed have already proven themselves to be remarkably blase about the unemployment levels, so I have to assume that they are expecting to see someting major shake loose in the financial markets, and they want to restart their sh%$pile for cash program to forestall this.

It might not be an economic or financial issue that is getting them to move though, as they are currently hamstrung by the intersection of the law and Barack Obama’s general unwillingness to challenge republicans on the stonewalling of even the most benign nominees.

As a result, 3 nominees for the Federal Reserve Board of Governors are cooling their heels, and with the retirement of Donald Kohn, the board membership is down to 4 members, which means that they cannot make the emergency loans that they did following the collapse of Lehman:

Here’s a scary thought: Let’s say the European sovereign debt crisis flares up again, and one or two Euro banks fail. (Not a bank like UBS or Deutsche Bank, but a medium-sized bank like Bank of Greece or a Landesbank.) That, in turn, causes a U.S. money market fund — many of which have large exposures to Euro banks — to “break the buck,” which leads to another run on money market funds.

The Fed would be powerless to help. The Fed’s emergency lending authority (the famed Section 13(3)) requires that any emergency lending facility to non-banks be approved “by the affirmative vote of not less than five members” of the Fed Board of Governors. Currently, there are only four members of the Fed board: Bernanke, Warsh, Elizabeth Duke, and Dan Tarullo. Donald Kohn retired earlier this month, and the Senate has yet to vote on Obama’s three nominees (Janet Yellen, Peter Diamond, and Sarah Bloom Raskin).

Indeed.

Of course, Obama could fix this by making a recess apportionment, I would suggest that he actually appoint Jamie Galbraith, because it would freak the Republicans out, but he doesn’t have the guts for that, or much else.

Japan Makes Banzai Charge Against Chinese Currency Manipulation

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As a result of Chinese currency manipulation, the Bank or Japan has started selling Yen to keep it from strengthening it too much, which wold kill exports and likely create a trade deficit.

This the first time that this has happened in 6 years, but there is a twist to what the BoJ is doing:

At first glance, the action looks like a something-must-be-done-this-is-something -therefore-this-must-be-done move: a new prime minister and a “bold action” doomed to be proved ineffectual. The FX markets are so enormous (dollar/yen alone trades some $750 billion per day) that it’s hard to believe a single sale of less than $20 billion in yen could even have the short-term effect we saw last night, let alone have any lasting consequences.

But this isn’t just about FX-market intervention. This is also about monetary policy, and that could make a real difference:

………

In other words, the Bank of Japan isn’t simply selling yen, it’s printing yen. (And then selling them.) Given (a) that it’s the central bank and that it can print as many yen as it likes, and (b) that it would actually welcome a bit of inflation, there’s actually a non-negligible chance that this kind of non-sterilized intervention could work.

The term “non-sterilized” means printing money.

The Federal Reserve could do the same thing, and getting the dollar to a reasonable level versus the Chinese Yuan, and some inflation right now would be a good thing.

Basel III

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Click for full size

Additional Capital Requirements


Phase In Schedule

I’ve been looking at the Basel III international banking proposals, and I find them rather weak tea.

The 10¢ tour of the proposal is that they are requiring more capital, 4.5% tier 1 capital (basically capital that can be redeemed for cash in a market essentially immediately), a further capital conservation buffer, and a “counter-cyclical” buffer that would kick in when times are good.

This will all be phased in over a 5 year period starting in 2013.

As to what it all means, I agree with Yves Smith that, “the reality is that a Basel III world will not look hugely different to the one from which the last crisis sprang.”

In particular, there is next to nothing on synchronizing accounting standards, which will send banks to places where they can call a bouquet of flowers a Tier 1 asset, does not deal with the shadow banking system in any meaningful way, and ignores the vast pit of putrescence that is the ratings agencies.

The Next Chapter of the Airbus/Boeing Pissing Contest

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And it does not involve the tanker.

The WTO, after ruling that Airbus was the recipient of illegal state subsidies, has now ruled that Boeing has also received billions of dollars in illegal state subsidies:

The long-running trans-Atlantic spat over government support of the world’s two biggest aircraft makers gained fresh momentum on Wednesday as a trade panel found that Boeing had received subsidies that violated global trade rules, people briefed on the decision said.

American lawmakers said on Wednesday that the subsidies, $5 billion from federal and state agencies, were just a fraction of the $24 billion that Europe had alleged and were far less sweeping than the benefits its rival, Airbus, had received.

But European leaders said that the finding, by a panel of the World Trade Organization, showed that the United States had also relied on subsidies in the fight for plane sales, and that the ruling would help prompt negotiations to resolve the problems.

What is interesting here is that they cite the military contracts that Boeing gets, but also the tax abatements with the WTO board determining that, “Boeing had received subsidies through some of the research contracts from the National Aeronautics and Space Administration and the Pentagon, as well as through tax incentives linked to its facilities in Washington State, Kansas and Illinois.” (emphasis mine)

This is about more than just the Airbus/Boeing subsidies. The WTO just ruled that the shakedowns that business inflict on communities by way of tax breaks are illegal subsidies under the current international trade regime..

This is a good thing.

I’d like to see Congress to find a way to ban this little bit of corporate pay-to play.

I Called It

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This is what the betrayal feels like to me, and I never believed in him.

Remember when I said that Obama would not recess appoint Elizabeth Warren, or use the law to allow her to be the interim head of the Consumer Financial Protection Bureau, because that’s what the DFH’s* would want?

Well, I was right. The White House is now shopping its plan to the media, and ABC’s Jake Tapper has the scoop:

President Obama will announce this week that Elizabeth Warren, the Harvard Law School professor who first proposed the Consumer Financial Protection Bureau, will be named to a special position reporting to both him and to the Treasury Department and tasked with heading the effort to get the new federal agency standing, a knowledgeable Democrat told ABC News.

So she will be a “special advisor”, not a recess appointment, nor the better alternative of an interim appointment.

So, she won’t have authority to:

  • Set budgets.
  • Hire staff.
  • Fire staff.
  • Explicitly write policy.
  • Direct investigations.

But I guess that she will be writing some really nice policy papers.

Matthew Yglesias nails what is going on:

With Warren, Obama showing real innovation in developing odd, satisfying to nobody compromises.

If this is what demoralizes your base. They follow this stuff closely, and the people who stuff envelopes and go door to door are the sorts who do follow this stuff closely, and it takes about 3 minutes to realize that this is a canard.

Honestly, appointing Warren is a no pain all gain alternative, because the American people hate the bankers, but they are afraid of offending people.

<Facepalm>

*Dirty F%$#ing Hippies.

Primary Results

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The races that are of interest to me, and were at all competitive in Maryland are:

  • Democratic primary for Congress in MD-4, where Donna Edwards, who took down the corrupt PG county machine politician Al Wynn last time is facing a challenge from the PG county machine:
    • Results: Edwards sails to victory.
  • Democratic primary for Baltimore County Executive, where I favor Joe Bartenfelder over Kevin Kamanetz, whose mission in life is to put cameras in every parking lot on the county.
    • Results: Kamanetz wins, damn.
  • Republican Primary for Governor: I dislike former Maryland Governor Bob “Bad Hair” Ehrlich, and his opponent, Brian Murphy, won’t win, but it will be interesting to see just how much the fact that Sarah Palin endorsed him gets him votes:
    • Results: Bobby didn’t even break a sweat. Palin does not carry much weight here.
  • I will note that Andrew duck won in the6th Congressional district, so he will face Roscoe Bartlett for the 2nd time in 4 years. He ran a creditable race in a very tough district in 2006. I met him, and he’s a good guy, albeit he is a bit to the right of me. Also note that he is on Matthew Saroff’s Act Blue Page.

Outside of the Free State, we have some interesting elections as well, mostly on the Republican side, looking at how well the teabaggers do:

  • The biggest election is probably the primary in Delaware, where Christine O’Donnell, a teabagger who is so outrageous that Dick Armey’s Freedomworks Teabagger AstroTurf org endorsed moderate Republican Mike Castle.
    • Results: The teabagger nutjob won by what looks to be about 6%.
  • In the New York Primaries, we have the always happless perennial loser Republican mainstay Rick Lazio running against the batsh%$ insane (he wants to put the unemployed in jail) Carl Paladino.
    • Results: Paladino wins, and Lazio once again proves himself to be the Washington Generals of politics, and Andrew Cuomo is going to be the next governor unless he is found with a dead girl in his bed.
  • And we have the Democratic Party primary in the 15th district, where the scandal plagued Charles Rangel is being challenged by the grandson of the man he beat to become a Representative, Adam Clayton Powell IV.
    • Results: Rangel wins, though he got barely 50% of the vote against his 5 opponents.
  • We have the New Hampshire primary, where in the Republican Senate primary, you have Ovide Lamontagne, who was endorsed by the Manchester Union Leader and is considered more teabaggy versus Kelly Ayotte, who was endorsed by the Palin bot and is considered more mainstream (Yeah, NH is weird).
    • Results: It appears that Ayotte has won, by something like 900 votes out of the over 100,000 cast.

  • Also in New Hampshire, we have the primary in the 2nd CD, where Blue Dog wannabee Katrina Swett is running against Act Blue fave from the Democratic wing of the Democratic Party, Ann Kuster
    • Results: Kusters wins in a walk, which is a surprise, because Katrina Swett is political royalty in New Hampshire, being the daughter of Tom Lantos and the wife of former Congressman Dick Swett.
  • The Washington DC Mayor’s race, where the polls have the incumbent, Adrian Fenty behind Vincent Gray, largely because he is a complete jerk, he is generally considered to have done a good job, and because he has completely alienated the African American middle class in the city, largely because of his support of School Chancellor Michelle Rhee’s policies, which are perceived as having engaged in, “a well-calculated strategy to weed out African Americans from positions in the public school management and classrooms,” in order to pander to the influx of rich white families in the district.
    • Results: Gray wins, and which probably means that Rhee is gone as well, if just because she was , “she abandoned the role of a politically impartial school administrator,” by actively campaigning for Fenty.

I’ll post the updates tomorrow,

That Will Leave a Mark

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Leon H. Wolf reviews Meghan McCain’s book Dirty, Sexy Politics:

This article, of course, is not about capital punishment. It is a book review of Dirty, Sexy Politics by Meghan McCain. However, the above discussion is relevant because I initially had reservations about writing this book review at all. After all, it is clear to everyone who has read Meghan McCain’s twitter feed, her “articles” on The Daily Beast, or her ill-fated campaign blog that Meghan is not a paragon of clear reasoning, exemplar of familiarity with facts, nor a model of English language expertise. And after subjecting myself to 194 continuous pages of her “writing,” it became clear that none of the above-described works truly plumbed the depths of mental vacuity in which Ms. McCain aimlessly and cluelessly drifts.

This presented a dilemma.

It is impossible to read Dirty, Sexy Politics and come away with the impression that you have read anything other than the completely unedited ramblings of an idiot. This being a professional website for which I have a great deal of respect, I searched for a more eloquent or gentle way to accurately phrase the previous sentence – but could not find one.

Sometimes a bad review is a joy, though I would argue that this one is a longer than it needs to be.

Go read.

H/t Ken Silverstein.