Year: 2010

I Am Not a Finance Guy, But I Have Some Warning Signs………

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And they are:

  • Opaque markets where ask and bid prices are not known by the participants.
  • Opaque financial instruments that seem to generate return and safety at the same time.
  • Minimal disclosures.
  • Promises from the sellers that they will take care of clients without regulation.

So we see all of this in so-called structured notes:

Wall Street banks are creating the “next investment bubble” by selling opaque and unregulated structured notes to investors hunting for yield, according to Christopher Whalen, managing director of Institutional Risk Analytics.

Using the same “loophole” that allowed over-the-counter sales of collateralized debt obligations and auction-rate securities, firms are pitching illiquid structured notes whose value is partly derived from bets on interest rates, Whalen wrote today in a report.

What’s even worse:

Individual investors, who “love the higher yields” on structured notes, will lose money when benchmark interest rates climb, according to Whalen.

“We already know of two hedge funds that are being established specifically to buy this crap from distressed retail investors as and when rates start to rise,” said Whalen, a former Federal Reserve Bank of New York official and co-founder of the Torrance, California-based research firm.

What this means is that when the economy starts to recover, and interest rates rise, we will see another bubble pop and push us down.

Lovely.

Kidnapped, Made to Smoke a Bong, and Worship Aqua Buddha?

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We have a report that as a some sort of twisted college prank, while an undergraduate at Baylor, Rand Paul and his friends kidnapped a coed, and then made her take bong hits worship “Aqua Buddha” in a stream.

This is whack, and I hope that Paul doesn’t do drugs any more, but it raises a question: If he was into this, why did he go to Baylor, where they ban premarital sex because it might lead to dancing.

This is a weird news day.

Obama Consensus Building: The Incumbent Oligopolies Win, We Lose

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Google and Verizon have released the details of their carve up the internet among the big players proposal:

Google Inc. and Verizon Communications Inc. on Monday called for equal treatment of most Internet traffic while at the same time saying fast-growing cellular networks and yet-to-be-developed broadband services should be exempt from such restrictions.

Google and Verizon released a proposal arguing that broadband providers shouldn’t be able to discriminate against Internet content providers. Marcelo Prince and Amy Schatz discuss. Also, Dennis Berman discusses why bond investors are giving up on recovery and jobs.

The ideas outlined in the proposal put forth by the Internet search giant and one of the largest broadband providers stand in contrast to the Federal Communications Commission’s recent proposals on “net neutrality” rules, which would prevent companies from giving preferential handling to certain types of online traffic.

In Google’s case, the proposal’s endorsements of two-tier Internet service and a hands-off approach to cellular-based Web services represent a break with many other online companies, which have argued for strict neutrality in how Internet traffic is treated. Google itself previously expressed general support for rules prohibiting discrimination among forms of Web traffic.

This is a direct consequence of the tenor and approach of Barack Obama. It is clear that in internet access, the incumbents have taken billions of government subsidies, and used this money to cement their monopoly positions, rather than improvement access.

It’s why US internet performance and penetration* is the worst in the developed world.

These are not people who you partner with to get the outcome you want, these are people you defeat to get the outcomes you want.

As to the long term consequences, I’ll go with what Atrios says:

I’m one who thinks that ultimately the forces of light will prevail and the repeated attempts to carve out internet walled gardens will, over the long run, fail as killing the internet would… kill the internet. But the long run is a long time and companies will likely screw and gouge us over the not very short run unless the FCC acts.

So not hopey changey, and as I have said before, this sort of craven acquiescence to the incumbent players who screwed everything in the first place appears to be a core philosophy of Barack Obama and His Clueless Minions™, whether it be telecommunications, finance, healthcare, etc.

*That sounds dirty, doesn’t it?

This is Not The Onion

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E=mc2: Could it be ………… Satan?

Andy Schlafley, daughter of noted wingnut Phyllis, has declared that Einstein’s theory of relativity is a liberal conspiracy:

The theory of relativity is a mathematical system that allows no exceptions. It is heavily promoted by liberals who like its encouragement of relativism and its tendency to mislead people in how they view the world.

……

See, e.g., historian Paul Johnson’s book about the 20th century, and the article written by liberal law professor Laurence Tribe as allegedly assisted by Barack Obama. Virtually no one who is taught and believes relativity continues to read the Bible, a book that outsells New York Times bestsellers by a hundred-fold

Seriously, you cannot make this sh$# up.

I Would Never Endorse Computer Hacking…

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But this bit of hacking is prize:

Somewhere in the world, someone must have woke up, went to his computer and thought to himself, “I’m going to hack Fox News today.” At least that’s how I imagine things started out today for the currently unnamed hacker who gained access to the Fox News online radio newscast dashboard.

He’s either got a lot of time on his hands, is incredibly skilled or received help from others. If you look at the above photo, you’ll see a screenshot of the Fox News Radio popup that you get when you try to listen live to the online newscast on http://radio.foxnews.com/. It says the title of the next radio program is. “Glenn Beck Raped And Murdered A Girl In 1990.” And there’s more.

The entire list of shows has been tampered with. Right now, the Fox News Radio popup shows that the next newscast is going to be “Naruto.” Everything on the list now is an anime of some sort.

I can’t approve the Anime bit, but this is prize.

H/t Vonbecks Temper

Meteor AAM Video Pr0n

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It highlights the better endgame kinematics and range available with a ramjet powered missile.

One of the things that surprises me is just how much smoke the initial booster puts out relative to the AMRAAM, which would increase launch platform visibility in visual range.

This implies to me that the European militaries planning to purchase this expect anticipate that its use in relative short range engagements, so I would expect that at least doctrinally, the minimum engagement distance for the missile would be a lot greater than that of the AMRAAM. (Reportedly 2km)

The music is a little bet better than most of these promotional videos:

Another Solution to Limited Look Angles of AESA Radars

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One solution, which I have posted about before, is the swash plate radar (also here), and the Russians are looking at mounting an AESA Radar on a conventional (though likely beefed up) radar actuators, and now we have radar mount that uses two oblique rotary bearings, rather like the 3 bearing nozzle on the STOVL version of the F-35 engine exhaust, to get off axis performance approaching that of conventional planar array radars.

One of the advantages appears to be that it avoids antenna polarization issues, and another advantage would be that conventional connectors for power, signal, and cooling could be used.

The original concept would have required slip rings and rotary fittings, which would likely have been maintenance headaches.

I Place This Up There With Soviet Super-Chopper Claims

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Skylon is claiming that it will have its liquid air engine ready for test in 3-4 years.

Considering the fact that it’s really being run on a shoe string, I simply do not find this a credible timeline.

Additionally (top video) it’s reentry profile appears to be problematic to me. The knife edge canard appears to be in a weak shock on reentry, which means that the surface temperature would much higher than in something like a space capsule, or the relatively blunt edged shuttle wing leading edges, where much of the heating occurs in a strong shock that is some distance from in front of any structures, but I am not an aerodynamicist.

If you look at the bottom video, from a couple of years ago, where Richard Varvill, Technical Director of Reaction Engines Limited talks about a 12+ year development cycle with a demonstration of the heat exchangers in 3 years, that sounds rather more realistic.

The bottom vid is also a nice primer on the basic operation of the Sabre engine.

My earlier post on the vehicle and engine.

The Cat Food Commission* is At It Again

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Well, we already know that the Republicans on Obama’s “Deficit Reduction Commission” are marching lock-step against any meaningful tax increases, and now we know that when push comes to shove, they will cut military pay and benefits over any sort of sanity in weapons systems procurement:

A source familiar with the proceedings of the working group on discretionary spending tells TPM that some commissioners, including one military contractor, would prefer to save money by freezing military pay and scaling back benefits, rather than by eliminating waste in defense contracting.

……

According to the source, [Honeywell CEO David] Cote and other members, including the commission’s co-chair Alan Simpson, are focusing instead on “freezing military pay, making military people pay for their health care.”

Because that waste is what this “military contractor” calls his “annual bonus.”

It’s all about someone else taking the hit on this.

On the brighter side, this makes any adoption of any proposals from Cat Food Commission* that much less likely to be adopted, because this is a completely clueless move.

I would also note that the uniformed military personnel levels are near a post WWII low, so the reason that the budget is exploding is not that we have 8 million active duty servicemen.

One wonders though, who is leaking all of this to Brian Beutler, and why are they doing so?

*In the interest of health, I would suggest that people eat dog food, and not cat food. Cats because they are one of the few true carnivores, do not need the complex carbohydrates and fats that people, and dogs do. As such, dog food is better for you than cat food because it provides carbs and essential fatty acids. A dog can go blind if it is fed on cat food, but a cat lives just fine on dog food. The phenomenon is known as rabbit starvation.

Dutch Defer JSF Decision Again

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It looks like they might buy a 2nd test aircraft, in order to preserve some workshare for Dutch firms, but that it’s unlikely that they will sign a deal for a production run at this time.

Not surprising, they are undergoing austerity cuts to meet Euro zone budget guidelines, cutting, “education, healthcare and social security spending,” so why purchase an aircraft that costs (at least) 5 times as much as the F-15, and costs (at least) twice as much to operate?

H/t ELP Defens(c)e Blog:

No, And What Is He Smoking?

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James Pethokoukis, whose work I have not followed, but appears to have a fair amount of respect from the blogs that I read, is reporting that a number of sources in the Obama administration saying that the GSEs (Fannie Mae and Freddie Mac), will, at taxpayer expense, engage in a massive program of principal reduction to underwater homeowners:

Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. ……

The motivation, apparently, is electoral politics:

The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. …

If you go to the article, and I suggest that you do, because I am just relying on my gut, you also see that investment bankers are talking to their clients to insurance themselves against such a possibility.

I take the statements of investment bankers with a grain of salt. Their job is to make people buy and sell securities, since they profit each time.

That being said, here is my take:

  • HAMP is an abject failure, because, once again, Barack Obama, as well as Tweedle Dum and Tweedle Dumber (Geithner and Summers) decided that banks were their “partners”, and they just needed some incentives and no oversight.
    • Additionally, the abject failure of HAMP is not beginning to hit the news, which might lead to damage control.
  • Obama is concerned about losses in November.
  • Notwithstanding what the teabaggers say, Obama is NOT a socialist, he is very much a corporatist, and the idea of this sort of massive government bailout to ordinary people is an anathema to him. He honestly does not want the government to be that activist.
  • Obama is, and remains, terrified of Republican accusations of socialism.

So, it ain’t gonna happen. We may see something to fix HAMP, my suggestion would be bankers arrested and made to do the perp walk, but it will be something relatively minor.

Devaluing the dollar, as Roosevelt did, or massive debt forgiveness is simply not in the cards.

Heck, he can’t even bring himself to bring back bankruptcy cramdown for home mortgages.

What a Remarkably Unambitious Goal

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After much study, the Congressionally mandated to review the Pentagon’s Quadrennial Defense Review has determined that it takes too long to develop and deploy new weaopons, and so there should be a 7 year limit to developing weapons systems:

To avoid this problem in the future, Perry and co-chair Steven Hadley want defense contractors to be held to a tight five to seven year development phase. “Past experience indicates that, with proper management authority and accountability, it is possible to deliver relevant military capabilities for current operations in weeks and months, and to deliver longer-term and broader increments of military capability in 5 to 7 years,” noted the pair in the report. “The 5- to 7-year time span is consistent with the march of technology, changes in the operational environment, and changes in operational needs to shape and respond to that environment.”

Sorry, but that is at least twice as long as it should be.

This is a remarkably timid conclusion, kind of like saying that you should not exceed 70 mph in a school zone.

US Aerospace/Antonov Out of KCX Competition

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Rather unsurprisingly, they missed the deadline, which is not surprising, since they seemed not ready for prime time.

Equally unsurprising is the fact that they have filed a protest with the GAO.

The cynic in me wonders if that was not the intention the whole time, to kinda file, and then use a GEO protest as a way to generate some ransom money.

Then again, now that the details have come out, the messenger showed up at the gate at 1:30, was delayed there, and then given bad directions by the gate guards, resulting in a 2:05 stamp, 5 minutes late, perhaps it is incompetence, or maybe the USAF had enough of this crap, and decided to play some hardball as US Aerospace claims.

Pass the popcorn.

You might as well watch. Your tax dollars are paying for this.

The Trippiest Russian Military Demonstrations Ever

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Them Russkies Know How to Drive a Tank


Seeing a tank do motocross jumps is almost as weird as the guys with the flaming helmets

Courtesy of Danger Room.

I do have a couple of geek notes about these displays:

First, look at the main gun: They have a larger bore (125 mm vs 120 mm in the west) and a longer length, which implies to me that, probably for metallurgical issues related to wear, they operate at a lower pressure than the western (German) guns, and make up for it with barrel length and bore diameter.

Also, Russian tank suspension ant track designers take a back seat to no one.

I half expected one of the tanks to throw a track.

Finally, is it just me, or did the tanks curtsy at the end of the top video?

Israel’s Iron Dome Completes Testing

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Click for full size


Launcher

Israel has completed tests on its Iron Dome defense system, successfully intercepting rockets and mortar targets:

Iron Dome is developed and produced by Rafael Advanced Defense Systems. During the final testS in Southern Israel, Iron Dome successfully engaged salvos of live rockets and mortar shells. With participation of teams from the IAF Iron Dome air defense battalion, the system repeatedly engaged rocket salvos and mortar shells in increasingly complex scenarios.

The system demonstrated effective detection and intercept of targets above and below cloud cover, while maintaining “keep-out zones” for integration with air traffic over the protected area. Iron Dome detected, tracked and selectively engaged only those targets presenting a threat to the area being protected. This feature – unique to the Israeli active defense system – is attributed to the multimode radar (MMR) and battle management and weapon control (BMC) system developed specially for the Iron Dome.

Obviously the first two locations for deployment would be on the Gaza border, near Sderot, and the Lebanese border.

Then again, it may not be deployed, because it is so damn expensive:

Yet, the IDF is reluctant to buy it, grumbling over the cost of each Iron Dome intercept, estimated at nearly $50,000, compared to the estimated $500 cost of a Palestinian rocket. Press reports put Iron Dome development costs at $250 million, with each battery costing about $50 million.

Truth be told, I think that the number for a Katyusha or Kassam is a bit high, and the mortar round is probably under %59.

There are also rumors that the system was actually developed for export to Singapore, with defense to be conducted by installations of land based Phalanx Gatling guns. (See also here for more on export customers, as well as a potential co-installation with Spike-NLOS SSMs, which I assume are for counter-battery fire)

Once again, we have missile defense running into a very simple brick wall: It’s something on the order of 100 times more expensive than the threat it is intercepting.

It’s Bank Failure Friday!!!!

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And here they are, ordered, and numbered for the year so far.

  1. Ravenswood Bank, Chicago, IL

Full FDIC list

So it is a slow Friday for bank closings, but the credit union closings mostly make up for that:

  1. Norbel Credit Union, Fort Collins, CO
  2. Certified Federal Credit Union, Commerce, CA
  3. Kappa Alpha Psi, Addison, TX

The NCUA has been busy over the past week.

Full NCUA list

So, here is the graph pr0n with trendline (FDIC only):

I would note that are now at the point where the utility of the least squares trendline is diminishing, but I’m keeping it here for historical purposes.