| Tuesday,
November 25, 2008 Bailout Funding
Apart from the Federal Reserve, vast sums are being
thrown around with little of it having actually been funded and spent. TARP
+ Obama's $700 billion brings it to at least $1.4 trillion, compared to a
2008 federal operating budget deficit of $250 billion.
Only part of Paulson's TARP 1.0 ($250 billion or so)
has actually been funded via selling T bonds and notes. And this has been
done at record low interest rates. The rest is still on the Second Life
books. It's reasonable to conclude that federal tax receipts will be down
and existing federal obligations up somewhat in 2009.
The question is what will happen when Geithner
actually attempts to sell $1.4 trillion of federal bonds and notes next year
just to cover Obama's spending, plus TARP 2.0, plus a 'routine' deficit that
will probably exceed $300 billion, plus whatever one year of auto industry
bailout runs. The current $25 billion was just to get them into Obama's 2d
month. Out of this $1.5 trillion only $25 billion is recognizable so far as
real economic investment. That's $25 billion in the DoE line for auto
industry retooling to build hybrids.
Like Buffett said, when the tide goes out you see
who's been skinny dipping.
1. The third largest holder of US Forex, Russia, was
just revealed to have Oligarch owed overseas debt about equal to its
sovereign Stabilization Fund.
2. Since this summer the IMF staff has been pointing
out that EU banks' capital structures are far closer to Bear Stearns &
Lehman in use of leverage and minimal capital. And speaking of that slender
capital, 3x to 4x of it was loaned out to emerging markets in Latin America,
eastern Europe, Africa and Central Asia. The EU therefore created an export
form of subprime mortgages.
3. China has just announced its own $500 billion
stimulus plan. That's about 25% of its own surplus of US Bonds and cash.
These are the previous major overseas funding sources.
Somewhere out there is a last foreign buyer of US Government debt, at least
in its present format. It doesn't matter whether the cause is apparent US
debt junk status or because the buyer pool goes bankrupt because of their
other rotten financial practices. There are domestic buyers around, assuming
they cease buying stocks, US corporate bonds, state/local bond issues and
mortgages to focus on US Treasuries.
This leaves the US Bureau of Printing and Engraving as
a gap funding source.
Mark
I have a three pfennig stamp overprinted to
3 mird millionen marks...
===========
Subject: Idea
Jerry,
How about instead of just handing the auto industry a
check, the government agrees to buy 1,000,000 new cars over the next two
years? It then sells national lottery tickets for a chance to win a voucher
for $25,000 that can only be used to buy a new vehicle from GM, Ford, or
Chrysler. They could give away roughly 40,000 a month. That amount might
even buy some families 2 cars depending on which on model they get.
This would give the auto industry the cash it needs,
keep jobs, and give a lot of Americans a new car which could help them get
to and from a new job, assuming they could find one of course.
Braxton S. Cook
Thomas Jefferson raffled off Monticello to
pay his debts. The winner gave it back to him, but didn't have to.
Fortunately for Jefferson there were no income taxes in those days.
==========
Houghton Miflin /
"According to GalleyCat, Houghton Mifflin has
"temporarily stopped acquiring manuscripts." Francis Hamit confirms"
Betcha a dollar this freeze doesn't apply to textbook
edition updates, and even new manuscripts to replace existing subject
textbooks in HM's line. That captive market is a lot less elastic than
Amazon, B.Dalton and Books A Million. And Paulson just announced yet another
$600 billion program to jump start student loan lending.
Clearly you and Francis need a program.
"The Federal Reserve just announced a new $30 billion
repurchase agreement term lending facility: TWISTEM. TWISTEM is the Total
Writers Income Stabilization Term Emergency Mediation facility. It is a one
year renewable collateralized term lending facility. Eligible collateral
assets are securitized credit card debt originally incurred in the purchase
of new 2008 or later copyright fictional works in either printed or
electronic formats...
Mark
=========
Video of Fireball
Jerry,
Now that's a fireball! <http://antwrp.gsfc.nasa.gov/apod/ap081125.html>
Regards, Charles Adams, Bellevue, NE
==========
Hi Jerry
In the lively discussion in the Chaosmanor Reviews
Mailbag, about USB device security, Rick Hellewell mentioned infected photo
frames as one of the possible vectors for infection. I've just read on ISC
that getting digital photos printed at kiosks is another danger.
The solution, burn the photos to a CD and use that in
the kiosk. Unfortunately this isn't likely to be useful to me since I
generally use online printers and I've only ever used kiosks when I need to
get a picture printed quickly while I'm away from home.
http://isc.sans.org/diary.html?storyid=5387
Best wishes
Paul Dove
==========
Mini Reactors
Toshiba wants to give one away to remote Alaskan
Indian village.
http://www.nytimes.com/2005/02/03/business/03power.html
Michoel Reach
==
Mini Reactors
Okay, why does this sound like an appallingly bad idea
to me?
US firm unveils plans for mini nuclear reactors
<http://physicsworld.com/cws/article/news/
36758;jsessionid=70BFB77BD33BFFE2
BEAF93F7573A2BFB>
<snip>
This nuclear reactor — or "battery" as the firm calls
it — is not much larger than a hot-tub and could supply thermal energy at a
rate of about 70 MW. That could be converted into about 27 MW of
electricity, which would be enough to supply about 20,000 US households.
Unlike conventional nuclear power plants, Hyperion's
reactor uses uranium hydride, which is essentially enriched uranium metal
that has absorbed a large amount of hydrogen.
</snip>
Okay, a small community gets tired of the lights going
dim from California's rolling blackouts and buys 2 of these things.
Presumably dozens, if not hundreds or thousands, of other communities around
the world do the same. Is transporting that much fissionable uranium to all
of these sites even logistically possible without having some pretty awful
consequences? Have these folks even heard of Murphy and his Laws?
The incidental radioactive waste (supplies used to
handle the really hot stuff going into and out of the reactors) from a few
of these things scattered about the country is somewhat manageable. Multiply
that by the dozens or hundreds of mini reactors springing up and "somewhat
manageable" goes out the window.
The folks at Homeland Security must be horrified at
the idea they will be tasked with securing all this stuff while also rubbing
their greedy little hands together while laughing at the HUGE influx of
staff it is going to require if they are forced to do so.
<snip>
[Hyperion] has already secured an order for six units
from a group of investors in Eastern Europe, including the Czech engineering
company TES, who have an option to buy a further 44.
</snip>
Yeah, no problems with security in any of these
Eastern European nations, none at all.
Now, I'll agree we need to get away from our current
way of generating power, but do we really want to spread fissionable
material out to the masses?
Braxton S. Cook
I have a lot of mail about these, but I know
nothing about them. There are lots of ways to have radioactive materials
that are less dangerous than, say, fertilizer and diesel fuel.
===========
Pirates!
Fascinating lecture on Pirates and Piracy, by Oscar
Herrman, from 1902.
The "money quote": (emphasis added)
."Piracy, by the law of nations, is punishable with
death within the jurisdiction of any nation under whose flag the capture may
have been made, for the pirate is the common enemy of mankind. /_*Although
it has passed the zenith of its perverse glory, and modern naval development
has made it impracticable and impossible, vestiges of piracy remain in the
Malay Archipelago and the China Sea. As recently as 1864 five men were
hanged in London on such a charge*_."
/As recently as 1864!
And yet today in 2008 we are told by "The Smartest
People On The Planet" (Pat. Pend.) that we cannot eradicate piracy?
"What man has done, he can aspire to..."/ /
http://www.leadtotreasure.com/uploads/
1902_O_Herrmann_PIRATES_AND_PIRACY.pdf
"There is hardly a person who, as a school-boy, had
not received the fire of imagination and the stimulus for adventure and a
roaming life through the stirring narratives concerning Captain Kidd and
other well-known sea rovers. A certain ineffable glamour metamorphosed these
robbers into heroes, and lent an inalienable license to their "calling," so
that the songster and romancist found in them and their deeds prolific and
genial themes, while the obscure suggestions of hidden treasures and
mysterious eaves have inspired many expeditions in quest of buried fortunes
which, like the Argo of old, have carried their Jasons to the mythical
Colchis. The pens of Byron, Scott, Poe, Stevenson, Russell, and Stockton,
and the musical genius of Wagner, were steeped in the productive inspiration
of these lawless adventurers, and Kingsley found in Lundy Island, the
erstwhile nest of the reckless tribe, a subject for his "Westward Ho!"
Byron, in "The Corsair," sings:
O'er the glad waters of the dark-blue sea, our
thoughts as boundless, and our souls as free, far as the breeze can bear,
the billows foam, Survey our empire, and behold our home! These are our
realms, no limits to their sway; our flag the scepter all who meet obey.
Ours the wild life in tumult still to range from toil to rest, and joy in
every change."
Petronius
===========
NASA's Black Hole Budgets
Jerry,
A column by a former NASA executive in charge of its
science program
Regards, Charles Adams, Bellevue, NE
<http://www.nytimes.com/2008/11/24/opinion/24stern.html?>
"Op-Ed Contributor NASA's Black Hole Budgets
By ALAN STERN Published: November 23, 2008 Clifton,
Va.
A CANCER is overtaking our space agency: the routine
acquiescence to immense cost increases in projects. Unmistakable new
indications of this illness surfaced last month with NASA's decision to
spend at least $100 million more on its poorly-managed, now-over-$2
billion Mars Science Laboratory. This decision to go forward with the
project, a robotic rover, was made even though it has tripled in cost
since its inception, it is behind schedule, there is no firm estimate of
the final cost, and NASA hasn't disclosed the collateral damage inflicted
on other programs and activities that depend on NASA's limited science
budget...."
==========
Dim Bulbs Finally Turning On
Dear Jerry,
This is another last year's news piece at Chaos Manor.
Still, it seems worth some time...
http://www.time.com/time/business/article/
0,8599,1861115,00.html?xid=feed-yahoo-biztech
"Why Unemployment Could Be Worse This Time".
"But beyond the headline number is a growing unease
among economists and job market watchers that, for the as many as 2.3
million people who will be asked to leave their cubicles and workspaces in
the next year, it might be harder this time around for them to regain their
piece of corporate America than in past recessions."
Yes. Now we reach the core of the problem:
"The underlying problem is something called
misallocation of human capital. It's a fancy term for the idea that in the
past few decades the U.S. may have been producing too many MBAs and not
enough RNs. Economists used to talk about it as one of those long-term risks
that most people shouldn't worry too much about. Now the problem, like the
dangers of sub-prime lending, obscure financial instruments and so many of
those other things we didn't worry about, seems to actually be a problem."
The article didn't discuss solutions because I think
it's clear it's conceptually insoluble for the present elites. We need to
define the full situation of this structurally unemployed and wrongly
schooled MBA to appreciate the gravity of the current crisis.
1. MBA is probably still carrying $25k to $50k of
government guaranteed (and securitized) student loan debt that can't even be
discharged in bankruptcy. 2. MBA has progressively lost: credit rating, job,
lost a foreclosed house and probably still owes negatively amortized
principal, and doubtless has some nontrivial amount of credit card debt.
Loss of medical insurance and unpaid medical bills are extra. 3. MBA may
have one or more children to support. This can be directly or perhaps
through court ordered child support that doesn't allow for unemployment as a
defense to being jailed for non-payment..
The Times article implies this person requires
retraining in a more useful hard skill technical field. I agree. The
question is how this training can be paid for given the current cost
structure of "accredited" higher education and MBA's own dire personal
situation. To this we can add collapsing state budgets and resulting cuts in
college support, plus massive college endowment investment losses. At very
best MBA's six years of college credits will only yield about 30 - 35
credits that are transferable toward a four year B.S. as an RN. Under the
existing system MBA needs three full years of college level retraining to
qualify for an RN under the existing system. I think obtaining more student
loans can also be reasonably ruled out.
This problem as presently stated has no solution.
Therefore one or more parameters will have to be changed. This can only be
in the costs and methods of educational delivery and "accreditation".
The article concludes with this quote from one of
Washington's best and brightest wonk economists:
"My expectation is that we are going to be seeing an
increase in manufacturing, and that is certainly a shift from where the
economy has been headed," says Dean Baker, co-director of the Washington,
D.C. liberal-leaning think tank the Center for Economic and Policy Research.
"Clearly you are going to have people moving down the pay scale."
Apparently he expects the "screw nut A on bolt B"
assembly line jobs are returning from somewhere or another. They aren't.
They migrated to Mexico and then onwards to China, where that type of
unskilled worker is now being laid off. Again. The last large block of such
jobs in the USA are soon returning to Washington to seek their own
"Bailout". I refer to US based GM, Chrysler, Ford and the UAW. Ford Brazil
doesn't use such primitive methods in its Camaceri plant.
Know how to use several CAD and CAM programs? How
about wiring servo motors to drivers? Are you perhaps a highly skilled
machinist able to do tool and die quality work? Perhaps you're a good
combination millwright and electronics technician able to repair industrial
robots and other automated equipment? If not I'm afraid your manufacturing
employment prospects are even poorer than financial services.
MBA's (and ours) only hope for useful hard skill
retraining is for the cost to drop by 90% and for the subject matter to be
delivered to where ever MBA is presently located and can afford to live.
Alternately we can try Dean Baker's apparent solution.
This is to leave a mass of millions of people in their 20s and 30s, of above
average intelligence and education, crushed with debts they can never repay
and facing forty years of a minimum wage future. I personally would expect
either fascist blackshirts or a real American analog to a Nazi party to
appear in short order. Best of all, a 1.5 million strong pool of war
veterans has been conveniently accumulated to provide recruits for the
sturmabteilungen wing of such a movement. They're also facing increasing
difficulties finding and holding good paying jobs.
Best Wishes,
Mark
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