Yet Another Rectal Bleed

The story in Europe just keep getting better, now there is a story about language being removed from the proposed/draft EFSF (European Financial Stability Facility) Bond Prospectus.   This particular language deals with an “explicit warning to investors that the euro could break apart or even cease to be a “lawful currency” entirely.”

This particular language had been inserted by the lawyers charged with drafting this document, what were they thinking?  They were probably confused since they were used to drafting prospectus for commercial entities, where the documents are legally required to convey germane, pertinent, and fiduciary facts to prospective purchasers.

The report goes on and states that management, who ever they are, had not approved the clause, no surprise there; the surprise appears to be for the purchaser.  Well what a welcome breath of fresh air on the part of the European Union in particular the people associated with this program.  Why would any one in their right mind purchase any of these instruments at any where close to par value?  These instruments are nothing more than unsecured junk.  I might be inclined to look at these investment if they were discounted such that their yield was somewhere north of 15 percent.

The EFSF is a “Special Purpose Vehicle”, word that should strike terror into the heart of every citizen.  The 27 member states of the European Union agreed in May 2010 to create this monster via incorporation, and it only exists as long as it has debt outstanding.   The European Investment Bank (EIB) was chosen as agency to provide treasury management services and administration support through a service level contract.

Theoretically the emission (bonds or some other type of instrument) would be backed by full faith and credit of the European Central Banks primary members, those that share in the profits that the bank generates.  The 17 National Central Banks (Germany (18.9%), France (14.2%), and Italy (12.5%) are on the hook for 45.6%) in proportion to their share of paid-up capital.  There are other members of the bank, they do not share in the profit of the bank, but do have funds deposited at the bank, primarily for international banking account transactions, clearances and guarantees.

Every day Europe is looking more and more like a house of cards.

Truer Words have never been typed/texted

GOP strategist Mike Murphy’s tweet on Rick Perry

“Listening to Perry try to a put a complicated policy sentence together is like watching a chimp play with a locked suitcase.”

I really think that he was trying to tweet

“Listening to Perry try to put a complicated policy sentence together is like watching a chimp play with a locked suitcase.”

Mr. Murphy was probably just suffer from convulsion after being forced to listen to a sentence on a complicated policy that Perry had just utter, and was stunned in disbelief at the absence of thought that must have gone into forming that utterance.

The words that should scare the rest of us are

“I am Rick Perry and I approved this ad.”

When Gov. Perry utters these words chills should travel up you spine, especially as he says it with the pride, conviction, tenor and ignorance as another past Governor of Texas.

Time to quit pouring more money down the rat hole?

First let me say that I am sorry that this is as long as it is, but it does need to be said.

Surprise Vice Admiral David J. Venlet Program Executive Officer F-35 Lightning II Program, had the task of giving the tax payers of the United States their Christmas Present early this year, unfortunately it is a sack of coal.

Admiral Venlet reported that major cracks and “hot spot” have been discovered in the aircraft airframe.  The really down side of this is that airframes have not even flown anything close to the required service airframe life of 8000 flight hour.  But, do not worry, because of this can be solved with nothing more than time and money, boy are we lucky, that we caught this before we spent a fortune on buying 2443 aircraft.  The cost to fix these issues according to Admiral Venlet “sucks the wind out of your lungs”.

Not bad for an aircraft that according to former RAND analysis John Stillion “can’t turn, can’t climb, can’t run”.  Remind me of the remarks that Admiral Thomas F. Connolly made to the Hon. John C. Stennis  (D. MS), Chairman of the Senate Armed Services Committee, when asked for his personal opinion as naval aviator, and test pilot if the TFX/F-111B was a fighter?  After a pause Vice Admiral Connolly replied “With all due respect sir, there is not enough thrust in Christendom to make a carrier fighter out of this aircraft”.  It should be noted that after Vice Admiral Connolly remarks the hearing was adjourned.

Is the JSF/F-35 the TFX/F-111B of the 21 first Century?  Admiral Connolly remarks cost him his fourth star and ended his career, but enshrined him in the pantheon of Naval Aviation Heroes.  Is Vice Admiral David J. Venlet made of the same timber?

Admiral Venlet at this time is only advising production of the F-35 be slowed until the problems can be ironed out, how nice.  How about slowing the production to zero for eternity.

It appears that Vice Admiral David J. Venlet is not in the same league as Vice Admiral Thomas F. Connolly, to bad.  Evidently sucking the wind out of your lungs has no effect on Admiral, especially as it applies to his duty to the service and for his shipmates now and those who will follow.  Does the term RAMP STRIKE mean anything to the Vice Admiral?

Off course the fix will drive the weight of the airframe up, there by reducing the range, combat maneuverability, and useable payload of the weapon system.  Another way of say it, is that it will not carry as much, will not carry it as far, and it will fly like the pig that it is quickly becoming.

This airframe problem goes back to the initial JSF fly off.  The Lockheed Martin JSF candidate was built not to be Carrier ready when it was tested.  This was a calculated risk by Lockheed Martin.  Lockheed Martin won the JSF fly off.  The McDonald Douglas/Boeing JSF candidate was built to Carrier ready when it was tested.

Given that Lockheed Martin aircraft was lighter (Not Carrier Capable) than McDonald Douglas/Boeing (Carrier Capable), and consequently due to it’s lower mass and mass moment arms was slightly quicker to accelerate, had slightly higher sustained turning rates, slightly quicker time to altitude, slightly high airspeed for given thrust setting, and slightly smaller wing surface area, everything that you would expect given that it was not dragging all that extra structure around that is needed for the more extreme forces encounter in carrier operations, it not surprising.

The real crime is that DOD accepted assurances from Lockheed Martin, that the Lockheed Martin naval version structure would be minimally heavier, but that even in this heavier configuration it would out perform the McDonald Douglas/Boeing JSF candidate, at least that is what their computer models told them.  (Remember all models are wrong, some models are useful for a very limited set of conditions).

This delay is a train wreck for some of he other nations that have made commitments to purchase this aircraft, namely Canada and the United Kingdom.

Vice Admiral Venlet doubts that the F-35 program would be cancelled.  I actual believe that it more of a hope than a doubt on the part of Vice Admiral Venlet.  To Vice Admiral Venlet, no matter what we have spent to date on this project, as far as the accountants are concerned the cost are sunk cost, we the people of the United States will never recover a dime back on this weapon system.

Some have said that this particular program is “low hanging fruit” and that it should go is not surprising.  If it is cancelled, it will not be the first program, several programs come to mind XB-70, A-12 Avenger II, F-111B (Naval Version F-111).  The world did not end with the cancellation of these programs, and if the F-35 is cancelled the world will not end, no matter that the Mayan calendar stops in 2012.

The United States Air Force might want to continue the program for they are very uses to flying aircraft with cracks.  The most notable USAF program being the C-141B, the work around was to limit the payload and aircraft CG limits, and to monitor the cracks.  If the cracks got too big, the airframe took one last trip to 309^th Aerospace Maintenance and Regeneration Group (AMARG) at Davis-Monthan AFB.  Do not let the name fool you it is the Bone Yard, essentially the roach motel for old airframes.

USAF procedures allow aircraft with cracked structures to be operationally flown.  USN procedures do not allow aircraft with cracked structures to be operationally flown.  The FAA takes a very dim view of operating aircraft with cracked structures.

Just like the TFX program of the 60’s it is time to shut it down, take what we can from the program and field an aircraft or aircrafts that we can afford to purchase and to operate.  Current estimates by the DOD suggest that F-35 will require 30 to 40 percent more maintenance hours per flight hour then the current systems (F-15E, F-16, F/A-18, and AV-8B).

There are other issues with the F-35 especially the naval version in that its spares storage area on the Aircraft Carriers is limited and this aircraft requires more volume per aircraft than the current aircraft.  Delivery of some of the spare parts to the carrier is currently problematic (Engines) in that this cannot be performed by current UNREP and VERTREP systems, nor can these spares be brought aboard by the current COD system, with out some serious modifications of either spare parts or the delivery systems.

Off course this can be solved, it only takes time and money.

The cancellation of the F-35 will hurt the Marines in that they will not have an aircraft to replace their aging AV-8B.  Except for the Marines, I not sure many experts will consider this to be a real issue.  For many experts the AV-8B is not considered by many to be a successful weapon system.  Its combat range (300 NM A/A 100 NM A/G) is limited, its payload was limited (A/G 3000 pounds), it is a complicated aircraft, and it required more maintenance then traditional fixed wing systems.

The AV-8B and Sea Harrier were derived from the Harrier.  The Sea Harrier was successful in the Falkland campaign, but this was more of fluke in that the opposition aircraft were operating at the limits of the operational range.  As a consequence of the short combat time and limited Anti-Radiation weapons (Shrikes) opposition aircraft could not perform much in the way of any type of SEAD mission.  The Sea Harrier could stay on combat station 6 times longer (30 Minutes versus 5 Minutes) than the opposition aircraft.

The Sea Harriers accounted for 20 opposition aircrafts, 17 of the kills were solely credited to the AIM 9L.  No public documentation exists on how many of the kills were head to head or head to tail, but given the operating conditions, and that the Blue Fox radar had no look down shoot down capability, I would suspect that many were head to tail in that the opposition aircraft had demonstrated that they could effectively use the local terrain to mask their entry into the combat box and attack with very little warning.

The AV-8B suffers from the same limitation as the Sea Harrier, but to slight lesser extent, but with a combat radius between 100 NM to 300 NM depending on mission, compared to other carrier based aviation assets the system has short legs.  The comment by RAF Squadron Leader Steve Long “that over it existing aircraft (FRS.3 and FRG.9) the F-35 will give the RAF and Navy a quantum leap in airborne capability.”  Given the British talent for understatement, on can only conclude that the FRS.3, FRG.9 and consequently the AV-8B are severely performance limited.

Do the Marines really need a replacement for the AV-8B, or should that mission also be retired when the airframes are retired?  In a full-scale armed conflict where the Marines could be performing their primary mission, assaulting an enemy shore, will they be operating in solitary mode, or will the Marines be supported by USN and USAF assets?

It is time to stop the madness, and just put the program out of its misery.  One size does not fit all; every attack aircraft does not have to be stealth.  An aircraft that tries to be everything to every fighter/attack/strike/recon community, in the end becomes nothing to every fighter/attack/strike/recon community because it is just one big compromise, and it will be just enough of a compromise such that it will be marginal in performing all of its various assigned missions.

Given other movements in combat aviation, in particular the advancement in the various UCAV, would the funds being expended on the F-35 program get us more bang for the bucks if they were spent on the development and fielding of advanced capability UCAVs?

To paraphrase Ronald Reagan “Mr. Obama cancel this program” (“Mr. Gorbachev tear down this wall”).

And You Wonder Why?

As the United States Operation in Iraq enter the next to last phase, extracting all of our operational personnel and equipment associated with “Operation Iraqi Freedom” out Iraq and gets them to Kuwait for preparation and transport back to CONUS, we the people of the United States do not know what this side trip down the rabbit hole has really cost the country.

Something we know with an exacting precision.  We know that at the end of Sept 2011, a total of 4,483 members of the United States Armed Forces were listed as Killed in Action.  We know that at the end of Sept 2011 a total of 32,200 members of the United States Armed Forces were listed as Wounded in Action.  Concerning these individual what we do not know and will never know is the associated misery and suffer that was a result of their loss.

That is not the only thing the United States Government cannot determine with any certainty.   The other is the  dollar cost of the trip down the rabbit hole.  The Bush Administrations initial published estimates was $60,000,000,000 (60 Billion Dollars).  The current administration has published estimates of the cost in the range of $845,000,000,000 (845 Billion Dollars).  We only missed the Bush/Rumsfeld estimated number by a factor of 14.  Although now it looks more like a WAG (Wild Ass Guess).   Some might argue that it should be a SWAG, but that for another rant.

If we could get an accounting of the cost to within normally accepted margins of error, 10%, 1%, or .01%, and the current number of 845 Billion Dollars is closed the “Actual Cost” we are looking at anywhere between 84.5 Billion Dollars to 84.5 Million Dollars of error in the number being provided.

And you thought that Accounting was precise, well as far as the Federal Government is concern you are very sadly mistaken.  Now as no other time in the history of the United States have the prophetic words of Everett Dirksen, Republican Senator Illinois, 1950-1969, have been more salient to the nation and our current circumstance.  Three come immediately to mind.

“We are becoming so accustomed to millions and billions of dollars that "thousands" has almost passed out of the dictionary.”

 “A billion here, a billion there, and pretty soon you're talking about real money”.

Probably his most prophetic statement is

“I have said, with respect to authorization bills, that I do not want the Congress or the country to commit fiscal suicide on the installment plan.”

Which is exactly what the Congress and the administration have done since 2003.

Off the book expenditure for the Wars on top of the existing DOD Budget are as follows:

Fiscal Year	Billion Dollars
2003	78.5
2004	107.5
2005	82.0
2006	72.4
2007	170.0
2008	190.0
2009	130.0
2011	159.3

For those of you that are counting via the installment plan for fiscal suicide the Congress and three Administrations (Bush Terms 1 and 2, Obama 1) have spent or authorized 994.7 Billion Dollars that we did not have, that we did not commit existing revenue streams to cover, that we did not commit additional revenue streams to cover.  And you wonder WHY.

News Flash from New Jersey

As reported by Bloomberg, “NJ Taxes Cause Rich to Move, Economist Says”

And here I thought it was that the “Garden State” is not really a garden, given that it is the only state that has every one of its counties deemed to be “Urban” as defined by the Census Bureau’s Combined Statistical Area.

Or is it because of the great locations to choose from you know Hoboken, Weehawken, Perth Amboy, Trenton, Bayonne, Plainfield, Camden, Paterson, Passaic, and who can forget the jewel in the crown Newark.

Yep, anyone who is making over a million dollars a year wants to leave New Jersey, at least that is what Charles Steindel, the New Jersey state treasury department’s chief economist either implied or stated.  What Mr. Steindel did not provide was how many of these lucky, plucky individuals are relocating or have relocated.  Additionally he was silent on just where they went.

But it gets even better,  this announcement is the results of a survey of subscribers to the state’s online newsletter which according to the article “includes financial advisers to high-wealth clients”.  Additionally the article states that, “More than half of the respondents said their clients had recently left or express interest in leaving”.  Leaving and expressing interest in leaving are to entirely different propositions; the latter is like asking your teenager if they would like a new car (The answer is Hell Yes).  The former is having your teenager spend his or her own allowance/savings to buy that new car (No Fracking Way).

Just speculation, but it might be that given the current real estate crunch that these lucky plucky few cannot sell their leverage houses for enough to allow them to move, and you thought there was not an up side to real estate mess.

A secondary issue maybe finding a mark who is willing to move to New Jersey or who already lives in New Jersey and does not want to leave, who is willing and able to purchase their house for their asking price.

The statement from Mr. Steindel implies that it is a bad idea to raise the taxes on the very rich, because they will just get up and move, or at the very least threaten to get up and move.

I almost feel sorry for these tax refugees, being periodically uprooted and forced to flee their recently financed mansions, as the tax man comes a knocking.  I have images of the Clampett’s loading up all their possession in the back of their Escalades and driving off into the night in their search for their next mansion where life is good, the services are excellent, and the taxes are low.

Ah the American Dream.

This Just In

"Europe is in one of its toughest, perhaps the toughest hour since World War Two,"

Angela Merkel Chancellor Federal German Republic, 14 November 2011 address to the Christian Democratic Union party meeting in Leipzig.

Come on Angela, here is a link to a Spiegel article full of before and after pictures.  I suspect that you might be stretching the story just a little.

http://www.spiegel.de/fotostrecke/fotostrecke-56828.html 

 Seriously?  I do not know but judging from the picture in the above link it sure looks like 1946-1953 was just about as bad as it can get and still be called a society/civilization..

Angela wants to Forge Closer Union

Off course Angela wants a closer union, she needs everyone to share the haircut that is about to take place, given that the European Banks are leverage somewhere north of 400 to 1.   And we thought it was bad in the United States, the banks thought that they were leverage between 16 and 20 to 1, when in fact they were leverage somewhere between 27 and 45 to 1.  It is my own observation that being leverage above 12 to 1 is approaching a rectal bleed.

In the United States it was all that toxic real estate paper.  In Europe for the most part (Except Ireland) it is all that toxic sovereign debt.  Much of this debt was gratefully acquired by the various banks in an attempt to be compliant with the Basel Conventions.  On paper it appeared better than holding cash reserves.

The mistaken assumption in the various Basel accords concerning Tier I debt.  You know the quaint thought that there no risk in sovereign debt, governments are rational, and they at least the European do not default on their debt, and the governments will not borrow money to support their life style, or operating expenses.  For we all know that modern responsible governments only issue debt to invest in infrastructure, and they have some form of levy to cover the expenses associated with the debt.

In the interest of fairness it was nice that the EU only required only the private banks to take the "Voluntary" 50 percent haircut on the Greek sovereign debt.  Remember dear reader that the Government of Greece did not institute this reduction, no it was done by the private creditors, the government creditor still expect and demand that they be paid in full.  The private creditors just have a few tens of thousands stockholders that are pissed, which is much better than have several hundred million voters pissed.

After all the management of the banks are safe, well as safe as anyone with their head in a guillotine is. Management typically controls enough stock in most occasions to control and keep their jobs.  Politicians on the other hand the situation is much more tenuous, they must remain popular typically with out regard to associated cost.  As evidence we provide Silvio Berlusconi.

There is an old saying that if you borrow a little money from the bank, the bank own you, but if you borrow a large amount of money from the bank you own the bank.

For sometime the Banks in Europe new that they were owned, and it took sometime for the bankers to convince the Politicians that the banks were owned by the debt that they held on their books.  And now it is time for the Politicians to break the news to the people.  This is really going to suck.

The Bankers think that they have an out, they can use the infamous "Nuremberg Defense" in that they were complying with the rules as provided to them by the various governments (Local, State, National, International)(Basel Conventions, local laws and regulations).   It did not work then it probably will not work now.

Pass a few conventions, laws and regulations and put the system on auto-pilot, or just not check on the baby from time to time, after all "All is Quiet on the Western Front".

To cite the title from a recent movie "There Will be Blood" it is only a matter of time.

Remember that all systems are self correcting, you just do not want to be around when they correct.


Angela just wants to spread all the pain around and she wants to be the spreader, remember that it more blessed to given than receive, the longer they wait the more the pain will be.

What a novel thought

What a novel thought that George Papandreou, the Prime Minister of Greece would insist on a binding public referendum for the European Union Greek Bailout Proposal.

George Papandreou has a 2 Vote Majority at best in the Parliament, and many suspect that he does not have that, and he does not want to find out the hard way.  The easiest decision to make is to let someone else make that decision, the blame is theirs not yours.  Of course you can advise them on the decision that they are being asked to make, but the fallout is theirs alone to bear.

If the people of Greece pass the referendum Mr. Papandreou will be able to say “I did not force this upon you, a majority of your fellow citizens agreed to accept this burden”.  The main problem will be that however the outcome of the vote the effects will not only affect the current generation it will be on at least the next two generations.  If the citizens of Greece pass of the life line with anchor attached, and then decide that Greece needs to go in a different direction, well so be it, again the choice was theirs to make and theirs to bear.

Greece might have been the birthplace of democracy, but since the end of World War II it has not spent much of the time in a stable democracy.  Greece history since World War II has been anything but stable.  About the only thing stable was the name.

Since the end of World War II some 67 years there have been 48 different governments in Greece.  Just a crude back of the envelope calculation would indicate that the average Greek government has a half-life of 8.4 months.  Mr. Papandreou must be doing something right considering that he is currently at 2.85 half-lives.  It could also mean that the situation is so balled up that no one in his or her right mind would even consider taking the position. (My condolences, You have won the election and you are the new Prime Minister).

The European Proposal has nothing to do with Greece, but everything to do with its own major banks, and the really sloppy practices (Regulators and Banks) that they have been operating with for at least past 10 years.

The various powers that are in place with banking over sight functions failed, and they failed big.  The data was there, and it was available, either by sheer incompetent or criminal collusion it was not acted on.

It was not an either or situation I believe that it started out with incompetents, and then graduated to criminal collusion.  Some of this incompetent is a result of deliberate/legislative blurring of the lines between commercial and investment banking.  Some of this incompetent was due to lack of experience with investment banking, or the assumption that investment banking was just like commercial banking.

That said when the various individual operating the banks started to make large amounts of loans to the Greek Government, and the incompetent regulator did not call them on it, and for that fact neither did their Board of Directors nor the stockholders.  Who wants to stop the elevator on the way up (The ride is really great counting those unrealized gains)?  The management of the Banks recognized this fact and jumped in with both feet, and just compounded the problem. (our depositors are demanding their interest payments, and I need my bonus)

Greece was writing IOU (they were not the only ones), Backed by the Full Faith and Credit of the Greek Government in a currency that they did not control.  The Investment Bankers where getting fat commissions and fee helping them write and place the IOU.  The Basel Treaty inadvertently provided a ready market for all the paper that was being created (Tier I Assets Requirements, the mistaken assumption between Zero Risk and No Risk, and that Sovereign Debt is “Riskless”) Zero Risk is relative, and No Risk is Absolute, the former is real and it is continually changing to reflect the current conditions.  The later is a figment of the mind and a delusional mind at that.

The European Governments do not want the Greek government to default.  A Greek debt default would trigger the first way of various Credit Default Swap agreements.  Since the Credit Default Swaps are not regulated (they are not regulated anywhere) no one has any idea of the magnitude of the counterparty risk, but if the experience of the United States is an accurate example we will all find out in rather short order.

Europe stands at the edge of the abyss, and I am afraid that they will fail the test.  In 2008 when the United States stood at the edge of the abyss the decision was easier to make since the states are united by form and function (Constitution, laws, monetary, de facto common language, common national history), we fought a civil war to establish most of these facts.  Europe has not had this experience (most of their wars have been just the opposite).  Europe in practice is not united by form and in reality by function.  Europe carries a tremendous amount baggage from its past, that makes it easier to be separate rather than united.

The term “common good” does not ring true in Europe, for Europe.  Common good does have resonance for the people only as it applies to their nation.  The lack of trust between the various members of the European Union is palpable, and in many case lies just beneath surface.  Any significant economic distress will bring this to the surface with all of attendant ramifications.

Many of the older and middle-aged Germans are scarred by the experiences economic turmoil of the Weimar Republic, and the initial post war period, in particularly their treatment at the hands of inflation and hyperinflation.  Many Germans are myopic and rather emotional on this subject (So are the Italian, French, you name them).  In many cases these Germans will not admit, much less understand that they benefit from this expansion of debt in Europe.  Many will not recognize that the debt allowed German industries to sell goods and services abroad.

Many of these Germans enjoyed the trip going up, but they are not looking forward to the trip down.  Many of the German that I talk to express a strong belief that this situation is only isolation to Greece, or maybe to the Southern Europeans, and that the effects will somehow by magic be isolated to these areas.

The various European governments, and for that matter the United States, are not coming clean with the various electorates as to just how vulnerable their countries are visa vie the risk in their respective financial systems (The United States passed the Dodd-Frank Bill and now we can sleep safe at night (NOT)).

The world has had sixty some years of peace in Europe, but this could be coming to an end in the coming years.  I hope that I am really wrong on this point.

Germany is the only European country with the financial resources to address this debt issue, unfortunately it will not address it, the internal political costs are too great, and the political cost of not addressing it are a matter for another day, and possibly another German Chancellor to address.  Regardless of the decision the People of Greece make it, the out come will not be good for Greece and the European Union.

The 13 Percent

Much has been made of the top 1% tax-filing units or as they are called the 1 %, but maybe the real issue is the 13% percent of tax-filling units or as I will call them the 13 %.  According to the IRS in 2010 there were 143,490,000 tax returns filed by tax-filing units that were not corporations.  The 1% is only composed of 1,494,900 tax-filing units with an Adjusted Gross Income (AGI) of 507 K$ or greater.  The 13 % is composed of 18,653,700 tax-filing units with an AGI of 137 K$ or greater.  Between the 1% and the 13% there are 17,158,800 tax-filing units, which is not an insignificant number.

Who is this in between population?  In particular who is in this population that determine what does or does not happen in the United States Government?

Based on just their listed salaries we have the following breakout.

The Executive Branch: The President of the United States (400K$), The Vice President of the United States (230.7 K$), Cabinet Secretaries (191.3 K$), Cabinet Deputy Secretaries (172.2 K$), Cabinet Under Secretaries (158.5 K$), Cabinet Assistant Secretaries (149 K$), Agencies Admistrator/Commissioner (139.6 K$), General/Admiral (0-10) (184.8 K$), Lt General/Vice Admiral (0-9) (161.6 K$), Major General/Rear Admiral (UH) (147.5 K$), and Brigadier General/Rear Admiral (LH) (138.5 K$)

Judicial Branch:  Chief Justice Supreme Court (223.5 K$), Associate Justices Supreme Court (213.8 K$), Circuit Justices (184.5 K$), and District Judge ($174 K$).

Legislative Branch:  Speaker of the House (223.5 K$), Majority Leader (House/Senate) (193.4 K$), Minority Leader (House/Senate) (193.4 K$), and Member House/Senate (174 K$).

If there ever was a privileged class this has to be it.  Their AGI are greater than 86% of all tax-filing units.  For them the system is good, hell better than good it is great and for some it is just plain fantastic.  What a deal, these tax-filing units earn at least 2600 dollars a week of AGI.  Many earn much more.

While 50 % of the tax-filing units earn less than 827 dollars of AGI every week.  The in between population have at least 3 times as much AGI every week.  But it gets even better; the average member of the House or Senate weekly AGI is at least 4 times greater than the 50 % of tax-filing units.  And we wonder why the government is disconnected from the people.

There can be no doubt that the net taxes of the 1 Percent tax-filing units need to be increased.  How much the net taxes should be increased is a matter of debate.

The net taxes of the “in between population” (2-13 Percent of tax-filing units) also needs to be increased.  Again how much the net taxes should be increased is also a matter of debate.

Notice I said the net taxes, I really do not care at this point how this is accomplished, either by creating additional tax brackets and new rates for those brackets, or by removing features of the existing tax code or by a combination of both, but it really needs to be done.

That said; will it get done?  I do not hold much hope out for this in that those who occupy the House and Senate are the one who need to make it happen, and given every one of them is a member in good standing of the 13 %.  Human nature being what it is, these individuals are not willing and therefore not able to accomplish this tasks, since it would directly affect their taxes and conversely their standard of living.  These individuals have had no major issues in raising someone else taxes, be it someone who makes significantly more or be it someone who makes significantly less.  There are many ways to raise the tax that an individual pays without actually change the rate that is applied to the Adjust Gross Income.  Most if not all the changes actual deal with how the AGI is calculated, since it is real easy to get individuals upset when there is talk about changing the rate, but it is in many cases much harder to get individual upset when the talk is about the minutia of tax code, this latter is typically the path taken to increase revenue.

Make no mistake that these individuals are not dummies, they are extremely perceptive, manipulative, conniving, and in many cases self-absorbed to the point of being narcissistic.  They should not be under estimated for their ability to tell half-truths, and to ignore the evidence is legendary.  Finally they do it for a living.

The effective tax curve has been flatten, and even compressed over the past 60 years.  The political cry had been that the tax code is too complicated, and too onerous.  This was not a lie; it had been complicated and onerous to the 13 %.   To those 50 % it was never that complicated or onerous.  The 50 % tax-filing units returns have for the most part been simple, manly due to the fact they never did make very much, and what they did make was quickly spent on life basic needs, (Food, Shelter, Health, Transportation) in that they were never in a position to take advantage of the features and nuances that existed in the tax code that Congress had so thoughtful provided.

Remember the words of Balzac, “The secret of great fortunes without apparent cause is a crime forgotten, for it was properly done.” it as true to today as it was when they were penned in 1835.

What the Hell has Apple done to OSX?

What the hell has Apple done to OSX 10.7 or Lion as it is called.  It appears that you cannot delete files, and it only gets better.  Do not touch the file for two weeks and it really gets locked up.

http://www.reghardware.com/2011/09/07/apple_mac_os_x_lion_the_nanny_os/

Maybe this is why Steve left the company?

I am an operating system agonstic, they all have their good points and their bad points.  I have several systems running 4 different operating systems.   But this is a really glaring bad point, thankfully I did not see a reason to upgrade from 10.6 Snow Leopard.  It maybe that I stay at 10.6.  It is also a reason that I am not a first adopter, at least on the systems that I use to make my bread and butter.

No Shit Sherlock

Talk about restating the obvious Texas Governor Rick Perry

Gov. Perry: Texas fires are 'mean, swift and highly dangerous'

What was the first clue, that they have destroyed building, killed people, livestock, and wildlife.  Or was the big wall of flame and smoke.

Did they have fire at A&M when you were there?  And this guy went to college to come up with this!

I am sure glad this nincompoop is at the ready to alert all the rest of us to this situation.

Barack Hussein Obama has not been a BAD President!

Yes Mr. Alter, Barrack Hussein Obama has not been a BAD President, but by the same token he has not be an Outstanding President, Excellent President, or Good President.  He might be an Average President, or a Mediocre President, and maybe even a Poor President.  But is Barack Hussein Obama a Bad President? NO.

My bet at this time he is somewhere between Average and Mediocre, but he is putting up quite a fight to be Mediocre.  He is but one of the 544 that have a direct say in the path that the United States takes.  It takes at least 295 individuals to be with you to be able to make any change, and Barack Hussein Obama, does not have enough of the 544 individuals on his side, and in all probability he never will have enough.  He is getting a great deal of help from the other 543 individual in quest to be Mediocre.

No body starts out trying to be mediocre, it just happens.

For an individual who used Audacity in the Title of a Book

First a definition to refresh our memories.

Audacious: Intrepid Boldness, Bold or arrogant disregard of NORMAL restrains.

Synonyms: Brash, Brazen, Hutzpah.

With all due respect and admiration to William Shakespeare Act 3, Scene 2 of Julius Caesar, let me say that Barack Hussein Obama, is a very nice, and decent, honorable man.  I am sure that he is a pleasant conversationalist.  He is intelligent; He is caring; He has a sense of Justice; He is a man of Letters.  Not withstanding all of this his actions, or more precisely his lack of action to date concerning the United States Economic Crisis he should not be considered to be Audacious, or to have any audacity, by any rational individual.

It is said the Barack was impressed with “Team of Rivals”, and supposedly how Lincoln lead or managed from behind during the civil war.  That some how he made the group not only work together, but that every member of the group was an equal to the tasks, and all were contributors.  The book is a good read, but for many students of the civil war it did not fill in any missing blanks, and in some cases completely glossed over some of the real documented problem with cabinet.  The comment in John Hay diary in the summer of 1863 is one of the primary pieces indicating that all was not well in the team.  Hay relates that Lincoln had to resort to “tyrannous authority”, and that “most important things he decide & there is no cavil."  The two major reasons that Lincoln won the civil war were he had the logistics systems to support his troops in the field, and he finally found some General who could fight.   Jefferson Davis, never had the logistics system to support his troops, and he ran out unoccupied territory, and out of Generals who could fight.  The Civil War was a war of attrition.

If we are looking for an individual who will clearly defined Goals.  If we are looking for an individual who can clearly articulate these Goals.  If we require an individual who can formulate a strategy and effectively communicate the Strategy to achieve these stated Goals, then to date Barack Hussein Obama has not demonstrated that he is that person.

One can lead from the rear, and that is fine, but one must have a clearly defined goal, and then one must create and communicate to all what the strategy is for achieving these goals.  I have not heard Barack clearly define any goals on any subject, other than to keep on keeping on, or if we just hang on it will all get better some day.

It appears that Barack Hussein Obama has adopted a path to re-election, which will present to his opponents a record of actions that cannot be assaulted, since to date his record is quite absent of any real actions to assault.

The one true weapon in the arsenal of the President of the United States that Barrack Hussein Obama has fail to use is the “Bully Pulpit” as of 30 June 2011 the president has only had 3 News Conference, he has had numerous one on one interviews, but they are not quite the same as the man coming out and being pushed across the networks at the same time.

In 2010 in an interview with Diane Sawyer, Barack Hussein Obama made the following statement “I’d rather be a really good one-term president than a mediocre two-term president”.  It appears that the other possibility have never been articulated by the president, and they are a mediocre first term president, and good second term president, or mediocre first term president and no second presidential term to judge.

From my position up till now it really looks like he trying to make this last option into reality.  The economy is in bad shape, and other than some platitudes about feeling our pain, his lack of leadership on the issue almost borders on malfeasants.  We have a sucking chest wound and rather than plug the hole and keep the lung from collapsing he would rather collapse a lung and have a really compromised economy for an extended period of time, rather than do anything to remediate the situation.  To date these are not the actions of a man with audacity.  I do not hold out much hope that the term audacious will be even with the loosest of interpolations be applied to the job plan Barack Hussein Obama is to be announce in the coming weeks.

For an individual who used audacity in a book title Barack Obama appears to be the antsiest of one who is audacious.

Barack Part Deux

After writing the first post of today I came across the following quote from David Bromwich article “George W. Obama” found here

http://www.cbsnews.com/stories/2011/08/18/opinion/main20094046.shtml?tag=cbsnewsSectionContent.13

“Indeed, Obama's understanding of international morality seems to be largely expressed by the proposition that "there's serious  evil in the world" -- a truth he confided in 2007 to the New York Times conservative columnist David Brooks, and attributed to the theologian Reinhold Niebuhr -- combined with the assertion that he is ready to "face the world as it is." The world we seek is, of course, the better world of high morality. But morality, properly understood, is nothing but a framework for ideals.  Once you have discharged your duty, by saying the right words for the right policies, you have to accommodate the world.

This has become the ethic of the Bush-Obama administration in a new phase.  It explains, as nothing else does, Obama's enormous appetite for compromise, the growing conventionality of his choices of policy and person, and the legitimacy he has conferred on many radical innovations of the early Bush years by assenting to their logic and often widening their scope. They are, after all, the world as it is.

Obama's pragmatism comes down to a series of maxims that can be relied on to ratify the existing order -- any order, however recent its advent and however repulsive its effects. You must stay in power in order to go on "seeking." Therefore, in "the world as it is," you must requite evil with lesser evil. You do so to prevent your replacement by fanatics: people, for example, like those who invented the means you began by deploring but ended up adopting. Their difference from you is that they lack the vision of the seeker. Finally, in the world as it is, to retain your hold on power you must keep in place the sort of people who are normally found in places of power.”

This is the most damming indictment of the Man who would be President.  A man who it appears feels that once he has voiced his concern about an evil he has discharged his duty to mankind.  It is the mark of a man who says he has convictions about good and evil, but at the end of the day lacks the determination or the will to change the situation.  In the minds of most people this is not a leader.  I am not sure that it makes a really good follower.  On the face of it, at best he is a mediocre President.  Barack might be a great campaigner, and he might have been a good senator, given that the Senate is purported to be a deliberative body, and it appears that he like to be deliberative.  But in the area of original thinking, and conviction, well not so much.

Senators do not make very good presidents, and I feel that unless there is some miracle this ex-senator/president is destined to join the list of the poor, undistinguished.  History will remember him, but it will not be a kindly rememberance.

The following is a list of Presidents who were Senator prior to be President and their ranking. There are 14 names on the list

James Monroe 2^nd Quartile, John Quincy Adams 2^nd Quartile, Andrew Jackson 1^st Quartile, Martin Van Buren 3^rd Quartile, William Henry Harrison 4^th Quartile, John Tyler 4^th Quartile, Franklin Pierce 4^th Quartile, James Buchanan 4^th Quartile, Andrew Johnson 4^th Quartile, Benjamin Harrison 4^th Quartile, Warren G. Harding 4^th Quartile, Harry S. Truman 1^st Quartile, John F. Kennedy 2^nd Quartile, Lyndon B. Johnson 2^nd Quartile and Richard M. Nixon 3^rd Quartile.

63 percent of the Presidents ranked in the 4^th Quartile have the dubious honor of having first served in the Senate.  50 percent of the above list presidents who were senators have the dubious honor of making the 4^th Quartile.  This 4^th Quartile also has it share of Generals (2), or 66 percent of Generals who were elected President without holding any prior elected office.

So what have we learned? Senator more times than not do not make good Presidents, Generals more times than not do not make good Presidents.

Back to Barack, given a choice I think that most men would rather have tried and failed, then not tried and failed.  With the first path there is a chance of success, with the second path there is the certainty of failure.

It is my opinion that Barack when given a choice,  9 time out 10 Barack will choose the option with the certainty of failure.

Dear Barack, You cannot have it both ways (SPMUYFM).

As President you have signed an executive order freezing pay of Civil Service Employees (OK); you administration has establish a policy where there are a series of sequential rolling 90-day periods of hiring freezes (OK?). You recently signed an executive order directing federal agencies to develop strategic plans to recruit and retain a more diverse workforce (WTFAH).

Let me get this straight in my mind, no pay raises, no new hires, no promotions, and now let's play office and require each organization to develop strategic plans to recruit diverse employee's if we could hire them, and retain diverse employee's if we could pay them.  I must be as dense as a stone.  Are you sure that your chief policy adviser on this subject is not a short little guy who is red, looks like a cat who wears glasses and answers to the name Catbert?

I cannot imagine how tough your job is but if you are not up to task, just raise your hand, turn in your wings, and walk away.  From my vantage it appears that you are really in deep Kim chi, and you forgot to breath through your mouth.

If you are going to stay please make up your mine, pick a path and follow it, this jumping back and forth is nuts.  PS it is also scaring the shit out of everyone.

YOU CANNOT AND WILL NOT BE ALL THINGS TO ALL PEOPLE, IF YOU TRY YOU WILL BE NOTHING TO EVERYONE.

As I see it right now you are in a knife fight to the deck to gain a position in the much vaunted 4 Quartile of Presidents of the United States.  This pantheon of politicians include William Harrison, John Tyler, Zachary Taylor, Millard Fillmore, Franklin Pierce, James Buchanan, Andrew Johnson, Ulysses Grant, Benjamin Harrison, Warren Harding, The every popular George W (Shrub) Bush. Every single one of which a mother would be proud and honored to name her first born failure after. 

The only question at this time is will you finish lower than the Shrub?  Out of the Jaws of victory defeat is snatched.

The market trend remains the same

Even with all of the wild market swings the net trend is still the same. DOWN.  All is not well in Gotham, Athens, Dublin, Lisbon, Madrid, Rome, Brussels, Paris, and Berlin.  It will take some time for all of them to get well.  Some bargains are starting to appear.  It may be best to just turn off the news and relax, because there is not much that you can do about it at this time, other than not feed into the system.

Regression to the mean is a bitch coming down, and a blessing going up.  We are at the present time going down at the present.  Regression to the mean is a fact, nature is a regression to the mean system.

Investing is a long game, trading is a short game.  So keep your powder dry, wait for your shot.   Aim small miss small.

As one very old investor said, patience, patience, and more patience.  Do not be in a hurry to buy, and do not be in a hurry to sell.

A Paler Shade of Gray

Opinions are like ass holes everyone has one; so here is my opinion/ass hole.  Bond Ratings are opinions nothing more and nothing less.  Therefore one must infer that Bond ratings are like ass holes.  The bad news is all ass holes smell to some varying degree.  These ass holes stink.

If you are having some doubt on the issue I invite you to read the June 2009 Moody’s Investment Document Titled “Moody’s Rating Symbols & Definitions”, which is slick 54 page document full of horse shit which appears to have been written by their marketing department. You can find it at their web site, I would put the URL here, but it does not seem work correctly.

In particular one should be directed to a little section on page 8 titled “Long-Term Corporate Obligation Ratings” where the various rating levels for long-term corporate obligations are categorized.  There are 9 major Levels.  Appending a numerical value of 1 to 3 is used to further delineate six of these Levels.   Three of these Levels are not further delineated by a numeric value.    This allows for 21 levels of Moody’s Bond rating hell, three times as many as Dante provide in “The Inferno”.  The rating for 19 levels of Moody’s Bond rating hell use one of the following four words in their description “judged, considered, subject”.  The lowest levels of hell use the words “likely in default” or “in default”.

The words “judged, considered, subject and likely” are words that connote opinion not fact.  You can be sued and lose for knowingly or for that matter unknowing misstating fact; knowingly misstating opinion is much harder to prove in a court of law.  Additionally words and phrases like “minimal, very low, low, moderate, substantial, high, very high” are used throughout the definitions.   Again these are words that connote opinioned size or probability, and again only in the most abstract of manner.  No opinion or guidance is provided in this document as to what is the difference say between “very low” and “low”.  It is left up to the reader to infer at their own peril as to what the committee was inferring when they came up with their rating, which is nothing more than a inference.

There appears to be just too much snake oil, too much smoke and mirrors, or just too much crap in the system and the process to make it seem credible much less usable to anyone.  The system appears to have been designed to create and foster confusion.

The use credit rating agency rating of an obligations is at best a lazy man way of performing due diligence on his investment, and at worse malfeasance.  The use of a credit rating which is reality nothing more than an opinion, that is bought by the selling agent should not relieve any fiduciary entity from performing their own due diligence on the issues that they are purchasing.  The use of credit agency rating is fraught with pit falls most notable being the implicit assumption that the rating agency did their due diligence.  At the end of the day it is the investor who stands the loss, not the fiduciary agent acting for the investor, and certainly not the credit rating agency.

The rating for long-term United States obligations as opinioned by one the three major credit rating agency fell from the first level of a possible 21 levels in their rating hell to the second level of a possible 21 levels in their rating hell.  And now we all are supposed to grab the hand of the persons standing next to us and calmly walk off the cliff.  “CRAP”

Credit rating agencies are filled with humans, and as such they are subject to all the failures of humans.  They have acted in the recent past in a manner that has shown that they are not independent, unbiased, or disinterested third parties.  They have been shown not to be independent, they know who provides their bread, and who butters it, and they have been shown to be loyal to their masters.  They answer to no one outside of the system.  Their actions are for the most part legal, but not moral.

In several recent books on the financial implosion it was state and believed by various individuals that the people who ended up in the various credit rating company arrived at that position because they were not the sharpest tools in the shed, in that they could not cut it at organization further up the food chain.  I do not know if this is true, but recent actions by at least one of the parties would indicate to me that there might be at least some truth to story.

Credit rating agencies have been shown not to have performed due diligence in their rating, additionally it has been shown that the mechanism that they say exist internal to their organization to detect and control an malfeasance are at best ineffective, and at worse non existent.

In all probability they were corrupt from day one, it is just that given the stakes that were involved then it did not really matter, unfortunately it is different today.

Wanker of the Year

Our nomination for Wanker of the Year goes to to Rep John Mica, 7th District Florida.  John has been a professional politician for most of his adult life.  First in the Florida State House (1976-1980) and then in the Congress of the United States(1992-Present).  When John was not in public office he was still living of the taxes we pay as an assistant to Florida US Senator. (1981-1985).  His other hobbies are real estate executive (imagine that a real estate developer in Florida).  A governmental affairs consultant (Lobbyist).  Politics have been very good to John, in 2006 his reported net wealth was in excess of 2 Million Dollars, on God knows what it is today.  From all the information that can be found on the internet, John's other hobby is wrapping the flag around himself.


So here is a picture of what a Wanker looks like.

Why is this Guy smiling?  Maybe it because the voters of the 7th district of Florida keep sending him back to Congress.

Only God know what is going through his mind, and I am not sure that even God really wants to know.   You know they should put photographs of individuals on the ballot.  Because if I saw a picture like this I would vote for the other person.