2013 Stress Test

2013 Hunger Games  Stress Test

After looking at the additional requirements that the United States Federal Reserve is requiring of some of the country’s 30 largest banks and financial services companies for their annual stress test, it does not look to good for some of these institutions, this year the test is suppose to be harder.  The new questions concern their exposure to Asia, and what could these institutions look like if something bad were to happen to the Asian economies (really it China, but we do not want to so direct).

The Federal Reserve announced that it will conduct some of the test on own on the 19 largest, but that is really a falsehood, in that they will really only perform the tests themselves on the top eight, the other 11 of this group will test themselves and submit the result to the Federal Reserve.  Maybe there is a question as to the rigor that some of the organizations applied to themselves in the last round of testing.

Those chosen for special consideration in order of Total Assets are (1) JP Morgan Chase & Co., (2) Bank of America Corp., (3) Citigroup Inc., (4) Wells Fargo & Co., (5) The Goldman Sachs Group Inc., (6) MetLife, Inc., (7) Morgan Stanley, and (8) US Bancorp.

The rest of the 19 financial institution in order of Total Assets are, (9) Bank of New York Mellon Corp., (11) Capital One Financial, (12) The PNC Financial Services Group Inc., (14) State Street Corp., (15) Ally Financial Inc., (16) BB&T Corp, (17) SunTrust Banks,  (19) American Express Company, (22) Regions Financial Corp., (24) Fifth Third Bancorp, and (29) Keycorp.

Rounding out the collection of the top 30 banks and financial institutions that are subject to this annual testing again in order of Total Assets are,  (10) HSBC North America Holdings Inc., (21) RBS Citizens Financial Group, AKA Citizens Financial Group, (26) BMO Financial Corp., (27) Northern Trust Corp., (28) UnionBanCal Corp., (31) M&T Bank Corp., (33) Discover Financial Services, (35) BBVA USA Bancshares Inc., (36) Comerica Inc., (37) Huntington Bancshares Inc., and (38) Zions Bancorporation.

The Federal Reserve has this nice little web site that displays the ranking of the top 50 Holding Companies in the United States.

 http://www.ffiec.gov/nicpubweb/nicweb/Top50Form.aspx

For those who are interested in the particular of the skull numbing tests I direct you to the following link.

http://www.federalreserve.gov/newsevents/press/bcreg/20121115a.htm

Enjoy they are the attachments at the bottom of the page.  It only took about 10 minutes for my skull to lose feeling.

Release the Kraken (Where is Liam Nesson when you really need him, Ben Bernanke just does not have the voice to pull this off), and to all thirty of the participant in the 2013 Hunger Games Stress Test  “Happy Hunger Games Stress Test! And may the odds be ever in your favor!”  Let the games begin.

So what is the cost to lose a F-22 in an accident?

How do you calculate the cost of a F-22?  Do you take the total funds spent by the Department of Defense on the program divided by the total number of airframes delivered to the United States Department of the Air Force?  The number of airframes 187 is a fairly easy number to determine, with the last being delivered in May 0f 2012.  With this last lost of an F-22 11/15/2012 we now only have 184 airframes.  Airframes were lost in 2009 and 2010.  The total program costs of the program well not quite as simple to determine as one would suspect. One estimate of the development and productions cost of the program was $67,300,000,000.00 Dollars ¹.  This number included the cost to develop the aircraft, establish the infrastructure to support and operate, and to actual purchase the 187 completed airframes, it does not include any follow on spending for maintenance, spares and or upgrades.  The program was sold as a “single step” program meaning that it was felt by Department of the Air Force leadership and Lockheed Martin that there would be no need for significant future modernization, as if time would stand still for this weapon system.

By December of 2011 the Department of the Air Force proposed that estimated costs to modernize F-22A at $11,700,000,000.00 Dollars.  Note Lockheed Martin had not delivered the last airframe to the Department of the Air Force.  That airframe in fact had just left the production line in December 2011, but it would not be delivered until May 2012.  How fortuitous for Lockheed Martin that a follow-on modernization program for the F-22A was in place that original “single step” program somehow morph to the traditional multi-step programs of old?

Of the $11,700,000,000.00 Dollars projected modernization cost with $5,500,000,000.00 Dollars having been spent.  With $6,200,000,000.00 Dollars committed for several major follow on programs.

So just how much does one F-22A cost?

The Development and Productions Cost version of the number is $359,893,048.13 Dollars per airframe.

The Development and Production Cost plus Modernization Costs to date version of the number is $389,304,812.83 Dollars per airframe.

The Development and Production Cost plus actual and budgeted Modernization Costs version of the number is $422,459,893.05 Dollars per airframe.

Survey say’s that at this time the answer is $389,304,812.83 Dollars.

For those who just want easy number to remember, 360 Million Dollars, 389 Million Dollars, and 422 Million Dollars respectively.

So yesterday’s loss of one F-22A at Tyndall Air Force Base just cost the United States 389 Million dollars, give or take a few hundred thousand dollars.

As a matter of comparison, the Internal Revenue service estimates that 239.3 million tax returns will be filed for Calendar year 2012², based on this number it appears that this airframe loss only amounted to $1.63 per tax return that is expected to be filed for calendar year 2012, what a deal for you and me.  So let go out a drop another one into the ground and call it a Starbuck Frap.

Just to add smoke and confusion to the issue, the Department of the Air Forces quote this thing that they call a “Fly Away” cost.  According to theory it should just contain the costs to actually build the airframe.  This “Fly Away” cost does not include any of the cost associated with development, that way they can report that the purchase of airframe is even more of a deal for you and me.

By the way my daughter and I used to get into the argument as to how much the car she wanted actual costs (I was expected and required to pay for it).  For some strange reason she would only report the sticker price, forgetting the tax, title, dealer options, dealer prep, and of course all of the interest that she (I mean that I) would pay.  The two numbers were as different as day and night.  (PS she got a used car that cost $2000.00 drive away, at first she was not happy, but given the choice between a $2000 used car and Shank’s Mare, she decide that the car was not that bad after all, and she that car for kept for 3 years and sold it for $2000 dollars).

¹ http://www.defenseindustrydaily.com/f22-raptor-procurement-events-updated-02908/

² www.irs.gov/pub/irs-soi/12rswinbulreturnfilings.pdf

Why do some of the Republican whiners remind me of Vizzini

With the passing of the election and the wishes of the people now known, we are no longer subject to endless speculation by the various experts/pundits/party hacks.

Why do some of the republican whiners, and you know who you are sound like the character Vizzini (the Sicilian) from the Princess Bride.  You remember the guy who was always saying “INCONCEIVABLE” to almost everything that in the end would prove to be true.

Well as inconceivable as the results appear, the results are nonetheless true.

The question for the Republican Party is what if anything did you any of you learn from the results of this last election?

Here is a list of items I feel you did not learn.

The majority of the United States population is women.

The population of the United States is diverse, and that it is becoming more diverse.

That at the end of the day no matter how much money an individual has he or she only gets one vote.

That for every one who is in the 1 percent group, there are 99 who are not in that group.

It only takes one of 99 to vote for the other candidate to return the election to the zero point. That still leaves the other 98 individual to vote for whom they want.

Most people do not like it when someone attempts to buy an election.

Most people like to know who is paying the bill for that political ad, especially if it is an “issue” message.

That in trying to make it harder for individual to vote only makes them want to vote that much more, because you are trying to take something away.  You would be far better off in promoting apathy, you know you can vote, in fact we have made it easier to vote, but why would you want to bother, it is just a fools errand.

Control your fringe groups if you cannot control them, then actively repudiate, renounce, disown and marginalize them.  They are not helping, the votes required to win the election are in the middle, not in the fringe.

It is just amazing: The Benders to end all Benders?

The plot of Household Disposable Income minus Household Debt, and it is just amazing and profound.  See Plot 1.

Plot 1

The data for this comes from the United States Federal Reserves, FRED system maintained by the St. Louis Federal Reserve.  The data is from just two of the FRED data sets DPIC96 and CMDEBT.  The data sets starts back in 1949 and ends in Early 2012, all I did was a point by point subtraction to produce the this plot.

It looks like we lost our collective footing and just stepped off the cliff in 2000.  Was this the result of the passage of the Commodities Futures Modernization Act of 2000?  Which specifically stated that CDS were neither future contracts nor were they securities, and therefore outside of regulation by either the SEC, or the CFTC, in other word there is no Sheriff in town and you can pretty much do, as you like, and they did.

A good read on what is wrong with Generals

If you want to have a good read on what is wrong with flag rank officers.  Then read the article Thomas Ricks at the following link: http://www.theatlantic.com/magazine/archive/2012/11/general-failure/309148/

Just a note it took me three years to read Mr. Ricks book “Fiasco”, not because the book was bad, but because all I could is read a few pages before I was mouth foaming mad, and I would have to put it down, or suffer some type of blowout.

The American soldier is one of if not the best in the world.  But what was once a better than average leadership core, had over time turned into something that I would not let walk my dog, much less lead my children into battle.  My family has had a tradition of serving in the military, unless there is a clear and present danger (the enemy state who ever they are is landing troops or threating to land troops on our shores) the family tradition will stop with me.

One of major complaints has been the lack of leadership in the officer corps (in particular the flag officers), and the emphasis on management, many of them have some advance degree in “some type of management”, as opposed to the Art and Science of War.  The officer corps those who have remained have turned into a bunch of power point idiots.  Hell they even have the power point police.  I have seen various chiefs of staff, and staff officers more concerned over the format of the power point, rather than the actual information that is to be presented.  It seems to get worse every time there is a new commanding officer.

I have seen stunts performed by some officers (company grade, field grade, and flag grade) that 20 years ago would have had that individual walking the streets in search of a new occupation, and yet these individual continue to be promoted up.  I have heard discussions that we must not do any thing to Smedley since he has a family, and how will they make it on the outside.  So instead they keep Smedley and inflict him on the personnel under his command, and God forbid that they ever have to go in harms way.

I cannot remember the number of times that I heard the phrase “We will manage the battle zone”.  War is chaos, and last time I check chaos was one of those things that cannot be managed.

Again I urge you to read the post.

General Ward will have to wait until after the election

The Department of Defense is strangely silence on General Ward.  Well it appears that General Ward will have to wait until after the election.  Which might be good news for the General.

If the General is let off easy (allowed to retire either as a General, or possibly as a Lieutenant General) and it is announced before the election it would be fodder for the Republicans, the Department of Defense under the Democrats are soft on suspected/reported/investigated official corruption.

If the General is not left off easy and it is announced before the election it would again be fodder for the Republicans, the Department of Defense under the Democrats selection process for Flag Officers has some issues.

At this time Brig General Jeffery A. Sinclair is setting at Fort Bragg, where he is accused of and is being investigated for allegations of sexual misconduct, adultery and other offenses over inappropriate relationships with several women under his command.

Amazon Stock could go $20 Either Way: Pros

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What a prognostication by the CNBC Fast Money Pros.  Here is the link http://www.cnbc.com/id/49541019

I can see Statler and Waldorf on the side crying out:  Bravo!  Truly amazing!  Mind Boggling!  Stupendous!  Here are some people who need to heed the immortal words Bullwinkle the Moose, “No doubt about Rocky I got to get a better Hat”.  I need to remind my self of Statler and Waldorf breaking the fourth wall comments when they asked “Why do you watch it?” or when Statler stated that he didn’t care much for puppets much, not finding them believable.  These guys might be in the same class, as puppets.  Do they get paid for this dribble?  This is from the network with a tagline that is “Fast, Accurate, Actionable, Unbiased”.  Well it does appear to be fast.  Accurate?  (If your target is a barn, then you are in luck.)  Actionable? (Your guess is a good as mine.)  It could be unbiased.  Well two out four, if it were the batting average of a major league baseball player it would be fantastic.

With Amazon at $228.49 per share, a $20.00 move either way has the price moving within a 17.5 percent window.  Yep saying that a stock could go up or down is amazing, and that it would remain within +/- 8.75 percent window within a single day, words escape me as to how to describe this prediction.

I know that if the stock market made a 8.75 percent move in either directions within a day and you could bet that either some type of miracle had just occurred, or that at a truly massive high speed trading error (Flash Crash) had just occurred, or some truly massive fraud had just been discovered.  Talk about going out on a limb, these folks brought their “A” game.  Talk about knowing where the market is going.

Their call is about as smart as backing your car down the driveway and turning the car either 30 degrees to right or to the left and continuing to back down the driveway hoping to make the street.