Sunday, August 28, 2011

What A $1.2 trillion Low Interest "PayDay" Loan Gets You

Lloyd Blankfein, CEO of Goldman Sachs; Jamie Dimon, CEO of JPMorgan Chase and Co.; Robert P.Kelly, CEO of the Bank of New York; Ken Lewis, CEO of the Bank of America; Ronald E. Logue, CEO of State Street; John Mack, CEO of Morgan Stanley; Vikram Pandit, CEO of Citigroup; and John Stumpf, CEO of Wells Fargo, testify during the House Financial Services oversight hearing of the Troubled Assets Relief Program (TARP). Photographer: Scott J. Ferrell/Congressional Quarterly/Getty Images

Over and above the $160 billion TARP bailout from the Treasury, various banks, including foreign banks, were gifted with low cost loans that peaked December 2008, at around $1.2 trillion. The money has since been paid back.

Still, one might question the wisdom of such loans on numerous fronts, not least of which: the moral-hazard argument; the fact that the US borrowed the money (via the sale of bonds) that it lent to banks;  the piddling interest banks paid on the loans given the extraordinary circumstances (These were like PayDay loans, and what do they charge? Like 400%! The Fed got 1.1%.); and the crummy collateral provided by the insolvent banks (stocks, junk bonds, etc.). Do you think even an established small-business should hope for a loan with such terms? Hah!

Gretchen Morgensen is a fine journalist, who cuts to the chase and offers clear provision of facts. She should be honored. Her article below refers to a Bloomberg article that should also be read if you want to understand what went on in 2008. Here's a quote:
“Bailing out firms indiscriminately hampered rather than promoted economic recovery,” Mr. Kane continued. “It evoked reckless gambles for resurrection among rescued firms and created uncertainty about who would finally bear the extravagant costs of these programs. Both effects continue to disrupt the flow of credit and real investment necessary to trigger and sustain economic recovery.”
The Rescue That Missed Main Street, NY Times
Published: August 27, 2011
Read the Times and Bloomberg stories, and check out the Bloomberg interactive graphic based on Fed data. They are required reading for civic minded citizens.

Thursday, August 18, 2011

US VAT = Broad Prosperity

Senator Fritz Hollings, in the Huffington Post, offers a coherent, convincing argument in favor of a Value Added Tax (VAT):

Inconsequential Washington, August 16, 2011
Globalization is nothing more than a war for the economy, with production looking for a country cheaper to produce. Each country competes vigorously in this war for innovation, research, technology, development, production and jobs, each building its economy -- except the United States. President Obama stays bogged down in the hot wars, totally ignoring the cold or economy war. The president could easily recover by transferring the subsidy the U. S. gives to off-shore jobs and giving it to on-shore jobs: cancel the corporate income tax and replace it with a 6% value added tax. The VAT is easily implemented and administered with computers. 140 countries compete in globalization with a VAT and don't find it regressive or "a money machine." The VAT is rebated on exports, but the income tax is not rebated. With a VAT, the more you consume, the more you pay; the less you consume, the less you pay. The poor that must consume for food, health and housing, are given exemptions from the VAT. Last year, the corporate tax produced $194.1 billion in revenues. A 2010 VAT would have produced $700 billion. $70 billion exemptions for the poor, still leaves $630 billion to pay down the debt. Spending cuts can produce more to pay down the debt. The VAT promotes exports, creating jobs. With the corporate tax cancelled, Corporate America can invest its $1.2 trillion in off-shore profits to create millions of jobs in the United States. Since there are no loopholes in a VAT, we have instant tax reform. Since the VAT is self-enforcing, we can eliminate much of the Internal Revenue Service or cut the size of government. Since the average corporate tax is 23%, replacing it with a 6% VAT cuts taxes. So this tax cut stops the hemorrhaging of our economy off-shore, provides billions to pay down the debt, creates millions of jobs, and cuts the size of government.

But the president ignores the off-shoring of our economy. He campaigns around the country calling for stimulation and government "make-work," proving himself inconsequential on jobs.
 A VAT would encourage fair trade, domestic manufacturing, domestic savings, and wage growth -- all of which would lead to broad economic prosperity. We had such prosperity in the past, we could have it again if we take back what the bankers and corporate bag men stole. Besides, the corporate apologist Heritage Foundation is opposed to it (Value-Added Tax: No Easy Fix for the Deficit), so it must be good for the country. (Mr. Dubay's arguments are typical conservative misdirection: they focus on well-known faults that have negligible impact on the overall effectiveness of the VAT, which is why smart societies governed for the benefit of the majority continue to use it. The effect of the faults can be minimized and mitigated. And Senator Hollings suggests the VAT replace the current 35% corporate tax rate, not as an addition to it. And of that 35%, most corporations pay only 3% -- rampant fraud? And few are suggesting a 20% VAT as Mr. Dubay asserts. Mr. Hollings suggests a 5 or 6% VAT. Mr. Dubay is blowing smoke in our eyes, like nutty conservative think tanks always do.)

Monday, August 15, 2011


What’s up with bat-shit, crazy-ass Republican politicians? Apathy and ignorance, that’s what. That’s what got them elected, and bat-shit, crazy-ass Republican politicians mean to stay elected. For-effing-ever, or at least until they can get a cushy, overpaid sinecure at some lobbying firm, or law firm in lobbyist’s clothing. Some place so corrupt an honest man’s nose bleeds when he walks in the door and inhales the fetid air.

These guys, these Republican politicians, give not a sliver about the people who elect them. These guys ain’t stupid. Dumb maybe, but they ain’t stupid. But they sure as shit are certain their wide-eyed, howling constituency is. Stupid, that is. Stupid enough to vote for bat-shit, crazy-ass Republican politicians who, over and over, slip the knife into their hapless voters' backs. These voters get snookered, but they must crave it: they beg for more abuse every chance they get.

The professional politicians they elect -- campaign-trail-commandos -- know perfectly well who votes for them: the utterly, profoundly, stunningly ignorant; lazy bastards who can’t bring themselves to tune out the hate porn on Fox News. They can’t bring themselves to tune out the “fair and balanced” network long enough to read a page or two from a reputable newspaper. And by reputable, I mean USA Today would be a start. Forget the New York Times. Forget the Washington Post (it’s "conservative," but still reputable!!). Or the LA Times, or the San Francisco Chronicle, the New Orleans Times-Picayune, or even the Des Moines Register, for crying out loud. Forget any place where the truth might reside.

No, these proud, patriotic, red-blooded Americans can’t be bothered with that “reading” or "truth" shit; got no time for that. Besides, they already know everything they need to know. Their opinions are well formed and God given. Give 'em some shouting, acid-spewing, CEO-ass-licker on Fox News -- Beck, O’Reilly, or some such cookie-cutter, copy and paste, bloviating, blowhard.Or, if these voters do read, they read stuff that won't inadvertently enlighten them, or broaden their narrow perspective on life. They read stuff like:, The Right Sphere, Breitbart, or some such semi-literate, sophomoric, I-hate-you-because-you-want-me-to-care-about-people-who-don't-share-my-bigotry-and-greed nonsense.

That’s the ticket: blame the lefties, blame the socialists, blame the progressives, blame the Jews, blame the blacks, blame the immigrants, blame women, blame men who don’t act like men, blame children who can’t read, blame unions, blame environmentalists...blame fucking everyone but too-lazy-to-think, or too-lazy-too-learn-anything-about-who-the-hell-you-are-voting-for, lazy-ass, right-wing haters. And then vote for someone who promises -- promises! -- to put a hurt on everyone else; everyone else except our self-righteous, sanctimonious, God-fearing, white-skinned, Anglo-Saxon "conservatives."

These are the folks who gleefully hold hands and walk themselves and the rest of this once proud nation over a cliff; and they coo about the blissful afterlife they’ve been promised -- promised!!! -- while they do it. These people are desperate and utterly deceived. And they want someone else to pay for their discontent.

Hate is why these fools vote Republican jackals into office. Jackals who will say anything -- anything! -- to keep cozy, PAC-fed seats in Congress. Political operatives who are feckless, benighted, drones who don’t deserve the dignity of mucking out sewers on their hands and knees with teaspoons. And yet, their electorate bestows on them Congressional seats, which they soil with their overfed, putrefying corpses while they spew the party line their corporate benefactors feed them intravenously under the table.A party line, which incidentally, drives their constituents deeper into poverty, economic insecurity, and discontent, thus ensuring the reelection of the same lying demagogues all over again.

It is absurd, and it is the IDIOCRACY that we inhabit, and will inhabit for the foreseeable future. And a quite easily foreseeable future it is, given our anemic commitment to containing the environmental disasters that now engulf our profit-sullied planet.

We get the government we deserve. And if we think we deserve better, we must compel ourselves to expose the malfeasance, corruption, and duplicity of the Criminal Right. For too long they have exploited the decency, the rectitude, and the apathy of the left. Let's speak up. Let's shame these clowns back into the filth encrusted caves they crawled out of when Ronny Reagan blew his dog whistle.

Sorry for the coarse and cold hearted rant. I know I risk the perception that I hate just like those I condemn -- if you know me, you know otherwise. The sentient among us have no choice but to shame the willfully ignorant, the civically negligent, the chronically self-serving into doing the right thing.

Let's stop treating corrupt robber barons, snake oil salesmen, and carpetbaggers like they hold valid opinions that simply differ from our own. They don’t hold valid opinions. They don't simply differ. Ignorant and uninformed does not a valid opinion make, and I wish the press -- our one and only firewall against organized misinformation -- would find the courage to expose “Republican” interlopers for what they are: thieves and scoundrels.

Simple civic duty compels citizens with hearts and minds and knowledge to stand up to mindless mob tyranny. The pen is mightier than the sword. Call liars liars, and thieves thieves, and watch them blink under the glare of infamy; watch them scurry back under the rocks where they naturally reside.

Wednesday, August 3, 2011

Why A Spacecraft In Orbit Around An Asteroid Matters

credit: NASA
 On Saturday, July 30, 2011 the NASA spacecraft, Dawn, descended into orbit around Vesta, the second largest asteroid in the Asteroid Belt, roughly located between Mars and Jupiter. Vesta currently lies about 117 million miles (188 million km) from Earth. Dawn covered 1.7 billion miles (2.8 billion km) to reach Vesta, and after a year will depart for another asteroid, Ceres. The trip to Ceres will take three-years, and span 930 million miles (1.5 billion km).

An ion propulsion engine hurtled Dawn along the circuitous path between Earth and Vesta, and will again between Vesta and Ceres. The ion engine functions as follows (explanation courtesy NASA):
The thrusters work by using an electrical charge to accelerate ions from xenon fuel to a speed 10 times that of chemical engines. The electrical level and xenon fuel feed can be adjusted to throttle each engine up or down. The engines are thrifty with fuel, using only about 3.25 milligrams of xenon per second (about 10 ounces over 24 hours) at maximum thrust. The Dawn spacecraft carries 425 kilograms (937 pounds) of xenon propellant.

Ion Propulsion Engine, credit: NASA/JPL
At maximum thrust, each engine produces a total of 91 millinewtons -- about the amount of force involved in holding a single piece of notebook paper in your hand. You would not want to use ion propulsion to get on a freeway -- at maximum throttle, it would take Dawn's system four days to accelerate from 0 to 60 miles per hour.

As slight as that might seem, over the course of the mission the total change in velocity from ion propulsion will be comparable to the push provided by the Delta II rocket that carried it into space -- all nine solid-fuel boosters, plus the Delta's first, second and third stages. This is because the ion propulsion system will operate for thousands of days, instead of the minutes during which the Delta performs.

So, Dawn’s got this wildly, insanely cool engine, like some Buck Rogers, Lost In Space, Star Wars, Back To The Future but better interplanetary -- heck, intergalactic if you want -- propulsion system. And how are we proud citizens of planet Earth celebrating this mind-blowing technical achievement. I don’t know. We don’t seem to be celebrating at all.

And what about the asteroids, Vesta and Ceres that Dawn is expected to study? Here’s some more facts (courtesy of NASA, again):
Ceres and Vesta are the two most massive residents of the asteroid belt. Vesta is a rocky body, while Ceres is believed to contain large quantities of ice. The profound differences in geology between these two protoplanets that formed and evolved so close to each other form a bridge from the rocky bodies of the inner solar system to the icy bodies, all of which lay beyond in the outer solar system. ...
--Discovered: March 29, 1807 by Heinrich Wilhelm Olbers of Germany (fourth asteroid discovered)
--Dimensions: About 578 by 560 by 458 kilometers (359 by 348 by 285 miles)
--Shape: Nearly spheroid, with a massive chunk out of the south pole
--Rotation: Once every 5 hours, 20 minutes
The asteroid's official name is "4 Vesta" because it was the fourth asteroid discovered. About the length of Arizona, it appears to have a surface of basaltic rock -- frozen lava -- which oozed out of the asteroid's presumably hot interior shortly after its formation 4.5 billion years ago, and has remained largely intact ever since. Telescopic observations reveal mineralogical variations across its surface.

Vesta has a unique surface feature which scientists look forward to peering into. At the asteroid's south pole is a giant crater - 460 kilometers (285 miles) across and 13 kilometers (8 miles) deep. The massive collision that created this crater gouged out one percent of the asteroid's volume, blasting over one-half million cubic miles of rock into space.

What happened to the one percent that was propelled from its Vesta home? The debris, ranging in size from sand and gravel to boulder and mountain, was ejected into space where it began its own journey through the solar system. Scientist believe that about 5 percent of all meteorites we find on Earth are a result of this single ancient crash in deep space. ...

--Discovered: January 1,1801 by Giuseppe Piazzi of Italy (first asteroid/dwarf planet discovered)
--Size: 975 by 909 kilometers (606 by 565 miles)
--Shape: Spheroid
--Rotation: Once every 9 hours, 4.5 minutes
The object is known by astronomers as "1 Ceres" because it was the very first minor planet discovered. As big across as Texas, Ceres' nearly spherical body has a differentiated interior - meaning that, like Earth, it has denser material at the core and lighter minerals near the surface. Astronomers believe that water ice may be buried under Ceres' crust because its density is less than that of the Earth's crust, and because the dust-covered surface bears spectral evidence of water-bearing minerals. Ceres could even boast frost-covered polar caps.
Astronomers estimate that if Ceres were composed of 25 percent water, it may have more water than all the fresh water on Earth. Ceres' water, unlike Earth’s, is expected to be in the form of water ice located in its mantle.
OK, so NASA built Dawn, launched it into orbit around Earth, started up its ion propulsion engine, and sent it whizzing off to Vesta, a really big rock, a long, long way away. What’s the big deal?

credit: NASA/JPL
The big deal is that Dawn proves American gumption and know-how can still inspire pride in everyone -- not just Americans. Dawn proves that humble American engineers, technicians, and manufacturing personnel can still get it together and build something miraculous. And building something miraculous means collecting raw materials, refining them, specifying which to use where, and then forming those materials -- meticulously, painstakingly, ever so carefully -- into something as wildly complex as Dawn. Then loading the little traveling marvel onto something as wildly complex -- and wildly powerful -- as a three-stage Delta II rocket and literally blowing it up into space on those ferocious rockets that are never more than a hair’s breadth from just plain blowing up. Once you get thing into orbit without rattling it to pieces during the 6g acceleration along the way, the cargo compartment opens up like a flower and pushes the spacecraft away so it floats free and clear, untethered from the mother ship. Then, remotely, the engines are fired up (or just clicked on in the case of ion propulsion), and the thing sails off on its own, gradually accelerating up to cruising speed. After flying for five years, through scads of interplanetary debris and micrometeorites, at deadly low temperatures (way, way, way colder than Antarctica, or even Detroit), in a nearly complete vacuum, eventually using the gravitational pull and toss of Mars to sling it along even faster -- all that without a breakdown or system failure. Then, as the little robot makes its approach toward the asteroid, using cameras to fine-tune its flight path, it decelerates from a blinding velocity of 4.2 miles per second (6.7 kilometers per second) down to a plodding 75mph (100kph), and orbits its first destination, Vesta:
The spacecraft will follow a series of circular near-polar orbits allowing it to study nearly the entire surface of the asteroid. These different orbits will be varied in altitude and orientation relative to the sun to achieve the best positioning for the various observations planned. At Vesta, the highest orbit will be roughly 2,500 kilometers (1,550 miles) in altitude, providing a nice vantage point to obtain a global view of the rocky world. The lowest orbit will be at an altitude of less than 200 kilometers (125 miles).
(NASA press release, “Dawn Launch, Mission to Vesta and Ceres”)
Dawn will hang around in orbit for about nine months, and then, once again, fire up its ion thrusters, break free of Vesta’s gravity, and slip off toward a distant rendezvous with Ceres, the second largest asteroid, or dwarf planet in our solar system. Three years will go by before, about eighty-five days out from Ceres, Dawn begins its approach and deceleration into orbit around Ceres. Once in orbit, Dawn will do the same sorts of observations that it made of Vesta.

Dawn will beam all of the information it collects from Vesta and Ceres back to Earth, via its little, low-power radio and dish antenna, and down to NASA’s Deep Space Network stations in California’s Mojave desert; outside Madrid, Spain; and near Canberra, Australia. These stations mostly use 34-meter antennas, but occasionally make use of larger 70-meter monsters for mission-critical communications. This is like the ultimate long-range WiFi, but one that can never, ever fail.

After all that, according to NASA:
Dawn’s prime mission is scheduled to end in July 2015. At that time, the spacecraft will be in a “quarantine” orbit around Ceres at an altitude of about 700 kilometers (435 miles). This orbit ensures that the by-then-decommissioned spacecraft will not impact Ceres for more than half a century.
But it will -- to use NASA’s bland term -- “impact” Ceres eventually. Meaning, it slowly spirals down toward the surface, where it finally, irrevocably wipes out in the sands of Ceres. That’s life.

credit: NASA/JPL

Dawn is indisputably a big deal. Before the advent of spacecraft, humanity never before finessed so many subtle, graceful, elegant technologies into performing so long a succession of almost magical feats, so reliably. What NASA, and all of the people downstream have accomplished with Dawn, and any of their spacecraft for that matter, make a Swiss watch look like a chimpanzee’s Play-Doh art. Not to offend the Swiss, or any watchmaker, but getting a spacecraft from point A to point B, is insanely difficult. Not just the technical hurdles -- which are always surmountable with enough time and money (and there is never enough of either) -- but the logistical and quality control hurdles, too. Remember, thousands of intricate little parts, from hundreds of manufacturers need to fit together perfectly -- or as near to perfection as humanly possible -- but then all those interlocking pieces are required to function exactly as they were designed, for years and years with no possibility of tweaking, or reboots, or a smack upside the metaphorical head. An old engineer once told me, "As complexity approaches infinity, mean time between failure approaches zero." That is where the quality control comes in. If you have ever worked in a place that designs and manufactures products to military specifications, you will know what I am talking about: endless testing, endless documentation, endless record keeping for traceability of every single constituent component. Oh, and don’t charge too much either, or the politicians will have their knives out and cut, cut, cut the project to ribbons.

And after all that effort, we take the thing, this pinnacle of human technical achievement, and we lob it into space like we would toss an empty champagne bottle over the side of ship. Done. Gone. Never to be seen again. Thanks, it’s been fun, but so long. Now that comes from a cool, and uniquely human philosophy: to expend so much effort on something so ephemeral, which offers such ineffable immediate returns. That takes the courage of one’s convictions, especially when surrounded by screaming mobs of naysayers (benighted, insensate, narrow-minded politicians and TV talking heads) who insist that your efforts are criminally wasteful and self-indulgent. They are not.

Besides, there are short-term gains for a multitude of private contractors. That should please the bean-counting, campaign-contribution-grubbing politicians. All those contractors develop new technologies, or leverage old ones, and then immediately use those technologies to design and assemble spacecraft components to the very high standards demanded by NASA. These contractors make money and employ many, many people to do this. And the technology they create -- at least the stuff they tell us about -- is either available to license from NASA, or offered up by NASA in the public domain for anyone to use. The point of this is to get the technology out in the open, where entrepreneurs can apply it in as many new, yet unimagined pursuits as possible. This creates a multiplier effect that offsets the upfront investment by taxpayers for the spacecraft. (I don’t have the data on domestic economic activity initiated through tech transfers, but I’m sure it is out there. Contact NASA if you don’t trust my multiplier assertion.)

Another good reason to create and launch interplanetary spacecraft is that such projects offer engineers the opportunity to develop what would otherwise be “blue-sky” innovations, which in private industry are typically off limits due to cost and timing constraints. The chain of “Eureka!” moments such “blue-sky” ventures provoke can not be priced, but trust me, the effort is priceless for developing the expertise required to innovate. The 3M Company recognizes this (at least they did the last time I checked). They require their staff to invest at least 30% of their time in their own hair-brained schemes just to see what comes of it. Ever used a Post-It®? There you go.

credit: NY Times
Besides, not everything a nation does should be done with an eye toward profit. We are not a corporation. We do not have shareholders. We are the nation, and we have hopes and dreams and crazy aspirations. We look up at the sky and wonder. And we should do what we can to fulfill those hopes, dreams, and crazy aspirations. Shouldn’t we? Or is being a citizen merely about creation of a government that facilitates personal, financial enrichment. Are we only about money? Hell no. And don’t ever give the time of day to the cretins who tell you that is what it is all about (they will call themselves libertarians, but they are really just self-destructive nihilists). A nation ought to invest in a sense of human community. Something we all do together, that makes us an indivisible part of something bigger than ourselves. And I am not talking about war. And I am not talking about exclusionary nationalism or religion. I am talking about the sense of shared adventure the entire planet enjoyed when Neil Armstrong walked on the Moon, and the whole damn planet was glued to TV’s and radios to hear the blow by blow account. We need to be able to look at one another -- anywhere in the world -- and know that we are all in this together, and that we have accomplished much together, and by extension, will accomplish much more together in the future.
If we have that between us, especially now on this imperiled, shrinking Earth -- our one and only safe harbor in the universe -- than we have hope. Not made-up-by-politicians-empty-rhetoric-hope, but real, meaningful, justifiable, actionable, save-the-world hope. And that’s what Dawn gently, gracefully, modestly extends to us as she circles silently around that gray stone a 120 million miles away. We should be awestruck and proud -- not as Americans, but as humans.

Thanks, NASA, and thanks to all the folks who make NASA tick.

photo: Australian Aboriginal Astronomy