Author: Matthew G. Saroff

No Longer Well Endowed*

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I am referring, of course, to the sad fortunes of Harvard University’s endowment, which I have blogged on a number of occasions.

Well, Felix Salmon notes that , something which I noted in December, though, to be fair, I never thought that it would get to this point, he said, quoting Mr. Salmon:

Richard Bradley reports:

Harvard has already halted the hiring of junior faculty and announced an early retirement program for tenured professors, and for the first time ever is considering laying off tenured professors.

And why might Harvard be laying off tenured professors? Because it’s down to its last $25 billion, of course. Bradley adds a bit to what we know about Harvard’s financial mismanagement:

According to the university’s 2008 financial report, in the next 10 years it must pay various private investors some $11 billion in capital commitments. Where will that money come from if, as seems likely, endowment growth over those years is minimal or nonexistent, and alumni’s own strained budgets limit their generosity?

So, the question here is where Harvard will go with all of this.

Obviously, hitting up alumni for more money is a given. That’s what they do normally.

The real question is whether they will either move to a less aggressive, and less risky strategy, which will provide lower, but more stable, returns and greater liquidity, or whether they will go whole hog into more private equity deals, betting on a rebound which will lift them out of their problem?

Human nature being what it is, I’m going to guess that they go with the latter, because doubling down on failure is basic human nature.

*Yes, I spent a lot of time on this title, and get your mind out of the gutter!

Terrorists Strike in American Heartland

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Someone shot George Tiller, who ran Women’s Health Care Services, in his church in Wichita, Kansas.

It is yet another right-to-life movement murder.

There has been an arrest, but, unfortunately, there has been no movement taken against those people and organizations that offer material support to these terrorists, such as Kansans for Life, Priests for Life, Operation Rescue, former Kansas AG Phill Kline, Randall Terry, and Kansas Coalition for Life.

It is clear that the ties between these people and organizations, and people and organizations that aggressively engage in terrorism against law abiding medical professionals are far closer than those between the Holy Land Foundation, whose leaders just received 65 year sentences, and Hamas, and Hamas has never engaged in terrorism in the borders of the United States.

Chinese Pilots to Train on Brazilian Carrier

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I think that this implies that the Chinese intend to move very aggressively towards creating an aircraft carrier capability.

It’s an opportunity for them to hone their skills, and tap the expertise of the Brazilian, along with the rapidly progressing refit of the Varyag, you can see pictures at the link, implies to me that the Chinese intend to have an training carrier air wing in a pretty near term operating from the never completely Admiral Kuznetsov-class carrier.

USAF May Lose Oversight of Tanker Purchase

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The Pentagon is looking at whether the USAF or the Pentagon will run the next competition between the 767 and A330 for the KC-X tanker.

If they go with the Pentagon, this is a a major change from earlier procedures.

It appears that some people are concerned that the USAF is incapable of doing this properly, after the first deal was shot down because of corruption, and the 2nd deal was successfully challenged to the GAO.

I can’t imagine why.

You Don’t Have to be a Sick F%$# to be a Republican…..

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But they do have more than their share

Case in point, a Republican legislative aide in the Pennsylvania statehouse who propositioned a teen online, he wanted to have sex while one or both of them were wearing a panda costume, and there are indications that diapers may have been involved too.

It gives an entirely new meaning to Richard M. Nixon’s “Checkers” speech.

When he talks about his wife Pat having, “Respectable Republican cloth coat,” and not a fur coat……

Damn! This Crap Never Dies, Does It?

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2 of the significant cancellations of the budget proposed by SecDef Gates were the USAF’s Transformational Satellite (TSAT), and the Army’s Future Combat System (FCS), but like the slasher flick villain, they’re back.

The USAF is now looking for funding of a “technology demonstrator” which would mirror TSAT’s capabilities, with an obvious eye towards reviving the program, and Army Chief of Staff General George Casey is saying that the FCS has not been killed, prime contractor Boeing still touting fictitious milestones being passed, and a senior acquisition officer saying that it would be split into 3 parts.

So, we’ll services coming after this again, and again, even though the gear and tech from the FCS that was supposed to enter service in 2011 has now been delayed.

The Iron Triangle at its finest.

Lithium Hydride Scramjet Shows Promise

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Lithium Hydride is a fairly dense and easy to handle way to store hydrogen, which is one of the reasons that it’s used, with Deuterium substituting for Hydrogen, as the fusion fuel supply for thermonuclear warheads.

Well, Claudio Bruno, of the University of Rome, has begun testing the material for use in scramjet engines.

Gaseous, or for that matter cryogenic, hydrogen is bulky and difficult to store, but it also is the material that is best suited to burn quickly enough to work well under supersonic combustion.

One of the techniques used is to use a catalyst, and the heat generated at speed, to crack hydrocarbon fuels, and use the hydrogen generated, or to use a preburner, basically a ramjet inside the scramjet, to preburn the fuel and create a hot reducing atmosphere for further combustion.

LiH would decompose naturally at operating temperatures, and would appear to be a simpler solution.

Economics Update

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We’re All Red States Now
(Philly Fed Index, Red is Contraction)

The revised numbers for the first quarter GDP are out now, and it’s an upward revision for once, from a fall of 6.1% to a fall of only 5.7%.

Of course, -5.7% is still pretty ugly, and the fact that the ATA Truck Tonnage Index fell 2.2% in April, and that the Philly Fed State index is not showing expansion in any states, seems to indicate to me that we are still talking about a change in the 2nd derivative, i.e. not getting worst faster, than a rebound.

Still, there was still some good news, with the Consumer Sentiment Index reaching an 8 month high, 68.7, and Japan’s factory output unexpectedly rose last month.

Still, with Euro zone inflation hitting 0% this month, the specter of deflation is very real.

Meanwhile, the less concern about the economy has pushed the dollar down, while oil price increases have pushed the Canadian dollar up by 9.6% in May.

U.S. Unemployment Now as High as Europe

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Actually the US unemployment rate is higher relative to Europe than the Center for Economic and Policy Research (CEPR) report suggests.

The Europeans have a far more relaxed count for the unemployed, counting, for example, full time students looking for part time work as unemployed, and the US counts active duty military as part of the civilian workforce,, which Europe does not, further lowering the US numbers relative to Europe.

When comparing apples to apples, the EU and US have been much closer in terms of unemployment rate, and right now, our unemployment rate is higher.

Additionally, the consequences of unemployment are far worse in the US with a threadbare social safety net which involves, among other things, things like a loss of healthcare.

Bushie Takes the 5th

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When I last wrote about PBGC head Charles Millard, who a large portion of the agency’s trust fund, and put it in the stock market just before the crash, I thought that it was just another case of another incompetent ideologue.

I was wrong. It’s Bush and His Evil Minions™ style corruption, baby!

The House Education and Labor Committee is now investigating his contacts with the investment banks that actually bought the stock, and generated over $100 million in fees.

So, they called Millard to testify, and he repeatedly invoked the 5th.

Sounds to me like he was throwing business their way in exchange for the possibility of a lucrative job offer.

More People Come Out in Support of Inflation

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I have been saying for some time that this is the way out of the housing crisis, because it will devalue the mortgage loans to match real-estate prices returning to sanity.

Well, there are now some noted economic voices saying the same thing:

So say economists including Gregory Mankiw, former White House adviser, and Kenneth Rogoff, who was chief economist at the International Monetary Fund. They argue that a looser rein on inflation would make it easier for debt-strapped consumers and governments to meet their obligations. It might also help the economy by encouraging Americans to spend now rather than later when prices go up.

“I’m advocating 6 percent inflation for at least a couple of years,” says Rogoff, 56, who’s now a professor at Harvard University. “It would ameliorate the debt bomb and help us work through the deleveraging process.”

6% is a 12 year doubling time, and 3 years at 6% would get you an increase in prices of about 19%.

I think that the reason that he’s talking about those numbers is because much above 6%, you start having real concerns about it getting away from you.

Meanwhile, Paul Krugman, while not coming out in defense of some inflation, says that he does not see it as a big deal.

He feels that the levels of debt under these circumstances are justified, and backs it up with historical examples.

So, Just How Were We Better Than Saddam?

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It’s far far worse than I imagined.

When I wrote about Bush rape rooms, I cited Scott Horton, who detailed only rape by instrumentality, but the reality is that we are talking full genital rape here, including the rape of a boy:

At least one picture shows an American soldier apparently raping a female prisoner while another is said to show a male translator raping a male detainee.

What’s more the Telegraph‘s source on this is unimpeachable:

Detail of the content emerged from Major General Antonio Taguba, the former army officer who conducted an inquiry into the Abu Ghraib jail in Iraq.

Allegations of rape and abuse were included in his 2004 report but the fact there were photographs was never revealed. He has now confirmed their existence in an interview with the Daily Telegraph.

…

Maj Gen Taguba, who retired in January 2007, said he supported the President’s decision, adding: “These pictures show torture, abuse, rape and every indecency.

We also know that Barack Obama lied when he talked about this:

Mr Obama seemed to reinforce that view by adding: “I want to emphasise that these photos that were requested in this case are not particularly sensational, especially when compared to the painful images that we remember from Abu Ghraib.”

I don’t think that he could say that you have pictures of a boy and a woman being raped, in additional to the forcible stripping of a woman detainee to humiliate her, any honest description would be almost as inflammatory as the pictures themselves, but saying that they are “no big” will make him less credible the next time something like this comes up.

More Economic Journamalism

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Remember when I was talking about economic journamalism on durable goods orders?

Well Bloomberg gets the story right, with U.S. Economy: Durable-Goods Orders Hover Near Lowest Since 1996, but Reuters (U.S. April durable goods orders post biggest gain in 16 months), and CNBC (Durable Goods in Surprise Jump; Jobless Claims Dip), both get it very, very wrong.

Let’s roll the Bloomberg story for what is going on:

Orders rose 1.9 percent in April after a 2.1 percent drop in March that was more than twice as large as previously estimated, the Commerce Department said in Washington. Meanwhile, the Labor Department said 6.79 million people are collecting jobless benefits, and another report showed new-home sales were lower than forecast in April.

(emphasis mine)

OK, this looks like a 1.9% bump, which is a significant bump, but Bloomberg covered this as low numbers.

Why is this correct, and Reuters and CNBC wrong?

That phrase, “more than twice as large as previously estimated,” is why it is wrong.

As Reuters notes a few ‘graphs down:

However, March orders were revised sharply lower, falling 2.1 percent from the previously reported 0.8 percent decline.

So, we are comparing initial estimates for April with revised numbers for March.

If you were to compare apples to apples, you would have 1.9%-2.1%-(-0.8%), or 1.9%-2.1%+0.8%, or a growth of 0.6% comparing apples to apples.

In fact, you get a lot of this out of the government statistic machine, and it’s faithfully echoed by the press.

You have a number that is an improvement over the last month’s (revised) numbers, and it’s really good news…..And then, a few weeks later it’s revised down, and the new figures for the next month come out, and they look really good compared to the downwardly revised previous figures.

Rinse, lather, repeat.