Author: Matthew G. Saroff

Those EU Regulators Have No Sense of Adventure

No Comments

Emirates airlines is planning a super luxurious first class for their A-380 super-jumbos.

It includes having a shower available to first class passengers which is kind of neat, but EU regulators refused to allow them to recycle water for the shower, so now they have to carry an additional 500kg of water for the showers.

It turns out that they do allow recycling in private jets, but for a passenger airline, they were not quite ready.

BTW, I think that this bathroom is neat. If I were to walk into it, upon leaving, I would have to say, “No Mr. Bond, I expect you to die.’

It’s got a wicked evil mastermind feel to it.

A New, and Plausible, Competitor in the Aviation Diesel Sweepstakes

No Comments

SMA light aircraft engines sent a rep to Oshkosh to sing the praises of their new engine.

What makes it different is that it’s designed to operate at 2,200 rpm, which means no reduction gearing between the engine and the prop, so the engine has a 2,000 hour TBO, and they expect to push it out to 3K hours, as compared to the gearbox on the Thielert, for example, that needed to be rebuilt/replaced every 300 hours.

It’s turbocharged, and rated at 230hp for five minutes and 200hp continuous up to 10,000 feet.

It displaces 5 liters, which is larger than the 2.0 liter Thielert obviously, but my guess is that the swept volume (rpm x displacement) are probably pretty similar.

Tanker Tango: How Much Did Boeing Suck?

No Comments

The former Air Force Secretary says that it’s enough to say that you just want to be friends:

Former Air Force Secretary Michael Wynne thinks the service should be pitiless with losing contractors, so they’re not encouraged to endlessly protest important contracts. Excessively kind language, he said, leads the losers to think they only lost by a hair. In the KC-X tanker competition, “We should have been harsher on the loser,” Wynne said during an interview July 28…….

One of the things that I’ve always said is that in order for the tanker contract to go to EADS, in an election year, it wasn’t a close thing, which implies to me that Boeing has a significantly inferior product.

Wynn is strongly implying the same thing.

A380 Weight Looks to Come Down

No Comments

As they get further down the production road, it looks like Airbus will get closer to the originally intended structure weight for the A-380.

According to Airbus and Emirates Airlines, it should add about 13 hours more endurance, and allow flights from their home base to SFO and LAX.

Additionally, Emirates is looking at pulling the retail catalogues out of the seats (!), and replacing them with a interactive channel on inflight entertainment system, which could save nearly a ton.

I think that this may make the aircraft far more competitive vs. the 747-8.

Bloody Fool

No Comments

Obama Opens the Door to Offshore Drilling

You and your campaign just allowed yourself to be bitch slapped, again.

Let remind my readers of the “Bitch Slap Theory of Republican Politics“:

One way — perhaps the best way — to demonstrate someone’s lack of toughness or strength is to attack them and show they are either unwilling or unable to defend themselves — thus the rough slang I used above. And that I think is a big part of what is happening here. Someone who can’t or won’t defend themselves certainly isn’t someone you can depend upon to defend you.

You just caved to a tremendously stupid idea.

It does not make you strong, it makes you look weak.

You and the Democrats lose, and McCain and the Republicans win. It’s that simple.

Talk About Rebelling Against Your Parents

No Comments

Yes, I know that the source is Wing Nut daily, but this story is just too amusing to pass up.

According to WND, Masab Yousuf, son of West Bank Hamas leader Sheik Hassan Yousef, has converted to Christianity, and has become a supporter of Israel:

“I know that I’m endangering my life and am even liable to lose my father, but I hope that he’ll understand this and that God will give him and my family patience and willingness to open their eyes to Jesus and to Christianity. Maybe one day I’ll be able to return to Palestine and to Ramallah with Jesus, in the Kingdom of God,” Masab said.

Masab said he previously aided his father with Hamas activities, but he now has affection for Israel and laments Hamas.

Well, I guess that’s how you rebel against your parents, if your parent is a rebel.

OK, these Numbers are Grim

No Comments

This time, it’s commercial mortgage back securities, and the default rate is about 4%, but this number is expected to quadruple if the economy slows down significantly.

Let’s note that this is commercial property, the stuff that’s supposed to be largely recession proof that we are talking about here:

Such a scenario corresponds “to the negative predictions currently offered by commercial real estate experts”, analysts at Fitch wrote. This would happen if the economy suffered a similar downturn to 1991, and assumes that the value of properties covered by the deals falls by 25 per cent, and cash flow from rents by 15 per cent.

The higher defaults under such a slowdown compares with a historical default rate of 7.9 per cent, and with the milder scenario that Fitch thinks is more possible of 0.8 per cent economic growth and a 13.7 per cent rate of default.

It would cause non-investment grade bonds – B and BB rated CMBS – to suffer loss rates of 100 per cent and 95.9 per cent, respectively. Meanwhile, 30.6 per cent of the lowest-rated investment grade bonds – BBB rated – would experience losses, while loss severities would rise to 37.9 per cent from an historical average of 33.5 per cent.

The data suggest that recently issued CMBS may fall victim to inflated property values and weaker underwriting standards experienced at the height of the US property boom in 2006 and 2007, as well as the weaker economy. Those bonds make up about 49 per cent of the outstanding CMBS market of more than $800bn. The survey covers all Fitch-rated bonds issued during those two years, making up 74 deals worth $217.3bn. That was about 60 per cent of all CMBS issued during the period.

These numbers are apocalyptic.

Freddie Mac Gets on the Clue Train

No Comments

This is why no one in their right mind is building anything. Construction spending is down for the 11th time in 13 months.

Freddie Mac seems to have realized the gravity of the situation though. Yesterday, I wrote about their doubling the payments to servicers for loan workouts, and today we discover that they are ending bonuses for servicers who foreclose quickly.

It makes sense. When times are good, you just want the stuff off your books and resold quickly, but when times are bad, you go broke doing that.

Economics Update

No Comments

Well, the official unemployment rate climbed to a 4 year high, 5.5%, and total number of jobs fell by 51K, the 7th straight monthly drop in a row, in July.

We’re in a recession. Get over it.

Manufacturing actually did a bit better than expected in July, it was flat, though much of that was military and exports driven by a weak dollar, but I’ll take what I can get.

In the monoliner insurance follies, we have good news for AMBAC, they paid Citigroup $850 million to get out of a $1.4 billion guarantee on some collateralized debt obligations (CDO).

It’s being reported as good news for AMBAC, which says something about the qualities of said CDOs.

As bad as the job news was, it was better than expected, so the dollar strengthened in international trading.

In energy, the employment report drove oil up too, though retail gasoline is back below $3.90/gallon. Woo hoo!!

Zimbabwe Update

No Comments

Well, we now have a report that Zimbabwe: Robert Mugabe offered Morgan Tsvangirai the vice presidency, a position with no powers, in negotiations….What I expected.

It’s no surprise then that there are reports that the negotiations are deadlocked, though talks are supposed Zimbabwe’s crisis talks to resume Sunday.

One interesting development is that Botswana is threatening to boycott of the summit of the next Southern African Development Community (SADC) summit if Mugabe is allowed to attend, which indicates, I think, some level of dissatisfaction with Thabo Mbeki’s mediation efforts.

An unfortunate development is that Mugabe is considering stopping a court action on disputed parliamentary seats:

Fearing an imminent court defeat that would further increase MDC’s parliamentary majority Robert Mugabe’s military junta is considering a law forbidding the courts to invalidate his defeated Zanu (PF) party’s victories in 60 constituencies facing legal challenges, official sources say.
The MDC is challenging the results of the March 29 elections in 60 constituencies, where they say electoral fraud, violence and intimidation of voters compromised the returns.

These are not the actions of a man, or a party, willing to negotiate in good faith.

One final note, they have dropped 10 zeros off the currency, meaning that a 10 billion Zimbabwean dollar is now 1 new Zimbabwean dollar, to deal with inflation, but with inflation running at something like 15,000,000%, it will not help for long.

This may finally be what takes Mugabe and his cronies down.