Category: Business

Indo-Russian Collaboration on PAF FA (T-50)

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This plane is intended to replace the Su-27 series, and it now appears that
Russia and India are in a 50-50 workshare.

I’m not entirely sure what this would mean, though the Indians are looking to use this aircraft on their carrier.

The company-to-company discussions ffollow an October 2007 intergovernmental agreement between Russia and India signed an on the cooperative development of a fifth-generation multi-role fighter. “This will be 50/50 cooperation in terms of intellectual property, resources and money,” said [Sukhoi CEO Mikhail] Pogosyan.

It appears that the Indian variants will have entirely Indian avionics, which is likely the result of Indian industrial policy.

In developing independent avionics, they may have an opening with upgrades of the aircraft sold to 3rd countries.

As to the 50/50 split, my guess is that this is more of offset numbers than real sharing. This is the crown jewels of Russian aerospace.

A quick note, the fact that the project is called the T-50 means that it has some variant of a delta wing. Were it swept wing, it would be something like S-50, which is why Sukhoi’s forward swept wing demonstrator was called the S-37.

World Wide Pants Makes Deal With Striking Writers, Letterman Back on the Air

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So will Craig Ferguson’s show, which is also produced by Letterman’s sartorially named production company.

The details of the deal have not yet been released, but this should create a significant advantage for both Letterman and Ferguson, not just because they will have writers, those monologues typically take a dozen writers to hammer out, but because there are a lot of guests who won’t cross a picket line, and with World Wide Pants productions, they are not.

As to whether this will lead to Letterman taking back the ratings lead from Leno, only time will tell.

As for me, I may watch Letterman, but I won’t be watching Stewart or Colbert, who will be airing shows without a deal with writers.

A Good Point on the Music Industry

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Cogitamus has a very good point on the music industry, when he looks at the RIAA’s latest VNR (Video News Release).

The RIAA is saying that if you find a mix CD that actually has the music that you want to listen to, it’s probably pirated.

So let me get this straight, in order for me to get the music I want in the format that I want, it has to be illegal?

Seems to me that this is a pretty good indication that the current legal music industry is absolutely worthless.

Scabs

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It looks like a number of the talk show hosts are going to cross the picket lines in addition to Carson Daley, Jimmy Kimmel and Jay Leno and Conan O’Brien will all be returning to air shortly.

Leno and O’Brien are actually members of the Writers Guild, which makes it worse.

Don’t watch them, boycott their advertisers.

I think that this is very different from David Letterman’s efforts, where, as opposed to breaking the strike, he is attempting to cut a limited deal (the same is rumored of Jon Stewart and The Daily Show).

The Old Negro Space Program

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If you are wondering what screenwriters are doing while on strike, some of it is private online projects that are pretty damn good, like The Old Negro Space Program (10:22).

It’s a very funny send up of Ken Burns documentaries (full disclosure, I went to Hampshire College for 2 years, and he graduated from there, though we never met, IIRC, he was up for an Oscar for his Brooklyn Bridge documentary my freshman year).

The movie studios are saying that they don’t need the writers, but it appears that a number of striking writers are in talks to launch Web start-ups, so I’m not sure if it’s not the other way around.

France Finally Gets Foreign Sale of Rafale: 14 to Libya

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The deal appears to be done, though there are still “i”s to be dotted and “t”s to be crossed.

This is very good news for both the French air forces, who were looking for foreign sales to drop unit costs, and Dassault, who have been pulling their hair out over the flop that the aircraft has made in the world market.

14 is not a lot, but it makes the aircraft a lot more attractive to a second potential purchaser, as being the only export purchaser tends to create worries about support.

France May Finally Get a Foreign Sale of Its Rafale

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It looks like Libya is seriously considering the Rafale.

This is important to the French industry. The marketing of the Rafale has been abysmal. Previous French fighter aircraft, the various Mirage series aircraft, have been at the bottom of the market of their generation.

The planes have been smaller and lighter than most, if not all, its competitors (the Mirage did signifantly outperform the F-5 though).

The Rafale is a midsized aircraft, and so the nations considering it, and the capabilities that they require, are significantly different.

For this upcoming generation of aircraft, the Gripen is probably closest to staking out the role of the Mirage in the market.

Gang-Rape and Cover-Up Brought to You By Halliburton

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Let’s see, a 22 year old girl, one of their employees is gang raped bo other Halliburton employees, and Halliburton’s response is to keep her prisoner in a shipping container, and when the Army doctor turned over the rape kit, they “lost” it.

I used to wonder why Halliburton hired Dick Cheney, and continued to employ him after his disasterous decisions (he bought a company that made them liable for asbestos law suits). Now I think I know why, they simply came from the same place value wise.

Steven Pearlstein Explains the Credit Crunch

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He does not get into the why this crunch has happened, short form is that you had regulators who allowed investment banks to use fairy dust and call it innovation, but its a very good picture regarding what forces are in motion now, and where they are likely to lead.

His OP/Ed is aptly titled It’s Not 1929, but It’s the Biggest Mess Since:

….

The financial giants that originated, packaged, rated and insured all those subprime mortgages were the same ones, run by the same executives, with the same fee incentives, using the same financial technologies and risk-management systems, who originated, packaged, rated and insured home-equity loans, commercial real estate loans, credit card loans and loans to finance corporate buyouts.

It is highly unlikely that these organizations did a significantly better job with those other lines of business than they did with mortgages. But the extent of those misjudgments will be revealed only once the economy has slowed, as it surely will.

At the center of this still-unfolding disaster is the Collateralized Debt Obligation, or CDO. CDOs are not new — they were at the center of a boom and bust in manufacturing housing loans in the early 2000s. But in the past several years, the CDO market has exploded, fueling not only a mortgage boom but expansion of all manner of credit. By one estimate, the face value of outstanding CDOs is nearly $2 trillion.

….

Those are scary numbers, but he goes on to explain why we are in trouble:

….

In the simple version, each investor owned a small percentage of the entire package and got the same yield as all the other investors. Then someone figured out that you could do a bigger business by selling them off in tranches corresponding to different levels of credit risk. Under this arrangement, if any of the mortgages in the pool defaulted, the riskiest tranche would absorb all the losses until its entire investment was wiped out, followed by the next riskiest and the next.

With these tranches, mortgage debt could be divided among classes of investors. The riskiest tranches — those with the lowest credit ratings — were sold to hedge funds and junk bond funds whose investors wanted the higher yields that went with the higher risk. The safest ones, offering lower yields and Treasury-like AAA ratings, were snapped up by risk-averse pension funds and money market funds. The least sought-after tranches were those in the middle, the “mezzanine” tranches, which offered middling yields for supposedly moderate risks.

Stick with me now, because this is where it gets interesting. For it is at this point that the banks got the bright idea of buying up a bunch of mezzanine tranches from various pools. Then, using fancy computer models, they convinced themselves and the rating agencies that by repeating the same “tranching” process, they could use these mezzanine-rated assets to create a new set of securities — some of them junk, some mezzanine, but the bulk of them with the AAA ratings more investors desired.

It was a marvelous piece of financial alchemy, one that made Wall Street banks and the ratings agencies billions of dollars in fees. And because so much borrowed money was used — in buying the original mortgages, buying the tranches for the CDOs and then in buying the tranches of the CDOs — the whole thing was so highly leveraged that the returns, at least on paper, were very attractive. No wonder they were snatched up by British hedge funds, German savings banks, oil-rich Norwegian villages and Florida pension funds.

What we know now, of course, is that the investment banks and ratings agencies underestimated the risk that mortgage defaults would rise so dramatically that even AAA investments could lose their value.

….

As part of the unwinding process, the rating agencies are in the midst of a massive and embarrassing downgrading process that will force many banks, pension funds and money market funds to sell their CDO holdings into a market so bereft of buyers that, in one recent transaction, a desperate E-Trade was able to get only 27 cents on the dollar for its highly rated portfolio.

Meanwhile, banks that are forced to hold on to their CDO assets will be required to set aside much more of their own capital as a financial cushion. That will sharply reduce the money they have available for making new loans.

And it doesn’t stop there. CDO losses now threaten the AAA ratings of a number of insurance companies that bought CDO paper or insured against CDO losses. And because some of those insurers also have provided insurance to investors in tax-exempt bonds, states and municipalities have decided to pull back on new bond offerings because investors have become skittish.

If all this sounds like a financial house of cards, that’s because it is. And it is about to come crashing down, with serious consequences not only for banks and investors but for the economy as a whole.

That’s not just my opinion. It’s why banks are husbanding their cash and why the outstanding stock of bank loans and commercial paper is shrinking dramatically.

…..

This may not be 1929. But it’s a good bet that it’s way more serious than the junk bond crisis of 1987, the S&L crisis of 1990 or the bursting of the tech bubble in 2001.

I Wish that I Were a Right Wing Moron

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You may not remember the last time that I quoted Amity Shlaes. It was an indirect quote by way of Rich Karlgaard, who is so stupid, that he should be getting a personal aide to cut his meat, where Karlgaard implied that the reason for the 1937 recession was that “the investor class” were somehow sick and tired of FDR’s “soak the rich policies”, when even the most solidly Chicago School economist could tell you that it was caused by a reduction in federal spending to balance the budget.

Well, Amity Shlaes is at it again, suggesting that potential shortfall in Social Security in 30+ years should be kept at a level of bare survival for 1935, the date of establishment of the program.

As an FYI, 45 million Americans did not have indoor plumbing in 1930, and you had similar numbers in terms of electricity. This was out of a total population of 123 million, giving about 37% of the population without these amenities.

So, why do I wish that I were a right wing moron? Because Amity Shlaes is a senior fellow in economic history at the Council on Foreign Relations, and with those connections, she makes more in 90 days than I do in a year.

The right wing intellectual infrastructure is an artifact of subsidies for bad ideas and opaque thought processes, which since people like the Coors family and Richard Mellon Scaife are aggressively buying*, leads to more bad ideas and opaque thought processes through the invisible hand of the market place.

*I believe that over the past 30 years, these folks have spent over two billion dollars, that’s $2,000,000,000.00, or about $800 for every man, woman, and child in the US, for think tanks and related activities. When you add in Olin, Bradley, DeVos (Amway), and the rest of these folks who never worked a day in their lives for their money, you are probably well over $3 billion….A quick Google shows spending of just the major organizations from 1990-2000 to be $1B.

Cox Also Shutting Down P2P Traffic

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They are using the same method as Comcast, though they are more honest about it, as evidenced by this response from the company:

To ensure the best possible online experience for our customers, Cox actively manages network traffic through a variety of methods including traffic prioritization and protocol filtering. Cox does not prohibit the use of file-sharing services for uploads or downloads, or discriminate against any specific services in any way. To help our customers make the most out of their Internet experience, we take proactive measures to ensure that bandwidth intensive applications do not negatively impact their service. These network management practices are outlined in our subscriber agreement and Acceptable Use Policy.

Certainly, I can see how, during periods of high bandwidth, one might want to drop priority on bit-torrent or similar applications (full disclosure, I use bit-torrent), but this is basically blocking:

According to Topolski, Cox is in fact using traffic shaping to degrade p2p traffic. In analyzing a user log, he has concluded that Cox is using traffic shaping hardware to send forged TCP/IP packets with the RST (reset) flag set — with the goal of disrupting eDonkey traffic. He’s been unable to tell precisely what hardware Cox is using, but he notes that the technique being used is very similar to Comcast’s treatment of BitTorrent.

It raises two questions: what is it about cable companies that make them so inclined to bull this bull$#@!, and why are they going through a backdoor block, as opposed to simply lowering the priority of the packets on their own internal network.

People to Put Up Against the Wall When the Revolution Comes

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This would be the Wall Street pukes who have engineered the housing bubble, and are now NOT reaping the consequences of its deflation.

Wall Street firms are planning record bonuses of $34 Billion this year.

That money, split among about 186,000 workers at Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos., equates to an average of $201,500 per person, according to data compiled by Bloomberg. The five biggest U.S. securities firms paid $36 billion to employees last year.

What happened to pay for performance?

Remember When I Said That Bear Stearns Would Be Gone in a Year?

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We have a little story about the relative success of Goldman Sachs as compared to the other investment banks. What interests me is this quote:

Money soothes a lot of concerns, of course, and Goldman has had plenty to spread around. Through the third quarter, Goldman’s $16.9 billion compensation pool — the money it sets aside to pay its employees — was significantly bigger than the entire $11.4 billion market capitalization of Bear Stearns.

So Bear Stearns’ market cap is less than Goldman’s payroll for just 3 months.

If they don’t go down, they will be bought out. It’s just a matter of time before the big fish eat the little fish, and as I predicted at the beginning of August, Bear Stearns will be one of the small fishes.

Giuliani Has Been Fox’s Bitch for Over a Decade

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And I’m not referring to the former President of Mexico. I am referring to Rupert Murdoch’s broadcast and cable empire.

It’s a story of payback to political friends, lawbreaking with the management of the New York cable system, and lucrative cable consulting gigs for Giuliani after he left office.

It’s why Fox is playing touch on his use of their debate footage, and that Fox has been so supportive of him, even when compared to other Republican candidates.

Radiohead $2.26 on every album download

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Remember when I commented on Radiohead making their album available online and allowing their fans to pay whatever they wanted?

After 29 days, some numbers are in, $2.26/album, with about $2.7 million in total sales. The coverage, of coursee, is that this is a pittance compared to the $19.95 for a CD, but that’s not what the band gets, that’s what the studio, retailer, record executive’s coke dealer and worthless brother-in-law, etc. get, not the artists.

Radiohead mad a lot more money in a few weeks than than they would in a few decades doing this. I recall hearing an interview with Aimee Man, formerly of ‘Til Tuesday, and she releases under her own label now, but her old stuff, the stuff that made the top ten and hit MTV forever, it was still “not recouped”, i.e. she had gotten no royalties.

The phenomenon is going to move down the chain, and I won’t shed a tear to see the demise of the record distributor paracites.

Right Wing Regenry Press Cheats Authors Out of Royalties

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It appears that Regenry Press, incubator of right wing nutjobs who can’t write*, is getting sued for cheating authors out of royalties. The claim is that Regenry, “orchestrates and participates in a fraudulent, deceptively concealed and self-dealing scheme to divert book sales away from retail outlets and to wholly owned subsidiary organizations within the Eagle conglomerate.”

In Regnery’s case, according to the lawsuit, the publisher sells books to sister companies, including the Conservative Book Club, which then sells the books to members at discounted prices, “at, below or only marginally above its own cost of publication.” In the lawsuit the authors say they receive “little or no royalty” on these sales because their contracts specify that the publisher pays only 10 percent of the amount received by the publisher, minus costs — as opposed to 15 percent of the cover price — for the book.

Mr. Miniter said that meant that although he received about $4.25 a copy when his books sold in a bookstore or through an online retailer, he only earned about 10 cents a copy when his books sold through the Conservative Book Club or other Eagle-owned channels. “The difference between 10 cents and $4.25 is pretty large when you multiply it by 20,000 to 30,000 books,” Mr. Miniter said. “It suddenly occurred to us that Regnery is making collectively jillions of dollars off of us and paying us a pittance.” He added: “Why is Regnery acting like a Marxist cartoon of a capitalist company?”

I love that last quote. FWIW, they are not acting like a “Marxist cartoon of a capitalist company“, they are acting like a Harvard Business School professor.

As a matter of law, I am not a lawyer. As a matter of the facts, this is rather complicated. Regenery has a long history of basically giving its books away to boost numbers, you see it all the time at places like Newsmax, where if you subscribe, they’ll throw in a bloody library of conservative hardcover tripe. This way, someone who writes a book that might sell 3,000 copies gets to do the pundit circuit as a someone who has sold 100,000 copies,

I’d love to be a part of the legal discovery process, but right now I’m basking in the Schadenfreude.

*Yeah, like I’m one to talk, but at least I don’t think that I’m the next Hemingway.