Category: Far East

These Things go Together

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Aermacchi’s M-346


Korea Aerospace Industries T-50

First, we have South Korea selecting the Israel Aerospace Industries/Elta Systems EL/M-2032 radar for its combat version of its A/T-50 trainer, and now Israel eyes has the T-50 on its short list, along with the M-346, as a replacement for its A-4 Skyhawk advanced trainer.

Funny how that works out.

If I were a betting man, I’d put my money on the T-50.

In either case, I feel a great affection for the A-4 “Scooter.”

Economics Update

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The Institute for Supply Management’s Chicago Purchasers’ Index beat expectations,
rising to 50, where 50 is the dividing line between contraction and expansion.

It’s the highest number since last September, but it has been goosed a bit for cash for clunkers, which has me wondering what the number will look this September.

I would say that we have a pretty good indicator for the cynics among us (hi there) that the stock market rally will soon be ending, as insiders are now selling their stocks 30.6 times more than they are buying, and when the insiders sell, it generally means that some sort of disappointment is on the way.

We are getting mixed signals from Asia, with both Chinese and Japanese industrial production rising, but South Korean exports falling this month, giving a 20.6% year over year drop.

In energy, closed at $69.96/bbl, as falling stocks led to demand concerns, and in currency, the biggest mover was the Yen, on the election news.

Economics Update (Yesterdays)

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Temporary Help Numbers, H/T The Big Picture

I was going to post, but thunder storms came through, and even with a surge protector, I shut down.

It was a big day for central bank news, with reports that the Federal Reserve sending signals that it will stop purchasing Treasuries, which means that while rate hikes are not on the horizon, that quantitative easing (printing money) will be ended over the next few months.

Meanwhile, the granddaddy of zero interest rate central banks, the Bank of Japan, has decided to keep its rate at 0.1% (basically 0%), as the Bank Governor, Masaaki Shirakawa, says that he does not see a strong recovery once stimulus measures fade, “I can’t be confident about the strength of final demand after inventory adjustments and policy measures run their course.”

The Bank of Korea is of the same mind, with it keeping its benchmark rate at 2%, an all time low for the institution.

In employment, the decline in temporary workers seems to be moderating a bit (see graph).

In real estate, it looks like commercial real estate (CRE)is on a path to crash more catastrophically than residential real estate, Fitch Ratings predicting that delinquencies could exceed 5% by year’s end.

Basically, CRE is in a worse place than residential, because they typically take out 5 year mortgages that they have to refinance at the end of the term. If real estate prices go down, they cannot refinance, while in residential real estate, once you have a mortgage, you have one until the loan is paid off.

In China, exports have declined for the 9th straight month, and new loans fell, indicating that they are not out of the woods yet.

Meanwhile, in currency, there has been a flight to safety, driving up the US dollar, and to an even larger degree, the Japanese Yen.

In energy, oil fell, though it is still above $70/bbl, and gasoline prices have spiked, up 15¢ in the past two weeks.

F-15 Silent Eagle Video Pr0n

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More defense contractor puffery, but it appears that some countries have expressed a significant interest in the Silent Eagel low observability program, most notably South Korea.

Of interest is the fact that Boeing has some real concerns about the US Government export license process being used to sabotage their sales process:

As for the F-15SE versus F-35 on frontal stealth, Jones says what Boeing is looking for is an assurance from the U.S. government that all competitors will be set at the same level of RCS reduction. Let the battle begin.

The translation here is that they are concerned that the JSF will be allowed for export at levels of stealth that the F-15SE would not be, because the USAF has no interest in the program, and doesn’t want it competing with the F-35.

Malaysia and China Move to End Dollar Trade

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The two nations are considering conducting their trade in yuan and ringgit, as opposed to using the US dollar as a medium.

Basically, with both the Treasury and the Federal Reserve shoveling cash out the door into that black hole which is the shadow banking system, people are beginning to wonder if there might be a better vehicle to conduct trade with than the dollar, which they expect to depreciate.

Economics Update

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The economic press is touting the fact that consumer confidence hit an 8 month high.

More accurately, they are touting that the jump from 40.8 to 54.9, is the biggest in 6 years….Only, of course, the index is bench marked such that 1985=100, so the number is still crappy.

It’s the same as the Chicago Bank of the Federal Reserve’s April National Activity Index, which is up (Yay!), but this does not mean expansion, it means contraction, just not quite so fast (Awww!).

You know, maybe we can wait to call a recovery until we have a month where the year over year Case-Shiller housing price index does not fall by 18.7%.

Consumers will not spend under these circumstances, and the economy, which is/was 70%+ consumer spending, will not recover.

In any case, be glad we aren’t German, and not just because that means that we aren’t German, because Germany’s GDP fell by 3.8% for the quarter and 6.7% year-over-year, as their export driven economy sputtered.

Meanwhile, in energy and currency land, oil was up on the consumer confidence figures, and the dollar rose as people freaked over the DPRK conducting another nuke test.

If I could predict the actions of the North Koreans, I would make a killing on the futures markets.

Park Dae-sun Acquitted

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He is a prominent Korean economic blogger who was was brought up on charges for making dire predictions:

Mr. Park, an unemployed 31-year-old, gained an almost prophet-like status among many South Koreans after he correctly predicted the collapse of the U.S. investment bank Lehman Brothers, the crash of the South Korean currency — the won — and the effects on South Korea of the U.S. subprime mortgage crisis.

It appears that he also published some data in error, such as when he, “wrote that the government had banned financial firms and major companies from buying dollars in an effort to arrest the fall of the Korean won,” and the government charged him with, “spreading false data in public with a harmful intent,” and faced up to 5 years in prison. (!)

Considering my accuracy, I’d be facing life without parole.

Economics Update

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So, the new unemployment numbers are out, and once again, they are brutal, with adjusted initial claims hitting 667,000, up 36,000 from last week, and the less noisy 4-week moving average hit 639,000, up 19,000, while the continuing claims are at 5,112,000.

As Calculated Risk notes, the 4-week moving average is the highest since 1982, and the continuing claims are the highest ever recorded, though both are somewhat better when normalized against total workforce size. (Graph at CR)

We also saw durable goods orders fall to a 6 year low, and new-home sales fell in January, the lowest number since records started to be kept in 1963.

We also have banks cratering with the FDIC list of problem banks up 50% in Q4 of 2008.

BTW, it’s hitting the export driven economies of Asia even harder, with Singapore’s Q4 GDP falling at a 16.4% annual rate.

We also have oil down following the announcement of production cuts by the UAE, and the dollar is down, for reasons that are not entirely clear to me.

Economics Update

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Well, we have another Asian economy cratering in Q4 of 2008, with Taiwan’s GDP shrinking at an 8.36 annual rate. Unsurprisingly, they are now predicting a contraction for 2009.

This is “post Berlin Wall coming down shock-treatment elderly begging in streets” numbers.

In the US, producer prices posted a large gain, 0.8%, or about a 9½% inflation rate. I’m not certain if this is good or bad news, as the concern right now is deflation, but the impetus for the jump seems to be massive cash infusions from the Fed and the Treasury, which implies that we may be tiptoeing toward Zimbabwe.

Still, the jobless report was brutal, with initial claims remaining at 627,000, and continuing claims jumping to 4.99 million, the highest number ever.

I wouldn’t expect manufacturing or building to be a part of a recovery any time soon though, as the Philadelphia Fed’s Business Outlook Survey hit a record low, as did the Architecture Billings Index (ABI).

Note that the ABI typically presages construction activity 9-12 months ahead.

Additionally, I think that we are near seeing some of the non AIG insurance giants failing, with the first indicator being that Prudential Financial Inc. being excluded from the Federal Reserve’s commercial paper program, because Fitch Ratings downgraded them.

Note that Prudential Financial Inc. is the parent of Prudential Insurance, and that the insurance division can still use the “Commercial Paper Funding Facility,” for a while, at least.

The dollar fell a bit today, largely on reduced concerns about the smaller nations in the Euro zone going completely broke.

In energy, oil rose, though it is still well below $40/bbl, because of a surprise drop in inventory.

Economics Update

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I’m not going to be writing about Geithner’s bank bailout plan here, it needs it’s own post, but I have some graph pr0n, a little update from last night’s Pelosi scary employment graph courtesy of Justin Fox (top) and William Polley.

The first goes back 6 recessions, and the 2nd covers all of the recessions since WWII, which makes a bit busy, but they are at least as scary as last night’s graph.

On to the update:

It appears that the Asian economies are melt down down, with Japan’s economy is deteriorating in a way that has not been seen in 50 years, China’s exports falling by double digits, the Taiwan dollar and Malaysian Ringgit falling, and the IMF predicting a 4% contraction in the South Korean economy in 2009.

Meanwhile, there is a report that Russia is attempting to restructure its debts, which is a polite way of saying that they are threatening to default.

Meanwhile, Geithner’s plan, and the Senate’s approval of a stimulus, does appear to be having an effect on the markets, with oil falling, which indicates that the oil traders do not expect to see a rapid economic turn around, and the dollar rising, on the same information.

In this case it appears to be cross purposes, but I think that the reason that the dollar is up is because people realize that the bailout makes US investments more attractive, albeit at taxpayer expense, but that is another post.

Japan Looks at F-15 Updates, Indigenous Stealth Projects

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They really want the F-22, but it appears that this is simply not going to happen, so they are looking at F-15 upgrades and a stealth platform of their own, the ATD-X.

Honestly, for legitimate defensive needs, the upgraded F-15 is all the JASDF needs. It’s actually superior for cruise missile interception, since it has a larger antennae than the F-22, and AESA radars have already been fitted to some export models.

Saab Offers Supercruising Stealth to South Korea

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The ROK (South Korea) is looking at fielding its own advanced combat aircraft (Paid Subscription Required), EADS is pushing a Typhoon pushed somewhere past tranche 3, and SAAB is pushing a new stealth supercruiser, Boeing is pitching a significantly updated F-15, while Lockheed-Martin is pitching the F-35.

This is in parallel to the (IMHO overambitious) indiginous KFX stealth fighter program.

SAAB is proposing both a one and a two engine variant.

Honestly, the only two I see likely are the F-35 and Boeing’s proposal. The former because it is the 800 lb gorilla in the room, and the latter because they are currently taking shipments of the F-15K.

Note that in the competition that selected the F-15K, the Rafale was widely rumored to have won, but the fact that it was not a US product led to the selection of the Eagle.


Boeing Proposal


SAAB’s P106 Supercruiser

Bush Administration to Pull DPRK from Terror Watch List

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It’s actually quite refreshing that Bush and His Evil Minions™ are acutally doing something to deescalate the diplomatic situation with North Korea.

Not surprisingly, Cheney, et al, are steadfast against this.

The fact is that the North Koreans are not crazy, they are paranoid, and when you have Cheney lobbying for a military attack, that’s just being a realist.

Hopefully, this will be a step towards formal diplomatic relations. The only thing keeping the regime in power is paranoia and distrust of the USA.