My Thoughts on Bernanke, Boeing and Citibank

Here’s a couple of random musings on a slow news day:

Did Bernanke appear overly nervous today? That was my take and I was rooting for the guy to make a good impression. The BofA-Merrill (BAC) deal has become politicized and someone is going to have to pay the price. My guess is that it’s Gentle Ben. No perp walk but I couldn’t help visualizing his reappointment flying out the window. Somehow it doesn’t work for a Fed Chairman to keep intoning “I don’t recall” from the witness chair. If you think about it, that’s a sad commentary on our current times.

There was a report out Thursday night that Japan is going to sanction Citi (C) for lax oversight of money laundering activities. How many times has this bank screwed up on blocking and tackling. It really is unmanageable — break it up and end the pain. They shoot horses, don’t they?

How close is Boeing (BA) to screwing the pooch? Building a new aircraft of the complexity of the Dreamliner is always a bet the firm sort of move. Boeing has been rolling those dice for decades and coming up sevens and elevens. Have they finally tapped out? I have a hunch this one is going to get ugly. The latest delay that calls for reinforcing certain parts of the plane sounds like more of a fundamental engineering problem as opposed to the production issues that have plagued the plane. Can you see a government bailout looming?

And finally, I think that the Obama veto or promised veto of the defense bill because of the inclusion of the F-22 program is going to set up a confrontation with Congress. This isn’t about Democrats and Republicans but about a good old fashioned pork program. Congress smells a president that can be rolled and this will be the test case. So far Obama hasn’t shown he can stand up to them and he seems to be drawing a line in the sand on this one. If he backs down, look for a tumultuous period and troubles for the Democrats in 2010.

That’s it. Kind of an opinion dump, so don’t be shy about telling me I’m so far off base I can’t even see the ball field.

Comments

[Dave Wrixon:]

Well not being an aviation engineer just a mere bridge engineer, I can still assure the connection of the wings to the fuselage is a pretty critical piece of the structure. If anyone want to get close and personal with some stress zones that is where you will find them. I personally doubt this is going to be a quick fix. Verifying the calculations for any proposed solution is likely to take forever, let alone producing the thing. Don't forget this bird still needs certification, unless a brown envelope still covers things that side of the pond.

Jun 26 12:26 PM

[Moon Kil Woong:]

Good points. Congress has been pushing pork for the last 8 years. Why stop now.

As for Boeing, they are locked in a battle with Europe over who can get the most government/military contracts and subsidies. I hope the US wins because it will help offset the taxpayers cost/investment. If we loose, we will end up with a lot of cost and nothing to show for it.

Jun 27 02:09 AM

[I am not a ...:]

The dreamliner project had 13 firm orders for Qantas Australia, but this was cancelled last thursday. Qantas cited lack of business as the reason,placing it's trust on the lead balloon Airbus A380's. Two of which threatened Qantas's unblemished flight record lately with unexplained faults.

Jun 27 08:54 AM

[Henry Buttal:]

While not a huge fan of Bernanke, I think he has done what needed to be done with his expansion/full utilization/piratical (your choice) policies at the Fed. Furthermore, I haven't hear incredible umbrage at his actions from other Feb members, who historically have not hesitated to make unaligned comments.

I am not sure about how his re-appointment will go, but I greatly prefer Bernanke to someone like Summers.

On the Dreamliner - if a foreign airline cancels an order, does it retroactively impact ex/im balances, or is that only calculated when something actually leaves the U.S.? Anyone know. Because those cancellations are going to be a big hit....

Jun 27 11:05 AM

[pockyclips ...:]

Two sides of the socialist coin.

Jun 27 02:33 PM

[Howard_T:]

On Boeing's 787 problems, the reason they kept coming up 7s and 11s on their previous commercial programs was that all were rather conservative forward moves from existing platforms. The original platform was an offshoot of a military tanker program that was made necessary by the performance characteristics of the B-47; it was too fast for existing piston powered tankers, thus the KC-135/707 was born. From the 707 forward, all that was done was to enlarge fuselage sections, try out new engines, etc. All of these steps were taken incrementally, not with a great leap. The 787 now makes use of a lot of new technology. I do not wonder that Boeing is having problems, but I applaud their conservative approach. Unlike Airbus, they do not rush into production and then hold their breath. The A-330 problems illustrate this point well. I believe there is a fundamental problem with Airbus aircraft that is hidden well enough that it has been overlooked. There seems to be some structural weakness in their use of composites coupled with their insistence on "fly-by-wire" control actuation. Flight control software may also be a weakness. If you need to limit control surface movement because the surface might break off, there is a problem. Many aircraft mechanics who have worked on both Boeing and Airbus platforms are of the opinion that the Airbus vehicles are "throwaway" aircraft, and are not built to last.

On the F-22, the problem is the old nemesis of design, "requirements creep". As you design something, new technologies become available, and the customers often ask you to include something else in what you have done. This usually means costly and time consuming redesign, and you never seem to get to the end. The F-22 is without a doubt the most advanced aircraft of its type ever built. I have some knowledge of its capability, and frankly I would not want to oppose one. The problem is to be able to pay for enough of them to ensure the survival of enough to completely destroy an enemy's capability. In other words, if you have 200 F-22s, and each can handle 10 enemy aircraft, the enemy needs to have in excess of 2,000 aircraft. If he does, then the F-22 is a losing proposition. (Please note that my numbers here are purely hypothetical and not based on any published studies) Replacing the F-22 with the F-35 is not entirely a bad idea, but the cost of the F-35 is likely to approach that of the F-22. Now we are faced with the same dilemma some years down the road. So what is our alternative? Some say building many more cheaper, less capable aircraft (upgraded F-15s, F-16s, and F-18s) is the answer. The problem here is manpower. It is very expensive to train a military pilot, and his service life as a pilot is quite a bit less than that of the aircraft he flies. It is not an easy problem, and politicizing it is the wrong thing to do. Someone needs to convince the politicians to take a long look at the many studies and intelligence analyses that have been done over the years, and hope that they can come to the right answer. Of course, expecting a politician to put what is right for his country ahead of what gets him re-elected is a forlorn hope.

Jun 27 04:29 PM

[billp37:]

"... the reason they kept coming up 7s and 11s on their previous commercial programs was that all were rather conservative forward moves from existing platforms."

I was coauthor with Pat Corey and ? of the 767 software certification policy document in 1980, a consultant to Boeing Commercial Aircraft Corporation..

I worked at Payne field in Everett, WA commuting by plane from Pullman, WA.

Corey was the project leader.

Corey and ? were experienced with the AWACS software.

en.wikipedia.org/wiki/...

AWACS software apparently ran on a mainfram type computer.

The 767, if I recall correctly, had a large numbers of microcomputers [microntrollers] connected via an ARINC 429 bus.

en.wikipedia.org/wiki/...

Cory was concerned about the software cost since AWACS software apparented costed-out to over $100 per line of code.

Number of lines of code in the 767 were very high and Corey was concerned that software costs migh cause Boeing financial trouble.

My view was that microcomputer/controller software can be very different from mainframe software in that micocontroller are frequently shorter and simpler to accomplish a required task.

Point is that my impression was that Boeing engineers are very conservative, careful, smart, SUPEREXPERIENCED so I am not suprised by delays in the 787.

Boeing and Sandia Labs labs made me job offers in 1980.

I went to Sandia because I thought the work would be more interesting. Right on.

Jun 27 07:20 PM

[billp37:]

My impression, with more reflection, is a no Boeing engineer would fail to report a potential problem because of fear job termination.

Jun 27 08:04 PM

[Economic Lens:]

All elected officials are in trouble in 2010 and 2012. If they are incumbent, look for them to get voted out. They are flushing America down the tubes, rank amateurs can do no worse.

Jun 27 08:19 PM

[Sovestor:]

They are all are surprisingly alive still.

Jun 27 08:36 PM

[whidbey:]

Actually, you seem to see the field rather well. Ben is a big boy, but is memory is a fatal disability. Too young for Medicare, he must be shot. Citibank is not really a bank and that is where you analysis went astray. Do not feel badly the Fed made the same mistake, C must be resolved for sake of the Fed's reputation.

Now BA. We knew it would not work, but it was a marvelous gesture to treat all those oversea suppliers like equals. It was meant to show the extreme humility of BA management. BA will survive on the 737 which is a real airplane, and a tanker, and yes it is also a fighter, so who cares about the F-22. Hope this helps.

Jun 27 10:56 PM

[lickbush:]

I've never read your stuff before. That said, I really like your style and take on the issue(s). TY.

Yeah, I supported Obama and like him. Notwithstanding, I am not happy with many of his administration's puny efforts. The Summers/Geithner puppet show needs to be retired (bring back Glass-Steagall, Larry, and stick in your overstuffed mouth). The Bernanke "don't recall" testimony is similarly hopeless. Aaargh.

I love the current Playboy observation, to wit: a novel idea, politicians (American congresspersons) should wear uniforms like NASCAR drivers, so we can tell who their sponsors are."

Jun 28 01:02 AM

[billp37:]

"Northwest Jet Suffers Similar Malfunctions to Air France Flight

[D]uring the brief but dramatic event, the Northwest Airbus A330's crew was left without reliable speed measurements for three minutes. In addition, the computer safeguards designed to keep the aircraft from flying dangerously too fast or too slow were also impaired. Like the Air France A330 jetliner, the Northwest plane entered a storm and quickly started showing erroneous and unreliable airspeed readings. ..."

home.comcast.net/~bpayne37/whitman59/w...

Jun 28 09:18 AM