Sean Olender's  Instablog

I had to travel from San Francisco to Berlin in September for business.  I picked up a reasonably priced ticket through US Airways, which partners with Lufthansa.  I hadn't flown US Airways before, but I figured that because the FAA licensed the planes and the company remained in business that it would be similar to my other experiences flying on many airlines.

Now let me put this in context.  I have flown many US, European and Asian carriers and I tend to prefer European carriers.  US carriers are more likely to charge for food, have less leg room, and fewer amenities.  At least this is my experience.  But I'm not such a princess that I really care that much.  Luxury is nice, but not necessary for me.  However, I'd not before experienced the amenities of a regional airline on an international flight.  And this wasn't from Berlin to New York, it was from Berlin via Philadelphia to San Francisco.  Let me correct that, I would have been happier with the amenities of a regional or short haul carrier on this international flight.

The flight was on a DC-10, which seemed a small plane for that distance.  The entire plane (with the exception of first class) was able to watch movies and television on three 14" monitors spaced evenly throughout the cabin.  The one I was watching was fastened at the front by duct tape to the ceiling.  I'm not kidding, duct tape.  I took a picture of it with my phone because I was fairly sure that no one would otherwise believe me and I will upload that picture in the next day or two to this article.  The lights didn't work in two of the bathrooms.  The light is usually dim and then brightens when you lock the door, but it didn't work.  I told a stewardess and she looked at me and said, "Yeah, I'll get right on that" and then started laughing.

I asked another stewardess when there would be meal service and she said there was no meal service.  She said that I could buy a turkey sandwich, or wait until we arrived in Philadelphia.  I said that it was unbelievable and she responded, "Oh, aren't you fancy.  That's not good enough for you?"  Then she walked away.

Later, there was some announcement, but I was talking to another passenger at the time about the incredibly dilapidated conditions in the plane (various parts were dirty or in disrepair).  I asked one of the stewardesses what the announcement was regarding bags and whether I'd have to collect my checked bags at Philadelphia to go through customs, or if I should take them only at my final destination of San Francisco.  She then scolded me saying, "Weren't you listening to the announcement?  Why didn't you listen?  You are supposed to pay attention when there are announcements.  Well?"

I was amazed.  I explained to her that I wouldn't fly US Airways again and that she shouldn't be surprised when the layoffs come because airlines provide a service centered experience and if the service is really bad, people will go elsewhere.

The passengers I was sitting with warned me after the stewardess left, "You better be careful complaining like that.  Those stewards and stewardesses have a lot of power now because they can say that you were disrupting the flight and the police or marshals will arrest you at the other side.  I read that they even shot and killed one unarmed man who got in an argument with a stewardess and then ran off of a plane."

These people were actually scared of the stewards and stewardesses because if you didn't take their crap, they might tell you to "Calm down" like in that Adam Sandler movie Anger Management and then regardless of your tone or whether you are indeed angry at all, they will see to it that you are arrested when the plane lands.

So, it seems that at least some of the passengers were scared to complain about the conditions on the plane because they feared arrest.  I had no such fear on the plane and I don't have it now either.  If it is really that bad in the United States, I'm going to leave.  And I don't think it's that bad, so I'll take my chances.

Southwest provides nicer planes for trips from San Francisco to Las Vegas or Los Angeles than US Airways does on international routes.  The experience reminded me of a time when I took a dilapidated train from Istanbul to Budapest and was stopped by Serbian army at a border checkpoint in 1995 during the Clinton Administration when US planes shot down two Serbian air force jets.  At least I knew what I was getting into that time and packed meals and a few good books.

Perhaps if US Airways advertised their service as, "Just like the romantic, packed trains of Eastern Europe" and advised passengers to bring their own food and other necessities, its customers could properly prepare.  As it is, I believe the only people flying this airline are ones who didn't know what they were getting into.

Although I don't know a lot about US Airways' business, my experience on their planes should say a lot about where their business is going.  Unless they can charge a lot less than competitors (which they didn't in my case), no one in their right mind is going to fly this airline twice.

I have no positions long or short in US Airways or any other airline foreign or domestic.

Suppose that the Fed and Treasury are really trying to dupe investors and speculators into sinking private money into a housing and bank bailout?  That is to say suppose Fed and Treasury are trying to lure private investors knowing full well they will lose money to avoid the taxpayers having to lose it instead.

The ultimate taxpayer cost for all of these bank frauds is at least the cost of lost FDIC insured deposits and possibly also the cost of partially bailing out foreign sovereign bondholders that could withdraw from future Treasury auctions and drive up US interest rates.  Because of government corruption, the cost also appears to include absorbing banks' bad loan losses.  Wall Street bankers own the White House, Senate Banking Committe and House Financial Services Committee and desperately want to avoid criminal investigations.  Breaks in causation can eliminate criminal investigations by working over time to destroy evidence through homeowner refinancings, foreclosures and unloading "toxic" securities (meaning loans packed with fraudulent borrower information and where issuers knowingly misrepresented the securities with criminal intent, designed them to conceal known frauds in the loans underlying them).

If the banks own the government, then why would the government bother to create a ruse to draw in private money?  The answer is that it doesn't have enough money to bail out the banks by itself.

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The unbelievable buoyancy of stocks in the face of continuing bad news is stunning.  It's clearly a bad idea to bet against this rally until it's run its course.  It might be over now, or it could run through the end of April, May, or even June.  We could see the Dow over 10,000.  This isn't due to fundamentals, but to fiat money pouring through the Fed into speculative activities.  The Fed and Treasury obviously want to push up share prices as much as possible to allow banks and other firms to raise capital through stock and bond offerings.  But easy money at 0% flowing through banks to brokers and other entities can't provide an indefinite rally.

So what brings it to a close?  Unemployment.  For every 1.7 million jobs lost net, unemployment rises by roughly 1%.  The March nonfarm payroll numbers were announced last Friday at -663,000, but buried deeper in the news was a note that January nonfarm payrolls was revised downward from -598,000 to -741,000.  For the past six months or so of revisions BLS has underestimated nonfarm payroll losses by more than 100,000 a month.  Payroll losses have been accelerating through March.

It is highly unlikely that the trend will reverse abruptly.  At the current rate of job losses, we will be at 10% unemployment and possibly higher no later than July.  Most banks don't even model loan losses for unemployment rates well over 10% and the losses are likely to be extreme.  Loan defaults in mortgages, auto loans, student loans, and credit cards will rise abruptly by the end of this year unless this unemployment trend reverses, which is highly unlikely.

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President Obama must stop the bailouts and start the prosecutions. It's time to focus on anti-poverty programs to protect the growing unemployed from hunger and homelessness. Stealth payments to billionaire bondholders must cease immediately.