Howard_T

Is Too Big to Fail Now Too Big to Exist?

I say break them up into their constituent parts, banking, brokerage, etc. While you're at it, likewise break up the entire industry. I think this was once called "Glass-Steagle". This will force the largest of the banks to compete on a more even footing with the smaller regional banks, and should result in more money getting into the hands of businesses in the form of loans.

If the mega-banks are not broken up, remember this: Even Tyrannosaurus Rex was too big to fail, and we all know what happened to the dinosaurs.

Major Banks Now Much Too Big to Fail

Too big to fail equates to too big to exist. These juggernauts need to be broken down into smaller, more useful vehicles before they crush us all. Restore Glass-Steagle, and make banks be banks, brokerages be brokerages, and commercial lenders be commercial lenders. When all of these things are placed under one roof, there is too much opportunity for numbers to be juggled, trash to be swept into dark corners, and outright fraud to be committed.

My Thoughts on Bernanke, Boeing and Citibank

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.

Obama Administration: Watch Your Moves

Obama's book: "The Audacity of Hope"

I guess I am audacious to hope that in the congressional elections of 2010 we can begin to take our country back from the precipice of a collectivist, state-run "social" democracy. I am also audacious to hope that in 2012 we can elect a true leader and not an eloquent but hollow orator to the White House.

The Escalator of Life Is Going Down (Part 2)

Why wait until 2012? We can start in 2010 with the congressional elections. Involve yourself in your party's selection of its candidate. Insist on a fiscal conservative who will bring the spending spree to a screeching halt, make sure that failing institutions really fail and are not artificially propped up, remove the influence of politics from business, promote effective regulation, and in general restore some sanity to government. If the incumbent does not pass this test, THROW HIM (or her) OUT!!! Do not let the sideshows distract you from the events in the center ring. Never mind about abortion, gay rights, global warming (except where it affects the economy), and all of the other issues that politicians put forth to keep you from looking too closely at the real problems. Stay focused, stay intense, and take back our country. Do it legally now before some feel they have to do it with viloence.

Why the Fed's TALF Is Bad for America

TALF is like trying to prop up a weakened structure by using the same building techniques that caused the structure to weaken in the first place. What ought to be done is to let the thing fall down. After the dust has settled, go in and find out exactly what went wrong (already obvious), salvage whatever good pieces remain, then start building all over again, but without making the same mistakes. Sure, there'll be pain, but it will be over a lot sooner than frantically trying to prop up something that's doomed to fail eventually.

Turning Japanese: The Audacity of Reality (Part 3 of 3)

Mr. Jeremy Needham has the correct slant on things for those who believe massive spending, a la WW II, will generate a recovery. Anyone who believes that throwing massive amounts of paper at the crisis will bail us out, just because it worked to end the depression of the 30's, hasn't looked at reality. In the late 30's, the US was the only economy among the major nations to be producing consumer goods. Europe and the industrial nations of Asia had been on a war footing for at least 3 years prior to 1941. During WW II we spent massive amounts of treasure to produce the means to fight the war, but at the end of 1945 we were the last nation left standing. Our productive capacity had not been touched, and with the pent up demand for goods fueled by the savings of a fully-employed population, the economy recovered to a consumer footing with blinding speed. Europe and Asia were forced to buy from us, and whatever treasure we had used during the war was rapidly replaced.

Perhaps once the population of the US figures out the ineptitude of our political leaders, we will take the correct 14 steps Mr. Quinn has proposed. Then maybe someone will emulate an impoverished Japanese mechanic at the end of WW II. This guy bought some surplus electrical generators from the US Army, removed the gasoline engines from them, and mounted the engines on bicycles to make motorbikes. He did pretty well thereafter. His name was Honda Shoichiro.