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Geithner’s new helper

Thursday, July 23rd, 2009

Six months after President Obama was sworn in, Tim Geithner is finally getting around to officially appointing his helpers (subject to Senate approval).  

The Wall Street Journal reported today that Jeffrey Goldstein will be nominated to be undersecretary for domestic (as opposed to international) finance.

So who is Mr. Goldstein and what does it say about future policy?   He currently works for a private equity firm, but before that, he worked at the World Bank as CFO.

The World Bank isn’t a “bank” at all. It makes “loans” to third world countries that it knows have no chance of ever paying the money back, kind of like a global Freddie Mac and Fannie Mae.

Some of its current areas of interest are: Gender Equality, ending Poverty in Africa, Ending Poverty in South Area, Global Climate Change. They work on the conflicts mostly by flying around the world holding conferences, forming study groups and passing resolutions.

Where does the World Bank get the funding to carrying on this critically important projects? Well, one source is the U.S. Agency for International Development, which is part of Hillary Clinton’s US State Department. The World Bank and the International Monetary Fund are sister organizations created as a result of the Bretton Woods conference in 1944 to deal with global finance and reconstruction of post-war Europe as World War Two was winding down.

Sounds like he’ll fit right in.

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Posted in Financial Collapse, Politics, Timothy Geithner Watch | No Comments »

GM may still go under

Wednesday, July 22nd, 2009

GM was rushed through bankruptcy, but there is another part of their problems that wasn’t solved, and could still drag them down, or possibly require us to throw more good money after bad.

Back in the 1990s, GM split out its part making operations into a separate company called Delphi (kind of a nicer name than AC Delco). Delphi has been languishing in bankruptcy for upward of 5 years, with many of the core component businesses being sold off to competitors, but Delphi still makes many of the critical parts and components for GM – the kind of stuff where you have to be directly involved in the engineering of the car long before it even hits the prototype stage.

Delphi’s bondholders voted and refused the latest reorganization plan. More than likely their game plan is… GM is now owned by Tim Geithner and he can’t let Delphi fail and take GM with it, so either GM will have to buy us back (with what money?) or Geithner will have to show up with a bucket full of money to bail us out, too.

Hence the principle that Geithner still doesn’t understand:
“When you reward failure, you get more of it”… if people believe you will “rescue” them, they not only will avoid solving their own problems, but start engaging in more and more reckless behavior knowing that Mommy & Daddy will be there to “backstop” them.

The suggestion has been made to use the same “We gotta do it yesterday” fast track bankruptcy procedure on Delphi – but since their bankruptcy is five years old, it seems hard to make a case that this is now an emergency. I don’t know if there is a precedent for declaring an emergency because “if this company fails, it would cause another company to fail”.  Then again, following the law doesn’t seem to be in fashion for the past few months.

The news today is that the Feds have taken over responsibility for the Delphi employees pensions. The federal agency that handles this sets caps on overly generous pensions, especially for those who retired way before 65…. so it will hit early retirees hard (or high income retirees), in order to keep the pension fund solvent and pay a reasonable pension for the rest (and not totally turn it into a government bailout).  If you make the pension guaranty corporation’s terms too good, then companies will just stop funding their pension plans, knowing the Tim Geithner will jump in and rescue the people on pensions 5 years from now.

Posted in Financial Collapse, Politics, Timothy Geithner Watch | No Comments »

Here we go again – 47 injured in Muni Crash

Sunday, July 19th, 2009

The Muni system in San Francisco was the scene of a collision at 2:30 PM Calfornia time, with 47 people injured, 20 of them seriously
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/18/MN3C18RJGG.DTL

Some background – because of its geography and dense population, San Francisco was one of the last major cities to have a substantial streetcar system. They used the PCC type streetcars that were invented just before World War two, and deployed widely after the war was over. Most of the lines ran on the very wide Market Street and looped at the Montgomery Station. Prior to BART, the Oakland Bay Bridge had a streetcar line that ran across the bridge.  

When BART was being designed, the decision was made to take the streetcars off Market Street and bury them in a tunnel, and the BART line in the tunnel a level below the streetcars. The streetcars were replaced with more modern LRV cars. (Interestingly, the PCC cars were brought back to Market Street as the “F” line as a heritage line, and has been wildly successful).  Being a transit geek, I’ve travelled to San Francisco several times just to ride BART and the PCC cars.

Here is some home movies of what Market Street was like when it was filled with Streetcars, Trolley buses, Diesel Buses and cars.

With the large number of trains running during the weekday, and the small lead times, MUNI decided to install automatic train operation systems from the Canadian company Altacel to allow the computers to control the operations in the tunnel, allowing 48 to 60 trains per hour instead of the 23 when done by human operators. Once the cars emerge from the tunnel, they run on city streets among cars, so need human operations.

The first few weeks of the MUNI operation were a totally disaster, with cars refusing to move, frustrated operators trying to override the system, and passengers fuming. Eventually, the bugs were worked out and it has operated pretty flawlessly since then – until today.

The reports indicate that one moving train rear-ended a stopped train at high speed. The driver of the moving train is one of the most seriously injured. It’s worth noting that this happened on Saturday afternoon, when trains would be few and far between and operating with large headways. The accident occured at the West Portal of the tunnel under Twin Peaks That’s the point at which the Train Protection ends and street running begins. Muni System Map
The Twin Peaks Tunnel is 2.27 miles long… plenty of time for a driver to be distracted and not watching the space in from of them since there is nothing to do in the tunnel for maybe 3 minutes and in the tunnel the train is still under automated control, and on a Saturday it’s not like there might be train right in front of them.

A blogger in San Francisco caught the damaged train being hauled away Pictures Here

Video of the general area of the crash is on Myspace here. The accident happened outside the tunnel underneath the roofed in area.

There was a similar accident in June 2008, when a Muni train hit the train in front going 17 mph, in a 3 mph zone. Accident Account

In August 2008, a Muni driver rammed the historic streetcar on Market Street, an hour after being warned she was following the streetcar in front too closely. Story

Early reports (usually wrong) suggest the driver of the moving train gestured that he wasn’t able to stop the train, or fainted, or the train in front of him stopped unexpectedly

Maybe President Obama should propose a Smarter Public Transit System.

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Posted in Technology Politics | 3 Comments »

Beware of being rescued

Wednesday, July 15th, 2009

I can’t tell you the name of the movie, where or when I saw it, but it’s one of those ideas that sticks with you….

Attractive woman is walking down the street by herself in the middle of the day, and a young kid runs by and steals her purse….  kid runs down the street, where a handsome looking man (having seen what just happened) grabs the kid and the purse – the kid gets away, and the “Hero” goes over to the woman and gives her the purse back, and the shaken women immediately embraces her hero, and they quickly go off somewhere and have sex.

What she doesn’t know is that she was conned.  The child was actually working for the “hero”.   The entire thing was scripted and prearranged to terrorize the woman and have the woman run into the arms of the man and do whatever he wanted to her.   

I don’t remember the rest of the movie – whether she ends up being killed or sold into prostitution or some other fate – but I hope the point is clear.  When Tim Geithner shows up to “rescue” you, he’s not your friend.  I think people are beginning to catch on to that.

Keep CIT in your prayers.

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Advice on leaving America

Wednesday, July 15th, 2009

Back before the 2004 election, Harper’s magazine did a serious article about just how difficult it would be to actually leave the United States and never come back if George W Bush won the election.  You are the property of the U.S. government after all.  It’s not like the farmer can let the cows leave the pasture and not be milked.

The article is located [here].   I don’t think in their wildest dreams they wrote this thinking that people might start rereading it in 2009.

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“New GM” recalls workers – to build luxury SUVs

Tuesday, July 14th, 2009

Well, not technically SUVs.   The new term is “Crossover” vehicles.   It’s a luxury vehicle with all the bells and whistles, but with a hatchback and room to carry lots of stuff.

The Detroit News reports that the factory in the Lansing Michigan area will recall 900 people to restart the second shift. If you haven’t heard of the Builck Enclave, here is their website. The price starts at $35,000. Standard features include:

  • 4975 pound curb weight
  • 4 Wheel Drive, 18″ wheels
  • Seating for 7
  • 288 horsepower V6 engine
  • Bose Stereo with XM Radio
  • Mileage – 16 City, 22 Highway
  • Remote keyless entry
  • Onstar

Optional features include:

  • Rear parking assist

You people just haven’t got the message yet!

On a slightly related note, the LA Times reports that US Government owned Bank of America has announced it will finances purchases of the Tesla Electric car, a $109,000+ sports car.

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Posted in Financial Collapse, Politics, Stimulus Fund Abuse, Technology Politics, Timothy Geithner Watch | No Comments »

Bankruptcy Watch – Chicago Cubs

Tuesday, July 14th, 2009

The Chicago Cubs baseball team is owned by the Tribune Corporation, currently in bankruptcy.   The LA Times reports that the Cubs may go into bankruptcy to make it easier for the club to be sold.   You may remember that the Tribune company wanting to sell the Cubs was the genesis of what ultimately ended up in Governor Blago being caught trying to blackmail the Tribune Corporation into firing members of its editorial board.  The Tribune company being unable to sell the Cubs to raise money then declared bankruptcy.

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Are you stimulated yet?

Monday, July 13th, 2009

The Metro North transit system operates a feeder line using diesel equipment that runs from Bridgeport up to Waterbury.   The line was closed today for about a month for a project to replace 12,500 ties and replace a bridge crossing the river.  

The line used to be an important freight line, but as the smelting and armament businesses were put out of business, the freight traffic dried up.  The only remaining use of the line is this commuter train that runs back and forth.   Further north up the same track is a rail museum that runs excursions, and the tracks continue north to Torrington, where the tracks end.

So I’m thinking….  how big of a boondoggle is this?   Now I’m a guy who loves trains, but not stupid governments.   The roadbed from my casual looking appears  better maintained than most mainline freight lines.   So I start looking to see if there are any published ridership statistics for this line can come up with a cost per passenger for the project.

What I found was much more interesting.  

http://bobbyderailed.blogspot.com/feeds/posts/default

This person works as a conductor on that line, and has written some of his experiences.   The high level summary is the “regulars” on the line are mostly people going back and forth to Bridgeport to see their probation officer, methadone clinic or drug dealer.   It’s a real dose of reality, especially for those of you who think Connecticut is full of rich white people.  (This is not a “slam” of the blog writer – he seems like a very decent guy, just disturbed by what he sees every day)

The MTA doesn’t state whether or not this is a “stimulus” funded project, but that seems likely.   By the way, the MTA is perpetually broke. 

Another New York area transit agency that is part of the MTA – the Long Island Rail Road –  was coaching its retirees how to milk the Federal government, with virtually 100% of retirees claiming “job related disabilities” immediately after they retired.  [NY Times Video]. Part of why the scheme worked was that the RailRoad Retirement Board has no motivation to say “no”, and keeps their jobs by saying “Yes”.

Keep this in mind if you are considering that “Single Payer” health care coverage is a good idea.

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Bankruptcy Watch – CIT

Saturday, July 11th, 2009

This is CIT, not CitiGroup.   THIS IS HUGE.

CIT is a commercial lender.  They loan money to businesses.   They had tried to get FDIC coverage on their obligations, but the FDIC has said no way.  FDIC coverage is for retail banks  (which is what Paulson/Geithner/FDIC should have said to American Express and GE Capital).   They had also been involved with mortgage investments, which they have already exited.

According to Reuters, CIT has retained a bankruptcy firm and is writing up the paperwork to file bankruptcy.   Commercial lending (funding of shopping centers, office buildings, factories, leases of airplanes and rail cars, factoring of receivables) tends to take a bit longer to go into default than consumer lending.

This might be the first indirect fallout of the GM and Chrysler bankruptcies.  By setting the precedent that Tim Geithner can brute force companies through bankruptcy, forcing the government and non-secured creditors to the head of the line and leaving the bondholders with all the worthless junk, that is going to kill the ability of companies to raise money by selling secured bonds by companies that have any hint of financial problems.    There is no free lunch.   The “quick fix” has unintended consequences.

CIT will announce its earnings on July 23rd.  That seems the logical date to also announce their restructuring.  The company lost about $1 a share in the first quarter of 2009.   A year ago their stock sold for about $60 a share, it is now approaching $1 a share, which is the kiss of death for a publicly traded stock.

In addition to what a bankruptcy will do to people holding stock and bonds, clients who rely on them for working capital (like selling receivables to get the cash sooner) will have to find another commercial bank.   If the clients themselves are on shaky ground, they will have trouble finding access to loans on their existing terms, and they could ultimately cascade into this dark deep hole being dug by Tim Geithner.

Tim Geithner and Mr Paulson created a “temporary” commercial lending facility run by the U.S. Treasury and funded by the Federal Reserve that is “cherry picking” the least risky and most profitable commercial lending clients, which will ultimately bury all of the commercial banks if it doesn’t go away (There is no such thing as a temporary government program).  

If you’re in business, you can’t compete against the government and survive, because the government owns all the weapons.   That’s why the notion that the US government and Health Insurance companies competing will never work.  Either it is extremely naive or it is deliberate strategy for complete government control after capitalism “fails”.

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Sears Willis Tower to “Go Green”

Thursday, June 25th, 2009

Story Here

Chicago’s Sears Tower claims it will reduce its consumption of electricity by 80%, and have the goal of becoming net-zero user of the power grid.  The London based Willis Insurance company will rename the Sears Tower to be Willis Tower next month.

How will technology save all this energy?   Well, they’re going to replace all of the windows in the building.  Okay, that’s useful.  I hope the new windows aren’t heavier than the ones they are replacing.   More efficient elevators and lighting control systems.     A few hundred square feet of solar panels to heat water for the 104 story building    They might try putting some wind turbines on the roof, but aren’t sure if that will work.

The description of the building says it is has a 150 Mwh power distribution system.   That’s 150,000 kw of power.   That’s a lot of power to get from 4 wind turbines.    How much energy is that?   Another stimulus funded green energy project on the south side of Chicago covering 46 acres in the former Pullman industrial site is “hoped” to generate a maximum of 10 Mwh of power.   Of course, that would only be when the sun is shining and there are no clouds.  

The building will somehow be powered by green energy… (like buying green energy offset credits from T Boon Pickens in Texas perhaps?)

Another part of the plan is to build a new hotel next door – Chicago currently has a glut of unused hotel rooms, but that could change when President Obama moves the U.S. Capital to Chicago.

A few other things to ask…  

  • Is the 80% figure for only the building or does it include the energy used by the tenants in the building?
  • How is the building heated?   Will the other changes change the heating and air conditioning load?  [answers]

The insanity continues.

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Posted in Politics, State of Fear, Stimulus Fund Abuse | No Comments »

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