Tag: commercial

The astonishing collapse of MF Global

7:41 pm

The astonishing collapse of MF Global.

The failure of broker MF Global is a unique event in the annals of American corporate history: To my knowledge, it’s the first time a CEO singlehandedly bankrupted his firm through actions that the board of directors was not only knowledgeable of, but had indeed expressly sanctioned. “That takes some talent!” quipped Roderick Hills, a former chairman of the SEC.

The article is long, detailed, and thorough. It describes a deep corruption that should chill the spine of anyone who has money in the investment world.

I must note that I do not advocate more regulations to eliminate this corruption. Such regulations never work. Take for example this quote from the article, describing the accounting systems that are required by law to prevent a client’s funds from being misused:

As noted above, it’s a major part of the CEO’s job to put the proper systems in place. In fact, regulations implemented through Sarbanes-Oxley — a bill that Corzine co-wrote while he was a senator — require that the CEO and CFO sign off on the effectiveness of the controls over financial reporting. … If those proper “controls and procedures” were in place, a breach of segregated client funds should have set off loud, blaring, obnoxious alarms that would have alerted management to that breach.

In the case of Jon Corzine and MF Global, those controls were obviously not in place, and thus the Sarbanes-Oxley bill wasn’t worth the paper that Corzine used to write the bill.

Rather than more regulations, what works is very simple and can be summed by two words: “Buyer beware.” Investors (as well as voters considering the political ambitions of Corzine and his friends) have to be more skeptical of whom they put their trust in. You have to protect yourself. You can’t ask others to do it for you.

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Richard Branson talks to the Wall Street Journal

9:23 am

Richard Branson talks to the Wall Street Journal about space.

Mr. Branson is still radiating enthusiasm. “We’ve got just short of 500 people now signed up to go, which is actually more people than have been up to space in the history of space travel, and we hope to put those up in our first year of operation,” he says, predicting the first commercial flight by “about next Christmas,” although he acknowledges that there have been many delays.

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Alan Boyle describes the details behind NASA’s decision to go with simpler contracting for future commercial rocket contracts

2:06 pm

Alan Boyle describes the details behind NASA’s decision to go with simpler contracting for future commercial rocket contracts.

If you read the article, you’ll notice that the opposition to this decision comes from a Congressman and the GAO. In both cases they cite safety as an issue, as is by some magic giving NASA a lot of bureaucratic approval rights on every design is going to make the rockets or capsules safer. All this will really do is slow things down, increase costs, and possibly increase risks as the companies will no longer have as many resources to focus on design issues. Instead, they will have to spend a fortune pleasing NASA bureaucrats.

And yes, I call them bureaucrats. Any NASA engineer who spends his or her time looking over the shoulder of another engineer — who is doing the real design work — is nothing more than a bureaucrat. Better to quit NASA and get a job with one of these new companies where you can do some real work.

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NASA has decided to stick with the same contracting arrangement it used for the COTS contracts

11:13 am

Good news: NASA has decided to stick with essentially the same contracting arrangement it used for the SpaceX and Orbital Sciences cargo deals to ISS in its future commercial crew and cargo contracts.

This suggests that the NASA bureaucracy, which had wanted more control of the new commercial companies by using a more restrictive contract arrangement, has lost. However, we don’t yet have the details on how the new contracts will be administrated, and as always, the devil is in the details.

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Germany’s space chief sees big battles in Europe over funding for ISS and Ariane

12:09 pm

Germany’s space chief yesterday said he expected big battles in Europe over future funding for ISS and Ariane.

Ariane is a serious problem, as it is expensive and a money-loser, despite dominating the commercial market in recent years. And worse, it will be difficult to make Ariane competitive in the future:

ESA in 2010 hired an outside auditor to review the current Ariane 5 system to look for ways to save money. Its principal conclusion was that very few savings were possible without scrapping the forced geographic distribution of industrial contracts that preserves the political and financial support needed for the Ariane system.

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Southwest orders 208 Boeing 737s valued at $19 billion

9:49 am

Some good news: Southwest Airlines has ordered 208 of Boeing’s 737, a deal valued at $19 billion. Plus this:

Last month, Boeing said Indonesia’s Lion Air committed to pay $21.7 billion for 230 Boeing 737s. Lion Air also has options for 150 more planes, valued at $14 billion, bringing the deal’s total potential value to $35 billion. But the Lion Air deal is not a certainty; it still has to complete the order. Also in November, Emirates Airlines ordered $18 billion worth of 777s.

Maybe Boeing should pump some of those profits into building the CST-100 manned space capsule and thus win more profits in the space tourism industry.

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Electric car company shuts down

11:25 pm

For once, the taxpayer doesn’t get screwed: The electric car company Aptera has shut down due to lack of interest from investors and the lack of a loan from the government.

The California company was counting on a federal loan – and private investments to match the loan – so that it could start producing its very first electric vehicle. Aptera said it was close to securing a $150 million from the U.S. Department of Energy, but it couldn’t line up the private dollars necessary to complete the loan application process.

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American Airlines files for bankruptcy

9:22 am

American Airlines files for bankruptcy. Note this as well:

American was the only major U.S. airline that didn’t file for bankruptcy protection in the aftermath of the 2001 terrorist attacks that triggered a deep slump in the airline industry. The last major airline to file for bankruptcy protection was Delta in 2005.

This list of bankrupt airlines does not include Southwest, however, which has seen its business boom in the past decade. I wonder, could these other airlines be driving customers away with their high baggage fees, complex ticket rules that end up costing customers money or convenience, and their willingness to go along with the abuses of the TSA?

Whenever I can, I fly Southwest, because they don’t charge for baggage and allow me to change or cancel flights without penalty. However, I also fly as little as possible these days, mostly to avoid being treated like a criminal by the TSA. And I know I am not alone in this.

Thus, all airlines have lost business due to TSA abuse. You’d think they’d wake up and start to fight this government intrusion into their operations.

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How Richard Branson started Virgin Atlantic

7:35 pm

How Richard Branson started Virgin Atlantic.

“In ’79, when Joan, my fiancee and I were on a holiday in the British Virgin Islands, we were trying to catch a flight to Puerto Rico; but the local Puerto Rican scheduled flight was cancelled. The airport terminal was full of stranded passengers. I made a few calls to charter companies and agreed to charter a plane for $2000 to Puerto Rico. Cheekily leaving out Joan’s and my name, I divided the price by the remaining number of passengers, borrowed a blackboard and wrote: VIRGIN AIRWAYS: $39 for a single flight to Puerto Rico. I walked around the airport terminal and soon filled every seat on the charter plane.

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Memo to the Occupy protesters: Ten things we evil capitalists really think

8:39 am

Memo to the Occupy protesters: Ten things we evil capitalists really think.

I especially like #8:

8. Capitalism, with all its imperfections, is the fairest scheme yet tried. In a system based on property rights and free contract, people succeed by providing an honest service to others. Bill Gates became rich by enriching hundreds of millions of us: I am typing these words using one of his programmes. He gained from the exchange (adding fractionally to his net worth), and so did I (adding to my convenience). In a state-run system, by contrast, third parties get to hand out the goodies.

Another way to say this is to call it freedom.

Read the whole thing.

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Training space tourists for their suborbital flight

9:13 am

Training space tourists for their suborbital flight.

In the NASTAR Center’s Observation Lounge, trainees can watch the centrifuge through a large window, as well as see a live video feed of its rider. Meanwhile, Henwood iterates the importance of the correct timing of breaths. “If you’re going to need it, you’re going to want to do it right.” Failing to begin the manoeuvre before the onset of the g’s can result in loss of consciousness.

“You’ll tell me when to breathe?” the first flier of the course says over the intercom to Greg Kennedy, NASTAR Center’s director of educational services and the monitor of participants’ in-flight safety.

“Yes,” Kennedy says. “Are you ready for your flight?”

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The case against SpaceX

9:38 am

The case against SpaceX. From one of the company’s biggest supporters.

Trent Waddington raises many good points, all of which must be considered to have a clear, educated sense of where the future stands for American manned spaceflight. Two quotes:

The goal of SpaceX is human spaceflight, and the greatest repository of knowledge about human spaceflight is NASA. As such, it would appear obvious that getting NASA to help you to fly humans safely is a good idea. The way to do that is with Space Act Agreements. This is what SpaceX did under the COTS program, and later under the CCDev program.. and they got paid for the privilege. As a result, the Dragon spacecraft will soon be fully qualified as safe for human habitation on orbit as it will be berthed to the ISS and have astronauts inside it.

The problem is that NASA is a precocious customer. They know what they want, they think they know even better than you do how to make it, and they feel no guilt about changing their mind halfway through the project. As such, Space Act Agreements just totally grind NASA’s gears. They don’t have enough control. [emphasis in original]

NASA money is like heroin.. once they start taking it, most people find it very hard to stop. There’s a dependence that has grown between NASA and SpaceX, and although it is obviously a love-hate relationship, it’s going to be very hard for SpaceX to let go.. but, inevitably, they must. The current needs of NASA are very different to the long term goals of SpaceX.

And this:

Fundamentally, SpaceX has a shoddy business case which is best described as a house of cards.. that they’re still trying to play poker with.. and there’s dogs at the table, and they’re smoking cigars! Yeah, metaphor.

Read the whole thing. It’s quite good.

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NASA budget compromise

8:27 am

Congress has come up with a NASA budget compromise. More details here.

Overall, the NASA budget is cut by about a half billion dollars, the total matching what the agency got in 2009. The key figures are $406 million for commercial manned space, $3 billion for NASA’s in-house heavy-lift rocket and capsule, and $529 million to finish the Webb telescope.

I predict that the $3 billion will be a waste of money, the project getting cancelled before completion.

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NASA, the federal budget, and common sense

12:41 pm

Let’s be blunt: the federal government is broke. With deficits running in the billions per day, there simply is no spare cash for any program, no matter how important or necessary. Nothing is sacrosanct. Even a proposal to cure cancer should be carefully reviewed before it gets federal funding.

Everything has got to be on the table.

Thus, no one should have been surprised when word leaked two weeks ago that the Office of Management and Budget in the Obama administration was proposing cutting the entire unmanned planetary program at NASA, while simultaneously eviscerating the space agency’s astronomy program. No more missions to Mars. No probes to Europa or Titan. Further and longer delays before the James Webb Space Telescope is completed. And Kepler’s mission to find Earth Like planets orbiting other stars would end mid-mission.

The Obama administration has to find ways to trim the budget, and apparently it is considering eliminating these programs as a way to do it.

Yet, the money spent on space astronomy and planetary research is a pinprick. Considering that the federal government overspends its budget by approximately $3.5 billion per day, and the total amount of money spent on these two science programs equals about $2.4 billion per year, it seems senseless at first to focus on these kinds of cuts. Quite clearly, even eliminating them entirely will not put the federal budget into the black.

Now I am not one to say, “Cut the budget, but please leave my favorite programs alone!” I recognize the serious financial state of the nation, and realize that any budget suggestions I make must include significant total cuts to NASA’s budget.

As a space historian and science journalist who knows a great deal about NASA, however, I also know that there is plenty of room for cuts in NASA’s budget. By picking our priorities carefully at a time when our options are limited, NASA might even be able to accomplish more, not less, with a smaller budget.

Moreover, if I, as a space junky, think it is possible to continue NASA’s most important programs and still trim its budget by 15% to 20%, in real dollars, doesn’t that suggest that the same could be done across the entire federal government?

All it takes is a little knowledge, some common sense, and the courage to say no.
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NASA moves first flight test of Orion capsule up three years to 2014

12:16 pm

NASA has moved the scheduled first flight test of the Orion capsule up three years to 2014.

This action, while good, was almost certainly triggered by the competition from the private space companies. The managers at NASA are finally realizing that if they don’t speed up deployment of their own spacecraft, they will certainly lose in the competition for government dollars. That they will have to use another rocket other than their heavy-lift vehicle for this launch, however, will not help that particular project’s lobbying effort.

Either way, I think this action is only further proof that the more competition we have, the quicker we will get into space. And the journey will cost less too, not only because it will take less time and therefore less money, but the competition between companies (or NASA) will force everyone — including NASA — to lower costs to show they can do it better.

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