“It was the largest financial transaction in the history of the world,” says Apfel. “And we couldn’t have done it without the iPad.”

How 100 iPads saved Greece $140 billion
[Via Brainstorm Tech: Technology blogs, news and analysis from Fortune Magazine » Apple 2.0]

Apple’s tablet plays a key role in the largest debt restructuring in history

FORTUNE — I got a London call last week from a Bob Apfel, a Brooklyn neighbor (and fellow Oberlin College graduate).

“Two weeks ago,” he began. “I completed the debt restructuring of Greece.”

It was pretty bold statement, but not entirely out of character. After all, Apfel runs a company called Bondholder Communications Group that does this kind of thing.

But that wasn’t the real reason for his call. He wanted to talk about the computer network his team had created to get the job done.

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The right iPad app allows people to do things more efficiently and faster then ever before. Here is provided the right financing.

“Wall Street is capitalism in its purest form, and capitalism is predicated on bad behavior.”

Fables of Wealth –
[Via NYTimes.com]

THERE is an ongoing debate in this country about the rich: who they are, what their social role may be, whether they are good or bad. Well, consider the following. A recent study found that 10 percent of people who work on Wall Street are “clinical psychopaths,” exhibiting a lack of interest in and empathy for others and an “unparalleled capacity for lying, fabrication, and manipulation.” (The proportion at large is 1 percent.) Another study concluded that the rich are more likely to lie, cheat and break the law.

[More]

Not much to comment on. I just want to have this on my blog so I can come back to it when I read the latest atrocity by JP Morgan or the glory of a totally free market.

Wall Street is capitalism in its purest form, and capitalism is predicated on bad behavior.

It can harness some of our baser emotions – greed, pride, vanity – to produce some positive things for society.  But we should not be surprised that it also attracts people who are very greedy, very prideful and very vain.

And that those people are just as happy doing things that hurt society as a whole.

Why no one seems to really care about JPMorgan – its loss is just too complex to understand

Lisa Pollack on J.P. Morgan’s $2B London Whale Loss: Too Big To Hedge
[Via Grasping Reality with Both Hands: Economist Brad DeLong's Fair, Balanced, and Reality-Based Semi-Daily Journal]

Lisa Pollack:

FT Alphaville » Too Big To Hedge: Throughout FT Alphaville’s coverage of the credit trades of JP Morgan’s Chief Investment Office, there were two thoughts that kept nagging us. We’d think about them whenever we wrote about the technicals the trades might be creating. One was: could this really happen under CEO Jamie Dimon’s watch? The other was: where the hell are the regulators in all of this?…

Like most trades, it probably started harmless enough, or it least it seemed that way. After all, no one enters into a trade to lose money….FT Alphaville thought they had entered into a curve trade…. The whole curve moving down would mean that these corporates are regarded as more creditworthy, i.e. spreads have tightened…. The curve flattens when things look bad even in the near term. Curves can completely invert when the view is that if the corporate (or sovereign) can manage to survive some immediate obstacles and not implode, things will probably get better or at least less bad…. [O]ur theory was that the CIO had put on a trade that bet that the CDX.NA.IG.9 — a credit index that was launched in 2007 which has decent liquidity due to the legacy of the CDO boom — would flatten. With such a trade, JP Morgan could say things like this (from the WSJ):

On a conference call with analysts, [J.P. Morgan Chief Financial Officer Doug] Braunstein said the positions are meant to hedge investments the bank makes in “very high grade” securities with excess deposits. (J.P. Morgan has some $1.1 trillion in worldwide deposits.) Braunstein said the CIO positions are meant to offset the risk of a “stress-loss” in that credit portfolio. He added the CIO position is made in line with the bank’s overall risk strategy. Which is a good thing to answer with when Paul Volcker comes knocking on your door, inquiring about any proprietary trading going on under your roof.

A flattener trade is just fine in reasonable doses, i.e. if there’s enough liquidity in the market to support it. Unfortunately, with curve trades, you have to rebalance them reasonably actively… keeping the ratio of protection bought at the short end to protection sold at the long end just right. Get this wrong and your position will start to look even more risky and volatile…. [I]t looks like the CIO… may have really screwed the pooch in terms of managing this trade, possibly increasing its overall size too in a fit of doubling down….

[More]

Reading this whole thing made my head hurt. All I get is that JPM lost $2 billion on something.

You know, banks that are too big to fail and expect to be bailed out by taxpayers should not do anything that cannot be explained to a college graduate. And they should have to reveal exactly what happened, not hedge around like JPM so that people speculate.

I like what Jonathan Weil wrote:

If a too-big-to-fail bank can’t disclose what its trading desk is doing for fear of blowing itself up, then the bank shouldn’t be allowed to do it.

And the only reason we are hearing about this now is that it could get worse. You knw, I’m not big on governments nationalizing private businesses but I am around to the idea we should just nationalize JMP and be done with it.

They take all the moral hazard out of their business – ‘we cannot ever fail so we can do just any stupid thing’ – because they know the taxpayers will back them up. Lose our shirts on stupid things, well, we will be made good.

This is easy to understand.

Financial crises are worse than anyone expected

Could this time have been different? – The Washington Post
[Via The Washington Post]

Christina Romer had traveled to Chicago to perform an unpleasant task: she needed to scare her new boss. David Axelrod, Barack Obama’s top political adviser, had been very clear about that. He thought the president-elect needed to know exactly what he would be walking into when he took the oath of office in January. But it fell to Romer to deliver the bad news.

So Romer, a preternaturally cheerful economist whose expertise on the Great Depression made her an obvious choice to head the Council of Economic Advisers, gathered her tables and her charts and, on a snowy day in mid-December, sat down to explain to the next President of the United States of America exactly what sort of mess he was inheriting.

Axelrod had warned her against pulling her punches, and so she didn’t. It was not a pleasant presentation to sit through. Afterward, Austan Goolsbee, Obama’s friend from Chicago and Romer’s successor, remarked that “that must be the worst briefing any president-elect has ever had.”

[More]

The data we now have indicate that the numbers being given to Obama in 2009 were way way off, and too optimistic.  They thought that the decrease in the economy during the last quarter of 2008  dropped at an annual rate of 3.8%. They were wrong and working in the dark with estimates that have been shown to be horribly incorrect.

It was not until this year – over 3 years latter – that we know what the real decrease was. Over twice as high at 8,9%

They proposed a stimulus that was not even large enough to make up for a 3.8% drop in the economy. It was tragically much too small for an 8.9% drop.

But the GOP would never stand for that. We now know we needed something closer to a $2.5 trillion stimulus to get us out of this whole. The GOP allowed us t get a $700 billion, with about half in tax cuts rather than direct stimulus.

A better approach would have been to follow some of the ideas from an insightful book “This time it’s different” which looks at a large number of financial crises. Rogoff and Reinhart, the authors, provide some useful points which need to be considered.

Because their work shows that in contrast to economic crises which are usually fixed relatively rapidly, the aftermath of financial crises can take years or decades to fix. In some cases the economy never recovers.

Thy do believe that the stimulus, as small as it was, was instrumental in preventing a second Great Depression. It just failed to recognize how long the slog is after a financial crisis. There are other things that can be done.

One would have been to take longer to use the stimulus. As a Republican economist stated, “The Recovery Act worked. The problem is we didn’t keep our foot on the accelerator.”

Rogoff/Reinhart show that these crises are extended because of the timidity of poltical solutions

Yet the Obama administration did too little. Its team of interventionist Keynesians immersed in the lessons of the Depression and Japan did too little. Everyone does too little, even when they think they’re erring on the side of doing too much. That’s one reason “this time” is almost never different.

The reason ‘This time is different” is never really different is that the politicians never really do enough. Not all of these need to be just stimulus also. Some, like preparing the population for the long slog of a financial crisis recovery, should be easy.

But the biggest thing that needs to be done about a financial crisis is to deal directly with the cause of it – debt. But the right kind of debt. This crisis was not caused by government debt. So lowering government debt will not fix it.

It was caused by the housing debt. The overall cost of housing now is $6 trillion less than in 2006. And this will get worse:

Morgan Stanley estimates there are more than 2.2 million homes sitting vacant, and 7.5 million more facing foreclosure. It is housing debt that has weakened the banks, and mortgage debt that is keeping consumers from spending.

But we have not dealt with this debt at all.  It is still there. In fact McCain actually proposed dealing directly with this debt – the government buy up the troubled mortgages and let people refinance. This was shot down so hard by his own party that Obama did not even try.

Because there is no way our politicians will allow people to be helped if it hurts banks. The banks pay for their election campaigns.

We will not really solve this financial crisis until there is a workable housing policy. I have yet to hear either candidate propose such a thing.

What is obvious form this article is that Obama’s policies were not as effective as they could have been. But the GOP’s policies would have been much,much worse. And nothing they are proposing will do much to ovecome the sorts of crises seen by Rogoff-Reinhart.

A few more charts to consider – I wish we had just done what Reagan did

Public-sector job losses: An unprecedented drag on the recovery | Economic Policy Institute
[Via Economic Policy Institute]

Since the recovery from the Great Recession officially began in June 2009, private-sector jobs are up by 2.8 million, but public-sector jobs (the combined employment in federal, state, and local governments) are down by 584,000. The figure below compares trends in public-sector employment in the last four recoveries. The current recovery is the only one that has seen public-sector losses over its first 31 months.

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This chart is telling:

Funny how recessions dealt with by Republicans see increases in public employee employment at a rate to decrease the overall unemployment levels.

But in this recession, the GOP has made sure that we continue to see large numbers of public employees put out of work. The rhetoric of their leadership continues to demonize any public employee.

They have made sure there is no recovery seen by public employees only for this recession. In the ones overseen by Reagan and Bush they made sure the recovery of public jobs rapidly returned to previous levels.

Funny how politics is more important  today than helping Americans. At least when it is a Democrat in the White House.

If they had just allowed the same rates of employment as Reagan did, there would be about 1.7 million more jobs today.

This would have reduced the unemployment rate 1.5 points to below 7. That is where we would be if everyone cared about jobs in the same non-partisan manner they did in 1981.

And I’d rather the GOP today just followed the government spending pathway that Reagan oversaw:

Yep, the socialist Obama is seeing much less government spending than that spendthrift Reagan.

More government spending, more public employees and lower unemployment if we had just done what Reagan did.

It seems that Reagan would be too liberal for the current GOP. Wow!

Charts everyone should look at

Chart Book: The Legacy of the Great Recession —
[Via Center on Budget and Policy Priorities]

The United States went through its longest, and by most measures worst economic recession since the Great Depression between December 2007 and June 2009. This chartbook will document the course of the economy following that recession against the background of how deep a hole the recession created – and how much deeper that hole would have been without the financial stabilization and fiscal stimulus policies enacted in late 2008 and early 2009.

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The data tell a mighty tale. Such as change in GDP:

Obama took over in the first quarter 2009. There has been an increase in GDP every quarter since.

The Recovery Act was passed in February 2009. Since then we see increasing employment in the private sector – 4.2 million jobs added or 163,000 a month. While the previous 12 months were all job losses. Real jobs have been created.

This one shows just how bad the job situation was. The previous recessions mostly reached bottom within 18 months. This one went out to 2.5 years.

But it would have been much worse without the stimulus. That stimulus, as small as it was, may be the thing that prevents a seconds recession, one that much of Europe is now experiencing.

Improving working conditions now seen as a plus

Foxconn and Apple will share costs to improve Chinese factories
[Via AppleInsider]

Apple and Foxconn will share the costs associated with improving labor conditions at factories in China where devices like the iPhone and iPad are built.

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Making the working conditions better for CHinese workers is seen as a competitive advantage by Apple and Fozconn. They will be able to hire a better employee than others.

Actually increasing worker’s pay is now a good thing. I wonder when this innovation will make it to the US?

The stock market does not understand Apple

Back to the balance sheet
[Via asymco]

I first noted a correlation between Apple’s share price and its balance sheet a year ago. In February, when I last checked, Apple’s share price was priced nearly at 4.6 times its cash value. The stock has had a brief rally but has returned to the trend line it’s had since late 2008.

[More]

Warren Buffett this weekend explained that Wall Street just doe not understand Apple or other 21st century companies.

• “I would not be at all surprised to see them be worth a lot more money 10 years from now but I would not buy either one of them.”
• “I sure as hell wouldn’t short them either.”
• “We couldn’t predict what would happen to Apple 10 years ago and we can’t predict what will happen to it 10 years from now.”
• “The chances of being way wrong in IBM (IBM) are probably less, at least for us, than the chances of being way wrong in Google or Apple.”
• “I just don’t know how to value them.”

The inability of the stock market to fairly value Apple on any fundamental sense is an easy proof of the inefficiency of the market. It is not perfect, especially with disruptive companies such as Apple.

The figure above shows the price of Apple correlates with the amount of  cash it has on hand. The important aspect of this is that there is no fundamental reason for why this should be. None. An efficient stock market should not value a company based on this measure.

Then we have this, from the same article. It looks at fundamentals and shows just how far off from expected they are for Apple:

 

The P/E ratio is supposed to be a measure of the future value of the company. Amazon has a P/E ratio of about 190. The market expects its stock price to increase a lot. Apple’s P/E ratio is about the same as a utility. The stock market does not expect Apple’s earnings in the future to grow much.

The PEG ratio is a somewhat crude measure of how efficient the market values a company. The P/E ratio should be a measure of growth. If we divide that by growth, we get the PEG ratio. A value of 1 indicates a close approximation of future growth with real growth.

Apple over the last 5 years has never been close to a ratio of 1. The market has substantially undervalued Apple and not properly predicted growth. Apple is almost ridiculously undervalued right now with a PEG ratio less than 0.2

People need to understand that the economy since 1975 has been very different than the economy before 1975

by OakleyOriginals

The wedges between productivity and median compensation growth | Economic Policy Institute
[Via Economic Policy Institute]

Income inequality has grown over the last 30 years or more driven by three dynamics: rising inequality of labor income (wages and compensation), rising inequality of capital income, and an increasing share of income going to capital income rather than labor income. As a consequence, examining market-based incomes one finds that “the top 1 percent of households have secured a very large share of all of the gains in income—59.9 percent of the gains from 1979–2007, while the top 0.1 percent seized an even more disproportionate share: 36 percent. In comparison, only 8.6 percent of income gains have gone to the bottom 90 percent” (Mishel and Bivens 2011).

A key to understanding this growth of income inequality—and the disappointing increases in workers’ wages and compensation and middle-class incomes—is understanding the divergence of pay and productivity. Productivity growth has risen substantially over the last few decades but the hourly compensation of the typical worker has seen much more modest growth, especially in the last 10 years or so. The gap between productivity and the compensation growth for the typical worker has been larger in the “lost decade” since the early 2000s than at any point in the post-World War II period. In contrast, productivity and the compensation of the typical worker grew in tandem over the early postwar period until the 1970s.

[More]

Here is one of the important graphs in this publication:

This is simply another representation of data I have discussed before.

But here we have a little more dissection of what has been going on. Until 1975 or so, compensation for those in the middle class rose in lock step with productivity.

Essentially, the increased economic value from doing more with less resulted in increased money for the people doing the work. But since 1975, productivity continued to increase but little of the increase in economic value found its way to those doing the work.

In fact, the vast majority of that economic value went to the top 1%, something that did not occur in the years before 1975.

Looking at the more recent time frame, we get this figure:

The share of productivity increases that resulted in income increase for labor decreased a lot. The median compensation was only 10.7% with male compensation being essentially zero.

If you look at the period between 1973 and 1995, there is no change in median hourly compensation, while productivity increases 30%. From 1995 to 2000, there was a 7% change in income. This was close to the 10% increase in productivity in that period. From 2001 to 2011, the increase in compensation was 4%, with most of that change coming in the early years of that period.

Those 6 years from 1995 to 2000 saw more income growth for most people than the other 32 years combined. I wonder what happened during those times?

The increasing divergence of productivity and compensation is actually increasing. The annual gap between productivity and compensation for the entire period (1973-2011) is 1.3. From 1973 to 1970, the annual gap change was 0.52. From 1979-1995, the change in 1.46. From 1995-2000, it was 1.21 and from 2000-2011 the gap increased annually by 1.53.

Some of this difference comes from the difference measure of productivity versus compensation. GDP is figured on output or production. But calculating compensation is based upon what consumers purchase.

Essentially, the effects of inflation have hit consumer’s compensation harder than the measure of productivity. This explains some of the gap but only a fraction. It is about 34% of the entire gap generated between 1973 and 2011. But since 2000, only 16% of the gap is explained by this difference.

Over the last decade, the other 84% of the gap between productivity and compensation is explained by two things:

an overall shift in how much of the income in the economy is received in wages by workers and how much is received by owners of capital. The share going to workers decreased.

[…]

the median worker (whether male or female) has not enjoyed growth in compensation as fast as that of higher-wage workers, especially the very highest paid

So, the percentage of the economic largesse going to labor versus capital has decreased and those with money are making more.

Since 2000, almost 40% of the gap comes from the inequality in compensation, with the rich getting larger increases in pay and the middle-class getting little. And over 45% of the gap an increasing share of the economy going to capital and away from labor.

84% of the productivity gap comes purely from the 1% getting wealthier, either through increasing wages or by capital investments.

Over the entire period from 1973-2011, these two explanations were responsible for 2/3rds of the divergence of productivity from compensation. They were not a major part of the economy before 1973, which is why productivity and income grew together.

I would be really happy if we just returned to the economic principles of the late 90s. BUt the data do show how different the economy has been for most Americans since 1973.

Read the whole thing. If we want to return to the economic growth we had in the Post-WWII years, we must decrease the inequality of income and we must move more of the economic bounty form increased productivity from capital to labor.

 

 

 

What is the female equivalent of Brogrammer?

Brogrammers “rage at gym to attract chicks, scare dicks!” and work “while receiving oral sex”
[Via Boing Boing]

In Mother Jones, an article exploring some of the sexist excesses of Silicon Valley’s male-dominant programmer culture. None of this is news to those of us (and by us, I mean women) who’ve worked there—but the article contains some hilarious/horrible anecdotes and examples. (via @clarajeffery)

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A lot of this is what happens when an industry made of of mostly men, many of whom are not skilled socially, talk out loud while in mixed company.

And they seem to fail to realize that their industry is becoming more and more mixed all the time. Acting like a bunch of fratboys may have been endearing in private with a mix of 9-1 male -female. now it is 4-1 and people are noticing.

And, apparently some men think the female equivalent of Brogrammer is  …. Hogrammer!

Wow. That is certainly not appropriate. I imagine not many women find that appealing. And this was something someone thought could be discussed openly.

I wonder what sorts of things are going on that do not make it out into the open. And it is stupid. Creating an environment that is hostile to any group simply reduces the pool of people to draw innovative creations from.

Reading positive things about the US from foreign media

by owenwbrown

America, Syria and the UN: This is what foreign-policy success looks like
[Via The Economist]

NOWHERE near enough attention is being paid to the way the diplomacy around the Syrian civil war is playing out. Nowhere near enough. The other day I noted that nothing had made me as pessimistic about development aid as the endgame of our failed intervention in Afghanistan. Today let me paint a stroke in the other direction: nothing has made me as optimistic recently about the prospects for a broadly international, pro-human-rights, anti-authoritarian foreign policy that brings together America, the democratic world, and many of the emerging-market/non-aligned countries as what’s happening right now around the Syria question. The complete isolation of Russia and China in the Security Council vote on sanctions last week is a watershed moment. It not only, as my colleague writes, cemented the image of Russia and China backed into a corner together in defence of authoritarianism. It also strengthened the tentative cohesion formed during the Libyan revolution last year between the democratic West, Arab democracy movements, and the Arab League.

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The article is a wonderful read. It provides a good explanation for why America’s overseas reputation is so high right now, why there is so much confidence in our policies overseas.

It reminds us of the cohesion that began last year with Libya, which reached a successful conclusion without becoming a money pit. It remains to be seen if a similar coalition will work in Syria but things are hopeful.

And the isolation of Russia and China has strong effects world wide. Has anyone heard about this:

Burhan Ghalioun, head of the opposition umbrella Syrian National Council, called Moscow and Beijing’s veto “a new license to kill from these two capitals for Bashar al-Assad and his criminal regime, which just yesterday killed 300 people.” The SNC said it held Moscow and Beijing “responsible for the escalating acts of killing and genocide.

“Protesters stormed the Russian embassy in Libya’s capital Tripoli Sunday, climbing on the roof and tearing down the flag. Men held up a banner saying: “Libyan revolutionaries are ready to fight with their brothers in Syria.”

This is simply extraordinary. At Foreign Policy, Colum Lynch notes that Vitaly Churkin, Russia’s ambassador to the UN, blamed the backers of the resolution for promoting a strategy of “regime change”. Mr Churkin seems to have phoned in his quote from a secret city in Siberia where the year is still 2003. There is a world of difference between an American request in the UN Security Council for authority to launch an invasion of a stable country, and a proposal for sanctions under a Security Council umbrella on a regime that is actively slaughtering its own citizens in order to cling to power in the face of a popular uprising. And when the Arab League, the relevant local multilateral group, is strongly behind the proposal, that should settle the question.

Wow. It is not American outposts being protested. Russia and China are hurting their worldwide influence by voting for authoritarian rule. The rest of the world sees it.

As for China, the vote is yet another in a series of recent strikes against the notion that Chinese “soft power” was poised to vanquish American hard power in the developing world. Over the past three years, China has proven inept and pointlessly confrontational in its push to seize control of the South China Sea. A relatively subtle American policy of offering help to regional countries looking for a counterweight to China, orchestrated with unobtrusive but pointed intent by Hillary Clinton, has proven extremely effective. Against all expectations, Western influence suddenly seems to be winning out even in Myanmar.

As he states, the US is now the soft power and CHina is now the hard. WHich one seems to be working better?

I have to say “Well done, US.” There are lots of areas in foreign policy where we still have a ways to go. We can not fix everything in a short period of time. But it is nice to read such a positive article. Ultimate applause may have to go to Secretary Clinton who has run a stupendous State Department.

We have done the experiment – austerity does not work

UK recession in charts
[Via MacroScope/Reuters]

Britain’s economy slid into its second recession since the financial crisis after official data unexpectedly showed a fall in output in the first three months of 2012:

[More]

The UK has fallen back into recession. To provide context, here is a chart from Paul Krugman’s column comparing the current UK economic response to the Great Depression (the graph is just a redrawing of the last graph of the Reuters article):

British GDP had recovered by this time in the Great Depression. Now it looks like a double-dip recession for the UK. They chose austerity for their economy.

The US chose stimulus – although there are lots of austerity champions. The second chart in the Reuters article compares the US, the UK and Europe – the first using stimulus and the latter two using austerity.

Now we see the difference between austerity programs and stimulus.  Both appear to work similarly in the first few quarters – both the US, the UK and Europe showed similar recoveries.

But it is what happens in the second year where we see a real difference. About a year after the crash ended, both Europe and the UK saw a flattening of the recovery curve. The ascent stalled with GDP  recovering perhaps halfway to its peak. Now both Europe and the UK seem to be slipping back into recession, meaning their recpvery will be even longer – longer than in the Great Depression.

But the US chose a different approach, one that worked wonders during the Great Depression – direct government infusion of cash into the economy. What do we see? A complete break with the trajectory of the UK and Europe from the middle of 2010 on. We have pretty much had almost 2 years of continuing growth in our economy. In fact, our real GDP is now higher than it was before the crash. In purely economic terms, we have fully recovered from the 2008 crash.

If you want to save an economy, stimulus works. Austerity does not.

Lots of Apple shorts meeting margin calls?

Apple profits surge 94% on sales of 35.1M iPhones, 11.8M iPads
[Via AppleInsider]

Apple on Tuesday announced its best-ever second fiscal quarter, as the company saw its earnings rise 94 percent to $11.6 billion, or $12.30 per diluted share, on quarterly revenue of $39.19 billion.

[More]

So the stock was way down throughout the day, closing down over 11 points at 560.28.

Then the reports shwoing they crushed what the market had decided was a bad quarter. In after hours trading the stock is up over $40.

I imagine a big pop tomorrow morning.

Houston has always been full of people who get things done

by deltaMike

Houstonians set up underground libraries in response to book ban
[Via LISNews - Librarian And Information Science News]

Houstonians set up underground libraries in response to book ban
After learning about a law in Arizona that has gotten books about Mexican-American history banned from classrooms, a group of Houstonians responded by collecting over 1,000 of the banned books, packing them in cars and taking them in a caravan across Texas and New Mexico to Tucson, Arizona.

Known as “librotraficantes,” or book traffickers, a group led by Houston Community College professor and author Tony Diaz has taken it upon itself to help the students in Arizona to have access to the books that have been part of their school district’s curriculum for years.

[More]

Houston is the most diverse city in the US. I was 28 when I left. While it has some problems – the weather being a big one – I always felt that’s unique benefits made it a great city. People living there believe that anything can be done.  They generally care more about results rather than who your family was or what political party you belong to.

Here we see a group that sees a problem, one that is actually happening in an different locality, and some  Houstonians respond by doing something, not talking about it.

Getting things done is how we succeed.

Capturing asteroids to change the world

Asteroid takeout—a one-billionaire mission to bring a 500-ton asteroid to Earth by 2025
[Via Ars Technica]

Visiting (and eventually mining) asteroids is viewed by space development advocates as an imperative stepping stone to making our way out into the solar system. One group of President Obama’s advisors, the Augustine Commission, counseled that a manned asteroid mission might bring the highest payoff per dollar spent in terms of science and essential skills for space exploration. A study was also commissioned to check the feasibility of bringing a small asteroid—on the order of 10,000kg—back to the International Space Station. It reported no showstoppers.

[More]

The title is misleading in one fact – the asteroid will not be brought to earth orbit. It will be brought to lunar orbit where it can be mined.

The report is quite fun to read. Using a single Atlas 5 level launch vehicle or a couple of Delta IVs, the entire launch system could be put into Earth orbit. It would use a solar-electric propulsion system to move out past the moon’s orbit to the asteroid, examine and capture it, and then move the whole package into lunar orbit.

It would take about 10 years to complete the whole trip. At a cost of $2.6 billion.

The asteroid – which is mostly iron, nickel, water and a few other precious metals – can then be mined for material. Material that can be used to create more asteroid catchers.

To lift 500 tons of material into the same orbit would cost about $20 billion. This would produce the same material for $2.6 billion. About an 8-fold reduction in trying to move things to the moon from Earth.

Further work could result in a 20-fold reduction.

And that’s not all.

Because once mining is set up around the moon, all sorts of possibilities come into existence. It becomes cheaper to produce material for space from here rather than the Earth.

NASA is already looking at putting a manned outpost on the far side of the moon. The moon has some worthwhile things to mine, such as nuclear fuels like Helium-3, as well as rare earth metals . What it does not have is a lot of iron and nickel for building things.

Combine both – mining on the moon for fuel and high tech materials, and asteroid mining for building materials/water – and we might have almost everything to expand to Mars and outward.

Using a nuclear reactor, ion engines could get us from the moon to Mars in perhaps 39 days, instead of the year or so by normal means from Earth. In fact, these engines could get us beyond Mars, perhaps taking only 3 years to get to Jupiter.

And since the nuclear power is produced from the moon, there is little worry of an accident releasing radioactivity into the Earth’s atmosphere.

Having a manned mining presence near the moon would serve as a tremendously cheap way to get to Mars, instead of trying to do it all from Earth. We have the technology today to do this.

The cost to get started is minimal. Do we have the will?