Archive for category Economics

Syria: Standing Steadfast or Slippery Slope?

Mark Salter, who used to write for Sen. John McCain, is advocating that President Obama get tough on Syria.

Bill O’Reilly advocates a strike on Syria even though two of his guests, both retired military officers disagree.

The point being made is that if President Obama does nothing, then the “Red Line” of chemical weapons use that was drawn a year ago will mean nothing. President Obama and the US will lose respect around the world.

Okay, that is a valid point. But what credibility does the US have in the Middle East right now anyway?

We abandoned Egypt’s President Mubarak after decades of mutual support. Mubarak was a dictator for sure, but he was co-operating with US interests. We abandoned him to the famed “Arab Street” in the Arab Spring.

It led to the Muslim Brotherhood being elected to power, and now overthrown by the self same Egyptian military we supported with training, weapons and financial aid for years. Only now they don’t trust us. (Proof of who is behind the military crackdown in Egypt is the fact that Mubarak was released from prison – these are the folks who propped up Mubarak for decades.)

A side note – the military crackdown in Egypt included invading a Mosque to capture a leader in the Muslim Brotherhood. This is precisely that type of action that the US military was forbidden in Iraq or Afghanistan for fear of arousing the “Arab Street.” What result in Egypt? The “Arab Street” has quieted down. US diplomats have been more afraid of the “Arab Street” than the Arab leaders.

The Saudi Arabians are now backing the military in Egypt – which puts us at odds with the single Arab county with real clout that has been quietly been backing our policies for the past twenty years.

We bombed Libya to achieve regime change – even though Dictator Kaddafi had given up his WMD programs and started giving us intelligence in the war on terror.  What did that get us? It got us Libya as a no-man’s land and a dead US Ambassador in Benghazi.

Meanwhile, Russia has stayed faithful to Assad. Yes, they are backing an unsavory character, but they are showing themselves to be a faithful ally. Plus, they have the reason of having a port in Syria – a legitimate strategic interest. If I were a Middle-Eastern leader, I would place more stock in Russia as an ally, than the US.

This, along with the Snowden affair, has put a damper on US-Russian relations. It is really a shame. Right now, the Middle East tensions are shooting up the price of oil – the whole reason the entire world cares about the region.

With the recent advancements in Shale Oil production and discoveries in the United States and elsewhere (along with the political will to create infrastructure such as the Keystone pipeline and ports that can support large Liquefied Natural Gas (LNG) tankers) the US can become a large exporter of energy.

With Russia and the US cooperating – as large energy exporters – they can make the Middle Eastern oil states much less important. Together, Russia and the US cooperating on energy strategy can also hold the ambitious Chinese in check. But those considerations seem not to be considered by the media and Washington.

Humanitarian concerns are important. But this is a civil war. There are bad people on both sides (Al Qaeda partisans are a large part of the Assad opposition.) As crass as it seems, aren’t we better off with them focusing their violence on each other instead of us or Israel?

If we just launch a few cruise missiles (at the cost of several million dollars and possible civilian casualties) and Assad survives, then what was the point? If we go all in to remove Assad’s regime we risk igniting the region. A third war in the Middle East in twelve years. And all we have to gain is the respect of President Francois Hollande of France?

It does not seem worth it.

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Dan Brown’s Inferno vs. Peter Diamandis’ Abundance: Two Different Views of the Future

It is always interesting when smart people look at the same set of data and come to two different conclusions.

That is what we have between the views of author Dan Brown and Space Entrepreneur Peter Diamandis.

Both have written books in response to projections that we are rapidly moving towards a global population of nine billion human beings, while not having the food, water, energy and public health resources to manage such a population. Brown’s book is the novel Inferno, and Diamandis’ book  is a non-fiction treatise called Abundance: The Future is Better than You Think.

Brown is, of course, the bestselling author of such books as the Da Vinci Code and Angels and Demons. His protagonist in Inferno is the same as in the previous novels, Robert Langdon, a Harvard professor that is an expert in deciphering symbols. Brown leads the reader down a path where the statistics about our coming nine billion person global population and the possible ramifications are all part of the plot. There are even graphs provided.

Dan BrownBrown carefully touches upon many of the “Third Rail” issues that such thinking brings up: Malthusianism, Eugenics, and forced population control. While he is careful to make sure that Robert Langdon and the other ”good guy” characters in his story are on then “correct” side of these issues – he leads the reader to what is at least an ambivalence, if not a resigned acceptance of a radical, involuntary, forced solution (which always seems to echo the Nazi’s “Final Solution”) to the problem. (I would expound further but I do not want to spoil the novel for those who have not read it.)

While Brown has not been a stranger to controversial views in his novel – in fact he seems to thrive upon them – in Inferno Brown has gone down a dangerous path. The fact that he is an effective and accomplished writer makes it all the more disturbing – his views will be read by many and he leads the reader carefully down the path.

While it would not make as good a novel, I wish Brown had read Abundance by Peter Diamandis and Steven Kotler. Kotler is a well respected journalist. Diamandis is an M.I.T. trained micro-biologist and aerospace engineer and, like Dan Brown’s Robert Langdon, has a Harvard connection: Diamandis achieved an M.D. from Harvard Medical School.

Kotler and Diamandis look at the same graphs and projections that Brown does and decided that technology can answer many of these problems. In food and water, emerging technologies and the efforts of the new generation of philanthropists are coming up with novel and low cost solutions. Similar events are happening in energy and healthcare.

Peter DiamandisDiamandis points out that much of this innovation will come from Do It Yourself Inventors and the new tech billionaires who have turned their finances and keen minds towards solving global problems – rivaling the efforts of the Carnegie’s and Rockefellers in previous generations. He also points out that the continuing multiplication of computing power (Diamandis is a Co-founder along with Ray Kurzweil of the Singularity University) will combine with the innovators to lower the cost of education and information not just in the developed world, but in the developing world too. In fact, Diamandis views the coming new billions of people in developing nations as an economic opportunity – as cell phones come on line for these people; they will be part of the global economy.

Diamandis is not wrong in this outlook – one of the wealthiest men in the world is Carlos Slim – who made most of his money in providing cell phone service in Mexico- who would have guessed that twenty years ago?

Interestingly, most of the solutions provided by Diamandis come not from governments but from the private sector. Diamandis himself is trying to take space Exploration private as a Co-founder of a asteroid mining company called planetary resources. In his future, it is private individuals and not politicians or governments that will solve problems.

Chances are more people will read Brown’s book than Diamandis’. They both deserve respect. The fact that two bright men have written books where the underlying theme is the coming challenge of a world population of nine billion means that this will be the subject of public discussion for years to come.

Let’s hope that we choose to go the route of Diamandis’ Abundance, rather than down towards Dan Brown’s Inferno.

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Who Are the Players in Commercial Spaceflight Part 2: Jeff Bezos, David W Thompson, Robert Bigelow, Art Dula

Here’s the next set of Commercial Spaceflight players:

Jeff Bezos of Blue Origin. The Founder and current head of Amazon.com (one of the few tech startup billionaires from the 1990’s who still heads his own company) has a facility in Everett, Washington where he is focusing on how to make commercial spaceflight much cheaper. He appears to be focused on making the one component of space vehicles that has mostly been expendable, the initial launch booster – be a reusable component as well. Bezos has also purchased land in West, Texas for launch operations. Many of his competitors tout each milestone in testing they make along the way. Not Bezos. When one of his test vehicles went down in Texas in late 2011 it was the first time many even realized that he was that far along in flight tests. This fits Bezos’ pattern that helped him become so successful with Amazon. He uses metrics to analyze shirt term progress, but uses gut and instinct when forming long term goals. Bezos went many years with Amazon not turning a profit while he perfected the online service. With his deep pockets, he is capable of following the same strategy with Blue Origin. He is following a childhood dream of building space stations and hotels in orbit. When Bezos actually does his big roll out- don’t be surprised if it is a fully functional spacecraft with the bugs worked out. That would be how he operates. When everyone was wondering who would be the big competitor to the Apple iPad, it was Bezos that surprised the world with the Kindle Fire Tablet. He is likely engineering a similar shocker with spaceflight.

David W. Thompson of Orbital Sciences. The Founder and CEO of Orbital Sciences could well ask, “What’s so new about Commercial Spaceflight? We’ve been doing it for three decades.” Indeed he and his crew at Orbital have. Impressed by Paul Allen and Richard Branson’s White Knight 1, which used an air craft to air launch a space vehicle, all done on a commercial basis? Orbital did it in the 1990’s with their commercial built Pegasus rocket air lifted by a modified L1011. They have used that launch system as well as others developed by them such as the Taurus, Antares, and various Minotaur models to launch satellites for the military, NASA and various commercial customers. They are currently developing the Cygnus advanced maneuvering spacecraft, capable of transporting pressurized cargo, that is slated to perform several resupply missions to the International Space Station (ISS). Orbital is a “one-stop-shop” for a commercial space customer in that they can design the orbital vehicle and/or satellite, build the launcher and execute the launch and spaceflight control for you. While outsourcing pieces of the mission can be useful, a space customer can deal with Orbital and get all phases of the mission accomplished. Thompson has degrees in aeronautics from M.I.T. and CalTech, along with time at NASA, including the Jet Propulsion Lab (JPL) the Langley Research center and the Johnson Spaceflight Center. Along with all of this engineering background he has an M.B.A. from Harvard Business School. He has never sought publicity and has had a passion for space that has lasted decades.  An ace up the sleeve of Thompson and Orbital is that they have been the lead on the first two phases of the Defense Advanced Research Projects  Agency (DARPA – all they have ever done is come up with such things as…The Internet) Fractional Satellite project. Fractional satellites, by having different small satellites communicate with each other for power, communications, navigation, etc could do for satellites what networks of smaller computers did for computing – eliminate the need for one large machine. With Orbital on the cutting edge of the Fractional Satellite technology, Thompson and Orbital may be decades ahead of everyone else yet again.

Robert Bigelow and Bigelow Aerospace. A self-made real estate magnate and owner of the Budget Suites hotel chain has started Bigelow Aerospace which is addressing the need of “what if we have all these rockets and they have no place to go?” The owner of a hotel chain has the answer – affordable commercial built space stations. He is using inflatable technology and already has two stations, Genesis I and Genesis 2 successfully in orbit. Right now, the ISS is the only place for humans to go in low earth orbit. Bigelow is proposing his BA 330, which can accommodate six for a long term basis as an independent space station, or connecting a series o BA 330’s as modules of a longer station. NASA is looking at this as an option to expand the current ISS. Bigelow has launch agreements with Elon Musk’s Space X  (See Part 1) and Memorandum of Understanding with various Asian and Middle Eastern Governments. Bigelow also has its own Mission Control center already operational in North Las Vegas. Bigelow may have been inspired to think about space by some relatives who apparently had a “Close Encounter.” The real estate entrepreneur also sees the US as having blown the opportunity to claim a large chunk of Real Estate – the Moon. Bigelow already sees China as staking claims on the Moon. He views it as the responsibility of the American private sector to do what a hapless government has failed to do: secure the American foothold in Space. Bigelow believes that it may be too late to keep the Moon from the Chinese, but the US commercial sector can secure an America future on Mars.

Art Dula and Excalibur Almaz. Unique among the Commercial Spaceflight pioneers Art Dula has a legal background as opposed to the usual technical or engineering background. Dula’s company, Excalibur Almaz,  has secured Reusable Reentry Vehicles and space station components from the former Soviet military program called Almaz (Russian for “diamond”). This strategy has a precedent in the Commercial Airlines that started after World War II with US Army Air Corps surplus planes (Braniff Airlines comes to mind.) Dula is following this pattern with Cold War surplus spacecraft. They make the point that the technology is already proven in space and that the Salyut, Mir and ISS space stations used the very Almaz orbital unit that they have in stock. Incorporated on the Isle of Man, a British territory with favorable corporate regulations, most of the company principles are American with some former Russian cosmonaut advisors, initial financing came from Japan. By updating the Soviet era analog communications, navigation and life support monitoring systems with new digital electronics they have gained several hundred kilograms of lift capacity from the original Russian missions. Excalibur Almaz promotes trips to Low Earth Orbit (LEO), and intends to have Moon missions using the larger space craft powered by ion pulse engines. While such a trip would take months to the Moon, it would be done in a spacecraft the size of a three bedroom apartment, not a capsule.  After the recent announcement of Planetary Resources with their intent to asteroid mine (See Part 1), Excalibur Almaz has added asteroid mining to their intended space missions. Dula has been involved in space ventures throughout his career. He is a Literary Trustee of the Robert A. Heinlein estate, which may indicate where his appetite for space flight was whetted.

In Part 3 of this series we will look at some of the smaller, but no less exciting players in Commercial Spaceflight.

Note: None of this should be viewed as investment advice. Dan Godzich is not an investment advisor and does not own stock in any of the companies mentioned above.

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Who Are the Players in Commercial Spaceflight Part 1: Richard Branson, Elon Musk, Paul Allen, Eren and Fatih Ozmen, Eric Anderson and Peter Diamandis

In a previous post we posed the question if Commercial Spaceflight is the next big boom. Then we compared it to the growth of Steam ship and railroad travel in the 19th century.

But who are the players in today’s Commercial Spaceflight boomlet? What motivates them? There are more than most people imagine so this will be Part 1 of a several part series on these Space Flight Players.

So in no particular order:

Virgin Galactic Founder Sir Richard BransonSir Richard Branson with Virgin Galactic. The flamboyant mobile phone, music and airline entrepreneur is taking to commercial space with Virgin Galactic. He already has more than 200 tickets sold for sub-orbital tourist flights aboard his SpaceShipTwo space craft. Flight testing for the White Knight Two (the aircraft that carries Spaceship Two initially) and SpaceShipTwo are under way. He has also built, together with the state of New Mexico, Spaceport America in Sierra County New Mexico. Branson intends to offer orbital flight as well in the future. Branson’s motivation seems to be his spirit of adventure that has always led him to ventures where he could claim to be “first.”
Elon Musk and Space Explorations (Or Space X as it is called). Space X is the first commercial company to successfully launch a capsule that docked with the International Space Station (ISS). Space X Falcon 1 Rocket and the larger heavy lift Falcon 9 rocket in development launch capsules that later splash down in the ocean upon reentry to the atmosphere – reminiscent of the Gemini and Apollo missions.  By having a private company replicate what it took NASA and the Cold War efforts of the Us Government was doing  several decades ago, there is a Back to the Future feel about this enterprise. The South African born but now American Musk was a co-founder of the online payment company Pay Pal. With degrees in both Economics and Engineering his personality was the inspiration for the Tony Stark character in the Iron Man and Avenger movies. Musk seems to want to solve problems that others have yet to tackle – one being mankind’s eggs all being in the Earth basket. Musk has the goal of eventual Mars exploration and settlement. Musk also is working to bring innovative electric cars to market with his Tesla Motors.

Paul Allen and Stratolaunch Systems. The Microsoft Co-Founder and Venture Capitalist (Vulcan Inc.) announced the start up Stratolaunch Systems, together with Burt Rutan of Scaled Composites. The Allen/Rutan team had collaborated previously on Spaceship One, which won the Anzari X prize for being the first commercial space craft to successfully launch and re-launch civilians into space. Stratolaunch Systems will be a mobile  air launched system with the carrier craft built by Rutan’s Scaled Composites, then with Space X (see above) providing a multi stage launch vehicle and finally a docking and integration system made by Dynetics. Allen, considered in the top five wealthiest men in the world, is also the owner of NFL, NBA and Major League Soccer Franchises. He has real estate and philanthropic interest primarily in the Seattle, Washington and Pacific Norwest region. Allen is a Science Fiction and Rick and Roll fan as well as a fan aviation history – he has opened museums for all three. The Stratolauncher, which will be the largest aircraft in the air when ready, has a similar name to the Stratocruiser which was the largest commercial aircraft of its time when another Seattle based Allen announced the aircraft that featured a spiral staircase and cocktail lounge in the post war 1940’s. (William Allen head of Boeing at the time, but no relation to Paul as far as I know.) Paul Allen being such an aviation history buff, this name selection is not likely accidental. Paul Allen appears to being living out his science fiction and aviation dreams together in his commercial space ventures.

The Ozmens and Sierra Nevada Corporation. No, not Donnie and Marie (those are Osmonds) rather Eren and Fatih. This dynamic wife and husband duo took a small engineering firm in a suburb of Reno, Nevada and turned it into the largest government Defense, Intelligence and National Security Contractor that you probably never heard of. Both have engineering degrees and Sierra Nevada Corporations Space Systems division already delivered the hybrid (green) rockets used by Rutan’s Scaled Composites Space ShipOne. They have also already drop tested (dropping the spacecraft from a carrier aircraft) the Dream Catcher space craft a shuttle-like craft they are developing as a people and freight transport to the ISS. They are also involved in developing other space technologies, such as the actuators that power the Mars Rover. Publicity shy and very focused this couple benefitted from the past decades defense build up – as defense dollars are looking to go down, it will be interesting to watch them venture into the world of commercial space.

Eric Anderson and Peter Diamandis of Space Adventures and Planetary Resources. Anderson and Diamandis co-founded Space Adventures which successfully sold space tourism flights aboard Russian space craft and have now launched Planetary Resources – a company developing low cost orbital telescopes with the goal of identifying and eventually mining asteroids. Many heavy hitters are investing in their company including Google Co-Founder and CEO Larry Page, H. Ross Perot Jr., Avatar Filmmaker James Cameron and Former Goldman Sachs Chairman John Whitehead. Anderson is the current chairman of the Commercial Spaceflight Federation, an industry association, and has helped found several space start ups. Diamandis is co-founder and chairman of the X Prize Foundation which awarded the first prize to Burt Rutan and Paul Allen’s SpaceShipOne (see above) for successful commercial space flights.  Diamandis, with Biology and engineering degrees from MIT and an MD from Harvard Medical has many futuristic interests including the Singularity University with Ray Kurzweil. Anderson and Diamandis seem to have had a life-long passion for promoting space flight. Diamandis’s love of rockets goes all the way back to his days as a youngster in the Bronx, NY when he won the Estes model rocket design prize.

These five are just a start. There will be several more parts to this series, as there are more players than folks are aware of. I know I was surprised when I started researching the number of players in this new and up and coming industy.

Note: None of this should be viewed as investment advice. Dan Godzich is not an investment advisor and does not own stock in any of the companies mentioned above.

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Charlie Sheen, Conan O’Brian, Middle East Revolution and Paddy Chayefsky

What do Charlie Sheen, Conan O’Brian and Steven Slater (the flight attendant who quit his job, grabbed a beer and slid down the emergency chute) have to do with protestors in the Egypt, Tunisia, Bahrain, Iran and possibly Saudi Arabia? 

And what do any of these people have to do with a 1976 movie written by Paddy Chayefsky?

A lot. In that film, “Network”, a fictional news anchor, Howard Beale, decides that he is “mad as hell,” and that he is “not going to take it anymore!” The network decides to keep him on the air, he becomes a phenomenon and called a Mad Prophet.

Sheen, Conan O’Brian and Flight attendant Steven Slater were all frustrated with their employers. They all left their jobs loudly rather than quietly and became folk heroes in the process. Folk heroes fueled by the internet social sites, Facebook and Twitter in particular.

Chayefsky was three decades ahead of his time and the word “Network” today has a larger meaning. In the movie the public at large joined the “Mad as Hell and not going to take it anymore!” movement. Today people across the world are mad as hell.

People have been “mad as hell” for a while. The current global economic downturn has frustrated people across the planet. The difference is that now people have decided that they “…are not going to take it anymore.”  The internet and social networking in particular, are providing a way to express the anger.  More than that, the online world is providing a way to organize and get results.

The results are real. Conan O’Brian was able to keep his fan base despite being barred from broadcast television. Charlie Sheen may be onto a new career as an online Mad Prophet selling Tiger’s Blood and promoting “winning.” In the Middle East, two strongmen who held power for decades have fallen, one is in a civil war and others may still be deposed.  

The plot twist in the 1976 movie was that the “Network” decided to keep the Mad Prophet on the air in a cynical ploy for ratings. In today’s network, the TV Networks could not keep Charlie Sheen, Conan O’Brian off the air- at least not off the internet. Neither could an Egyptian state run TV station silence a Google manager.

When people are Mad as Hell in this new Communications/Information age, those in power will have to listen – they can no longer just pull the plug. The Mad as Hell side is “winning.”

That changes everything.

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Watson, Google, Egypt’s revolution, Saudi Kings, the price of oil and the Singularity

Watson the IBM Computer not only wins, but beats two of the biggest former human champions handily on the TV game show Jeopardy.

Wael Ghonim, a marketing manager for Google, plays the part of Egypt’s Technological Cromwell and helps spark a revolution.

Raymond Kurzweil, a leading Artificial Intelligence expert predicts a “Singularity”, the day when Artificial Intelligence surpasses human intelligence, as coming sooner rather than later.

All these events happened within days of each other – how are they related?

Just as the Twentieth Century was dominated by technological, social and political changes caused by the industrial revolution – we are seeing that the Twenty-First Century will be dominated by such changes caused by the information revolution.

We had begun to see signs of it before. When Barak Obama was able to defeat Hillary Clinton in the Democrat Party race for the Presidential nomination, it was a victory for the online world against what was viewed as the establishment.  Now we have the role of Twitter and Facebook in the Middle East and elsewhere; partially spurred by revelations coming from Wikileaks.

The established political structures in the world are becoming as relevant as candle makers after Edison invented the light bulb and electrification of cities.

How is a King Abdullah of Saudi Arabia, who will be eighty-eight years old this August, to deal with this sort of a world? In fact, almost all of the large middle-eastern oil producers are in a similar predicament. They, and Russia, are right now “pinch points” in the world economy and therefore world politics. But even their economic clout could be threatened by the information revolutionaries.

Brilliant people all over the world are trying to figure out how to make a better battery. Combine a better battery with a breakthrough in nuclear fusion or some other energy producing technology and crude oil could become as irrelevant as the telegraph much faster than any of us imagine. The oil producers would become less relevant as well.

Don’t think it could happen? In the late Nineteenth Century the “industrialized world” (Europe and the America’s) were facing a vast oil shortage – whale oil that is-until fossil fuels were placed into use. Henry Ford demanded that his engineers produce a V8 engine for the automobile, despite engineers assurances that it could not be done.

We are already facing a time of greater change for more of the world’s population since World War II. It may greater change, and upheaval, than any of us can even imagine.

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