An open invitation to risk my money, justice exists and aerobatics

This is it. I have warned about it a couple of times but now it's agreed: bail-ins will be possible as of 2016. The eurogroup finance ministers adopted a new "Bank recovery and resolution directive" that puts your savings at risk when your bank goes belly-up. What are the rules? Pretty simple:

• First the shareholders have to cough up. They have to take a minimum of 8% of the banks losses.
• Savings are guaranteed until 100000,- €, anything above that is up for grabs.
• Every member state has to establish within 10 years a 'resolution fund' that has to reach 1% of all deposits covered. All banks have to contribute to this fund.

Before you start applauding a couple of small remarks:

• The 8% minimum coverage of bank losses by shareholders will quickly become a maximum when the dirt hits the fan. Shareholders will argue that they only have to cover 8% of the losses before savings above 100000,-€ can be shaved. With many governments now shareholder of banks, I expect they will also argue this way.
• It is noteworthy that there is no cap above 100000,-€. In other words, you don't risk loosing a part of what you have saved above 100000,-€, no you risk loosing everything above 100000,-.
• There is no differentiation between a personal saving account or an account of a small or medium enterprise. They too will suffer the same fate.
• That 'resolution fund' only needs to be established within 10 years. I would surely hope that we are out of the woods by then! What happens in the mean time (if bank goes bust and no 'resolution fund' available yet) does not bode well for our savings.
• A 1% 'resolution fund' is not going to resolve anything if a big bank is in trouble. A quick calculation: in Belgium there is about 250 billion € on saving accounts. That means the fund will have to be at least 2,5 billion € big. This is peanuts if one of the bigger banks goes bankrupt as they hold tens of billions of € in savings! And it'll be interesting to see how banks can be convinced to depart from 2,5 billion €.
• A lot of that 250 billion € is on Belgian saving accounts but from foreign banks (example PNB Paribas, a French bank, that took over Fortis). So the Belgian fund has to guarantee savings deposited at and controlled by a foreign bank over which it has no control. Am I the only one who sees this as an open invitation for foreign banks to take risks with money collected abroad?

Justice exists in the financial world... but you have to go to Iceland for it. Those at the helm of the Icelandic Kaupthing Bank that threw the whole country into the abyss got sentenced to 5 years of imprisonment. The rest of the world could learn an important lesson from this.


One of my friends started his own company called AURTE: Aerobatic & Upset Recovery Training Europe. Anyone who followed civil aviation and pilot training discussions over the past years, knows there is an issue with degrading manual flying skills. So this new start-up is very welcome. But it made my heart beat faster for another reason. They are using a Corvus Fusion. Ultralight adepts (like me) know what this means: a fast aerobatic ultralight. Watch how they take it through its paces. In summary: I want one!!!

I heard you Barack, forget Nature and colour schemes

When world leaders gather at a funeral I always get a feeling of unease. Maybe I am just too sceptical but I can't help wonder if they attend because they want to pay their respect to the deceased or because they want to bask in the shine and glory the deceased has left. Looking at how respectful world leaders were by posting selfies on twitter during Mandela's memorial service I get the impression they are there for the second reason, not for the first.
Also it is striking that in all speeches I heard during the service not a single one apologised to Mandela and the South Africans. Apologise? Yes indeed apologise. UK and US supported Apartheid until just before Mandela was released. CIA helped jail Mandela  in 1962. UK and US put Mandela on their terrorist list. The US kept him on the terrorist list until 2008!
Also I heard Obama say following:
"There are too many of us who happily embrace Madiba's legacy of racial reconciliation, but passionately resist even modest reforms that would challenge chronic poverty and growing inequality.
There are too many leaders who claim solidarity with Madiba's struggle for freedom, but do not tolerate dissent from their own people. And there are too many of us who stand on the sidelines, comfortable in complacency or cynicism when our voices must be heard."

I heard you Barack. You want a place in history books? Then go and really do what you preach and maybe the world will become a better place in some parts of the world.

In the mean time lets listen to N'Kosi Sikeleli, South African's national anthem in a a-typical but very good and powerful version by Perpetuum Jazzile:

The Nobel price winners received their price on the same day as the Mandela memorial so that news got a bit snowed under. There is one article that I recommend reading because Randy Schekman (winner of the Nobel price for medicine) declared he will no longer send papers to the top scientific magazines. Why? Because: "Leading academic journals are distorting the scientific process and represent a "tyranny" that must be broken. Schekman said pressure to publish in "luxury" journals encouraged researchers to cut corners and pursue trendy fields of science instead of doing more important work. The problem was exacerbated, he said, by editors who were not active scientists but professionals who favoured studies that were likely to make a splash."
You can read the full article here.

Talking to a pilot this week, he told me he got on an Alpha Jet flight. Blimey! I would love to have a go as well. It reminded me of the lively colour schemes that our Belgian Airforce came up with every year before the start of the airshow season. Ok, granted, not all were works of art, but colourful they were. Below a selection of the schemes between 1989 and 1994.

The best Belgian colourscheme ever was not on an Alpha Jet but on a Belgian Air Force Mirage V. I shot below picture in Bierset (then still partly a military airfield) of BR15 in the celebration scheme for 70 Years of the 42nd Squadron Mephisto. What a beauty!

The big picture²

I took half a day off this week to join a speech from Barry Ritholtz. Those of you who don’t know him, Barry is world renowned in the economic and financial world. He has his own wealth management company, is a regular guest on Bloomberg tv and his blog (the big picture) is ranked by TED amongst the top 100 sites one has to know and it has more daily pageviews than USA Today.

So when I received an invitation to attend his speech I immediately put in my request for half a day off.

Now Barry threw a lot of interesting graphs at his audience but the one thing that made me think was something he said. In the late 19th century companies were laying down a complete railroad network across the States. These companies struggled for survival because of the high cost of the endeavour but everyone wanted to invest because the future was here. Until it all went ‘pop’, the bubble burst, companies went bankrupt and the infrastructure was bought up by others for pennies on the dollar. The buyers made a fortune as they had in their hands the basic infrastructure at a very cheap price upon which a whole new economy developed. Fast forward to the turn of the 20th century and companies were laying down fibreoptic cables across the country. A very high investment (100s of dollars cost per mile) but everyone wanted to invest because the future was here. Until it all went ‘pop’, the bubble burst, companies went bankrupt and the infrastructure was bought up by others for pennies on the dollar. The buyers made a fortune as they had in their hands the basic infrastructure at a very cheap price upon which a whole new economy developed (e-commerce, social networking, ...). Fast forward another decade. Debt was build up and everyone was out for a loan because investment was plentiful and a sure bet. Until it all went ‘pop’, the bubble burst, companies went bankrupt and ... Nothing. Here is the difference between the current crisis and the above big crisis. The railroad and fibreoptic crisis gave us, after the bubble burst, infrastructure at low cost upon which a new economy developed. When the bubble burst in 2008 it left us with debt. Conclusion: it will take a lot longer to recover from this crisis.

What made me wonder is where the next ‘useful’ bubble is. ‘Useful’ meaning giving us something to build on at low price. If I knew I would be in for some serious money making but I don’t know. However I am just wondering if green energy is not a good candidate. Windmill parks, solar parks, ... are developed with a lot of incentives and government support. Once this support falls away (due to austerity cuts), these new energy parks seem to run into trouble as they have too much debt and without the incentives, too few revenue to pay off the debt. So, if these go belly-up, the interesting bits will be up for sale at a cheap price. To those of you with deeper pockets than me, maybe this is worthwhile reflecting upon.


Off to space! This week China sent a lunar rover to the moon and SpaceX (from Elon Musk) put its first satellite into orbit. I include two pictures posted by Elon Musk on his twitter account.

Fascinating as it all is, it is dwarfed by these breathtaking pictures from Cassini. Talking about a big picture, they rarely come more beautiful than these! No one understands how that hexagon was formed on Saturn’s north pole. Researchers are running all kind of hypothesis to get a grip on it. Nature is wonderful isn’t it.

Taxes are only for us normal mortals, youfly and one down five to go

The European Commission announced this week that they are going after so-called postbox companies. These are global companies that set up subsidiaries across the world to optimise their taxes. The result is that these global companies hardly pay any taxes at all. The European President stated some weeks ago that all EU members together miss 1000 billion € in taxes per year because of this high-tech financial wizardry.
Needless to say that the announcement was greeted with a lot of acceptance and sympathy both by the media and the public. After all, going after the big bucks from those who apply sneaky tricks is only fair. Or is it? I have some mixed feelings though. Is it ethically and morally questionable when the richest companies on earth use every rule in the book to lower and evade taxes? Hell yes. Is it legally wrong?
The thing is, those 'rules in the books' were voted and implemented by... governments. Countries purposely create rules beneficial to global companies just to attract them and set up shop in their country. In fact countries compete heavily amongst themselves to attract business. My own country, Belgium, is no exception. Belgium invented a very interesting rule (when using their own capital for investing in R&D, companies can deduct it from their taxes as if it was a loan) and then went on a global road show to pitch it to multinationals. Of course many saw the benefits (handy way to lower their taxable income). Can you blame them? Other countries have other incentive schemes. And when companies happily apply (of course!) then suddenly they become the bad guys. Again, it is ethically and morally wrong but shouldn't the Commission go after its own members because it is the Member States that created the rules that companies use? But I guess it is more popular to go after business sharks then go after your own members. And then one another point: Commission officials don't pay taxes on their income as us normal mortals have to do. So who are they to speak about socially unacceptable tax evasion?

I came across a website featuring a flying machine that tickled my imagination. I remember as a kid seeing these things in a comic book ('De speelgoedzaaiers'). But here is this company in Perth that is developing them. Have a look:

We Belgians have always been way ahead of the rest :-).
Ok ok ok, just to prove that I do have some sort of self-relativity as well here is Monthy Python about us Belgians:

For those of you who can't get enough and who missed it (shame of you if you did!), here are they again announcing their new reunion show called "One down, five to go":

A definition, breaking records, stars lining up and approaching Queenstown

There was a fantastic quote circulating the net last week regarding inflation. You can’t switch on the tv last months or you have a central banker or a politician proudly saying that inflation is low. Of course we all know the calculation is rigged (last change in Belgium was to include the Summer and Winter sales in the inflation basket). The bread price on the other hand was taken out years ago already. So inflation is not representative at all about the real cost of living, as anyone who does his weekly grocery shopping himself knows very well. So I give you this wonderful definition of inflation and central banking from Dylan Grice:

“Trying to control a variable you can’t measure (inflation) with a tool you don’t fully understand (money) in a complex system with hidden, unobservable and non-linear interrelationships (the economy) is a guaranteed way to ensure that most things which happen weren’t supposed to happen.”

I came across a graph (courtesy of Bloomberg and Zerohedge) that really spooked me.


It’s the New York Stock Index divided by the US FED balance sheet. Ok so 2008 is Lehman we know that. The thing is since Lehman, the US FED has pumped 4 trillion $ in the economy as reported last week. This has not done anything to the stock exchange if you divide it by the FED balance sheet. So the optimists will look at this graph and say: “Wow! The NYSE can go up another 500% just to reach the 2008 levels. Let’s rock-and-roll!” The realist in me however is scared sh#tless (excusez-le-mot) because 4 trillion $ has done nothing, null, zero, rien. Never mind that stock exchanges are breaking new records. Taking the FED balance sheet as basis, shares haven’t moved an inch. Basically we fell off a cliff in 2008 and since then flat line... The economy and financial system is dead and they don’t know it. Bucket loads of money are acting as defibrillator but no matter how often they push the defibrillator button (printing press) the patient is brain dead and the heart beat is not coming back.


Contrary to the new NYSE records which are in the news almost daily, this piece of very interesting news, hardly got any media attention: Germany argued against the use of European funds to help banks.
From Euroactiv:
“Ahead of the meeting, French Finance Minister Pierre Moscovici told reporters: "France continues to believe that we ... must not exclude direct recapitalisation by the European Stability Mechanism as a last resort."
Speaking just yards away, however, Wolfgang Schäuble, Germany's finance minister, poured cold water on the idea.
"The German legal position rules it out now," said Schäuble. "That's well known. I don't know if everyone has registered that."
Inside the meeting room, people close to the talks said the two clashed again, when Germany asked for the removal of any reference to ESM bank aid from the ministers' statement”.

Just politics you say? Well yes of course but there is more behind it. I see some stars lining up here and it doesn't bode well for us working class who try to save some money.

The ECB is going to do a big bank stress test next year. Contrary to earlier bank tests (which were a joke) this time it seems the ECB intends to do a proper job that risks exposing many banks short of capital (because they still have too much bad loans). Latest estimates talk about 95 billion € of losses.

The question then is: who will pay for the losses? A new European wide system was meant to do this, but this is what Germany now opposes to. And what if some banks are not worth salvaging?

The answer is disturbing: “Any state help will come at a heavy cost by imposing losses on shareholders and junior bondholders. In time, possibly as soon as 2015, senior bondholders and even depositors with more than 100,000 euros will be forced to take losses.”

So yet another confirmation that the ‘never-to-be-repeated-once-in-history’ saving of the Cyprus banks slowly but surely becomes institutionalised.


During a meeting in Auckland we were shown below movie of the approach in Queenstown. Very challenging but oh so beautiful. Watch this tribute to airmanship and enjoy the scenery!

The moon is upside down and the madness is everywhere.

I was taken aback by an opinion published in the Wall Street Journal. A certain Andrew Huszar, former manager of the US FED QE program (which buys 85 billion $ of bonds every month), wrote a piece titled 'Confessions of a Quantitative Easer". Although I knew most of what he wrote, it is still a big reality check. QE did not and is not working... except for Wall Street that has made huge profits thanks to it. 2009 (with the financial crisis in full swing) was the most profitable year for Wall Street. 4 trillion$ of QE generated 0,25% of GDP growth (equivalent to 40 billion $ -> that's a return on investment of 1%), 0,2% of the US banks control 70% of US bank assets (who said 'too-big-to-fail' was a problem?). And still the FED and Wall Street continue claims that QE is necessary and helps Main Street. Madness. Read the full opinion piece here, please do so it is worth it.

The moon is upside down, it's the end of Spring, the wine is Tasmanian and the beer from the Western Territories. Other than that there is not much difference between my country and Down Under. Whilst fighting my jet lag on Wednesday I listened to the news  about a discussion in the Aussi Parliament to raise the debt ceiling from 300 to 500 billion AUD. I can only conclude that no matter how far one travels from home, there is no hiding. The madness is everywhere.

Thinking about all of this one song came to mind: "Baggy Trousers" a Madness classic: "All I learnt at school was how to bend not break the rules"

Exciting news, what's the fun in that and I thought so...

Exciting news this week on virtually every aviation and technology website!
Skunk Works revealed the Mach 6.0 SR-72! http://www.lockheedmartin.com/us/news/features/2013/sr-72.html

Those who understand the code in the above sentence now have water dripping from their mouth.Those of you who don't know Skunk Works nor the SR-71 (not a typo, read on) will have some of questions...

The retired SR-71 was designed by one of the most innovative aeronautical engineers of all time: Clarence “Kelly” Johnson. He became instrumental in the Lockheed Skunk Works where he worked amongst others on the U-2 and the F-104 Starfighter. And Skunk Works is the official alias for Lockheed (Martin’s) Advanced Development Programs. Skunk Works is the birthplace of the P-38 Lightning, F-104 Starfighter, the U-2, the SR-71 Blackbird, the F-117 Nighthawk, the F-22 Raptor and the F-35 Lightning II.

The Blackbird truly was one of a kind. On wiki you can learn that the SR-71 was the world's fastest and highest-flying operational manned aircraft throughout its career. On 28 July 1976, SR-71 serial number 61-7962, broke the world record: an "absolute altitude record" of 85069 feet (25929 m). Several aircraft exceeded this altitude in zoom climbs but not in sustained flight. That same day SR-71, serial number 61-7958 set an absolute speed record of 1905,81 knots (3529,6 km/h), approximately Mach 3.3.

SR-71 Blackbird   Copyright: Lockheed Martin

So now work is on its way on an SR-72! At Mach 6.0 it promises to be another wonder of science and technology. But then... the bummer. The damn thing will be a pilotless aircraft!!! Hey guys what's the fun in that????

SR-72   Copyright: Lockheed Martin

It's always sad when an airplane type retires and even more so for the real iconic ones. I know, I have talked about iconic designs in the past but it's a hard search to beat the SR-71. Usually when airplane types are taken off line they are replaced by a new one which is better and more advanced. Not so with the SR-71. It didn't get replaced at all because there was actually nothing flying that could match it. Same for Concorde.

It's 10 years now since its last flight. Gone are the days of supersonic passenger transport. Nothing flying today even comes close to bridging large distances at twice the speed of sound. I saw Concorde for the first time in 1994 in Farnborough and will never forget it. I was standing along runway 24 as it landed and took off, its mighty Olympus engines roaring so hard my heart was resonating in my chest. Ok it may not have been the most fuel efficient airplane around and a lot of technological advances have been made since but if you were offered a transcontinental flight today and could choose between Concorde or any other airliner, which one would you choose? I thought so and rest my case.

Not a chaotic combination at all and entertaining birds

I had some spare time this week so I took the opportunity to catch up with my reading. I recently, after a one year search, acquired a copy of the book: ‘The Edge of Chaos’ written by M. Waldrop. It’s a thrilling story about the brilliant (Nobel-prize winning) minds at the Santa Fe institute (in the late 80s early 90s) who discovered how the world adapts itself to a state of continuous renewal on the edge of chaos. In fact, life can only thrive on this thin edge. The word ‘world’ you can interpret as biology, physics, evolution, chemistry, nature, climate, economy (aha!)… In one sentence: how life develops into ever more complexity floating on the edge of chaos. From only a couple of basic and simple rules, complex behaviour emerges and this behaviour stabilises under the right conditions to a limited number of steady states. Let me give you some examples from the book:

• a water molecule is very simple: one oxygen bound to two hydrogens. Nothing spectacular, but throw some trllions of them together and what you get is emergent properties (properties that a single entity does not have but a group of entities do). Water is fluid, or turns into ice below 0°C or becomes vapour above 100°C. When boiling water, the convection bubbles are purely chaotic.
• or how people in the Middle Ages were able to build cathedrals using only some basic heuristics as they did not have the knowledge to perform stress calculations. Still catherdrals are wonderfully complex and have stood the test of time. Compare this to today's buidlings and structures calculated up to 5 digits behind the comma.
• or chess: from a limited number of rules, there are 10^120 different moves. In case you have trouble picturing this number (a 1 with 120 zeros), if you would make one move every microsecond since the Big Bang, you would only have scratched the surface of the 10^120 combinations by now.
• or boids, the simulated computer equivalent of birds that are programmed with 3 simple rules but behave like a flock of birds and have no problem avoiding objects, just like a real flock of say starlings. The three simple rules are: keep an as small as possible distance to other objects in the surrounding, including other boids; keep the speed equal to the speed of other boids around; try getting closer to the center of the group. Compare the computer simulation with a video of a falcon diving on a swarm of starlings. Isn't life (and science!) wonderful?

It all also links in with the fact that history does not flow but that it jumps (see Taleb et al), with "The Tipping Point" (Malcolm Gladwell), with "Thinking Fast and Slow" (Daniel Kahneman) and of course with "Chaos" (James Gleick). But back to ‘The Edge of Chaos’, finally I read a book confirming my feeling there is something wrong with the term 'sustainability' (I never liked it)! I always felt that sustainability does not exist otherwise dinosaurs would still be around. Maybe a harsh picture but so it seems, rather accurate.

Not a chaotic combination at all.

In between the reading, birds kept me entertained (no it's not what you think you dirty minds, I'm talking about our feathered friends). Mocking birds were picking up walnuts, flying high in the sky and dropping hem on the terras and street to break them. Blackbirds and buzzards were doing dogfights (with spectaular wingovers and barrel rolls). And a black redtail took his daily bath in the bird water tub. Ah Autumn can be so wonderful!

We don't have a clue, the Ten Commandments and a birthday present for me (please!)

Now that the weeks of Nobel-prize winning announcements are over, we can do a little evaluation. The Peace-prize was given to an organisation that not many knew before, a Belgian (François Englert) shared the prize for physics together with Peter Higgs, but the prize that raised many eyebrows was the one for economy. First of all, this isn't a real Nobel prize anyway as it is awarded by the Swedish Central Bank and not by the Nobel Committee.Only physics, chemistry, medicine, literature and peace were named as official prizes in Nobel's testament. Since 1968 the Swedish Central Bank prize for economy in commemoration of Alfred Nobel was instituted. So actually it is the odd one out and shouldn't actually be part of the Nobel prize-list anyway. Economy is not art (like literature), does not serve mankind (like working for piece) and it definitely is not a science. This year the economy prize went to Eugene Fama, Lars Peter Hansen and Robert Shiller. Summarising why those three won it could be done like this:

• Fama proved that "the value of shares are not predictable (in the short term) and do a random walk"
• Shiller proved that  "the value of shares is predictable on the long term"
• Hansen is an econometrist who found some complicated way how to "estimate  population parameters by equating sample moments with unobservable population moments and from that estimate the quantities..." (yes I know... I read this as "if you don't know the defining parameters of a population, you estimate some of these parameters and then calculate the quantities". Not helpful either? Let's just say if you don't know what you are looking at, you estimate what it is and from that estimation you then calculate it. Or even simpler: a statistical method to measure Fama and Shillers theory against the real prices).

But next to that hocus pocus, I think the real message behind awarding those three with the prize of the Swedish Central Bank is: "about economy - well... we don't have a clue either". It's about time someone finally admits economy is not a science. I would have preferred if the Swedish Central Bank would have just bluntly stated this and abolished their prize. Alfred Nobel would rest in piece again if they did. After all, they got it spectacularly wrong in the past. In 1997 Merton-Scholes got awarded the prize because they found a formula to put a price on options. They started their own hedge fund in 1994 using their self invented formulas, received the Nobel prize in 1997 and went spectacularly bust in ... 1998 loosing 2,3 billion $ in 3 weeks for a total of 4,6 billion $ loss.


Former Nobel peace-prize winners met this week and Lech Walesa came up with an inspiring proposal. He said we should make a new version of the Ten Commandments that would be accepted by all cultures, nations and religions: "We need to agree on common values for all religions as soon as possible, a kind of secular Ten Commandments on which we will build the world of tomorrow." That's the kind of idea that stimulates my mind! At first sight one might say that Mr Walesa is a bit too ambitious, that it is impossible for everyone to agree on ten basic rules. On the other hand, we are all human and irrespective of our culture, religion or political system, we all experience the same emotions that make us tick. In his speech Mr Walesa stated that besides universal values, the international community needs to focus on the economy of tomorrow, which definitely should not be based on communism nor on capitalism as we have it today. He is definitely right about this!
I am not going to post the Ten Commandments Moses brought back from the mountain, let's do this exercise with an open mind. the floor is yours.

Picture AFP

My birthday is coming up next moth and for those of you who are still desperately looking for a nice birthday gift, please have a look at this website: http://www.rmauctions.com/lots/?SaleCode=NY13&feature=0&sort=lot The 1966 Jaguar E-Type or 1956 Aston Martin DB2/4 MkII would be highly appreciated. I'll show you my eternal gratitude by taking you for a spin!

Pictures courtesy of RM Auctions

What's wrong with this concept and Canberras

So the drama queens in the US made a last minute deal. And they found their inspiration on how to solve the crisis over here in Europe: don't solve it, postpone it. So all what happened on Thursday was giving the can one massive kick and it rolled further until February 7. That's when the US will hit their new debt limit: 17 trillion $. For those of you who think all those Armageddon stories about the end of the financial system if the US would default (even if only technically and for a couple of days) is nonsense, here is what Jim Yong Kim, president of the World Bank, said just after the deal was reached: "the world economy escaped a potential catastrophe". So we can all breathe now for a couple of months and go through the same flirting-with-disaster again early next year. In the mean time you can be sure that some parts of the world have drawn their conclusion. I highly recommend reading what China published in Xinhua (China's official press agency): U.S. fiscal failure warrants a de-Americanized world - see http://news.xinhuanet.com/english/indepth/2013-10/13/c_132794246.htm Bottom line, the US Dollar will no longer be the reserve currency of the world.

But don't we live in a strange world where we all hope the US will continue making debt so they and the rest of the world can continue to prosper? Isn't there something thoroughly wrong with this concept?


The bad thing about going to conferences (like I did past two week), is that they can be very boring. The good thing is you get to chat to some interesting people. One lunch I found myself talking to a former RAF pilot who flew the Canberra. It is one of those post-war designs that had a very long service life. The English Electric Canberra B2 started service with the RAF 101 Squadron in January 1951. It bowed out of service 55 (!) years later when the PR9 variant did a flypast at RAF Marham on July 28, 2006. The Canberra was still used extensively  in Iraq and Afghanistan. I've only seen the Canberra once. The picture below is from an airshow in Koksijde in the nineties. The awkward nose is because this is a  T Mk 17 electronic warfare variant (apologies for the grainy picture - film roles had to be developed in those days so no 10 Mb pixel quality).

And one more picture, this is from the model I have in my own collection: a Martin B-57 which was a license-built version of the Canberra for the USAF.

Please pay us, cut your flesh or someone else's, surely they can do better than that? And a tribute.

I'm starting to get worried that my blog will rise on the anti-US hitlist... It's really not meant like that. And I'll make up for it at the end (well... a little bit anyway). But it's not me that is spewing criticism, it's Joe Stiglitz. Sitglitz is a US citizen, Nobel price winner, former chief economist of the World Bank, author of several books and one of the most influential thinkers of today. And what he said last week was not open for interpretation. He said that if a country had applied for World Bank aid during his tenure, with a financial regulatory system similar to the Federal Reserve's - in which regional Feds are partly governed by the very banks they're supposed to police - it would have raised alarms: "If we had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure."

No further comments but you can read more here: http://www.huffingtonpost.com/2010/03/03/stiglitz-nobel-prize-winn_n_484943.html

In the mean time the US is still in shutdown. This also affects the National Weather Service where about 4000 employees are continuing working but without being paid. The NWS amongst others provides the weather forecasts for airports. The Anchorage office issued last week this forecast, including a message to its government (see red box):

But then yesterday, the big whammy hit those of us who live in the eurzone with thanks to the IMF. I wrote before (here) about the bail-in becoming standard procedure in case of a bank default. Saving accounts will be stripped above a supposedly guaranteed amount of 100000,- €. The IMF has just taken this a step further and proposes to levy a one-time tax of 10% on all saving accounts of the 15 countries of the eurozone. I repeat: the IMF proposes to levy a one-time tax of 10% on all saving accounts of the 15 countries of the eurozone. The idea is not new and has been floated by other groups and a (Danish) bank CEO (by the way it seems the Danish banks are in need of > 15 billion € to meet capital rules - see Bloomberg - now I don't believe in coincidence, do you?).

The idea is included in the IMF Fiscal Monitor of October 2013 under the chapter "Taxing our way out - or into? - trouble". I copy the relevant text for you below:

So is this just some brainstorming thoughts of economists who don't have their feet in reality any more? Hmmmm, not sure. It becomes difficult to further tax industry without killing it completely. It is equally difficult to further tax the income of employers. Substantially raising the VAT would have equal detrimental effects. So what is left is that enormous amount of capital that is 'hiding' in saving accounts and is low taxed (or not at all below a certain level). If I take Belgium's example: the total amount on saving accounts is 246 billion €. Yes largely untaxed (only if your interest rises above 1880,- € / year, you pay taxes). But bear in mind I only get to keep half of my salary (50% is taxed away) and VAT is 21% so anything that I manage to save is already after our government took the bulk of my gross income (in addition my employer pays another 30% of tax on top of my gross income). Now this 246 billion € of savings, you need to offset it against Belgium's debt: 370 billion €. So a 10% tax levy would substantially lower it. Very tempting for politicians and I bet they would already have done it if they thought they would get away with it. So far it hasn't happened but the pressure is rising. Every budget control our government does look with watering mouth to these savings and you can hear them think "if only...". Of course scaling down the government expenditure would be another way of making savings but of course that doesn't even cross their mind. If you had the choice what would you do: cut your own flesh or someone else's? So read that IMF proposal again and draw your conclusions.

One of my fellow twitterers pointed me to an article on helicopters of the future (this is the kiss-and-make-up part with the US) . The Pentagon is running several projects looking a couple of decades ahead. Four companies have been selected to refine their initial designs: Bell Helicopter, Sikorsky Aircraft, AVX Aircraft and Karem Aircraft. One particular design study from AVX caught my eye. I love new technology, and gazing into the future mesmerising what might be possible is fascinating. And the US has often been the birthplace of many new technologies, so the Pentagon projects promises to be very inspiring. But when I saw the AVX, I had a flash-back.

Picture courtesy of AVX

It immediately reminded me of an iconic rotorcraft: the Gironef! The Gironef was first used in 1945 (The Island of Amoras), designed by professor Barabas. Ok ok it's from a (Belgian) comic strip (Suske en Wiske - or Spike and Suzy in English - for other languages see http://en.wikipedia.org/wiki/Spike_and_Suzy).I know both designs are not identical (double main rotor, canards, ducted fans, tailplane) but that's only because the AVX design is just a first study and needs further refinement :-).

From the album 'The Island of Amoras'

But let's be honest: if we Belgians thought this one up back in 1945, then surely the US can come up with something better than this?

This morning I heard the news that Scott Carpenter died at the age of 88. He was one of the Mercury Seven, the second American to orbit the Earth and the fourth American in space, following Alan Shepard, Gus Grissom and John Glenn. As a small suggestion  to all of you who won't be watching football this evening (like me), I suggest to watch the epic movie "The Right Stuff" (watch it here or here) which tells the story of the Mercury program. As a tribute to Astronaut Carpenter.

God bless the United States of America, Costa Europe and landing at stall speed

The greatest nation on earth is setting us quite an example. Those who want to bomb the rest of the world to democracy has again shown us their democracy actually... does not function all that properly. Their politicians couldn't agree on the annual budget, one of their basic responsibilities, and so the government shut down. It closed, no one works (except NSA, CIA, FBI, ...).
And it's not that the USA doesn't have some problems to sort out. Allow me to give you some numbers:

• With 716 prisoners/100000 habitants, they are worlds number 1. For reference, Greenland is the first European country on 25th place with 340, Iran is 39th with 284, and Belgium 146th with 100 (data from wiki)
• 15% of the population is on food stamps (see here)
• With an infant mortality rate of 5,9/1000 births, the US stands at a 51st place (Nr 1 is Monaco with 1,81 and number 2 Japan with 2,17, see here)
• Possesses 7700 nuclear warheads (see http://www.fas.org/programs/ssp/nukes/nuclearweapons/nukestatus.html)
• Still has 3150 tonnes of chemical weapons (wiki and also here)
• Government debt about to reach 16,7 trillion $ (remember those zero's?), that's 1 trillion$ more than its GDP...

Talking about that debt, in about 2 weeks it is crunch time again between Democrats and Republicans because the US will hit that 16,7 trillion $ ceiling and the politicians thus have to agree to raise it or do some drastic cuts. Maybe that's why they shut the government down? So they can't spend any more!

In any case the CEO's of America's biggest banks are worried, because half a dozen of them paid Obama a visit on Wednesday. And Treasury Secretary Jack Lew wrote a letter to Congress saying if the debt ceiling is not raised by the 17th of October the government will not be able to meet all its financial commitments, such as making payments to US debt holders, government contractors and social security recipients: “If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history.”. (see http://www.politico.com/story/2013/10/debt-ceiling-treasury-final-extraordinary-measures-97690.html). In other words: please let me continue my money printing.

But let's not be cocky about it. Our politicians are not a lot better either. Italy went through its regular political turmoil, the Portuguese government lost heavily in local elections, the anti-eurocrats won 31% of the votes in Austrian elections, in Greece - the cradle of democracy - government is jailing opposition leaders, the Spanish Prime Minister Rajoy was grilled by Bloomberg during an interview in NY about his party’s alleged role in the Bárcenas campaign funding scandal and its destruction of vital evidence relating to the criminal case (see http://www.youtube.com/watch?v=SBgCpnlHBSE#t=169) and Mutti is still struggling to form a government after her big win. So sssssh, give Merkel some time. Once she has her own government sorted, cruise ship Costa Europe will have its captain back. After all the Costa Concordia was winched upright recently as well.


If you think US politics are up for a challenge, what about landing at Yrausquin Airport in the Dutch Antilles! There's a challenge for you. Watch this video of a Twin Otter doing a perfect landing (stall warning goes off at touch down), at the 1300 ft (396 m) long runway:

Big boys birthdays

A bit of a special blog this week with only the subject dearest to us avionistas: airplanes!
Last weekend the Belgian 15th Wing opened its doors in Melsbroek. Those who don't know Melsbroek, this is the military part of Brussels National. When you take off from 25R and are sitting at the right hand, the hangars you see: that's Melsbroek, home of the 15th Wing which is the transport section of the Belgium Air Force.
It's the 3rd time in 20 years they opened their doors and the occasion was always the anniversary of the in-service time of the C-130 in the Air Force. First time I went was on May 2, 1992, then September 28, 2002 and last weekend. Below some photos full of nostalgia and some scenes of this year's event. Most prominent advance in those 20 years is the artwork! Enjoy!

20 years C-130

30 years C-130

40 years C-130

Canadian C-130J showing off its fancy props to its older Belgian brother

I wonder if that massive in-flight refuelling probe on top of this RAF Hercules doesn't make the thing nose heavy...

Also 40 years in service: Falcon DA-20

The old-Aeroflot style livery on the 15th Wing 330 remains awful

MD-900 Explorer

Didn't know our Police was doing black OPS...

It doesn't get more nostalgic than this DC-3

Up close and personnel to the business end of another DC-3 (Air France F-BBBE)

Britten Norman Islander

What am I? Another oldie, this time of the Armée de l'Air EMB-120 Xingu

One of the newest registrations on the Belgian Public Register OO-NAG Tecnam P2006T

Get used to a lot of zero's, tipping banks, floating books and off to space

Let me ask you something: how much is a quadrillion dollars. Don’t say a lot of money, that’s too easy. How many zero’s does it have? 9? That’s a billion. 12? That’s a trillion. 15 then? Yep. 1 quadrillion looks like this:

1000000000000000

Why do I ask this question? Well let me answer that by asking you another question. How much is the Gross World Product (GWP)? (GWP = total gross world product = the value of everything we all together produce over a year). The IMF (and they should know) puts it at 72 trillion US$ at market exchange rates (see p 149 of the April 2013 IMF World Economic Outlook). That’s a lot. You also remember what brought the banks down back in 2008 (this weekend was the 5th anniversary of Lehman’s fall): the wonderful world of derivatives (like Credit Default Swaps) and too much exposure. The current estimates of the total global derivatives markets range from 700 trillion (estimate by The Economist in 2011) to 1,2 quadrillion US$. These are estimates because no-one really knows. Scary hu? Why does no one really know? Because derivatives are fictitious. It doesn’t really exist. It is not adding any value to the economy or the real world. I give you the Wikipedia definition which is clear enough: “A derivative is a financial instrument which derives its value from the value of underlying entities such as an asset, index, or interest rate—it has no intrinsic value in itself.”
Some claim however that these numbers are a gross exaggeration. In fact these derivatives “only” have a market value of 21 trillion US$.
A couple of remarks. Even if true, 21 trillion still is an enormous amount of non-existent value. But it isn't true. Last week the US Office of the Comptroller of the Currency published its quarterly report showing that just US banks hold 231 trillion $ in derivatives! JP Morgan is champion with 70 trillion$! The horror literature can be found here: http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq113.pdf
Secondly if the global derivatives market is 700 trillion and the “real” market value is 21 trillion, someone has used a rather big leverage... In fact the real value is only 3% of the total market (at the conservative estimate of 700 trillion). So what might you conclude? Well, when the derivatives market shrinks with a mere 3%, the complete underlying real value is wiped out and the whole system comes crumbling down on us. When this happens can we afford it? Well... no. The derivatives market is 10 times the value of everything humans produce during 1 year!

I was reminded of this by an interview I saw last weekend and a presentation. Throughout history numbers with 15 zero’s have not been uncommon to the man in the street. In November 1923, the American dollar was worth 4210500000000 German Mark (that’s 4,2105 trillion German Mark). So you needed 4210 of these notes to exchange them to 1 US$ (picture courtesy of Wikipedia):

Now, the presentation I saw gave some numbers of the very top rich, the 0,1%. These are quite fascinating and are for the US but the same happened all across the world:

1970      1% were worth      10% of national income

Today    1% are worth         20% of national income

Today    0,1% are worth      8% of national income

In 1992, the total Forbes 400 list (400 wealthiest people in US) represented a wealth of 300 billion US$.

Today this is 1,7 trillion US$.

What does this teach us? Get used to a lot of zeros. The richer are getting a lot richer, fast. Inequality is rising (fast). For the Taleb aficionados (like me) this is Extremistan to the extreme (and you know what happens next).



In other news, Dijsselbloem (head of the Eurogroup) spoke before his turn (again), when addressing the European Parliament week before last, stating Greece is in need of another rescue plan. The warning was taken over by the IMF and Moody’s last week. In the mean time almost unnoticed, Slovenia liquidated two banks (Pro Banka and Factor Banka). The Government seized the institutions to prevent what they fear could otherwise have been a deposit run. And the oldest bank in the world, Italian Monte Pascchi, is in critical need to raise 2,5 billion €. Commenting on Reuters one investment banker described the chances of success like this: "There is no chance on the planet that they can raise [this] in 12 months... they are heading towards nationalization”. The capital raise equals the current entire market value of the bank. So the Italian state is likely to have to come to the rescue which means a repeat of the Cyprus experience (remember that template-which-wasn’t-one “exceptional-case-that-will-never-be-repeated-again”). This also means that bondholders AND depositors would be drawn into a bail-in (for deposit holders above 100000,- €)! Also last week Dijsselbloem added that Europe should ensure bail-ins are done in the right way by states (to be understood as 'by confiscating depositors' savings'). See here for the EU’s law that will be adopted by year-end legitimising the bail-in principle based on the one-off-special-never-to-be-seen-again-case of Cyprus: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/137627.pdf



Over to some fun! Embrear posted this video about a floating book it sent to selected potential customers for its Lineage 1000. I would love to get a copy as well (no I am not in the market for a Lineage 1000).

As for the aviation part there is no contest with Virgin Galactic’s successful test flight demonstrating all technical mission phases in one single flight for the first time:

Questions I like to see answered, Noam Chomsky, designed by hand and crash tests

Seems that nor the politicians nor the media are asking the right questions about Syria, let alone answer them.
So in an attempt to help them out here is what I like to have answered (truthfully if possible):

1. Can we believe the US this time when they claim they have irrefutable evidence?
2. Is it really so that the US and some European countries are appalled that chemical weapons have been used?
3. Or is it just a good excuse and is there a different agenda (gas pipeline?)?
4. If chemical weapons are so inhumane why has the US not disposed off its own chemical weapons yet? (It is working on this, but they still have a stockpile left according to wikipedia: The Chemical Weapons Convention signed in 1993 stipulated a deadline of April 2012 to fully dispose of all chemical weapons, the US missed the deadline and the Pentagon indicated that they are looking at a 2023 target!!! http://en.wikipedia.org/wiki/Chemical_Weapons_Convention)

I am sure that the media will keep us informed over every nitty-gritty detail leading up to the US Congress discussion and vote on Syria. Whilst you are watching that theatre, bear in mind the words of Noam Chomsky (he doesn't need an introduction - but for those who have never heard of him see http://en.wikipedia.org/wiki/Noam_Chomsky). He made some remarkable statements during his keynote address at the Deutsche Welle Global Media Forum in Bonn, Germany, 17 June 2013: “In the past, the United States has sometimes, kind of sardonically, been described as a one-party state: the business party with two factions called Democrats and Republicans. That’s no longer true. It’s still a one-party state, the business party. But it only has one faction. The faction is moderate Republicans, who are now called Democrats. There are virtually no moderate Republicans in what’s called the Republican Party and virtually no liberal Democrats in what’s called the Democratic [sic] Party. It’s basically a party of what would be moderate Republicans and similarly, Richard Nixon would be way at the left of the political spectrum today. Eisenhower would be in outer space.”


Now, today's blog may give you the impression I am US-basing. That's not the intention.
As a small token of appreciation, I include two movies. The first one has a big wow-factor for me. In my student days as engineer we were still drawing on paper when designing something. We also had some courses on computer drawing but they were rather rough. Elon Musk (the founder of Paypal and current CEO of Tesla and Space X) posted a movie where they design pieces of a rocket in 3D with hand gestures (!) and then print it in 3D. He speaks of a revolution and that is exactly what it is. (The more critical reader would say that Elon is a born South-African, so this is not an example of how great the US is, but Elon's businesses were started, nurtured and grown in the US, so see it as a tribute to the good-old American Dream).

The second movie is posted by NASA doing a crash test of a helicopter on August 28. The research is aimed at improving the survivability of helicopter occupants. A very and much needed, noble goal. I am particularly intrigued in this test as I worked in car industry for 12 years, mainly dealing with car safety and have witnessed a lot of car crash tests and in my current job, I am amongst others responsible for helicopter safety. So this really is an interesting combination of my two worlds! I would love to see the readings from those dummies. Especially the two dressed in white (as they only had lap belts!).

You probably guessed the song that has to go with it: Crash Test Dummies - Mmm Mmm Mmm