by guest blogger Ken

Howdy All!  I’m back from a long roadtrip to the Lunar Exploration Analysis Group (LEAG)/International Lunar Exploration Working Group (ILEWG) Conference on Exploration and Utilization of the Moon (ICEUM) / Space Resources Roundtable (SRR) conference in Cape Canaveral, Florida, and boy is my rear-end tired. [Note: I was busy and lost track of this post, but have just finished it off.]

This was my first two-week vacation since I started at the bank over five years ago, and so of course I over-loaded it with space stuff.  After taking the car in to the shop for a road-trip check-up, I hit the road heading east.  I got stuck on 80E out of Dallas and lost time there, so I decided to skip the casinos in Shreveport and turn south to see how far I could get Friday night.  The roads were beating me up, so that ended up being Natchitoches, which name reminded me a lot of Nagcodoches here in Texas.  My brother-in-law laughed when I pronounced the word as one would have expected from the spelling, and indicated that it’s been cajun-ified into something like nack-eh-dejz.  Next morning was the drive south then east, hitting Baton Rouge and then Nawlins.  I was quite disappointed to see that so much damage remains untended and visible from I-10.  Stennis has a huge buffer zone, and I’m learning to appreciate the extent to which NASA facilities often serve as nature habitats, protected from the constant onslaught of commercial development and allowing Mother Nature to continue her way as she sees fit.

I never realized that Mobile had such a striking skyline, although the tunnel underneath downtown and Mobile Bay precluded close examination from the highway.  My goal was to make it as far as Pensacola, but once there I just kept on trucking, blowing through Tallahassee and finally giving up for the night outside of Jacksonville.  This left the next morning as a nice leisurely drive down the coast through Titusville and to Cape Canaveral.  Plenty of time to visit the Visitor’s Center at KSC and see if I can find any good souvenirs.

Memories came flooding back of the last time I was driving around the area, back in 2002 when the Goddard NASA Academy did their field trip to the center and got the special behind-the-scenes ultra-exclusive tour of the facilities.  Things like downlink equipment and low-temp adiabatic demagnetization refrigeration dewars for ultra-low-temp experiments, interviews and presentations with the guys doing the plant-growth research in the isolation chamber at the Cape Canaveral Air Station, and an excursion right up to the fence surrounding the shuttle launch pad (more on that later).  Some of the businesses were still there, others weren’t.  Slowly the layout of the roads came back to me, and I had the freedom of exploring in my convertible.

I got settled into the hotel on Sunday, and Monday got things started with the Young Lunar Explorers (YLE) event at the Florida Institute of Technology.  When I first walked in there were more greyhairs than kids, but the balance shifted after lunch.  Effectively it was a bunch of presentations summarizing what’s going on in Moon research at the moment, and why they (the youngsters) should be interested.  In addition to seeing old friends like Bernard Foing (SGF), Bob Richards (ISU) and Dave Dunlop (Moon Society), I also met some new folks, like Marianne from CSA (an ISU alum and Archaean Geologist), Anna from Poland (an asteroid expert in training), Ludivine from Paris, Arthur from Canda and a student and RASC-ALly guy at MIT, and Trond from Norway, another ISU alum who had organized the YLE event.  I was also gob-smacked to learn that Marianne actually knew about my website, and had recommended some of the Moon titles for acquisition by the CSA library.  I learned more about the YLE over the next couple of days, bringing back more memories, these of civic work I had done back in NYC.

Since I was a single guy and new to the city, I wanted to meet chicks, so I figured that getting involved in community service would be a good way to meet like-minded, civic-virtue oriented women (and as is usually the case, the ones I truly desired wouldn’t have me). It was, sort of. When I first got involved with the United Nations Association (UNA) through their NYC chapter, it was all greyhairs, and they knew it. I quickly ended up on the BoD of the NYC chapter, but the ossified structure left little opportunity for outlets for my kind of creativity, so I got stuck with doing the newsletter. Soon thereafter, I was invited to the charter meeting of a group called Rotaract at the UN. Rotaract is a construct of Rotary International and is supposed to stand for ROTARy in ACTion. It’s a recognition by the organization that its membership must be constantly renewed, and boring rubber-chicken luncheons are not necessarily the best way to do that. The young need activities and projects to keep them busy and let them think they’re making a difference in their community (which they are). So Rotaract provides a mechanism to attract young professionals that can be evaluated and groomed for leadership in the Rotary organization. Through Rotaract at the UN I was able to participate in such projects as collecting books for orphans in Haiti, volunteering for Model UNs for inner-city youth, planting flowers in Morningside Heights park, playing Santa Claus for mentally disadvantaged youth in Harlem, and cleaning up nasty drug paraphernalia in a park in the Bronx.

Once UNA did a membership survey and realized what the average age was of their membership, they quickly bought into the idea and formed a UNA Young Professionals Group (YPG). (and also encouraging members to bequest donations to the organization in their will)  So how in the world does this all tie into my travelogue?

It looks like Lunar Explorers; (Lunex) is recognizing the same demographic phenomenon and is trying to cultivate a Young Lunar Explorers to cultivate and nurture the next round of Moon leaders for the organization.  More and more young people are getting into the excitement of the possibilities for science and engineering challenges that await us on the Moon, and things like YLE allow the establishment to, in theory, pick and choose the best leaders for tomorrow.  The caveat being of course the political interplay of the agendas and interests of those who make the decisions of who moves up the ladder.

This also ties into a phenomenon that I’ve mentioned before.  There are going to be more and more situations where individuals in more senior positions in whatever hierarchy (corporate, non-profit, academic, whatever) will vacate their positions without having groomed a successor, meaning that there will be a lot of Gen Xers, and increasingly Millenials, who will be moved into positions of authority for which they may be capable, but not necessarily prepared, because no one else can be found to fill the seat.

Moon studies is a field that has been so neglected for so long that it is ripe with opportunity.  So many folks bought into the Mars mindset that there is little competition in the Moon playground, and folks who are focused on Planetary Geology and Martian mineralogy are not necessarily the ones we need to be turning to find Lunar selenologists.  Rather, we need to train them from the ground up to maximize the value they can return from going back to the Moon. Conferences like this one help to find out who that talent is.

Tuesday was the opening of the main program.  NASA was up first, so I slept in (since I’m on vacation), but made sure to make it to Margueritte’s (whom I met at STAIF 2001) presentation on the Outpost Science & Exploration Working Group which has been renamed as the Optimizing Science & Exploration Working Group.  One chart in particular was rather ugly, trying to show how the different groups are communicating their requirements and responses to each other.  Then I spent some time rounding up autographs for some of the books in the Lunar Library, chatting with some folks like Christian Salaberger (from STAIF 2001), Wendell Mendell (LEAG conferences) and others (and learning some really cool info that I stupidly agreed to embargo in my blogging [this was a talk with Dennis Wingo, who did the restoration work over at MoonViews), and caught the tail end of Clive’s presentation on the LEAG roadmap to date.  Interestingly, Commercial On-Ramps were identified throughout the roadmap, and a suggestion was made to identify international on-ramps as well, but I didn’t see any kind of identification of youth on-ramps into Lunar exploration efforts.  After lunch were the international presentations.  The ISRO presentation was particularly interesting, and I was happy to hear that they recently got approval (and money) to get started on their next step, a rover.  In this regard they seem to be following a path similar to China, and kind of like a digested version of the first 50 years of space exploration:

1) Orbiter
2) Lander/Rover
3) Sample Return

Even the mention of sample return seemed to generate some excitement, and one question on how far along ISRO was in that regard.  (It’s at the conceptual level).

Late Tuesday afternoon, I was trying to figure out how to flirt with Anna (since she had an Audrey Hepburn-esque quality and style to her that I just can’t resist), so I decided to get her input on my various meteorite pieces that I use for public outreach.  While I have a couple of nickle/irons, my genuine fake Moon rock sets also have some meteorite pieces cut from larger rocks, so you get to see inside the meteorite.  One is identified in the box as being ‘meteorite’, while the other is ‘meteorite (stony)’  Well, stony chondrites, she informed me, with one being a lot more brecciated than the other, which has metal inclusions.  Some of the other youngsters gathered around and we went through the different stuff in my little bag of goodies, like aerogel and shuttle tile material.  The YLE organizers quickly realized that show & tell is a great way to do outreach, and started trying to figure out a way they could write that into their recommendations.

Wednesday morning is spent looking at dust and some mitigation strategies.  I keep hearing about Fresnel lenses, something that hasn’t really come up in prior conferences.  The first one I saw talked about using reflected sunlight (and a Fresnel lens) to focus sunlight and melt the regolith.  This talk elicited a large number of questions, including the nuke-head who went on about how us youngsters looking at this stuff to consider using nuclear power for all their Lunar needs.  It’s a nice sentiment, but a little pragmatic reflection reveals the difficulties in launching a nuclear power source through the Earth’s atmosphere.  It’s a lot easier to launch Solar panels.  Additionally, the particular study was to look at low tech, high-ISRU solutions, and flying in a nuke plant doesn’t really count as ISRU.  It’s certainly an interesting alternative to the microwave sintering you usually hear about.

Ms. Clegg gave an impressive presentation on the damaging effects of debris kicked up in landings and launches. Rather impressive use was made of shots of the destruction to the fence around the launch pad when the recent shuttle lift-off peeled away the sides of the flame trench. Big old holes made by large chunks of debris that went through the fence like tissue paper and ended up far, far away. Folks seemed happy to hear that study of old videos from the Moon gives an estimation of the angle at which the dust is blown away during landing and take-off operations tends to largely lie between 3-6° above the surface.  This lends support to the use of berms around the landing site and along the approach corridor. Ms. Tranfield gave a really interesting talk on the generation of hydroxyls from interaction of atmosphere with free-floating regolith.  She was well occupied with listeners after that talk, and I was pleased to learn she was an ISU alum.  I made sure to point out to her the section in the very first ISU project on Lunar medical facilities (something which could probably use an update, hint, hint).  I had the book with me because I was getting Bob Richards’ signature on the front page, one of a number of books I had folks autograph for the Lunar Library.

After a long lunch I came back to more presentations on the kinds of in-situ research that could be conducted as part of our return to our Moon.  I say our, because the international presence at the conference was pronounced, especially with lots of NASA folks not showing up because of the curtailment on conference spending.   Which is idiotic because this was exactly the conference that the up and coming NASA Lunar scientists needed to be at to network with their global colleagues and figure out strategies for Lunar science.

By Thursday you could tell that the conference was over the hump and heading towards the conclusion.  Not to say that there weren’t lots of good presentations.  Notable was the dinner where the YLE was recognized, as were a number of other folk.  Bernard tried to get us to sing ‘Fly Me to the Moon’ but the kids all chickened out.  I suggested to Bernard that he have lyric sheets on hand next time around.

I missed most of Friday morning driving Anna to the airport down in Melbourne (boyfriend in Poland, blah, blah, usual stuff), and by noon it had pretty much wrapped up.  I spent the rest of the afternoon visiting the Astronaut Hall of Fame and picking up some souvenirs from The Dinosaur Store. Saturday was the drive down to Fort Myers to visit relatives, and after a relaxing Sunday morning at the local Calusa Nature Center it was time to hit the road home to be back in time to vote. Sunday turned into a bizarre time-travel experience, as I spent 12 hours on the road, but only 10 hours passed on the clocks. I managed to make it as far as Wiggins, Mississippi before crashing for the night, and had a nice leisurely drive into Dallas on Monday. Tuesday I voted, Wednesday I rested, and Thursday it was off to the airport to fly to Huntsville, AL for the NSS Board of Directors meeting. Since things didn’t start until Friday afternoon, I spent the morning at the U.S. Space & Rocket Center, which I hadn’t seen since my trip to Adult Space Camp back in 1999. The Saturn V layout in the new Davidson Center is much like the one at KSC, and they have their work cut out for them filling out the space around the rocket. I made sure to hit up the Gift Shop (30% off everything until Dec 23rd! Buy something to donate to a local toy drive!), and stopped by the Educator Resource Center to see if I could sweet-talk them out of some goodies for the Lunar Library. Most of the BoD stuff was confidential, but it was an interesting behind-the-scenes look at NSS. I have to say I’m pretty positive about where the organization is going, and I’m also happy that a consensus seems to be building that my 2007 ISDC was one of the ‘good’ ones. The black hat is, of course, legendary at this point, and I’m probably going to have to start wearing it to future space events.

That wound up on Sunday, then it was back to the bank for another week of slogging through property tax records. Then for Saturday it was another road trip, this time to College Station for the SEDS SpaceVision 2008 conference. My job was to sell Space Settlement calendars and explain what it is that NSS of North Texas does. I did sell a few calendars, and had packs of them enthralled with my displays and meteorites and aerogel and free handouts and Chinese Moon globe. They were plenty curious about our Moon, and I think a few of them started to look at our Moon in a new way. It’s good to see so many folks curious about our Moon, and I do wonder if the little Moon niche I’ve cozied myself up into isn’t actually an enormous well-spring of opportunity. Most of my generation were captivated by Mars in the 90s, and that’s where you still find the predominance of interest in my fairly paltry generation (half as many, roughly, as either the Boomers or Millenials). The Millenials, though, weren’t enraptured by the siren song of Mars, and they are more than aware, post-Columbia, of the limits of our space technology. For them the Moon makes absolute sense as a near-term target, and they’re fascinated by seemingly obscure topics like Lagrange points (which have been around for a while). Fuel depots and cislunar infrastructure are easy to understand because of what they enable. Tearing up the asteroids instead of our own planet to obtain resources seems a more pressing objective than the scientific search for potential traces of past non-terrestrial life on Mars. Still, they do understand the all-eggs-in-one-basket argument as well. And the fact that the space industry is one of the few fields left in which the U.S. has a competitive commercial advantage (barely). In the end, I think there is a lot of Moon potential awakening out there, it just needs to be cultivated.

Which reminds me, my next task is to prepare a Generic Universal Moon Presentation (GUMP) to give at the Science Place Inquiry Zone the Saturday after Thanksgiving for an NSS-NT event where I’ll be speaking about our Moon, and which I can post to the Lunar Library for everyone to use. Copyrights are going to be tricky, but I don’t want to rely on NASA stuff alone. Never a dull moment out here in the Selenian Boondocks.

Wow, so all of the chickens are coming home to roost and those who created the problem want to fob the guano off on the public at large. Anyone who has been reading my postings since the beginning of the year knows how I feel about the situation, especially since I work at one of the places that cleans up messes. Now I hear the government wants to become a competitor, and they’re willing to pay “above-market prices” with your money for assets that we invest the time and effort to determine a real risk profile for and appropriate return and bid accordingly.

But that’s not what I want to talk about. What I want to talk about is how the space field is likely to be affected by all of this. Please be advised that this is free-flow analysis, with no intention of taking position or making judgment. I just want to see what the facts tell us.

Looking at NASA and the government side, I don’t see good things. The government budget is going to face increasing pressure from debt service, as most gov’t borrowings are shorter term, and so will follow interest rates up much more quickly than if it were longer term debt. I don’t remember if it was David Stockman who got the ball rolling on that process, but the practice has been around for a couple of decades. In my view debt needs to be tenored against whatever obligation by the gov’t/asset of the people that it is financing.

There are a lot of those obligations by the gov’t that are going to be coming due by the time we get to the 2020 time frame. The Baby Boomers seem to have a strong predilection for retiring early, which moves forward in time the obligation pressures. I hate to say it, but I think we need to fundamentally rework the way we go about social security. The cap on contributions needs to be lifted immediately, and the retirement age set at 70 with no early retirement (except for things like ‘differently-abled’ and survivors), crawling up to 75 by the time I would get there. I’m at the front end of Gen X, for the record, and really not looking forward to inheriting the standard of living of my grandparents by the time my generation rolls into power.

Medical entitlements are also a problem area to address, and I long ago gave up trying to understand how that medical stuff works. I just basically don’t go to the doctor unless I really need to do so. It needs to be fundamentally reworked into a General Practitioner-oriented system (i.e. networks of family doctors), not an ER-driven system. How to do that I have no clue.

These two items are the biggies facing our government, coupled with paying down the debt, that are going to put extreme pressure on discretionary spending. I think the military is going to have to do exactly what Ron Paul said and scale back our presence overseas, though I don’t believe they’ll end entirely and we’ll still have regional facilities. But the days of empire are over.

I think the military will continue to have a significant presence in space operations. Imagery and communications have proven key to having global warfighters, especially special ops. These two should do fine whatever happens. On the NASA side, I think vested interests will try to continue the cash flow to ATK et al for ARES for as long as possible. Hopefully it won’t be for too much longer, so that we can start applying those cash flows to alternate solutions and beefing up the science again. We need to look at alternative solutions.

By alternative solutions I am of course referring to the private sector. In two forms – transportation and finance.

In transportation the private sector has to show success. That really hasn’t happened yet, and so the investment capital is sitting on the sidelines. I think suborbital is interesting, but I think the real money is waiting on an Earth-to-LEO solution to get into the game. I’m hoping that Boeing and LockMart have aces up their sleeves, but I’m not counting on it. I think rather they’ll wait for some opportune moment, like when NASA gets delirious and asks American industry for transport to orbit just like everyone else. Then you might see some miracle solutions, but otherwise don’t hold your breath. That leaves SpaceX, and I’m waiting for the IPO, as I’d certainly like to have some skin in that game.

If the transport problem can be overcome relatively quickly, then I see micro-g science payloads as the next field to open up. This is an area where the U.S. can excel, and should be pursued vigorously. Again, investor money will sit on the sidelines until there are a few successes, but once the Bigelows are up and running things should proceed fairly smoothly and added investments will bring added successes. Some are skeptical, but I think there is promise in things like micro-g foamed metals.

Y’all have to realize, there is an enormous, huge amount of cash that is sitting on the sidelines as things unfold, and looking for something good to invest in. Space is something good to invest in that will, over the long term, have innumerable benefits to those of us stuck here on Earth. The problem is how to make that something to invest in now. That’s where crisis = opportunity. Again, it all revolves around transport of humans to LEO. For the military it makes sense to have some sort of…never mind, I don’t think it’s a good idea to publicly speculate in such areas. For the private sector it provides access to leased Bigelow facilities. For NASA it means continued access to the ISS, and staging for future trans-LEO missions.

Over the near term a focus on things like in-space infrastructure that enables more than just NASA, and independent access to orbit because you have multiple sources is really what is required. NASA can certainly help by providing industry-useful services like universal docking standards, space comm protocols, safety measures and standards, and transport to orbit purchases.

Successes in the space field will attract investment capital. Translating that into an institution-friendly investment vehicle is a tougher call.

Let’s take a stroll down fantasy lane of how that might come about, which touches on some of the things I’m going to talk about later…

Banker Ken sets up the U.S. Bank for Space Development. The U.S. B.S.D. is woefully under-capitalized (because I put the initial set-up on my credit cards), but clever fakery makes it look like a million bucks. Sucker money men (a/k/a pension and mutual funds) stroll in and they get the pitch. B.S.D. is structured through various holding companies, LLCs, S-Corps, and SPVs, and will invest in/make loans to the space sector for the purpose of providing a steady return on assets comparable with money-center banks. Here are various models of how investments would have fared had we had your money invested in them, and so we can assure you that these projections provide a reliable indication of what your future return will be. You can use them when preparing future financial statements…we will. We have some friends in the appraisal field who will be more than happy to provide “As-If” appraisals, and so we can have these companies valued as if they were actual space-faring companies engaged in space trade. With bank status B.S.D. will have unique access to global capital markets, and so will be able to borrow money to leverage your returns. We’ve got a Century Bond issue lined up that pays interest quarterly based on money-market rates, which are almost always the lowest, so we’ll be able to provide that leverage at low cost throughout the period of your investment. Our lawyers are working on special papers to get B.S.D. recognized by the UN, so you can count on special tax treatment to boot.

Through savvy investment, Banker Ken rides the front edge of the growth curve into space. New industries are enabled. Men and women provide for their families while building a better future for everyone in space. Kids are inspired to pursue scientific and technological futures so that they can fly rings around Uranus. Our basic electrical needs are eventually satisfied by Solar power sats. Broadcast sats are finally big and powerful enough to punch through the storm clouds so you can watch the game on your satellite dish. (If you’re going to fantasize, fantasize big)

In reality, space is quickly falling by the wayside as the attention of America is led by the media from focus to focus. Space is not seen as providing solutions, nor is it yet a real investment opportunity. It could be one, if America can be convinced that the space industry is one of our hopes for a better tomorrow. They need to see evidence. To the extent these successes can be achieved over the next year or so then an effort should be made, especially in the dark times of what is to come.

Do you want to know what the government bail-out is going to be investing your money in? At above market rates? Here’s the deal on what’s going down:

[Note: What follows is not pretty, and so not for the faint of heart]

Over the last five to ten years, actually maybe even 15+ for the early adopters, private equity and hedge funds have been doing leveraged buy-outs of small to medium-sized U.S. companies. Leveraged because they borrowed the money to do it. How did they do that? Easy! Let’s use a hypothetical example.

I’m Private Equity Guy (PEG). A bunch of rich folks have given me a bunch of money to invest in a way that gives them a significantly above average return, and they’re not too concerned with the particulars. I use part of that cash to buy a business. This business is a…let’s say a resort, located in a resorty part of the U.S. or it’s territories. I pay the owners a nominal amount to cash out their equity position. I get my good friend Helpful Appraiser Guy (HAG) to get me an “As-If” appraisal on the property. With the existing hotel and golf course it might be worth $100Mn, which I’ve just given the owners.

If we add a another golf course over there, build another hotel or two, and flesh it out with some high end houses and boutiques and concierge services, the property might be worth $500Mn, says HAG. I take this $500Mn “As-If” appraisal from HAG to Bank Underwriter Guy (BUG) who puts together a loan for $250Mn with a nice five-year term and not too bad interest rate. At a 50% Loan-to-Value (LTV), it’s an easy sell for BUG to put together a Syndicate of Lending Investors (SLI) that includes other banks and bonds that invest in Collateralized Debt and Loan Obligations (CDOs and CLOs). BUG only has to hold a small portion of the loan on his books, especially with all of the demand from the CDOs that are being snapped up by the big investment pools like mutual and pension funds.

So as PEG, I’ve just bought a company for $100Mn, and borrowed $250Mn. My exit strategy is to sell the equity about four years down the road, well before the debt comes due. Having learned from the Enron Error (wherein Enron bought companies and reported modeled profits even if the companies weren’t performing to the model), I promptly dividend $150Mn of the loan to my Private Equity Fund and park the cash on my balance sheet. It is now protected by the corporate veil, which I like to call a Leveraged Equity Grab (PEG-LEG).

Over the the four-year life of the $100Mn investment I am now assured a 37.5% per annum return ($150Mn/4 years = $37.5Mn/$100Mn investment = 37.5%, easy because the cash is already in my bank account, so I don’t have to worry about the company actually earning it, SLI has to worry about the company actually earning it), which is well above average. Another way to look at it is that I retrieve my initial investment and provide a 12.5% return, but with a bonus of the equity sale cash after four years.

The problem is that the cash from all the looted companies is burning a hole in my balance sheet, and I’ve got to put it to good use. Check it out though. Our friendly investment banker is willing to sell us these Credit Default Swaps. We can use them to hedge our investments because we can bet on bonds issued by our acquired companies’ peers (and so should perform similarly to our investment) and we don’t even have to own the bonds! We can just buy the insurance on whether the other company is going to go belly up, and we can get intelligence on that through our acquired company in that industry.

Around 2006, perhaps before, the CDS market became huge. Not just big, HUGE! I’ve seen the number $1.2Qn bandied about (that’s $1.2 quadrillion in notional value, $1,200,000,000,000,000, netted would be much less). I was staffing the trading desk and had to collect bond prices frequently. Bond trades and quotes were few and far between, whilst CDS quotes were everywhere, from everyone. Now let’s get this straight. This is like ME buying insurance on whether YOUR house burns down. I need have no association with you whatsoever. I just buy the insurance. I consider purchase of CDS default protection for a bond not owned to be speculation. The regulators completely abnegated their duty in this regard.

This is the heart of darkness of the problem. I’ve been trying to think of a good way to describe it, since Jon says most of this stuff is going right over his head. Let’s try this, all examples are entirely hypothetical:

Murphydyne Space Systems (MSS) issues a $1,000,000 bond to finance a new launch pad they can also lease out to other companies for launch use. This would be considered good debt if the company is credit-worthy. Pension Fund X (PFX) likes MSS’s prospects and buys the entire debt issue of $1Mn. PFX is not entirely comfortable with the space industry, and so decides to swap out the risk of MSS defaulting on the $1Mn bond. PFX goes to Investment Banking Dude (IBD), who happens to know someone who is willing to take the risk, Counterparty X (CPX). CPX sells PFX a Credit Default Swap (CDS) for an initial and periodic premiums. This comes out of the interest, so the return that PFX is getting on the bond investment is lower, but the principal invested is protected from MSS not repaying the bonds.

This is the classic definition of a hedge, where the focus is on keeping the principal intact. There is absolutely nothing wrong with a bondholder buying insurance to protect their principal, and it is often considered a smart thing to do (until the counterparty can’t pay up).

Here’s the ugly wrinkle: You do not need to own the underlying bond to buy the insurance. So IBD now has a structure he can use to sell additional CDS on MSS bonds. In my view, if you do not own the bond from which the CDS is derived (making a CDS a derivative), then you are speculating. IBD doesn’t care, he just knows that investment professionals want to buy CDSes on MSS debt, and so hooks them up with counterparties (for a fee). In this way, Investment Guys A, B, C, D, E, F, G, H, I, J, and K (IGA, IGB, you get the picture) also purchase CDS protection on MSS paying the $1Mn bond. Hapless Insurer A (HIA) happens to have sold all 11 of these CDS contracts because the money was so good, and MSS’s prospects are bright.

If MSS goes into BK (forced or voluntary) and technically defaults on the $1Mn, then CPX pays $1Mn to PFX. HIA pays $1Mn to each of IGA through IGK. Total cash flows associated with the MSS default? $12Mn on a $1Mn bond.

Because CDS are unregulated (thanks to our compliant government employees of both political parties), there are no requirements that counterparties actually prove they can pay out on the claims, and any number of investors can take a position on the viability of a debt instrument. In effect, the risk of MSS’s default on their penny-ante $1Mn bond has not been spread around, it has been magnified. Well, leveraged from the point of view of the investors, who love that juice to their returns.

Poor HIA is driven to its knees by having to pay out on its no-longer-contingent liabilities. It goes into bankruptcy. Here’s where the heart of darkness descends into the brimstone depths. Thanks to the way that the rules have been rewritten by our compliant legislators of both political parties, when HIA goes into bankruptcy that triggers a credit event on each and every CDS contract that HIA has written, requiring them to be netted out and settled on the spot. Since derivatives get special treatment in bankruptcy, they get first dibs on the cash and assets of HIA. Given the financial diarrhea that would be triggered, lots of little people like creditors and equity and policyholders would get nada.

Not all of the CDS settlements would go against HIA, and some would go against various counterparties, driving them into bankruptcy, which then triggers a credit event on that counterparty’s other CDS contracts. Each time a counterparty runs out of capital, a new round is triggered. After settling over several rounds a company that might otherwise have done okay will find itself teetering. Rather than mitigating risk in the market place, exercise of CDS once again magnifies the risk in the market. That these instruments are unregulated is less disturbing only when compared to the fact that they were willfully unregulated, and even enabled (such as by the BK provision).

It was fun until the market started drying up because the smart money started to figure out that something was up and starting parking more and more money into cash trying to stay clear of the shenanigans.

Luckily, says PEG, our good friends the regulators are ignoring the off-shore commodity exchanges setting up shop on our shores but reporting to European and Middle Eastern regulators, so we can play in that market and no one will know. Let’s go!

Meanwhile, employees of small sold-out company are starting to notice a dip in attendance, as gas prices start climbing. Management of small sold-out company is starting to freak out about servicing the debt. $250Mn in debt on $100Mn in assets (maybe) is a 250% LTV, and SLI is starting to wonder how he’s going to get repaid on yet another loan.

Oops, folks are starting to sniff around the oil markets. We need to go somewhere else, says PEG. Hey, we’ve got all this CDS protection on financial firms, let’s go do some naked shorting of the financial firms to drive them out of business, and then the idiots on the other side of the CDS will have to settle up, making us even more money! Personally, I consider naked selling to be a financial weapon of potent force. That the regulators would allow people to sell things they didn’t have to deliver T+3 is an enormous risk in the market, irrespective of the enormous return potential for the speculator of a naked short.

If I were going to scam the market using these tools, here’s how I’d go about it. Find a publicly-traded company and buy a CDS on their debt, then go into the market and sell naked shorts on the equity. The downward pressure on the stock price creates uncertainty about the viability of the company, which drives up the cost of protection from debt default. I sell my CDS at the higher market price for a profit, and use the cash to cover my naked shorts, profiting there as well. Since both transactions are unregulated and I don’t report any financials or holdings, there is no way for the market to know that it has just been manipulated. How could I not have seen this! This is brilliant! Dang I wish I had some capital to play with and a complete absence of any kind of moral foundation whatsoever.

Meanwhile, small sold-out company can’t make it in the economic downturn and has to file for bankruptcy, leaving crumbs to the creditors (unless small sold-out company was stupid and played with derivatives in which case q.v. brimstone depths, supra). All of sudden CDOs that had bought the debt of small sold-out companies are not getting payments, and have to be re-valued down to the current Net Present Value (NPV) of the demonstrated (i.e. made their last payments) remaining cash flows from the instrument. Remember, CDOs and CLOs are bonds and purchasable loans collateralized by pieces of other bonds and collateralized loans; your last auto loan would have ended up as a piece of a CDO. This revaluation translates into lowered returns and investment values for all of the mutual fund investors whose investments were poured into these vehicles. That’s where this mess hits middle America in the pocketbook. These are the investors who took the risk on repayment of the loans taken out for the PEG-LEGs.

The BUGs ended up not being able to unload the worst tranches of these structured debts and had to keep them on the bank’s books. The bank being forced to write down capital for all of the loans it underwrote suddenly going bad hurts the balance sheet, making the company look weak and subject to feral market forces. They effectively got left with the bong tar (the piece that doesn’t get paid first if things don’t work out), and that’s what the government wants to spend above market rates buying with your (and my) tax dollars.

I find the whitewash kabuki that’s going on in Washington to be an absolute farce, but it doesn’t negate the fact that the moneyed interests are going to make sure that Joe Taxpayer is stuck with the bill for their looting. The bailout is merely a greasing of the wheels to make sure that the unwinding doesn’t happen Right Now. If they are successful, do not look to NASA for space leadership. And I would advise space companies to think twice about taking money from folks who are more concerned with value extraction than value creation. Space does not need to be yet another sucked-dry husk of an industry littering the looted American landscape.

Waiting for all of this to settle is a LOT of very nervous cash. It wants something solid to invest in, an honest opportunity, not another paper house of cards. Can space be that industry? I don’t know. We’re entering a very, very uncertain time and the paths to the future become muddled. Government simply cannot provide the leadership we need in this field given its existing and future obligations, however much we may wish it to be otherwise. Only American industry can do so, but who is to provide the leadership? The old space names are firmly ensconced on the government teat (with a trickle of ITAR-proof traffic from the commercial sector), whilst the newer ones march towards success but have not yet arrived (and some won’t).

To what extent can the space sector provide a viable investment vehicle that nurtures and grows the industry whilst pleasing funders? Perhaps a ‘space bank’ is one solution and not entirely a fantasy. I think long-term bonds should be considered for things like Solar power satellites.

But without transport to LEO, all of our space dreams are nothing and there will be plenty of indentured servitude back here on Earth to keep us all busy.

Solve the problem, guys.

P.S. For those who are feeling a bit glum by the revelation of these shenanigans that you and I are going to pay for, I can tell you that in reorganization bankruptcies BK Courts are pretty good about making sure the employees who remain get paid. They might lose everything else, like retirement funds, but they’ll still have cash flow to the extent it’s available.

I consider the solution to this problem to be in the courts, where contracts are disputed, not in Congress. The courts won’t be able to handle the huge influx of cases, but that just means more employment opportunities. People will still need haircuts and groceries. Mail needs to be delivered and the buses need to run. This is a performing-on-your-contract issue. In a free market those companies that make promises they can’t keep are supposed to pay the price, and that’s why we regulate insurance companies and banks. It just doesn’t help that these jokers have NPVed and monetized a significant portion of our future.

This is not the end of the world, except for maybe some folks who thought they were rich on borrowed money. Life will go on, though the landscape is going to change significantly. Everyone just needs to have courage and be tough. Pioneers are supposed to be the strongest and toughest of us, space pioneers should be no different, and I suppose this could be considered a test of our tenacity. I just think that having a space future provides the strongest and most prosperous future for everyone. This crisis is an opportunity for the space sector, if it can show that it has the value. I’m convinced that corporate Earth-to-LEO is the key that opens the door to much greater investment capital in the field, and success instills confidence (necessary for investors). There’s money looking for a good place to go that’s away from all of these paper shenanigans going on. There are plenty of sane people left in the world, and they have cash to invest, they just can’t find anything decent to invest in. Space could be that place.

Crisis = Opportunity, y’all.

While Jon is trying to keep the politics to a minimum out here in the Selenian Boondocks (and so I now owe him several space-related posts), this is a little something that you’re not likely to see through major news sources.

Libertarian candidate Bob Barr filed suit in Texas court to keep the candidates of the Republican and Democratic parties off of the Texas ballot (more).

It seems that neither the Republicans nor the Democrats bothered to certify their candidates for the ballot by the deadline legislated by…Democratic and Republican legislators.

Talk about karmic justice!  Both parties are of course kicking and screaming that they can’t be kept off the ballot just because they couldn’t bother to abide by the rules they created.  That would be mean and partisan and not fair.

Libertarians and other parties have to fight tooth and claw every single election to get their candidates on the ballot, and can expect no mercy when they don’t get everything properly put together.  The privileged parties, the Democrats and Republicans, however, apparently get privileged treatment.  Even though they’re very strict about enforcing the rules on others, they don’t expect to actually have to abide by said rules themselves.

Of course, one need only read the headlines to see where that has gotten us.

I have to admit that Mr. Barr has risen in my esteem by this act.  It is a crafty revealing of the basic hypocrisy of both the Democratic and Republican political machines.  It’s in the same spirit as Michael Badnarik obtaining a court injunction against the taxpayer-funded political presidential debate in AZ back in 2004 from which he was excluded even though he was on the ballot in all 50 states (IIRC, I think the Libs only got 45 states this time around).  Rather, he was ‘detained by authorities’ for attempting to serve the court order.  Imagine that, ‘detained’ for trying to enforce a respect for law.

I hope the suit is recognized, as it has merit just on the basic facts conveyed.  As far as I’m concerned, if they can’t respect our Texas laws, laws which they wrote, then they can be write-ins, just like the Constitution Party candidate is here in Texas because they didn’t get their paperwork right either. It’s not the Libertarians who will have excluded the candidates from the ballot – any fault would lay squarely with the Democratic and Republican parties and no one can say otherwise.

The obvious compromise is to allow the Dems and Reps on the ballot, but also allow all of the other parties onto the ballot as well.  This would really be the only fair solution.  Otherwise, I say let ‘em twist in the wind by their own rope.

Update: The Texas Supreme Court ruled today (09/23) to deny the Motion to keep the Democrats and Republicans off the ballot. No reason was given. Like the Nike motto, they “Just Did It”.

I find myself wondering why I should vote for anyone from either of these two parties for any position in government. They’re clearly not interested in serving the citizenry at large, only themselves, and I have no interest in being governed by those who think the rules don’t apply to them.

If we can’t count on the law being just and equitable (and those who ‘enforce’ it), then what can we count on?

Howdy all! I just got my NSS Board of Directors ballot. It looks like I’m running unopposed for Region 3, which means I’m a shoe in. Nyah, nyah! I haven’t quite decided what kinds of projects to work on on the BoD, but you know I’ll find something interesting and will probably ruffle a few feathers in the process. Most of the stuff I excel at is local work like displays and events to build citizen-level awareness of the importance of the space industry, which means that I need something different at the national level. I am thinking about membership, and ways to significantly up the membership numbers.

Looking through the list of candidate names for the other positions, I don’t see a lot of youngsters (i.e. Gens X and Y) in the list. It’s getting harder to think of myself as a youngster as I venture into my 40s. (time to start thinking about that law degree) Still, the basic demographic fact is that the Baby Boomers are in all of the important positions, and the efforts of NSS will continue to be flavored by their space experiences, which admittedly span a longer time frame than do mine. I was too young to remember Apollo, the mid-70s were spent in the UK (and we all know how the Brits officially feel about human spaceflight), and the shuttle got launched (again), to go in circles (again), and to do micro-g experiments (again). Then came Challenger. After that I really can’t say that I remember anything space-related in my life until the late 1990s, when my yearly project for the UNA-USA NYCitywide Model UN decided to be focused on the UN Outer Space Treaties, given the recent re-launch of John Glenn, the start of ISS construction, and the (then) upcoming UNISPACE III conference. That led me to the Space Generation Forum at UNISPACE III as a US Delegate, then to Space Camp (Right Stuff Medal), STAIF 2000, ISU (cum laude), NASA Academy, World Space Congress, NSS, Zero-G, Meteor Crater the VLA, and more.

My space ain’t your space. Trying to sway me with the glories of Apollo don’t cut it. I’m looking ahead, not behind, and I want to build new glory for this nation, not bask in the glow of the Greatest Generation’s Greatest Achievement the World Has Ever Known, nor the Baby Boomers’ Shuttle.

My space is stepping beyond LEO. I want an EML-1 station, which can be visited periodically starting from the ISS. I want fuel depots starting in LEO, so that every mission doesn’t have to carry everything from Earth. I also want them at EML-1, so that we can start looking at options like global sorties to the Moon for prospecting, freeflyers in low-energy trajectories that bring them right back where they started from for better micro-g materials science, sorties to GEO for commercial purposes, servicing centers for various observation platforms stationed at various Lagrange points throughout the Solar system and brought home on the Interplanetary Superhighways, sorties of opportunity to nearby NEOs, and the cheapest delta-V to anywhere else from anywhere in cislunar space. I want Polar Lunar communities and scattered outposts looking for resources. I want SBSP and off-planet materials sourcing so that we can stop tearing up our own planet.

Where does Apollo figure in all of this? It doesn’t, and that’s why the space field is losing the battle for the hearts and minds. It’s selling product that few in the new crowd are interested in. People are interested in going to the Moon, just not necessarily NASA’s way. They want to go to the asteroids, but not necessarily NASA’s way. So long as NASA is seen as being the equivalent of everything space, then the entire space field must bear the burden of NASA’s lowered expectations because that’s the way the budget cuts. Fortunately, I do think that the idea of space exploration and development is starting to divorce itself from the idea of NASA=Space, a process which I think will be complete when one of the usual suspects in the field (I’m looking at you LockMart and Boeing) fields an Earth to orbit crew transport vehicle irrespective of the pressure NASA brings to bear.

There could be a very bright future for America in the next decade. I don’t think ESAS is the path to that bright future, and long-time readers know I’ve been bellyaching about it for a long time. I wish SpaceX all the best, and when that IPO comes around I’m more than happy to buy in, in spite of the recent failure. That they’re having to relearn all of these things tells me that NASA has done a poor job in documenting space, or Elon has done a poor job of making sure his folks have enough time and resources and incentives to be doing their homework in all of the publicly available documents NASA has provided. At this point and with limited knowledge I’d have to put the level of blame at about 50/50.

I do think that RLVs are a better option for the Earth to LEO problem, but I don’t think our materials are quite there yet (one more of the reasons to be doing more research in micro-g). Expendables are the sucky alternative, and the only solution there is mass-production, the tried and true industrial method for achieving significant cost savings. That means EELVs, which make sense as they’re in the ~20 metric tonne to LEO launch class, making them commercially competitive. Heck, we did build a giant factory to crank out Delta IV cores, let’s put it to good use launching people as well as payloads. I think TSTOs can come sooner, but I don’t see true RLVs for at least another decade at best. What I think will happen is that there will be enough demand, provided in part by Bigelow balloons, that the expendables will have a run of maybe 20 years where they’re launching passengers frequently before RLVs really start taking over. The smart expendable guys will have invested in the RLVs to make sure they still have a presence in the market, just like it makes sense for OPEC nations to invest in SBSP. They don’t deliver oil, they deliver energy in potent oil form. For the sake of social order it makes sense to have a back-up plan for when the taps run dry, something that has happened time and again in human history.

I’m for business in space that helps clean up our planet. The solutions are there waiting for us, we need merely apply human thought and labor to unlocking them. That’s an exciting space message, but impossible without the right tools, which is why I am in favor of the Dragon capsule. The team mascot at Round Rock High School, from whence I graduated back in the day, is the Dragons. My view is that just as we at RRHS lost every single football game of my sophomore and junior and most of my senior years, we pulled through in the end and won the last two of my senior year with brilliant victories, and everything was cool after that. If Elon makes the Dragon, they will come.

And now for this week’s finance rant. Let’s talk about information. Information is the key to fair and open markets. When everyone has good information, prices will be at or near their equilibrium. It’s when folks start gaming the markets by hiding information from transaction counterparties that you start having problems. There’s a reason the Securities and Exchange Commission exists, and I have nothing but praise for their EDGAR system which I use abundantly. Anyone that buys stocks knows about the 10-Qs and Ks, and it’s by allowing a degree of transparency in the company that you induce investors to the comfort level of putting their stake in your company.

Back in the 90s, when I worked the Wall Street Desk at the Banque Nationale de Paris’ NY branch over on Park Ave, one of the routine reports that we would receive would be the FOCUS reports, mainly because we wrote it into all the loan documents that we had to receive them. These are Form X-17A-5 filings with the SEC that broker/dealers have to make every month. They provide a more detailed breakdown of the b/d’s assets and liabilities, allowing market regulators to keep an eye on capital levels as well as concentrations of risk. Individuals with stock brokerage accounts should be able to get a copy, but it would likely be the FYE one. Folks like SIPC, the Securities Investor Protection Corp, probably look at them as well. That was then.

Now, it’s like pulling hen’s teeth half the time. I happen to be working on a routine project where I need the ‘Statement of Financial Condition’ for a number of broker/dealers, and the ease of getting them varies from the simple to hideously complex with multiple levels of clearance. What’s interesting is the ones for whom it is easy, and those for whom it is difficult. I won’t name names, but there are a few for whom the process is grinding, which is incomprehensible given that other firms make it a snap, quite easily found. Then of course, there are the ones who can’t even figure out what’s going on. (“You want a what report?”) The most absurd moment to date came when I called up FINRA. This is the new & improved version of the old NASD, the National Association of Securities Dealers. On one of the pages of their website (you have to dig, but I have good Google Fu), it indicates that you can request a FOCUS Report for a financial insitution by calling a certain phone number, which I do. I indicate the financial institution for which I work, and ask about getting a Focus report on Company X. Reply: “…You can’t have that…”. Huh? (looks at monitor again to verify what I think it says) Well, I’m in the industry. This is a corporate project. Well, that didn’t matter. I recognized early on that I was on a snipe hunt and didn’t push it as I’ve got better things to do with my time. This kind of incident illustrates to me the extent of the damage wrought on our financial system by … sigh … a great number of selfish individuals who have enabled or cashed out so much of the value that used to exist in this great nation. Folks that paid 15% tax on the loot when they had to, less if they could figure out a way to do so. Mother Jones has three articles (1 2 3) on the mess, and the only beef I would have with it is that I don’t think the authors totally understand credit default swaps, but they’re mostly right.

Which leads me to a political rant. Unlike Rand over at Transterrestrial Musings, who seems to hunt for reasons to vote against someone, I spend my time looking for reasons to vote for a candidate. Obama ruled out my potential vote for him (because I was thinking about it) when he sold out to corporate interests on the Fourth Amendment. It demonstrated to me that as fresh as he is he is still too deep in the political sleaze in this country for my tastes. McCain has never been an option for me, nor Clinton. I consider them both to be too encrusted with the muck of what has been transpiring over the last several decades, and totally sold out to corporate interests. Bob Barr’s antics back in the 90s left a bad taste in my mouth which remains to this day. Nader I consider too marginal a candidate, and I don’t think he would carry any international heft. Oy, where’s Ron Paul when you need him?

I intend to carry a list of incumbents with me into the voting booth this November, and nary a one of them is getting my vote. I’m sick of it. I’ve voted since I’ve been old enough to do so, and I’m increasingly of the opinion that people who don’t vote shouldn’t have a voice in the commons under the old principle that you can’t gripe if you weren’t there to have your say in the decision you’re griping about. It’s not just your right as a citizen to vote, but also your responsibility and duty. The fact that only about half of our citizens actually bother to turn out to vote is pretty sad, and also the kind of thing that makes Rovian political calculus possible. Here’s how it works:
(1) Identify a core constituency comprising about 28-30% of the modern American demographic.
(2) Gerrymander the districts to have that core constituency represented in as many places as possible, especially politically powerful ones.
(3) So long as less than about 55-56% of the populace bothers to turn out to vote, then this core constituency will determine the outcomes because they vote as a fundamental block. With pressure they can raise the hurdle to about 60% turnout, which doesn’t happen often enough these days to be statistically meaningful.

Thus was a political dynasty crafted. I think what they didn’t count on was that so much damage would happen so quickly. I blame the profligate looting of taxpayer resources by ‘connected’ corporations and individuals, which probably exceeded all expectations of what would be enabled by the weakening and dismantling of governmental regulatory bodies.

We’ve done an awful lot of extracting of value from American assets. My feeling is that we’re going to need to buckle down and start working harder at creating value if we’re going to stop the backward slide in generational prosperity. Gen X is not doing as well as where their parents were at the same age. Gen Y may or may not do as well as the Boomers. A sad testament to the promise that is the U.S. of A. My secret, perverse hope is that the FBI is ignoring the White House and is conducting a RICO investigation on the looting.

At this point the only candidate I would really trust would be the one that says

“Yeah, I’m probably going to have to raise your taxes, and cut programs that you don’t want cut, but I’m going to try to spread the piss-offedness around as much as possible, so don’t think you’ll be alone in how much it’s going to suck in having to fix this mess.”

As an American citizen, I can dream of doing business on the Moon at some point in the not too far distant future that I just might live to see. That’s the beauty of this country – it’s not entirely an unreasonable ambition in this day and age, which is astonishing in human history. I think space is one of the few industries where the U.S. has a global competitive advantage, and we’re too scared to exploit it because of NASA. We need to be exploiting our space advantage, big time, so that we can sell its products and services to the rest of the world at a fair price instead of buying it from them in an impoverished future. We are at the threshold of both possibilities, and I intend to fight for the more promising outcome.

So, those of you who are National Space Society members, be sure to vote for Ken Murphy for Region 3 Regional Candidate to the NSS Board of Directors for 2008 – 2010. He’s the only choice you’ve got and you know he’ll do a reasonably good job at it.

This time around I took a few days off to head down to Houston for the 15th annual International Space Settlement Design Competition (ISSDC), not to be confused with the ISDC. This was the final event, gathering together all of the best teams from around the world for a design challenge weekend. It certainly was international, with students from Romania, India, Australia, Uruguay and more. In many respects it reminded me of team projects I’ve done in previous space adventures, particularly at ISU. The working with no sleep for extended periods, or minimal amounts if any is obtained, to meet the deadline. The trying to make sure we’ve covered all aspects of the Request for Proposal (RFP). And the final, nervous, but triumphant presentation of the results to a panel of critical judges.

This year’s competition represented a foundation underwriting the development of a Lunar base meeting a set of prerequisites that advance the foundations goal and should prove profitable overall within a reasonable timeframe. The teams receive an extensive amount of support material, get lectures from scientists working in the different areas addressed by the RFP, and access to an extensive library of reference books. Peeking through their list ahead of time, I culled a number of titles in the Lunar Library that might help support the cause. The two titles that the students showed particular interest in were New Views of the Moon, published in 2006 by the Mineralogical Society of America and the Geochemical Society, and which contains a thorough set of mineral maps taken from Lunar Prospector and Clementine data, and the classic Resources of Near Earth Space by Lewis et al in 1993, which text is now available online thanks to the good folks over at the University of Arizona. It’s a huge service to the space research community, as the book is typically quite hard to find, and expensive when it is found.

My purpose for being there was two-fold:
1) Collect information on the methodology of the conference. Back at the 2007 ISDC, Danish space adventurer Per Wimmer was quite impressed with our efforts, and donated $1000 to NSS of North Texas to send a kid to Space Camp, with the person chosen being the winner of some kind of space settlement contest. Sending the kid to Space Camp is easy, it’s the competition that is hard. Our chapter President recently sent an e-mail describing the competition to a list of science teachers in the metroplex, and got zero response – not a very encouraging start.
2) Sell NSS 2009 Space Settlement calendars to the students and chaperons. Not yet available to the general public, these beautiful calendars are intended in part to help with the ‘envisioning of our space future’ process that helps build public support for space programs. Sales were a bit less than hoped for.
3) I also talked about space with many of the students and provided a large amount of free materials such as Ad Astra magazines focused on the Moon, Moon posters from the Artemis Society, brochures, flyers, bookmarks, and so on. I also had all of my props, such as genuine fake Moon rocks, meteorite samples, display boards, et al. They seemed most smitten with the sample of aerogel, and the accompanying flyers from JPL quickly disappeared. Next thing you know they’re trying to figure out all sorts of clever ways to work it into their designs.

I stuck around through the presentations, and I have to say I was quite impressed with the results, and kept having flashbacks to NASA Academy and ISU and SGF. There was one absolutely genius idea for the Moonbase that could be applied right away here on Earth. Just brilliant, and exactly the kind of thing that these exercises help to uncover. Here’s the scoop. All of the projects touched on the ideas of recycling energy as much as possible, and one idea involved the high speed transport cars passing through the tunnels between the modules. Anyone who has ridden the NYC subways knows what happens when you push something through a tunnel – the air gets displaced. The idea is to use small windturbines lining the tunnels to recapture the energy of the air displacement. This could be immediately implemented here on Earth by lining interstate highways with small ground-level windturbines that capture the displacement of air by traffic. Anyone who’s watched the grass being flattened by the wake of a passing 18-wheeler knows exactly what I’m talking about.

I did get to talk to some of the youngsters from JSC who were volunteering their time as specialists to give information and advice to the students as they worked through their designs. One young lady in structural mechanics asked me what I thought of Constellation, and I told her that she probably wasn’t going to like what I had to say about it. I told her what I saw as the transport needs in cislunar space, how those needs could be addressed, and why I don’t think ESAS addresses any of those needs, and is therefore not something that I can support. I may not have a choice with my tax dollars, but I do with my opinion and my expression of it.

I’d actually like to go back next year and help out in a more involved fashion with Moonbase II. The two years after that are Mars Base I & II, which I wouldn’t be of much help with. (I’m not one of the folks who see mars as ‘The Goal’) Maybe they’ll do a Ceres station after that.

If there’s one recommendation I would make it would be that some corporate organization step forward and underwrite the conference a bit more, primarily with regards to the arranging and printing of support reference materials for the students, as well as miscellaneous goodies (like providing Space Settlement calendars for the students, hint, hint).

It was a well-organized and run event, evidence of the many years that Anita and Dick have put into the event. It was a comprehensive systems exercise, and all of the teams pulled it off. The grilling was gentle but thorough, making sure that the students had put effort into coming up with their particular results. I didn’t stick around to hear who the winner was, but I sure am glad that I didn’t have to judge the thing. There was no obvious winner to me, meaning that it would have been fought out in the details. All of the students presented well regardless of their level of competency in English, which was generally at a high level. Kudos to all of the participants.

I did of course make a pilgrimage to the Half-Price Books on NASA Rd 1 and picked up a few new titles for the Lunar Library, including the last volumes that I was missing from the 1970s US/USSR scientific collaboration Foundations of Space Biology and Medicine.

No space adventure is complete without the element of danger factor. In this case it was on the way out of north Houston on 45. Traffic was thinning out, and I was trying to follow the high velocity flow given that I had a trek ahead of me back to Dallas. Up ahead I espied a large blue pickup, one of the ones with the double wheels on each side in the back, slowing up the fast lane. And part of the shoulder. And part of the middle lane. Either drunk or having medical issues. I gave him some headlight flashes and he straightened out for a brief time, but soon returned to wandering. I decided to put as much space between him and me as possible, so zipped by on the right (which I despise doing. I think passing on the right should be forbidden as it is incredibly dangerous) and forged ahead at modestly over the flow at 80 mph to gain some distance on him. Soon though, I found myself in a situation where the flow was moving to the right through a gap left by a sporty SUV. By the time my turn came around the SUV had moved up to block the pass, and so I was stuck behind someone parked in the left lane doing beneath the speed of at least two lanes while the SUV moved up and gave me space to fall behind. I check the rearview and what should I see roaring up behind me at a significant velocity differential but the grill of Mr. Blue Pickup with lane issues. I flash the gold car ahead of me while trying to figure out whether I was going to need to move over to the shoulder to get out of the situation since I couldn’t move right thanks to the SUV. The brake lights finally got his attention as the space between his large vehicle and my small Bug grew terrifyingly short in a terrifyingly short period of time. I managed to finally squeeze right and pass the car in the fast lane and wouldn’t you know it it was some idjit playing chatty Cathy on her cell phone. Fine, I’m out of there, sounds like the two were perfect for each other. Drunken driver in enormous vehicle meets cell phone idjit in the fast lane of the highway. I have a low level of tolerance for either kind of vehicular stupidity and have no problem exceeding the speed limit to put my vehicle at a safe distance from that stupidity. I rode that adrenaline rush for a while.

Lady luck, though, seems to have blessed this poor Irish soul, and I made it back alive. Luckily, I took today off as well, to give me some time to recover, and write my next in a series of articles on Juvenile Space Fiction. This week is New High Frontier fiction. I.e. from the last twenty years or so. Next week is all of the old stuff from the 40s through 60s like Tom Swift and Tom Corbett, and then I’ve got a surprise for the fifth week. I should have covered close to 100 youth and juvenile space titles by the time I’m done. And I just remembered that I promised Marianne Dyson a review of the old TV space soap opera Jupiter Moon for the NSS Reading Space. Maybe I can piggyback on the one I do for Out of the Cradle.

And so goes yet another vacation…

Having goofed up on my paperwork the first time around, I had to wait longer than expected to get the final documentation, but I am now looking at an official Certificate of Filing of Lunar Library LLC.

That’s right, according to the LLC Agreement, I am now the proud Custodian of the online assets of OutoftheCradle.net, as well as the physical collection which is currently overflowing my apartment.

The goal of the business is to make money on the Moon, starting right here on Earth.

I have yet to figure out how to apply the physical assets. I still like the idea of using it as the seed for a Lunar Academy program at some university. Something that blends the UND Space Masters program, the NASA Academy, and ISU to train future Moon leaders.

I’m a bit bummed that I’m missing the NLSI Conference out at Ames. From Keith’s coverage over at NASAWatch it sounds interesting and well-attended. And hey, you know, if you’re going to apply for the position of NLSI Director you should probably go to their conferences. But I’m just a poor working stiff from the wrong side of the launch pad, with a limited number of vacation days and amount of budget to expend on the Lunar Library and space conferences. My vacation days this month are going towards working at the International Space Settlement Design Competition this next weekend down in Houston. Not in an official capacity, just NSS, but I expect to end up helping out in some way.

My big vacation is the end of October when I’m going to drive down to the big Moon conference at Cape Canaveral. Given the generally larger turnouts appearing at Moon conferences it should be a very exciting one.

Speaking of working stiff, how about that article on the front page of the Wall Street Journal? About the only thing I can say is that it was really spooky reading about the very same things I saw in that portfolio, including one file in particular that is specifically cited as an example in the article. I’m not really supposed to talk about it, so that’s all I’m going to say.

More interesting was an article a couple of pages in that talked about the increasing number of undercapitalized businesses that are heading into bankruptcy. The article cites an example that I looked at at work, so I can’t talk specifically about that one, but it does tie back in to what I’ve noted in previous posts about private equities buying up small companies with borrowed money and then dividending the borrowed money to themselves instead of investing it in the company. This was how they got around the Enron error. Instead of basing profits on a computer model, they based their profits on the money they had already sucked out of the companies, which could be allocated to the P&L as appropriate. Risk for the payment default on the borrowed money rides with the CDO holders who bought bundles of these loans packaged up and sold to get the loans off the books of the banks, who were making their money off the fees associated with making and servicing the loan (a/k/a shaving pennies). An interesting note in the article was that there are an increasing number of fraudulent transfer cases being filed in these bankruptcies. My conjecture is that they are founded at least in part on the fact that so many of these bank loans were made on ‘As-If’ appraisals being supplied by the appraisal industry. Under traditional banking theory, the money from the loans would have been used to render the ‘As-If’ business as ‘Actual’, thereby providing the increased business necessary to pay off the loan. Under modern banking theory, the plan seems to be that you get a phenomenal ‘As-If’ appraisal to get everyone to buy into the loan syndicate, and then the money goes to the guys who borrowed it in the first place to buy the company, and those guys go in periodically to exhort the employees of the newly acquired company to work harder to pay off the bank debt.

Company town? Hah! Welcome to Corporate Nation!

Some folks might try to slander me as a right or left winger. Whatever. I am less concerned about the blame so much as how we’re going to clean up this mess. It is not the fault of Bush, or Clinton, or Bush, or Reagan. It’s the fault of all of them, and all the other political enablers in Congress and elsewhere, as this mess has been developing for decades. The subprime debacle now? Look at the charts in the WSJ. These guys were honing their technique at the end of the last administration. I can remember from my earliest days as an intern at Shearson Lehman Brothers when CMOs were a bad word. This has been a long time coming, and frankly printing new money is not going to solve our problem.

If you’re trying to figure out where I’m coming from, let me just say that I defy any attempts to pigeonhole me. Politically I vote independent and consider myself a small-l libertarian, with hints of classical liberal and traditional conservativism. I’m an Aquarian, an AB bloodtype, and I’m anywhere from 6 months to five years ahead of the rest of the world. Okay, it’s been as little as two weeks, but I’m usually pretty far ahead. I don’t do polls as I don’t have a landline and they never have my answers to their questions so pollsters can’t use me anyway. You know that Bell Curve? Pick any particular thing to apply it to and I will usually be found more or less way out on one of the tails. I’m basically a pathfinder who finds new ways and then shows others how to follow.

I should be on the Moon, exploring there, but that’s clearly not going to happen for my generation unless it happens by private means. Contributing to that is part of the goal of the Lunar Library. I suppose that would technically make my company a ‘NewSpace’ company, but I’m just trying to create a groundswell of consumer interest in the Moon, because money talks. To the extent I can figure out how to divert some of that swell to the cash flows of Lunar Library LLC I will do so.

It’s so cool joining the ranks of entrepreneurial Americans.

Is the fact that unless we get more women interested in and supportive of moving this species out into space, then it’s going to take a lot longer and be far more difficult than it otherwise has to be.

Polls have consistently shown women to be much less interested in things space than men are. My conjecture is that if more women can be interested in science, engineering, and space to a greater degree, then the boys will go where the girls are. When it comes to machines and technology, no man likes to be upstaged by a girl. Women, then, can be the whetstones against which we men sharpen our technological prowess by constantly challenging men in this field. You can’t show off for girls if they can do the show-off better.

So, to help encourage the ladies in thinking about space I’ve dedicated this week’s Carnival of Space to The Women of Our Space Future. It’s a tour d’espace from cislunar space to the deep reaches of our Milky Way galaxy, with special images scanned from the Lunar Library.

The Carnival’s of Space are a fun round-up of space-related blog posts. It seems to have a strong constituency of astronomers as contributors, and some strong regulars like Emily over at the Planetary Society. I try to contribute as I can, like my recent Rollerblading on the Moon article at Out of the Cradle.

Since I usually give readers here at the Selenian Boondocks the heads up first, look forward to an announcement about Out of the Cradle around the end of the month. If you’re looking for the heads up in financial news, the basic story is that we’re all being Enronned on a massive scale by financial speculators. The secret was revealed earlier this week in Congressional testimony. The official media story is that foreign governments’ taxpayers have been subsidizing petroleum consumption by their citizens, but can no longer afford it. This is true, and is important from a macro-economic perspective, but one has to peer in closer to find the more proximate causes. Due to a basic abnegation by regulatory bodies, such as the CFTC, of their basic duties to preserve price transparency so that Americans can make rational and informed economic decisions, there has been a lot of economic activity conducted here whose consequences can’t be traced to the instigators. Through a little sleight of regulatory hand, large volumes of trades conducted here in the U.S. (and elsewhere) can be seen as having originated from somewhere else, and therefore the unbalanced economic effects of the transaction are initially masked. This effectively has allowed speculators (who need to do something with large amounts of capital to provide a superior return) to operate in the shadows of the public marketplace, and Uncle Sam can cast a mighty big shadow if he wants to.

Another example, and representative of a longer term strategy, is the reclassifications of the calculations for determining the ‘official’ inflation rate. The proximate rationale back in the 80s and 90s was to keep COLA and other inflation-tagged costs under control. It also worked great for corporations trying to keep their salary and wage expenses under control. Welcome to the modern age of stealth inflation. Since the Feds stopped publishing M3 numbers, there’s really no good way to know how much money is sloshing around out there. This mal-information makes pricing of the USD problematic. Which is also having an effect on petroleum prices. The structure of our regulations is such that the folks who know how to game the system are doing so with great earnestness. They know how to game the system because the regulations have been gamed to provide certain difficult-to-understand advantages. This is why your credit card can now go to 30% interest at the drop of a hat. It’s why people who did mortgages made out like bandits (the prepayment penalty/refi adjustment twist I talked about in an earlier post). It’s why small to mid-sized companies can be taken over, burdened with huge amounts of debt on flimsy assets, and stripped of the proceeds via a capital disbursement to the owners. Undercapitalized, most of those acquired companies will not survive what is coming, and the only consequences are to the investors in the debt (through vehicles like CDOs/CLOs), who get to fight over the last scraps of the company, or refi into something actually reasonable.

Which is what really ticks me off, because the employees will suffer most directly, and they have families to support and communities they’ve built. Credit card and medical bills they’ve racked up. Mortgages set to pull out the last of their short hairs.

Ugh, what a mess.

This is exactly why the space industry needs broader exposure, with more commercial and economic interest. It represents an industry in which we have a strong economic advantage, and one that we can define going forward. We can start tapping the resources and opportunities in space (once we get the confounded regular transport to LEO thing licked), and start producing things of value for the world the likes of which people have never known. I, for one, would like to leave a stronger, more prosperous nation (and world) for my having been here. I see space as a good way of making that happen.

Because Americans really need some future they can believe in right about now.

Howdy everyone! I hope everyone’s enjoying a nice, relaxing Memorial Day weekend. I just unloaded the nephews on their dad and am taking a quiet moment to contemplate…

I recently listened to the Dennis Wingo and Peter Kokh interviews on The Space Show, and I was struck at how similar the messages were. A stepwise building up process that provides longterm benefits not just to a permanent space presence and space faring, but also to planet Earth.

Dennis, of course, is in the midst of a series of missives on developing the Moon over at SpaceRef. Peter Kokh is an emeritus of the Moon Society, and longtime editor of the Moon Miner’s Manifesto. The MMM alone is reason enough to join, and there’s even a program to make it available to your local libraries for a nominal fee so that even more people can get familiar with the idea of developing our human destiny on the Moon.

There are a few themes that are becoming more common. The use of current Sun power to supply our energy needs rather than the stocks of accumulated dead dinosaurs and plants. Only nuclear and geo power are exclusive of our Sun’s effects. Solar, wind, hydroelectric, hydrocarbon, all of them are present or past Sun power. Rather than fouling our planet and fouling our air to provide energy, it makes sense to get the energy in space directly from the Sun and transmit it to where it’s needed. Peak Sun is not expected for another 4 billion years or so.

The hitch is trying to build anything suitable entirely from Earth. It’s just too punishing to try to do so, which is why it’s increasingly making sense to send the seed plant and equipment to the Moon and build the low-value added stuff like extruded titanium support girders or sheets of vacuum-processed Solar cells (the Moons got a fair amount of vacuum, you know, about 15,000,000 square miles to work with). Launch the low-value-added stuff from the Moon (even doing some assembly where it’s easier to do so with a bit of gravity), and focus on launching the lesser amount of high value-added stuff from Earth.

Dennis also advocates using the ISS as a staging point, rather than a microgravity lab. He has a strong point, as the microgravity science guys would really rather have freefloating platforms, unperturbed by human-induced jitters. This can be done in LEO near the ISS, and will increasingly make business sense if the ISS is adapted to use as a staging point, but ultimately it makes sense to do so further out, at our good friend EML-1.

Staging to EML-1 from ISS is pretty much no different dV-wise than from a 40, 28, or 0 degree orbit, so it makes sense to start now and build up capabilities at other inclinations as it becomes appropriate to do so. Once at L1, all kinds of options open up. As can be seen in the graphic, Freeflyer platforms can be sent on long orbits that come right back to where they started from. This gives ample processing time for the microgravity experiments and eventually production. L1 is also a great place to stage for a mission to the asteroids, especially if you’re supplying oxidizer from the Moon. In the end I have to agree with the Asteroid guys that the debris in cis-Jovian space needs to be mapped out and cleaned up. This is going to be the quickest way to start moving polluting industries off-Earth, by supplying raw materials at a higher degree of purity at a cheaper price.

L1 is also a good spot for running servicing missions to GEO. You can also go anywhere on the Moon’s surface 24/7, which makes pseudo-arguments like North Pole vs. Equatorial vs. SPAB kind of moot because from L1 you can do each one as appropriate. Mr. Wingo, and IIRC Mr. Kokh, prefers a North Pole location, in part because it offers access to more metal heavy mare materials at Mare Frigoris. I, like NASA, prefer SPAB because of the scientific questions surrounding the fossilized remnants of the biggest smack in the Solar system. Parts of the Aitken Basin (the AB part of SPAB) exhibit mare-ish characteristics unusual for the far side. Still, it is more than twice as far to the nearest good source of mare material, in Mare Humorum, as at the North Pole.

Still, in the long run most of the materials for a space-faring civilization are going to come from asteroids, not lithic gravity wells. Including life-support stuff like nitrogen and carbon for the Moon. Which would give the Moon leverage in transacting that stuff with Earth. If there’s ever going to be agriculture on the Moon, or even Mars somehow, then it’s going to take a fair amount of support from our asteroid friends.

By opening up the utilization of asteroids from Earth as soon as possible, you ensure a surer footing in the high frontier. It’s obvious from the diagram at right, from the Time-Life book ‘Spacefarers’ in the ‘Voyage Through the Universe’ series, that L1 is where you want to stage from to build an economy between the Earth and Moon as well as travel beyond. You can get there from ISS. Dennis’s idea of using it as a near-term logistics node is not a bad one, and one that does take advantage of existing space assets, even if the transport is apparently becoming a bit problematic. One thing that both gentlemen talked about is having NASA take a more NACA like role in created a common interface between launch vehicles and ‘CEVS’, so that transport to space would not be tied to any individual launch provider (i.e. NASA). This is what was supposed to happen with the EELVs, and I don’t think they’re a lost cause if we accept some humility and accept that about 20-25 metric tonnes is the launch market right now and it serves just fine for getting people regularly and frequently into orbit. Increasing the frequency of launches decreases individual launch costs as fixed overhead can be spread amongst more vehicles. This is basic economics, and what we have to work with until we get RLVs figured out. We can assemble a CEV in orbit if it’s never going to land in a gravity well, though we might want to consider a bit of aerodynamicity to provide an aeroslowing option.

Providing the common interface means it doesn’t matter what your CEV design is so long as it provides the info needed by the interface. Having a common interface means that it doesn’t matter who your launcher is. Imagine if the D4, A5, F9, Ariane V, Proton, and Long March were all able to launch a crew to LEO orbit because each adapted to a common interface. That’s value-added. Ultimately, I don’t think that NASA should have a monopoly on crewed transport to orbit, nor do I think that my tax dollars should be spent by NASA to create a National Space Transportation System. I’d rather they were spent enabling transportation to space for our nation.

***Rant on:

Besides, if ESAS is so all-fired good as a transport system, why wasn’t it being competed in the Concept Exploration and Refinement process back in 2004? ATK had it ready. The Safe Simple Soon website was up. The Planetary Society report ‘Extending Human Presence into the Solar System’(pdf) was available. Here’s the Conclusion from the section on transportation options:

The nation has three or four technically viable domestic launch options for alternative crew access to low Earth orbit in the near term. The selection of one or more on approaches ultimately may depend more on political factors than on cost. For example, will it be acceptable to use a Delta IV or a Sea Launch Zenit-2 to launch astronauts to the ISS if it means closing the VAB and Launch Complexes 39A and B?

On a global level, there are many reasons to make the CEV compatible with as many launch systems as possible. Technically, such redundancy will help avoid the single-point failure vulnerability of the Shuttle system that is currently paralyzing ISS operations. Second, those participants who wish to develop and utilize their own human launch capabilities are more likely to continue to be committed partners during difficult periods. Finally, selling CEVs to the rest of the world could become a notable export opportunity and would enable the United States to retain the lead with respect to defining standards and guiding human launch vehicle operations around the world. The F-35 Joint Strike Fighter program may serve as a model in this regard.

At this point, SDV designs including both an SRM-based vehicle for CEV services and an in-line heavy-lift configuration appear to be very attractive options for leveraging the investment in infrastructure and people for a quick response. The manner in which the Shuttle phase-out is actually implemented and the determination of which infrastructure elements will then be available for other applications will be major determining factors in whether these vehicles can become viable options for near-term applications.

Boeing even had it as one of its transport options in their study. So if the ATK architecture which became ESAS was the solution, why wasn’t it part of the process?

***Rant off.

There are a lot of unknown future industries awaiting us, not just on the Moon, but in between and beyond. Developing these future industries and technologies and solutions could be a wellspring of hope for beleaguered Americans as at least one new industry for the future where we have a competitive advantage. The many Americans we remember this weekend who died for our freedoms and our liberty have made this kind of future possible. We should not disrespect them by passing on the opportunity we have at this time to create a spacefaring, and not just space visiting, civilization. I am doing this space thing not just because I love my nation and want it to prosper into the future (energy, folks. Energy = prosperity), but also because I love my planet and want her to remain a beautiful and savage cradle of humanity.

Recently, SMU hosted the awards luncheon for the Dallas Regional Science and Engineering Fair, wherein all of the winners in the different categories got a whole slew of awards. I managed to wrangle a ticket to the luncheon, and it was certainly an amazing event. I’m not used to the VIP treatment, so it was kind of cool that there was a parking space with a cone, right up front, and a nice young lady to direct me to the entry. Seating was front and center, and the parade of young science and engineering talent was a sight to see. I was quite surprised by the sheer preponderance of young women as compared with young men. Far more lopsided than I would have expected. Plano also fared rather well, though someone mentioned that there are incentives associated with achievement in academic competitions, so the science teachers are all over the science fairs.

I did spot the young man who did the project on growing plants in simulated Moon regolith and gave him a hearty round of applause and a discrete “Moon! Woo-hoo!”. Having won second place in his category, he was part of the inspiration for my three-part article on cynthiculture over at Out of the Cradle, “Of a Garden on the Moon” (Parts I, II, and III). Since I got to sit at one of the VIP tables, I got to lunch with the folks who gave the welcoming comments for the event, and in his comments Mr. Quick mentioned that he had worked at the Lunar Receiving Laboratory (the Moon Rock Lab) back in the day. Over salad I mentioned that one of the young winners had done a project on Moon dust, and we got to talking about Lunar science. At one point he mentioned the NASA Lunar Science Institute (NLSI), and that they’re looking for a Director. I laughingly suggested that I should send in my resume, given my work with the Lunar Library and my quest to be the most knowledgeable Gen Xer there is regarding the Moon.

So one night, out of idle curiosity, I look up the description. It’s actually an interesting challenge, to establish what amounts to a virtual Lunar network of research to start preparing for when we do start sending crews back to the Moon in a decade or so. The basic idea is to have a handful of reasonably well financed teams of scientists at universities around the nation who will lay the groundwork for the science outlined in the N.A.S. report “The Scientific Context for the Exploration of the Moon”. It envisions three types of science: Science of the Moon, Science on the Moon, and Science from the Moon.

I was also happy to see that the NLSI was working with the NASA Academy to try to implement a Lunar Academy this summer, modeled on both the Academy and Astrobiology Institute models. This is where a group of, typically, post-grad students are gathered together for a ten-week intensive space program. In the case of the NASA Academy this involved topics as esoteric as quantum mechanics and the finer points of wind tunnel operations. I think this is a great first step, and hopefully something that will be replicated in the future.

Well, you know what, this job sounds like just the kind of challenge that I’ve been looking for. I think I would be a great NLSI Director, and would put Lunar studies on the radar of a lot of folks. I’ve been to the conferences, who else in my generation is as much as a Moonatic as I am? So you know what, I went ahead and applied.

I would wager my chances at less than 5%. Not because I don’t think I would be any good, but because my resume is all wrong. I don’t have a PhD. I don’t have a degree in planetary geology. I don’t have a list of journal and conference papers (regular readers will remember my recent attempts to foray into that realm). I haven’t worked in a lab or research institute (at least not since my summer job cleaning mice cages back in high school). I’m not from academia. I’ve worked in the financial world for a long time. My space background is rather unusual, and doesn’t work terribly well in the USAJobs database. The fact that I can only do my Moon work during non-work hours means that it’s largely constrained to the Lunar Library, work with NSS-NT in my community, and taking vacation days to go to Moon conferences on my own dime. Actually, it was at one of those conferences that I got to meet Ames Center Director Pete Worden when he came over to check out one of the community outreach displays that I had with me and was showing to a couple of gentlemen between sessions. IIRC it was my map of cislunar space and I was getting their input on its accuracy. I wonder if he remembers it…

I was also thrilled when he did his Second Life presentation from our ISDC last year. If I were NLSI Director, one of the things I’d try to do would be to set up a ‘Lunar Library’ in Second Life as a collaborative virtual resource for Moon science document retrieval. One of the things I’d like to see in the near future is either an undergraduate or graduate degree in Lunar Studies or Lunar Science, or at least a Minor. We’re getting to the point where the folks we do have who are really knowledgeable about the Moon are becoming less and less available to convey what they know to the next round. In the business world this is known as succession planning. Mentoring is the usual way to do this. From a cynthiculture perspective, we need to get to cultivating.

I’ll be sure to let everyone know how things turn out. I figure that the worst that can happen is that they send me four rejection letters this time around. And of course, there’s absolutely no way I could have ever gotten the position had I not applied. Nothing ventured, nothing gained. As weird as it looks on paper I do think I have the right skills to do a good job, and put the NLSI on the map and show that the U.S. of A. is serious about going to the Moon, and that our science will not just be about science, but also security and yes, commerce.

Over at NASAWatch, Mr. Cowing has the latest NextGen slideshow up, and it’s much tighter and more focused than the last round. One of the slides shows a terrifying demographic fact that I had wondered about, the percentage of folks at NASA who are under 40. They’re still a bit off in the definition of where Gen X starts. It’s generally considered to begin in 1964, which you can see in another slide in the presentation is where the birthrate starts dropping off the cliff. They have it starting in 1967, my year, the year of the Summer of Love, after which birthrates ticked up a bit before resuming their plummet. So technically, the charts should be of those 44 and under, either way I’m still at the front end of the transition generation, GenX.

So what are the percentages? For those under 40, my cohort, the peak in about 1995 (when I was still under 30) at a bit over 40% was almost the same level seen back in the 1960s, as the Baby Boomers worked their way through the system. This was also the time of the Goldin Years, when NASA kept going to Congress and saying “Please Sir, may I have less?”. Now that GenXers and Millenials are the ‘Under 40s’, that has dropped to 16%.

Let’s see what happened to the ‘Under 30s’. They peaked much earlier, about 1986, at ~15% before beginning a long decline, whose inflection changed sharply at about the same time the ‘Under 40s’ started to decline, and plummeted from the then ~10% to the current 4%.

Comparatively, the ‘Under 40s’ represent 47% of the U.S. workforce (vs. 16% at NASA) and the ‘Under 30s’ represent 25% of the national workforce (vs. 4% at NASA).

They then note two very salient points that have been long under-addressed in national debate:
1) “We realize that there is potential for increased risk on those projects but missions today must take the risk of raising young people and not just hiring already experienced people.”
2) “The agency is facing a human spaceflight gap and we are heading into that gap with a young workforce that has its own experience gap.”

They also note that NASA should be:

“Providing the Next Gen NASA workforce the programs and experience today that it needs to be the leaders in the future.”

Stranger things have happened…

While Jon gets to go have fun at the Space Access conference, I’m stuck here in the metroplex with a dearth of vacation days in the kitty. That’s not necessarily a bad thing, as I was back this last weekend for my second year as a volunteer judge at the
Dallas Regional Science and Engineering Fair. I go waltzing in at 7:30am Saturday morning all ready to be a Junior (high) judge again, slowly working my way over the next couple of years up the ladder to Senior (high) judge. Surprise #1: I’m judging high school projects this year. Uh oh.

Settling in at the Physics & Astronomy table with breakfast, I find there are three sets of papers, representing over 25 projects. I naturally gravitate to the more astronomy set, given my Master of Space Studies. Surprise #2: Despite calling “Not it!” early on, I end up as Captain of the judging team, since the guy from TI and the guy from Raytheon were both rookies at judging, even if they did have a slightly better handle on this stuff than I did. When they asked for a raise of hands of new judges, over half the room raised their hands. I guess that’s the Peter Principle in effect – the more incompetent you are the higher up you get pushed in the hierarchy.

Great projects. A LOT harder to judge than last year. The higher level of sophistication is evident, and these kids are a lot farther along than I was at their level in many regards. There’s always the difficulty of trying to gauge the extent to which the parents hovered over and directed the experience. The added complexity of ready access to the internet made it even more difficult, and in the end what you’re really trying to figure out is how well they really understand the underlying principles of their experiment, how well they applied the scientific process, did they really analyze the data, and does it lead to further investigation.

I do have to say that the forms for the judges are really well done. They have an enormous normalizing effect for finding the best ones. Like last year, I was in the middle of the pack, with the guy from TI a little more generous, and the guy from Raytheon a lot more strict, but he had worked in black projects, so that kind of discipline is understandable (and admirable, in my view). I asked him what it was like to come out from working on technology so far ahead to technology so far behind, and he basically described it as interesting. I was a bit surprised to see much less of a presence from the military this year (though they were there). I hope someone from the government was out scouting for talent and trying to cultivate our best and brightest. Perhaps that was the Special Awards team.

Our top picks on my team didn’t line up quite so much as was the case last year, so we added up the scores, laid out the top half, and wrestled over the order before arriving at a consensus at 1, 2 and 3 plus honorable mention. I think I can say that the young lady who was our top pick definitely has a future in electrical engineering.

After turning in the results the smart guys got to leave, and I got to stay behind with the other two captains to take the top nine picks plus honorable mentions down to the top three plus honorable mentions. At this level each of the Captains is essentially advocating for their experiments against those from the other groups as a means of shaking out the ones that really stand out from the standouts. Our top three were all very good, and it was tough picking the top one. Again, it boils down to the scientific process, and how well they conducted their experiment, and how well they learned from it, which is really the key. I think we did well with our top choices, and a couple of honorable mentions that we felt really stood out.

So we go to turn in the forms, and the official lady tells us that only two honorable mentions is harsh. Yeah, there’s space for up to six, but these are the ones we felt really stood out for honorable mention since they couldn’t get into the top three. I think her point was that only recognizing 20% of the field for awards was not the best way to encourage these bright young minds, so we buckled (it’s for the kiiiids, man) and added some more who weren’t quite as good as our first two choices (who I guess I would have given Special Honorable Mentions), but there you have it.

One thing that did surprise me was how quickly I shot up the hierarchy versus last year. In the first round the two rookies had me cornered, since I at least had one year of experience under my belt, so there was no escaping being the Captain there. But in the second round, I did get the impression that the other two judges were deferring to my ‘leadership’ a bit, even though I in no way sought a leadership position. The young lady from Turkey who was on the same judging team as I was last year also ended up as a Captain. She said she’s seeing a lot of Planck-related stuff, so perhaps the Millenials will be the ones who figure out the quantum foam and the fourth physical dimension (in the same way that circles are two dimensional representations of three-dimensional spheres [or cones or cylinders], I consider our universe to be the 3-D representation of something in the fourth physical dimension; since we haven’t figured out how to measure that fourth physical dimension with our 3-D tools, so consequently there’s a lot of physical effects here in the 3-D universe that we still don’t understand, and probably won’t until we get a better handle on the next dimension up, and quantum mechanics is a part of that, IMHO). The other Captains were both teachers, so they were closer to both the subject matter and the student’s level, and I certainly made it clear that I respected their deeper knowledge of the subject. Perhaps it was just because I made sure we worked through the process and that the consensus was really the consensus. Or the Peter Principle, part two. We were pretty much the last judges to leave.

Sunday morning now. I wanted to see if the coverage by our local rag, the Dallas Morning News, could be any more pathetic than last year, and lo and behold, the winners weren’t even named in the paper, there was just a picture even further back in the Metro section (8B this year versus 2B last year), details on viewing the displays today, and a link to a website (dallasnews.com/extra). Just what hundreds and hundreds of eager-beaver young stuents are looking to save to their scrapbooks. The photo is of a display that I remember seeing entitled “A Study of Cymatics, Applied to Planetary Models”. The reason I remember it is that I scanned through the text and didn’t actually see an explation of what the heck the word Cymatics means. The best I can find amongst my dictionaries at home is cyma and cymatium, both architecture terms relating to curves and stuff. I was quite happy to see a junior project called “Operation Moon Dirt: Can the Man on the Moon take up Farming?”. There’s been a fair amount of traffic to the entry in the Lunar Library on NASA’s Lunar Plant Growth Chamber Challenge. Perhaps an article on cytherian gardening is in order for the next Carnival of Space…

…

Okay, so we’re here later in the week, as I wanted to give John’s great post some time at the top of the page. I missed this week’s Carnival of Space, but the article on cytherian gardening is coming along. I just need to fill out the hyperlinks and get the pictures ready for the first part. I’m going through a lot of the older books in the Lunar Library and scanning the really cool Moon-related illustrations. Finding gardening-related ones is a bit tough, but I’ve found a few. It’s going to be a three-parter, with the first one up probably this weekend. Right now I’m bogged down in a review of “Lunar Base Agriculture: Soils for Plant Growth” from 1989 for the middle part of the article, and then for the third part I’m going to take another stab at looking through NASA’s Lunar e-Library, a collection of NASA research papers over the years relating to the Moon. Apparently it’s so comprehensive that it’s export-controlled (as if that’s stopped anyone that really wanted to get a copy), but it also sucks memory and wreaks havoc on my computer, making it very difficult to use. There’s some other stuff I’m going to look through as well to try to answer the question of whether we can garden in the regolith of the Moon.

One last note, sharp readers will note that the testimony Bernanke gave before Congress today was codespeak for some the financial things I’ve talked about in previous posts, especially relating to Bear Stearns. The Telegraph in the UK was the only decent coverage of what he was actually talking about. The main theme going on here is that the markets must remain calm, and there needs to be sufficient liquidity in the market to make sure that no one gets jittery about counterparty risk. Right now, I have no doubt, investment and commercial bankers are carefully poring over their documentation about just who they are exposed to and for how much (both pay and receive). Documentation and systems risks are also to be considered in companies that have high turnover or supertight staffing. In fact, gentle readers, now is probably a good time to pull out your prospectuses and see if you can figure out in just what exactly your savings are invested. (Ha ha ha…heh heh…oh ho ho……good luck) Self-directed accounts of course know exactly what their investments are, unless they’re buying mutual funds. Read the fine print, all of the mutual fund companies are allowed to engage in hedging activities with all kinds of instruments.

And here’s my issue. In the purest sense, to hedge means to protect against principal loss, usually by trying to at least match the rate of inflation. The whole point is to not lose principal, even if interest is foregone. If you start with a million dollars you should at least end up with a million dollars, hopefully more.

Much of what is called hedging these days is actually speculation, which is when you put principal at undue risk to get outsized gains when you score. This is different from investing, which should really be considered things like grandma buying the bonds of the local utility company for a steady 6-8% return year-after-year-after-year. [Ha! Those days are long gone] You won’t be rich, but you’ll be comfortable if you save.

One thing you might hear is that Credit Default Swaps (CDS) is a way of ‘shorting’ bonds. In a sense this is true. For the uninitiated, shorting is where you borrow some stock to sell at the current market price with the expectation that the price will go down (you have a different analysis from the market), so that when you have to give the stock back to the guy you borrowed it from, you can buy it at the cheaper price in the market and pocket the difference. In the case of bonds, you buy the CDS as ‘insurance’ against your bond defaulting and losing all of that principal, the triggering event being the non-payment of the bond, BK, &c. and anon, though in the case of CDS it is not necessarily clear if you actually have to have any association at all with the bond to purchase the ‘insurance’, which would differentiate it significantly from a short. Since these are considered derivatives, they get special treatment in BK, ranking equal or superior to secured creditors, which would require disgorgement of lots of capital in such an event as market contracts netted out. That is why liquidity is so important for the markets right now. What’s keeping the investors from the markets is lack of transparency. There isn’t any real investment being put in because everyone is looking for their expectation of the proper price and the constant additions of liquidity are propping up prices that no one believes. Until the market goes through a fundamental repricing it is going to experience ongoing timidity amongst investors and people are going to sit on cash. This means that there is going to have to be foreclosures, bankruptcies and yes, deflation of prices. I am not going to pay stupid money for a house. I looked at one last weekend that is waaay overpriced, and as a consequence has been on the market for a while. I have no intention of paying out a speculator, I’d like to buy from a homeowner that’s going to negotiate a fair value.

So there you have it folks, make sure you pay off your credit cards, read contracts before you sign them, even if the salesperson is tapping her toe, only buy something you understand, and eat oatmeal, it’s good for you.

[Caveat Emptor]