Ares/Orion Debacle?

The Ares I/Orion, the "Space Shuttle replacement," is an albatross of awesome proportions. Cost overruns for the Ares 1 manned rocket were recently announced in the neighborhood of $7 Billion. People have taken to calling it "Griffin's Folly" after the current NASA administrator, as if he lost control of the project and it became something unflyable and unmanageable. But there's a possibility that this was an intentionally constructed albatross.

Consider the atmosphere at NASA after Columbia. It was clear to the point of a mandate that the Shuttle needed to go. NASA had no political pull because it had just blown up a vehicle. Congressmen were drooling over the remains. So Griffin gave them what they wanted. The program is way too obviously a throwaway, consider:

- The idea of lofting humans on a solid booster is preposterous. Solid rockets can't be throttled, shut off, or controlled in almost any way. The combustion zone is millions of times the volume of a liquid rocket, making the harmonic range much higher. Among rocketeers, solid rockets are "big, dumb rockets" - they give you a big push, but it is best to get rid of them once you've lifted the rest of the vehicle off the pad.
- Heavy lift was kowtowed to, even though the high flight rate has been shown to be the single biggest driving force in lowering launch cost. The reason Apollo used Saturn V was that NASA lacked experience in on-orbit assembly, so they wanted to lob everything in one shot. Clearly, with the experience and way station provided by the International Space Station, this is not a driving factor anymore. Why else did we spend $100B on the thing?
- For good measure, the crew size was made large, multiplying first-unit cost dramatically. Again, we have a space station to stash 3 people at for a short term if necessary. And the whole point of the project is to create a base on the moon, which would operate much more smoothly with change-outs of 3 crew members than 7 crew members.
- The whole thing was parsed out to as many NASA centers and aerospace contractors as possible. Not much choice here; it's the way NASA and the military have worked for 50 years. Cost-plus contracts turn overruns and admin costs into pure profit and votes.

This all sounds like it could be just another string of stupid government agency decisions, but two facts stand out:

1) There were already plans for much cheaper shuttle-derived lifters that would have preserved congressmen's booty. It's hard to believe that a compromise to the Shuttle-C heavy lift vehicle, or a reduction of the crew to 3, or even an evolution of the existing Boe-Mart launchers for the human portion would have been politically unacceptable if packaged the right way. This would have created something like everything the agency has done in the last 40 years: compromised, commercially unviable, politically tenuous but passable, unsafe, but flying and giving people jobs in congressional districts across the land. But this project is so bad, it's like 30 congressmen came into NASA offices one day, and they all started shouting their demands, and Griffin just kept smiling and saying "yes", "sure", "you've got it," and the congressmen all went awkwardly quiet, and filed out with a funny feeling they'd been had that vanished by the time their drivers' white-gloved hands helped them out of the limo.
2) COTS. Why would Griffin choose to contrast the flagship program with a high-profile competitor? If he had any hope or will that Ares would fly, there's no way COTS would have happened. Ares is the rich, loose girl at the dance who's really loud and slutty but you know she'll put out for a while before she falls apart at age 20 and you can dump her. COTS is her shy sister that no one notices who is way better looking, smarter, and an all-around better person.

My optimistic (or at least pragmatic) theory is, Griffin and NASA came to the conclusion that there was no tenable solution that would both replace the shuttle and ensure the agency's funding. So they went the other way, and completely scrapped the whole flying hardware part of the idea and decided to just make congress happy.

COTS is the checkmate move... it's like a knight that doesn't get noticed until it's about to corner the king. It's small enough to fly under the radar... that's why Griffin keeps holding back on the D option for human flight. He doesn't want to alarm the biggies until SpaceX is so close that they'll have something flying by the time the check is written. Everyone who pays taxes should be heartily cheering on the Ares debacle, because it could signal the beginning of the end for the cost-plus primes model of space procurement and management. If either COTS contractor (SpaceX and Orbital Sciences) gets to orbit, it will be for the neighborhood of $1B. By then, Ares/Orion will have spent 10 times that much on a system that has probably never flown, and if it did there were grave problems found that require an expenditure in kind. By then, it will be long dead, along with future projects of the same ilk. Or at least, we can dream.


Robbing Peter to pay... Peter?

Well, the news has come down from Washington that the glorious executive will be giving about 2,000 of my dollars to rich banking executives, in addition to the hundreds they've already given. I would get pissed at the bankers, but I just don't have the... well, the myopia to do that.

This is the government's own fault. And now we're being forced - at gunpoint if necessary - to pay for it. I knew this would happen. In fact, I told everyone starting in 2004 or so that something wasn't right, and that they should stay out of real estate. I don't know if I actually swayed anybody. I had a friend buy a 1500 square foot ranch with a small back yard and no ocean view in Huntington Beach for close to a mil - the kind of house that my relatives had paid 90,000 for in the '80's. I didn't have the gut to tell him he got suckered at the time, but the astonished look on my face probably did the job.

So, okay - people put big price tags on their homes and other people bought it... but why? Well, because they could afford it. When prime rate literally can go no lower, mortgages get really cheap (or they should, more on that later). So people bought debt and used it to invest in real estate. The smart ones locked in and, regardless of what their house is worth today, they have a place to live. The dumb ones... not so much. See, this happened way back in the 1920's, or, the "Roaring Twenties." It all goes back to 1913.

This is when the government had an idea. They saw the dairy industry as having too much power over the people, and they wanted it to stop. I had led to many milk and cheese shortages, which hadn't previously been a big deal to congress; it didn't really affect them. However, 7 years earlier the congress had just passed an (unconstitutional) law that authorized them to take as much as they needed out of every bottle of milk delivered in the US. Well, milk shortages suddenly were now hitting them where it hurt. While congressmen have no talent for raising cows and making milk, they could affect how milk was apportioned by setting the price by law! Well, the first thing they did was to set the price of milk as low as they thought market could possibly bear. Farmers made lots of milk alright... and for a few years there was an abundance of milk, cheese, yogurt, and cream. Then the cows went fallow - you can only take so much so fast. And when all the milk dried up, everyone's life went down the shitter. The Great Depression happened. History books blame it on random cycles, Herbert Hoover, and Germany, but the fact is something that was made with the intention to protect us from "milk shortages" brought on the worst of them all. And now it's done it again.

This is what the Fed is, and this is what it does. It makes money cheap. Well, people say, that's great! Cheap things are great. Right, but money is different from other commodities. Other commodities have intrinsic value. They supply a want or need. Money is a medium; it can't be used for much except wiping your ass if it doesn't buy anything. You CAN make money in arbitrar amounts out of thin air (if you're the Fed). You can't make value so easily. You have to actually work at it, and make something somebody else wants and is willing to pay for. Hey, I hate selling as much as the next guy but... the alternative is worse.

So when the Fed was keeping interest rates in the 1-3% range when we were having the second tech boom, I knew shit had to hit the fan. And it's not like I'm the only one. Every banker knew too. And if, like pre-1913, that was where it ended, then we'd be quite well off. But put yourself in a banker's shoes in 2006. You know the shit is close to hitting the fan. You know that you're way over-leveraged, and your sub-prime debt will not bail you out. Your assets aren't enough to float you out of the mess. Even if you wanted to shore up your balance sheet by selling higher-interest debt, no one will buy with all the discount mortgage companies throwing money around, that they know they'll never be able to back but who cares? Their executives will be in the Bahamas by this time next year. What can you do? Nothing. The game is a fix. You can buy money at prime rate and sell it at not much above (or even below). Your history and prudence has little weight. The only way to "win" is to sell at rates you know will kill you, and then just hope someone is around to buy you out; or if you're really a bad business the federal government will buy you out.

Sure, some banks would have over-lent and gone out of business even without the Fed, but it would have been a few banks with bad policies, and it would be a steady, predictable stream. The good banks would have survived and even thrived on the carcasses of cheap equity and debt that their liquidity could afford to buy. Instead, we have the entire credit economy going down at once. The good banks are forced to spend their cash not on money - making loans, but on bailing out badly managed competitors so that the whole sector doesn't go down the crapper. And it seems the biggest sin in this climate is not failing, but not failing spectacularly enough. Lehman Brothers and Bear Stearns got picked apart, but the behemoth disasters of Fannie Mae and Freddie Mac got cradled by the Treasury - THE SAME TREASURY THAT SENTENCED THEM TO DEATH IN THE FIRST PLACE!!! When you centralize things, you don't make them any safer - you just make the crashes farther between but worse.

Now the Fed is keeping interest rates low, but there's no more money to make easy. Instead, loans are ridiculously cheap and ridiculously scarce. In a free-floated capital market, interest rates would probably be up near 10% right now - a tough pill to swallow, but also a powerful sifter of wheat from chaff. Those business with great profit potential would get the money and pull us out of the recession. Those banks that had sat on their hands and scraped while idiots and criminals made paper money in the boom would be making windfall profits that they deserved. Instead, credit is now awarded on political merit, not financial. Remember those stories about bread lines in Russia? Now it's the executives who drove industries into the ground getting outlandish severance packages, and regular workers, as usual, getting the shaft. All you Marxists out there: it ain't the bosses. It's the people with the laws and the guns.

I don't know what is worse - the feeling of helplessness that I and (I hope) tens of millions of other Americans felt when the prime rate wasn't moving even as the economy was so obviously overheating and all our reserves were being shipped overseas; or the disgust I feel towards my fellow Americans now ranting about more government oversight and how this was all the bankers fault as they finally read the fine print in their ARM contracts. When you dance with the devil you'll get burned no doubt. But it seems in this case like people jumped into the fire on their own accord, then went crying to the devil, asking if there's anything for the pain. He's the expert, I guess he'd know. Good luck folks.