Being a privately-held company, SpaceX’s finances have been notoriously opaque. No doubt Elon Musk prefers it that way, because he can’t be too pleased with last month’s Wall Street Journal “expose” of their account books. The story is still behind the WSJ paywall so we’ll have to take The Motley Fool‘s word for it:
In an expose compiled from “exclusive … internal documents” — probably obtained from the “former SpaceX employees” that it interviewed — theJournal confirms that SpaceX has in fact been losing money since at least the beginning of 2015. Says the Journal, not only did SpaceX rack up losses of $260 million in 2015, but it actually incurred “an operating loss every quarter, and also negative cash flow of roughly $15 million.”
For the record, this means SpaceX was losing money nearly one year before the company removed the famous “profitable and cash-flow positive” assertion from its website.
Not too surprising, considering that their launch rate was still well below target even before losing two boosters to “rapid unscheduled disassembly.”
The above links are not entirely unrelated. While the flight crew experience minimums came down from on high (or wherever it is Congress resides), the sudden reversal on regulating spaceflight perfectly illustrates how our government looks at us lately. The FAA is just the branch I have the most personal experience with and they’ve been getting decidedly too big for their britches lately: Weight & Balance rules that will grind airline ops to a screeching halt, directing AMEs to assume anyone over a certain BMI needs a CPAP machine, classifying off-the-shelf R/C models fitted with GoPro cameras as “drones” to be regulated.
Deciding it’s time to regulate in-development spacecraft and orbital operations tells me the Feds have decided that literally nothing is beyond their reach. Pardon me, Mr. Nield, but you have not the slightest damned idea what you’re talking about. Assuming the past 50 years of NASA-centric spaceflight experience puts you in a position to dictate standards to companies who’ve set out to break that mold is the worst kind of hidebound bureaucratic “thinking.”
Over the last fifty years, how much demonstrable progress has been made on reusable launchers? If your answer is “space shuttle” then you’re missing my point. Each orbiter had to go through the rough equivalent of an airline heavy-check every single time they flew. If we did that, we’d be out of business just as surely as if we threw away our airplanes after each trip.
Did anyone anticipate SpaceX would be able to create a reusable first stage that lands on its tail like something from a 1950’s sci-fi movie? Or XCOR’s runway-to-suborbit spaceplane? How would either of those fit into standards that by Nield’s logic should be based on NASA legacy systems?
Those who can’t do, teach. Those who can’t even manage that, regulate.
Now, I have nothing against high earners and fancy homes. I aspire to it. But this is what happens when Uncle Sam takes it upon himself to start spreading the wealth around. That is, it gets wasted on all sorts of stupid crap — such as landscaping for people who can afford it on their own. And it attracts parasitic cronies who are busily figuring out ways to skim it for their own benefit.
See this? It’s the entrance to our little neighborhood in small-town Ohio, USA. Know who paid for it? WE DID through our homeowners association (which, BTW, charges way too much for the services they allegedly provide but we haven’t been able to throw them out until all the lots were built). Nobody else’s hard-earned tax money bankrolled it.
Just one example of many. They’re not too hard to find, so expect this post to become the first in a series.
It’s looking less like comedy and more like prophecy.
Speaking of prophecy, Ayn Rand was on to something. Tell me, does this sound familiar?
A few houses still stood within the skeleton of what had once been an industrial town. Everything that could move, had moved away; but some human beings had remained. The empty structures were vertical rubble; they had been eaten, not by time, but by men: boards torn out at random, missing patches of roofs, holes left in gutted cellars. It looked as if blind hands had seized whatever fitted the need of the moment, with no concept of remaining in existence the next morning. The inhabited houses were scattered at random among the ruins; the smoke of their chimneys was the only movement visible in town. A shell of concrete, which had been a schoolhouse, stood on the outskirts; it looked like a skull, with the empty sockets of glassless windows, with a few strands of hair still clinging to it, in the shape of broken wires.
Beyond the town, on a distant hill, stood the factory of the Twentieth Century Motor Company. Its walls, roof lines and smokestacks looked trim, impregnable like a fortress. It would have seemed intact but for a silver water tank: the water tank was tipped sidewise.
If you’re less inclined to read her otherwise turgid prose, there’s always RoboCop. Better Half and I lived briefly (very briefly) outside Detroit back in the ’90s when it was already a well-known $#!+hole, pretty much the big-city hell this Southern boy imagined it would be. We were quite happy to leave it in our rear-view mirror one snowy morning.
So is this an isolated incident? Doubtful. Despite the insane blatherings of certain MSNBC hosts (whom I refuse to link), this was not a result of Republican meanies. This is what happens when unsustainable policies are left to run their course in the hopes that they can keep squeezing blood from a stone.
“Bin Laden is dead, and Detroit is alive.” It was a laughable line then to anyone who was paying attention. Now it’s just sad.
This is what happens when nations run up too big of a bar tab and have run out of options as the taps run dry and the bartender shouts “last call”: they start scrounging for dropped change, steal the waitresses’ tips when she’s not looking, and then eventually start lifting other patron’s wallets.
Of course, now that tiny little Cyprus has decided to brazenly steal from its depositors, the other EU zombie-states are starting to fall in line. If the citizens of Spain, Italy, and Greece wish to remain “citizens” (before they finally blow right past being “subjects” and become “serfs”), they’d better be paying close attention and getting their cash out of the banks now.
Think that’ll go well? Me neither. But once a state has removed that crucial psychological pillar – that is, your money’s safe here – then there is nothing to stop a good old-fashioned bank run. And that’s bad for everybody:
The economic repercussions of having people feel that their money is not safe in banks can be catastrophic. Banks are not just warehouses where money can be stored. They are crucial institutions for gathering individually modest amounts of money from millions of people and transferring that money to strangers whom those people would not directly entrust it to.
That means no loans for new cars, new homes, or new businesses.
Once the dust settles, they’re likely to treat their elected “betters” the same way they’d treat the proverbial drunk trying to stick them with his bill. Of course, there’s one little problem in that they all have a share of the National Bar Tab.
Since flight delays are one of the most over-hyped metrics of Sequestrageddon (no doubt to be followed next year by Sequestrageddon II: This Time, it’s Personal), let’s use a little modern technology to follow the decline of American civilization in real time:
Wow. Just look at the path of fiscal destruction wrought upon our national airspace system! One cringes in horror. It must be falling into chaos ’cause DHS says so. And their fingers are on the collective pulse of the nation…right?
U.S. airports, including Los Angeles International and O’Hare International in Chicago, are already experiencing delays in waiting lines as a result of automatic federal spending cuts, Homeland Security Secretary Janet Napolitano said Monday.
Their fingers are probing a collective something, alright, but it ain’t our pulse.
The Argentinians who suffered through the Peron collapse – at least the ones who understand the how & why of it – are preparing for the inevitable:
What consumers will certainly do is scramble into local stores to take advantage of artificially-controlled prices knowing very well they have two short months to stock up on perishable goods at today’s prices, before the country’s inflation comes soaring back, only this time many of the local stores will not be around as their profit margins implode and as owners, especially of foreign-based chains, make the prudent decision to get out of Dodge while the getting’s good and before the next steps, including such measures as nationalization, in the escalation into a full out hyperinflationary collapse…
I have written before about the grotesque – in my view – and persistent misallocation of capital (in financial markets) being caused by the mispricing of capital/money by central banks; by their ongoing “promises? to misbehave – seemingly forever – such that anyone with good common sense will eventually be battered and beaten into submission and be forced into the misallocation game; and by the – again, in my view – irresponsible behaviour of fiscal policymakers too. Collectively, we have a huge global game of kicking the can down the road driven by excessive and wasteful government largesse, funded by explosive growth in central bank balance sheets.
Put simply, the Fed’s Everlasting Gobstopper money-printing operation is pretty much the only thing propping up equities. They’re flooding the world with cheap money, creating an investment bubble that will eventually pop just like the housing bubble.
Lord help us but the Commie thug Khrushchev may have been right after all: Capitalists would sell us the rope we’d hang ourselves with.
I say that as a proud gun-totin’ free-marketeer, but would note that there is a distinction between a free market and whatever it is we’ve been experiencing for the past several years.
Following that train of thought: European research into hypersonic suborbital airliners. Well, a guy can dream, but this looks like more EU BS. Studies are fine; research is necessary. But why pretend like they’re ever going to get serious about actually building something?
End of the world watch: “QE3: This Time, It’s Personal!”: Stepping on the accelerator as we head over the cliff. Apparently the old “I can’t be broke, I still have checks!” line is a joke to some and a guiding philosophy for others. I don’t really care what your politics are, just know that this will not end well unless we can somehow grow the economy at a rate that will eventually surpass the Fed’s money-printing velocity. And let’s face it, pro-growth policies are not exactly flowing out of Washington these days. Our only real hope is the domestic energy boom underway in the Appalachians and Dakotas, which so far are not hamstrung by a need to access Federal land. If the EPA can be kept from strangling that baby in the crib, we may have a fighting chance. Better hope so, because otherwise an inflection point is coming and reality will not be denied for much longer.
What’s really infuriating about all this political theater is that those of us who’ve tried to learn History’s lessons are going to suffer from the foolishness of those who refuse to (or believe they’re smarter than their forebears). In the end, human nature is what it is. There is nothing new under the sun.
Because simply calling them “economic illiterates” doesn’t quite get the point across harshly enough.
When the freaking Teamsters agree with management and accept concessions, shouldn’t that be an indication that hey, this is kind of serious?
Something like this happened with Eastern Airlines back in the late ’80s. Despite having their mechanic’s union steward holding a seat on the board of directors, it still didn’t satisfy them. If anything, their leadership used that privilege to just create more hate, discontent, and chaos. Labor strife got so intense that, near the end, company chairman (and Apollo 8 CDR) Frank Borman reportedly carried a concealed pistol in an ankle holster.
The end result? One union eventually drove a once-great airline into the ground. On purpose, to prove a point; never mind their thousands of colleagues who had no say in the matter and were dragged down with them.
I can’t imagine the fury such people at Hostess must be feeling right now. Why couldn’t anyone understand that 80 or 90% of something is far better than 0% of something? Take the deal, suck it up, and use the time you just bought to find a better job. And if you can’t find a better gig, be patient. Life sucks for a lot of people these days and it ain’t about to get any better.
The only explanation for this kind of behavior is greed, bound to a sense of entitlement, with a healthy dose of economic ignorance. I’ve never understood this notion that businesses are just sitting on enormous piles of cash with no better purpose.
Maybe they are, maybe they aren’t. Either way, it’s not like there aren’t other obligations. Just because a company has cash reserves doesn’t mean they should hand over all of it to their employees. What happens if they have a bad year? You’d kind of want those reserves on hand to cover your bills – which includes making payroll.
In other words, it’s the same principle we should all be using to manage our personal finances. If I get a raise (cough, hack…’scuse me, gagged on something there), it doesn’t mean my kids are suddenly going to see a big increase in their allowance. And I love my kids a whole lot more than our employers love us.
Let’s face it: work sucks. That’s why it’s called “work” and not “fun”. Sometimes we’re fortunate enough to land at good companies with good leadership; sometimes we’re working for the pointy-haired boss in the Dilbert comic. I’ve had both, and have never comprehended the strike mentality that tries so hard to squeeze more blood from the stone. If your gig blows that bad, then find another.
Perhaps I’m too harsh, but my heart goes out to the innocent bystanders in this mess. That includes the Hostess employees who were just cast into financial turmoil by a few boneheaded coworkers, and the rest of us who are now well and truly screwed when the zombie apocalypse finally arrives:
Margaret Thatcher observed this about socialism’s fundamental weakness: eventually, you run out of other people’s money.
Well folks, we are rapidly approaching that point here in the good ol’ USA. No amount of tax increases will fill the chasm of our national debt; the Fed’s unbridled money-printing certainly won’t. Our only choice is to expand the economy with sane tax & regulatory policies while putting the brakes on printing new money.
The first will allow the economy to expand, ideally to a level that actually provides value to that money we’ve already printed. And those printing presses will have to be shut off for a while, causing interest rates to go up. But this must happen, otherwise our dollars will become worthless sooner rather than later.
Think of this in terms of personal finances – if you make 50,000 a year but spend 75,000, you’re in the hole for 25 grand. Sometimes it’s for legit reasons, sometimes not. Either way, most people would handle that deficit with credit cards or bank loans.
But here’s a twist: let’s say that instead of getting paid, you’re trusted with a magic money-printing machine, and its capacity is normally pegged to the value of your salary. You should be able to print 50 grand a year no problem. If you want to print more than that, someone else has to guarantee its value since you can’t. You can do this because lenders know you’ve always been good for it.
At some point, you get a case of the “I wants” and just start printing money to spend on who knows what. Lenders might tolerate this for a short time, particularly if everybody else in the neighborhood is having even worse trouble. They’ve either been spending way more than they earn (Greece), or cosigning too many loans for less well-off neighbors (the EU), or even flat-out lying about their salaries (China). Either way, you’re pretty much it for the time being so you don’t change any bad habits.
Eventually, some of your neighbors get their act together and are now doing pretty well. Individually, they might even make less than you, but they’ve all managed to save a little and have kept their debts low. Pretty soon, lenders aren’t interested in you because they’re starting to worry that you’ve bitten off more than you can chew. And now they have options. So the loans you counted on for all those goodies are starting to dry up – but you’re still left with the same amount of expenses.
Now what? You can either file bankruptcy (bad, bad move – nobody would trust anything from your magic money printer for a long time) or find a higher paying job. Maybe even a second job.
In other words, make mo’ money. Buckle down, limit your spending, and increase your income until your debt is back to a manageable level. Then start steadily paying it off while vowing to never, ever, get yourself into such an awful position again.
The alternative, bankruptcy, leaves you at the mercy of the people with money. And as we see with the EU, this can have undesirable consequences like loss of self-rule.