So there’s been some discussion about Sarah Palin’s comment last week in her interview with Katie Couric, where Palin said…

“When you consider even national security issues with Russia, as (Prime Minister Vladimir) Putin rears his head and comes into the airspace of the United States of America, where – where do they go? It’s Alaska,”

There’s been stuff going around the net about what the heck she was blabbering about, and I figure it’s time to step up with an insider’s perspective and try to straighten it out a bit. To establish my bona-fides, I’ve worked for the Federal Aviation Administration for over 17 years. I am presently an air traffic controller; some of the airspace I control extends out over the Pacific Ocean (towards RUSSIA! And CHINA! I’m qualified to be Vice-President!) and for a couple of years, including on 9/11, I worked as a military liason for the FAA.

As a little more background into this matter, here’s a AP article that tries (poorly) to clarify the situation. Included in it is this:

The spokeswoman for the McCain-Palin campaign, Maria Comella, clarified in an e-mail to The Associated Press that when “Russian incursions near Alaskan airspace and inside the air defense identification zone have occurred … U.S. Air Force fighters have been scrambled repeatedly.”

The air defense identification zone, almost completely over water, extends 12-mile past the perimeter of the United States. Most nations have similar areas.

However, no Russian military planes have been flying even into that zone, said Maj. Allen Herritage, a spokesman for the Alaska region of the North American Aerospace Defense Command, at Elmendorf Air Force Base.

“To be very clear, there has not been any incursion in U.S. airspace in recent years,” Herritage said.

So who’s telling the truth?

I believe they both are, kinda.

To really look at this, we’re going to have to get educated a bit. Sorry, but it’s true.

AIRSPACE
First of all, there’s multiple types of airspace being discussed here. There’s the “airspace of the United States”, there’s international-but-controlled airspace, and then there’s the “ADIZ”.

• The actual territorial airspace of the United States follows the same boundary as our territorial waters. As a general rule, that is 12 nautical miles off the shoreline. There’s some exclusions and exceptions to this, but that’s generally how it works.
• Everything outside of 12 nautical miles is international airspace- it might be “controlled” by a given nation’s air traffic control (ATC) provider, but that doesn’t mean that nation “owns” it. When we say we “control” such airspace (and we do), we don’t mean that we can keep people out of it if we want; it means that we provide ATC services to airplanes in the area so they don’t smack into one another.

  Signatories to the ICAO agreements basically all agree that civilian aircraft that are registered/licensed in those member states (nations) will operate properly in international airspace. This means that they agree to be “controlled” by the ATC provider for that airspace. For a good portion of the world, that’s the Federal Aviation Administration, because the FAA does the ATC for huge portions of the Pacific Ocean in addition to the US airspace.

  However, in international airspace like that, “state” aircraft are allowed to operate outside of normal ATC procedures. These are government-owned aircraft, which generally means “military”.

  Military aircraft, then, are allowed to fly anywhere they want when they’re in “international” airspace, even if it’s “controlled” international airspace. That means they can fly right up to 12 miles away from the shoreline of the United States.

• Finally, there’s the “ADIZ”. An ADIZ is an Air Defense Identification Zone. ADIZs (ADIZII? ADIZes?) are established by nations to serve as areas where that nation is saying “we declare that we want to know about every aircraft that’s flying in here, and we’ll send our military to do it if we have to”.

  The Alaska ADIZ, like the Pacific ADIZ on the west coast of the United States, starts at 12 miles out and extends to 200 miles out (except where it goes out to Russia’s ADIZ when Russia is less than 400 miles away, in which case the two ADIZs meet halfway).

  The important thing to note here is that an ADIZ, despite being established by a given nation, is actually international airspace, and by treaty and international agreement nations have a right to fly their state-owned (military) aircraft around in there all they damn well please. Likewise, the nation establishing the ADIZ can and will treat it as though it’s a matter of national security to know who’s in that ADIZ at all times.

So now you’re an airspace geek. Congratulations!

PROCEDURES
Inside of the United States doesn’t really matter for the purposes of this discussion, and the different subcategories of airspace are WAY too complicated for a single blog post, so let’s not go there. Okay, that was easy.

When it comes to the ADIZs surrounding the United States, the military unit responsible for watching that airspace is NORAD, which is a joint US-Canada operation. There’s a NORAD unit that does exactly that for the airspace over the US and west of the Mississippi just 40 or 50 miles down the road from me, at McChord AFB outside of Tacoma, Washington. The unit is known as WADS (Western Air Defense Sector) and they have their own web site, so me telling you about it isn’t breaking any kind of secrecy or security!

WADS (for real geeks, their call sign is “Bigfoot”) is a pretty interesting place. I’ve been there on business a few times. Their control room looks a lot like a civilian ATC control room, but also like what you’ve seen in movies.

The various NORAD units watch the ADIZs that are in their areas all the time. I posted a blog quite some time ago (about 9/11, but it’s worth noting here) that has a graphic depicting the locations of the newest FAA/Air Force joint radar units, the ARSR-4. You’ll note that they’re all on the periphery of the US.

When an aircraft gets to a certain range within the coast (in my area it’s at 128 degrees west latitude) they will switch from the oceanic ATC provider (in my case, it’s Oakland Center, which controls something insane like 1/10 of the earth’s surface because their airspace goes from the US almost all the way to Japan, and south to Fiji) to the one for over land (Seattle Air Route Traffic Control Center, in my case).

The new center will assign a discrete transponder code to the aircraft (they squawk a “nondiscrete” code of 2000 when they’re over the water) and then radar identify them. This all takes place right about at the outer ADIZ boundary.

Now, NORAD is watching all of this as well. At Seattle Center, we can see the airplane on radar over 200 miles out over the ocean. If the a/c gets closer and hasn’t called us, they’ll still have 2000 on their transponder. At some point (which I don’t exactly know, and even if I did I wouldn’t tell you, because it’s a security thing and I don’t want to screw up my security clearance) the NORAD unit responsible for the ADIZ will start to get concerned.

Their first call is to me at the FAA. “Hey, do you know who this target is? Are you in communication with this aircraft?”

If we aren’t talking to them and don’t have a flight plan for the aircraft (and remember, the military planes flying around in international airspace don’t have to have a flight plan) then at some point the NORAD unit will get ready to scramble some fighters.

Our fighters are on varying levels of ready alert at all times… but we don’t have as many of them as you might think. Back in the height of the Cold War, we had many more fighters in alert status, ready to launch with just a few minutes’ notice, but those numbers dwindled to just a few dozen by 2001. (There’s more now, thanks to 9/11, but instead of all being ready to intercept enemies from outside our borders, their duties include being ready to take action within the USA.)

The fighters are launched and go out to identify the aircraft in question. Their procedures from that point onward depend on how close and what type of aircraft it is, and whether or not it establishes some contact with ATC or not. Believe me, if it’s a civilian, they’re going to be getting ahold of ATC as quickly as possible when a fighter jet turns up alongside of it!

When the fighters go out to intercept, they fly through our (FAA’s) airspace. In the area of the intercept, we’ll delegate a big chunk of airspace to the NORAD controllers so they can do their thing with the fighters, but we remain in close contact and coordinate with them (after all, we’re using the same radar, so we can see what’s going on) in case we have any other normally operating civilian flights in the area.

Congratulations, now you’re a fighter intercept geek!

PALIN
So finally we come to Sarah Palin’s claim that she’s got foreign policy experience because Putin and the Russians are coming into US airspace right up there in her neck of the woods. And we’ve got the NORAD spokesman saying that Russians haven’t penetrated our airspace. Who’s telling the truth?

Well… both, really. Kinda.

First of all, it’s pretty well established that the Russians have been operating more flights in the ADIZ lately. There are a number of stories about it in the internet tubes, dating back to well prior to the election- some even quoting the same NORAD spokesman as the Palin stuff now.

Palin’s quote made it sound as though the Russians have actually penetrated the territorial airspace of the United States. The NORAD spokesman said that isn’t so, but he also said that indeed the Russians have been in the ADIZ, and the military has done its job (ie, scrambled jets) in that instance. I think that this story comes the closest to getting it right…

What Palin might have been referring to was a buffer zone of airspace that extends beyond the 12-mile strip. Although not recognized internationally as America’s to protect, the military watches it.

That zone is where there has been increased Russian bomber exercises – about 20 incidents in the last two years. When Russian bombers enter that expanded area, sometimes called the outer air defense identification zone by the military, U.S. or Canadian fighter jets are dispatched to check them, Herritage said.

As you can see, this story more or less confirms both Palin and the NORAD guy. There have been violations of the airspace the US military watches, and Palin was probably informed about that… but the Russkies haven’t actually come into US airspace.

Does this mean Palin deserves a free pass on this one? Not exactly, but it does mean she’s not exactly lying her butt off about it, either.

The reality is this: The governor of the state has absolutely zero to do with what we’re talking about here. It’s all federal and even if it’s a National Guard unit that flies the intercept (as in the case of the 142nd Fighter Wing, the Oregon Air National Guard unit that does the defense job for the northwestern continental US- I work these guys all the time) the state isn’t involved beyond, perhaps, a courtesy briefing and explanation of what that Guard unit is doing.

So Palin’s suggestion that she’s got some kind of foreign policy or military experience stemming from the fact that Air Force fighter jets based in her state are intercepting Russian planes up near her is total bunk. She doesn’t have a damn thing to do with it and doesn’t know WTF she’s talking about.

BUT… she’s right in suggesting that those missions are happening. She’s wrong in saying that it’s over the territorial airspace of the US, but she probably made a layman’s mistake and doesn’t understand the difference between an ADIZ and the actual US airspace. (Most folks don’t, even political leaders.)

If, however, you are willing to grant Palin just a tiny shred of doubt, it’s relatively easy to see that when she said that US fighters are going out to Russian planes “in US airspace”, she’s technically correct because those fighters are doing it in a US ADIZ.

So, as much as it pains me to admit, she wasn’t flat-out lying. In fact, she was doing a very typical politician thing, which is to spin a mostly-truth into something much more to make her own credentials look much bigger.

Kind of like how Al Gore invented the internet, you know.

THE FINAL CONCLUSION (AND WHAT THIS POST WOULD HAVE BEEN WITHOUT ALL THE EDUCATION)
There really isn’t a conflict between what the NORAD spokesman said and what Palin (and the McCain/Palin campaign folks) have said. The NORAD guy is technically correct; no Russians have been in US territorial airspace. Team Palin is technically correct; US fighters have intercepted Russians inside of a US ADIZ.

And Palin’s suggestion that it gives her some kind of foreign policy experience is utterly laughable to anyone who has a basic understanding and education into the reality of territorial or international airspace, or ATC/military procedures for ID on aircraft in ADIZ areas.

…on my “other” blog (the one I write on nearly daily), The FAA Follies, is the following post. Those of you curious/bored enough to wander here get a little preview; this post will be up on Friday on the Follies.

If you’re a Sarah Palin fan, today’s blog entry is for you, because your hero is the featured politician in today’s blog entry.

This will take about two minutes of your time. Watch it, and then click on “more” to continue reading the rest of this entry.

Read the rest of this entry »

There’s been a ton of stuff in the news this week about a potential financial meltdown here in the United States. I’ve been following this for some time- like a couple of years. Seriously. Bear with me as I veer slightly away from the FAA and aviation; don’t worry, we’ll wind up there.

A couple of years ago, give or take a few months, I got a letter in the mail. It said that I had about 1700 mileage plan miles on Delta Airlines that were about to expire. If I wanted, I could redeem those miles for some magazine and newspaper subscriptions.

I only found a couple that I thought were worth even sending the response card in for, but one thing I did sign up for was The Wall Street Journal.

Now, I’m not an investor guy. I plunk my money into the TSP like everyone else (and as a side note to all the new hires who’re reading this blog: Right now, immediately, if you’re not already, start plopping the absolute maximum into your TSP, because you’ll thank me later) and have a few other little things here and there, but I don’t really get deeply into investing.

One thing I noticed after getting it for about two months, though, was that there was an ever-increasing number of stories in the paper about the subprime lending market- specifically, subprime home loans. The WSJ was running story after story, usually three or four a week, about how there were problems in this market.

The stories were almost always couched in soft terms, and there was always a quote from someone in the industry who was very reasssuring that hey, there’s no problem, don’t sweat it.

And yet now, guess what? The financial world is shaking because of, primarily, subprime loans.

Let’s go back a little bit further. Bear with me; like I said, I’m not a financial guy, but I’ll explain this as best I can.

Remember the famous Christmastime movie “It’s A Wonderful Life“? You know, the black and white one, with Jimmy Stewart as the guy who’s running the small family bank? Came out in 1946.

In one of that movie’s big scenes, Stewart’s character is explaining to people (during a run on his bank) that he doesn’t actually have their money sitting around.

You’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here. Your money’s in Joe’s house…right next to yours. And in the Kennedy house, and Mrs. Macklin’s house, and a hundred others. Why, you’re lending them the money to build, and then, they’re going to pay it back to you as best they can.

Now, that didn’t stop the run on his bank, but it did slow it down… and for decades, that’s the way that the mortgage industry in the United States worked. It worked very well, too.

Loans were kind of an asset for the bank, but not exactly. See, a mortgage is a kind of a bond. The bank invests a bunch of money, and then over time they get it back, plus interest.

Now, big financial institutions like to sell stuff. Primarily, they like to sell money, or pieces of paper that represent money. They could sell a mortgage if they wanted to; the buyer would look at the mortgage, how much was owed and how high the interest rate was, and be able to offer the bank a price for it.

The problem with mortgages is that they were kind of hard to price. See, a regular bond has a defined time limit to it. You know that it’s good for 5 years or 10 or 15 or 30 or whatever.

But a mortgage, that’s trickier, because the guy living in the house might decide to sell it- and then he pays off the mortgage in one shot. Boom, now whoever BOUGHT the mortgage is kind of screwed, because they bought it counting on getting that interest money coming in, every month. They got their original investment back because the guy paid off the principal, but they have to go find another mortgage if they want a steady stream of income and profit coming in.

So mortgages weren’t really traded and bought and sold and processed that much, because they were unpredictable. If interest rates fell and people refinanced, or if they sold their houses to move, the mortgages weren’t worth anything.

Then someone came up with the seemed-like-a-great-plan-at-the-time idea of “bundling” the mortgages up.

By taking not just a single mortgage, but a great big bunch of them, and putting them all into one bundle, you lessen the risk and increase the predictability of them. Yeah, some of them are going to be paid off early, but by getting all statistical and stuff, you could figure out how many that would likely be. The bigger the bundle, the lower the amount of fluctuation and the greater the predictability of the mortgages.

So the financial marketplace was delighted, because they could now buy and sell and process more stuff- these big bundles of mortgages. In fact, it revolutionized the whole mortgage market!

Now instead of your good old fashioned bank holding your mortgage for a long time, they were making money by writing mortgages and then bundling them up and selling them… and writing more mortgages and bundling them and selling them… and so forth.

Of course, if there’s money to be made, people are going to get creative- and they did. Variable rate, ARMs, 5% down, 3% down, no-money-down, no-doc, 80/20 first/seconds, home equity lines, 40 year mortgages, 50 year mortgages (talk about paying nothing but interest- these took decades just to make a tiny dent in paying off the principal) and so forth.

But even more important was that the government thought this was great, too. Remember George W Bush’s “ownership society“? Well, a huge part of that was deregulation. Let the markets control everything.

The banks were feeling hamstrung. All these new guys were out there creating new mortgage products and selling them and making great gobs of dough, and the old-school banks wanted in on the action. Who wouldn’t? There was a gold mine out there!

So the government set out to wipe out a bunch of the regulations that had been in place for decades- they were put there during/after the Great Depression, in fact- that constrained a lot of the big banks and investment firms. Alan Greenspan was very big in this, and it fit in very well with Republican ideology of “free markets” that should have no constraints from the government. Here’s a quote from an economist talking about Greenspan and the Congress’ deregulation, back in 2006:

But I also worry that deregulation has gone too far and made us more vulnerable to financial meltdown in the face of large and unexpected shocks. Housing markets are a good example of this. The promotion of home ownership though creative financing allows many to purchase homes that could not have done so not that long ago. But have people taken on excessive risk and thereby increased our vulnerability to a crash?

Man, that guy is good, isn’t he?

So what happened, with all these new markets and types of loans being created, was that a bunch of people were buying houses. The real estate market kept bubbling up- like crazy in some places. And like all bubbles, sooner or later it had to end.

Now it has ended… big time. But why is it being talked about as though it’s threatening the entire economy?

Because of those bundled mortgages. As this guy puts it…

After we get the mortgage, the lender sells that mortgage, along with others, to a larger international, investment or commercial bank, or, to a hedge fund or private equity fund, who then takes these separate mortgages—and the expected payments on them coming from us—and combines them into a bundle, and then uses the promise of the future income stream (the monthly mortgage payments from us) as collateral to take out a large loan (from another institution) of their own to finance something like a corporate merger or the restructuring of a major business.

I am aware of the amount of mortgages bundled together in one asset reaching as high as 4,000. I would not be surprised to learn of even greater amounts. This bundling process is known as securitization.

How does securitization work, again?

In a December 10, 2007 article in CFO magazine entitled, “Saving Banks: How the Mortgage Bailout Strains Accounting Efforts” we read, “In a securitization, a bank or other mortgage lender sells the future proceeds of a mortgage loan to a trust, or special purpose entity (SPE). The trust then pools them with other loans and issues bonds backed by the loan payments.”

This article makes clear that the current effort to contain damage from the subprime mortgage meltdown is stretching accounting safeguards that were put in place after the Enron scandal.

The mortgage crisis became publicly visible through the financial media in 2007 when it was learned that major banks like Bear Stearns, Bank Of America, Citibank and Morgan Stanley owned a dangerously large amount of these SPEs, some of which are also known as Structured Investment Vehicles (SIVs), and that they could no longer find a market to sell them to others. The reason there were no additional buyers for the SIVs/SPEs was because those who had previously been interested in them—including many hedge funds and private equity firms—began to see that the mortgage payments that supported them were not being made on time or at all.

So what happened is that when the real estate bubble finally burst, and prices fell back, all those mortgages- all those super-duper-neato creative ones, where people’s rates were suddenly zooming up after the first few years, or where the principal never actually went down (there were actually mortgages where your principal INCREASED after you bought the house), or other goofy stuff- all those mortgages suddenly became pretty much worthless. No money was coming in.

When the housing market was zipping along upwards, no problem- people could just sell and pay off those mortgages, so at least the base was safe. When prices are falling, though… the whole thing is screwed.

And thanks to deregulation, way more banking and financial firms that normal held all kinds of these bad mortgages. Some institutions that didn’t even do mortgages were getting whacked, because they were investing in other stuff that was investing in those wacky mortgages, so everything was linked up.

Now, why do I mention all of this? Because these things all wound up working together to get us into the mess we’re in right now. And the biggest factor of all, in my opinion, was deregulation. The government never stepped up and said “hey, creating a mortgage called ‘no-doc’ where you don’t even check to see if the buyer has the income to pay the mortgage is stupid and against the law”.

So instead of some simple, common-sense regulations being in place, the financial markets were tremendously deregulated and messy. Many banks and investment groups didn’t even know how many mortgage-backed securities they actually held, or whether theirs were traditional “good” mortgages (which were still doing okay) or the weird crummy bad ones that were failing left and right.

Now that things are blowing up, the “small-government” Republicans are suddenly even more socialist than the Democrats; they want the federal government to nationalize the financial industry and bail out all the rich fatcats who were snarfing down huge sums of money from the trough just a year or three ago.

In fact, the federal government IS effectively nationalizing failed businesses, with the latest, Washington Mutual, an S&L that was headquartered in my hometown.

And here’s three more quotes you should think about.

First:

McCain has indicated he might favor a move to privatize ATC, which has occurred in Great Britain and a number of other industrialized nations. The Reason Foundation, a libertarian think tank that has advised McCain in the past, strongly backs this position. Obama vehemently opposes putting ATC in private hands.

I told you I’d get back to the FAA and aviation. Of the two candidates for President, one wants to deregulate ATC and turn it over to private industry, because he thinks that private industry is better than government for almost EVERYTHING. (Even air traffic control!) That candidate is John McCain.

The next quote (and this one will really rock you). It’s a bonus… a video clip! Woo-hoo, the Follies is going multimedia!

Yeah, great plan, Senator… let’s let those banks do whatever they want, because they obviously know just what they’re doing, right?

And the final quote- here’s a quick analysis of it, and here’s the original source:

Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.

With McCain, you could pretty much insert anything into where it says “the health insurance industry”, because he supports pretty much ALL types of deregulation.

Now, this has been a really long post, probably because I didn’t write much earlier in the week.

But it boils down to a pretty simple question: Do you really want to turn the keys of the FAA over to Mr Deregulation-of-the-financial-markets-is-a-great-thing, John McCain?

The reality is this: Until about a week and a half ago, when it proved to be an incredibly stupid idea, John McCain was all for deregulation of the financial industry- and all for deregulating everything and anything else that the federal government was into as well.

Now he’s supposedly suspending his campaign (but his ads are still on the air, his spokespeople are still appearing on the news shows, and he’s still fundraising and working on campaign stuff); he’s trying to duck out of tonight’s debate (oh, I so TOTALLY hope he doesn’t show and Barack Obama gets to answer questions all by himself on all the national TV networks for an hour or so); and he’s supposedly all eager to work up a plan to save the same financial markets that he was proud of deregulating and getting the government OUT of.

Yeah, let’s elect this guy and deregulate air traffic control. Great plan.

(In case you haven’t noticed, I’m gettin’ political on Fridays. Expect it to continue for about another month or so, and if you don’t like it, go start your own blog.)

Sorry about that. I was trying to move my blog over from one web host to another, and ran into some troubles getting the blog up and running. With any luck things will keep working now!

This is a test post to see if it’s up and working normally. I might still choose to screw this all up again, though, so if you’re here and seeing this and then later it quits working, that’s what happened.