The Federal Aviation Administration (FAA) announced today that a computer glitch would cause delays and cancellations of flights nationwide. The Wall Street Journal has more:

The problem involved the FAA computer system that files automated flight plans, forcing air traffic controllers to revert to the much more time-consuming approach of entering flight plans by hand.

Delays began on the East Coast and were rippling out to the west. The problem wasn’t affecting radar coverage or communications with planes in the air, the FAA said. The air traffic controllers union, however, said the FAA systems that provide information on weather and wind speeds at airports also weren’t functioning.

USA Today elaborates:

CNN reports the FAA computer system affected by the malfunction is centered in Atlanta. “The system — the National Airspace Data Interchange Network, or NADIN — appears to be the same one that failed in August 2008. The FAA said flight plans are being processed through the network’s Salt Lake City, Utah office,” CNN says on its website.

CBS adds “the practical ramifications of this problem are that the entire air traffic control system on the East Coast is slowed to about 40-50% of what a normal day would look like. Controllers must input flight data for each takeoff and landing manually.”

The FAA has a history of similar technical failures. They blamed the previous NADIN failure, in 2008, on a Windows upgrade, but offered no more specifics than that, according to Portfolio. By all indications, this was a) not unprecedented, and b) will probably happen again sometime.

In 2008, I closely commented on the demise of Lehman Brothers and the hidden cancers on other balance sheets. At the time, the fraudulent real estate bubble found a poster child in Lehman investment McAllister Ranch: a three square mile development in which Lehman dropped a quarter billion dollars of loans … and the mega-community became a ghost town.

Now, a few weeks from the modern space odyssey 2010, video is surfacing that even more costly and extravagant real estate developments in China are following the Lehman model (which was probably 486 Excel sheets built by a 24-year old working 110 hours a week). Welcome to the real, yet imaginary, city of Ordos:

Ordos is a hyper modern city, full of brand new glass walled residential and commercial buildings, yet devoid of inhabitants. In its attempt to present a “growing” economy, and to “invest” its $585 billion stimulus into anything and everything, courtesy of comparable idiocy on the other side of the Pacific, China’s communist party is now ruling over ghost towns. One wonders just how many such “efficient” projects sustain China’s magical 8% growth. (Source: Zero Hedge)

So, there you have it. An entire generation has grown up and been conditioned to believe economics is the fundamental nature of reality, yet the proof continues to mount that economics is simply a wealth shifting game which does not solely enhance civilizations or lives. If the Chinese government eventually pulls a Lehman, the next chapter of history will be messy.

Damien Hoffman is the Editor-in-Chief of Wall St. Cheat Sheet.

So exactly what is the mandate of the New York State Department of Environmental Conservation? Classic government bureaucracy.

8. Pigasus the Immortal Boar

Pigasus the Immortal was a boar hog put forward by the Yippies (Youth International Party) in the 1968 US presidential race, named after Pegasus, the winged horse god of Greek mythology. The announcement of Pigasus’ candidacy was made during the heady protests at the 1968 Democratic National Convention. Phil Ochs, Pigasus’ owner, demanded the pig was treated the same as its legitimate rivals and given secret service protection as well as access to foreign policy briefings. Unfortunately, Pigasus’ candidacy was short-lived, for barely had the official introduction at his first press conference begun, when folk-singer Ochs, Stew Albert and several others were arrested by the FBI. The humans were released later that day, but Pigasus’ fate remains unknown – he may have been taken to the Humane Society, or he may have ended up as dinner for the other candidates that evening.

7. Incitatus the Horse

The Roman Emperor Caligula became infamous for a string diabolical acts. Among his best known insanities was disinterring the body of Alexander the Great to steal his breastplate, castrating the gladiator Longinus because he had a longer penis than him, and destroying the kidneys of nobleman Valerius Catullus during an extended erotic session (no questions please). But perhaps one of Caligula’s most well-known acts of madness was his decision to appoint his favourite horse, Incitatus, as a Roman Consul (as such Incitatus didn’t strictly run for government, but we thought him worthy of inclusion on this list anyway). It seems that, unsurprisingly, Incitatus didn’t do a lot with his time in office, but he did appear to have led a fairly cushty life – according to Suetonious he had a stable of marble with an ivory manger, purple blankets, and a collar of precious stones, and others have reported that he was attended by up to eighteen servants and fed oats mixed with gold flake. Caligula even arranged for him to have a beautiful wife-cum-secretary, the finest mare in all of Rome, Penelope. Eat you heart out Bill Clinton!

6. Tai the Poodle

In 1989 residents of the small town of Whangamomona, New Zealand, objected to plans to redraw their county boundaries and declared themselves the Republic of Whangamomona. Their already wacky mandate took a turn for the worse when, in 1999, they elected a goat called Billy Gumboot as their president, setting an insane precedent for animals as their leaders. The 2001 presidential race was won by Tai, a poodle owned by the local hotel’s barman. Tai was known as a great ambassador, frequently sniffing the behinds of other dogs and making them feel welcome in Whangomomona. Unfortunately though, Tai proved that even animals are not exempt from the dirty fighting and underhand tactics that so marks human politics. Enjoying a bone one sunny Sunday afternoon, Tai was the subject of an assasination attempt when he was attacked by a larger dog. And although he survived, like Ronald Reagan, many remarked he was never the same again.

5. Cacareco the Rhinoceros

In 1958 a rhinoceros at Sao Paulo zoo called Cacareco ran as a candidate for the city council elections, protesting against political corruption. Although the establishment did not accept Cacareco’s candidacy, she eventually won over 100,000 votes – many more than any other party in the election. Cacareco’s candidacy was traced back to a group of students who had printed up 200,000 ballots with her name on them, but the ballots were all legitimately cast by voters, one of whom commented: “Better to elect a rhino than an ass.” The director of the zoo commented that he would ask Sao Paulo to pay Cacareco’s Councilman’s salary, however, election officials nullified all her ballots and a new election was held the next week. Cacareco died in 1962, but her legacy lives on through the Canadian Rhinoceros Party, led by the rhinoceros Cornelius the First, and in the phrase ‘voto Cacareco’ (Cacareco vote) which to this day is often used  to describe protest votes in Brazil.

4. Molly the Dachshund

This cute dachsund from Oklahoma named Molly was a candidate in the 2008 US presidential race, running under for the mysterious BYOB party. One would assume that the BYOB (Bring Your Own Beer?) party, were not entirely serious, but in reality little is known about Molly or BYOB. What we do know is that, unsurprisingly, she failed to pose a threat to Obama. Perhaps the video below might shed a little light on this underappreciated political candidog…

3. Tião the Chimpanzee

Tião, a chimpanzee with a reputation for being bad tempered, was put forward as a candidate by the Partido Bananista Brasilerio (Brazilian Banana Party) for the position of mayor of Rio de Janiero in 1988. The notion of having an ape run as candidate was intended to highlight the unqualified nature of the other contenders, but popular response surpassed their expectations. Running with the campaign slogan, ‘vote monkey – get monkey’, a reference to getting what you vote for, Tião received over 400,000 votes or almost 10% of the total cast, coming third in the race. Unsurprisingly, the Electoral Tribunal dismissed the election declaring the results null, but the damage was done – in the end a chimpanzee had aped the Brazilian political system.

2. Katten Mickelin the Cat

Billing themselves as ‘a party for the seriously unserious’ the Swedish Ezenhammer Plastic Bags and Child Rearing Utensils Party for many years had as their leader a black cat called Katten Mickelin (Pussy Mickelin). Fanatical members of the party referred to Mickelin as ‘The Unmentionable’, ‘The Black One’, ‘The Furry One’ or ‘The Almighty’ – and to this day there exists a book, entitled KMGB, which is said to contain the last sacred fragements of the holy text, Katten Mickelin’s Good Book. Unsurprisingly Mickelin failed to ever achive office, although he did manage to collect 102 votes in the Swedish 1994 general election, largely as a result of a terrifying alliance with the Swedish Miniature Cars and Intoxicating Beverages Association. Mickelin’s death came as sad news to a small but devoted following in Sweden and on the internet. His followers believe he has gone to a better place and is now chasing those ‘heavenly mice’, waiting to return to them – what do you expect from a party with a ‘Minister for Adhesive Tape and Small Furry Pets’?

1. Clay Henry III – Beer Drinking Goat

As the official site for mayor of the town of Lajitas, Texas, states: many towns can claim that their mayor is an old goat, or that he enjoys his beer – but not many can validly claim that their mayor is a beer drinking goat. Literally. Lajitas has that dubious honor. In the original election in the 1980s Clay Henry I defeated a wooden Indian and a local ranch dog called Buster by a landslide and the tradition continues to this day, with Clay Henry III. The town claim the goat is their political pride and joy and on most days can be found holding court at the town Trading Post, usually with a cold beer to hand. Now, we don’t know about you, but giving alcohol to animals was something that stopped being funny at about the age of 12 – bearing that in mind, it doesn’t seem to reflect well on the town that they have created an entire political system and democratic culture out of doing this. Grow up.

Images: rachdian, soggydan, azure, wikimedia

Sources: 1, 2, 3, 4

This Saturday, you can help avenge some of Bernie Madoff’s victims by purchasing his personal stuff at a government auction. The auction, which will take place in New York, will sell roughly 200 items for an estimated minimum value of $500,000. Proceeds will go towards repaying Madoff victims. The Wall Street Journal has the details:

The government has been trying to sell Mr. Madoff’s homes and now will auction some personal effects. Proceeds from the sale of the roughly 200 items will go toward compensating victims.

On Saturday prospective buyers can bid live at the New York Sheraton Hotel & Towers, or bid online if they register at the auction house’s Web site by Thursday afternoon.

The article lists some of the Madoff items for sale, along with their estimated values:

A blue satin Mets baseball-team jacket with “Madoff” stitched on the back in orange: Up to $720.

Three Boogie boards with “Madoff” written on them in black marker: $80

White his-and-hers stationery with the names Bernard Madoff and Ruth Madoff printed on it, along with envelopes: $90+

1960 Hofstra University ring that belonged to Mr. Madoff, engraved with his initials: $300

18-karat yellow gold, black-faced vintage men’s Rolex, the Monoblocco: Up to $87,500

A pair of Victorian-era diamond earrings: Up to $21,400.

3 wooden duck decoys: Up to $80

More items:
5 designer fur coats
Christofle flatwear
Tiffany placecard holders
3 polo shirts monogrammed with the names of one of Madoff’s yachts (”Bull”)

The auction promises some unique buys. Where else could you buy three used boogie boards for $80?

Former Hewlett Packard CEO Carly Fiorina announced that she will run for Senate in California today. The Washington Post has more:

“Throughout my career I’ve brought people together, and I’ve solved problems,” wrote Fiorina in an editorial in the Orange County Register today. “And that is what is needed in our government today. People who are willing to set aside ego and partisanship and instead work to develop solutions to our problems.”

One California Republican strategist acknowledged that Fiorina “has a long way to go” in terms of viability but quickly added that her profile, her personal wealth (assuming she spends some of it) and Boxer’s controversial persona means that the Republican will likely stay within shouting distance of the incumbent through next summer and fall.

If Fiorina’s HP legacy has any bearing on her ability to be a successful political leader, this doesn’t bode well. That said, many people have become politicians after unusual careers (especially in California). And in politics, dogma and money override past mistakes. It’s not about ability to govern, it’s about the ability to get votes.

This will get interesting.

Cory Doctorow posted this frightening bit after looking over a leaked copyright treaty called the Anti-Counterfeiting Trade Agreement (ACTA):

Obama’s administration refused to disclose (the full text) due to “national security” concerns. It’s bad. It says:

* Mandatory prohibitions on breaking DRM, even if doing so for a lawful purpose (e.g., to make a work available to disabled people; for archival preservation; because you own the copyrighted work that is locked up with DRM)

Find more specific details about the treaty here.

I wonder whether this would ever pass in its current form, given that Google and Yahoo own YouTube and Flickr, respectively. The problem appears to be precisely that governments are keeping this agreement secret. The talks were initially focused on stopping counterfeit merchandise, but have expanded to public policy. If you disagree with the direction talks are going (according to the leak), or want governments to stop negotiating this treaty in secret, the EFF has more on what to do.

CIT Group (CIT) filed for bankruptcy protection Sunday with broad support from its debtholders, but taxpayers will lose the $2.3B invested in CIT, marking the first definitive loss in the government’s rescue of the financial system.

Nearly 90% of CIT’s bondholders voted in favor of the prepackaged bankruptcy, which CIT says will enable it to reduce total debt by $10B, significantly reduce its liquidity needs over the next three years, enhance its capital ratios and accelerate its return to profitability. Bondholders will receive about $0.70 on the dollar, a number that could have fallen as low as $0.06 had CIT entered a freefall bankruptcy. With $71B in assets and $65B in liabilities, CIT’s bankruptcy ranks among the largest in corporate history.

CIT, which is not related to Citigroup, is a commercial and consumer finance company that received $2.3 billion from the TARP program. Now the CIT is filing for bankruptcy, common and preferred stock will get wiped out. However, bondholders will get a return of $0.70 on the dollar. In other words, taxpayers foot the bill.

Spend Matters analyzes what CIT’s bankruptcy means for the retail supply chain:

Kurt Cavano, Chairman and CEO of TradeCard and an expert in the area of global retail trade, stated this morning that CIT provided financing lifeblood for an important portion of the retail supply chain. While many exporters and importers — not to mention actual retailers, who are not always direct importers — pay a reasonable APR if their credit rating is strong (e.g., LIBOR + 200 basis points), Kurt suggests, for companies with less than perfect credit, trade financing costs can easily reach a 10-12% APR. I’ve personally seen actual APRs hit over 20% based on some research I’ve done in the apparel supply chain in the case of global suppliers who accepted early payment discounts.

According to Kurt, “CIT made a great living working the edge of the bad credit companies with high rates and keeping the risk down. This worked well until everything cracked. Then the 8-10% they were charging was not enough when defaults rocketed. Combine this with the fact that the management team was levering up the returns by investing in exotic instruments on Wall Street (e.g., CDOs) and it created a perfect storm.” However, it was not always this way. Kurt notes that, “CIT had always done a great job of profiting and working with those firms on the edge of bad credit.” But going forward, the question remains whether this group will be able to find the liquidity they need to run their businesses if CIT does not come back out with the same type of credit capacity. This is critical because as Kurt suggests, “a huge portion of the retail sector runs on very thin margins” and “use the credit of companies like CIT to run their businesses”.

The Atlantic Wire has a nice summation of who wins and loses as a result of the CIT bankruptcy. Losers, as mentioned above, include retailers and the US taxpayer. Winners: Carl Icahn, CIT itself, and (surprise!) Goldman Sachs.

The Commerce Department today said the economy grew at 3.5% during the third quarter of this year. This is the first time that gross domestic product (GDP) has been positive since Q2 2008. It is also the fastest rate of growth since Q3 2007. According to Forbes:

Growth was driven by consumption, exports, federal government spending, home building and inventories. Consumption contributed 2.4% of the growth, with a particular boost in autos. Thanks to the Cash for Clunkers program, motor vehicle output added 1.66 percentage points to GDP. But even without this particular stimulus program, consumption improved and the economy grew nearly 2%, a swift turnaround from the first quarter of 2009 when the economy was shrinking at a 6.4% rate.

The U.S. economy grew in the third quarter for the first time in a year as consumer spending and investment in new home-building rebounded, data showed on Thursday, unofficially ending the worst recession in 70 years.

If you’re like me, and you suspect there’s some hot air behind these numbers, you’re not alone (Reuters):

Strip out Cash for Clunkers and 3Q GDP growth came in at 1.6 percent. Also strip out slowing inventory cuts and GDP would have been just 0.6 percent. Then you have a report that the WH has overestimated the number of jobs created by the stimulus.

Barry Ritholz assesses the conclusion that the GDP numbers mean an end to the Great Recession:

We begin looking at the NBER definition (of recession):

Perhaps the bimodal definition the NBER uses is outdated: Read literally, their definition suggests that there are only two options, either the economy is expanding or contracting. It might be worthwhile to consider a third possibility: None of the above. The economy might have reached a state of stasis — a balance where it neither expands nor contracts.

Commenter IvoZ adds:

…if GDP is created by debt, then there are 2 possibilities:

Using GDP to measure economic performance is misleading in itself, even if GDP is properly calculated. Then add all the distortions of how GDP is calculated! Using GDP is like using an earnings or revenue number, while ignoring the balance sheet effects to achieve them.

The Wall Street Journal sums it up:

The economy is about to post growth numbers reminiscent of the good old days, otherwise known as the “old normal.” But a “new normal” of slower growth might be inevitable.

“New normal” might also include putting an end to recovery claims that don’t pan out.

A new Senate proposal will offer a first time home buyer tax credit extension to homes under contract by April 30, 2010. The former deadline was November 30, 2009. The home buyer tax credit will also be offered to people who have lived in the same home for five years, according to the proposal, which at time of writing hasn’t passed yet, but has bipartisan support. Bloomberg has more:

An agreement reached yesterday by the Democrats would let homeowners who buy a new home qualify for a $6,500 credit if they have lived in their prior residence for five years, according to Regan Lachapelle, an aide to Senate Majority Leader Harry Reid.

The credit would be available to individuals earning up to $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the current law, Lachapelle said.