The Financial Fix

While the financial sector keeps slowly dragging the rest of us over the cliff, it's clear that our understanding of what must be done has greatly evolved in a short period of time.

This past weekend, both the Times ( Joe Nocera ) and the Post ( guest editorial by Matt Richardson and Nouriel Roubini ) published very cogent arguments for a plan for nationalizing the large, insolvent banks, giving even Republicans such as Lindsey Graham a reason to pause and consider that option.

That's progress. Yet since Treasury Secretary Geithner's has yet to clarify the administration's plan, a lot still remains up in the air.

Wall Street is starting to pressure the Obama administration to relax its proposal for a stringent review of the banks' books.

Any indication that administration agrees would be bad news, because that's exactly what needs to be done first -- by now it's clear that whatever the thousands of lobbyists who work for Wall St. propose, we could probably do a lot worse than react by simply doing the opposite.

Ultimately, the onus will fall upon President Obama. His ability to stand up to one of the most powerful industries in the country is crucial. The consequences are so huge and stakes are so high that it could literally make or break his entire presidency.

Let's hope he will remember what he told an audience at Cooper Union back in May, when he talked about his position on regulating finance: "The future cannot be shaped by the best-connected lobbyists with the best record of raising money for campaigns...The details of regulatory reform should be developed through sound analysis and public debate." All sorts of prominent economists from the IMF to Joseph Stiglitz are pushing for nationalizing insolvent banks sooner rather than later. Obama and Geithner have to be paying attention. Expecially since these voices have laid out in careful terms a practical course of action.

Richardson and Roubini, for example, suggest that the first thing Treasury needs to do is require that the banks undergo "stress tests" before any are deemed eligible to be treated under the rest of the plan.

(Although there won't be time to do a granular analysis of the books, I hope the banks are forced to disclose all of their offshore accounts and derivatives positions and other so-called "toxic" assets).

If that happens, some of the banks will most likely be revealed as insolvent -- after all, if they don't have anything to hide, then why lobby so strenuously against a tough review?

Those insolvent banks, the economists say, would need to be put into receivership (perhaps under the FDIC's supervision). Perhaps they need to be broken up. Perhaps not. Maybe some will need to be restructured under the supervision of a corporate monitor, the way that WorldCom was supervised by former SEC chair Richard Breeden before it was allowed to emerge from bankruptcy (btw, that was one of the first cases where a CEO pay cap was instituted under Breeden's supervision, albeit it was pretty weak). Others will be broken apart, with the valuable assets sold off and the toxic assets piled up in an aggregator bank, the way the FDIC took all the insolvent savings and loans.

If we follow this process and aggregate the toxic assets in one place, there should be less need to cave into the pressure created by the private equity, hedge funds and other vultures to provide them with unnecessary taxpayer-funded financial assistance or a guarantee to cover any losses. We shouldn't have to rush into a fire sale that allows them to run off with valuable assets on the cheap.

(As candidate Obama said at Cooper Union back in May, "a free market was never meant to be a free license to take whatever you can get, however you can get it.") The Wall St. banks and the hedge funds can all be expected to try to rush this process. Confusion works could work in their favor, and they would not be wrong to suggest that the longer the process drags out, the longer the credit system will stay frozen. Thus, they can be expected to try to take advantage of the growing pain in the real economy to put more pressure on Washington.

Which is why they need a pressure relief valve for Main St. -- i.e. things that stop foreclosures and set up other lifelines. The stimulus will do some of that, and there will have to be more.

Ultimately, the simple fact is that if the Obama administration doesn't organize this process in a rational way that allows it to determine which banks are salvageable and which are insolvent and therefore in need of a full government takeover, it will easily cost us hundreds of billions (trillions?) more than it should have to, as we throw more good money after bad.

An orderly transition is necessary not only to protect taxpayers, but to guarantee that investors will want to come back into our markets.

The Financial Fix 1

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What Is the Best Method of Driving a Mobile Crusher?
A topic of discussion which is guaranteed to provoke any disagreement among design engineers and confusion among crushing plant users alike, but why and what separates the mechanical and hydraulic methods? Here is some insight to this of this frequently asked question.Usually the crusher would be v-belt driven directly from the diesel prime mover, decoupled by a mechanical clutch. Due to the immense inertia of the flywheels it would be necessary for the operator to fiddle the clutch lever in order to coax the machine to start without stalling the engine.This worked well, and in many cases is still a good solution if a few starts a day and low throughput is all you need, however, the market is now crowded with other solutions all claiming to be the best way and it can be confusing for plant users to know what will work best for them.Omitting torque converters and hybrid diesel-electric drive solutions, which have niche applications but are not in widespread use due to their cost, the industry gravitates around dry plate clutch and hydraulic drives.Take the dry plate clutch for example! Bolt it straight onto the engine and hang a pulley on the output shaft to drive v-belts. In terms of absolute efficiency, this certainly has the lowest power loss of all methods if your only consideration is how much fuel you use.The trade-off is pure efficiency vs. functionality.To offer a soft-start clutch engagement, computer controlled pilot systems are now the norm for modulating or "fiddling" the engagement (as the operator used to do by hand). As every start raises the clutch plate temperature, its thermal capacity limits the permissible number of starts per hour.Depending on the arrangement of clutch main shaft bearings, limited side-load capacity can leave the clutch and engine sensitive to over-tensioning of the drive belts and as the drive belts have to be tensioned by moving the entire engine pack correct tensioning can be difficult. Also, the direct vee-belt drive limits the available positions for the engine installation.Torsional vibration from the engine can cause "micro-slips" which raise the running temperature and can lead to premature failure.As mobile crusher with varying feed size and quality can be prone to blockage, the crushing chamber of a direct drive machine must be cleared manually if a blockage was to occur. If an attempt to start a blocked crusher is made by clutch engagement, serious damage may occur. While some machines are able to open the setting to discharge some of the blocking material, it is still unlikely that a re-start is possible without manual intervention.The dry plate clutch occupies the primary power take-off on the prime mover. A track-mobile crushing plant will require an additional high-torque power take-off to drive track pumps. This frequently leads to some ingenious designs to accommodate the additional requirement for PTO by way of external drive splitter boxes, crankshaft nose PTO's and even forward belt drive and cardan joints. Original equipment accessory drives, which are fitted behind the engine, bell housing raise the pumps high, making it difficult to properly flood feed the pump inlet port and leading to cavitation in colder weather.While the OEM cost of a hydraulic transmission systems can exceed that of a dry plate clutch, the main system pump will supply hydraulic power to both the crusher and tracks for mobility. The main pump occupies the primary power take-off of the prime mover and no secondary high torque power take-off is required, resulting in a very compact installation.As the crusher drive is indirect, the engine and pump assembly location is not constrained by the drive train. Consequently, the engine may be mounted in the best position and orientation for effective operation and maintenance. It should also be remembered that the crusher drive is only a part of the whole system. A wasteful auxiliary drive system can easily lose any efficiency advantage gained by the drive method. Hydraulic drives have been used for crusher drive for some time by several major manufacturers with a good history of success. The major benefits of a hydraulic system relate to greater flexibility in both control and operation.What is the difference between hydraulic and hydrostatic drive? Essentially a conventional open loop hydraulic system draws oil from a oil reservoir, through a high pressure pump, and then drives the hydraulic motor. The return flow from the motor passes directly back to the oil tank. This system allows the motor to be reversed using a directional control valve and is protected from overload by a pressure relief valve.In the hydrostatic system, high pressure oil from the pump passes to the motor then returns to the inlet of the pump in a continuous closed loop. This means that if the load tries to run faster than the pump, the engine is used as a brake to maintain control. By these means the crusher can not only be driven by the system but can also be slowed and stopped down.Having stopped the machine in an emergency, the jaw is now left full of rock! A clutch drive machine would now have to be manually cleared; however, the hydraulic machine can reverse jaw rotation and start up, the jaws still full, without danger of damage. Blockage clearing is considered one of the most dangerous procedures when operating a jaw crusher. With hydraulic blockage clearance it becomes a routine which can be performed remotely and with reduced danger. The backwards crushing action can also be used for crushing delicate materials such as Asphalt which are susceptible to packing, as well as blockage clearance.Exact control also manifests itself in tracking. A heavy plant can now steer by varying the speed of each track independently as well as slewing on the spot. It is not necessary to constantly shock the plant by slewing just to take a curve in the way; it can be steered by running one track faster than the other one.Given the degree of electronic control, to assist the operator a direct data link may be fitted to enable remote access from the manufacturer. Not only can performance data be recovered to assist in breakdown situations but, if necessary, modifications may be made to the programming to adapt the performance of the machine to the operator's requirements.A further advantage of the hydrostatic system is that the pumps can be controlled infinitely directly by the machines on-board computer, making it incredibly controllable.Typically, when a mobile crushing plant is shut down, the flywheels continue to rotate for several minutes, slowly dissipating their stored energy. Having gently accelerated the flywheels to working speed, the hydrostatic drive system can now bring them smoothly to a stop in just a few seconds. An additional benefit to this degree of control is that "emergency stop" can mean just that, by bringing the entire plant safely to a stop in just a few seconds!Today's transmission pumps are able to be controlled exactly by an on-board computerized system. In starting the crushing plant, the flywheels may be accelerated up to speed over several seconds without imposing excessive load on the engine and also doing it almost silently. The control system monitors the engine working parameters in real time and if the power draw becomes excessive the pump delivery can be reduced to enable maximum productivity without interruption.But, what is the down side of all this? Hydraulic driven machines are often accused of inefficiency but a good designed system can offer more advantages which offset the less overall efficiency. Ok, a simple gear pump and motor combination when hot and heavily loaded can get down to 50-60% efficiency, agreed, however, a modern axial piston transmission pump/motor is much different. Individual component efficiency can be well over 90% providing the system is well designed and thermal management is effective as the system is most efficient over a small range of oil temperature.Older open-loop transmissions were filled with over 1000 litres of oil content, frequently dumped and refilled. This is no longer the case, state of the art, closed loop hydrostatic drives require a much lower reservoir capacity and rather than adopt a filter and oil replacement system based on the hours it runs or months of service, condition based maintenance based on oil sampling can significantly reduce the maintenance costs.Conclusion Hydraulic transmissions offer greatly improved functionality and durability with very low routine mechanical maintenance costs and will continue to appeal, especially the new generation hydrostatic machinery which enjoy enhanced control and safety features unavailable on mechanically driven machines.While dry plate clutch technology continues to develop with intelligent engagement systems and improved bearing capacity, the attractions of an efficient transmission system are obvious providing the complete plant has been optimized for maximum efficiency.
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