But profit (sort of) matters

Submitted by: aka.attrition

Source: ConciousnessOfSheep

 

https://consciousnessofsheep.co.uk/files/2024/01/Profit-matters.jpg

The notable – but largely unacknowledged in the mainstream – feature of the recent (failing) attempt to revive the pre-1972 moon landing project is the way in which modern rockets have proved susceptible to all of the problems which beset the Saturn V in the 1960s. Nor is this a mere technicality. The reason that the Apollo programme was brought to a premature end in December 1972 was that it had run into an invisible economic limit. To people – including most economists – who have learned to think of the economy as a purely financial system, this sounds mean. We can always find the money to fight wars and bail out banks, so why shouldn’t we divert money into a scientific endeavour which might (it won’t) act as a launch pad for humanity’s journey to the stars?

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The Fossil Fuel Farce

Originally posted at Dispatches from Reality, by Scipio Eruditusdfreality.substack.com


“The real menace of our Republic is the invisible government, which like a giant octopus sprawls its slimy legs over our cities, states and nation. To depart from mere generalizations, let me say that at the head of this octopus are the Rockefeller–Standard Oil interests and a small group of powerful banking houses generally referred to as the international bankers… powerful international bankers virtually run the United States government for their own selfish purposes.

They practically CONTROL both parties, write political platforms, make catspaws of party leaders, use the leading men of private organizations, and resort to every device to place in nomination for high public office only such candidates as will be amenable to the dictates of corrupt big business.

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A Tale of Three Narratives, Energy Edition

Guest Post by

Frequent and longtime commenter TAE Summary makes lists from time to time of differing views on topics as these can be found on The Automatic Earth and elsewhere. Since so few people understand the topic of energy (and thermodynamics), this latest list is useful as usual.

What the media reports on energy is as much “The Science” as it is on Covid and the climate. We better start questioning everything about it, or we’ll be as wrong about it as we were about Covid. With equally damaging consequences. Or worse.

TAE Summary:

Background

– We are addicted to high energy use.

– Each first world citizen has the equivalent of scores of energy slaves.

– We spend colossal amounts of energy on useless things.

– Governments and especially militaries are fabulous energy wasters.

– People and even experts don’t understand energy.

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The War in Ukraine and the Imminent Impact on Food Supplies… What You Need To Know

Via International Man

Food Supplies

Everyone understands by now that Russia is a large energy producer, but what many don’t know is that when they sit down at the dinner table at night, the entire supply chain (aside from the energy required for transportation) that gets them that dinner involves Russia and Ukraine to a frightening degree.

Our current globally integrated food supply system and mass food production cannot exist without, among other things, fertilizer.

This includes three main categories: nitrogen, potash, and phosphorus fertilizers. Potash is a potassium-rich salt fertilizer that enhances plant quality and is responsible for 20% of global fertilizer demand.

Together with Belarus, Russia has a 40% market share in global production and export of potash fertilizer. What OPEC+ is to the oil market, Belarus and Russia are to the potash market. The two monopolies in this space are Uralkali and Belaruskali, with the Belarusian Potash Company being the latter’s export arm.

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The Real Reason for US Concern in Ukraine? Energy.

Submitted by Steve Z.

The concern over Ukraine is more likely a power play between east vs west energy producers, namely Russia and the US.

NEO

Can the World Handle the Truth about the West-East Crisis?

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The Biden Administration needs Russia to invade Ukraine. The US shale oil business needs Russia’s gas, to remain in Russia. The world may be at war soon, but not over the rights, wants, and wishes of the people of Eastern Europe or Central Asia. The controlling elites of the west are the ones gamling with lives, not Vladimir Putin and the Russians.

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Energy Is The Currency Of Life – Money Should Be Based On It

Guest Post by Javier Lopez

Bitcoin and Benjamin Franklin Federal Reserve Bank Note

Some people say that money makes the world go around. In reality energy is responsible for everything that happens in our lives. Without energy nothing can be done; nothing can be built, moved, transformed, manufactured, invented, grown, defended or destroyed without the use of energy in all of its multivariant forms.

So why is it that for hundreds of years money has essentially been printed out of thin air under a system of fractional-reserve lending run by the world’s central banks?

And why did anybody tolerate such an obviously fraudulent system for so long?

Economists, in general, have always taken energy supplies for granted. It’s a given. A part of the overall equation that’s always plentiful. It’s always there underlying every activity. There’s no need to worry about it, either in the present or even the mid-to-long-term future because something else will always materialize to save the day and keep industrial civilization ticking along.

There’s just one thing.

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More Juice!

Guest Post by John Stossel

More Juice!

Was the power on in your house this morning?

If so, thank fossil fuels!

A few parts of America do get energy from other sources. Washington state has fast-flowing rivers that allow Washingtonians to get most of their electricity from hydroelectric power. Iowa now gets about 40% of its electricity from wind.

But most of us get power from the much-hated fossil fuels, primarily natural gas and coal.

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The Fed has fueled inflation — and it’s helping the rich

Higher stock and real estate prices don’t benefit average Americans

It may come as no surprise that in the aftermath of an epic single-family housing boom and subsequent bust, millions of more people have been renting — without much new multifamily housing supply until recently.

This situation has let to strong gains for apartment REITs and an astonishing ability for property owners to raise rents.

Now a research paper by Rob Arnott and Lillian Wu of Research Affiliates in Newport Beach, Calif. asks why the CPI doesn’t reflect the inflation that is apparent in places where people spend their money.

Arnott and Wu argue that the four biggest expenditures for most people — rent, food, energy, and health care — have been rising. Since 1995, rents have been rising at 2.7% clip, energy at a 3.9%, food at 2.6%, and health care at 3.6%. Notably, these four expenses account for 60% of the aggregate of people’s budgets, 80% of middle-class budgets, and 90% of the budgets of the working poor.

Research Affiliates

Indeed, these Four Horsemen are galloping along, outstripping headline CPI, but it has taken six years of massive government spending, borrowing, and central bank stimulus for real per-capita GDP to regain its pre-recession peak.

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DERANGED CENTRAL BANKERS BLOWING UP THE WORLD

It is now self-evident to any sentient being (excludes CNBC shills, Wall Street shyster economists, and Keynesian loving politicians) the mountainous level of unpayable global debt is about to crash down like an avalanche upon hundreds of millions of willfully ignorant citizens who trusted their politician leaders and the central bankers who created the debt out of thin air. McKinsey produced a report last year showing the world had added $57 trillion of debt between 2008 and the 2nd quarter of 2014, with global debt to GDP reaching 286%.

The global economy has only deteriorated since mid-2014, with politicians and central bankers accelerating the issuance of debt. These deranged psychopaths have added in excess of $70 trillion of debt in the last eight years, a 50% increase. With $142 trillion of global debt enough to collapse the global economy in 2008, only a lunatic would implement a “solution” that increased global debt to $212 trillion over the next seven years thinking that would solve a problem created by too much debt.

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Wells Fargo’s Problem Emerges: $17 Billion In Junk Energy Exposure

Tyler Durden's picture

When Wells Fargo reported its Q4 earnings last week, the one topic analysts and investors wanted much more clarity on, was the bank’s exposure to oil and gas loans, and much more color on its energy book over concerns that Wells, like most of its peers, was underestimating the severity of the upcoming shale default wave.

And while the company’s earnings call indeed reveals that things are deteriorating rapidly in Wells energy book, perhaps an even bigger concern for Wells investors, which just happens to be the largest US mortgage lender, should be what is going on with its mortgage book. The answer: nothing. In fact, at $64 billion in mortgage applications in the quarter, this was not only a major drop from Q3, but also the lowest since the first quarter of 2014.

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LIES, DAMNED LIES & STATISTICS

The government released their monthly CPI report this week. Even though it came in at an annualized rate of 3.6%, they and their mouthpieces in the corporate mainstream media dutifully downplayed the uptrend. They can’t let the plebs know the truth. That might upend their economic recovery storyline and put a crimp into their artificial free money, zero interest rate, stock market rally. If they were to admit inflation is rising, the Fed would be forced to raise rates. That is unacceptable in our rigged .01% economy. There are banker bonuses, CEO stock options, corporate stock buyback earnings per share goals and captured politician elections at stake.

The corporate MSM immediately shifted the focus to the annual CPI figure of 0.1%. That’s right. Your government keepers expect you to believe the prices you pay to live your everyday life have been essentially flat in the last year. Anyone who lives in the real world, not the BLS Bizarro world of models, seasonal adjustments, hedonic adjustments, and substitution adjustments, knows this is a lie. The original concept of CPI was to measure the true cost of maintaining a constant standard of living. It should reflect your true inflation of out of pocket costs to live a daily existence in this country.

Instead, it has become a manipulated statistic using academic theories as a cover to systematically under-report the true level of inflation. The purpose has been to cut annual cost of living adjustments to Social Security and other government benefits, while over-estimating the true level of GDP. Artificially low inflation figures allow the mega-corporations who control the country to keep wage increases to workers low. Under-reporting the true level of inflation also allows the Federal Reserve to keep their discount rate far lower than it would be in an honest free market. The Wall Street banks, who own and control the Federal Reserve, are free to charge 18% on credit card balances while paying .25% to savers. The manipulation of the CPI benefits the vested interests, impoverishes the masses, and slowly but surely contributes to the destruction of our economic system.

A deep dive into Table 2 from the BLS reveals some truth and uncovers more lies. Their weighting of everyday living expenditures is warped and purposefully misleading. Let’s look at the annual increases in some food items we might consume in the course of a month, living in this empire of lies:

  • Ground Beef – 10.1%
  • Roast Beef – 11.8%
  • Steak – 11.1%
  • Eggs – 21.8%
  • Chicken – 3.7%
  • Coffee – 3.4%
  • Sugar – 4.2%
  • Candy – 4.6%
  • Snacks – 3.5%
  • Salt & Seasonings – 5.3%
  • Food Away From Home – 3.0%

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HEADLINES vs REALITY

This is the headline on Marketwatch this morning:

Consumers boost spending by most in six years

 

The article then goes on to make the false case that all those new Obama jobs are allowing consumers to spend like there is no tomorrow, again. One problem. It is complete and utter bullshit. The government propaganda release buries the FACT that half of the entire increase is due to auto “sales”. Now that is funny. They actually call the rental of autos for 7 years at 0% interest a sale. Over one-third of these “sales” are going to subprime deadbeats. Another third are actually leases. And the last third are the 7 year loan “sales”. Nothing like some more mal-investment created by the Fed and their ZIRP/QE fiasco. So jobs have nothing to do with this surge – low payments and high risk borrowers are the reason.

Then we get to the FACT that the rest of the spending was driven mainly by a 4.72% surge in spending on Energy goods & services. Yep. Gasoline prices have surged by 40% in the last 5 months, so you are spending a lot more for gas. That has a lot to do with those new Obama jobs, right? In reality, spending excluding energy spending was the lowest since 2011. Sounds a little different than the Marketwatch headline, doesn’t it?

So the reality is that senior citizens are getting 0.25% on their savings while paying a lot more for energy and food. Therefore, they have to dip into their dwindling savings to survive during this great economic recovery. The Fed keeps pumping the bubble with 0% interest rates and Wall Street/Auto Industry machine keeps doling out autos to anyone that can fog a mirror. The never ending monthly payments for the ignorant masses never cease. The faux journalist dolt at Marketwatch worries that the 5.1% savings rate is too high. He cheers on spending and scorns saving. This is what passes for economic journalism today.

So there is your daily dose of reality versus fantasy. Now I’m off to the beach.


S&P 500 EARNINGS COLLAPSE

Stocks are already overvalued by 100% by every historically accurate valuation model used over the last 100 years. The S&P 500 EPS dropped by 3.7% last quarter versus the previous year. Their actual earnings dropped by more than 5%. These mega-corps have been buying their stock back at a record rate, even though the market is at all-time highs, reducing the number of shares and artificially boosting EPS. It’s good for their Executive bonuses, don’t you know.

The Atlanta Fed is already estimating only a 1.2% GDP in the first quarter of 2015. It will be negative when everything is said and done. Manufacturing new orders have declined for 6 consecutive months. This only happens just prior to a recession or during a recession. Take your pick.

One of the major reasons manufacturing is faltering, besides the global recession, EU disintegrating, Japan blowing itself up, and China’s real estate boom going bust, is the tremendous appreciation of the USD. Companies selling US made goods in foreign countries see the price of their goods rise, as the dollar appreciates. It has appreciated 20% in the last 8 months against the basket of all foreign currencies, and now sits at an 11 year high. It is now 33% higher than the 2008 lows.

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PIN MEET HOUSING BUBBLE 2.0

Housing bubble 2.0 just met Pin 2.0

The 30 Year U.S. Treasury bond yield hit 2.35% yesterday. That is the lowest rate in U.S. history for the 30 Year Treasury. During the deepest darkest depths of the recession in March 2009, after the stock market had fallen over 50%, the yield was 3.5%. One year ago it was yielding 4.0%. Long term interest rates are not controlled by Yellen. They reflect the economic prospects of the country. When they are rising it means the economy is doing well. When they are plummeting to all time lows, the economy is either in recession or headed into recession. Take your pick. No amount of government data manipulation, feel good propaganda spewed by the captured mainstream media, or Ivy League educated Wall Street economist doublespeak, can change the fact this economy is in the dumper and headed much lower. The Greater Depression is resuming its downward march toward inevitable war.

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  • KBH SEES 1Q BOTTOM LINE ABOUT BREAK-EVEN (against expectations of a 17c rise!)
  • KB HOME CFO SAYS FIRST-QUARTER MARGINS EXPECTED TO BE DOWN
  • KB HOME PULLED OUT OF `COUPLE’ HOUSTON LAND DEALS, CEO SAYS
  • LENNAR CFO SAYS MARGINS ARE POISED TO NARROW ON LESS PRICING POWER
  • LENNAR GROSS MARGIN DECLINED & SALES INCENTIVES GREW
  • LENNAR CEO SAYS “ACROSS THE BOARD, WE’RE SEEING INTENSIFIED COMPETITION AS BUILDERS GO OUT AND CHASE VOLUME”

KB Home had revenues of $2.4 billion in 2014. They are one of the largest home builders in the country. It’s stock has dropped 30% in the last few days. It’s down 40% from its February 2014 high. It’s down 85% from its 2005 high. It had $9 billion of revenues and delivered 60,000 homes in 2005. Then Pin 1.0 popped the first bubble. Revenues collapsed to $1.3 billion and they lost hundreds of millions from 2007 through 2012.

Lennar had revenues of $7.0 billion in 2014. They are the largest home builder in the country. It’s stock has dropped 9% this week. It had been trading at a seven year high, but is still trading 33% below its 2005 bubble high. It had $14 billion of revenues and delivered 42,000 homes in 2005. Then Pin 1.0 popped their bubble. Revenues imploded to $3 billion and they also lost hundreds of millions from 2007 through 2012.

Their admissions earlier this week are proof Bubble 2.0 has met Pin 2.0. KB Home’s 85% increase in revenue and Lennar’s 130% increase in revenue since 2011 have been nothing but a Federal Reserve/Wall Street/U.S. Treasury engineered scheme to repair the balance sheets of the insolvent Too Big To Trust Wall Street banks. The financial industry oligarchs and their servile lackey puppet politicians decided an easy money, Wall Street created scheme to boost home prices would benefit the .1% and restore some of their fraudulently acquired wealth. It isn’t a coincidence home prices rose in parallel with the Fed’s QE programs. And it isn’t a coincidence the bubble is rapidly deflating now that QE3 is over.

The fraudulent nature of the supposed housing recovery can be deciphered by analyzing a few pertinent data points. 30 year mortgage rates were in the 5% to 6% range during the first bubble. Mortgage rates have been consistently below 4% for the last three years. In a healthy market driven economy, these low rates should have brought in first time home buyers and led to a sustainable long-term recovery.

Instead, the number of homes bought by first time buyers has languished at record low levels. The majority of homes sold in 2011 and 2012 were distressed foreclosures and short sales, and the vast majority of sales in the last two years have been to Federal Reserve financed Wall Street investors, Chinese billionaires and fast buck flippers. New home sales of just above 400,000 five years into an economic recovery are at previous recession lows, despite record low mortgage rates. They languish 65% below 2005 levels, when KB Home and Lennar were minting money. Existing home sales of 5 million are back at 1999 levels and 30% below the 2005 highs. This pitiful result is after $3.5 trillion of QE, extremely low mortgage rates, and tremendous hype from the NAR and the corporate MSM (It’s always the best time to buy).

The falsity of the housing recovery storyline can be seen in the fact that mortgage applications linger at 1995 levels, even though mortgage rates are 400 basis points lower than they were in 1995. A critical thinking individual might ask how home prices could rise by 20% since 2012 even though mortgage purchase applications are 20% lower than they were in 2012 and 65% below 2005 levels. The answer is they couldn’t have risen by 20% without massive monetary manipulation and insider deals between Wall Street banks, Wall Street hedge funds, FNMA, Freddie Mac, The Fed, and the U.S. Treasury.

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You see, average Americans buy houses not as an investment, but as a place to live. They save enough for a down payment by spending less than they earn, and then make monthly payments for 30 years from their rising household income. Of course, that was the old days. Real median household income is exactly where it was in 1995. It is currently below the level of 1989. Average Americans have made no headway in 20 years. The median price of a home in 1995, according to the Census Bureau, was $128,000. The median price of a home today is $281,000. When prices go up 120% and your real income remains stagnant, even record low mortgage rates is just pushing on a string. With real wages continuing to fall, young people saddled with a trillion dollars of student loan debt, the full impact of the Obamacare neutron bomb (kills small business, doctors and jobs, but not insurance conglomerates or government bureaucracy) just detonating, and an economy clearly going into the tank, there is absolutely no possibility of a real housing recovery in the foreseeable future.

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The Too Big To Trust banks have consistently accounted for 35% to 55% of all mortgage originations in the U.S. over the last four years. Wells Fargo is the undisputed leader. All of these banks have reported dreadful financial results this week, with plunging revenues and profits, even with accounting shenanigans like relieving loan loss reserves and marking their balance sheets to fantasy rather than true market values. In the midst of a supposed housing recovery, with mortgage rates at historic lows, the largest mortgage originator in the world, saw their mortgage originations FALL by 12% over last year. They are down 65% from two years ago. JP Morgan and Citigroup also saw their mortgage businesses contracting. These banks have been firing thousands of people in their mortgage divisions. This is surely a sign of a healthy growing housing market. Right?

Essentially, the entire housing recovery storyline has revolved around the Federal Reserve providing free money to Wall Street banks, who then withheld foreclosures from the market, sold them in bulk at inflated prices to Wall Street hedge funds like Blackstone, who then created a nationwide rental business, driving prices higher. FNMA and Freddie Mac did their part by selling their bulk foreclosures to the same connected hedge funds. The average person had no opportunity to bid on foreclosed homes and reap the benefits of lower prices. Blackstone has since created a new derivative, by packaging their rental income streams into an “investment” to sell to muppets. Their rental properties are concentrated in the previous bubble markets of Arizona, California, Florida, and Nevada. What a beautiful business concept. Free money from their Federal Reserve sugar daddy, kicking people out of their homes and then renting their houses back to them, driving prices higher by restricting supply and stopping new household formations, double dipping by creating a new exotic subprime investment opportunity, and then exiting stage left before it all blows sky high again.

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