The world economy can appear to be operating quite well but can be hiding a major problem that causes it to be fragile. My presentation The World’s Fragile Economic Condition (PDF) explains why we should expect financial problems if energy consumption stops growing sufficiently rapidly. In fact, a global sell off in the equity markets, such as we have started to see recently, is one of the kinds of energy-related impacts we would expect.
This is Part 2 of a two-part write up of the presentation. In Part 1 (The World’s Fragile Economic Condition – Part 1), I explained that a large portion of the story that we usually hear about how the world economy operates and the role energy plays is not really correct. I explained that the world economy is a self-organized system that depends upon energy growth to support its own growth. In fact, there seems to be a dose-response. The faster energy consumption grows, the faster the world economy seems to grow. The period with fastest growth occurred between 1940 and 1980. During this period, interest rates were rising and workers saw their wages increase as fast as, or faster than, inflation. After 1980, the rate of growth in energy consumption fell, and the world needed to tackle its growth problems with a different approach, namely growing debt.
In this post, I explain how debt (and its partner, the sale of shares of stock) help pull the economy forward. With these types of financing, investment in new production becomes almost effortless as long as the return on investment stays high enough to repay debt with interest and to repay shareholders adequately. At some point, however, diminishing returns sets in because the most productive investments are made first.
The way diminishing returns plays out in energy extraction is by raising the cost of producing energy products. In order for the sales prices of energy products to rise to match the rising cost of production, rising demand is needed to give an upward “tug” on sales prices. This rising demand is normally produced by adding increasing amounts of debt at ever-lower interest rates. At some point, the debt bubble created in this manner becomes overstretched. We seem to be reaching that point now, especially in vulnerable parts of the world economy.
Slide 34
Let’s first look at a slide from Part 1, explaining the way in which the economy works like a giant factory.
Slide 20
As long as energy products are very inexpensive, it is possible for the economy to expand very rapidly. When this happens, the Goods and Services produced in Box 4 are able to grow so rapidly that all of the Resource Providers in Box 1 can be well compensated, simply by using a quasi-barter arrangement, facilitated by the use of money. With this approach, Resource Providers can get adequately paid using the Goods and Services produced in close to the same time period. Something of this nature occurred prior to 1970, when inflation-adjusted oil prices were less than $20 per barrel (Part 1, Slide 26).
Slide 35
If the growth of the economy slows, so that not enough Goods and Services are being created by the economy to use this approach, it is possible to work around the problem by adding debt. Adding debt makes it possible to substitute promised future Goods and Services for already produced Goods and Services.
Slide 36
Added debt makes it seem like more goods and services are available to pay resource providers.
Selling shares of stock acts very much like debt, because the funds provided by these shares also provide access to goods and services that others have already produced. In the case of the sale of shares of stock, the promises are for future dividends, capital appreciation, and partial ownership of the company.
Slide 37
Growing debt looks like it can solve all problems! No wonder that Keynesian economists found it so useful. But the return must remain high enough to repay debt with interest.
Slide 38
Borrowing money generally comes with the requirement that the amount borrowed be repaid with interest. If the energy purchased using debt allows the economy to grow fast enough, there is no difficulty in repaying debt with interest. If energy is very inexpensive (equivalent to oil cost less than $20 per barrel in inflation-adjusted price), this payback system generally works because a large amount of energy can be purchased for a small quantity of debt.
If the price of the energy rises, much more debt is required for the same amount of energy produced. For example, if oil is $80 per barrel, the affordability is much lower. It takes four times as much debt to pay for a barrel of oil. Repayment of debt with interest becomes more difficult.
Slide 39
In Part 1, we observed that US long-term interest rates have been falling almost continuously since 1981. This situation of falling interest rates led to falling mortgage payments for a given amount borrowed. Because of the lower monthly payments, homes became more affordable; in other words, there tended to be more potential buyers for homes at a given price level. Indirectly, the increased affordability of home ownership tended to raise the resale value of homes. It also encouraged the building of additional homes.
Building homes indirectly requires the use of many different types of commodities. Metals are used in pipes and in wiring. Wood is used for framing. Concrete is often used for the basement. Oil is needed to haul these goods to the site where the home is to be built. Thus, indirectly, falling interest rates tend to raise commodity prices.
Slide 40
Many assets are purchased with debt. If interest rates are very low, purchasing these assets becomes more affordable. The sale of shares of stock provides another way of raising capital for a company. In the case of oil-producing companies, the purchasers of shares of stock often think, “If extraction costs are rising, surely oil prices and other energy prices will rise as well.” This belief allows the price of shares of stock to be bid up to a high level.
Slide 41
When asset prices rise, economists sometimes refer to the wealth effect. Homeowners feel richer if their homes are worth more, and they can borrow more against them. Owners of shares of stock feel richer if their shares of stock have higher values. Owners of pension plans are happy when stock prices are high, because it looks as if these shares can be sold, allowing the plans to meet their pension obligations.
If the debt bubble stops growing, then the commodity price bubble cannot continue to grow. In fact, it may abruptly pop. This is what happened in the second half of 2008, when oil prices dropped precipitously, from $147 per barrel to the low $30s.
Slide 42
Government pension plans such as Social Security are not treated as debt because they are not guaranteed, but they act in much the same way as debt.
Slide 43
The gray bars on Slide 43 indicate recessions. These recessions often seem to be intentionally caused. If a person looks closely, it is possible to see that in most cases, increases in US short-term interest rates preceded recessions. In fact, if a person looks at the minutes of the Federal Reserve Open Market Committee, it is sometimes clear that the Open Market Committee raised interest rates to intentionally pop asset bubbles in order to “reduce volatile food and energy prices.”
Slide 44
The huge interest rate spike to 18% in 1981 on Slide 43 corresponds with the big drop in oil prices on Slide 44. Interest rates were so high that buyers could no longer afford new homes or factories. Prices seem to have been brought down by falling demand.
Slide 45
If we look at recent oil prices, we can also see that they also depend very much on interest rates. In my paper, Oil Supply Limits and the Continuing Financial Crisis, I show that the US debt bubble popped precisely when oil prices hit a peak in July 2008. That is when US consumer credit and mortgage debt started falling.
On Slide 45, QE stands for Quantitative Easing. This was a program that allowed lower long-term interest rates in addition to lower short-term interest rates. Thus, it gave the Federal Reserve (and other central banks) the power to reduce interest rates to an even greater extent than was possible by reducing short-term interest rates alone.
Slide 46
The Federal Reserve seems to have been instrumental in causing the Great Recession, as well. Slide 46 shows a larger scale of the same information about oil prices and short-term interest rates shown on Slide 43. There can be several years between the time interest rates are raised and the resulting recession occurs, so most people miss the role that intentionally raising short-term interest rates plays.
Also, high oil prices also tend to have an adverse impact on the economy because energy prices rise, but wages do not rise at the same time (Part 1, Slide 28). Consumers are forced to cut back on discretionary goods when the cost of necessities (such as the cost of commuting and the cost of food) rise.
In fact, it seems to be the combination of rising energy prices and increased interest rates that leads to recessions.
Slide 47
On this chart, I show some of the comments heard about oil prices. In mid-2008, it was clear that high oil prices were becoming a problem, especially for those with subprime mortgages who were living in homes that were distant from their work. By early 2014, we started hearing that oil prices had been too low for oil producers in 2013. Because of the unprofitability of oil production, some oil producers were cutting back on investment in new production. See my post, Beginning of the End? Oil Companies Cut Back on Spending.
Now, it is fairly clear that no oil price will work for both producers and consumers. Today’s Brent oil price of about $80 per barrel is both too low for producers and too high for some consumers. Consumers who are particularly affected are those whose currencies are falling relative to the dollar, such as consumers in Turkey and Argentina. Even countries with more modest decreases, such as China and India, are cutting back on automobile purchases. This change will affect future oil demand.
If, by some chance, oil prices should spike to a high level such as $100 per barrel, the affordability problem pretty much guarantees that oil prices will fall back fairly quickly. This issue, by itself, makes it impossible to believe that oil prices will increase endlessly.
I should mention, too, that we are also at a point where no interest rate works for everyone. Those buying new homes and new cars need low interest rates, in order for these goods to be affordable. Pension plans, on the other hand, need high interest rates, in order to meet their pension promises. There is no one interest rate that works for every purpose.
Thus, we have a combination problem: no interest rate works for everyone, and no set of energy prices works for everyone.
Slide 48
The Federal Reserve is now in the process of raising short-term interest rates (see Slide 43). It is also selling the QE securities that it previously acquired to reduce long-term interest rates. If buying these QE securities lowered long-term interest rates, selling them should raise long-term interest rates. Raising both short- and long-term interest rates sounds like a formula for creating a huge number of debt defaults and lowering prices of shares of stock. It is likely that these actions will also start a major recession.
Slide 49
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Slide 50
On Slide 50, “earlier” refers to Slide 16 in Part 1 of this presentation. From Part 1, we remember that the first small peak refers to the California gold rush; the second larger peak about 1910 refers to “Electrification and Early Farm Mechanization.” The third peak about 1970 refers to the “Postwar Boom.” The last small peak refers to the expansion made possible by China’s growth, and the growth of other Asian countries.
Slide 50 shows that the troughs refer to periods that were bubble collapses, or the collapse of the central government of the Soviet Union. Slide 51 (next) gives details with respect to these low periods. These were bad times for economies: depression, debt collapses, and periods with significant wage disparity. They were not periods with high energy prices.
Slide 51
Clearly, none of these low periods was a good period for the economy. While we can see that there was low energy consumption during the periods, the primary reason for this low energy consumption was the collapse of a debt bubble or of a government.
Slide 52
Peak coal occurred in the United Kingdom in 1913, and World War I began shortly thereafter, in 1914. When peak coal occurred, wages for workers were very low, because diminishing returns had made the operation of coal mines increasingly expensive, but those purchasing coal could not afford higher coal prices. Thus, mining companies could not afford to pay workers adequate wages. World War I gave an alternative employment opportunity for coal miners and others with low wages.
Entering World War I was a very successful strategy for the UK. The fact that the UK was on the winning side allowed the UK to retain its role as the holder of the reserve currency. In this position, it was fairly easy for the UK to borrow the funds needed to obtain coal and other energy imports.
Germany seems to have encountered peak coal about the time World War II began. Was this an attempt to cover up Peak Coal? We don’t know for certain, but the timing certainly looks suspicious.
In both of these cases, low energy supply seems to have led to fighting, rather than high prices.
Slide 53
The collapse of the central government of the Soviet Union seems to have been an indirect impact of the long term low oil prices in the 1981-1991 period. The high oil prices of the 1970s had encouraged the Soviet Union to ramp up oil production. Once the US raised interest rates and oil prices fell, there were no longer funds for investing in new oil production. The Soviet Union was dependent on oil exports. It was able to continue for quite a few years with low prices, but eventually its central government collapsed. Over the long term, consumption has continued to be much lower, reflecting the permanent loss of industry.
Slide 55
Slide 55 is a graph of the “peaks” on Slide 50. If we listen to mainstream economists (including Paul Romer and William Nordhaus, who recently received the Nobel Prize in economics), improved technology can allow the world economy to become increasingly efficient, and thus overcome the problem of diminishing returns. Slide 55 shows that over a period of nearly 200 years, this has never happened in the past. The troughs represent collapses of one kind or another. These low periods did not represent sustainable situations.
The problem is that diminishing returns leads to the need for very different techniques to work around new problems. For example, if there are diminishing returns with respect to extracting fresh water from wells, the first alternative is to dig deeper wells. Efficiency gains can somewhat help offset the cost of deeper wells. But once the problem advances to the point where desalination is needed, plus remineralizing the water with the correct minerals after desalination, the cost of fresh water becomes much higher. It becomes impossible for improved technology to work around the very large increase in costs that diminishing returns seems to cause.
We haven’t been able to work around diminishing returns with increased efficiency before; we are likely kidding ourselves if we think we can do so now.
Slide 56
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Slide 57
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Slide 58
The point that should be emphasized is that the reason why the United States economy now looks fairly good is because we are at the top of a debt bubble. This bubble is partly the result of world’s long running low interest rates, and partly because of the United States’ recent tax cuts. Thus, the situation today is a lot like 1929 before the debt bubble collapsed, or a lot like 2007 before the economy derailed. Things look good, but they won’t necessarily stay favorable for very long.
Slide 59
Separate Additional Conclusions for Various Audiences
At this writing, I have actually given variations on this talk three different times, to different audiences. The first audience (which is the one I mentioned at the beginning of Part 1) was a meeting of about 100 property-casualty actuaries. These actuaries help determine rates and financial statement amounts for lines of insurance such as automobile, homeowners, and medical malpractice. The specialized conclusions I added for that audience were the following:
Slide 61
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Slide 62
The second version of my talk was given at the 2018 Bermuda International Life and Annuity Conference, to a group of 300+ insurance executives of various kinds. This talk was called Energy Economics: Is a Discontinuity Ahead? This audience was especially interested in my talk because interest rates are central to the operation of pension plans. If interest rates do not rise, this is a major concern for this group.
The conclusion slides to that presentation were the following:
Conclusions -Slide 1 of 2 – Life/Pension version
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Conclusions for Life and Annuity Providers – Slide 2 of 2
The third version of the presentation I gave was to a group of followers of Peak Oil theory. This presentation was somewhat shorter and slightly rearranged. The title of this presentation was How the Energy System Really Works and What Seems to Be Going Wrong.
Its short conclusions’ sheet mentions the following dangers:
Conclusions of Shorter Version
“Time to …turn your focus to the U.K. — which is even now, after last week’s summit, on a path to the worst sort of Brexit, a disorderly “no deal” in which the U.K. leaves the European Union with no agreement at all on March 29. That means no plan and no disruption-reducing transition period — which in turn means chaos at U.K. and E.U. ports, food and medication shortages, and, if we’re unlucky, an eventual U.K. financial crisis for which we’re extremely unprepared.”
http://nymag.com/intelligencer/2018/10/were-headed-for-a-brexit-crashout.html
“UK car output fell by 16.8% in September according to the latest data issued by the Society of Motor Manufacturers and Traders. The trade association said some 25,610 fewer cars rolled off production lines than in the same month last year, capping off a turbulent first three quarters as global trade tensions… September production fell for both home and overseas markets, down year on year by a respective 19.0% and 16.2%.”
https://www.just-auto.com/news/uk-car-production-down-17-in-september_id185278.aspx
“Stock markets expect the value of UK retail property to fall almost as much as during the financial crisis, according to an analysis for the Financial Times.”
https://www.ft.com/content/528899ee-d848-11e8-ab8e-6be0dcf18713
I think we can all guess that this will raise default risk.
Ugh, we are like an already decrepit wildebeest that in its confusion has wandered away from the herd – and now the lions are hoving predictably into view:
“Russia is among 20 countries that are looking to squeeze a commercial advantage from Brexit after blocking an attempt by the international trade secretary, Liam Fox, to fast-track a World Trade Organization deal on the UK’s terms of trade with the world.
“Whitehall is now facing “up to two dozen” different negotiations with countries over how much meat and dairy produce will be permitted into the British market and what tariffs the UK will set on imports.
The development will pile pressure on the UK’s already strained resources…”
https://www.theguardian.com/world/2018/oct/26/russia-brexit-liam-fox-wto-plan-uk
avant le deluge
“Crime and a grinding economic crisis have turned the traditionally vibrant, teeming streets of Caracas into no man’s land once the sun goes down… In Venezuela it is almost impossible to eat out when inflation is beyond runaway and projected by the IMF to end the year at 1.35 million percent… NGOs say there were 26,000 violent deaths last year in Venezuela — 89 per 100,000 inhabitants, which is 15 times the global average.”
https://www.france24.com/en/20181026-crime-crisis-turn-caracas-streets-dark-deserted
“Brazil is still struggling to recover from its worst recession on record, the full effects of which will only become clear several years down the line. The currency has devalued significantly, and despite a recent rally, the Real has slipped 16 percent against the U.S. Dollar in the last year. A weaker Real causes all sorts of problems at home, not least provoking the ire of consumers who have seen their hard-earned salaries become worth less and less as the years go on.”
https://brazilian.report/money/2018/10/25/sale-brazilian-assets/
“Early Thursday, Argentina’s lower house approved the heavily-protested austerity budget, which was designed to meeting a $57-billion International Monetary Fund (IMF) bailout requirement.
“”We are in a crisis and the government must take responsibility. Social problems and the recession oblige us to pass the law,” Cambiemos party lawmaker, Mario Negri, said in a speech after the budget was passed.”
https://www.telesurtv.net/english/news/Argentina-Lower-House-Approves-IMF-Austerity-Budget-20181025-0006.html
How does an austerity budget help the world’s problem with low energy demand/afforability?
“India’s tight money conditions and fears of a contagion following a debt crisis at a local lender dented demand and put a muzzle on animal spirits in the world’s fastest-growing major economy… price pressures intensified, with higher fuel costs and a stronger dollar making imported goods pricier.”
https://www.bloombergquint.com/global-economics/india-s-animal-spirits-muzzled-by-cash-crunch-slowing-demand#gs.=qydh5Y
“The rand yesterday extended its losses after Finance Minister Tito Mboweni warned that [South Africa] might be forced to go to the International Monetary Fund (IMF) for a bailout if the escalating debt was not reined in. The local unit fell to R14.57 to the dollar by 5pm after hitting R14.50 on Wednesday after Mboweni said in his maiden Medium Term Budget Policy Statement (MTBPS) that government debt had widened far more than initially thought.”
https://www.iol.co.za/business-report/economy/rand-falls-as-mboweni-warns-of-possible-imf-bailout-17651525
At what point does the IMF run out of money for all of these bailouts?
“Copper, an industrial metal known as a leading indicator of economic activity, has been pointing investors toward slowing global growth, setting prices on track for their first yearly decline since 2015 and raising questions about other world markets.
““Investors are expressing economic concerns,” said Dan Denbow, a portfolio manager at USAA.”
https://www.marketwatch.com/story/copper-weakness-hints-at-economic-woes-ahead-2018-10-25
“Asia markets were mostly down on Friday as major indexes see-sawed between gains and losses. Stocks on Wall Street saw a recovery overnight after suffering from steep losses in the previous trading session stateside, but futures pointed to declines at the open on Friday.”
https://www.cnbc.com/2018/10/26/asia-markets-wall-street-ecb-currencies-in-focus.html
“The onshore renminbi fell as much as 0.22 per cent on Friday morning in Asia trading to Rmb6.9644 against the dollar, representing its weakest value since the global financial crisis in 2008.”
https://www.ft.com/content/80573442-d8d0-11e8-a854-33d6f82e62f8
Part of the issue may be too much copper production in response to last years’s higher price. I notice that the International Copper Study Group says:
“World mine production is estimated to have increased by about 4.5% in the first seven month of 2018.”
https://www.icsg.org/index.php/component/jdownloads/finish/114/2885?Itemid=
That is quite a high increase, compared to world economic growth and world energy growth.
“If you’re a student of price charts, you have to be fascinated lately by the look of a couple of significant markets that greatly affect all of the planet: oil and bond yields…
“What information can be gleaned from this? The first thing is, from the standpoint of the long-term, oil is lower now than it was when it peaked at 150 during the financial crisis that stormed all markets in 2008. Secondly, oil remains lower today than the peaks in the 110/120 area of the 2011 through 2014 period.
“The 2016 low of 26 demonstrates the remarkably wide range of price that shows up over time — from 150 to 26 in 8 years. At the recent price of 75, about half of the down move has been retraced, but the price of oil remains below the down trend line extending from the 2008 peak. From the standpoint of monthly chart analysis, oil is in a down trend.”
https://www.forbes.com/sites/johnnavin/2018/10/25/what-the-oil-price-charts-the-interest-rate-charts-are-revealing/#6c2bad9d63c8
A couple of thoughts:
(1) This is a WTI chart. A Brent chart would show a steeper downward trend. I would tend to believe the Brent chart more.
(2) Everything I can see says that price is determined by “demand” – quantity affordable a given price. This depends on the wage distribution and how low interest rates are. It is quite reasonable to believe that quantity affordable keeps leading to a lower maximum price.
Great article on Lithium reserves from Alice “the other Gail” Friedemann’s blog:
http://energyskeptic.com/2018/not-enough-lithium-for-electric-car-batteries/
“Li-ion energy storage batteries are more expensive than PbA or NaS, can be charged and discharged only a discrete number of times, can fail or lose capacity if overheated, and the cost of preventing overheating is expensive. Lithium does not grow on trees. The amount of lithium needed for utility-scale storage is likely to deplete known resources (Vazquez 2010)
To provide enough energy for 1 day of storage for the United states, li-ion batteries would cost $11.9 trillion dollars, take up 345 square miles and weigh 74 million tons (DOE/EPRI 2013).
Barnhart et al. (2013) looked at how much materials and energy it would take to make batteries that could store up to 12 hours of average daily world power demand, 25.3 TWh. Eighteen months of world-wide primary energy production would be needed to mine and manufacture these batteries, and material production limits were reached for many minerals even when energy storage devices got all of the world’s production (with zinc, sodium, and sulfur being the exceptions). Annual production by mass would have to double for lead, triple for lithium, and go up by a factor of 10 or more for cobalt and vanadium, driving up prices. The best to worst in terms of material availability are: CAES, NaS, ZnBr, PbA, PHS, Li-ion, and VRB (Barnhart 2013).”
Yes, using batteries for storage on the grid is currently untenable. Replacement of spent batteries would be even more so. I would image a replacement cycle of ~10 years. Just not a solution. One coal plant can run for 30-50 years. There is no comparison.
Having enough water seems to be a limit on mining lithium. Someone posted a link recently.
https://www.reuters.com/article/us-chile-lithium-water/in-chilean-desert-global-thirst-for-lithium-is-fueling-a-water-war-idUSKCN1LE16T
I would guess that lithium reserve estimates do not take into account water limits. This adds to the difficulty.
Looking at America through Google Trends
https://i.imgur.com/hu2Xl4q.png
ten dollars a barrel of oil when she crashes
Sales of New Houses Plunge, Pile of Unsold Homes Highest since January 2009, Prices Drop from Year Ago
Sales of new single-family houses in September plunged 18% from September a year ago, not-seasonally adjusted, to just 41,000 new single-family houses, according to estimates that the Census Bureau and the Department of Housing and Urban Development jointly reported this morning.
In terms of the seasonally adjusted annual rate of sales, which projects what sales for an entire 12-month period would be based on the sales in September: It plunged 13% from September last year to an annual rate of 553,000 houses. Single-family house sales account for about 10% of total home sales. This data is volatile and is subject to big adjustments, but after a while, the trends are starting to be unignorable:
https://wolfstreet.com/2018/10/24/sales-of-new-houses-plunge-unsold-new-homes-highest-since-january-2009-prices-drop-from-year-ago/
https://wolfstreet.com/wp-content/uploads/2018/10/US-New-Home-sales-2018-10-24.png
Sniff sniff, it’s starting to smell like 2008 all over again.
Perhaps the fakery at Tesla is aimed at keeping it alive for a little longer… because Tesla is part of the Big Lie… if it were to fail … that would deflate the hopium bubble that the masses live inside…
And accelerate the decline of the global economy…. which looks to be breaking down right before our eyes now…
The spent fuel ponds are … worming up!!!
lalalala la…. la la la la…
OMG this is sooo fantastic…..do gooder donations being put to best use!
https://www.theguardian.com/world/2018/oct/12/papua-new-guinea-imports-40-maseratis-to-transport-apec-delegates
”Papua New Guineans have reacted with anger at its government importing a fleet of Maseratis to drive international delegates around the Apec conference next month, amid a health and poverty crisis, struggling economy, and ongoing efforts after a devastating earthquake.
The PNG government has defended its decision, expressing confidence that all 40 luxury cars will be bought by the “private sector” after the two-day event, leaving the government with no financial burden.
The cars, which cost between $200,000 and $350,000 each in Australia, were flown in from Milan on two Boeing 747-8F charter planes this week, with the costs covered by “the private sector”, according to the minister for Apec, Justin Tkatchenko.
“Maserati Quattroporte sedans have been secured and delivered, and are being committed to be paid for by the private sector,” he said.
“Having vehicles paid for by the private sector is the smartest way to have use of the vehicles for Apec at no overall cost to the State.”
Tkatchenko dismissed the backlash, saying the government had only paid a deposit – believed to be around 40m kina (A$16.75m) – for the cars, which would be reimbursed by private citizens who had expressed interest in buying them after Apec.”
…expressed interest in buying them….lets see how that works out!
Why didn’t they use Teslas? That’s a win win.
you need 4-wheel drive SUVs and BFTs to get around in PNG, unless you intend to stay in the city.
I have an APEC card… do I get one?
Chief Accounting Officer Dave Morton gave notice Tuesday that he was resigning … Morton, a former chief financial officer for computer-drive maker … Morton walked away from a $10 million new-hire equity grant….
https://www.bloomberg.com/news/articles/2018-09-07/tesla-chief-accounting-officer-leaves-citing-level-of-scrutiny
10 million — and possibly go to prison for fraud…
Or leave and look to fight another day….
Leave it is….
What we need is someone who quit to expose what is going on … you’d think this would be one for wikileaks… but wikileaks is mainly concerned with gossip e.g. which politician made insulting comments about another politician
You think it is only Tesla that is committing fraud? I would bet all the top 500 companies in the US are also committing immense levels of fraud. Levels of fraud that 50 years ago would have seen anti-trust laws closing these companies down. But, today, no, these corporate powers just buy their political influence with millions and pocket billions.
Not to mention, governments that are creating great subsidized industries, and treating all of that subsidized industry as being GDP. Part of the subsidy has come from incredibly low interest rates.
Buying back shares is basically fraud….
https://i2.cdn.turner.com/money/dam/assets/180215161837-chart-stock-buybacks-leaderboard-780×439.jpg
http://intermarketandmore.finanza.com/files/2016/01/largest-stock-buybacks-us.png
GE is just stupid I think Apple is just dumb…I see nothing branded GE anywhere Apple on the other hand…
Google parent Alphabet’s shares crashed over 7% after hours after missing revenue estimates…
Despite reporting Q3 EPS of $13.06 (well above consensus $10.40), the company reported revenues of $27.2 billion, versus expectations of $27.3 billion (excluding acquisition costs). A small miss, but enough to erase the day’s exuberant gains…
https://www.zerohedge.com/news/2018-10-25/alphabet-shares-plunge-after-missing-revenues
Tell me it isn’t so….please….!!
https://www.zerohedge.com/news/2018-10-25/chelsea-clinton-hints-run-political-office
This has to be a new low and become the new definition of ‘cognitive dissonance’.
If things could continue another 10 years (which they won’t) then, Chelsea would certainly be high up the political latter by 2028. These people are groomed by their handlers and selected for these positions. They are “selected” not “elected”.
All future PRESIDENTS will have the name Trump…mark my words
One major issue is that there is no way that Social Security and Medicare benefits can be maintained at their current levels. I expect that this is true in other countries as well. But there is also no way that an elected set of representatives can make the changes to massively reduce benefits. Also, the drop in “demand” for goods and services would be so severe, after such a change were implemented, that commodity prices would fall below the cost of production. Debt defaults would become huge.
So a person can argue that a non-elected strong man could work around the problem of not being able to reduce benefits enough. Except that even if the strong man succeeded, the system wouldn’t work.
Revenue of $56.576BN, missed the estimate $57.06 billion. Amazon in July forecast revenue of $54 billion to $57.5 billion
More importantly, Amazon guided Q4 net sales to be between $66.5 billion and $72.5 billion, which however was far below the consensus est. $73.78B. Meanwhile, operating income is expected to come in between $2.1 and $3.6 billion, compared with $2.1 billion in Q4 2017, and also well below the consensus estimate of $3.9 billion.
https://www.zerohedge.com/news/2018-10-25/amazon-crashes-after-missing-revenue-poor-guidance
And don’t you all just love it that a company can’t have a decent qtr these days. Now it HAS TO BE constant GROWTH, even better, EXPONENTIAL GROWTH. Amazon has always been about breaking even because they reinvest their profits back into the company such as their Prime Services.
Apple is another one of the FAANG Stocks that can’t have a decent qtr without the stock going into meltdown mode. It has to be better than expected growth every qtr, every year, forever. In other words exponential growth which according to this website is impossible, because we live on a finite planet.
See what happens when the mother takes too much acid during pregnancy…
https://www.zerohedge.com/sites/default/files/styles/inline_image_desktop/public/inline-images/Chelsea%20book%20tour_0.jpg
she looks so much like her father Webb Hubbell…
https://www.wnd.com/files/2015/10/Webb-Hubbell_Chelsea-Clinton.jpg
Bill was too busy with his harem of 14 year olds so HRC hooked up with Webb…
Her face reminds me of that famous Rodney Dangerfield joke.
What’s with all the misogyny FE?
Didn’t your daddy teach you not to pick on girls?
My daddy didn’t teach me much… at all…
For some reason I have grown to despise the Clintons…. slimy, sleazy…. if I was forced to vote and had to choose between Trump and any of the Clintons at a voting booth…. I would definitely vote for Trump…
But I don’t vote… it is against my religion….
https://imgur.com/a/2rWja4m
Suspicious packages could be ‘Russian operation,’ says MSNBC host
https://www.rt.com/usa/442301-suspicious-packages-russian-operation/
Russia is being blamed for everything including bad weather..
the Don has already got his pardon pad out ready
Saudi Arabia’s might as an oil producer is being tested
Will it be able to fill the gaps left by smaller producers?
Oil traders are inherently strong-stomached, but even for them October has been a woozy month. On October 3rd the price of Brent crude reached $86 a barrel, a four-year high. On October 23rd it slid to $76, on the news that demand might ebb, stockpiles rise and production increase. At the centre of this is Saudi Arabia, the world’s most powerful petrostate. Khalid al-Falih, the country’s oil minister, said on October 23rd that the kingdom was prepared “to meet any demand that materialises”. But that is not an easy task.
Exports from Iran have plunged and are due to fall further after November 4th, when new American sanctions take effect. Even as America’s crude production soars, President Donald Trump has demanded that the Organisation of Petroleum Exporting Countries (opec) boost output to lower prices. Saudi Arabia seems keen to appease him, both because it supports the sanctions and because of anger over the killing of Jamal Khashoggi, a journalist, in the Saudi consulate in Istanbul. But the gains from producing more are uncertain. Both opec and the International Energy Agency (iea) have cut their forecasts for oil demand in 2019.
Even if Saudi Arabia wants to fill the gap left by Iran, it is not clear that it can. That is in part because Saudi output is already so high. As Iranian exports have dropped since May, when Mr Trump announced the sanctions, Saudi Arabian exports have picked up. The kingdom is producing more than 10.5m barrels of oil a day (b/d); officials claim the capacity to produce around 12m. “They can reach about 11m barrels with relative ease,” explains Neil Atkinson, head of oil markets at the iea. Analysts debate how quickly—or whether—the country can ramp up to 12m b/d. “They have never actually proven they can do that,” says Ehsan Khoman of mufg, a bank.
Saudi Arabia may also be unable to counter weakness in smaller petrostates, where supply could drop unexpectedly. In the past six months Nigeria, Libya and Venezuela have helped to offset falling exports from Iran. But they are a volatile trio.
Violence and political unrest make production in Nigeria and Libya prone to big swings. The situation is more extreme in Venezuela where, thanks to political turmoil, production is about half of what it was in early 2016. Still, Venezuela produced 1.2m b/d in September. Exports actually increased by 250,000 b/d between April and September, according to Bernstein, a research firm, equivalent to more than half the rise in Saudi exports in that period. There is ample room for Venezuela’s output to drop further.
The result may be further dramatic swings in the market, with Saudi Arabia’s oil production put to the test. “It is the first time in modern history that countries have faced so many restrictions at the same time,” according to Mr Atkinson of the iea. Much depends on just how far exports from Iran sink—some countries are pushing for waivers from sanctions. Mr Falih remains confident that Saudi Arabia can help provide stability. But as it increases output, spare capacity may reach a record low by the end of the year. “The more they produce, the less there is in the tank for any additional supply outages,” says Mr Khoman. Get ready for a bumpy ride.
https://www.economist.com/finance-and-economics/2018/10/27/saudi-arabias-might-as-an-oil-producer-is-being-tested
https://imgur.com/a/Tux1pL2
“Computers are useless. They can only give you answers.”
— Pablo Picasso
https://youtu.be/QTcL6Xc_eMM
Wow, my ignorance of history is astounding.
“No matter how cynical you get, it’s never enough to keep up.”
And to think, people give their lives up in defence of America’s ‘freedom’
Pipe bomb duds in the mail are quite good at knocking Khashoggi off the front page.
But, Sir Ronnie was a tool——
I’m thinking those pipe bombs are false flags
could be…
elections are two weeks away…
someone could be trying to make the conservative “R” side look worse…
liberal “Ds” seem to be more desperate than ever before…
Very banana republic like…
When something smells rotten… it is rotten
https://www.zerohedge.com/news/2018-10-25/analyst-erupts-tesla-they-used-every-trick-every-fraud-put-lipstick-q3-results
Tesla is gaming the working capital and depreciation numbers, ultimately flowing into COGS and profits. They are focused on an epic blow-out quarter so that they can raise additional capital and keep their scheme alive into 2019.
Besides, why else have they lost their entire accounting department (CAO twice) this year? Accountants don’t usually leave a business when it’s about to have a blow-out quarter—unless they want to avoid prison.
Q3 will be the high-water mark. They have now almost fully worked through their backlog of high-margin cars, the model 3 is a certifiable lemon, demand is evaporating and when sales comp negative, the working capital build will go in the other direction. In the interim, they have two sizable maturities between now and March 2019. If they cannot pop a financing very soon, the game is over.
I’m glad I booked my 2019 put spread—they gamed the quarter just like I suspected they would. I still have my 2020 put spread. I don’t know if Tesla rolls over immediately or takes a few weeks. It depends on how fast people analyze Q3 numbers and start asking the sorts of questions that I am asking. Let’s just say that I have dozens of other questions and the 10-Q hasn’t even been released. I’m on high alert to add to my bearish position using some combination of options. I will probably do it too early—that’s OK. 2019 is the year when Tesla implodes.
Notice that nearly every country the US has problems with now has oil?
Russia, Venezuela, Syria, Iran…and don’t forget Iraq and WMD’s..
And they are all fake issues made up out of thin air..
Venezuela has a dictator..(even though he was democratically elected)
Iran is building secret nukes (even though the IAEA said they are not)
Syria’s president is gassing his own people (even though Putin removed his chemical weapons back in 2014 and was nominated for a Nobel peace prize for it)
Russia is meddling in the US election (the evidence is a few twitter and fb trolls)
“Is the brotherhood even real?
That Winston you will never know.”
-Orwell 1984
China, of course, as well. China’s oil production is now falling. In fact, China has become the world’s largest oil importer in the world in 2017. So Trump’s issues are not just with oil exporters, but with countries importing oil as well. Perhaps Trump is simply being rational.
Perhaps those who control Trump… are being rational.
Fixed it….
https://imgur.com/a/NSBlpen
“Perhaps Trump is simply being rational.”
Or insane. It’s hard to distinguish rational decisions from insane ones when the context of those decisions is itself insane.
Justifying your job position is rational thinking, maybe even if it means ww3 in 8 years instead of 10
Forgot Libya as well..
I love what the libtards have done with north Africa
I love how Obama gets a pass on all the murder and mayhem that happened while he was in office…
Oh right…. I forgot… he was just following orders… from the ____ ders
Same guys who awarded him the peace prize
The workers in the construction sector in Slovakia suffer from insufficient wages and fall into debts, as they do not earn enough to sustain their households:
https://ekonomika.sme.sk/c/20945669/slovenski-stavbari-su-zadlzeni-nezvladaju-pokryvat-ani-vydavky-domacnosti.html?ref=trz
This is part of the affordability problem.
More debt usually translates into more wages, and those wages go into more demand.
The construction sector is highly dependent on the leased machines and the oil prices. Also the higher complexity of the current buildings requires more energy, so that the buildings are energy efficient.
When the construction sector is driven by the debt, like the mortgages of the insufficiently paid workers, this also translates into the low wages of the construction workers.
Translate does not compute on my end
My GUESS is the pay is 1248 euros per month…That is what we get per week+another 15 per hour in benefits and even with that we need foreign workers.
If you pretend to pay workers they pretend to work.
About the Tesla profit news: it seems they need 10/12 subsequent negative quarters get one quarter of record profits (i.e., respective to the previous 10/12). This is the fractal, four-dimensional chess of the new economy. If you think that is nonsense, you’re definitely one of the bns of plebs who are going to be face-sprayed with rat faeces by the weaponised drone squadrons. That is, after “they” use record profits like that to take over the world with AI, EVs and (surprisingly enough) PMS.
They can start paying down the 9.51 billion they owe.
Tesla should take all of its cash on hand… and punt it on cryptocurrencies….
Or better still… go to Vegas … put it all on red … and spin the wheel…
Didn’t some company buy a very expensive gem stone last week… and see their share price increase dramatically?
Maybe Elon should do that…. start buying up the biggest diamonds, rubies etc….
Cuz this sucker is going to zero at some point….
Rats do not flee a ship that is filled with grain…..
https://www.cnbc.com/2018/09/12/yet-another-finance-executive-is-leaving-tesla.html
https://www.zerohedge.com/news/2018-10-25/analyst-erupts-tesla-they-used-every-trick-every-fraud-put-lipstick-q3-results
Tesla groopies and investors are squeeling with delight at the moment…
But as that analyst points out… this is nothing but smoke and mirrors …. aimed at creating hype… so that Tesla can cover it’s debt obligations as they come due … and raise more money going forward…
Of course the SEC will ignore this…. just as they pretty much ignored the ‘we have the funding to go private’
I am not sure which is a bigger joke being played on the masses – tesla … g ww….. or renewable energy….. I do know that all 3 are epic lies
He’s a visionary. You need to get on board with that.
Yep, he keeps on having visions alright.
and, did we mention that he used to date Amber Heard?
Did he do this
https://www.google.ca/search?q=amber+heard&rlz=1C1GGRV_enCA751CA751&source=lnms&tbm=isch&sa=X&ved=0ahUKEwit6un9jqTeAhWEm-AKHalVAgoQ_AUIDigB&biw=960&bih=469&dpr=2#imgrc=UHcZ0n_U5fTShM:
“Theresa May has set a date for Whitehall to trigger a series of no-deal Brexit preparations as her government faces up to the possibility that there will be no agreement with the EU about Britain’s departure.
“With less than six months to go before the UK leaves the bloc, the cabinet has agreed that a flurry of activity will be triggered in the second week of November as the government prepares to crash out of the EU, informed sources said.”
https://www.theguardian.com/politics/2018/oct/24/may-sets-november-date-to-trigger-no-deal-brexit-preparations
You can not leave this ship of Earth. I have got the CD – those imploding 70s.
Britain is leaving the EU, Jaguar Land Rover is opening its new factory in Slovakia:
https://ekonomika.sme.sk/g/108534/zavod-jaguar-land-rover-v-nitre?ref=https%3A%2F%2Fekonomika.sme.sk%2Fc%2F20946446%2Ffoto-jaguar-land-rover-nitra-automobilka.html&list=1
That is so awesome. I’m sure the Slovakians will enjoy buying and driving those nice automobiles.
Slovakia average salary
In the Slovak Republic, the average household net-adjusted disposable income per capita is USD 20 265 a year, lower than the OECD average of USD 30 563 a year. There is a considerable gap between the richest and poorest – the top 20% of the population earn almost four times as much as the bottom 20%.
btw – good taste in music
When they were building the factory they did not count with the increasingly hot summers in our part of Europe – there is no air-conditioning in the production facilities and the workers were complaining. We will see how they tackle this problem in the future.
As regards buying those cars, I am not sure, that Slovaks will buy them in big quantities: as the people are increasingly in debts, firstly they need to repay the loans and mortgages. Furthermore, the new nuclear power plant blocs that are being finished in the nearby Mochovce, required much higher amounts of money as it was planned. Also, the shortage of workforce needs to be solved by foriegn workers.
I have never known of a NPP in the west to come in on budget.
They knew and lied.
“The value of euro zone banks .SX7E have collapsed by a third since markets touched their peak at the end of January, data showed on Wednesday, as another quarter of disappointing profits at Deutsche Bank (DBKGn.DE) dragged the region’s sector down.”
https://www.reuters.com/article/us-markets-banks/value-of-euro-zone-banks-drops-by-a-third-from-2018-peak-idUSKCN1MY29I
“The European Central Bank seems certain to keep policy unchanged on Thursday but it is likely to acknowledge the growth outlook is deteriorating, even if not yet by enough to derail a carefully crafted retreat from stimulus. Having exhausted much of its firepower with four years of unprecedented support, the ECB will reaffirm its asset purchases are set to end this year…”
https://uk.reuters.com/article/us-ecb-policy/ecb-to-stick-to-exit-plans-despite-darker-outlook-idUKKCN1MY32N
““It is evident that the [UK] housing market is struggling for traction in the face of still limited consumer purchasing power, fragile consumer confidence and wariness over higher interest rates.
“Brexit uncertainty may also be having some dampening impact on activity,” said economist Howard Archer at the EY Item Club.”
https://www.telegraph.co.uk/business/2018/10/24/housing-sales-track-weakest-year-since-2013/
“Swedes became more pessimistic as the central bank prepares to raise interest rates for the first time in seven years and politicians struggle to form a government more than a month after the nation’s inconclusive election.”
https://www.bloomberg.com/news/articles/2018-10-25/swedish-confidence-declines-on-concern-over-economic-slowdown?utm_source=google&utm_medium=bd&cmpId=google
“German private-sector growth slowed to its lowest level in more than three years as manufacturing and services both lost momentum, a survey showed on Wednesday, in a sign that Europe’s largest economy started the fourth quarter on a weaker footing.”
https://www.businesslive.co.za/bd/world/europe/2018-10-24-german-growth-slows-as-manufacturing-services-weaken/
“Italy’s government is ready to intervene to help banks suffering from rising bond yields, said a top adviser to Deputy Prime Minister Matteo Salvini, in a warning to the European Union from the government whose spending plans have frightened investors. Italian banks would need recapitalization if the gap between yields on the country’s government debt and German bonds gets close to 400 basis points…”
https://www.bloomberg.com/news/articles/2018-10-24/italy-s-league-says-banks-need-capital-boost-if-spread-nears-400
But they didnt raise. They have planned to do it every single day for 10 years.
Do the turnips have a central bank as well?
If not then its well past time!
Higher interest rates when an economy is already doing badly is crazy! Except that investors may move their money elsewhere, if the rate of return their debt is paying is too low, relative to what others are paying.
Maybe higher interest rates are inevitable once the rising “energy cost on energy” as a whole can no longer be arbitraged away, or at least not without a crash/recession. One could look at the recent economic crashes/recessions as proclaiming to incrementally larger numbers of people that promises made won’t be kept, which is a kind of arbitrage.
It is true that falling interest rates have been mostly able to “arbitrage away” the rising cost of energy production because they enable cheaper monthly payments, so more potential buyers can afford factories, homes, and vehicles. Falling interest rates also help the process by enabling a debt bubble that leads to higher commodity prices. As a result, higher cost resources can economically be extracted.
I think the issue at this point is that falling interest rates have hit rock bottom, and leaders think that they can bring them back up again. This is impossible to do. Raising interest rates reverses both of the favorable effects referred to in the previous paragraph. When sale of QE securities is added to the mix, it worsens the situation further.
You raise a question about what happens when “the ‘energy cost of energy’ can no longer by arbitraged away.” As I see the situation, the economy can only grow, when the cost of “Energy Services” (that is, the cost of energy, taking into account the growing efficiency with which it is used) is falling, in inflation adjusted terms.
https://gailtheactuary.files.wordpress.com/2017/11/fouquet_average-price-of-energy-and-energy-services-in-the-uk-1700-2008.png
Total Cost of Energy and Energy Services, by Roger Fouquet, from “Divergences in Long Run Trends in the Prices of Energy and Energy Services.”
http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2014/06/LREnergyPricesREEP2011.pdf
The “energy cost of energy” is a short-hand way of looking at energy costs (using graduate student labor, instead of inside information of companies), developed by Charlie Hall. In my opinion, it doesn’t work very well. There certainly is no inevitable rise in the average “energy cost of energy,” unless efficiency growth is offsetting it. A growing debt bubble is needed to afford higher-cost energy of any kind. Higher interest rates very much depress the growth of this debt bubble, so they tend to make the economy collapse.
From the paper about energy services: «In the second half of the twentieth century, however, average energy prices did rise, reflecting not so much rising resource scarcity as greater value to consumers, as they shifted to energy sources that provided the desired services more efficiently.
Second, the article highlights the dangers of focussing on the price of energy rather than the price of energy services when considering the long run. The price of energy ignores major technological improvements and their benefits to the consumer. This failure to focus on energy services is likely to lead to incorrect estimates of consumer responsiveness to changes in price and income. The article suggests that the inclusion of service prices and consumption variables would lead to more reliable models of long run energy demand and forecasts of carbon dioxide emissions.»
Would like your comment on this, Gail. Raising energy prices would not make a problem, if the consumers could afford them, which the autor kind of presupposes!
I think the paper is right. A person can afford to pay more for gasoline, for example, if his car is very fuel efficient, so he needs very little of it.
Also see Aude Illig and Ian Schindler, Oil Extraction, Economic Growth, and Price Dynamics.
https://link.springer.com/article/10.1007/s41247-016-0016-6
Ian Schindler occasionally comments on this site.
Thanks for the reply.
“There certainly is no inevitable rise in the average “energy cost of energy,” unless efficiency growth is offsetting it. A growing debt bubble is needed to afford higher-cost energy of any kind. Higher interest rates very much depress the growth of this debt bubble, so they tend to make the economy collapse.”
If you think of ECOE (energy cost on energy) as the cost of both extracting and *using* the energy in the overall economy (the latter also indirectly requiring energy and other resources), it is rising.
To be brief and perhaps simplistic, the energy we extract is creating a decremental number of new things we can use it for, including new cheap and high quality energy sources. Wouldn’t you say that this can only be due to the rising cost of current extracted energy happening at some level?
My objection to this line of discussion is that trying to separate the “energy cost” of energy from
(1) the “capital cost” of energy
(2) the “labor cost” of energy
(3) the “governmental tax cost ” of energy
plus whatever other pieces need to be considered, such as land rent, is a sort of a silly exercise. This is something you can do if you have a lot of graduate student time available, and are only looking at simple comparisons like how one oil field compares to another oil field.
The point is not that we are running out of energy. It is that energy is embedded in many different parts of the economy. Consciously ignoring the energy embedded in these pieces, and counting very different types of energy as equivalent (intermittent = non-intermittent, for example), leads to many wrong decisions about what types of energy make sense. EROIs of wind and solar are simply misleading, IMO.
I love it: ‘still limited consumer purchasing power’ – as if it could ever take off again!
xabier,
You have so little faith. There is so much to be done……
A few days ago the creator of the most famous consumer ‘credit score’ in the United States announced a major overhaul in how it rates borrowers.
Consumers live and die by this ‘FICO score’. A high FICO score means that it’s easy to obtain loans at lower interest rates.
And a bad FICO score (in theory) means that you have a history of not paying your debts… hence making it difficult to obtain loans.
Well it turns out there are tens of millions of people in the US who either don’t have FICO scores at all (i.e. NO credit history), or they have BAD credit.
So FICO decided that they would reinvent the way they calculate the scores– giving a big boost to people with bad credit.
Virtually overnight, people who have a history of not paying their bills will immediately be deemed creditworthy.
And poof… they’ll have access to more debt than ever before.
https://www.zerohedge.com/news/2018-10-25/what-bunch-idiots
Insurance companies (auto and homeowners) make heavy use of FICO scores in states where the state governments will allow them to use these scores. People with poor scores tend to have a lot of homeowner and auto claims, presumably because if they are careless with their finances, they will be careless with their home and auto. Or they will be in such poor financial condition that they will attempt to pass off pre-existing conditions as the effect of some recent accident or wind storm.
Yes, there is that solution to ‘fragile’finances – make them even more fragile!
“Last year, Africa’s foreign debt reached the highest level since 2001, according to the British lobby group Jubilee Debt Campaign. Eighteen countries are experiencing an acute debt crisis or are on the brink thereof, according to the World Bank.”
https://www.dw.com/en/africas-new-debt-crisis/a-46020639
“South Africa predicted wider budget deficits and cut growth forecasts in a bleak budget on Wednesday that focused spending on infrastructure, manufacturing and agriculture to boost the recession-bound economy.”
https://uk.reuters.com/article/us-safrica-budget/recession-bound-south-africa-sees-wider-budget-deficits-low-growth-rand-dips-idUKKCN1MY1QS
“[China] The chief engine of growth for the world’s carmakers is turning into their biggest headache. In the past 48 hours, auto giants from Volkswagen AG and Ford Motor Co. to Renault SA and PSA Group have pinned flagging profits and weakening sales outlooks on a slowdown in the world’s largest auto market. The companies spent billions of dollars over the past two decades setting up production and sales channels in China, as rapid growth saw millions buy first — and second — cars, only to see demand fizzle as the economy wavers.”
https://www.bloombergquint.com/global-economics/growth-engine-for-the-world-s-carmakers-is-becoming-a-liability#gs.k_1Zt_w
“A team led by Chinese President Xi Jinping’s top economic aide and tasked with maintaining financial stability amid an escalating trade war with the United States and a weakening economy met for the 10th time in two months on Saturday.”
https://www.hellenicshippingnews.com/chinas-financial-crisis-team-goes-into-overdrive-with-10th-meeting-in-two-months/
“South Korea’s gross domestic product (GDP) moved at a snail’s pace of 0.6 percent in the third quarter against the three-month period, on path for the lowest annual growth in six years as corporate and construction spending soured sharply…”
https://pulsenews.co.kr/view.php?year=2018&no=666004
Ouch!
The world has become awfully dependent on China and the rest of Asia as an engine of growth. This is rapidly disappearing.
Understandable though it is in the context of the issues you write about, the trade war feels like such an ‘own goal’ in that regard.
https://www.youtube.com/watch?v=b1a_z9wyWpc
I don’t know anyone’s experience with asians and especially the Chinese, but this is what my father’s was. As a professional fisher I have had the pleasure of being on fishing boats for months at a time with them and their lack of respect for life and comforts is unique.
We’ll see them again out of necessity.
“Shares in Asia Pacific have plunged into bear market territory and wiped billions off the values of companies as one analyst warned that the losses could be a harbinger of a wholesale “capitulation”. After the worst day for tech stocks on Wall Street for seven years, markets were in retreat from Sydney to Shanghai as concerns about the global economy and rising borrowing costs were compounded by local factors.”
https://www.theguardian.com/business/2018/oct/25/asia-pacific-australia-us-stocks-freefall-fears-ftse-markets-global-economy-intensifies
“The cost of hiring container ships has plunged 24 percent from a multi-year peak while raw material vessel rates have slumped 10 percent from a five-year high, adding to signs of slowing global trade with dangerous implications for the economy.
“While much of world is focussed on the stock market losses this week, the drop in shipping rates as trade declines because of the trade dispute between the United States and China, emerging market currency weakness and tighter credit conditions is an omen of slowing global economic growth.”
https://uk.reuters.com/article/uk-global-economy-freight/red-flag-warnings-global-shipping-freight-rates-slump-as-trade-slows-idUKKCN1MZ0PL
“Warning signs about the slowing of the global economy continue to crop up, and market jitters are taking the steam out of oil prices. U.S. corporate earnings are no longer sky-high… The [impact of] the U.S.-China trade war… is only growing as costs work their way through supply chains. This week, a slew of disappointing earnings came in… Evidence of a slowdown in China is also becoming apparent.”
https://oilprice.com/Energy/Crude-Oil/Oil-Under-Threat-As-Global-Economy-Struggles.html
This happened back with the recession in 2007-2009 also.
Enron Musk….
Yep… something is not right… for once Wolf and I are both scratching our heads at the same time…
https://wolfstreet.com/wp-content/uploads/2018/10/US-Tesla-net-income-2018-Q3.png
But this chart is a head-scratcher. It’s funny-looking for anyone who has been around business for a while. There is a total and sudden break in trend, without gradual reduction in losses, and without transition of any kind. It just jumps from a sea of record losses to a profit. A magic wand comes to mind.
This was only the third quarterly profit ever. Tesla has never made an annual profit. This chart which goes back to 2014 shows two of them. The one in Q3 2016 was triggered by the sale of $139 million in taxpayer funded pollution credits. It was followed by an even bigger sea of losses.
I’m still scratching my head about the chart above. While I’m at it – wife is watching me askance, wondering if I have lice – I’m thinking about the abrupt departure of Tesla’s chief accounting officer in early September; and the sudden departure of its CFO last year, upon which Tesla brought back its old CFO, and all the turmoil these personnel changes engendered. These are the folks responsible for the financial statements we just looked at.
So I’m a little nervous. There are lot of big changes in these financial statements, largely due to the surge in sales and production, which triggers big changes in the balance sheet. I just need confirmation for a few quarters before I see where this is going.
https://wolfstreet.com/2018/10/24/what-i-think-about-teslas-financials/
https://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/09/05/tesla%20departure_0.jpg
https://www.zerohedge.com/news/2018-09-21/tesla-exodus-continues-vp-global-supply-management-resigns
While speculation can run rampant about possible reasons for leaving, and we certainly hope all is well with Mr. Branderiz, one thing is known. When hired in October 2016, Mr. Branderiz was provided a $5 million equity grant that vested over four years. His abrupt departure leaves a significant portion of this grant unvested. While executive departures are rarely a good sign, they’re especially alarming when an executive is leaving big money on the table.
https://www.forbes.com/sites/greatspeculations/2018/03/20/time-to-follow-tesla-executives-and-run-for-the-hills/#57c4ca0f72ec
http://www.torontorealtyblog.com/wp-content/uploads/2014/05/SpockIllogical.jpg
Unless …
fozzy
Oct 25, 2018 at 12:05 am
“But doesn’t it sell its cars on a cash basis, meaning that it gets paid at around the time of delivery, either from an auto lender or the customer?”
A lot of people on Twitter have complained about paying in full for their Model 3 at the end of Q3 while not having received their car by the end of the quarter. The delivery rep setting a delivery date a few days ahead, the customer paying in full, and that delivery date is suddenly cancelled. Some have had 3 delivery dates cancelled by Tesla. Some have had their assigned VIN In Texas in particular, people were complaining of making their first loan payment for a car they weren’t in possession of.
People have also said their assigned VIN was removed and even told their car was sold to someone else. Makes you wonder if that 17% Q/Q drop in COGS per vehicle was helped from having the same car sold more than once.
Diner
Oct 25, 2018 at 12:35 am
I suppose at some point in simply comes down to whether you trust Elon Musk.
Items that suddenly jump from one Q to the next usually involve some fine print that they’ve started accounting for something differently than they did before. And a sudden claim that more people owe them more accounts receivable than before gets at least a Vulcan eyebrow raise with an ‘interesting.’
Fascinating how ‘manufacturing hell’ which bled money all over the joint suddenly turned into an efficient organization that makes lots of money. My grey hairs agree with Wolf that this usually does not happen overnite or even within one quarter. Seems a bit like when the kids clean the house really quickly, but there are big lumps under the rugs.
fozzie
Oct 25, 2018 at 12:56 am
Makes one wonder… With numbers like these why did Musk want to take it private? Why did the CAO leave after just one month? These happened during “their best quarter ever”
LOL!
You have to be off your rocker to buy a Tesla.
Or a peak oil fanatic, who wants to impress his friends.
I was wondering…
If I presented an outlandish idea on a crowd funding site … I know … the one where I am breeding sheep with solar panels… to create living hybrid power generators….
I wonder how much cash I could raise
Market Summary > Tesla Inc
NASDAQ: TSLA
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Oct 25, 11:52 AM EDT · Disclaimer
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You might be surprised at how much you could raise.
I was in a gay bar dressed as a school girl(I dont remember the year) and Trump grabbed my package.
Please go to my GO FUND ME page and donate so we can bring the orange monster to justice.
Thank you
F.E.
An average American throws away about 10 bags a week. That’s 520 bags a year–a fuel equivalent of 60 miles of driving.
https://1bagatatime.com/learn/plastic-bags-petroleum/
I just drove 370 miles…. and spewed over 3000 plastic bags worth of petroleum into the environment….
Yee Haw!!! Yee F789ing Haw!!!
Just call me … Green…. Mr Green.
https://i.ytimg.com/vi/SxVwW_X22VM/maxresdefault.jpg
Like this!!! Exactly!!!!
https://youtu.be/ncrrM4uKLFk
And this too
https://youtu.be/S9eAzb-Yuzw
FE someone needs to produce a tv show – Fast Eddy’s Countdown to the Collapse
Any long time student of debt, finite resources, and EROEI knows that you are ultimately correct, but it is also debt and pointless energy consumption and expenditures that keeps you alive (again as you point out). Gail uses the bicycle analogy of energy and forward propulsion to keeping the economy upright (i.e. BAU). It is a difficult left brain / right brain struggle because of the duality of it in direct conflict with one another. We are killing ourselves but in order to stay alive we have to kill ourselves.
I enjoy your comments and reading about your antics. I hope when the end comes you are eaten with care and speed.
Ah ha …. one of the Tesla shops was open in Australia….
I got passed to one of the charging experts when the sales guy could not respond to my question about how the car is powered…. and how I can do something other than charge with coal because I want to do my part and be green…
After I bombarded him with facts and logic …. and asking him to tell me why I would buy a Tesla over a BMW ICE vehicle…..his final pitch was that the Tesla has no emissions from the car….
I was of course incredulous — is that your best pitch? Because we both know the cars do not run on air — they are charged using coal….
You have to do better than that – you need to convince me that I am going to be green if I buy a Tesla.
I’m sorry I can’t.
Ok .. thanks for your time.
And then I made monkey sounds ooo ooo ahhh ahhh…. and shouted 1 ..2 … 1…. 2… 1….2….. then hung up …
https://nataliaantonova.files.wordpress.com/2013/12/cannot-handle-the-hysterical-laughter.gif
If I was the salesman I would have said that Tesla has agreements with local utilities to use only clean eco-coal instead of conventional coal. I would have added more BS that Tesla takes environmental issues very seriously. I would also make up stuff like: before sales of Tesla’s are allowed in a region, care is taken to ensure any coal burning electric utilities in the area are using eco-coal before the 1st Tesla is even sold. Your salesman was not slick enough it seems.
And a Green Groopie would be soothed by those comforting assurances… and hand over his cash 🙂
I am surprised he did not claim that the coal emissions are scrubbed clean…. remember how some years ago that was all the rage…. the story was ‘it is much easier to clean emissions on a large scale coal plant than on individual cars’
The salesman did try to argue that coal burning is cleaner than ICE vehicles…
My retort was — take a look at a coal burning plant and watch the black smoke billowing out …. then look at the exhaust of a new car — do you see any black smoke?
Thinking about the future at the university of Oslo:
https://www.sum.uio.no/english/research/projects/arne-ness-chair/arne-ness-symposium-2018%3A-homo-futurus-with-a-thou/
It seems like theory starts from an understanding of the necessary outcome and works backwards. What can we humans do to produce the desired outcome?
Exactly! Those are the preconditions and requirements you have to accept.
Meanwhile…. I am on the coast and M Fast is not here to berate me over my trolling of Tesla….
So I was looking for Tesla shops that are open…. just missed the Australia opening hours…. Europe is not yet open… so I googled Tesla Shops in Singapore and lo and f789ing BEHOLD
Singapore has faced plenty of misrepresentations – be it Chow Yun-fat welcoming the Pirates of the Caribbean crew or Criminal Minds: Beyond Borders portraying Geylang to be similar to Hong Kong’s Kowloon Walled City.
Back in 2015, Mr Joe Nguyen made negative headlines when his imported Tesla model S was slapped with a $15,000 emission surcharge. Even Tesla’s boss, Elon Musk, stepped in to ask our PM what was going on. LTA sat on the case for a while and didn’t change its stance. Singapore was now in the limelight for absurdly slapping a pollution surcharge on a world-renowned green vehicle.
Importing a used car, like many other models, have a whole different set of rules to follow. In Mr Joe’s case, LTA had worked out the battery’s efficiency to be less than that stated by the manufacturer when brand new and was deemed to be consuming a lot more wH / km. This put it in the bad range of the CEVS band. It is unlikely to happen to someone buying a brand new electric vehicle in Singapore.
Under the new Vehicle Emissions Scheme (VES) this year, LTA announced that the emission factor to be used for computing the carbon dioxide (CO2) emissions of electric vehicles (EVs) and plug-in hybrid vehicles (PHEVs) has now been revised from 0.5g CO2/Wh to 0.4g CO2/Wh.
While it may not seem to make much sense as it still means that electric vehicles are being treated as pollutive based on the coal they burn to produce electricity, the calculations put them in generally good brackets.
http://www.oneshift.com/features/11304/goodbye-tesla-this.-is.-singapore.
It makes total sense…. Tesla is a coal-powered vehicle…. and needs to be taxed as such.
Let me try Malaysia … perhaps they are stuuuupid… and allow Tesla in without massive emission taxes
So…. we are dumping millions of electronic devices with toxic innards + batteries from EVs every year (yoo hoo EV groopies… what about those massive batteries????)….
http://deathbydesignfilm.com/about/
Yet everyone is on social media on their smart phones and computers… talking about … banning plastic bags in countries where plastic bags are NOT ending up in the ocean….
And doing sweet f789 all about poverty stricken countries with no garbage collection services…. who have no choice but to toss the bags into the river….
And if you explain this to a Anti-Plastic Fanatic….. they will get angry …. they will want to kill you … or they will accuse you of being negative….
Please can someone trigger the end of BAU so the stuuuupid humans can be wiped from the face of the earth….
I can’t stand it!
…Or they will say “at least I’m doing something!”, or that one has to “start with the man in the mirror”.
I just say “don’t worry, there is nothing we can do”. Many people seem to be relieved by this statement, others double down and say there will be robots collecting plastic in the ocean, and more paper packaging of goods.
It is impossible to work out what is wrong with this …. but there is definitely something not right…
We’ve seen all those 3’s parked in massive lots… we’ve seen the endless articles on the horrific quality control…. we know that those deposits were made against a 35k car … not a 50k car… we know Musk has lost his mind….
We know that sales of sedans have been crashing as people prefer SUVs and trucks…
We also know that Tesla is the post child of the Unholy Triumvirate of Lies (renewable energy EVs and G W)… is there a hidden hand involved in this?
Something … is just … not right….
https://www.zerohedge.com/news/2018-10-24/tesla-soars-historic-results-revenue-earnings-free-cash-flow-soar
US economy about to collapse, taking down dollar & American standard of living – Peter Schiff
https://www.rt.com/business/442118-peter-schiff-bubble-economy-dow/
https://twitter.com/aeberman12/status/1055104608400564226
https://www.washingtonpost.com/
Tesla turns a profit in what Musk calls ‘a historic quarter’
“Tesla earned a profit in the third quarter, fulfilling Elon Musk’s promise of a turn to positive cash flow amid months of scandals involving its high-profile CEO and federal probes, the company announced Wednesday.”
I know this will come as difficult news, but, well, there it is.
If Tesla can make them, they will be sold.
On this date:
1929 — US: Wall Street Stock market Crash, harbinger of worldwide Great Depression of the 30s.
“It is not Capital that transforms raw materials, nor Capital that produces goods. If living activity did not transform the materials, these would remain untransformed, inert, dead matter. If men were not disposed to continue selling their living activity, the impotence of Capital would be revealed; Capital would cease to exist; its last remaining potency would be the power to remind people of a bypassed form of everyday life characterized by daily universal prostitution.”
The idea that electric cars are lowering demand is ridiculous. Electric cars haven’t made a dent, just a small scratch in oil demand. Electric cars are only 0.2% of light-duty vehicles, and cost so much only the upper 5% can afford them, even with subsidies.
I suspect the peak oil demand idea is one more attempt by the wealthy and powerful to hide peak oil, because peak oil studies have shown that if peak oil were acknowledged, stock markets all over the world would crash since the economy would be shrinking from then on and debts couldn’t be repaid. Credit would freeze and dry up. Panic and social disorder would follow.
https://un-denial.com/2018/07/04/by-alice-friedemann-on-fake-peak-oil-demand/
yep
And next up … fracking companies are profitable!
If this is not fake news – then it means we will burn more coal — and that is good.
Tesla’s coal-powered cars and trucks
Tesla’s mission is “to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible,” wrote Elon Musk in The Secret Tesla Motors Master Plan. The large-scale shift from internal combustion engine powered automobiles to electric vehicles (EVs) is a crucial part of this ‘sustainability’ mission. Governments around the world have bought into electric cars as a way to lower their countries’ carbon emissions and have coughed up the generous subsidies electric car makers need to make themselves competitive (but note: the current versions of the U.S. Senate and House tax bills end these subsidies).
But in many countries, internal combustion engine-powered compact cars like the Mitsubishi Mirage have a smaller total carbon footprint than electric cars. How is this possible? There are two main sources of EVs’ hidden carbon footprint: first, carbon-intensive manufacturing processes including aluminum and copper extraction and refinement and second, the dirty electric grids charging the cars’ batteries.
Electric carmakers prefer lightweight aluminum over steel to maximize range: Tesla builds the body and chassis of its Model S almost entirely from about 410 lbs (190 kg) of aluminum. Average total aluminum content per car is expected to grow from roughly 397 lbs per car in 2015 to 565 lbs by 2028. The highly energy-intensive processes involved in aluminum production mean that a car’s worth of aluminum costs about 30% more in emitted CO2 than a car’s worth of steel. In China, the world’s leading manufacturer of EVs, 14 tons of CO2 is emitted for every ton of aluminum produced, three times more than the CO2 emitted by Alcoa, the U.S.’s largest aluminum producer. China now worries that their dirty smelting operations mean that switching to electric cars will actually make their smog problem worse.
“If the USA had 10% more petrol cars by 2020, air pollution would claim 870 more lives. A similar increase in electric ones would cause 1,617 more deaths a year, mostly because of the coal burned,” said Danish researcher Bjorn Lomborg.
EVs’ intensive copper use—an electric car uses about 6 km of copper wire weighing 45 kg, compared to a conventional auto’s 20 kg of copper—also poses a carbon emissions problem. In the mid-1800s, copper ore contained about 10% usable copper, but over the course of the twentieth century, that purity has decreased to less than 1%, making the mining and production of copper extremely energy- and carbon-intensive. The energy used to smelt copper increases exponentially as the ore grade falls below 1%. The new copper mines being constructed to meet increased demand have to be factored into the carbon footprint of electric vehicles—and in general, new copper ore stocks being developed are deeper and require more energy to exploit than currently productive reserves.
What about the power grids that charge EVs’ batteries? Energy sources vary wildly by country. Globally, in 2014, 66% of global energy came from coal (29%), oil (22%), and gas (5%). China, the country with the largest number of EVs on the road, got 72% of its energy from coal alone in 2014; the United States produced 68% of its energy from fossil fuels, including coal (38%) and gas (30%) in 2014. Coal use in the United States is trending downward as a proportion of overall energy use, partially due to the new shale gas deposits being exploited by fracking.
Shifting the energy burden of the American transportation industry from gasoline and diesel fuels to the power grid will result in enormous increases in electricity demand. In temperate places like San Francisco, plugging an electric car into a dedicated circuit like Tesla’s PowerWall is the equivalent of adding between 5 and 10 houses to the grid. The supercharging stations required to charge Tesla’s Semis will require surge capacities far beyond anything the American grid was designed to handle. Finally, to get EVs closer to being considered ‘carbon-neutral’—because of their raw materials they never truly will be—the American energy system will have to go green.
But it’s an open question as to whether solar and wind plants can generate enough power to not only replace fossil fuel plants but also match the increased demand for electricity as hundreds of millions of vehicles start plugging in. The largest, most powerful solar plant in the United States is the Ivanpah Solar Power Facility in the Mojave Desert, which generates 392 MW; the largest wind plant in the United States is the Alta Wind Energy Center in California’s Tehachapi Pass, which generates 1,547 MW; by comparison, the largest coal plant in the United States, Plant Scherer in Georgia, generates 3,389 MW.
Ironically, Tesla’s electric cars and trucks may end up prolonging America’s reliance on fossil fuels to generate electricity, because renewable sources cannot yet meet rising demand.
https://www.freightwaves.com/news/2017/11/28/teslas-coal-powered-cars-and-trucks
“Ironically, Tesla’s electric cars and trucks may end up prolonging America’s reliance on fossil fuels to generate electricity, because renewable sources cannot yet meet rising demand.”
They never can!!
In this two reports the higher use of both aluminium and copper in EV, which is one of the crucial points in the article, is ignored, as far as I can see:
https://www.ucsusa.org/clean-vehicles/electric-vehicles/life-cycle-ev-emissions#.W9IWrqQ8yaM
https://www.transportenvironment.org/press/electric-cars-emit-less-co2-over-their-lifetime-diesels-even-when-powered-dirtiest-electricity
Frustrated Investors Want Frackers to Consolidate
Kimmeridge tells Resolute Energy to find a merger, latest sign of rising activism in the oil patch.
A private-equity firm is urging oil producer Resolute Energy Corp. REN -0.17% to merge with a rival, the latest salvo in a growing campaign by some investors to force shale drillers to consolidate.
Kimmeridge Energy Management Co. told Resolute’s board of directors in a letter Friday that it was stepping up call for changes at the company, saying Resolute had failed to follow through on a strategic review to explore a merger or potential asset sale announced in May after investor pressure.
New York-based Kimmeridge said in the letter that it may seek to install new board members at Resolute, which is focused on the Permian Basin in West Texas and New Mexico, if it doesn’t heed the firm’s suggestions. Kimmeridge, which has about $1.2 billion under management, owns nearly 10% of Resolute’s shares, according to S&P Capital IQ.
Resolute did not immediately respond to requests for comment.
Resolute’s shares are down around 9% for the year, while oil and gas companies are collectively up nearly 6%. U.S. oil prices have surged by almost 20% in that time. The failure of most shale companies to rise with the rally in crude prices has frustrated investors and put pressure on company leaders.
The activist campaign is the latest to hit the shale oil and gas industry, a sector many investors believe needs to consolidate to generate profits.
Well-known activists, including Elliott Management Corp. and billionaire investor Carl Icahn, have recently taken aim at oil producers. Nine producers in North America have been publicly subjected to activist demands over the past year, according to research firm Activist Insight. Energen Corp. , EQT Corp. and Hess Corp. have each made concessions to activist investors to stave off proxy fights, and many in the energy industry expect more campaigns in coming months.
BHP Billiton Ltd.’s $10.5 billion sale of U.S. shale assets to BP PLC in July was spurred by Elliott, which had pushed the Australian mining company to sell or spin off the oil unit.
Diamondback Energy Inc. announced a deal in August to buy Energen for more than $9 billion. Mr. Icahn and Elliott had pushed Energen to sell itself for some time.
Kimmeridge, which typically buys and operates drilling fields with its private-equity funds, pushed Houston explorer Carrizo Oil & Gas Inc. to sell assets earlier this year. The firm sold out of all but a sliver of its stake in June for a $90 million profit after the company said it would hold on to the assets.
Kimmeridge argued in its letter Friday that Resolute, based in Denver, is too small to properly develop its assets, and said that its management has enriched itself while pursuing growth over returns. Resolute appointed three outside directors to its board in May and said at the time that it was committed to addressing shareholder feedback.
The shale industry has attracted activists, in part, because shifting from proving untested shale wells to economically producing oil and gas from them has been far more challenging than many executives and analysts predicted.
Two-thirds of U.S. oil producers failed to live within their means in the second quarter, even as oil prices have risen almost 40% over the past year to more than $70 per barrel. Fifty major U.S. oil companies reported they collectively spent $2 billion more than they took in, according to an analysis of free cash flow by FactSet.
“That will be ripe ground for activism in the space,” said Andrew Calder, head of Kirkland & Ellis LLP’s energy practice.
Investors have begun pushing companies in the shale sector, populated with many small and midsize firms, to pursue purchases or combinations, arguing that greater scale will help them turn profits. Companies that are big enough to drill giant wells, finance new pipelines and lock up equipment and other needs in long-term contracts have a strong advantage over those that cannot, some analysts say.
“Consolidation is long overdue,” said Todd Heltman, a senior analyst with Neuberger Berman Group, which has more than $300 billion in assets under management. “It makes sense operationally and financially, but often there aren’t enough incentives for management teams to do it.”
Some frustrated investors see consolidation as a clear solution that many top executives won’t consider for reasons of ego or CEO pay. Annual compensation for some shale executives can top $10 million or more, and their equity stakes sometimes represent less than three years’ compensation, making the value of the job greater than any share price uplift from a merger. Those incentives may be setting them up to avoid merger discussions that are in the best interests of shareholders, Mr. Heltman said.
Numerous shale companies took steps to change pay practices in the past year, placing added emphasis on metrics such as return on capital rather than on growth-related targets. Most of the companies didn’t go far enough, analysts say.
https://www.wsj.com/articles/frustrated-investors-want-frackers-to-consolidate-1539958426
Great Idea!
It’s kinda like Tesla model where you lose money on every car sold … but they make up the difference by selling more cars….
But slightly different… if each fracking play is losing money … you just merge them into one corporate entity … and that will guarantee they make money.
Consolidation removes some of the variability of results. Makes it harder to hide problems behind unrealistic models of hoped for future production at rosy future prices. It is hard to see why the companies would want consolidation, other than that it does change things up a bit. It is alway possible to claim that the future will look more like the past at the better of the two combined companies.
Consolidation makes it easier to receive subsidies than to make hard decisions, one of which is to go out of business and to lay a large number of workers off.
This is undesirable politically and status wise for many in the elite.
Companies that are too big to fail don’t have to change their business practices and can command political influence by sheer size.
Large companies publicly hope s that volume can save their failing business practices.
but what they really hope is that their size , the status of being too important to fail, can get them subsidies to hide their lack of profit;
One very lucrative subsidy can come in the form of government contract. In order to comply with government contracts they comply with government social goals.
https://careers.google.com/eeo/
They most likely get a lot of tax breaks for hiring people who have been on welfare, who are veterans, and who are underrepresented.
These companies can offer jobs to political constitutes while the government gives them subsidies or tax breaks. This arrangement works until it can’t.
You are likely right about these things. This is the way self-organized systems work.
More people live inside the red area than the gray area.
https://imgur.com/a/UoyxtYH
Without the food and energy resources produced in the gray area, the people in the red areas would be up a creek, without a paddle. They are utterly dependent on the rest of the country and the rest of the world.
TESLA is up 14% today—–
The 3 production and sales is taking off.
Sven Rogeberg posted this long link a few days ago.
https://seekingalpha.com/article/4205144-tesla-endgame
It explains how the third quarter results might be somehow manipulated to show fairly good results. Tesla did this once before, in a prior third quarter. The author didn’t think that the result would actually be positive profit, however.
We shall see– just a observation on my part.
They do seem to be moving 3’s as fast as they can make them.
I know some people who have them– I’ll get primary info—-
Californian regulatory credit policy changes, the “lex Tesla” that came into effect in 2018, will shift more ZEV credits towards the company at a time when more Model 3s will be sold. If Tesla is fortunate to sell $200 million worth of regulatory credits [editors’ note: corrected from previous version referencing $250 million], the equivalent of selling around 4,000 Model 3s at an ASP of $63,000, the company could fabricate its intended Q3 profitability.
https://seekingalpha.com/article/4205144-tesla-endgame?referrer=
Come on, PPT’s!
“Stocks fell sharply in volatile trade Wednesday, with the Nasdaq poised to finish in correction territory, as the latest batch of quarterly results failed to offset concerns over rising interest rates and signs of a global economic slowdown.”
https://www.marketwatch.com/story/dow-futures-drop-220-points-as-stock-market-extends-rout-2018-10-24
Another story says: Dow industrials finished 608 points lower, while the S&P lost 3.1% and the tech-heavy Nasdaq Composite declined 4.4%.
It was pretty messy– what a day to go bird watching.
On another front:
While the western Pacific is where the world’s most powerful tropical cyclones tend to form, Yutu’s strength is likely to be unprecedented in modern history for the Northern Mariana Islands. The islands are home to slightly more than 50,000 people, a majority of whom live in the largest, northernmost island of Saipan.
“a majority of whom live in the largest, northernmost island of Saipan.”
Actually, it is the southernmost, if you discount Guam, Tinian and Rota– the chain extends north for hundreds of miles.
https://i.ytimg.com/vi/ZmBNcVvBUNs/maxresdefault.jpg
I wouldn’t worry that much about sea level rise. It’s happening but slowly.
Low down on my list of concerns, too.
Permian Won’t Be Enough – Prepare for Supply Gap and ‘a Decade of Disorder’
https://www.oilandgas360.com/panel-permian-wont-be-enough-prepare-for-supply-gap-and-a-decade-of-disorder/?fbclid=IwAR1j0yVsAX95C09J6Ao9MOOxGJFsbyKiQLiuX0c54T53AwdhRCsrhGzoWsQ
Imminent peak oil could burst US, global economic bubble – study
https://www.theguardian.com/environment/earth-insight/2013/nov/19/peak-oil-economicgrowth
The article concludes: «There are two prime ways to adapt to these potential risks, according to the new study. One is to decrease the vulnerability of critical sectors:
“Examples may include curbing the strong dependence on artificial fertilizers by promoting organic farming techniques, or reducing the overall distance traveled by people and goods by fostering local, decentralized economies.”
The other is to identify substitutes for vulnerable sectors with outputs from less vulnerable sectors.
The problem with the latter approach is that “our society is reaching limits in the possible global production flows of many natural resources” including coal, phosphorous, uranium and other minerals. However, the risks mapped out here could help “in designing a roadmap toward a post-carbon economy.”
Post-very much else people appriciate and have getting used to, I guess…
Here is the study if you want to read it..
Economic Vulnerability to Peak Oil (Kerschner 2013)
https://www.scribd.com/document/375485924/Economic-Vulnerability-to-Peak-Oil-Kerschner-et-Al-2013
It seems like it is obligatory for every published article to end on a positive outcome of some sort, no matter how remote.
‘by promoting organic farming techniques’
Someone of means recently said to me ‘I don’t understand why anyone would not eat only organic food’
And I said — maybe because it is so expensive…. and most of the world only makes a few dollars per day….
And they said ‘ya but I mean people who can afford it’
And I said…. well I guess if that were to happen then an organic apple would cost $20…..
People really are f789ing stuuuupid….
These people who are raging about plastic bags…. do not seem to register the fact that bags are made of petroleum…. the same stuff that powers the massive airplane that they fly around the world on … without a second thought…
The same f799ing idi ots … who if they had the time and money …. would travel the world endlessly and stay in luxury concrete hotels….
BUT…. they would make sure to use the same f789ing towel for their entire hotel stay… provided there are heated towel rails to dry them….
Can we change the laws and make it legal to hunt Green Groopies?
How awesome would it be to perch up on a balcony and fire 308 rounds into EVs as they drive past…..
I stopped reading at the sub-headline:
‘Major industrial sectors are at risk without a swift transition to a more resilient, post-carbon economy’
Wait a minute, FE, Celine Dion isn’t hot?
Technically …. no…. but I suppose after 15 beer….
You could say that about half of Hollywood actresses.