Month: September 2019

A manufacturing recession could wind up being the Achilles Heel for President Trump in the upcoming 2020 election, says Bloomberg Businessweek. 

Greg Petras, President of Kuhn North America, who employs about 600 people at its farm equipment factory in Wisconsin, says that President Trump’s claims of China bearing the brunt of his tariffs are “outright lies”. For Kuhn, the trade war has resulted in rising costs and falling sales. 

“You’re slamming your fist on the steering wheel and saying ‘Why would you tell people this?’” Petras said of Trump’s comments.

About 250 of his employees spent their Labor Day weekend in the midst of a 2 week furlough, and they’re facing another one in October. The company’s shrinking order book has meant that is has to cut costs and slash production. For people like Petras, the economy looks “far bleaker from the swing-state heartland than it does in either the White House or on Wall Street,” the report notes.

While the company’s summer picnic survived, its weekend shifts didn’t. Four years ago, the plant was “humming along” to a record $400 million in sales with its sister plant in Kansas running at 50% capacity. This $11 million paint shop, which coats its products in its signature “Kuhn Red” is now at 39% capacity. 

The company has had to shelve plans for a $4 million R&D facility. Petras said: “We’ll do it someday. We just need things to be going in a better direction.”

This rounds out a picture of the country’s heartland, where there seems to be a rising tide of evidence that the country is heading for a recession. America’s factories have been hit not only by the trade war, but also by rising uncertainty, a damper on capital expenditures, slowing export markets, a stronger dollar, and higher input costs.

Manufacturing activity measured by August’s ISM number showed the first contraction since 2016, sending stock prices and bond yields tumbling. The last time the country logged two consecutive quarters of contractions was in 2016, when the country lost about 30,000 manufacturing jobs as a result of oil prices collapsing. None of those quarters saw a slump as bad as the 3.1% number that was posted in the second quarter of this year. 

And the rise in industrial jobs that President Trump saw his first two years in office has “gone into reverse”. The U.S. added 44,000 manufacturing jobs this year, down from the 170,000 it added during the same period last year.

The number of people working in factories in 22 states – including key states like Wisconsin and Pennsylvania – fell in the first seven months of this year. Trump had campaigned on, and promised, bringing factories back home by unraveling deals like NAFTA and taking on China. 

Those promises aren’t likely to have the same effect in 2020 that they did while campaigning in 2016. Trump, on the other hand, continues to believe the ends will justify the means. 

“To me, this is much more important than the economy,” Trump said on Sept. 4.

“Somebody had to do this.”

He has called businesses that blame tariffs “badly run and weak” and has tried to force U.S. companies to abandon China. His advisers have argued that blame belongs squarely on the Federal Reserve for hiking interest rates too quickly last year. They also blame the strong dollar for making U.S. exports less competitive. 

Trump also points to gains in manufacturing employment during his term. The U.S. has added 485,000 factory jobs since Trump took office, according to Bureau of Labor Statistics data.

But in the swing states, where it will matter to Trump’s 2020 election bid, the news is more grim. Pennsylvania, for instance, lost more than 8,000 manufacturing jobs in the first seven months of this year. And Trump is said to be more exposed politically to a manufacturing downturn than any Democratic rival. Manufacturing accounted for almost 12% of the jobs in counties that voted for Trump in 2016 versus less than 7% for those who supported Clinton. 

In battleground states, the difference is even more pronounced: factory jobs accounted for more than 21% of employment there. 

Mark Muro, a senior fellow at the Brookings Institution said: “This is the one thing he was going to deliver. And Democrats are not vulnerable at all because if things go south they are not responsible at all.”

Petras, who is a lifelong Republican, says he won’t vote for Trump in 2020. He’s now “expecting to vote for a Democrat”. 

“I defaulted to the Republican ticket thinking pro-business,” he said about voting for Trump in 2016. His company has paid $2.5 million more for steel over the last 12 months than it did the year prior. This makes up about 1% of the $250 million in sales he’s expecting for the year. He’ll also pay about $1 million in tariffs this year on about 100 different parts it buys from outside suppliers. 

His purchashing manager, Jim Paum, said: “You can tell the health of the economy from these phone calls. For the most part it’s not as healthy as Wall Street thinks.”

“There’s more uncertainty, not less uncertainty,” Petras concluded.

“It’s not a good economy at all.”

You can read Bloomberg’s full longform writeup here.

Authored by Michael Snyder via The Economic Collapse blog,

Despite the fact that more money is being spent on suicide prevention efforts than ever before in our history, the suicide rate in the United States continues to rise dramatically.  As you will see below, one new study has discovered that our suicide rate actually increased by 41 percent between 1999 and 2016.  Even though we have the highest standard of living that any generation of Americans has ever enjoyed, we are an exceedingly unhappy nation and we are killing ourselves in unprecedented numbers.  This shouldn’t be happening, but unfortunately the forces that have taken over our culture have convinced multitudes of Americans that their lives are not worth living any longer.  In a culture where truth has been abandoned, it is easy for lies to run rampant, and it takes a great deal of deception to get someone to willingly choose to embrace suicide.  No matter what you are going through right now, there is always a way to turn things around, and we all have been given lives worth living.

Sadly, the suicide rate in this country has continued to escalate year after year.  According to the Los Angeles Times, 2017 is “the latest year for which reliable statistics are available”, and in that year the U.S. suicide rate hit a 50 year high…

Whether they are densely populated or deeply rural, few communities in the United States have escaped a shocking increase in suicides over the last two decades. From 1999 to 2016, suicide claimed the lives of 453,577 adults between the ages of 25 and 64 — enough to fill more than 1,000 jumbo jets.

Suicides reached a 50-year peak in 2017, the latest year for which reliable statistics are available.

These numbers come from a new study that was just released, and it claims that our suicide rate actually increased by 41 percent between 1999 and 2016…

The researchers evaluated national suicide data collected between 1999 and 2016, then created a county-by-county estimation of suicide rates among all adults between the ages of 25-64. In that time period, suicide rates rose an astonishing 41%; from a median of 15 suicides per 100,000 county residents in 1999 to 21.2 in the last three years of analysis.

And suicide is also a rapidly growing problem among our teens and young adults as well.

In fact, suicide is now the second leading cause of death for Americans from age 10 to age 24.

Everyone goes through very low times, and for many people it can seem like those low times will never end.  But when I was at my lowest points many years ago, I always had faith that better days were coming, even though at the time I couldn’t even imagine the absolutely amazing things that were ahead for me.  The point that I am trying to make is that we simply do not know what the future will hold.  No matter how dark things may seem to you right now, a miracle could literally be right around the corner.

This new study that just came out also discovered that suicide rates are significantly higher in rural parts of the country…

It was noted that suicide rates were at their highest in less-populous counties and in areas where people have lower incomes and diminished access to resources. For example, between 2014 and 2016, there were 17.6 suicides per 100,000 people in large metropolitan counties, noticeably lower than the 22 suicides per 100,000 people recorded in rural counties.

The quality of life in rural areas is so much nicer in so many ways, but there is also a lot of isolation and poverty as well.  Humans are meant to be social creatures, and when there aren’t a lot of people around that can feed feelings of depression.  And if someone is deeply struggling with poverty, it can be difficult to see a way out in an area with few economic opportunities.  According to Brookings Institution research analyst Carol Graham, many Americans living in such areas “see no optimism for the future”…

“These are the places that used to be thriving rural places, near enough to cities and manufacturing hubs,” she said. “They’re places that accord with a stereotypical picture of stable blue-collar existence — and a quite nice existence — for whites in the heartland.”

With the collapse of extractive industries such as coal mining, the departure of manufacturing jobs, and a strapped agricultural economy, “these communities just got flipped on their head,” Graham observed. “And the people in those places became unhinged. You’d have a sense of places where everything has left. And among those who stay, you see no optimism for the future.”

If this is happening now, while economic conditions are still relatively stable, what is going to happen to the suicide rate during the next major U.S. economic downturn?

There is never, ever, ever a good reason for someone to commit suicide, but unfortunately during the next recession we are likely to see the suicide rate rise substantially higher.

Another factor that is resulting in a higher rate of suicide in rural areas is a lack of health insurance…

Last but certainly not least, a lack of health insurance coverage is significantly associated with rising suicide rates in rural US counties.

Specifically, the researchers observed that the more people in a county who didn’t have health insurance coverage, the higher that county’s suicide rate was.

When you are buried in medical bills that you know that you will never be able to pay, it can be exceedingly difficult to envision brighter days ahead.  Our healthcare system is deeply, deeply broken, and this is something that I wrote about on Tuesday.

It is such a tragedy when people choose to end their lives because of financial circumstances, because financial circumstances are always temporary.

No matter how bad things are in your life right now, there is always a way to turn them around.  The best days of your life could still be ahead for you, but you have got to be willing to believe that this is true.

Life is an absolutely incredible gift, and don’t let anyone ever convince you that you should end it.

It has been said that life is like a coin.  You can spend it any way that you want, but you can only spend it once.  I would encourage you to spend it loving others greatly, enjoying each day to the fullest, and doing something that truly matters.

The US trucking industry had a blockbuster year in 2018, as high demand for freight allowed transportation companies to expand fleets. But since freight demand was artificial, sparked by importers pulling forward to get ahead of tariffs, the good times were destined to end and end rather sharply.

According to new data from the Bureau of Labor Statistics (BLS), the boom in trucking jobs could be over. More than 4,500 truckers lost their jobs in July and August as the freight industry continued trending lower.  

This was the first time the BLS slashed trucking jobs since March when about 1,200 were laid off. The latest cut was the biggest since April 2018, when about 5,500 truckers lost their jobs. 

Donald Broughton, principal and managing partner of research firm Broughton Capital, told FOX Business that in 1H19 nearly 640 trucking firms failed. That equates to 20,000 trucks have been pulled off the road. 

In 2018, only 310 trucking companies failed, which points to an accelerating trend that could transform into a major bust cycle for the industry in 2020.

“This has to do with the spot market,” American Trucking Associations chief economist Bob Costello told FOX Business. “Those fleets that are primarily in the spot market are facing volumes that are down nearly 50% and rates that are down nearly 20%.”

As previously reported, we’ve detailed how a freight recession continues to gain momentum through the end of summer, likely to continue through fall into 1H20.

And we’ve routinely pointed out that freight is a leading indicator of where the economy could be headed. At least 70% of domestic goods are moved on heavy-duty trucks, so when freight companies are cutting their workforce – it’s typically the onset of an economic downturn. 

As far as a downturn, the Institute for Supply Management’s purchasing managers index plunged to 49.1 in August, the first time a contraction has been seen since 2016. The index printed below 50 suggests a manufacturing recession is developing. Data also showed new orders dropped to a seven-year low, while the production index hit 2015 lows. So it makes sense why trucking jobs are being slashed, it’s because of manufacturing output is slowing, which requires fewer trucks to haul goods. 

And to make matters worse, ACT Research warned that last year’s surge in trucking demand has led to overcapacity for the industry, could depress freight rates for the next several years. About 6% more capacity was brought online last year, or about 90,000 heavy-duty trucks. Production of heavy-duty trucks could reach 350,000 vehicles this year, the second-highest level since 2006.

What’s new in this report is that trucking layoffs are increasing – and it’s the overall growth rate cycle downturn in employment that could start weighing on consumer sentiment and ultimately shift the economy into a full-blown recession sometime next year or the year after. 

Authored by Mark Jeftovic via Guerilla-Capitalism.com,

Last night I made the mistake of putting Ben Hunt’s The Long Now Part 2 on a tablet and brought it to bed to read. My kid had an early morning soccer practice at school today and I thought I’d read this before turning in. By the end of it I couldn’t sleep.

It articulated something I’ve been grappling with for so long, so clearly and so lucidly that it got my mind racing. I’m sure you all know how it is when you’re galvanized by an idea at night. You lie there in bed with your brain completely overclocked, scribbling in a notebook beside the bed. I ended up padding over to my office and emailing Mr. Hunt around midnight and he gave me permission to attach a PDF of the The Long Now Part 2 with the email I’m sending my list. It’s also online at the EpsilonTheory website.

From the very opening line, I should have known I was in for a sleepless night….

Every three or four generations, humanity consumes itself with the fang and claw of fascism and collectivism. Every three or four generations, we eat our own.

This is that time. This is the Long Now.

As it so happens, I had just started listening to Strauss and Howe’s The Fourth Turning this week, a book I’ve owned probably since the third turning but never got around to reading/listening to until now. I knew the overall concept of the Fourth Turning, and that by Howe’s reckoning we had entered the Fourth Turning with the Global Financial Crisis of 2008-09.

The Fourth Turning is a crisis period, what Hunt calls The Long Now…

In politics it takes the form of a widening gyre, where the center cannot hold against the onslaught of polarizing political entrepreneurs who eliminate the political promise of the future, replacing it with the Long Now of constant political fear. In economics it takes the form of a market utility, where those same illiberal political entrepreneurs eliminate the economic risk of the future, replacing it with the Long Now of constant economic stimulus.

Hunt calls forth the analogy of the Rhinoceros, after the 1959 novel by Eugene Ionesco. In the story the villagers in a central European town begin, one by each, turning into rhinos, and then running on destructive rampages through the town. It is a metaphor, Hunt tells us, that describes how fascism rises within an otherwise normal community….

People are a little puzzled at first, what with their fellow citizens just turning into rampaging rhinos out of the blue, but even that slight puzzlement fades quickly enough.

Soon it’s just the New Normal. Soon it’s just the way things are … a good thing, even.

The key point Hunt makes in his essay is this:

It’s not just bad people who turn into rhinos

Everybody is susceptible, and the penalty for buttressing oneself against the trend of “going Rhino” is utter and profound aloneness. It almost seems not worth it.

Your typical MAGA zealot is a rhino. So is everybody in Antifa. Both Paul Krugman and Tucker Carlson are rhinos. People who mean well become rhinos because in the prospective Rhino’s mind

…the danger at hand is so great, so existential, that NOTHING MATTERS other than combating that danger, that you must sacrifice your most precious possession – your autonomy of mind – to believe in the necessity of these political actions. You must not only think that it is possible for 2 + 2 = 5 if the political exigency is urgent enough, you must believe that it is necessary for 2 + 2 = 5. Orwell called this “collective solipsism”. I call it political nihilism. Either way, THIS is the politics of the Long Now.

We are all in danger of  “going Rhino”: Yesterday, in fact, I had just set up a new Twitter account, a parody that was to push a new blog I was spinning up whose intent was to be like the “F**kedCompany” of this generations’ forthcoming tech bubble implosion. It was cynical. Jaded. Biting. After reading The Long Now, I felt slightly ashamed of myself.  It wasn’t helping. Even if I managed to get it off the ground it wasn’t going to be productive. It would be yet another source of acerbic angst in your social media feed. Who really needs that?

So this morning I shut the entire thing down and started writing this instead. As Hunt tells us, we can’t do anything about the disruption that is baked-in to a Fourth Turning / Long Now style unraveling.  All we can do is to “refuse to become rhinoceros ourselves”, and in doing that, we take another tack:

Make, Protect, Teach

What resonated with me so much from reading this essay was because I’ve been trying to articulate something similar for a long time. It’s the basic premise behind “The Transition Overview: Building Companies That Matter” piece that kicked off Guerrilla Capitalism back in 2017. In my last podcast with Charles Hugh Smith we talked about it (around the 38:19 mark):

MJ: when I look at  Pathfinding [Our Destiny] like part seven where where we’re talking about what the way forward looks like, that it’s outside of the control of the of the establishment, that it’s outside of the system I get this sense that for society to flourish and adapt around this and evolve. I guess that’s the key word, we’re going do this around the institutionalized hierarchies.

They’re not going to get religion one day, we’re not going to elect the right candidate, we’re not going to have the right party gain power that’s suddenly going to say “I read this great book by Charles Hugh Smith and this is how we’re going do it”.

It’s going to be something like institutionalized hierarchies will just lose more and more relevance as these new social and business and financial configurations start gaining more and more relevance.

CHS: That’s an excellent point and I think if anything I didn’t emphasize that enough. That really what we’re talking about is kind of like hacking the system in in the old time sense that a hack was a workaround. It wasn’t like you were breaking into the system to steal something, you’d created a workaround for a kludgy system that just didn’t work anymore.

And so I think you’re absolutely right, it’s going to be working around us and and Bitcoin is is one example of how workarounds are manifesting and of course the status quo is going try to suppress those and/or co-opt them but what we’re really talking about is when systems fail at a systemic level you can’t reform them. You’re not going to make a policy tweak that’s going to fix higher education or the health care system. It just isn’t going work.

People are going to start working around that and they’re going be starting to pay cash for for medical care from pop up providers or remote physicians. Or there’s lots of different solutions to that in education. What I see the model that’s going to emerge whether people like it or not and is that students are going to start taking control of their own education and they’re going start organizing their own education.

They don’t need this bloated structure that charges them $70,000 a year and so that’s where technology, the internet and networking has really enabled a whole suite of solutions that basically bypass all the institutions that now hold the wealth and power, that have all this as you say institutionalized lethargy as as their their model.

It’s actually quite an exciting time but for those who are dependent on the system within these institutions it’s a very disturbing time

The way through the Long Now is not to vote in the correct political party in or to cajole professional panderers into decreeing the correct policies. We’re beyond that now.

All of this to pave the way for the punch line in The Long Now, Part 2, which is that

“The way through the Long Now is a social movement, not a political party.”

That sentence was why I couldn’t sleep last night. That’s what people like Charles Hugh Smith and Chris Martenson and George Gilder and Tom Woods and numerous others have been converging on for the last decade or so. That’s the emerging theme and Ben Hunt, in this essay I think, finally nailed the three word ethos of what is emerging: Make Protect Teach.

I believe that a decentralized and service-oriented social movement at scale can thrive in the age of social media technology. I believe that a decentralized and service-oriented social movement can both inoculate our hearts from the top-down Nudges that push us into rhinocerosness, as well as fill us with a positive energy that reverses the pervasive alienation that creates the Neb Tnuhs of the world.

It’s a social movement for a revitalized foundation of citizenship. It’s Make – Protect – Teach.

There’s no primacy to these three rightful objects of political power and the citizenship which drives them. Put Teach at the top of the triangle. Spin everything 90 degrees. Marry two of them. Take them independently. Change the colors and the font size. I’m not trying to be symbolic here.

I’m trying to be Real.

I’m trying to provide an alternative to the abstracted world of narrative and cartoon that rules our mindfulness from the top down, in favor of a concreted world of actual human beings making things and protecting each other and teaching each other, where we act as Stewards of our children’s future rather than as Managers of our personal now.

If I’ve done Hunts’ essay any justice in this piece you’ll set aside 15 or 20 minutes and read it sometime in the next day or so. I’ll feel like I’ve accomplished something if you did that.

The Long Now Part 2: Make Protect Teach

The Justice Department on Thursday notified attorneys for former FBI Deputy Director Andrew McCabe that his appeal to avoid criminal prosecution has been rejected, according to Bloomberg, citing a source close to McCabe’s legal team. 

The decision comes roughly a month after McCabe filed a wrongful termination lawsuit against the DOJ and Attorney General William Barr, after an internal investigation into media leaks resulted in his firing. 

The U.S. attorney’s office for the District of Columbia informed McCabe’s legal team last month that charges against McCabe were being recommended, according to a person familiar with the matter.

McCabe and his legal team met with Deputy Attorney General Jeffrey Rosen and the U.S. attorney, Jessie Liu, on Aug. 21 to appeal the recommendation, according to the person.

McCabe’s lawyers still have the right to request a meeting with Barr over the matter, the person said. –Bloomberg

The 51-year-old McCabe was fired DOJ Inspector General Michael Horowitz issued a criminal referral based on findings that he “made an unauthorized disclosure to the news media and lacked candor – including under oath – on multiple occasions.” 

As we noted last month when he filed the lawsuit, McCabe authorized an F.B.I. spokesman and attorney to tell Devlin Barrett of the Wall St. Journal, just days before the 2016 election, that the FBI had not put the brakes on a separate investigation into the Clinton Foundation – at a time in which McCabe was coming under fire for his wife taking a $467,500 campaign contribution from Clinton proxy pal, Terry McAuliffe.

Then he lied about it to the inspector general four times. 

In his defense, McCabe said said that his boss – former FBI Director James Comey, knew about and authorized the leak – a claim Comey denies. 

#BREAKING: Statement from Andrew McCabe’s attorney claims McCabe told @Comey repeatedly that he was working with The Wall Street Journal. pic.twitter.com/dAptPpvvzj

— Ryan Saavedra (@RealSaavedra) April 18, 2018

Looks like McCabe will need to dig a little deeper into his $540,000 legal defense GoFundMe launched in the wake of his firing – less than two days before he was set to retire and receive his full retirement package.