The paranoia from inside of Tesla continues. The company is still not happy about the amount of information that is escaping its closed, so it recently wrote another email to its employees threatening, among other things, criminal charges, for leaking information or talking to journalists. The threats, ironically enough, were documented in an email that leaked to the media, according to Business Insider.
The company’s long-held interest in creating an air of worry and conspiracy about short sellers and the media doesn’t seem to have dissipated in 2019. The email sets out to remind employees of their confidentiality agreements with the company and Tesla cited “an intense amount of public interest” in the company and “people who will do anything to see us fail” as a reason for the reminder.
The company also reminded its employees that journalists would “target” employees on their social media accounts. Employees were then told to forward all communication requests to Tesla’s security team. Tesla’s e-mail said:
“These solicitations are not only potentially damaging to our company, they can also be illegal, putting you and your colleagues/friends at risk for termination or even the possibility of criminal charges.”
In the e-mail, the company cited several examples of “inappropriate conduct and the potential consequences”, including:
“This month, an employee posted the dial-in information of an internal meeting on social media. This employee was identified and terminated the following day.
“A felony charge was filed last month against a former employee who exfiltrated confidential business information from the Tesla domain to his personal account and threatened to disclose confidential company information.
“A former employee uploaded Tesla intellectual property to a personal iCloud account and left the company for a competitor. Tesla filed a lawsuit and is suing him for stealing trade secrets.
“Tesla filed a lawsuit against former employees and a competitor for stealing proprietary information and trade secrets to help the competitor leapfrog past years of work needed to develop and run its own warehousing, logistics, and inventory control operations.
“In January an employee was identified for sharing confidential business information on Twitter, including production numbers, with journalists. The employee was terminated for violating their [nondisclosure agreement] and Tesla’s Communications policy.”
Instead of lashing out at whatever remaining employees the company has after its recent round of layoffs, perhaps Tesla should consider that part of the reason it continues to find itself in the media’s crosshairs is due to its awful execution of its business operations and the erratic behavior of its CEO. When Elon Musk wants to find the real culprit for the media’s insatiable appetite to critique all things Tesla, perhaps instead of emailing his employees, he should be looking in the mirror.
When all this federal funds business started, the effective federal funds (EFF) rate was pretty well established at 16 bps above the RRP “floor.” It had been that way, consistently, all throughout Reflation #3, all throughout 2017. So consistent, that dependable spread was a very solid indication of reflation.
As of yesterday, EFF was…16 bps above RRP. It’s not at all the same, though. In between December 2017 and now, the Federal Reserve has instituted three “technical adjustments” to IOER. In other words, IOER has been reduced by 15 bps just to get EFF back to where it was when all this mess began.
This is no small thing.
Nor is yesterday’s move. IOER was reduced 5 bps while EFF dropped only 4. That means EFF would still have been above where IOER was Wednesday, and it’s now 6 bps ahead of it. There’s an inexplicable upward pull, some tightness-like gravity which has latched onto the federal funds market of all things.
Some are now trying to blame the Federal Home Loan Banks (FHLB); how quickly the tax refund/money market fund excuse meekly fades down the memory hole. These are practically all that’s left of the federal funds market so they make for an easy mark. The new thinking goes like this: FHLB’s are chasing repo rates. Since repo is higher than federal funds, the absence of what’s being used by the FHLB’s to chase repo means there’s not enough left in federal funds.
First of all, there is no law that states only the FHLB’s may offer liquidity in federal funds. They’re only there because they are prohibited from getting paid IOER. Any dealer can go into that market and provide the same thing – if it so desires. Why get paid IOER when there’s an entire range of federal funds offering fatter rates.
So, even if the FHLB’s are leaving federal funds dry, where are the other dealers who should pick up the slack?
And that still leaves us with the supposed mystery surrounding repo. If FHLB’s are in pursuit of GC rates, why are GC rates where they are? Secured interbank interest should not be so much more than unsecured, let alone persist this way.
Back in March 2018, the FOMC finally spoke up about all this. They blamed, if you remember, Donald Trump. Not directly, but in the esteemed estimation of FOMC officials reckless tax reform had meant a bigger fiscal deficit which the Treasury Department would have to fund by issuing more T-bills. A deluge, many called it.
In short-term funding markets, increased issuance of Treasury bills lifted Treasury bill yields above comparable-maturity OIS rates for the first time in almost a decade. The rise in bill yields was a factor that pushed up money market rates and widened the spreads of certificates of deposit and term London interbank offered rates relative to OIS rates.
And by making dealers have to absorb so much of the new bills at auction, there was less spare liquidity in repo, too. Convenient.
Understand what they are saying here. The FOMC is trying to claim that LIBOR is up because T-bill rates are; the latter are monetary equivalents. Bill rates are higher because of, purportedly, tax reform and the Trump budget. In other words, a heavier supply of bills at auction would lead to rising bill yields and therefore as money equivalents other money market rates would move up, too, including LIBOR.
That’s crap.
Indeed it is. That hasn’t stopped the bill lie from being perpetuated especially now in trying to explain repo in order to go backdoor to EFF. With federal funds being so publicly wayward, it can’t just be ignored.
The bill rate spread was nothing more than markets adjusting to Jay Powell’s expected rate increases. But let’s assume anyway that it was the deluge. That might account for what I’ve marked above as Euro$ #4a and Euro$ #4b, but how then does anyone explain Euro$ #4c; the very market conditions we are now discussing?
There is no unusual spread indicated by bill yields, and over the last four plus months LIBOR has fallen (vindicating, very importantly, the eurodollar futures curve and an entirely different interpretation of things). And yet, dating back to the end of February 2019, the repo rate is up again which so happens to coincide with EFF breaking above IOER and then really moving higher; leading to this third technical adjustment.
We should also note what was going on elsewhere in the last days and week of February, how broader funding/money markets were behaving as this Euro$ #4c/EFF kerfuffle developed:
In short, LIBOR not rising, T-bill rates not unusual, but a lot of the other stuff the FOMC and mainstream ignore which was screaming that something was coming (again). In UST futures, investors were running to the long bond to be hedged against illiquidity more broadly. In gold and repo, collateral breakdown which really doesn’t ever coincide with good working market conditions. Also illiquidity.
Getting back to where we were before this digression and review, if FHLB’s are leaving federal funds high and dry for the fatter, lower risk returns of repo, you still have to account for repo in the first place. Where are the dealers in both federal funds and repo?
It’s not the T-bill deluge keeping them on the sidelines, and it never really was. There was a lot of evidence before, and there’s even more now.
The Federal Reserve lied about it all along because they knew the lie would be repeated over and over and over. Recall the mainstream narrative: the Fed first fixed the financial system which then allowed them to heal the economy. It had to be in that order. Can’t have anything so glaring as federal funds raise questions about the first part lest people start to really ask questions about the second.
Back to what I wrote last year:
Instead, they deliberately throw out this seemingly nondescript reference because it will serve as a de facto official explanation (without appearing to make a big deal out of it) while at the same time they know it will never be challenged. Even though it is, again, demonstrably false, the mainstream media and almost every form of financial commentary is deathly afraid of something like OIS; they don’t understand it, they believe nobody else does, so therefore if the Fed says something about it, then it must be so.
Demonstrably false. It was that all the way back in March 2018 and I think in May 2019 it’s even more so. Where’s the money? Where are the dealers who are the money?
The financial system is not fixed and it never was. And without a monetary system in good working order you better believe the (global) economy is in danger. Again.
via ZeroHedge News http://bit.ly/2vE0RwI Tyler Durden
Refusing to believe that Kim Jong Un would break his promise to hold off on hostilities at least until another round of talks with the US could be scheduled, President Trump brushed off reports about a short-range missile test in North Korea, tweeting that “I believe that Kim Jong Un fully realizes the great economic potential of North Korea, & will do nothing to interfere or end it. He also knows that I am with him & does not want to break his promise to me.”
Trump concluded – in what appeared to be an attempt to reassure Kim before he does something even more drastic – by adding that a deal “will happen.”
The tweet, posted while Trump was in a motorcade to the Trump National Golf Club in Virginia, was the president’s first response to the news that the North had fired an unidentified short-range missile in the direction of the East Sea Saturday morning, local time.
Anything in this very interesting world is possible, but I believe that Kim Jong Un fully realizes the great economic potential of North Korea, & will do nothing to interfere or end it. He also knows that I am with him & does not want to break his promise to me. Deal will happen!
The incident marks the first missile launch since November 28, 2017 when the North launched an ICBM which traveled 600 miles in 50 minutes until crashing into the Sea of Japan.
South Korean and US authorities “are analyzing details of the missile,” added the JCS. However, South Korean intelligence later changed their description of the launch, and stopped referring to “missiles” and instead started referring to “projectiles.”
Last month, North Korean leader Kim Jong Un gave the United States “till the end of this year” before he walks away from negotiations over his country’s missile program, suggesting that the Trump administration needs to be more flexible. And this latest launch, according to Bloomberg, is the clearest sign of frustration yet at the lack of progress in talks between the North and the US.
Via a spokeswoman, South Korea President Moon Jae-in denounced the launch, saying it “goes against” a military agreement the two Koreas reached in September to halt “hostile activities.”
South Korean Foreign Minister Kang Kyung-wha discussed the incident with Secretary of State Michael Pompeo by phone on Saturday, the ministry said in a statement. Nuclear envoy Lee Do-hoon also called US Special Representative Stephen Biegun, who will be in the region next week visiting Japan and South Korea.
Analysts said the launch appeared to be more of a ‘message’ than a deliberate provocation.
“This is an expected move from North Korea – not too provoking, but urging the U.S. to take a slightly stronger stance than their initial one,” said Kim Hyun-wook, of the Korean National Diplomatic Academy. “This seems like a message for Stephen Biegun’s planned trip to the peninsula.”
The timing of the missile launch is certainly curious, following reports circulated by the Chinese sources warning that trade talks with the US might be in jeopardy over the White House’s refusal to compromise on the few remaining priorities on which they haven’t already offered major concessions.
We can’t help but wonder: Did Kim get the ‘tap’ from Beijing to create a distraction to ratchet up pressure on the White House as Beijing pushes for a trade deal that will ultimately result in the rollback of US tariffs in exchange for billions of dollars of purchases of agricultural goods?
via ZeroHedge News http://bit.ly/2JeCugZ Tyler Durden
When looking at the health of an economic system it is impossible to gauge growth or stability by only taking two or three indicators into account. The problem is, this is exactly what central banks and governments tend to do. In fact, governments and central banks wildly and deliberately promote certain indicators as the signals everyone should care about while ignoring a whole host of other fundamentals that do not fit their “recovery” narrative. When these few chosen indicators don’t read well either, they rig the numbers in their favor.
The most promoted and and by extension most rigged indicators include GDP, unemployment, and inflation. I would include stock markets to a point in this list, but as I’ve always said, stocks are a trailing indicator and never tell us accurately when an economic crash is taking place. If anything, stocks are and always have been a placebo for the masses, a psychological crutch meant to lull them to sleep while the crash begins. Other than that, they have no value in determining the health of the system. As a lagging indicator, we will cover stocks at the end of this analysis.
GDP rigging is mostly a government affair,as much of how GDP is calculated today includes government spending. So, even though the government has to steal your money through taxation in order to then spend money, government spending is still counted as “production”. This includes programs like Obamacare, which despite assumptions among some conservatives, continues to operate today. “Official” establishment estimates of government spending as a percentage of GDP stand at around 20%. More accurate estimates accounting for ALL expenditures show that US government spending accounts for around 35% of GDP. This is an enormous fraud.
Most of my regular readers know full well how unemployment numbers are rigged to show recovery, but to summarize, around 95 million working age Americans who are unemployed are not counted as unemployed by the Bureau of Labor Statistics because they have been jobless for long enough to be removed from welfare benefits roles. Now, to be clear, the BLS does keep track of this statistic, but, they DO NOT treat it as a measure of unemployment when reporting their stats to the public.
To clarify, 102 million WORKING AGE people (counted and not counted as unemployed) are jobless in the US. This is almost 50% of the total 206 million working age people in the country. Yet, the BLS reports the unemployment rate at an astonishing 4%. Recovery indeed…
Inflation rigging is a bit more complicated, but the primary method has been for the government and the Fed to simply change their methods of calculation over the past 4 decades, and to exclude inflation in certain goods like food and energy from the numbers. If you want to see real inflation numbers calculated the way they should be, visit John Williams over at Shadowstats.
Another issue that we must take into account is the Federal Reserve’s role as a creator of financial bubbles, and the destroyer of financial bubbles. The Fed can and does act with impunity to influence the system, but they also seek to exploit certain economic indicators as a rationale for their policy decisions. For example, the Fed’s QT policies have for the past couple of years relied on positive GDP, unemployment and inflation stats. In the meantime, the Fed has all but ignored the vast array of stagflationary and deflationary warning signs which run contrary to their interest rate hikes and balance sheet cuts.
For at the past ten years, the Fed has refused to acknowledge that there is no recovery. For the past two years, the Fed has been tightening liquidity despite the lack of recovery. And, even in the past four months with all the talk of the Fed “retreating” on QT and going “dovish”, Fed bankers still claim in their public statements that the US economy is enjoying a “solid” recovery.
This creates some serious confusion, as we saw this week when the Jerome Powell finally hinted to the public that the Fed was more hawkish than it had allowed everyone to believe.
I think the message is clear, though. The Fed continues to cut its balance sheet almost weekly, the Fed’s benchmark interest rate KEEPS RISING despite all the claims that the Fed is “backing off”, the Fed is still insistent that the US is in recovery, and now GDP numbers are coming in rigged to shocking highs. This tells me that the Fed is NOT backing off of tightening measures, even though they have been feeding dovish rhetoric to the mainstream and alternative media.
But what about all the other fundamentals that are alerting us to an ongoing economic crash? What about all the numbers that the Fed is pretending don’t exist when they say that we are enjoying a strong recovery?
How about the recent plunge in earnings forecasts for global companies like Google parent company Alphabet, 3M or Intel? Alphabet saw a 9% drop in earnings growth and the worst day for its stock since 2012. 3M has reported its worst earnings forecast in a decade, and is now planning to cut at least 2000 jobs. Intel also reported earnings expectations well below Wall Street estimates. It smells like 2008 all over again.
This is a trend which is accelerating. Not only in earnings forecasts, but across the board in terms of economic data. Expect the situation to get much worse as the numbers continue to roll in.
Poor corporate earnings reports are the latest signal that we are entering (or returning to) a recessionary crash. But other signals have been visible for at least the past year. Corporate debt has hit historic highs once again, as companies sink into the red at levels not seen since 2007, just before the last economic disaster. This problem has been mostly dismissed in the mainstream economic media because companies were still reporting healthy profits, but now, as we’ve seen, profits are staring to falter. So, it is likely you will be hearing a lot more about massive corporate debt levels in the coming months. For now, the globalists at the IMF are preempting the disasterby “warning” about potential outcomes of corporate debt instability, just as they did before the 2008 crash (a little too late).
Consumer credit card debt and household debt has hit all time highs, yet retailers report a multi-month plunge in sales. This tells me that households are likely being forced to take on more and more debt to pay off previous debts. Once again, this is exactly what happened just before the crash of 2008.
US retail numberscontinue to fall month after month and have been declining since the last quarter of 2018. Despite a jump in March (primarily due to higher gas prices), the downward trend appears as though it will continue.
US auto sales in almost every category are falling, and rising interest rates are at the core of the decline.
Existing home sales continue to crumble since the end of 2018, while new homes sales finally saw a jump in March. This jump, however, is probably due to the fact that home price growth is beginning to fall back to reality in many markets. The tenuous nature of the housing market is reaffirmed in the latest numbers on mortgage applications, which have now fallen to six year lowseven in the face of a recent drop in mortgage rates.
In the meantime,US rental costs are skyrocketing, and have been rising exponentially for at least the past year. This is the conundrum of stagflation in play, with value being lost in some goods, while the prices of necessities spike and strangle consumers.
There are a few factors which have been artificially propping up public hopes on economic health in the US – the hope that the trade war with China will soon end with a “huge” deal brokered by Trump, the hope that the Fed will reverse on it’s tightening policies and start cutting interest rates again, and the performance of the stock market. All of these things seem to be tied together in a fantastic mess of false promises.
First, every time the Trump Admin injects the notion of a trade deal with China, it has consistently proven false, or exaggerated. My position is this – the trade war is an excellent distraction from the sabotage the Federal Reserve is initiating against the US economy as it pops the “Everything Bubble”. This is why the trade war never seems to end. And, even if a trade deal is finally announced with China, I predict it will also be a farce, a fake deal which will result in no meaningful benefits to the US and one that will eventually fall apart. Ultimately, as the current crash progresses the trade war will be blamed, rather than the central bankers that created the mess in the first place.
Second, the Fed will not be cutting interest rates anytime soon. In fact, I continue to believe the Fed will hike rates again this year. Not that it matters, because the Fed’s benchmark interest rate has been climbing anyway, which may indicate the central bank is seeking to tighten liquidity while pretending it is “remaining patient”.
Third, global stocks have been propped up for the past four months by a number of factors, as mentioned above, but first and foremost they have been enjoying massive stimulus injections from China. It is China’s QE, not the Federal Reserve or the “plunge protection team”, which has kept global stocks alive. I expected China to cut their stimulus efforts much sooner and for stocks to begin dropping back to their December lows, but it appears as though they have opted to continue into May.
I will be covering this issue in an article soon, but it is clear that China is getting diminishing returns from this QE. Also, Chinese stimulus may be a temporary response to trade war conditions (or trade talks). We will see how long it lasts if the trade discussions fall apart, or if a trade deal is finalized. For now, China is hinting that it will soon pull back on QE.
The bottom line is, the next crash has already begun. It started at the end of 2018, and is only becoming more pervasive with each passing month. This is not “doom and gloom” or “doom porn”, this is simply the facts on the ground. While stock markets are still holding (for now), the rest of the system is breaking down right on schedule. The question now is, when will the mainstream media and the Fed finally acknowledge this is happening? I suspect, as in 2008, they will openly admit to the danger only when it is far too late for people to prepare for it.
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via ZeroHedge News http://bit.ly/2JcKgrA Tyler Durden
As we reported yesterday, a cruise ship belonging to the Church of Scientology, which had been quarantined on the Caribbean nation of St. Lucia earlier n the week after a case of measles turned up on board, was boarded by authorities in Curacao, a nearby Dutch Caribbean island, who have started vaccinating people to prevent a full-blown measles outbreak.
Back in the US, more than 700 cases of measles have been reported this year already, marking the worst outbreak since the early 1990s, and the worst since Measles was declared ‘eradicated’ in 2000.
Health officials said only those who already have been vaccinated, or who have already had measles, would be allowed to leave the 440-foot Freewinds.
Curacao epidemiologist Dr. Izzy Gerstenbluth told the AP that a small team will be responsible for examining the more than 300 people aboard the ship.
“We will go on board and do our job,” he said, adding that authorities have an international obligation to avoid spreading the disease. “If we allow that to happen, measles spreads in places where the risk of severe complications is much bigger, especially when we’re talking about poor countries where people have a lower level of resistance.”
Gerstenbluth warned that spreading the disease would be easy give that it is a small ship. Symptoms include a runny nose, fever and a red-spotted rash. Most people recover, but measles can lead to pneumonia, brain swelling and even death in roughly 2 of every 1000 cases.
“This is what happens when we don’t vaccinate,” he said.
Authorities are worried that people aboard the ship might have been exposed after a female crew member was diagnosed with measles after returning from Europe. Gerstenbluth said she arrived in Curacao on April 17 and visited a doctor April 22 complaining of cold symptoms. A blood sample was taken and sent to nearby Aruba, where officials confirmed it was measles on April 29, a day after the ship had already departed for St. Lucia. Curacao health officials then alerted authorities in St. Lucia.
In the US, the outbreak has spanned more than 20 states and has largely been centered in Orthodox Jewish communities in New York.
Public health officials blame the measles resurgence on the spread of misinformation about vaccines. A vocal group of parents opposes vaccines, believing that ingredients in them can cause autism. Social networks have resorted to censorship to prevent the spread of any related postings.
The largest outbreaks are concentrated in Orthodox Jewish communities in New York City’s Williamsburg neighborhood, where some 390 cases have been confirmed, and Rockland County north of New York City, which has recorded 201 cases. Those figures include infections from last year and are not directly comparable to the CDC numbers.
Other outbreaks have been reported in Washington state, New Jersey, California’s Butte County and Michigan.
The disease is highly contagious and can be fatal, killing one or two of every 1,000 children who contract it, according to the CDC. It can also cause permanent hearing loss or intellectual disabilities. It poses the greatest risk to unvaccinated young children.
The United States’ 2000 declaration that measles was eradicated meant that the disease was no longer present in the country year round. Measles remains common in some countries in Europe, Asia and Africa, and unvaccinated travelers to those countries can bring it back to the United States. The current outbreaks are believed to trace back to visits to Israel and Ukraine.
New York City officials said some 21,000 people have received the measles-mumps-rubella vaccine in affected areas since the outbreak began in October. The city has begun fining unvaccinated adults.
Lawmakers in Oregon, California and Washington state are considering bills to eliminate nonmedical exemptions that allowed unvaccinated children to attend public schools.
In order to achieve herd immunity that protects those unable to get the measles vaccine, such as infants and people with compromised immune systems, 90% to 95% of the population needs to be vaccinated.
via ZeroHedge News http://bit.ly/2vAcUuQ Tyler Durden
‘The Company Store’… leaving almost nothing to live on
In the song Sixteen Tons by Merle Travis (and made famous by Tennessee Ernie Ford), the idea of the ‘company store’ referred to a system of debt bondage that effectively trapped workers within an unfair system designed to harvest all of their labor at very low cost.
You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store
Sixteen Tons – Merle Travis
How exactly did the company store system operate?
Under a scrip system, workers were not paid cash; rather they were paid with non-transferable credit vouchers that could be exchanged only for goods sold at the company store. This made it impossible for workers to store up cash savings.
Workers also usually lived in company-owned dormitories or houses, the rent for which was automatically deducted from their pay.
This model was simple enough to understand. “Pay” your workers with scrip vouchers, then sell them your marked up goods at the company store, pocketing a nice profit. On top of that, force your employees to live in company housing, too, also at terms very favorable to the company.
Add it all up and the workers found themselves in perpetual service to their employer. No matter how hard and long they toiled, there was nothing left for their own private benefit after all was said and done. The company succeeded in skimming off any and all ‘excess’ for itself.
This vast unfairness eventually led to the formation of unions as well as to regulations providing protection to the workers.
However, capital never sleeps; and the human temptation to skim and take what they can for themselves is a constant in every hierarchical, post-agriculture society. If the idea of “the company store” was too obvious, then a better method of achieving the same outcome had to be hatched. Something with sufficient additional complexity to defeat the ability of the average worker to detect the nature of the scam.
The Financialization Of The Company Store
Which brings us to today’s so-called financial markets. Or ““markets”” as I prefer to refer to them, because they don’t actually represent a free and fair system where prices are set fairly. The scam today that’s enabled by these ““markets”” is every bit as egregious as the company store of old; only today’s victims are mostly blind to the way that the system is rigged against them.
It’s just sophisticated enough that it mostly evades detection. Or is diffuse enough that even if the scam were detected by a participant, whom would they protest against? The markets? The exchanges? Any of the thousands of funds or private money institutions that are feasting off of the system?
It’s a genius set-up. The harvesting is every bit of a violation as the old model, but it’s almost impossible to prosecute.
The main losers in this battle, as before, are the primary producers of value: those who labor to extract the primary wealth of the Earth and bring it to market. The farmers, the ranchers, the fishermen, the loggers, the miners, and the refiners.
Farmageddon
Let’s illustrate how this works for farmers. Or, rather, works against them.
The price of any commodity is now set in the financial markets, principally within the futures market where paper contracts are bought and sold by three main participants: producers (the farmers), consumers (ag and food companies) and speculators.
In a free and fair world, the price of a commodity should reflect the actual supply and demand for its derived products. We should observe some sort of relationship between the primary source of wealth – the corn, wheat and soybeans for example – and the end food products that consumers buy in the store.
This is a low-end estimate of how far food has actually advanced in price due to inflation over the past 20 years, as the CPI persistently underestimates inflation.
Turning now to the farmer, how have the prices received for their products fared over that same stretch of time? In the case of corn, not one single bit. A bushel of corn sells for the exact same (nominal!) price today as it did back in 1996:
Now think of all the input costs a farmer has to pay to run his or her farm. In 1998, oil traded at $11.61 per barrel. Today its cost is 390% higher than that. At our recent annual seminar (April 26-28, Sebastopol CA, replay video available), a gentleman from Nebraska informed me that the cost of a bushel of seed corn has advanced from $40 to over $400 today.
Fertilizers are much more expensive versus 20 years ago. So are tractors, farm land itself, water…you name it. Every single farm input cost has risen strongly over the few decades, but the price of corn is exactly the same as it was 23 years ago.
Meanwhile, the consumer has seen the price of a box of cornflakes increase by 44% on average since 1998, from $2.29 per 18-ounce box to $3.28:
How do the farmers survive this squeeze on their (already tiny) profit margins? How do they cope with flat prices for corn and huge increases in input costs?
One way is by abusing their soil — using GMOs, heavy fertilizer and herbicide applications and other tricks to squeeze as much short-term productivity out of every acre they can.
But beyond these productivity improvements, which eventually hit a point of diminishing return, what else can a producer do with rising costs and flat revenue?
Well, they can go deeper into debt:
The above chart is of farm mortgage debt. Total farm debt across all credit instruments hit a new record in 2018 of more than $409 billion.
Today’s remaining farmers are forced to take on more and more risk.
Here’s a table for Nebraska that details the plight. Note that while net farm income remained relatively flat between 2002 and 2015, family living expenses exploded in parallel with total farm debt:
Expressed as a percentage of revenue, the net profit margins of farms have plunged from 6.3% to just 3.0%. That’s a very skinny margin which leaves very little room for error. One bad season and all reserves are chewed up (and then some):
More than half of U.S. farm households lost money farming in recent years, according to the USDA, which estimated that median farm income for U.S. farm households was negative $1,548 in 2018.
Farm incomes have slid despite record productivity on American farms, because oversupply drives down commodity prices.
See the narrative in play? “There’s farm oversupply”. If that were the case then food prices would come down to bring supply and demand into equilibrium. But that’s not happening.
Instead, the farmers eat the losses. But the rest of the food delivery chain keeps its prices intact and pockets the difference.
Our farmers work exceptionally hard, labor-intensive jobs to produce an absolute essential input to human life. And yet somehow, when all is said and done, they’re left with barely more for their efforts than the coal miners trapped in the system of the company store.
Take away a bit of complexity and it’s the same exploitative system as before. It’s just a little less obvious. And instead of a company foreman or owner to rail against, the perpetrators are much more obscure and shadowy.
The Scam
The principle of any scam is the same as for any successful parasite: take as much as you can but leave the host somewhat alive.
Here’s how the modern ‘company store’ scam works.
First, you have to convince everyone that money has value, and that that value is very real. Make people crave it and work for it, and take away all of their property and belongings if they run out of it. Do this long enough to reinforce the idea that money is everything. You either have it or you don’t. It need to be regarded as tangible and essential .
At the other end of the spectrum, for the big players, print up and distribute as much digital money as needed by the big players to run their various schemes and scams. If they ever get in big trouble, make up a fancy sounding name like TARP or TALF or QE and then talk about how you ‘had to do it’ to save the system and prevent a systemic crisis.
Next, be sure that your regulators are unable (though incompetence and/or neglect) to detect price manipulation in the financial markets under even the most egregious of circumstances. No matter how obvious such manipulation is, it’s vital that no investigations be undertaken and, if they are, that they take many years to conduct and come to the conclusion that no wrongdoing happened.
Finally, allow an unmanageable swamp of high frequency computer algorithms to take over securities trading, creating a system that is so complex, so secretive and so ripe for fraud and abuse that nobody can unravel the complexity to detect that a scam is even happening.
Using this ecosystem of legalized theft, then have the various crooks involved monkey the prices of key commodities to levels that — surprise! — leave hardly any breathing room for the farmers, miners, loggers and refiners to live within.
Now that the scam has been exposed, the appropriate question to ask is, “if the producers aren’t getting the benefit of their labor, then who is?” The people running this scam — the financiers, the bankers and their moneyed clients — are the beneficiaries. They make oodles of money, while performing no real work, and taking very little real risk, same as any other natural-born parasite.
The Abuse Is Widespread
In case you think that I cherry-picked corn as an example particularly favorable to my case, I assure you I didn’t. Here are several key commodities suffering the same abuse:
Regarding the above chart of silver, there are two important factors to note.
First, it’s practically impossible to ‘get better’ at mining silver because the ore grades have been declining each year as companies burn through their very best ores in a quest to remain alive. From that alone, we’d expect to see prices climbing higher over long stretches of time like this.
Second, the business is very energy and capital-intensive. Yet silver is now at the same price as it was back in 2006, 13 years ago.
The orange oval in that chart reveals a decade of pure price suppression that many miners did not survive. This tells us that these scams have been alive and well for a long time.
The Bitter Conclusion
Run this scam long enough and one day we’ll discover that the banks and their proxy agents – private equity funds, hedge funds, endowments, and family offices, etc – own all of the productive farmland, all of the mines, all of the oil wells, all of the timberland, and every other means of primary wealth production.
The former farm and mine owners will be offered roles as “managers” or other types of tenant-farmer arrangements, essentially working for whatever income the labor market can see fit to provide. It won’t be much.
At that point, the entire economy will have become a “company store”.
We’re well on our way there. The Federal Reserve prints up oodles of money and it goes into “the financial system” which is a code phrase for “to the big banks and big money outfits.” They in turn use these funds to make loans to the primary producers on the one hand, and to drive down the price of commodities with the other hand.
Eventually, the farmer has a bad couple of years and his farm is foreclosed on. The land goes up for auction and bought by the highest bidder…which means the buyer with the most money. That increasingly means a big-money type that feasts at the trough of the banking system/money-printing machine.
The next thing you know, vast swaths of farmland magically end up in the hands of those with money, which – surprise! – usually turn out to be the same entities feasting on the central bank/free-money machine that’s been operating ever since Alan Greenspan set this slow motion train wreck in process in the late 1990s:
Who really owns American farmland?
July 31st, 2017
The answer, increasingly, is not American farmers.
Today, the United States Department of Agriculture (USDA) estimates that at least 30 percent of American farmland is owned by non-operators who lease it out to farmers. And with a median age for the American farmer of about 55, it is anticipated that in the next five years, some 92,000,000 acres will change hands, with much of it passing to investors rather than traditional farmers.
But what about the people—often tenant farmers—who actually work the land being acquired? During the same period that farmland prices started gaining steam, many crop prices have stagnated or fallen. After hitting highs above $8 a bushel in 2012, corn prices today have fallen back to less than $4 a bushel—about what they were ten years ago, in 2007, when farmland prices first started to soar.
It’s a tenuous predicament, growing low-cost food, feed, and fuel (corn-based ethanol) on ever-more-expensive land, and it raises a host of questions. Is this a sustainable situation? What happens to small farmers?
Ageing farmers, increasing ownership of farmland by financial investors, and utterly dismal economics – what’s not to love?
The sorry conclusion to all this is that one day, not too far away, we’ll wake up and discover that the majority of US farmland belongs to mega corporations and financial interests, most of whom came across their vast gobs of wealth as a consequence (and a predictable one at that), of the Federal Reserve policy that spurred today’s great wave of financialization.
An explosion in farmland prices really kicked into high gear with the Fed’s quantitative easing (QE) programs following the Great Recession – freshly printed money that wound up in the hands of financial firms and interests with few good ideas of where to put it. So some of it leaked over into farmland.
The same dynamic has seen firms like Blackrock tap into ultra-cheap Fed money to buy up vast swaths of US housing stock — just to rent back to the same people who couldn’t compete against this leviathan’s all-cash offers, using money that was 75% cheaper than the terms regular borrowers receive.
Big Money coupled to Cheap Money leads to this outcome. Every time.
Eventually you wake up and discover, with a few clicks on a keyboard, that the bankers and financiers have taken possession of every productive asset. And everybody else has to pay into the company store.
This isn’t an accident either, which is why it really galls me to have Janet Yellen, the former Fed Chair, out there for years making the ludicrous claim that the Federal Reserve is ‘not political.’
What could possibly be more political than enabling the removal of the productive assets of a nation – it’s land, its houses, and its mineral rights – and facilitating and cheering their acquisition by a very tiny financial elite?
That’s practically the most political act there is.
More tragically, it’s just a gussied-up version of working for the company store. We’ve gone backwards. And not in a good way.
As one tragic story in a recent article goes:
It was a Sunday in April 2017 when a queasy feeling in Darrell Crapp’s stomach sent him rushing home. He found his wife, Diana, lying crumpled on the floor of their Lancaster, Wis., bathroom. She had swallowed a handful of pills.
Overwhelmed with debt and with little prospect of turning a profit that year, the Crapps knew BMO Harris Bank NA wouldn’t lend them money to plant. The bank had frozen the farm’s checking account.
Mrs. Crapp managed the fifth-generation corn, cattle and hog farm’s books. She had stayed up nights drafting dozens of budgets to try to stave off disaster, including 30-day, 60-day and 90-day budgets.
“It was too much for her,” Mr. Crapp, 63, said of his wife, who survived the incident.
Crapp Farms filed for chapter 11 bankruptcy the next month, with a total debt of $36 million.
In a written statement, Patrick O’Herlihy, a BMO spokesman, said the bank doesn’t comment on specific customer relationships but strives to “approach every situation with empathy, and to help our customers manage challenging financial situations.” He said the bank had been working in the agricultural sector for more than a century and was committed to the industry.
At its height, Mr. Crapp and his two sons had grown crops on 17,000 acres. The farm’s last 197 acres, homesteaded by Mr. Crapp’s ancestors in the 1860s, will likely be auctioned this month.
Mr. Crapp now sells farmland for a regional realty company and helps run the family’s trucking business, which transports grain and livestock feed for area farmers. His younger son drives trucks for the company. His older son repairs grain storage bins. Mr. Crapp said he would have to file bankruptcy again—likely under chapter 12—to discharge his remaining debts.
“We haven’t won very many battles,” said Mr. Crapp. “The bank pretty much owns us.”
That’s straight up the 2019 version of the Sixteen Tons refrain: “I owe my soul to the company store”.
What the politicians, financial institutions, and Federal Reserve are defending and supporting is a system that utterly lacks in integrity and is strikingly heartless.
If we want to create a world worth inheriting, that means we cannot afford a system that forces farmers to fight for their very livelihoods each and every year, barely hanging on, and forced to cut costs to even survive.
Cutting costs and boosting productivity means more pesticides, less soil building and a resting, fewer crop varieties, and every other measure of health and complexity upon which our very survival as a species depends.
All in service of money.
In Part 2: It’s Time To Respond, we detail why it’s so pressing right now to mobilize into action.
The opportunity, such as it is, is for us to first recognize this game for what it is (rigged), to take steps to escape the smothering squeeze of financialization being applied to all of us in today’s economy, and then to realign our own actions with the future we wish to see.
A chartered Boeing 737-8000 skidded off the runway and slid into the St. Johns River late Friday after landing at Naval Air Station Jacksonville.
Amazingly, there were not fatalities. Boeing – already struggling with the mass-groundings of its 737 MAX 8s – and the NTSB have launched investigations into the incident, Bloomberg reports.
The NTSB said it’s sending one of its ‘Go Teams’ to investigate the incident, and Boeing and the Navy said they would provide technical support if possible. The NTSB team is expected to arrive around noon on Saturday.
The NTSB is sending a Go Team to investigate Miami Air International flight 293, a Boeing 737-800, which departed runway and came to rest in St. Johns River, Jacksonville, Florida (no reported fatalities).
***Plane incident update***
At approximately 9:40 p.m. today, a Boeing 737 arriving from Naval Station Guantanamo Bay, Cuba into Naval Air Station Jacksonville slid off the runway into the St. Johns River…. https://t.co/7a3gMnJgtK
Boeing extended its well wishes to everybody on board and asked the press to direct all questions to the NTSB.
Boeing, the manufacturer of the 737-800 that skidded off the runway at NAS Jacksonville, is providing assistance to the NTSB. pic.twitter.com/MX6hKm9E6g
Though it isn’t clear what caused the plane to slide off the runway and into the river, the incident is bound to heap additional scrutiny on Boeing, which is already enmeshed in one of the biggest crises in its more than century-long existence. Officials have speculated that a brief but torrential rainstorm led to the conditions.
The Jacksonville Sheriff’s Office said its Marine Unit has been called in to assist the Naval Air Station with pulling the plane out of the river, which should be an easier task seeing as the plane was not submerged.
Jacksonville Mayor Lenny Curry said teams have been working to clean up fuel that leaked into the river. President Trump also called to offer the White House’s help as the situation was ‘developing’.
We have a commercial plane down on the river. I’ve been briefed by our Fire and Rescue. They are on the scene. While they work please pray.
Outspoken conservative actor James Woods has been banned from Twitter for more than a week after he tweeted “If you try to kill the King, you best not miss’ #HangThemAll” – an apparent reference to the Mueller report.
Photo: Jules Pochy
Woods’s girlfriend Sara Miller tweeted a screenshot of Twitter’s account suspension, which cites “targeted harassment” as the reason.
In September, Woods was temporarily suspended for posting a satirical meme which very clearly parodies a Democratic advertisement campaign, encouraging feminized liberal men to “make a woman’s vote worth more” by staying home.
On Friday, President Trump tweeted: “So surprised to see Conservative thinkers like James Woods banned from Twitter, and Paul Watson banned from Facebook!”
So surprised to see Conservative thinkers like James Woods banned from Twitter, and Paul Watson banned from Facebook! https://t.co/eHX3Z5CMXb
According to Breitbart‘s James Caruso, Twitter appears to have two sets of standards, and has given many on the left a pass for much, much worse behavior. Via Breitbart:
Twitter allowed a number of verified accounts to participate in doxxing and violent threats against teenagers from Covington Catholic high school in January.
Sen. Susan Collins (R-ME) was on the receiving end of vicious sexist Twitter abuse after she defended Supreme Court Justice Brett Kavanaugh.
Actor Peter Fonda said that Barron Trump should be taken away from his Melania and put in a cage with pedophiles. Fonda also called for Kirstjen Nielsen to be whipped. He later apologized.
Hollywood star Jim Carrey posted a drawing of Eric Trump and Donald Trump Jr. getting bludgeoned to death by an elephant last year. The tweet is still up.
In 2016, various accounts called for and cheered on the shooting of police officers.
Take a look at these tweets from left wing accounts calling for Republicans and Trump to be assassinated or hung, all recent and Twitter does nothing because they’re busy shadowbanning conservatives and suspending @RealJamesWoods. Blatant hypocrisy. pic.twitter.com/c69k2Eck4s
Meanwhile, on Thursday Facebook unilaterally banned several conservative influencers from its platform – ‘balancing it out’ with documented anti-Semite and Democrat ally, Louis Farrakhan.
The conservatives banned include Paul Joseph Watson, Milo Yiannopoulos, Laura Loomer and Paul Nehlen, who were labeled “extremists” and “dangerous.”
Thank you Mr. President. Now hopefully Facebook will be stripped of its immunity under section 230 of the Communications Decency Act because it is clearly acting as a partisan publisher and not a platform. This is election meddling.
While Watson had earlier said on an Infowars broadcast soon after the ban “I don’t have the money to sue Facebook, and I don’t want to,” he tweeted on Friday that he has the “best media lawyers in London looking over the Facebook issue,” adding “I am not an “extremist” or a “dangerous person” and won’t be defamed as one.”
I have the best media lawyers in London looking over the Facebook issue. I am not an “extremist” or a “dangerous person” and won’t be defamed as one.
Earlier on Friday, President Trump fired off a barrage of tweets decrying the censorship.
I am continuing to monitor the censorship of AMERICAN CITIZENS on social media platforms. This is the United States of America — and we have what’s known as FREEDOM OF SPEECH! We are monitoring and watching, closely!!
The wonderful Diamond and Silk have been treated so horribly by Facebook. They work so hard and what has been done to them is very sad – and we’re looking into. It’s getting worse and worse for Conservatives on social media!
Palestinian militants launched over 90 rockets into Israel within the span of merely an hour early Saturday following following a tit-for-tat series of escalations that began with Gaza border incidents on Friday, including two Palestinians shot by Israeli soldiers during protests.
Explosion caused by an Israeli airstrike in Gaza City on Saturday, May 4. Image source: AP/Times of Israel
According to early reports, there have been no casualties in Israel following the intense volley, and on the Gaza side one person has died as a result of Israeli Air Force retaliatory strikes with three others wounded, according to the Palestinian Ministry of Health.
There are some unconfirmed reports of injuries on the Israeli side, including injuries of Israeli civilians after a rocket reportedly impacted a school in a town called Kiryat Gat. The IDF confirmed its Iron Dome defensive measures were active throughout the morning.
#Breaking: Just in – Video of a rocket from #Gaza fell into a field in the region of #Ashkelon, destroying partially a side of a building, where one male was critically injured after debris hit him from the explosion in #Israel. pic.twitter.com/7Ta9BuHZKp
The Israeli Defense Forces (IDF) launched a massive counterattack on Gaza targeting Hamas and Islamic Jihad, the IDF Spokesperson confirmed.
#Update: Children in #Gaza and in #Israel are developing PTSD symptoms, This video shows a beach with locals and children, in #Ashkelon early this morning flying rockets and mortar shells over them and the iron dome intercepting them, pic.twitter.com/e34zxJXmKt
From Friday into early Saturday, a total of five Palestinians have been killed according to Gaza sources, which includes a Friday Israeli airstrike on a Hamas command post in central Gaza.
Air-raid sirens have continued throughout the day across southern and central Israel after a barrage of Hamas rockets reached as far as Bet Shemesh, a central Israeli city near Jerusalem.
The IDF later updated their tally of the number of rockets fired from the strip to over 150 launched over the course of Saturday morning.
Meanwhile a UN envoy alongside Egypt have reportedly been attempting to mediate toward a ceasefire between Israel and Hamas in talks, according to diplomats in the region.
via ZeroHedge News http://bit.ly/2VgClAY Tyler Durden
Nigel Farage is continuing to smile after the latest polls for the EU elections continue to show the Brexit Party leading the way.
Despite only being launched last month, the Brexit Party quickly stormed to the top of the polls – and the latest set of figures show their support has only increased.
According to YouGov, Mr Farage’s party are now polling on 30% – an increase of 2% from the previous poll.
2,000+ turned out in Newport for the Brexit Party.
“This wasn’t like party conferences, there was noise, excitement, and the number of selfies and pictures should show the regard supporters hold their candidates in.” https://t.co/xrWPflfql1
The above table represents the official party position. Most Tories (Conservative) do not favor Theresa May’s pathetically negotiated withdrawal agreement.
Many in the Labour party favor remaining, a referendum, or even leaving.
Both the Tories and Labour splintered mightily over Brexit but Labour fared better, at least for now.
Change UK is a group of pro-Remain misfits of former Tories and former Labour who left their parties in disputes over Brexit.
They have little in common other than a foolish desire to remain in the EU.
In the next UK general election, most of the Change UK supporters will be voted out of office.
Pro-Brexit Support
Support for pro-Brexit parties is seemingly overwhelming 68%.
Appearances deceive. Labour leader Jeremy Corbyn favors a customs unions, an arrangement even worse than remaining.
Unless the EU makes a special deal, a customs union would limit the UK’s ability to make trade treaties on it own, tie the UK to many inane EU policies, make the UK pay fees for single market access and give give the UK no say in EU policies.
It’s crazy to back such a state of affairs, but that is the official Labour position.
via ZeroHedge News http://bit.ly/2H1tNF9 Tyler Durden
