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Poor economies impact countries in a number of detrimental ways including higher rates of poverty, unemployment and chronic disease. Now, a new study shows the bad economy is to blame for another unfortunate trend: the rise of the selfie generation and "spornosexuality."

As PlanetFreeWill.com's Joseph Jankowski reports, according to a new study from the University of East Anglia (UEA), young men are seeking value through their bodies rather than traditional value creation because of poor economic conditions.

Since the 2008 financial crisis, more men have been taking to social media to post images of their fit bodies, says the study’s author, Dr Jamie Hakim.

This trend has been labeled ‘spornosexuality’, a combination of ‘sports star’ and ‘porn star’. It was coined in July 2014 by media commentator Mark Simpson, in an article in The Daily Telegraph about the rise of men attending the gym primarily for reasons of appearance, rather than for health or fitness.

"One of the most interesting aspects of this development is the power-shift of a segment of society who have historically defined themselves through their mind, whilst at the same time defining those they have subordinated – women, gay and working-class people – through their bodies,” said Dr Jamie Hakim.

 

“The former group has historically been employed as high-paid decision-makers, whilst the latter have had to rely on their bodies for low- or no-pay work, such as manual and domestic labour, slavery and sex work.”

The study, titled ‘The Spornosexual’: the affective contradictions of male body-work in neoliberal digital culture’, was published on Thursday in the Journal of Gender Studie.

“Austerity has eroded young men’s traditional means of value-creation so they have become increasingly reliant on their bodies as a means of feeling valuable in society,” Dr. Hakim continued.

 

“In theoretical terms, so-called ‘spornosexuality’ is an embodied response to material changes brought about by neoliberal austerity.”

The study found that the amount of 16 to 25-year-old men attending the gym between 2006 and 2013 significantly increased.

Hakim denies the growing interest in bodybuilding as simply a new craze.

“The rise of men going to the gym and sharing images of their worked-out bodies began around 2008, coinciding with the intensification of neoliberalism that occurred in response to the 2008 economic crash and the following austerity measures,” Hakim said. “This is no coincidence.”

 

“There is a correlation between the rise of young men fashioning muscular bodies and sharing them online, and the austerity measures experienced by their generation,” the study’s author says.

 

“These economic tactics are widening inequality, especially for those born after 1980, with prohibitively high house prices, the loss of secure long-term contracts, tuition fees and other hurdles to economic security.”

Highlighting the lack of opportunity for young men since the 2008 crash, the Congressional Budget Office found that 1 out of 6 young men inside the United Sates in 2014 were jobless or incarcerated.

Breitbart reported back in May:

According to the Congressional Budget Office (CBO), out of the 38 million young men in the U.S. in 2014, 16 percent were jobless (5 million or 13 percent) or incarcerated (1 million or 3 percent). The share of young men without a job or in prison has increased substantially since 1980, when just 11 percent of young men fit into either category.

At the end of last year, it was reported that 498,000 young people between the ages of 16-24 were unemployed in the UK.

In a shocking recent study by Pew Research, which highlights the economic struggle young men, and millennials in general, are going through, it was found that for the first time in 130 years Americans ages 18-34 are more likely to live with their parents than in any other living situation.

As more and more good paying jobs leave the United States, it can come as no surprise that young men, who once sought validation through the acquisition of labour, starting a family, and buying a home, are struggling to find themselves and traditional manhood.

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After Tesla’s latest problem involving a Model S crash in Beijing while in autopilot mode (which has since prompted the carmaker drop remove “autopilot” from its Chinese website), Elon Musk may have to return to a more familiar problem plaguing his vehicles: spontaneous combustion.

According to Electrek, as part of its ‘Electric Road Trip’ tour for the summer, Tesla stopped in Biarritz, France to promote Model S and Model X over the weekend. During a test drive in a Model S 90D, the vehicle suddenly sent a visual alert on the dashboard stating that there was a problem with “charging”. The Tesla employee giving the test drive made the driver park the car on the side of the road and all three (the driver, the Tesla employee and another passenger) exited the vehicle. 

The Tesla Model S caught on fire only a moment later (pictured above), according to witnesses. Firefighters arrived quickly on the scene to control the fire, but the vehicle was completely destroyed. The result was reportedly similar to the remains of the Model S that caught fire while Supercharging in Norway earlier this year.

The website adds that it is talking to members of the Tesla Motors Club in France and reaching out to Tesla.

While the traditional Tesla defense applies, namely that while electric vehicle fires are widely reported there’s no evidence that there are any more frequent than gas-powered car fires, what is particularly interesting here – though it could change since the story is still developing – is that previous instances of Tesla vehicles catching fire happened after severe impacts, especially after debris on the road punctured the battery pack at high-speed.

Those incidents stopped after Tesla added a titanium shield on the bottom of the battery pack, but so far there’s been no report of an impact in the case of the fire in France today.

The cause of the fire is still unknown. A Tesla spokesperson sent Electrek the following statement:

“We are working with the authorities to establish the facts of the incident and offer our full cooperation. The passengers are all unharmed. They were able to safely exit the vehicle before the incident occurred.“

The developing story has yet to hit the mainstream news.

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Following his bearish note last week, Morgan Stanley’s oil analyst Adam Longson is out with a new report, in which he accurately explains that the recent oil-price jump is driven by traders covering bearish bets, even as market fundamentals are seen remaining weak in coming months.

According to Longson, a “sizeable” amount of Sept. WTI put positions at $40, $45 recently came into or near the money, leading to spike in hedging by traders to cover their exposure. However, the good news for oil bears is that the effect of this action will fade once option expires Aug. 17. As we have pointed out previously, the recent comments from OPEC, and IEA helped reverse bearishness and also unleash the recent short squeeze which led to the biggest weekly jump in oil in 4 months.

He then notes that he “would not be surprised to see tank top fears return in 1Q17” as he sees rising U.S. crude inventories in coming months.

He list other bearish factors for oil, which include modest implied draw in global oil stockpiles in 3Q, as well as a lack of meaningful cuts to refinery run rates. A record OPEC production, albeit seasonal, with potentially higher Libyan exports and Iraqi output growth into 2017 add to bearish indicators.

He notes that the draw in U.S. gasoline inventory seen deceptive as higher net exports – lower imports and more overseas shipments – could be “masking the problem.” He concludes that if global product markets remain oversupplied, ability to export on larger scale may be limited and run cuts unavoidable.

This is what he said on the imminent end of the oil squeeze:

The Option Squeeze Lifts Oil Prices. Sentiment regarding oil continues to swing with price momentum, and in the short run, rapid shifts in positioning can move prices. A large option position and delta hedging left the market vulnerable to a rally. Thus, bullish comments from OPEC and the IEA caught the market uniquely offside to reverse bearish positioning (see detail and calcs inside). Yet, once option expiry passes on Aug 17th, this issue should fade. Moreover, this move higher also brought in bullish buying from those who believe the worst is past, and the call skew is now shifted bullish for Sep. The problem is that fundamentals tend to be a stronger driver medium term, and the picture appears skewed negative over the coming months.

Here are the details on what many believes is the key factor in the latest price spike, the short squeeze, and why Longson believes it will end in just two days.

Negative Gamma: The Option Squeeze Lifts Prices

 

Positioning is moving short term prices, but fundamental setup remains bearish. Sentiment regarding oil continues to swing with price momentum – from bullish in May/June to bearish in July/Aug and back to bullish of late. In the short run, rapid shifts in positioning can move prices. Even this past week, the market sold off sharply on bearish DOEs before reversing late in the week on OPEC and IEA comments. We expect this back-and-forth volatility to continue. However, fundamentals tend to be a stronger driver medium term, and the picture appears negative over the coming months.

 

Large option position and delta hedging left the market vulnerable to a rally. The market had built up sizeable WTI put positions for Sep at $40 and $45, which had recently come into or near the money. As these options gain or fall in value, traders/dealers need to buy and sell a corresponding number of contracts to hedge their exposure (the delta value). These delta values tend to rise quickly as contracts approach the money. 

 

Therefore, bullish comments from OPEC and the IEA caught the market uniquely offside to reverse bearish positioning. Rising prices lifted the weighted avg Sep WTI put delta across over 380,000 contracts from (0.30) to (0.17) in just 2 days. As these puts fell in value and delta values climbed, traders/dealers were forced to buy back contracts quickly to cover their exposure. To put this in context, we estimate traders needed to buy 48,000 Sep WTI contracts from 8/10-8/12 vs. only 215,000 reported open interest in WTI Sep futures (although Sep option interest is far larger), simply to cover this hedging interest before we consider other short covering.

 

 

 

We expected this OPEC floor at a lower level with more extreme positioning – hence our $35 floor. But option positioning was far enough offside to create a short squeeze and pain trade higher. Once option expiry passes on Aug 17th, this issue should fade. Short squeeze running out of steam? A notable amount of short position has likely been flushed out, but we would be remiss if we didn’t acknowledge a large open interest in $45 puts. However, this move higher also brought in some bullish buying from those who believe the worst is past. In fact, the call skew is now shifted bullish for Sep, and we would expect lagged CFTC positioning data to follow. Not only does this likely leave less upside from positioning, but a more balanced market suggests upcoming bearish fundamentals are likely to drive markets.

As for fundamentals, nothing good here:

Fundamentals and Data Points Should Remain A Headwind

 

Physical market challenges to crude oil still lay ahead of us. As we wrote previously, the market sell off on product market concerns did not lead any notable change in crude oil fundamentals. Refiners have yet to pull back meaningfully on crude oil purchases (run cuts and maintenance have yet to begin in earnest), and crude oil inventory builds are only starting to turn bearish in both the weekly US statistics and globally.

 

 

US crude oil inventories face growing challenges. As we’ve noted and seen, US crude oil inventories are set to build – likely above normal – over the coming months. In essence, the US is done drawing for the year (other than random weeks and Dec). Given the market’s intense focus on these US statistics of late, it may be difficult to support any larger oil rally if US inventories are rising. In fact, we would not be surprised to see tank top fears return in 1Q17. Key headwinds include:

• Not only are Canadian imports likely to continue to rise, but waterborne imports should be slow to fade after strong incentive pricing just a few weeks ago.
• The US is also past peak refinery runs, and a number of refineries are already reporting unplanned outages or lower utilization. Upcoming maintenance and potential run cuts may be helpful for product markets, but they will only exacerbate the headwinds for crude oil.

 

 

Global challenges await too: We vehemently disagree with the IEA assessment of a 1 mmb/d crude oil stock draw in 3Q16, and we see little evidence for that in reported data. Global draws are common in July and August, and the IEA’s estimated number may not be far from historical averages, but this year appears underwhelming. We see only a modest implied global draw in 3Q16, while countries we can track are likely to build.

 

US crude oil inventories are already building counterseasonally in Aug and fell well under 5Y avg draws for much of July. Sep will likely show larger than normal US builds. China commercial crude oil inventories climbed counterseasonally in June and typically rise materially in July, Aug and Sep. That said, the IEA does admit their crude oil throughput estimate may be too high, and the organization shows large global builds returning in 4Q16

Finally, the biggest confusion emerges when looking at OPEC production, which despite a new bout of speculation about a production freeze next month, is producting at a record pace.

OPEC production continues to surprise to the upside, although much of the current strength is seasonal. The most recent monthly oil market report from OPEC shows estimated July production hitting a record setting 33.4 mmb/d. However, a number of bearish forward indicators were also lost in the rally, including potentially higher Libyan exports and Iraqi growth into 2017, which combined could offset a year of crude oil demand.

 

 

 

 

Saudi Arabia: Record production Has so far held to its promise not to “flood” the market, but the kingdom has kept production elevated. July estimates indicate Saudi production was at 10.62 mmb/d spurred primarily by higher domestic consumption. A heatwave across much of the Middle East is adding pressure to already high summer demand.

 

Iraq: Consensus may be too pessimistic. Production has continued to surprise to the upside, with July production at 4.33 mmb/d. Iraq also relies heavily on crude oil and petroleum products for electricity generation, and demand has also been boosted by a summer heatwave.

 

Consensus expects Iraq to be flat or down in 2017, but increasingly it appears the country will grow. We currently expect production in the Gulf State to grow ~300 kb/d this year on avg, and we show only a slight ~60 kb/d increase next year. However, the recent announcement by Iraqi officials that agreements have been reached with major producers to restart previously stalled investments puts this at risk. Officials now believe that 2017 production could grow 250 – 350 kb/d. We have seen false signals from Iraq before, but this announcement should not be dismissed.

 

Libya: No increase yet. Despite a recent agreement between the national oil company, armed guards and the unity government to reopen three blockaded ports, oil exports will not increase until blockades at the field level are lifted. While elements of our production recovery scenario appear to be playing out, the political and security challenges remain acute and any production recovery could easily be derailed by yet another armed group.

* * *

For now, however, the squeeze continues and oil has suged out of the gates, adding to its weekly gains, now up 16% off last week’s lows, and almost back in a bull market.

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Submitted by Benn Steil and Emma Smith via CFR,

Italian banks have taken a pounding of late from the ECB, the markets, and the media.  They currently hold a whopping €360 billion in nonperforming loans (18 percent of their portfolio), the most in the European Union and double that of the next worst performer—Spain.

As shown in the graphic above, Italy is also the worst performer among major EU nations along another metric of banking-sector fragility – the dreaded “doom loop” of indebted banks and sovereigns.

A doom loop is set in motion when banks load up on debt issued by their government, and the government in turn guarantees, explicitly or implicitly, the debt of the banks.  As banks’ balance sheets weaken with rising bad loans, this impairs the fiscal position of the government backstopping their debt.  And as the government’s fiscal position deteriorates the loss exposure of the banks holding its debt rises.  Thus do weak banks drag down weak sovereigns, which in turn further weighs on the banks—ad infinitum.

The graphic also shows that Portugal’s doom loop metric has soared over the past two years.  Portuguese banks have been gorging on Portuguese sovereign debt, taking it from 7 percent of total assets to 10 percent – the same level as Spain.  If they continuing loading up at this pace, they will reach Italian levels by 2018.

This is worrying because Portugal has a government debt-to-GDP ratio of 129 percent (just below Italy’s 136 percent) and is set to fall short of its deficit target for a third year running.  Spain, with debt to GDP at 101 percent, will fall short for the 9th straight year. And slowing growth means that current budget projections may prove overoptimistic yet again, leading to ratings downgrades.

What does this mean from a practical perspective?  Well, we calculate that a 15 percent fall in the bond prices of their respective sovereigns would erase 35 percent of Italian bank capital, 22 percent of Portuguese bank capital, and 18 percent of Spanish bank capital. 

This would fuel already heightened tensions with the EU over new bailout restrictions and revive speculation of a Eurozone break-up.

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Did Putin just spoil the party?  

• RUSSIA DOESN’T SEE OIL OUTPUT FREEZE AT OPEC TALKS IN SEPT: IFX

This whole ramp was driven by chatter of Russia and Saudis talking which has now been denied…

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Submitted by Julieanna Geiger via OilPrice.com,

Delta Airlines recently experienced what it called a power outage in its home base of Atlanta, Georgia, causing all the company’s computers to go offline—all of them. This seemingly minor hiccup managed to singlehandedly ground all Delta planes for six hours, stranding passengers for even longer, as Delta scrambled to reshuffle passengers after the Monday debacle.

Where Delta blamed its catastrophic systems-wide computer failure vaguely on a loss of power, Georgia Power, their power provider, placed the ball squarely in Delta’s court, saying that “other Georgia Power customers were not affected”, and that they had staff on site to assist Delta.

Whether it was a true power outage, or an outage unique to Delta is fairly insignificant. The incident was a single company without power for six measly hours, yet it wreaked much havoc. Which brings to mind (or at least it should) what happens when the lights really go out—everywhere? And just how dependent is the U.S. on single-source power?

When you hear about the possible insufficiency, unreliability, or lack of resiliency of the U.S. power grid, your mind might naturally move toward the extreme, perhaps National Geographic’s Doomsday Preppers. Talks about what a U.S. power grid failure could really mean are also often likened to survivalist blogs that speak of building faraday cages and hoarding food, or possibly some riveting blockbuster movie about a well-intentioned government-sponsored genetically altered mosquito that leads to some zombie apocalypse.

But in the event of a power grid failure—and we have more than our fair share here in the U.S.—your survivalist savvy may be all for naught.

This horror story doesn’t need zombies or genetically altered mosquitos in order to be scary. Using data from the United States Department of Energy, the International Business Times reported in 2014 that the United States suffers more blackouts than any other developed country in the world.

Unfortunately, not much has been done since then to alleviate the system’s critical vulnerabilities.

In theory, we all understand the wisdom about not putting all our eggs in one basket, as the old-adage goes. Yet the U.S. has done just that with our U.S. power grid. Sadly, this infrastructure is failing, and compared to many other countries, the U.S. is sauntering slowly behind many other more conscientious countries, seemingly unconcerned with its poor showing.

The Grid, by Geography and Geopolitics

According to the United States Department of Energy, the American power grid is made up of three smaller grids, known as interconnections, which transport energy all over the country. The Eastern Interconnection provides electricity to states to the east of the Rocky Mountains, while the Western interconnection serves the Rocky Mountain states and those that border the Pacific Ocean.

The Texas Interconnected System is the smallest grid in the nation, and serves most of Texas, although small portions of the Lone Star state benefit from the other two grids.

And if you’re wondering why Texas gets a grid of its own, according to the Texas Tribune they have their own grid “to avoid dealing with the feds.” Now that’s true survivalist savvy—in theory.

When you look at the layout of the grid above, it’s easy to see that a single grid going offline would disrupt a huge segment of North America.

Wait—make that all of North America.

To give it to you straight, our national electrical grid works as an interdependent network. This means that the failure of any one part would trigger the borrowing of energy from other areas. Whichever grid attempts to carry the extra load would likely be overtaxed, as the grid is already taxed to near max levels during peak hot or cold seasons.

The aftermath of a single grid going down could leave millions of residents without power for days, weeks or longer depending on the scope of the failure.

So although on the surface it looks like the U.S. has wisely put its eggs into three separate baskets for safer keeping, the U.S. has in essence, lined up our baskets so that if one were to drop, or if the bottom were to fall out, the eggs from basket #1 would fall into basket #2. Which would break from the load, falling into basket #3—eventually scrambling all the eggs. Sorry, Texas.

When multiple parts of the grid fail at the same time, it’s not necessarily more catastrophic—the catastrophe just happens more quickly.

According to Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission, in an interview with USA Today, "You have a very vulnerable system that will continue to be vulnerable until we figure out a way to break it out into more distributed systems."

The Grid, by the Numbers

Let’s look at the math behind the power grid, and what the U.S. is doing to improve it.

1. Through the Recovery Act, the DOE invested about $4.5 billion in the power grid since 2010 to modernize it and “increase its reliability”. $4.5 billion seems like a fairly large number, unless you’re talking about a single machine that serves as the lifeblood to nearly every human in North America—a machine that was conceived in 1882 by Thomas Edison—with little changed since then, conceptually speaking. For people who reside in weather-challenged areas, such as my home state of Michigan, a home generator is almost as necessary of an appliance as a microwave, and people are scrambling to go “off-grid” with alternative energy solutions—an act that will not provide them immunity should the lights go out everywhere else. And for what it’s worth, for those of you sporting solar and wind energy, you’re further taxing the grid—the grid just wasn’t designed to accommodate the surges and lulls of such systems, however green you find them.

 

2. Power outages—just the ones due to severe weather—cost the U.S. economy between $18 and $33 billion annually in spoiled inventory, delayed production, grid damage, lost wages and output. Despite a few billion dollars being thrown at the grid to improve its resiliency or reliability, the number of outages due to weather is expected to increase, assuming that climate change will indeed intensify extreme weather, as some predict.

 

3. The total annual cost from power outages, per federal data published in The Smart Grid: An Introduction, is a whopping $150 billion.

 

4. As of 2014, the DOE had generously spent $100 million (million, not billion) into modernizing the grid for the specific purposes of surviving a cyber incident by maintaining critical functions. This would be measures separate from making the grid more reliable.

 

5. The American Society of Civil Engineers gave the electrical grid a grade of D+ in early 2014 after evaluating the grid for security and other vulnerabilities.

 

6. The average age of large power transformers (LPTs) in the US is 40 years, with 70 percent of all large power transformers being 25 years or older. According to the DOE, “aging power transformers are subject to increased risk of failure.”

 

7. LPTs cannot be easily replaced. They are custom built, have long lead times (even 20 months, in some cases), cost millions of dollars, are usually purchased from foreign entities due to limited U.S. capacity, and weigh up to 400 tons. All this means that patching and fixing is likely to be favored over replacement, despite their age and associated risk.

Working with those figures, most of which are provided by federal sources, this means the U.S. invested, from 2010 to 2014, $4.5 billion to modernize the grid, along with an additional $100 million to stave off cyber threats. That’s $4.6 billion over four years, or $1.15 billion per year in upgrades. Next to the $150 billion lost each year due to outages, it looks like someone has done some subpar calculating.

The security of the power grid, which is a separate issue from the reliability of the power grid, is a whole other issue that concerns itself with hypothetical one-off scenarios—albeit terrible one-off scenarios. But at least there’s a chance that those one-off scenarios, such as a cyber-attack on the grid or some terrorist activity, would not come to fruition. A chance, at least.

What we are certain of, is that severe weather will continue to stress and threaten our power grid. And unless something changes, ultimately, it will fail. So when we talk about reliability, we’re talking about “when” and “for how long” scenarios, not “what if”.

The how-long factor plays a huge role into how bad is “bad”; not because of the events that one knows will follow, which includes mass food spoilage, deaths due to overheating in the hot summer months, deaths due to freezing in the cold regions, and the halting of everything we take for granted these days—airlines, internet and most other forms of communication.

All that sounds pretty bleak, but when you throw into the mix the mania and hysteria that would ensue shortly after such catastrophic events, it will be so much worse. Best-selling author Charles Mackay, in his book Extraordinary Popular Delusions and the Madness of Crowds, does a pretty good job describing, through example, how crowd decisions and reactions are significantly less sensible than individual decisions—sometimes downright nutty, as evidenced by Tulip Mania, where supply and demand—or in this case scarcity and demand, drove up the prices of tulip bulbs to ridiculous levels.

In the context of blackouts, we saw this in 1977, when a lightning strike in New York on a Hudson River substation tripped two circuit breakers, causing power to be diverted in order to protect the circuit. The chain of events that followed ended in an entire blackout for the area, which led to mass rioting, over 1000 deliberately set fires, the looting of 1600 stores, and the eventual arrest of 4,500 perpetrators and the injury of 550 officers, according to some estimates. The power was only out for 25 hours, and in one area.

In all likelihood, the haves (those who have removed themselves from the grid and prepared accordingly) will soon be overrun by the have-nots in the event of any extended blackout, with heavily populated areas taking the brunt of the chaos—and your solar roof panels or generator will not suffice as your savior.

The U.S. would be wise to follow the lead of some other countries, such as Denmark, which has decentralized its grid, but we doubt the cash exists to fund such an ambitious overhaul of an archaic system that has been left essentially unattended for decades upon decades.

(Click to enlarge)

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