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Authored by Michael Snyder via The Economic Collapse blog,

Why are so many people suddenly moving away from major U.S. cities?  Recently, I wrote about the mass exodus that is happening out of the state of California, but the truth is that what is happening there is just part of a national phenomenon.  The populations of some of our largest cities are steadily shrinking, and many experts are completely mystified by the seismic demographic shifts that we are now witnessing.  Of course there are a whole host of reasons why people would want to move away from huge cities such as Chicago, Detroit, Baltimore and Cleveland.  For some families, it simply comes down to wanting a better life for their children.  But as you will see below, there are others that believe that things in this country are about to take an apocalyptic turn, and the big cities will not be a place that you want to be when economic collapse, rioting, looting, civil unrest and crime are all spiraling out of control.

According to data just released by the U.S. Census Bureau, Chicago took the prize for the biggest population loss from 2015 to 2016, and it was followed by Detroit and Baltimore…

The counties containing Chicago, Detroit and the independent city of Baltimore were the biggest population losers in the United States from 2015 to 2016, according to data released today by the Census Bureau.

 

Cook County, Ill., where Chicago is the county seat, had the largest population loss of any county in the country from 2015 and 2016.

Cook County alone had a “domestic migration” loss of more than 66,000 people.  That is a staggering number of people to lose in a single year.

Cleveland and Milwaukee were also very high on the list, and some are pointing out that all of these cities are in relatively colder climates and are all struggling economically.

So you certainly can’t blame people living in these cities for wanting to find somewhere warmer and more economically prosperous to live.

But others that are moving away from large cities are deeply concerned about where things are ultimately headed in this country.  It doesn’t take a genius to see that anger, frustration and hatred are rising all around us, and many believe that conditions are ripe for civil unrest and civil conflict.  In fact, best-selling author Doug Casey believes that we could soon see a “civil war” that is set off by a “financial collapse”…

Best-selling author Doug Casey wrote “Crisis Investing” at the time when the U.S. political landscape was transitioning from the Carter Administration to the Reagan Administration. Now, Casey sees a coming crisis that is equal or worse than the Civil War.  Casey explains, “In the U.S. right now, there seems to be so much antagonism it’s almost like pre-Civil War.  There is actually hatred in the U.S. at this point.  It used to be the Republicans and Democrats could disagree, but they could have a civil conversation about a difference of opinion.  Now, it’s active hatred between these two groups.  This is not going to end well.”

 

Casey thinks the coming financial collapse will be the trigger. Casey says, “It’s going to come down eventually.  I am worried about that, but we are in a situation where the country seem like it is just before a civil war.  It will be more serious than just a financial collapse, and it is likely to be set off by a financial collapse.”

Without a doubt, our financial system is certainly primed for a financial collapse, and when things get really, really bad in this country how will people respond?

Many have decided that they want to get away from the major population centers before we find out the answer to that question.

For example, not too long ago the Chicago Tribune ran a story about why so many preppers are moving to the Great Northwest.  One of the individuals profiled was an ex-resident of California named Trevor Treller who moved up to north Idaho prior to the recent election…

Trevor Treller, 44, who carries a small Smith & Wesson pistol on his hip, moved to north Idaho last year from Long Beach, California, and recently paid a little less than $400,000 for a defensible three-bedroom house on five wooded acres.

 

Treller, a sommelier at a local resort, said Obama was a key factor in his decision. He said the president has inflamed racial tensions in America, presided over a dangerous expansion of the national debt, been “hostile” to Second Amendment rights and failed to curtail the nuclear ambitions of North Korea and Iran.

 

Treller said any one of those factors could lead to crippling chaos, so he and his wife have laid in food, weapons and ammunition and are installing an iron gate across their long gravel driveway.Of course it isn’t just ordinary Americans such as Treller that are deeply concerned about what is coming.

Less than a week ago, CNN ran an article entitled “Billionaire bunkers: How the 1% are preparing for the apocalypse“…

Many of the world’s elite, including hedge fund managers, sports stars and tech executives (Bill Gates is rumored to have bunkers at all his properties) have chosen to design their own secret shelters to house their families and staff.

 

Gary Lynch, general manager of Texas-based Rising S Company, says 2016 sales for their custom high-end underground bunkers grew 700% compared to 2015, while overall sales have grown 300% since the November US presidential election alone.

So why are Bill Gates and his billionaire friends so interested in buying luxury survival bunkers if everything is going to be just fine?

Can someone explain that one to me?

Everywhere you look, retail stores are closing and economic warning signs are flashing red, but those that sell survival bunkers to the elite are making tremendous amounts of money.

And I certainly wish that I could afford one of these survival bunkers, because they sound quite appealing…

One of those shelters, Vivos xPoint, is near the Black Hills of South Dakota, and consists of 575 military bunkers that served as an Army Munitions Depot until 1967.

 

Presently being converted into a facility that will accommodate about 5,000 people, the interiors of each bunker are outfitted by the owners at a cost of between $25,000 to $200,000 each. The price depends on whether they want a minimalist space or a home with high-end finishes.

 

The compound itself will be equipped with all the comforts of a small town, including a community theater, classrooms, hydroponic gardens, a medical clinic, a spa and a gym.

These elitists plan to ride out the coming American apocalypse in style while the world above them is literally going insane.

Meanwhile, most of the general population continues to be completely oblivious to what is about to happen to them, and so the events that are coming will close upon them suddenly like a trap and there will be no escape.

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When it comes to the price of oil, both the sellside and oil producers have been adamant that the only variable that matters is supply, i.e., how much oil is produced at any given moment which was also the justification behind the Vienna production cut deal: reduce supply enough, and the record global inventory glut will decline by bringing markets into equilibrium, boosting prices in the process. Alternatively, another explanation has been the recent liquidation of oil positions by speculators (read hedge funds), who tend to amplify moves in the world’s most financialized commodity. Indeed, the sharp move lower over the past three weeks was largely attributed to selling be levered entities who unable to push the price of oil higher, had no choice but to take the other side of the trade.

Throughout this, one aspect of price formation that is rarely mentioned is demand, which is generally assumed to be unwavering and trending higher with barely a hiccup. The reason for this somewhat myopic take is that while OPEC has control over supply, demand is a function of global economic growth and trade (or lack thereof) over which oil producers have little, if any control.

And yet, according to the latest oil price dynamics report issued by the Fed, it was declining global demand that pushed prices lower in the most recent, volatile period.

As the New York Fed report in its March 27 report, “Oil prices fell owing to weakening demand” and explains as follows: “A decline in demand expectations together with a decreasing residual drove oil prices down over the past week.”

While there was some good news, namely that “in 2016:Q4, oil prices increased on net as a consequence of steadily contracting supply and strengthening, albeit volatile, global demand” offsetting the “modest decline in oil prices during 2016:Q3 caused by weakening global demand expectations and loosening supply conditions,” the Fed’s troubling finding is that the big move lower since 2014 has been a function of rising supply as well as declining demand:

Overall, since the end of 2014:Q2, both lower global demand expectations and looser supply have held oil prices down.

And while this trend appeared to have reversed in 2016:Q2 and 2016:Q4, recent indications suggest that demand may once again be slowing, which in turn has pressured oil prices back to levels last seen shortly after OPEC’s Vienna deal.

The Fed shares the following decomposition table on imputed supply/demand recent data:

It is curious that according to the NY Fed, at a time when OPEC vows it is cutting production, the Fed has instead found “loose” supply to be among the biggest contributors to the latest decline in oil prices.

But what may be concering to oil bulls is that as the decomposition chart below shows, while oil demand was solidly in the green ever since Trump’s election victory, in recent weeks it appears to have also tapered off along with the supply contribution to declining oil prices.

This seems to suggest that along with most other “animal spirits” that were ignited following the Trump victory, only to gradually fade, oil demand, and thus price, may be the next to take another leg lower unless of course Trump manages to reignite the Trumpflation trade which, however, over the past month appears to have completely faded. Finally, in an environment of rising interest rates, and with Obamacare repeal delayed indefinitely – which as a reminder will soak up potential discretionary spending on other goods and services – one can argue that the decline in demand observed going into last year, coupled with a potential disappointment from the failure of Trump to implement his full fiscal policy, the decline in demand will only accelerate in the coming weeks.

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Following similar calls by his ideological peers, the top Democrat on the House Intelligence Committee demanded on Monday evening that Committee Chair, Devin Nunes, should recuse himself from “any further involvement” into President Trump’s campaign ties with Russia.

“After much consideration I believe Chairman should recuse himself from involvement in investigation/oversight of Trump campaign & transition,” Schiff tweeted on Monday evening, as Nunes was giving an interview to CNN about his visit to the White House grounds to view classified material last week.

“This is not a recommendation I make lightly, as the chairman and I have worked together well for several years,” Schiff said in a statement and added that “I take this step with he knowledge of the solemn responsibility we have not he Intelligence committee to provide oversight on all intelligence matters, not just to conduct the investigation…. There was no legitimate justification for bringing that information to the White House instead of the committee. That it was also obtained at the White House makes this departure all the more concerning. In the interests of a fair and impartial investigation whose results will be respected by the public, the Chairman’s recusal is more than warranted.”

After much consideration I believe Chairman should recuse himself from involvement in investigation/oversight of Trump campaign & transition http://pic.twitter.com/jpfA1x80Si

— Adam Schiff (@RepAdamSchiff) March 27, 2017

Schiff’s call for Nunes to recuse himself follows that of Senate Minority Leader Chuck Schumer, who on Monday said Speaker Paul Ryan should replace Nunes in order for the Russia probe to be “credible.”

“Chairman Nunes is falling down on the job and seems to be more interested in protecting the president than in seeking the truth,” Schumer said on the Senate floor Monday. “If Speaker Ryan wants the House to have a credible investigation, he needs to replace Chairman Nunes.”

Rep. Jackie Speier (D-Calif.), who also sits on the House Intelligence Committee, reiterated the call for Nunes to recuse himself, along side fellow California Democrat Eric Swalwell. Swalwell, the ranking member of an intelligence subcommittee, said, “Chairman Nunes should no longer be anywhere near this investigation, let alone leading it. 

“For the sake of our duty to independently find the truth, and for the sake of his ability to chair the committee in its other important duties, he should recuse himself from our committee’s Russia investigation.”

At the same time as Schiff made his statement, Nunes spoke to CNN on Monday evening after the previously discussed revelation that the republican had visited White House grounds the day prior last week’s stunning announcement that members of Trump’s campaign had been “accidentally” surveiled, to view confidential documents that allegedly prove potential surveillance of Trump team members. Nunes said that he was sure the West Wing was unaware of his visit to White House grounds to view said documents.. 

Some have speculated that the White House was the source of the intelligence viewed by Nunes. He would not give details to CNN Monday evening, but maintained that he had to view the documents on White House grounds, as they could not be brought to the Capitol complex.

Nunes on Monday denied that there was anything untoward in his Tuesday visit to the White House, pushing back on reports that the venture took place at night and calling the visit “pretty common.”

“At least once a week, if not more than that, we have to go to the executive branch in order to read classified intelligence,” he told CNN’s Wolf Blitzer.  “The sun was out,” he said. “If I really wanted to I could have snuck onto the grounds late at night, but I wasn’t trying to hide.”

Nunes said he was “quite certain that no one in the West Wing knew I was there.”

But Democrats have accused Nunes of acting as an agent of the White House and say he can no longer lead a credible investigation.

Perhaps the only silver lining to come out of this is that Nunes has become the Democrats top persona non grata, diverting attention from Trump, if only for the time being.

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Authored by Jonathan Newman via The Mises Institute,

 

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Now that repealing Obamacare is out of the picture indefinitely, here is what the timeline looks like for the balance of Trump’s policy agenda, which includes reform of Trade, Budget and Tax policy, courtesy of Barclays, which takes a pessimistic outlook for what is in store and writes “Trump’s short-term agenda (reforms of healthcare, taxes, and trade policy) seems overly optimistic and has met resistance; healthcare’s lack of progress begs the question – is this GOP Congress an opposition party or a governing party?” We should know the answer once Trump/Ryan try to pass the next key item on the Trump agenda: the much anticipated tax reform.

Some additional thoughts from Barclays:

Healthcare may negatively affect tax reform negotiation, as the GOP needs to transition from a party of opposition to a party that governs.

• Healthcare: House delays American Health Care Act (AHCA) – The GOP’s goal is to minimize intra-party struggles, re-focus on comprehensive tax reform, and leave the option to revisit healthcare
  • GOP calls to repeal and replace ACA over the past seven years were more political rhetoric than an actual plan. GOP has not resolved an internal dispute with healthcare’s three-legged stool – the individual mandate, providing subsidies, and enforcing the guarantee for pre-existing conditions – as removing any one of them requires trade-offs between cost and coverage
  • We expect an intense intra-GOP fight, especially between the president and Speaker Ryan. There are concerns that the GOP domestic policy agenda could dissolve, but we think this delay will increase efforts to pass tax reform (or targeted tax cuts) before the Nov 2018 mid-term elections
• Tax Reform or Tax Cuts: GOP to re-focus immediately on taxes and pursue comprehensive reform, with a goal of passing legislation by August, well before the 2018 mid-terms
  • Outlook: Comprehensive tax reform will very likely meet significant obstacles, as there are limited revenue raisers to offset the proposed substantial tax cuts. We think tax reform could evolve to tax cuts (corporate rates possibly from 35% to 20-30%) and a repatriation of foreign earnings (potentially taxed at 8-15%). The House-proposed border adjustment tax (BAT) faces hurdles, given concerns of price increases, WTO compliance, and possible domestic job losses. Current costs of individual tax cuts will likely alarm fiscal hawks; we expect a more muted plan than the current one
• Trade: Administration aims to implement protectionist measures (eg, tariffs), as they view this form of economic nationalism as spurring long-term growth
  • NAFTA process has started; expect formal notice to trading partners shortly

And as an added bonus chart, here is Barclays on its take of Trump’s proposed Tax reform, which the GOP Aims for August, but expect late 2017 or early 2018: “While GOP-led Congress aims to use budget reconciliation (FY2018) to pass tax reform, politics of ACA reform will complicate tax negotiations”

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Elon Musk, Silicon Valley’s automotive visionary, loves to wow the world with grandiose visions that serve primarily to reinforce his position at the top of the list of tech titans.  That said, at some point we suspect his shareholders will actually expect him to perform against his ‘visions’ rather than simply talk about them.

And while one can never be sure just how many chances investors in this frothy market will allow Musk before turning on him and his aggressively priced stock, it appears as though he isn’t doing himself any favors with his recent Model 3 production guidance.  As Bloomberg points out this morning, Musk is guiding the market to production volumes of 10,000 Model 3’s per week by 2018, or roughly 5x his current volumes for the Model S and Model X, combined.

First, Musk said the company is placing orders with suppliers for “1,000 cars a week in July, 2,000 a week in August, and 4,000 a week in September.” 1 Tesla then plans to increase production to 5,000 cars a week by the end of the year, and 10,000 a week by the end of 2018. For context, the company is currently able to make about 2,000 Model S and Model X cars a week.

 

And while it’s certainly reasonable to assume that a lower-priced Tesla will have more of a mass market appeal than previous, more expensive models, it just might be a stretch to assume the new car will out sale the BMW 3 Series and Mercedes C Class, combined, in it’s first year of production.

For Musk to hit all of his targets, Tesla would need to build about 430,000 Model 3s by the end of next year. That’s more than all of the all-electric cars sold planet-wide last year. The rollout will begin in California and move east, focusing on U.S. reservation holders. Even if half of the Model 3 inventory shipped to other countries, U.S. sales under Musk’s targets would outpace the BMW 3 Series and the Mercedes C class—combined.

 

Another forecast Musk reiterated is that Tesla thinks it can build 500,000 total cars next year. 3  Model S and Model X growth would continue, but at a slowing rate. The chart below, as far as we can figure, is the ramp that Tesla is forecasting.

 

To sell that many $35,000 sedans in the U.S. “would be absolutely unprecedented based on what we know about car markets today and how people spend their dollars,” said Salim Morsy, electric car analyst at Bloomberg New Energy Finance. “It could happen. I’m pretty sure it won’t.”

Virtually every Wall Street analyst agrees. Even the most bullish among them don’t think Tesla can sell half a million electric cars next year, and Musk has a long history of never setting a deadline that he’s likely to keep.

Meanwhile, as we pointed out earlier this month (see “Tesla Admits It Still Hasn’t Completed A Model 3 Beta Prototype“), Car and Driver found an interesting “risk factor” in Tesla’s 10-K which basically cautioned that, despite aggressive production guidance slated to begin just 6 months from now, the company hasn’t even developed a Model 3 “beta prototype”….

And Car and Driver’s Anton Wahlman – who appears to be one of the few who actually read Tesla’s 10-K filing – may have found the reason for the doubts…

From the filing:

 

“We expect that the next performance milestone to be achieved will be the successful completion of the Model 3 Beta Prototype, which would be achieved upon the determination by our Board of Directors that an eligible prototype has been completed. Candidates for such prototype are among the vehicles that we are currently building as part of our ongoing testing of our Model 3 vehicle design and manufacturing processes.”

In other words, Wahlman points out, Tesla has not “completed” a Model 3 “beta prototype” as of, well, either of these two dates: December 31, 2016 (the period that the SEC filing covers), or March 1, 2017 (the date on which the document was filed). Pick your poison.

…but it’s totally fine because, as Bloomberg notes, Musk has plans to simply ‘revolutionize’ the automotive production process by simply skipping the beta testing phase.

Tesla is redefining how cars are developed, built, sold, and updated. Some of the tricks Musk plans to speed up the launch can only be done once. Others may transform the automotive industry much like Telsa’s over-the-air software updates. Here’s what we know:

 

Tesla is skipping “beta”—sort of. On Friday, Musk fired off a barrage of 50 messages on Twitter while on a flight to Cape Canaveral, Florida. Among them was a six second 4 , the first glimpse of what he calls a “release candidate” Model 3. The term is more typically used in the software industry, referring to a final version that’s almost ready for public release.

 

Musk is condensing the typical timeline for a car release. A traditional auto manufacturer spends about six months testing a beta cars prior to a rollout. Musk seems to have skipped a step, and is building test vehicles using the same equipment line that will feed mass production. If that’s the case—and this truly is a “release candidate”—then it implies that production is on track. The car looks very much like the vehicles Musk showed a year ago, and that fidelity to the original prototype will have helped keep engineers on schedule.

Of course, if beta testing phases are so irrelevant one has to wonder why the major OEMs spend 1-2 years, and millions of dollars, testing their vehicles before mass release…we’re sure it’s all just bureaucratic waste…

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Authored by Jeff Thomas via InternationalMan.com,

“They couldn’t hit an elephant at this distance.”

Those are purported to be the last words of General John Sedgwick, spoken as he observed distant Confederate troops during the 1864 Battle of Spotsylvania in Virginia. (Historians debate as to whether these were his very final words or amongst his final words, but there is no debate as to whether he then received a mortal bullet wound to his face.)

Going back a bit further, British Prime Minister Lord North commented in 1774, with regard to the rebellious American colonies, “Four or five frigates will do the business without any military force.”

Later, in August of 1914, Kaiser Wilhelm II (the last German emperor and king of Prussia) stated to German troops, “You will be home before the leaves fall from the trees.” He wasn’t alone. The phrase “The war will be over by Christmas” was a common one in Britain in 1914, often repeated by journalists and politicians.

Recently, US Lieutenant General Ben Hodges ordered over 60 US tanks to fire their guns in Poland. He later announced,

We're serious – this is not just a training exercise. It’s to demonstrate a strategic message that you cannot violate the sovereignty of members of NATO… Moscow will get the message – I'm confident of it.

The general has reason to be confident. It can be said with relative certainty that, if the US sends scores of tanks halfway around the world to a country that borders Russia, then begins firing the guns, the Russians will indeed interpret that as a warning that their sovereignty is no longer respected by the US.

Of course, they already have ample reason for concern, as, in recent years, the US tradition of détente has been dropped in favour of continual blackguarding of both Russia in general and its leader in particular. Every prominent television news programme in the US has kept up a steady stream of invective against Russia, often reporting stories that oppose what most of the world recognises as the truth.

As to the generals, history is full of stories of military leaders who have demonstrated overconfidence and even eagerness to attack other sovereign nations. Do they seek to fight a great war in order to leave behind a legacy of their own personal greatness, or are they simply delusional—imagining their opponents to be imminently defeatable and their own army to be undefeatable?

It matters little either way. The attitude has existed for thousands of years and countless military and political leaders have made the exact same mistake in every era.

Interestingly, one consistent trait that we can observe is the blind confidence that accompanies the bluster and bravado. Leaders have a tendency to picture the glory of the destruction that they desire and rarely, if ever, anticipate a devastating pushback from their opposite number.

This of course results in a very dangerous course of events – charging ahead without taking proper measure of what the opponent might do.

Virtually every war in recent history has taken far longer to undertake than was originally expected. With few exceptions, wars that were intended to take a few months at best have dragged on for years. In many, there was no truly positive outcome—a cessation of aggression rather than a clear “victory” for one side or the other.

But, in the bargain, countries (even empires) have had their populations decimated and their economies destroyed as a result of the dramatic drain in wealth that’s a by-product of warfare.

All the more vexing then, that grown-up schoolyard bullies that make careless threats against other countries often succeed in setting off the spark that leads to war.

At one time, these self-possessed blusterers often needed to carry the public willingness to fight under their own steam. Today, however, they have the extensive support of the media. Every major television news programme can be counted on to offer supportive commentary by retired generals, who often are employed by the military-industrial complex. Further, the news anchors themselves add to the rhetoric like trained chimpanzees, hooting in support.

It all makes for exciting theatre, but, ultimately, it’s always the people of the nation that pay the price.

The next time a general effectively claims that Iran or Russia couldn’t hit an elephant, his bluster may, as has occurred so many times in history, prove to be the flash point for the next major war.

*  *  *

There’s a good chance the US could back its way into a major war soon. But war or no war, New York Times best-selling author Doug Casey and his team think the US is on the brink of a major crisis. That’s why they are sharing this time-sensitive video. It’s packed with critical information on the looming economic meltdown. Click here to start watching now.

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Very much like the self-imposed output cut by OPEC and non-OPEC members which successfully boosted the price of crude over $50 even if global crude inventories “inexplicably” continue to hit new all time highs, one of the main reasons why commodity metal prices have seen a dramatic increase in prices over the past year has been China’s solemn vow to cut back on overcapacity and excess production. In 2016, China’s state council set out plans to eliminate 100 -150 million tonnes of steel capacity in a bid to restructure the economy from one driven by government-led infrastructure investment and exports to a more consumption and services-oriented model. Last January, the hub of China’s steel production –  the northern province of Hebei – announced it would cut output to ease pollution and help curb oversupply. Hebei said it planned to reduce steel output by 8 million metric tons in 2016, its Governor Zhang told local lawmakers, while Iron ore production would be cut by 10 million tons.

More than one year later, it appears that Governor Zhang lied about Hebei’s intentions, and according to a provincial notice by the Chinese province, it has emerged that China’s compliance with its own mandatory production cuts has been “problematic.”

A steel factory in Wu’an, Hebei province

According to Reuters, the same Hebei province, China’s biggest steel-producing area, launched a probe into steel overproduction in the city of Tangshan “amid concerns that firms have continued to raise output despite mandatory capacity cuts.“

Tangshan is the heartland of Chinese steel production. The city is home to the headquarters of the state-owned Tangsteel Group, which in 2006 merged with other companies to form Hebei Steel Group, the second-largest steel producer in the world. Located around 100 miles east of the capital Beijing, Tangshan is on the frontline of the country’s “war on pollution”, and was seventh on the list of China’s ten smoggiest cities in the first two months of this year.

Hebei was ordered by China’s central government to investigate firms in Tangshan that have “restricted but not cut production, restricted production but not actually cut emissions, and cut capacity but actually increased output,” the provincial dated March 25 said, and circulated by traders on Monday.

Cited by Reuters, an industry source based in Tangshan confirmed the veracity of the document, but said it was unclear whether the new round of inspections would have any immediate impact on production or prices. The document was issued by a special provincial policy team responsible for restructuring the steel industry. It said Hebei has already established an inspection team and Tangshan must begin its own investigations immediately.

The FT adds, that the notice, sent on Saturday, cites orders from President Xi Jinping and Zhang Gaoli, the vice-premier, for Tangshan to investigate the problem of falsely reported plant closures and rising steel output.

Tangshan produces around 90 million tonnes of steel a year, more than the whole of the United States. While China has pledged to slash steel capacity by between 100 million and 150 million tonnes over the 2016-2020 period to shore up prices and ease sector debts, there have been lingering suspicions that this may have been a ruse to push commodity prices higher, boosting cash flows of overindebted domestic producers, who employs millions of low-skilled workers and whose mass defaults could result in widespread social unrest.

The FT confirms as much:

local authorities have dragged their feet on implementing orders to shut down steel mills because doing so would potentially eliminate hundreds of thousands of jobs.

 

“The local government will always want to protect its own industries because company officials get promotions based on growth,” says Scott Laprise, the founder of steel research firm LTH Consulting. “No one gets a promotion because they lost jobs and their local economy did poorly.”

In addition to the cuts noted above, at the start of the year, Tangshan promised to shut a further 8.6 million tonnes of annual crude steel capacity in 2017. It pledged to make cuts of 40 million tonnes over the 2013-2017 period and had already shut 31.9 million tonnes by the end of last year. Hebei promised to cut crude steel capacity to less than 200 million tonnes a year in the province by the end of 2020, down from 286 million tonnes in 2013. It aims to shut 15.6 million tonnes in 2017.

However, in light of the recent revelation, it appears that local producers did not take the directives too seriously, and may have simply been stockpiling the excess production.

As Reuters adds, the Ministry of Environmental Protection has routinely named and shamed municipal governments in Hebei for failing to implement pollution rules; so far it has failed to achieve the desired result.

Of course, if one province is reneging on its production cut agreement, why not more?

That may indeed be the case: one month ago, Greenpeace said that China’s active steel capacity actually rose by 35 million tonnes in 2016 after the high-profile closure program focused mainly on shutting plants that had already been idled. Additionally, production of crude steel in 2016 actually rose about 1% from the year before, to 808m tonnes, according to preliminary data from the National Bureau of Statistics.

“The steel industry’s capacity reduction targets need to be upgraded to reductions in actual production – only then will we see real improvements in air quality,” said Lauri Myllyvirta, senior global campaigner at Greenpeace East Asia.

The problem is that just like with OPEC, there is no credible way of enforcing capacity cuts.

“Local governments will report back and simply say certain companies eliminated capacity or were closed or went bankrupt,” said LTH Consulting’s Laprise. “No one is checking what is supposedly already closed and what is actually closed.”

Excess production notwithstanding, China’s jawboning alone, and stated commitment to removing overcapacity, has managed to send prices of core commodities such as iron ore soaring as shown in the chart below.

Should it be confirmed that China was merely jawboning about removing excess supply then the appreciating commodity complex, a core driver of the global reflation trade which in recent months appears to have plateaued may soon see prices tumbling, in the process launching the latest deflationary wave to emerge out of China, and putting an end to the “global coordinated recovery” as so many analysts have called it in recent months.

It may already be happening: prices of iron ore, the key material used in steel production, tumbled fell 6.7% on Monday as inventories of the commodity at China’s ports rose. The fall brings the price to its lowest since January 10, down nearly 18% from its peak in March.

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Over the past several months President Trump has called out pretty much every major auto OEM for their efforts to move low-skilled assembly jobs to Mexico.  But absent new tariffs, it’s not terribly surprising to most people that American companies would seek to move low-skilled, labor-intensive jobs to lower cost labor markets…the math is pretty simple.

But what is somewhat surprising is how poorly the U.S. is performing versus international competition in the development of advanced manufacturing robotics.  As the Wall Street Journal points out this morning, when it comes to automating a manufacturing floor, buying robotics ‘Made in America’ isn’t even an option.

Vickers Engineering Inc. embodies the potential of American manufacturing. The New Troy, Mich., machining company supplies precision parts to clients including Toyota Motor Corp. and Volkswagen AG , and exports to Mexico and Canada. Its staff has risen fivefold and average pay has doubled over the past decade, says Chief Executive Matt Tyler.

 

What’s helping to power Vickers’s made-in-America success? Advanced Japanese and German factory equipment. When Vickers first bought industrial robots in 2006, it chose between only European and Japanese models, says Mr. Tyler, and has been adding Japanese robots ever since. “We were not aware of any American-made option.”

 

America is losing the battle to supply the kind of cutting-edge production machinery that is powering the new automated factory floor, from digital machine tools to complex packaging systems and robotic arms.

Commerce Department data show the U.S. last year ran a trade deficit of $4.1 billion in advanced “flexible manufacturing” goods with Japan, the European Union and Switzerland, which lead the industry. That is double the 2003 deficit. It was down from $7 billion in 2001, but much of the decline came from foreign equipment suppliers expanding in the U.S., not from an American comeback.

 

Meanwhile, U.S. firms are also losing market share at home, according to Germany’s VDMA industrial-machinery trade group. In 1995, they satisfied 81% of domestic demand for factory equipment. In 2015, the most-recent data, that had slipped to 63%.

 

And while the U.S. lags, China is looking to make aggressive moves in advanced manufacturing robotics and is seeking to move beyond its reliance on cheap labor to compete globally. Its ‘Made in China 2025’ strategy aims to dominate advanced manufacturing, in part through aggressive foreign acquisitions such as appliance-maker Midea Group’s purchase last year of Germany’s Kuka AG, a world leader in industrial robotics.

 

Of course, the U.S. wasn’t always the laggard in advanced manufacturing and actually dominated the space through the 1970’s when the domestic auto manufacturers were at their strongest.  But that all ended in the early 80’s as domestic auto production got cut in half and the USD strengthened.

The U.S. dominated advanced manufacturing through the 1970s, when the cutting edge was largely machine tools. Detroit was at the forefront. The world’s first industrial robot, the two-ton Unimate built in Connecticut, was installed in 1961 at a General Motors Co. plant in Trenton, N.J., according to the International Federation of Robotics, a trade group. GM and Ford Motor Co. tested robots through the 1970s. GM and Fanuc in 1982 created a joint venture.

 

In the 1980s, as U.S. manufacturing slumped, almost seven of 10 American machine-tool companies closed due to falling demand, the strong dollar and strategic miscues, according to a 1993 Rand Corp. study.

 

The decline continued this century as U.S. manufacturers outsourced more and baby boomers retired. Shrunken manufacturers demanded fewer production experts, accelerating the factory-technology decline. “In the U.S. there’s been a brain-drain in manufacturing technology,” says Alex West, manufacturing-technology analyst at London consultants IHS Markit.

Over the long-term, of course, the loss of low-skilled labor positions in the U.S. is inevitable.  Moreover, further regulations like minimum wage hikes and border tariffs will only help to ensure their long-term demise by making capital investment projects even more attractive.  But, without a presence in manufacturing robotics, all that capital is sure to flow overseas rather than into American households.

via http://ift.tt/2nazlA7 Tyler Durden

Get ready for the future organic humans – Elon Musk is about to take transhumanism to a whole new level…

What’s Neuralink and do we still get to have sex in the future?

SpaceX and Tesla CEO Elon Musk is backing a brain-computer interface venture called Neuralink, according to The Wall Street Journal. The company, which is still in the earliest stages of existence and has no public presence whatsoever, is centered on creating devices that can be implanted in the human brain, with the eventual purpose of helping human beings merge with software and keep pace with advancements in artificial intelligence. These enhancements could improve memory or allow for more direct interfacing with computing devices. –The Verge

It’s pretty obvious what’s going on… Musk knows that the Earth is doomed – not from global warming, but because the sun’s output is decreasing and we’re going to enter into another ice age. Expect 7 Billion humans to try and cram together around the Equator, competing for increasingly limited resources – leading to civil war, death, and a huge setback in technological progress as humanity struggles to simply survive. We gotta get the fuck out of dodge.

So – Musk is taking us to Mars! He’s already mentioned nuking the atmosphere to unlock the Martian polar ice, which means all that’s left is to pool all of Earth’s resources and execute on his well thought out plans before it’s too late. Not so fast! Our feeble human bodies which are designed to live on earth, not Mars… In addition to massive cancer caused by unshielded exposure to solar wind – which the earth’s unique magnetosphere protects us from, human bodies will shrivel up in the low-gravity Martian environment, which is just 38% of earth’s.

So clearly we need radiation resistant cyborg bodies controlled by our organic brains for now, and eventually Musk will figure out how to create a positronic brain into which we will eventually upload our consciousness and live extremely long lives. Fully functional, hopefully. Plus, as Musk says, we’re going to need to be able to compete with AI – which will be able to think orders of magnitude faster than our clunky biological grey matter.

Also, consider this… If the human race becomes robotic – brains and all, we could conceivably build spaceships that would allow us to travel through vast distances of space over long periods of time. All we’d have to do is power down our brains, stow our robot bodies, then head towards the nearest habitable planet for a few hundred years at a fraction of the speed of light to see what’s there. If we find another utopian Earth-like planet, maybe we can genetically engineer biological bodies again to repopulate humanity the good ol’ fashioned way.

Then again, maybe Musk is just trying to test the limits of the simulation…

Elon Musk discusses the future of humanity, space travel, and living in a simulation… https://t.co/EHUQsOkBzP http://pic.twitter.com/ApN7CfLZTL

— ZeroPointNow (@ZeroPointNow) March 27, 2017

 

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