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And Now Trucking Is Suddenly Slowing Down
And Now Trucking Is Suddenly Slowing Down
This comes at the totally wrong time. Trucking had been booming. 2014 had been a banner year. Capacity was squeezed, and rates were rising, so trucking companies went on a buying binge, ordering everything in the book in preparation for red-hot demand in 2015 and more banner years down the road. But then came 2015.
Among businesses, over-ordering and tepid sales caused inventories to rise and the inventory-to-sales ratio to spike to Financial Crisis proportions. And now businesses are trying to bring them down by trimming orders because they’re having trouble selling more to the middle class, the over-indebted modern proletariat whose stagnant incomes are being eaten up by skyrocketing costs of housing, healthcare, college, and the like – and they simply can’t spend that much on shippable items.
And now this is ricocheting through the industry.
Monday after hours, the largest US truckload carrier, Swift, announced earnings. And on Tuesday, it clarified the debacle. It’s suffering from indigestion. The high costs from its red-hot capacity increase – average truck count jumped by 831 trucks in the third quarter from a year earlier – are now slamming into swooning freight demand.
Operating revenue declined 1%, which Swift blamed on the disappearing fuel surcharge, though it didn’t explain why it is getting away with still charging $109 million in fuel surcharges when diesel prices have plunged to rock-bottom.
So it’s cutting back. In its pervious disclosure, it announced that its average truck count for 2015 would grow by 700-1,100 trucks. Now it cut the growth down to 500-600 trucks, “given that the freight environment is softer than we originally expected, and peak volumes have not yet materialized as in years past,” it said.
September is the beginning of the holiday shipping season. Volume should be sharply higher. But it’s not happening [read… US Freight Shipments Have Worst September since 2010].
…click on the above link to read the rest of the article…
The Downsides of Cheap Abundance
Having “a lot” is not necessarily a good thing. (Photo: Public domain)
In college, Economics 101 is often described as the social science discipline that deals with the production, distribution and consumption of goods and services. MIT Economist Paul Samuelson liked to focus on scarcity, or more specifically, the allocation of scarce resources. “Abundance” was always a pretty word with an idyllic connotation for Professor Samuelson. I often wonder why there weren’t a few classes about the real-life consequences of abundance, along with scarcity and people’s material welfare.
The present generation of internet technology is a proper subject of study within an economic framework. It might help us understand what is happening to our society.
Let’s start with today’s highly-touted information age. At our finger-tips is the greatest free trove of information in human history. We can get it quickly and efficiently. Are we more informed? Are we hungry for more information? Do we read more books in an era of record production of books? Do we know more about what our congressional and state legislators are about? Are we more knowledgeable about history and its lessons?
My sense is that the present generation of students knows about popular art and music, and has a nascent awareness of current events. But an unfortunate consequence of the abundance of information available to them is that too many students have left themselves less informed than their predecessors about serious information regarding our overall society and the world. This includes geography, politics, economics, literature, history, the side effects of technology, the interactions between consumers, workers, taxpayers and corporations, the doings of City Hall, or even how to cultivate gardens. Alas, the virtual reality of the culture of addictive distractions and stupefying daily routines still reign.
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Demographics and Major Financial and Economic Trends
Demographics and Major Financial and Economic Trends
Demographics Driving Declines in Oil Consumption, Mounting Debt, & Central Bank Mismanagement
Sometimes, the simplest answer really is best. I contend the primary and simplest factor that need be watched to gauge present and future economic activity are the changes in core populations (15-64 year old segment of the larger population) for any nation or grouping.
The core’s declining growth and outright shrinkage appear to be the trigger for declining oil consumption*. In turn, this slowing activity drives central bank reactionary interest rate cuts intended to incentivize credit creation and leverage…all to get more (raise consumption) from less (a declining population set).
*Oil is generally irreplaceable by other sources and offers a good barometer of a nation’s general economic activity.
Photo credit: fmh
The chart below highlights the Bank of Japan’s (BOJ) interest rate reactions to the changing demographic nature of the Japanese population. As Japan’s core population began declining, the BOJ pushed rates lower to incentivize more credit (consumption) from a declining number of consumers.
Japan’s core population vs. BoJ interest rates
And the Fed, faced with similar though less dire US demographic circumstances, emulated the BOJ’s actions despite the BOJ’s utter lack of success (below).
US interest rates, federal debt and core population trend – click to enlarge.
Central banks around the world, at best, are blinded by their formulas and hubris to the inevitable and certain demographic and population headwinds now very much upon us. These central banks are reacting to the least surprising, most reliable, and most important data in existence. Central banks, entrusted with economic stewardship of nations, have acted out of greed or the stupidity only academics can talk themselves into.
They have sailed downwind with all sheets available to make the good times fantastically better, but left nothing for the entirely predictable changing conditions we now face…negative demographics and population trends coupled with exhausted interest rate policy, over-indebtedness, and massive overcapacity for declining core populations.
…click on the above link to read the rest of the article…
The Boundaries and Future of Solution Space – Part 4
The Boundaries and Future of Solution Space – Part 4
Blind Alleys and Techno-Fantasies
The majority of proposals made by those who acknowledge limits fail on at least one of the previous criteria, and often several, if not all of them. Solution space is smaller than we typically think. The most common approach is to insist on government policies intended to implement meaningful change by fiat. Even in the best of times, government policy is a blunt instrument which all too often achieves the opposite of its stated intention, and in contractionary times the likelihood of this increases enormously.
Governments are reactive – and slowly – not proactive. Policies typically reflect the realities of the past, not the future, and are therefore particularly maladaptive at times of large scale trend change, particularly when that change unfolds rapidly. Those focusing on government policy are mostly not thinking in terms of crisis, however, but of seamless proactive adjustment – the kind of which humanity is congenitally incapable.
There is a common perception that government policy and its effect on society depends critically on who holds the seat of power and what policies they impose. The assumption is that elected leaders do, in fact, wield the power to determine and implement their chosen policies, but this has become less and less the case over time. Elected leaders are the public face of a system which they do not control, and increasingly act merely as salesmen for policies determined behind the scenes, mostly at the behest of special interest groups with privileged political access.
It actually matters little who is the figure-head at any given time, as their actions are constrained by the system in which they are embedded. Even if leaders fully understood the situation we face, which is highly unlikely given the nature of the leadership selection process, they would be unable to change the direction of a system so much larger than themselves.
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Why the Cash Economy in Greece May Be Ending
Why the Cash Economy in Greece May Be Ending
Many believe we have a teetering world economy, even without Greece as an indicator. Now Greece is looming ever larger as a critical if unknown actor. It is mostly considered a bad one, for the entire European, and even the worldwide, financial system and economy. The Greek economy is approaching an almost unprecedented standstill. For clear reasons it probably will never get back to a “normal” or desirable level of consumption. When stepping back from witnessing the daily crisis, it would appear timely to ask what are the real factors in the big picture? Was the crisis brought on just by second-rate policies combined with inefficiency, corruption, and oppression?
Or have longer-term characteristics of industrialism and Western Civilization’s relentless, aggressive growth caught up with us to undermine our future as a species? If so, the discussion about what’s wrong and how to deal with it has to change, and soon. In this discussion a different impression of Greece and its potential emerges. The conventional wisdom that the Greek economy is simply on its death bed is very rarely set aside.
As an observer of Greece who has spent long chunks of time enjoying the country and its people, I’ve still not had a clear grasp of the state of the nation’s precarious finances and interesting politics. But I am not shy about pointing out irritating facts such as that the consumer economy is clearly unsustainable, and that the eco connection in economy, ecology and ecosystem is perhaps the major fact of life — denied or ignored to everyone’s peril.
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U.S. Households Under Pressure: Stagnant Incomes, Rising Basic Expenses
U.S. Households Under Pressure: Stagnant Incomes, Rising Basic Expenses
How do you support a consumer economy with stagnant incomes for the bottom 90%, rising basic expenses and crashing employment for males ages 25-54? Answer: you don’t.
Frequent contributor B.C. passed along a sobering set of charts that provide context for How The Average U.S. Consumer Spends Their Paycheck. The basic story is well-known to the bottom 90%: most of the household income goes to taxes, housing, food and transportation, with healthcare and insurance, pensions and retirement contributions rounding out the big-ticket items. (Higher education is, as we all know, paid with student loans by all but the top-tier of families.)
Here’s the question this raises: is the sliver that’s left enough to support a $17 trillion consumer economy? The answer is obvious: no.
Stagnant household income has a number of systemic causes, including the generational decline of full-time employment (A Rising Share of Young Adults Live in Their Parents’ Home) and the concentration of wage gains in the top 10%. These dynamics are not easily addressed, for the simple yet profound reason that the amount of human labor that generates a meaningful profit in a stagnant, over-indebted, financialized economy is declining.
The only way most enterprises can sustainably earn a profit is to offload costly human labor (with its immense burdens of healthcare, pensions, workers compensation, disability insurance, etc., and the heavy regulatory burdens of workplace rules) and replace it with networked software and smart machines.
The types of human labor that generate hefty profits are increasingly scarce, and as a result entry-level pay and employment are both capped by the high costs of human labor (even at minimum wage) and the relatively meager profits generated by conventional labor.
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No Climate Protection without Climate Justice; No Climate Justice without Degrowth
No Climate Protection without Climate Justice; No Climate Justice without Degrowth
Shortly before the most crucial UN climate change conference after the failure of Copenhagen, it seems that the international climate-movement is finally getting its act together: resistance against fossil fuel extraction is gaining ground and a rising global movement is putting pressure on institutions to divest their money from fossil fuels to finance renewables instead. Green jobs in the renewable energy sector have been a success story and it is broadly accepted that we need to keep 80% of the known fossil fuel reserves in the ground if we want to prevent runaway climate change. Last year, more than 400 000 people flooded the streets of New York City in the largest climate march in history and, as the global development of renewable energy increases in scale and efficiency, people are starting to believe in a transition away from fossil fuel dependency.
This is of course good news, and nobody concerned about climate change would seriously doubt that the global transition towards renewable energy is an absolute necessity. However, much as right-wing conservatives, mostly in the US, deny anthropogenic climate change, the majority of the climate movement tends to deny an equally important issue: that renewables are unable to maintain our Western growth-based consumer lifestyles on a global level.
“Renewable” does not equal “unlimited”
The limitations and environmental impacts of renewables are being discussed in breadth and depth elsewhere; suffice to say here that e.g. wind mills and solar panels are very energy-intensive in production – and intensive in other natural resources too, such as metals, minerals and rare earths. Windmills for example require lots of concrete which is a highly CO2 intensive industry. Solar photovoltaic systems use on average 23-59 kg of aluminium per kW – the aluminium sector being another CO2 intensive industry.
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The First-World Fear That Makes Life Harder
The First-World Fear That Makes Life Harder
Here in the so-called First World, we give up a lot because of an exaggerated fear of a particular feeling.
It’s usually pretty subtle, but I see this fear made explicit whenever Mr Money Mustache or other early-retirement advocatesget national news coverage. The comment sections of these major publications are always vile, and I don’t recommend you read them, but if you do you will notice a trend. Even when Pete explains the shockingly simple math that proves early retirement is possible for people of average incomes, commenters insist they would prefer to leave their lifestyle costs unchanged than retire twenty years earlier but “live a life of deprivation”.
This unexamined fear of deprivation has a huge effect on our lives. Consumers go into debt because they’re afraid of going without something they’re used to. We eat too much because we’re afraid of being disappointed by small portions. We continue bad habits for years because the thought of disallowing ourselves to do something we enjoy feels oppressive. “We deserve it!” we tell ourselves. Or at least advertisers tell us to tell ourselves that.
The strange thing is that usually it’s not even real deprivation. These are all choices. The big purchase, the extra calories, and the indulgent habit are always available to you to take or leave.
…click on the above link to read the rest of the article…
Energy prices and consumer spending
Energy prices and consumer spending
Among the disappointments in the 2015:Q1 GDP figures was weak consumption growth, which was a little surprising given the extra cash most consumers have on hand as a result of lower energy prices. I wanted to take a look at how the recent consumer behavior compares with what we’ve seen historically.
The graph below plots the price of energy goods and services relative to the overall price consumers pay for other purchases. Real energy prices have fallen about 20% from where they had been last summer.
Many consumers buy the same number of gallons of gasoline each week regardless of whether the price goes up or down. Such behavior would mean that someone who used to spend 5% of their budget on energy would only need to spend about 4% if energy prices fell 20%. And indeed we see in the data that purchases of energy goods and services now account for only 4.4% of total consumer spending, down from 5.6% a year ago.
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The Financial Markets Now Control Everything
The Financial Markets Now Control Everything
The entire economic and political structure is now dependent in one way or another on the continued expansion of financial markets.
The financial markets don’t just dominate the economy–they now control everything. In 1999, the BBC broadcast a 4-part documentary by Adam Curtis, The Mayfair Set ( Episode 1: “Who Pays Wins” 58 minutes), that explored the way financial markets have come to dominate not just the economy but the political process and society.
In effect, politicians now look to the markets for policy guidance, and any market turbulence now causes governments to quickly amend their policies to “rescue” the all-important markets from instability.
This is a global trend that has gathered momentum since the program was broadcast in 1999, as The Global Financial Meltdown of 2008-09 greatly reinforced the dominance of markets.
It’s not just banks that have become too big to fail; the markets themselves are now too influential and big to fail.
Curtis focuses considerable attention on the way in which seemingly “good” financial entities such as pension funds actively enabled the “bad” corporate raiders of the 1980s by purchasing the high-yield junk bonds the raiders used to finance their asset-stripping ventures.
This increasing dependence of “good” entities on players making risky bets and manipulating markets has created perverse incentives to keep the financial bubble-blowing going with government backstops and changing the rules to mask systemic leverage and risk.
The government must prop up markets, not just to insure the cash keeps flowing into political campaign coffers, but to save pension funds and the “wealth effect” that is now the sole driver of “growth” (expanding consumption) other than debt.
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Today’s Money Regimes Are Doomed To Failure
Today’s Money Regimes Are Doomed To Failure
Centrally issued money centralizes wealth and generates systemic inequality.
A Thought Experiment on Money
Let’s imagine a small mountain kingdom with only ten very scarce and thus highly valued seashells in circulation. These few shells are certainly valuable in terms of scarcity, but there aren’t enough of them to act as a means of exchange.
One solution to this innate problem of scarcity—money has to be scarce enough to retain value but not so scarce that there isn’t enough of it in circulation to grease trade—is for the kingdom to issue 100 slips of paper for each shell, each slip of paper representing 1/100th of the shell’s value. Now there is enough money in circulation to facilitate trade and each slip retains a store of value equal to 1/100th of a shell. The slips are paper money, i.e. currency.
This system works well, but the rulers of the kingdom aspire to consume goods and services in excess of what their share of the shell-backed money can buy in the open market. The kingdom’s leaders print another 100 slips of paper without acquiring a shell to back the new slips with intrinsic value. Nobody seems to notice, and so the leaders print another 100 slips. Note that the kingdom didn’t produce more goods and services; its leaders simply produced more money.
Eventually this excess of paper slips reduces the value of each slip in circulation. What once cost 10 slips now costs 20 slips. This reduction in the purchasing power of money is called inflation, as the price of goods inflates as the money supply is increased while the production of goods and services remains unchanged.
Let’s assume the kingdom’s leaders avoid the temptation to expand their consumption by printing money rather than first increasing the production of goods and services.
…click on the above link to read the rest of the article…
10 SHADY ORIGINS OF CONSUMERISM IN THE US
10 SHADY ORIGINS OF CONSUMERISM IN THE US
Consumerism and the practice of flaunting one’s status through clothes, jewelry, and other things has existed since the dawn of civilization. Yet, the endless cycle of working to buy has never been more rampant than it is now. How did the United States, a nation founded on Puritan, non-materialistic tenants become filled with the biggest shoppers on the planet and end up occupying 29% of the World’s consumer market? As it turns out, Americans were carefully and systematically manipulated into becoming insatiable shoppers.
10. Freud’s Theories
The man who is largely responsible for introducing advertising as we know it was none other than Sigmund Freud’s nephew, Edward Bernays. Bernays’, nicknamed the “father of public relations,” studied his uncle’s writings on psychology and group mentality and learned humans react to feelings not facts. With this knowledge, he saw an opportunity to capitalize on people’s subconscious desires by selling goods with the promise of delivering power, status, sex appeal, glamour, health, and other things with emotional connections. His uncle also taught him that humans often act irrationally when emotions are involved and can be led to believe objects are a symbol of their character. Bernays used these theories to manipulate people into buying products they didn’t necessarily need or want.
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Only Less Will Do
Only Less Will Do
When I’m not writing books or essays on environmental issues, or sleeping or eating, you’re likely to find me playing the violin. This has been an obsessive activity for me since I was a boy, and seems to deliver ever more satisfaction as time passes. Making and operating the little wooden box that is a violin is essentially a pre-industrial activity: nearly all its parts are from renewable sources (wood, horsetail, sheepgut), and playing it requires no electricity or gasoline. Violin playing therefore constitutes an ecologically benign hobby, right?
It probably was, a couple of centuries ago; now, not so much. You see, most violin bows are made from pernambuco, a Brazilian hardwood that’s endangered because too many bows have already been made from it. Ebony, too, is over-harvested; it’s used for making fingerboards, tuning pegs, and bow parts. Some fancy older violin bows are even decorated with tortoiseshell, ivory, and whalebone. And while maple and spruce (the main woods from which violins are constructed) are not endangered, whole forests are being cut in China to meet the burgeoning global demand for student instruments. Modern strings (most of which are made using petroleum derivatives) are often wound with nonrenewable silver or aluminum, and almost nobody tries to recycle them.
You see, the real problem with violins is one of scale. If there were only a few thousand violinists in the world, making and playing fiddles would have negligible environmental impact. But multiply these activities by tens of millions and the results are deforestation and species extinctions.
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Sustainability for Whom?
Sustainability for Whom?
The mission of UPSTREAM (formerly Product Policy Institute) is “sustainable production and consumption and good governance.” Sometimes I feel like we’re swimming against the tide in advocating a role for government action in ensuring sustainable production and consumption.
Big brands like Wal-Mart, Nestle, Procter and Gamble can effect rapid, systemic change in their global supply chains when it suits them. The Cradle to Cradle Products Innovation Institute and Ellen MacArthur Foundation’s Circular Economy Initiative are doing great work by partnering with industry to redesign products.
Governments, on the other hand, are mired in political stalemate and often produce weak regulations when they act at all, especially in the international arena inhabited by the multinational corporations that produce the products we buy. Why even bother with public policy? Some government actors settle for “co-regulation” with corporate actors, or defer to voluntary corporate initiatives. For their part, foundations often support NGOs to conduct “market” campaigns targeting companies, or to partner with companies; in both cases the strategy is to access the power of corporations to effect swift, large-scale change.
What is the appropriate role for organizations that look out for the public interest – governments and nonprofits – in advancing sustainability in an environment in which the power balance has shifted dramatically to the private sector?
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The Journey of Setting up a Reuse and Repair Centre – a solution for a circular economy
The Journey of Setting up a Reuse and Repair Centre – a solution for a circular economy
The 1951 film, ‘The Man in the White Suit’, is a classic comedy from Ealing Studios with a sinister edge. It tells the story of an inventor of a thread that never wears off. When his bosses at the factory discover what he’s doing, they hunt him down. A fabric that never runs out is the antithesis of capitalism and their business model.
65 years later, you could ask what has changed. Modern capitalism is still framed around a disposable culture where things are made not to last in order to sell more – the concept of ‘built-in obsolescence’. As consumers, we are taught to be dissatisfied with what we have. A recent documentary ‘The Lightbulb Conspiracy’ charts the way product design (of lightbulbs, and many other household objects) has increasingly been for shorter life-spans as a way of fuelling growth for growth’s sake.
For me, 20 years ago, it took the experience of a year living in a village in rural eastern Nepal to see how our culture of consumption in the developed world is not just manufactured, it is only one reality and possibility amongst many others. There, living in a household of 8 people for a year, we created less than a dustbin of waste. We got milk straight from the cow, vegetables unpackaged from the market and hoarded and refilled containers full of rice, kerosene and other staples. And when our precious stove broke down, we would get it fixed.
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