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If this is what passes for competence while we cheerlead “the Roaring 20s”, then our delusion has reached “what looks like a permanently high plateau.”

That America is mired in a crisis of competence appears to be yet another issue that can’t be addressed directly as it might upset the narrative control that all is well and everything is getting better in every way, every day.

And so we sugarcoat the incompetence, the endless delays, the sclerosis and the decline in quality and functionality as if these are all signs of rude, vibrant health rather than signs of systemic decline and decay.

Relatively straightforward infrastructure projects now face years or even a decade of delays / zero real-world progress. I can name several projects in my county where the environmental impact studies and various governmental reports have consumed six years, during which the harbor remains closed, the roads are unpaved gravel, the park is closed and the bridge is awaiting repairs.

When the public rightly complains of years of inaction and foot-dragging, local officials throw up their hands in frustration as all the necessary approvals and funding must wind their way through the impenetrable thickets of state and federal agencies, a leisurely process over which they have no control.

As for the private sector, I’ve often detailed the immense, systemic decline in the quality of everything from the ingredients in packaged food to “stainless steel”, as well as the equally immense burden of unpaid “shadow work” demanded of us all just to manage the complexity thickets generated by “progress.”

Stainless Steal (February 26, 2023)

The “Crapification” of the U.S. Economy Is Now Complete (February 9, 2022)

Digital Service Dumpster Fires and Shadow Work (February 14, 2024)

Is Anyone Else’s Life as Stupidly Complicated by Digital “Shadow Work” as Mine Is? (May 22, 2024)

If AI Is So Great, Why Is Managing the Digital Realm Eating Us Alive? (March 1, 2024)

…click on the above link to read the rest of the article…

Why Unregulated Capitalism Always Leads to Enshittification

May 20, 2024

Why Unregulated Capitalism Always Leads to Enshittification

(right click to open chart in a new tab, or click here, to view full-size; like everything on my blog, my graphics are covered by Creative Commons licence)

Lots of ideas work well in theory, but many of them don’t work out so well in practice, especially when the idea becomes an ideology, pursued dogmatically without oversight to correct for malfunctions and abuses.

The idea of investment capital was one such idea, allowing, for the first time, a group of people to pool their money to enable major projects like factories or resource development or large-scale trade that no individual (other than rich monarchs) could finance.

While pooling of capital was a good idea, some people decided to turn the idea into an ideology, called capitalism, and this ideology, in its most extreme, unregulated form, now underlies many of the problems we face today. It has, in short, become utterly dysfunctional, leading to obscene disparities in wealth and income, catastrophic destruction of our environment and many people’s lives, monstrous amounts of waste of all kinds, and a globalized economy teetering on the edge of complete collapse.

Cory Doctorow has dubbed the process by which initial good ideas, without constant attention and oversight, can devolve into dysfunction, as enshittification. (His article is well worth reading in its entirety.) He explains how this has inevitably happened with Amazon, with Facebook, with Twitter, and other “platforms”, and most recently with TikTok and Google Search:

Here is how platforms die: First, they are good to their users; then they abuse their users to make things better for their business customers; finally, they abuse those business customers to claw back all the value for themselves [ie the managers and shareholders]. Then, they die.

…click on the above link to read the rest of the article…

Why Shortages Are Permanent: Global Supply Shortages Make Fantastic Financial Sense

October 7, 2021

Why Shortages Are Permanent: Global Supply Shortages Make Fantastic Financial Sense

The era of abundance was only a short-lived artifact of the initial boost phase of globalization and financialization.

Global corporations didn’t go to all the effort to establish quasi-monopolies and cartels for our convenience–they did it to ensure reliably large profits from control and scarcity. Not all scarcities are artificial, i.e. the result of cartels limiting supply to keep prices high; many scarcities are real, and many of these scarcities can be traced back to the stripping out of redundancy / multiple suppliers of industrial essentials to streamline efficiency and eliminate competition.

Recall that competition and abundance are anathema to profits. Wide open competition and structural abundance are the least conducive setting for generating reliably ample profits, while quasi-monopolies and cartels that control scarce supplies are the ideal profit-generating machines.

The incentives to expand the number of suppliers, i.e. increase competition, are effectively zero. America’s corporations spent $11 trillion buying back their own stocks over the past decade; that’s equal to the combined GDP of Japan, Germany and Italy. If adding new suppliers to the global supply chain were profitable, some of that $11 trillion would have exploited those vast profits.

The financial reality is attempting to compete with an established cartel that has captured regulatory and political mechanisms is a foolhardy waste of capital. If firing up a new supplier of essential solvents, etc. was so captivatingly profitable, the why wouldn’t Google and Apple take a slice of their billions in cash and go make some easy money?

The barriers to entry are high and the markets are limited. A great many specialty lubricants, solvents, alloys, wires, etc. are essential to the manufacture of all the consumer and industrial products that are sourced globally, but the markets are narrow: manufacturers need X amount of a specialty solvent, not 10X.

…click on the above link to read the rest of the article…

Mass Education and the Climate Crisis: Lessons from the Pandemic (Part 2)

March 2, 2021

Mass Education and the Climate Crisis: Lessons from the Pandemic (Part 2)

This is part two of a five-part essay that highlights lessons from the coronavirus pandemic which could advance the fight for a Green New Deal. Part one (published on Resilience.org here) argues that money is not scarce. Part two argues that control of government policy by wealthy elites tends to produce unnecessary suffering and inadequate responses to major crises. Part three argues that plutocracy is incompatible with serious climate action. Part four explores how the public can easily draw very different conclusions and argues that the climate movement must undertake mass education to ensure these lessons are learned. Part five outlines a broad curriculum containing these lessons and many more.

Lesson 2: Plutocracy’s Deadly Cruelty

Many Americans recognize that their government does not represent them. Political scientists have shown that we live in a vastly unequal society where the wealthiest individuals and large corporations control not only the economy, but the political system as well. When the policy preferences of the superrich diverge from the rest of the population, those are the policies typically implemented. Though it possesses some essential elements of a democracy, the US political system often operates as a form of plutocracy. However, discussions of politics tend to explore the surface phenomenon of Democratic and Republican politicians’ approaches to social issues like the pandemic. Seldom does the public hear serious discussion about how political decisions reflect the dynamics of a profit-maximizing economy and the priorities of the wealthy elites that control both parties.

Many crises facing society can be explained simply by reference to the economic goal of profit maximization. When greed is an economy’s central organizing principle, it means that financial self-interest is pursued even at the expense of diverse public interests…

…click on the above link to read the rest of the article…

Who profits from the end of the mid-range nuclear treaty?

October 27, 2018

Who profits from the end of the mid-range nuclear treaty?

The US move to shelve the Intermediate-range Nuclear-Forces treaty could accelerate the demise of the whole post-WWII Western alliance, and herald a bad remix of the 1930s

A large Russian missile is seen in a rehearsal for a military parade in Red Square, Moscow, on May, 5 2008. Photo: iStock

The Bulletin of the Atomic Scientists has moved its Doomsday Clock to only 2 minutes to midnight. It might be tempting to turn this into a mere squabble about arrows and olives if this wasn’t such a terrifying scenario.

US president Ronald Reagan and Mikhail Gorbachev, secretary-general of the USSR, signed the Intermediate-Range Nuclear Forces Treaty (INF) in 1987.

Three decades later, the Trump administration wants to unilaterally pull out of the INF Treaty.

Earlier this week President Trump sent his national security adviser John Bolton to officially break the news to Russian President Vladimir Putin in Moscow.

As they were discussing extremely serious issues such as implications of a dissolving INF Treaty, the perpetuation of anti-Russia sanctions, the risk of not extending a new START Treaty and the deployment, in Putin’s words, of “some elements of the missile shield in outer space”, the Russian President got into, well, arrows and olives:

“As I recall, there is a bald eagle pictured on the US coat of arms: it holds 13 arrows in one talon and an olive branch in the other as a symbol of peaceful policy: a branch with 13 olives. My question: has your eagle already eaten all the olives leaving only the arrows?”

Bolton’s response: “I didn’t bring any olives.”

Russia's President Vladimir Putin, left, shakes hands with US National Security Adviser John Bolton during a meeting at the Kremlin in Moscow on 23 Oct 2018. Photo: Russian Foreign Press Office / Anadolu Agency / AFP

…click on the above link to read the rest of the article…

Workers’ Power vs. Climate Destroyers: What It Will Take to Save the Planet

August 30, 2018

Workers’ Power vs. Climate Destroyers: What It Will Take to Save the Planet

Humanity faces a multi-faceted crisis. Endless wars of imperial aggression, both overt and covert– from Iraq, Syria, Libya and Afghanistan to Yemen, Palestine and Central and South America. These conflagrations compel those at the bottom of the economic pyramid to fight and die to protect the wealth and privileges of those at the top. These wars destroy human beings and our natural environment, but also opportunities and resources that could be allocated to human betterment. Nuclear arsenals remain on hair trigger alert, with fearsome destructive potential, one accident or a single myopic policy decision away from wiping out the entire human race. Economic inequality, having already reached obscene proportions, is showing no sign of slowing down or reversing course. Racism, xenophobia, sexism and other forms of hate-filled discrimination are used to distract and divide those victimized by the current state of affairs and to hinder a united fight by all of the oppressed against our common oppressors.

And then there’s the matter of climate Armageddon. The world is heating up as a result of economic and energy policy choices. These choices have maximized profits for the 1% while threatening the very biosphere we all depend on for life, liberty and the pursuit of happiness. We know that the burning of fossil fuels and the resulting additional carbon in our atmosphere are driving rapid planetary warming. We know this, not because a majority of climate scientists believe it to be true – that’s not how science works; after all, majorities of scientists have been wrong on occasion. We know this crisis is real because a substantial amount of data has been collectedthat corroborates the climate change hypothesis, and because key scientific predictions based on the theory of human-accelerated climate change have been born out by evidence and experience. Climate change has been directly implicated in:

…click on the above link to read the rest of the article…

Top U.S. Shale Producers Soaring Debt Service Guts Profits

August 14, 2018

Top U.S. Shale Producers Soaring Debt Service Guts Profits

The massive debt accumulated by the U.S. Shale Industry is now decimating company profits. As company debts and interest rates rise, these shale producers interest expense also continues to increase. Debt service is not only cutting into company profits, but it also takes a great deal of oil and gas production to cover this expense.

For example, 16 of the top U.S. shale energy companies racked up a hefty $5 billion interest payment. The company with the highest annual interest expense is Anadarko Energy at a stunning $932 million in 2017:

Devon Energy came in a distant second at $514 million while Chesapeake took the third spot at $425 million. The 16 shale energy companies shown on the right-hand side of the chart are listed from highest to lowest annual interest expense for 2017. And, it is a simple rule-of-thumb that the higher the annual interest expense, the higher overall debt on the company’s balance sheet.

Anadarko has such a high annual interest expense ($932 million) because it holds over $15 billion in debt. Devon Energy had the second highest interest expense in 2017 due to its $10+ billion in debt. However, Devon has recently sold assets and paid down its debt and lowered its interest expense considerably. Furthermore, Chesapeake is paying $425 million a year to service its $9+ billion in debt.

It is quite remarkable that these 16 shale energy companies forked out $5 billion to service their debt last year. The debt service is an expense that impacts the company’s net income profits.

For example, Anadarko posted a loss of $456 million in 2017. However, they paid $932 million in interest expense last year. If Anadarko didn’t have an interest expense, their $456 million loss would have been a $479 million net income profit. So, these 16 companies lost $5 billion in potential profits because they have to service their skyrocketing debts.

…click on the above link to read the rest of the article…

Is Profit-Maximizing Data-Mining Undermining Democracy?

March 19, 2018

Is Profit-Maximizing Data-Mining Undermining Democracy?

If targeting political extremes generates the most profit, then that’s what these corporations will pursue.

As many of you know, oftwominds.com was falsely labeled propaganda by the propaganda operation known as ProporNot back in 2016. The Washington Postsaw fit to promote ProporNot’s propaganda operation because it aligned with the newspaper’s view that any site that wasn’t pro-status quo was propaganda; the possibility of reasoned dissent has vanished into a void of warring accusations of propaganda and “fake news” –which is of course propaganda in action.

Now we discover that profit-maximizing data-mining (i.e. Facebook and Google) can–gasp–be used for selling ideologies, narratives and candidatesjust like dog food and laundry detergent. The more extreme and fixed the views and the closer the groups are in size (i.e. the closer any electoral contest), the more profitable the corporate data-mining becomes.

Meanwhile, back at the ranch, the data-mining gets all the important stuff wrong. As correspondent GFB explains, oftwominds.com was identified as “propaganda” by data-mining, which concluded that any site that posted content that wasn’t pro-Hillary was automatically propaganda:

At least we now know why your site was flagged as a source of Russian disinformation:

Cambridge Analytica is hired by the Russians to data mine to find the most efficacious targets for their disinformation campaign – and in the course of doing research, they find that a number of individuals who visit your site have shown – in other social media actions – to have anti-Hillary, or anti-powers-that-be tendency. They conclude the number of visitors that have that data profile would suggest that it is likely most, if not all visitors to your site would likely have the same view – and so any visitor to your site gets flagged to be targeted, if possible, by the disinformation campaign.

…click on the above link to read the rest of the article…

Believing The Impossible

January 20, 2018

silenceofmind.com

Believing The Impossible

Is necessary to rationalize today’s bubble markets

“Alice laughed: “There’s no use trying,” she said; “one can’t believe impossible things.”

“I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”

~ Lewis Carroll, Through The Looking Glass

To borrow from Lewis Carroll: To have confidence in today’s central bank-created bubble markets, we have to believe in six impossible things.

Thing 1: Fundamentals Don’t Matter.

In our brave new world of money printing to infinity, we’re supposed to buy into a “new paradigm” story. You know, that It’s different this time.

Spoiler alert: It never is.

Companies either make money or they don’t. They’re either good investments or they aren’t. They’ll either return risk-adjusted cash to you over time, or they won’t.

Here’s a simple exercise. Using a publicly available stock screener at Finviz.com, a favorite site of mine, I set two filter parameters to obtain a list of companies that have::

A market cap of over $2B
A P/E ratio in excess of 50x

These are the biggest companies that, in theory at least, require investors to wait 50 years (or more) to be paid back in profits for each dollar invested.

236 companies fit this description right now. 236!

Here’s a screenshot of page 11 of the results. Every company listed here has a P/E multiple of over 190(!).

(Source – here’s the exact screen I used, so you can troll the results for yourself)

Again, these sky-high ratios mean that investors are willing to wait more than 190 years for these companies to earn back their principal at current stock earnings prices.

…click on the above link to read the rest of the article…

We Need to Admit the Government Story About 9/11 is Bullshit

September 12, 2017

We Need to Admit the Government Story About 9/11 is Bullshit

It wasn’t just me of course. It was an entire nation that was callously manipulated in the aftermath of that tragedy. The courage and generosity exhibited by so many New Yorkers and others throughout the country and indeed the world was rapidly transformed into terrifying fear. Fear that was intentionally injected repeatedly into our daily lives. Fear that translated into pointless wars and countless deaths. Fear that was used to justify the destruction of our precious civil rights. Fear that was used to initiate a gigantic power grab and the source of tremendous profits for the corporate-statists and crony-capitalsits. Unfortunately, that is the greatest legacy of 9/11.

– From my 2013 post: How I Remember September 11, 2001

Unless we come to terms with 9/11 and the obvious fact that the official government story is a ridiculous fairytale, it’ll be hard for our nation to move forward in an intelligent, courageous and ethical manner. Many of the most destructive trends which have defined our post September 11, 2001 environment, such as a loss of civill liberties and endless barbaric wars of aggression abroad, have been directly related to our false understanding of that awful terrorist attack. As I’ve always maintained, I have no idea what really went down on that day, I just know that the U.S. government and its intelligence agencies are not being honest.

Although it’s been a long time coming, we’re finally uncovering some kernels of truth about the attack and the role Saudi Arabia played in carrying them out. Much of this progress has been driven by family members of those who died, some of whom are suing the Saudis for their role in that despicable slaughter of civilians.

…click on the above link to read the rest of the article…

Canadian banks set to reveal quarterly earnings amid housing & debt concerns

May 22, 2017

Canadian banks set to reveal quarterly earnings amid housing & debt concerns

Ratings agency Moody’s downgraded the credit ratings for Canada’s big banks earlier this month, citing concerns that over-stretched borrowers and high house prices have left lenders vulnerable to potential losses. (Dillon Hodgin/CBC)

The Canadian banks are expected to benefit from rising U.S. interest rates and fewer bad loans in the oilpatch as they start reporting their latest quarterly results this week, but analysts say worries about the housing market and consumer debt remain key concerns.

“The reality is that given all of the fears about the Canadian mortgage market, I think that even if the results are good, people will dismiss them as being backward-looking,” said analyst Meny Grauman of Cormark Securities.

The Bank of Montreal will kick off the earnings parade on Wednesday, followed by Royal Bank, TD Bank and CIBC on Thursday. Scotiabank will report May 30.

Edward Jones analyst Jim Shanahan said fee income from trading activities and other types of charges was a key driver of earnings growth last quarter.

That likely moderated during the second quarter, but a strengthening in net-interest margins — stemming from U.S. interest rate hikes in December and March — will likely pick up some of the slack, he said.

BMO and TD are most likely to benefit from the rate increases, Shanahan said.

The banks could also see some improvement in their loan loss provisions as stability has returned to the oilpatch.

“From a credit perspective we should see some continued improvement within the oil and gas portfolios,” Shanahan said.

However, analysts said concerns about high home prices, debt-laden consumers and a liquidity crisis at mortgage lender Home Capital Group could all weigh on the bank stocks.

…click on the above link to read the rest of the article…

De-[Constructing] Growth: Decoupling Profits from Unsustainable Production*

January 13, 2017

De-[Constructing] Growth: Decoupling Profits from Unsustainable Production*

Degrowth has been described as a “movement” rather than an ideology1, and as such it presents several variations. For some of its proponents, degrowth is a proxy for sustainable consumption, and to a lesser extent production2. A second group of degrowth advocates are those for whom an emerging discussion of “sufficiency” as a societal norm is taking shape, as a result of activism3. Finally, a third group of advocates views anti-capitalism as central to the degrowth agenda. They see growth as the principal influence and root cause of sustainability challenges.

Most importantly, amidst these diverging perceptions within the degrowth movement, a continual dissatisfaction with the term degrowth has been voiced, acknowledging its unfortunate connotations and difficulty in influencing mainstream policy discussions.

While not offering a critique of the degrowth discourse, I throw some light on the debate by offering a deeper and more useful conceptualization that avoids the negative connotations of, and resistance to, “degrowth”4. Conceptually, rather than simply describing the degrowth discourse by the descriptor “degrowth”, I recommend a more nuanced approach that gets rid of the jargon and negative aspects of the evolving concept of degrowth and makes a distinction between growth in production and growth in private-sector profit. My proposed formulation, De-[Constructing] Growth, achieves this by decoupling profit from unsustainable consumption and production.

Meanings and implications of growth

According to this formulation, growth widely understood has different meanings and implications:

Aggregate growth in products and services that consume energy and materials;
Growth in profits (tied to subsidies, tax treatment of investment, profit, and the provision of producer and consumer credit, all of which encourage consumption);
Growth in trade (avoiding internalizing the externalities by globalizing commerce);
Growth in disparity in consumption, wealth, and income; and
Growth in under- and un-employment.

…click on the above link to read the rest of the article…

End of the U.S. Major Oil Industry Era: Big Trouble At ExxonMobil

November 12, 2016

END OF THE U.S. MAJOR OIL INDUSTRY ERA: Big Trouble At ExxonMobil

The era of the mighty U.S. major oil industry is coming to an end as the country’s largest petroleum company is in big trouble. While ExxonMobil has been the most profitable U.S. oil company in the past, it suffered its worst year on record.

For example, just four years ago, ExxonMobil enjoyed a $45 billion net income profit in 2012. Now compare that to a total $5 billion net income gain for the first three-quarters of 2016. If Exxon continues to report disappointing results for the remainder of the year, its net income will have declined a stunning 85% since 2012.

Actually, the situation at Exxon is much worse if we dig a little deeper.

profitability is much less when we factor in capital expenditures

To understand the real profitability of a company we have to look at its cash flow, or what is known as free cash flow. Free cash flow is calculated by deducting capital expenditures (CAPEX) from the company’s cash from operations. ExxonMobil’s free cash flow declined from $24.4 billion in 2011 to $1 billion for the first nine months of 2016:

steve-1

So, here we can see that Exxon’s free cash flow of $1 billion (2016 YTD) is down 95% from $24.4 billion in 2011. The reason for the rapidly falling free cash flow is due to skyrocketing capital expenditures and falling oil prices. But, this is only part of the picture.

If we include dividend payouts, Exxon’s financial situation drops down another notch. While free cash flow does not include dividend payouts, the money Exxon pays its shareholders must come from its available cash. By including dividend payouts, the company was $8.3 billion in the hole in 2015:

…click on the above link to read the rest of the article…

Are We Entering an Earnings/Sales Recession?

January 12, 2016

Are We Entering an Earnings/Sales Recession?

Are corporate profits due for a retest of the lower channel line? If so, what happens to equity valuations when corporate profits plummet?

Is the U.S. economy in recession? Is it heading for recession? These questions can only be answered in hindsight, but it’s worth looking for clues to what might be just ahead.

Longtime correspondent B.C. recently submitted a chart of corporate earnings and one of real demand and time deposits (a measure of money) and real final sales.

(Explanation of demand deposits).

Unsurprisingly, all three of these metrics tank in recessions.

Corporate profits have been hugging the upper line of a long-term channel for years.

While real final sales have not yet plunged to recession levels, the annual change in real demand and time deposits has fallen into negative territory.

While the annual change in demand and time deposits has swung between positive and negative for decades, the annual change in real final sales only enters negative territory in recessions.

While the two series don’t align perfectly, there is a clear correlation between the expansion of money supply and sales.

For this reason, the recent decline in demand and time deposits might serve as an early warning of an impending drop in real sales to recession levels.

Corporate profits have remained in a rising channel for 85 years, with one exception: the Global Financial Meltdown of 2008-09.

Interestingly, all three recent equity bubbles–in 2000, 2007 and the current bubble–align with corporate profit peaks above the upper channel line.

Are corporate profits due for a retest of the lower channel line? If so, what happens to equity valuations when corporate profits plummet? These questions may be answered later in 2016.

…click on the above link to read the rest of the article…

The Fed Induced Farce

November 19, 2015

The Fed Induced Farce

The minutes from the last Fed meeting were released on Wednesday afternoon. The minutes, along with a squadron of jabbering Fed heads lying about the economy doing great, pretty much locked in the most talked about .25% interest rate increase in world history. Evidently the Wall Street titans of greed have convinced the muppets higher interest rates are great for stocks, as the market soared by 250 points. As institutional money exits the market on these rigged up days, the dumb money retail investor buys into the market with dreams of riches just like they did with Pets.com in 2000, McMansions in 2005, and Bear Stearns in 2007.

The Fed has lost any credibility they ever thought they deserved by delaying this meaningless insignificant interest rate increase for the last three years, so they will make this token increase in December come hell or high water. They want to give themselves some leeway for easing again when this debt saturated global economy implodes in the near future. The Fed is trapped by their own cowardice and capture by the Wall Street cabal. If they raise rates the USD will strengthen even more than it has already. The USD is already at 11 year highs. It has appreciated by 25% in the last year versus the basket of world currencies. The babbling boobs on the entertainment news channels authoritatively expound with a straight face about the rise in the dollar being due to our strong economic performance. It’s beyond laughable, as the economy has been sucking wind since the day the Fed turned off the QE spigot in October 2014.

Chart of the Day

Anyone with a working brain and an IQ over 100 (eliminates the bimbos and boobs on CNBC) can see the USD isn’t strengthening of its own accord.

…click on the above link to read the rest of the article…

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