- Recession Watch: Freight Volume Drops to Worst Level since 2010
By Wolf Richter of Wolf Street
Freight shipments by truck and rail in the US fell 4.9% in April from the beaten-down levels of April 2015, according to the Cass Transportation Index, released on Friday. It was the worst April since 2010, which followed the worst March since 2010. In fact, shipment volume over the four months this year was the worst since 2010.
This is no longer statistical “noise” that can easily be brushed off.
The Cass Freight Index is based on “more than $26 billion” in annual freight transactions by “hundreds of large shippers,” regardless of mode of transportation, including by truck and rail. It does not cover bulk commodities, such as oil and coal and thus is not impacted by the collapsing oil and coal shipments. The index is focused on consumer packaged goods, food, automotive, chemical, OEM, heavy equipment, and retail.
In a similar vein, the Association of American Railroads reported last week that loads of containers and trailers fell 7.5% in April year-over-year. “Intermodal” is a direct competitor to trucking. Combined, they’re a measure of the goods-based economy.
The Cass Freight Index is not seasonally adjusted. Hence the strong seasonal patterns in the chart. Note the beaten-down first four months of 2016 (red line):
And May is not going to look much better. The report:
May is usually a relatively strong month for freight shipments, but given the high inventories with ever slower turnover rates and the decline in new production orders, May could be another soft month.
These inventories are a doozie. Total business inventories have ballooned since late 2014, even as business sales have declined. On Friday, the Commerce Department reported the March installment of that story: total business sales (adjusted for seasonal and trading-day differences but not for price changes) fell once again, this time by 1.7% from a year ago; and business inventories rose by 1.5% from a year ago.
As a result, the crucial inventory-to-sales ratio, which tracks how long unsold inventories sit around and gather dust, has blown out to the same crisis level it had spiked to following the Lehman bankruptcy:
With sales down and inventories very high, businesses are trimming their orders to bring inventories back in line, and this is impacting the transportation industry.
Due to falling volume and “very soft rates,” as the report puts it, shippers have spent 8.3% less in April than a year ago, the lowest April spend since 2011. “With ample capacity available across the modes, competition for loads is holding rates down,” the report explains.
Transportation data provider DAT looks at this from the truckers’ point of view. It tracks national spot-market demand for trucks and availability of trucks via its load-to-truck ratio – “a sensitive real-time indicator” of the balance between the two. And the spot market for the largest category, van-type trailers has become ugly: Last month, the load-to-truck ratio for vans plunged 46% from April 2015, and 52% from April 2014. It has been terrible all year (red line):
Cass notes that the economy “decelerated in the first four months of 2016.” And this “slowdown,” the report said, was caused by:
- the continued decline of the global economy;
- the reticence of the consumer sector to increase its buying;
- the loss of jobs and income from the plunging oil costs (which shut down the fracking business and cut back on coal shipments);
- very high inventory levels across the entire supply chain;
- and poor export figures due to both the strength of the U.S. dollar and a decline in worldwide demand.
Which aptly summarizes much of what troubles the US economy. And the current data doesn’t leave much room for any excess optimism:
Eyes are on the Chinese economy, which has been extremely unstable and can have a big effect on world economies if it continues to falter. Based on the trends of many economic indicators, it appears the economy may get worse before it gets better.
This type of transportation data shines some light on the goods-based economy in the US, and by extension, in the world: the goods-based economy is hurting – and there are no signs it’s getting any better anytime soon.
The downturn’s impact on railroads has become very visible beyond their income statements: the majestic sight of 292 Union Pacific engines idled in Arizona Desert! Read… Freight Rail Traffic Plunges: Haunting Pictures of Transportation Recession
- You Know Those Missing Hillary Emails? Russia Might Leak 20,000 Of Them
Submitted by Claire Bernish via TheAntiMedia.org,
Hillary Clinton sits at the center of a raging firestorm concerning her arrangement of a private email account and server set up in her home — from which top secret information may have been deleted. But despite Bernie Sanders’ apparent annoyance with the “damn emails,” the scandal just exponentially intensified, when Judge Andrew Napolitano revealed on Monday that Russia has possession of around 20,000 of Clinton’s emails — leaving open the possibility her deletions might not have been permanent after all.
“There’s a debate going on in the Kremlin between the Foreign Ministry and the Intelligence Services about whether they should release the 20,000 of Mrs. Clinton’s emails that they have hacked into,” Napolitano told Fox News’ Megyn Kelly in an interview for The Kelly File.
With Clinton’s repeated claims she employed the personal email server only for mundane communications and non-sensitive State matters having been proven outright lies, the deletions of 31,830 emails — in the new context of Napolitano’s statement — have suddenly become remarkably relevant.
As the FBI investigation of Hillary Clinton’s questionable email practices deepens, the question of who had access to what information previously located on the former secretary of state’s server is now more critical than ever.
One such individual, Romanian hacker Guccifer, who was abruptly extradited to the United States, revealed he had easily and repeatedly accessed Clinton’s personal server — and he wasn’t the only one.
“For me, it was easy,” the hacker, whose given name is Marcel Lehel Lazar, exclusively told Fox News; “easy for me, for everybody.”
If Guccifer and Napolitano are right, Russia may, indeed, have possession of highly-sensitive information courtesy of Clinton’s arrogant failure to adhere to the obligation to use a government email account during her tenure as secretary — a situation worsened by the now-mendacious claim no sensitive information had been sent through the personal account.
In fact, if Guccifer is to be believed — as his extradition by the U.S. indicates — news of the Kremlin having obtained potentially top-secret material may be the tip of a gargantuan iceberg. Using a readily available program, the Romanian hacker also claimed he observed “up to 10, like, IPs from other parts of the world” during sessions on Clinton’s personal server. If just one of those unknown parties was connected to Russia, who the other nine might be could be central to the FBI’s decision whether or not to charge Clinton for mishandling classified information.
Adding yet another nail in the coffin case against Hillary on Thursday, the Hill reported conservative watchdog Judicial Watch revealed, pursuant to a Freedom of Information Act request, frustration with technical difficulties in obtaining a secure phone line led the secretary to direct a top aide to abandon the effort and call her without the necessary security in place.
“I give up. Call me on my home [number],” Clinton wrote in a February 2009 email from the newly-released batch — on the also notoriously unsecured server — to then-chief of staff, Cheryl Mills.
Though the email thread contains no confirmation such a call was ever made on the unsecured phone line, it evidences still more of the same flagrant disregard for national security apparently peppering Clinton’s practices during her time at the State Department.
“This drip, drip of new Clinton emails show Hillary Clinton could not care less about the security of her communications,” noted Judicial Watch president, Tom Fitton, in a statement cited by the Hill. “How many other smoking gun emails are Hillary Clinton and her co-conspirators in the Obama administration hiding from the American people?”
For a putative presidential hopeful, Hillary Clinton certainly doesn’t appear to appreciate the imperative for keeping matters of national security obscured from … anyone.
- How Hedge Funds Invest Heavily In Washington D.C.'s Culture Of Corruption
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
Earlier this week, Ryan Grim and Paul Blumenthal published a blockbuster piece in the Huffington Post, titled: The Vultures’ Vultures: How A New Hedge-Fund Strategy Is Corrupting Washington.
It details the secretive world of the dark money groups representing mercenary hedge funds in their insatiable quest for more and more money. In many ways, it’s merely a microcosm of America in 2016. A culture in which ethics has become so irrelevant, it isn’t even a nuisance; it simply never factors into the equation.
The first few paragraphs set the stage perfectly:
WASHINGTON – Take Robert Shapiro.
A Harvard-trained economist, Shapiro is the head of a consulting firm called Sonecon. That business card doesn’t do it for you? He’s got a few more in his wallet:
Senior fellow at the Georgetown University School of Business.
Adviser to the International Monetary Fund.
Director of the Globalization Initiative at NDN, a progressive think tank.
Shapiro, a Democrat, has advised presidents and presidential candidates, and has held powerful government posts. It stands to reason, then, that when he has thoughts on public policy, he can find an outlet ready to publish them.
Recently, he’s had ideas on how the government can address the debt crisis in Puerto Rico and how it can end the conservatorship of Fannie Mae and Freddie Mac by moving them into the private market. Before that, he had a take on how to deal with Argentina’s debt crisis. For all three, he produced academic-looking papers, complete with footnotes and charts.
All three situations have one thing in common: If they were resolved the way Shapiro suggested, a variety of bets placed by a select group of the most politically powerful hedge funds would pay off in a huge way. In the case of Argentina, they mostly have. Fights over how to resolve the other two issues are still raging in Washington.
For this article, we called Shapiro to ask on whose behalf he has been waging these intellectual battles. His answer was surprising in its honesty: He’s working with DCI Group, a political dark arts master known to be advocating on behalf of a group of powerful hedge funds that are changing how Washington works.
If you want to get a sense of what’s motivating Donald Trump and Bernie Sanders voters, it’s a desire to take people like Robert Shapiro, remove them from the halls of power, and toss them into a cardboard box on the street. Of course, that won’t be happening any time soon, but that’s what a lot of people want.
What follows are some additional excerpts from the piece, which I strongly suggest you read in full.
Shapiro, it turns out, is but one foot soldier in the hedge fund infantry. A review of public documents, tax filings and interviews with people involved finds that in each of the three campaigns, hedge funds have enlisted the same set of lobbyists, political operatives, dark money groups and think-tank experts spanning the political spectrum.
The band that has gotten together for the big three hedge fund jam sessions includes some unlikely allies: There’s DCI Group, the powerhouse lobbying firm. Then there’s the Raben Group, operatives whose specialty is working in the progressive space and lobbying Democrats. There’s the American Continental Group, a bipartisan lobbying firm. There’s 60 Plus and the Center for Individual Freedom, two groups that call themselves part of the conservative movement, but in reality are dark money groups known to run whatever campaign they’re paid to run, and that are happy to conceal the source of the funding. All these groups have roughly nothing in common, other than that they all have united in advocacy campaigns that alternately go up against the Argentinian people, Puerto Ricans and the rest of the American public.
Each of these campaigns appears to have been run by or aided by the DCI Group. We say “appears” because DCI is one of Washington’s great black boxes — news articles that involve DCI routinely include a line informing readers that the organization did not respond to a request for comment. This article is no different.
Old Washington hands involved in these particular fights say that nothing they’ve seen before in politics has prepared them for the mercenary campaigns the hedge funds are now waging.
“There’s something about this that’s almost more disturbing, because you get an issue that’s not particularly a big public issue and people can spend and spend and spend,” said a veteran policymaker who found himself on the wrong end of the hedge funds. “And I don’t know how anybody can compete with it. And then you start losing the narrative and you see groups on the left get bought out and corrupted — really corrupted. I don’t know what to do about it.”
It’s so bad, even the critters in Congress are disgusted by it.
And it’s not ideological, either. If a big group of hedge funds decided to short the health insurance industry, it could easily be in their interests to fund a dark money campaign on behalf of single-payer health care. If they short the big banks, they’ve now become allies with Sen. Elizabeth Warren (D-Mass.).
In Puerto Rico, the group of hedge funds waging the biggest lobbying campaign own debt that is first in line to be paid off in case of any calamity. (That’s not to say there aren’t other hedge funds that own different sets of Puerto Rican debt lobbying so that they’re the first to be paid; more on them later.) They’re now betting that they can stop Congress from rescuing Puerto Rico by amending bankruptcy laws to allow Puerto Rico to cover its basic expenses before paying out the hedge funds.
Betting that Congress does nothing is often a smart wager. If the island government is forced to pay off creditors first, it will have to take those funds from vital programs threatening the livelihoods of people who live there.
Here’s an example of how they threaten Congressional aides.
Or even against staffers. In the midst of the debate over how to restructure Fannie Mae and Freddie Mac in early 2014, Jim Millstein was sitting down on Capitol Hill with Michael Bright, an aide to Sen. Bob Corker (R-Tenn.), who was working on the legislation. Millstein, like other hedge-fund titans lobbying on the bill, had a set of structural recommendations he thought the Senate should take up.
Millstein was worth listening to: While a top Treasury Department official, he had overseen the successful restructuring of AIG after the government bailout. But Millstein had an extra recommendation: The Fannie Mae shareholders needed to be paid out — shareholders like Millstein.
The aide told Millstein he didn’t see why shareholders, who bought Fannie stock for pennies when the government had already bailed it out, needed a windfall. The meeting turned tense. “Don’t worry kid, you’re about to get yours,” Millstein said, according to a Democratic committee staffer later briefed on the episode. Bright, reached for comment, declined to speak for this article.
The DCI Group most famously built its reputation doing the dirty work of the tobacco industry. That long-running operation involved funding “experts” who would question the medical science around smoking, and targeting individual advocates and lawmakers. It pioneered the use of shadow groups that concealed the true source of funding for the campaign, and can be seen as a blueprint for the hedge fund campaigns.
Of course it did.
Back in 2007, DCI was instrumental in killing legislation that would have regulated Fannie Mae and Freddie Mac, a doomed effort that may have prevented the lenders from melting down. It earned $2 million from Freddie Mac for its work.
DCI was also part of American Task Force Argentina, the hedge-fund backed effort that battled Argentina over its default. Raben Group’s Robert Raben and Shapiro led the task force, and Shapiro’s consulting firm was paid at least $450,000. While there are no public filings today, the group is helping run the Fannie hedge-fund operation, according to DCI managing partner Justin Peterson, who has privately talked about DCI’s work. Shapiro, too, said he was working with DCI for his housing policy work.
McGill represented NML Capital, a subsidiary of Elliott Management, the hedge fund connected with GOP megadonor Paul Singer, in the lawsuit against Argentina, along with Aurelius Capital Management. That lawsuit allowed the hedge funds to extract billions from the Argentinian people. It came after the years-long slash-and-burn campaign run from the American Task Force Argentina — a lobbying coalition of Covington & Burling, DCI Group and the Raben Group.
Well, well, well, will you take a look at that. Who do we find amongst hedge fund mercenary groups? None other than Covington & Burling. That’s right, the law firm that Eric Holder worked at before spinning through the revolving door into government, just in time to serve as Obama’s attorney general in order to protect bank executives from prosecution.
Recall what we learned in the post, Cronyism Pays – Eric “Too Big to Jail” Holder Triumphantly Returns to His Prior Corporate Law Firm Job:
After failing to criminally prosecute any of the financial firms responsible for the market collapse in 2008, former Attorney General Eric Holder is returning to Covington & Burling, a corporate law firm known for serving Wall Street clients.
The move completes one of the more troubling trips through the revolving door for a cabinet secretary. Holder worked at Covington from 2001 right up to being sworn in as attorney general in Feburary 2009. And Covington literally kept an office empty for him, awaiting his return.
The Covington & Burling client list has included four of the largest banks, including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo.
For more information on one of the most shameless cronies and fraudsters in American history, see:
Must Watch Video – “The Veneer of Justice in a Kingdom of Crime”
The U.S. Department of Justice Handles Banker Criminals Like Juvenile Offenders…Literally
Eric Holder Announces Task Force to Focus on “Domestic Terrorists”
Eric Holder and the DOJ Have Spent Millions of Taxpayer Dollars on Unreported Personal Travel
Elizabeth Warren Confronts Eric Holder, Ben Bernanke and Mary Jo White on Bankster Immunity
Even Washington D.C. Insiders Admit Eric Holder is a Bankster Puppet
Eric Holder Claims Emails Using Words ‘Fast and Furious’ Don’t Refer to Operation Fast and Furious
- Robogov coming to a town near you
Automation is taking over all aspects of society. In many cases, this is a good thing. As we explain in Splitting Pennies – Understanding Forex – trading Forex manually (Without robots or automation) is basically impossible. But also we’ve learned that when anything is done by the government, it ends up being mismanaged, overpriced, delayed, or worse. In the most extreme example, inmates on death row that are killed by the government, are later found to be innocent with DNA or other hard evidence. Studies show recently that 4% of inmates killed are innocent, but many believe it to be much higher, as much as 50%. Whatever is the number, one person being killed who is innocent is one too many.
So, the state of Florida has implemented an automated toll system, which will not only take a photo of your license plate automatically, it will automatically find your address based on your DMV records, and mail you an invoice!
This invoice was paid promptly via online credit card. What would have been interesting to see how they handle situations where the invoice was not paid! But they fairly billed only the toll, $4.75. It happened on the way from Fort Lauderdale to Miami, on 95’s new overpass, southbound to Miami. There were many flashing signs “Tolls begin Monday (it was Saturday night)” – but no where to pay the toll.
What happens when the IRS automatically deducts your taxes from your bank account? Let’s be practical, any bank or financial institution inside the borders of USA – is open to the possibility of complete control by the Feds, for benign reasons – or in case of emergency, POTUS can always declare some emergency circumstances.. and poof! For example:
“In order to protect your security, and maintain financial stability of the system, we are deducting this temporary lien fine from your account, according to Section 42 Title 9 of the code. Due to paperwork reduction act compliance this notification is electronic only. Have a nice day.”
Sounds far fetched, but so does the automated robotic toll system currently in use by the state of Florida, that automatically photographs cars and mails the registered drivers invoices – to other states!
Practically speaking, systems like this are not new, and have been in use in Europe for decades, and in California. What’s particularly creepy about this though is there was no way to pay the toll in person by car. It wasn’t labelled too well – no sign saying “Drive in this lane and we will mail you a ticket.” Not sure if that’s even legal.
Dear lawyers, is it a legally binding contract, between driver and the State of Florida, by driving in this lane, I have agreed they will photograph my car, and mail me an invoice? Does it violate my privacy? What if I didn’t understand the contract? There wasn’t any clear explanation of how this contract worked. What was simply strange is that in Florida, like many states, roads are distinguished between public and private. Florida’s Turnpike, a well known private toll road – has it’s own tolling system. It’s clearly marked and if you are really stupid, you can ask the toll booth worker about the rules, and if you don’t have money to pay or want to argue about something, there’s a manager in an office near most toll stations. So seeing this ‘private lane’ on the drive to Miami was a real surprise for a Floridian, especially that it wasn’t marked clearly – and that robogov found me one month later in another state!
As an IT professional, the system is respectable. Managing millions of drivers in a tourist state is not easy. And the drivers in Florida are CRAZY. So that’s another point, maybe it takes robots to manage such a group of “Floridians.” But on another level, something just doesn’t feel right about a government run system that is automated.
If this is the thinking of the government – beware Roboregulations.
Our company Elite E Services has authored thousands of Forex robots, that automate the trading process. Banks develop robots to automate their liquidity and risk management, so trading has become a battle of the robots. But in this case, it’s just a one way – management robotic system.
Learn more about Forex automation at Elite E Services or checkout our book, Splitting Pennies. Learn more about class action settlement automation at Liquid Claims.
- US Army Shrinks To Smallest Since 1940 As Chinese Military Recruiting Accelerates
The Army’s latest headcount shows that nearly 2,600 soldiers departed active service in March without being replaced, an action that plunges manning to its lowest level since before World War II, according to ArmyTimes.com. This is occurring as The People's Liberation Army (incidentally the world's largest military force, with a strength of approximately 2,285,000 personnel, or 0.18% of China's population) has begun aggressively recruiting, and rattling its sabre increasingly loudly over US interference in the South China Sea island dispute and most recently in Hong Kong.
During the past year the size of the active force has been reduced by 16,548 soldiers, the rough equivalent of three brigades.
Endstrength for March was 479,172 soldiers, which is 154 fewer troopers than were on active duty when the Army halted the post-Cold War drawdown in 1999 with 479,424 soldiers, the smallest force since 1940, when the active component numbered 269,023 soldiers.
According to the Army Times, the Army is on track to reach its goal of reducing the number of active duty troops to 475,000 by Sept. 30, the end of fiscal year 2016. Under a drawdown plan unveiled last July, the number of active-duty soldiers would be reduced to 460,000 soldiers by the end of fiscal year 2017 and 450,000 by the end of fiscal year 2018, barring action by Congress or the Pentagon.
If those targets are met, the number of soldiers on active duty would be down 20 percent from 2010, when there were nearly 570,000 soldiers on active duty.
When the Army presented its plan last July, military officials said their hands were tied by reduced funding levels.
"These are not cuts the Army wants to make, these are cuts required by budget environment in which we operate," Gen. Daniel Allyn, vice chief of staff of the Army, said at the time. "This 40,000 soldier cut … will only get us to the program force, it does not deal with the continued threat of sequestration."
In addition to those on active duty, the Army has 548,024 soldiers in reserve, for a total force of 1,027,196 soldiers. Under the drawdown plan, the total force number would be reduced to 980,000 by the end of fiscal year 2018.
And this is occurring as China builds its military might with aggressive recruiting tactics.
As we previously noted, whilst history doesn’t repeat it often rhymes. As Alexander, Rome and Britain fell from their positions of absolute global dominance, so too has the US begun to slip. America’s global economic dominance has been declining since 1998, well before the Global Financial Crisis. A large part of this decline has actually had little to do with the actions of the US but rather with the unraveling of a century’s long economic anomaly. China has begun to return to the position in the global economy it occupied for millenia before the industrial revolution. Just as the dollar emerged to global reserve currency status as its economic might grew, so the chart below suggests the increasing push for de-dollarization across the 'rest of the isolated world' may be a smart bet…
The geopolitical consequences of the diminishment of US global dominance
Each of these events has shown America’s unwillingness to take strong foreign policy action and certainly underlined its unwillingness to use force. America’s allies and enemies have looked on and taken note. America’s geopolitical multiplier has declined even as its relative economic strength has waned and the US has slipped backwards towards the rest of the pack of major world powers in terms of relative geopolitical power.
Throughout this piece we have looked to see what we can learn from history in trying to understand changes in the level of structural geopolitical tension in the world. We have in general argued that the broad sweep of world history suggests that the major driver of significant structural change in global levels of geopolitical tension has been the relative rise and fall of the world’s leading power. We have also suggested a number of important caveats to this view – chiefly that a dominant superpower only provides for structurally lower geopolitical tensions when it is itself internally stable. We have also sought to distinguish between a nation being an “economic” superpower (which we can broadly measure directly) and being a genuine “geopolitical” superpower (which we can’t). On this subject we have hypothesised that the level of a nations geopolitical power can roughly be estimated multiplying its relative economic power by a “geopolitical multiplier” which reflects that nations ability to amass and project force, its willingness to intervene in the affairs of the world and the extent of its “soft power”.
Given this analysis it strikes us that today we are in the midst of an extremely rare historical event – the relative decline of a world superpower. US global geopolitical dominance is on the wane – driven on the one hand by the historic rise of China from its disproportionate lows and on the other to a host of internal US issues, from a crisis of American confidence in the core of the US economic model to general war weariness. This is not to say that America’s position in the global system is on the brink of collapse. Far from it. The US will remain the greater of just two great powers for the foreseeable future as its “geopolitical multiplier”, boosted by its deeply embedded soft power and continuing commitment to the “free world” order, allows it to outperform its relative economic power. As America’s current Defence Secretary, Chuck Hagel, said earlier this year, “We (the USA) do not engage in the world because we are a great nation. Rather, we are a great nation because we engage in the world.”
Nevertheless the US is losing its place as the sole dominant geopolitical superpower and history suggests that during such shifts geopolitical tensions structurally increase. If this analysis is correct then the rise in the past five years, and most notably in the past year, of global geopolitical tensions may well prove not temporary but structural to the current world system and the world may continue to experience more frequent, longer lasting and more far reaching geopolitical stresses than it has in at least two decades. If this is indeed the case then markets might have to price in a higher degree of geopolitical risk in the years ahead.
- New KFC Restaurant Is Run Entirely By Robots
First McDonalds, then Wendy’s, soon Carl’s Jr., and now KFC. The minimum-wage-driven automation of the lower-end of the workforce is accelerating…
Submitted by Nick Bernabe via TheAntiMedia.org,
Colonel Sanders is raising a robot army to serve fried chicken at a restaurant near you. KFC’s first automated restaurant, called Original+, went live in Shanghai on April 25th, complete with an artificially intelligent robot manager named “Du Mi” who works at the front counter.
According to Chinese news outlet Sohu, “‘Du Mi’ marks the first commercial use of artificial intelligence in the fast food industry. The artificial intelligence robot was launched by China’s leading web services company Baidu during its World Conference in 2015.”
(Interior view of the KFC store in Shanghai…doesn’t look much like the local KFC here)
KFC hopes that the hip new automated restaurant will attract young customers with its free wireless phone charging stations and human-less eating experience.
But it’s not just KFC, and it’s not just China where automation, robots, and artificial intelligence is taking the place of human workers. If and when these automated restaurants gain traction in places like China, they are sure to be implemented in the U.S., as well. In fact, they already are — though to a lesser extent, for now. McDonald’s and other food chains are experimenting with digital kiosks similar to the self-checkout machines already found in many grocery stores.
KFC’s Original+ kiosk.
In fact, as we covered recently at Anti-Media, automation is set to replace human jobs across broad sectors of the U.S. and world economies:
“[T]he Bank of England is preparing for automation to shed 80 million American jobs and 15 million British jobs within the next 10 to 20 years. This is approximately 50% of the U.S. and British workforce. Forbes has put the number at 45%.”
The ongoing debate surrounding robots, A.I., and automation displacing human workers is a delicate yet very important one. Many experts, including Stephen Hawking, have warned of the dangers of monopolistic artificial intelligence while others believe with the right direction from people, robots and technology can liberate humanity from manual labor.
The inevitable automation of the world’s economy will reshape society as we know it. Minimum wages will no longer protect workers as employers shift to using robots who will never ask for breaks, pay, raises, or healthcare. Worker unions may essentially be rendered useless. Militaries will eventually no longer need humans to fight wars. Additionally, Uber, Lyft, taxi and limousine drivers, and other driving jobs could soon be replaced by self-driving cars as automation also changes the way we think about transportation altogether.
Automation is loved, feared, and hated by many, but only time will tell how it will change our lives — for better or worse.
- Is A Venezuela Coup Imminent? An Interview With A National Guardsman
Following several very disturbing stories about the start of Venezuela’s social apocalypse, in the first case chronicling “Streets Filled With People Killing Animals For Food” and then last night documenting “Countless Wounded” After 5,000 Loot Supermarket Looking For Food, we concluded that “as civil war appears inevitable, as there are factions vying to oust Maduro, although we are confident the dictator will hang on for dear life (literally) and force his population to endure more of this socialist nightmare.”
Today, now that speculation about a coup and/or civil war is becoming ever louder, we address some of these concerns courtesy of a must-read interview with a member of Bolivarian National Guard, the country’s national guardsmen, conducted by PanAm Post, which provides a critical blueprint of the next very tragic steps in Venezuela, which unfortunately now appear certainly to conclude with a national coup.
From PanAm Post:
“Venezuela Is on the Brink of Social Collapse” National Guardsman
Food Shortages Cause Daily Looting, Energy Crisis Worsens as National State of Emergency Approaches
At the moment, the armed forces’ position vis-à-vis the government is not clear. Some speculate that the Bolivarian National Guard is divided. Others claim that the regime exerts full control over the Bolivarian National Guard’s members. The only certainty is that uncertainty abounds.
The PanAm Post had the opportunity to interview a Bolivarian National Guard member of middle rank, who asked to remain anonymous since his views could expose him to danger.
Why has the state launched an offensive against criminal groups?
The situation was getting out of hand for political reasons. The state has no means to control criminal groups. The country’s jails are in chaos. The streets themselves are in chaos. The state’s security personnel are unarmed.
The Maduro regime created the Organization for the Protection and Liberation for the People (OLP) to fight organized crime. Has that organization committed illegal acts as well?
From a legal standpoint, yes. Now from the point of view of the general population, no, because they tolerate harsh methods against the criminal bands.
But do they only kill criminals?
In the majority of cases.
Is the OLP really carrying out its operations strictly to end gang violence?
That is their main purpose. But there is also a political element. The OLP’s creation was a desperate measure. The government had given liberty to the gangs to do what they please. They armed them and now they are attacking them.
Is the OLP at war with gangs and with government officials at the same time?
Yes, because they can’t control them. They have become too powerful. They are armed and they teach military strategy. These criminals used to fight against each other. Now they have a truce between them and they fight the military and other security forces. They say, “as long as we kill them, we’ll survive.”
Does the state benefit by arming gangs? What is the regime trying to achieve?
Their goal is to have armed groups on their side in case of political turmoil. That is the final goal. Disarmament laws only affect innocent people. Criminal have many more weapons than we do at the National Guard. They also have much more power. We can’t control that now. Any solution will come too late.
The economic crisis and the public health crisis are becoming uncontrollable. The security forces are competent, but the government had to realize that the criminals were killing us all before they acted against them.
How corrupt is is the National Guard?
There is corruption in the National Guard, and there always has been. The difference is that, before, the system was more efficient. The National Guard decayed when it became political. Since we started to vote and to take part in the country’s political life, there has been no peace in the ranks.
Now there is pressure on us because we have to follow the constitution, but we also have to be loyal to our higher officers even when their orders don’t correspond to the laws. If their orders contradict the laws, you can’t follow them. So there is a rift between the security forces and the other institutions.
The government has an apparatus for persecution and espionage, so you can’t make negative statements about functionaries. The security services themselves are plagued by informants. You have to watch your every word.
All of those military upheavals denouncing the government, those attempts to overthrow the government — are they real?
No, the majority are false. There won’t be any coup attempts in Venezuela.
Why not?
Right now, all elements of the armed forces are under control. A coup-d’état takes place when you reach a breaking point and someone in the higher echelons of the armed forces decides that it’s time to act against the government. Right now in Venezuela, there are political divisions within the armed forces. There is neither the necessary unity nor the necessary organization for a coup to take place. Besides, officers fear the government’s informants. Everyone is on guard.
What will result from the current discontent?
The army and the National Guard are waiting. I can assure you that we are quite unhappy. But there is an entire structure above us, so it’s not easy to act. We receive criticism from all sides. Wherever I go, I come face to face with civilians’ displeasure and complaints. I also think the opposition has failed to take advantage of its opportunities to topple the government.
How so?
For example, when they won the parliamentary elections last December, the atmosphere was tense. The entire leadership knew what would happen. So did we. Former Speaker of the House Diosdado Cabello was willing to take the armed forces to the street against the opposition, but Padrino López, the Minister of Defense, didn’t allow him to do so.
What happened exactly on December 6?
The stories are true. That day there was a strong discussion between Padrino López and Cabello. López told Cabello that, if he ordered the troops to take the streets, he was going to have the army kill him.
But did Padrino López only do it to save his own skin?
Of course. He would have been responsible if the army started to massacre people. López was not going to allow that to happen. So that day the army was ordered to guard the opposition.
On whose side does Padrino López find himself? That day, a rumor got out that he was defending Chávez’s revolution.
Padrino López is intelligent, and I don’t doubt that he’s a chavista. But all branches of the armed forces are dissatisfied with the current situation. Imagine if one day they let Diosdado Cabello commit a massacre. If something like that occurs, the army will support President Maduro.
And what has the Bolivarian National Guard done during the recent demonstrations? Why has the army remained silent?
Those are two different situations. Like I said, government intelligence is an obstacle to action. The risk of not obeying orders is very large, but there is a lot of discontent and resentment due to the measures carried out by the Bolivarian National Guard and other officials.
If discontent is so widespread, why is there no talk of a coup?
That’s already been discussed. The coup d’état, we hope, will not be repeated. We remember what happened in 2002 with Chávez and we don’t want something similar to happen in the future.
We are rather waiting for things to get truly out of hand. And that will happen in the following months. The situation is extremely unstable and the status quo can’t last. We are witnessing daily looting at supermarkets, and people are protesting.
The crisis at Guri Dam (Venezuela’s most important hydroelectric power station) will get worse. Everything will get worse and there will be an implosion.
At that moment, the country’s future will be determined. I don’t believe there’s much time left.
Are you sure that something drastic will happen soon?
Without a doubt. The Bolivarian National Guard has already discussed the matter.
The situation in Venezuela has never been as bad as it is now. The breaking point is near, but still not at hand. My recommendation is for people to prepare, to look for food and then to store it. Obviously, when the implosion occurs , it won’t last long. I believe it will last something like 10 days, but they will be difficult days.
There will be a state of emergency, and that will bring the crisis to an end.
What will happen with the recall referendum that the opposition is trying to unleash against President Maduro?
That’s not a serious option. The regime has demonstrated that it can violate the constitution without second thoughts. They are going to accept the referendum, but only if they know they can win with any method available. The situation will only come to a head when hunger and the lack of electricity force people to take direct action.
So are the Armed Forces ready for a social catastrophe to take place?
We are really willing to intervene if the country undergoes a social catastrophe. It’s as if we have water in a pot and it begins to boil very slowly. There will be a moment when, if the gas is not turned off, the water begins to overflow and disaster ensues.
- The Dismal Retirement Picture For America's Older Generation
As we have pointed out many times in the past (most recently here), the jobs "recovery" has gone disproportionately to older workers at the expense of younger workers.
In fact, as Bloomberg points out, the employment-to-population ratio for those 65 and over is at its highest level since the early 1960's.
This creates a bottleneck for younger workers who are looking to move up from their current roles, and also those that are trying to gain entry level employment but can't until the current occupiers of those seats can move up. The situation doesn't appear to be on the verge of getting any better either, as 27% of Americans say they will "keep working as long as possible" according to a 2015 Federal Reserve study – and to make matters worse (for younger generations), 12% of Americans say they don't plan to retire at all.
The primary reason for the older generations remaining in the workforce isn't surprising: people simply don't have the money to retire. Three in five retirees surveyed by the Transamerica Center for Retirement Studies said making money or earning benefits was at least one reason they had retired later than planned, and almost half said financial problems were the main reason for working past 65.
With nearly 60% of all U.S. households having no savings in individual retirement accounts such as a IRA or 401(k), the fact that older workers simply can't afford to retire is not a surprise. Those that do have a retirement account, predictably see different levels of funding according to their income.
And of course, those with the highest funded retirement account receive the highest monthly returns – said otherwise, the wealthy grow disproportionately richer in retirement as well.
What all of this means is that the trouble younger workers are having getting into the workforce will continue, furthering their inability to make any payments on the massive amount of student loan debt racked up while in college. For those that are fortunate enough to already be in those entry level positions, they'll have to make due with the current situation, because the older generation isn't going anywhere. What it also means, is that the Federal Reserve better figure out how will it keep market levels where they are, otherwise it runs the risk that what little is currently in retirement accounts will be wiped out. If there is a replay of 2008, the younger generations might as well hang it up – as well as those institutions that are holding the corresponding student debt.
- For The American Farmer "It's Death By A 1,000 Knives”- US Farmland Values Plunge Most In 30 Years
Not so long ago, US farmland – whose prices were until recently rising exponentially – was considered by many to be the next asset bubble. Then, exactly one year ago, the fairytale officially ended, and as reported in February, US farmland saw its first price drop since 1986. It was also about a year ago when looking ahead, very few bankers expected price appreciation and more than a quarter of survey respondents expect cropland values to continue declining.
They were right.
According to several regional Fed reports released last Thursday, real farmland values in parts of the Midwest fell at their fastest clip in almost 30 years during the first quarter.
This is how the Chicago Fed described the increasingly dire situation:
Agricultural land values in the Seventh Federal Reserve District fell 4 percent from a year ago in the first quarter of 2016—their largest year-over-year decline since the third quarter of 2009. Cash rental rates for District farmland experienced a significant drop of 10 percent for 2016 compared with 2015—even larger than the decrease of last year relative to 2014. Demand to purchase agricultural land was markedly lower in the three- to six-month period ending with March 2016 compared with the same period ending with March 2015. Moreover, the amount of farmland for sale, the number of farms sold, and the amount of acreage sold were all down during the winter and early spring of 2016 compared with a year ago. Nearly two-thirds of the responding bankers expected farmland values to decrease during the second quarter of 2016, with the rest expecting farmland values to remain stable.
As the WSJ added, falling crop prices have weighed on land values from Kansas to Indiana over the past two years as farm income declined and investors who had piled into the asset at the start of the decade retrenched.
Three regional Federal Reserve banks all reported year-over-year declines in farmland values in their districts and said the drops would continue, though their forecasts were based on surveys taken before the recent rally in corn and soybean prices.
The St. Louis Fed region that includes parts of the U.S. agricultural heartland in Illinois, Indiana and Missouri reported the steepest decline, with the average price of “quality” farmland falling 6.4% in the quarter, the biggest decline since its survey began in 2012. The Chicago Fed said prices for similar land in its district fell 4% from a year ago, the seventh successive quarterly decline. Adjusted for inflation, prices in an area that includes parts of Illinois, Indiana, Iowa, Michigan and Wisconsin fell 5%, the biggest quarterly drop since 1987.
Not even a recent short-term bounce in commodity prices – driven by China’s now concluded record loan expansion – is cause for optimism. Though some agricultural markets have rallied in recent weeks, prices for corn and wheat are still more than 50% lower than their 2012 peak, and the U.S. Department of Agriculture has projected that net U.S. farm income will fall this year to the lowest level in more than a decade.
Commodity prices have declined as farmers in the U.S. and elsewhere harvested bumper crops, adding to already generous stockpiles. U.S. farmers have also been hit by the strength of the dollar, which has stymied demand to export their crops.
Another reason for America’s farmland recession: the drop in land values has been accompanied by deteriorating credit conditions, with more loans taken out to cover farm operations even as repayment rates fell on existing debt.
It appears that in its scramble to save banks’ from their underwater energy exposure, the Fed forgot all about bailing out the American farmer. The Kansas City Fed said the weaker credit environment had left many growers unable to pay off loans extended to them in the previous year, forcing them to carry debt into 2016.
It gets worse: loan-repayment rates fell for the 10th consecutive quarter, which the bank said was the longest run of deteriorating repayment rates since the early 2000s. While farm loan delinquency rates remained low, growers with significant debt may face continuing stress.
“This most recent uptick in loan demand may be more concerning because it has coincided with a period of falling repayment rates, softening farmland values and increasing collateral requirements,” said the Kansas City Fed in its report.
* * *
And then there was the latest JPM report from its 2016 midwest planting tour. Here are some of the key findings:
We spent the last few days in the Midwest visiting dealers, farmers, and a variety of industry experts. Overall, our sense is that the industry is “healing” but the down-cycle will be long as used inventories remain elevated, used prices are still “in discovery mode”, and farmers are staring at a fourth year of losses and asset write-downs; sentiment improved a little with the USDA’s demand outlook, at least for beans (but that may be short lived). We maintain our negative outlook for US ag fundamentals.
Among JPM’s other troubling findings is that farmers are not making money at current prices, and rents have started to move down, but not quickly enough; in IA, farmers must alert landlords in writing by September 1 if they want to renegotiate for the following year. Farmers have been buying equipment at auction when they perceive that it is good value, even though they may not need extra equipment; however, dealer used equipment prices continue to decline YoY, and the decline is accelerating as more used equipment is going to auction (at about a 20-30% discount).
JPM also makes the following key observations:
- Deere dealer: The Deere dealer we met in Iowa noted that he (uniquely) sold no new equipment for the past 16-18 months in order to reduce used inventory, which peaked at $20MM and is now at $7.5MM (vs. normal of $10MM). At the peak of the cycle he sold 80 tractors and 30-40 combines and his turns were 3.5- 4.0x, whereas now his combine turns are ~1.5x. He was able to sell some used equipment to Mexico but had to liquidate some through auction at a significant loss (up to $100K on a high HP tractor)
- Titan dealer: At the peak of the cycle this dealer sold 23 combines per year; he sold three in 2015 and has 13 sitting in used inventory (about three years excess used inventory). He cannot sell new equipment until he sorts out the used equipment inventory (combines in particular), though he noted that he has sold six tractors YTD, more than he managed for all of 2015. Like other dealers we spoke with, Titan dealers are very hesitant to sell used equipment through auction as prices can be up to 25% lower than book value; he would prefer to sell used equipment at a loss rather than write down the value of his entire book.
- CAT (AGCO) dealer: This dealer noted that his dealership reported $186MM in sales at the peak in 2013, and this year his budget is to deliver $130MM, but he acknowledged that he may not make the budget as he too is struggling with excess used inventory. Unlike the DE dealer who simply stopped selling new equipment, this dealer has charged his sales force with a ratio of used for every new sale (tractors and competitor combines are 2:1 used vs. new, and for Lexion combines (Claas) the ratio is 3:1). He acknowledged that he may be taking a “death by a 1,000 knives” approach that could result in 2017 sales being down again.
Here is JPM’s summary assessment on US farmer sentiment. It’s not good.
The farmers we hosted remain pretty downbeat about the prospect for profits in the 2016/17 crop year, though they did sell most of the 2015/16 crop during the recent rally. Once again this year much of the focus was on rent, which remains elevated, and, while it may be inching lower, farmers in IA need to put in a written request for a re-negotiation by September 1 for 2017/18; those conversations are going to need to be uncomfortable this year. One farmer noted that he has 20+ landlords, so the process can be time consuming and emotionally exhausting. On a separate issue, the farmers noted that Farm Credit requested that farmers write down equipment values by 20% in January; the longer the down-cycle lasts the more stress on their balance sheets, especially for farmers renting a significant portion of their farmland. None of the farmers are rolling equipment right now, but they do not like to have equipment out of warranty as repair costs can run to $20K out of pocket. Beyond equipment, savings are being made on seeds (by moving to fewer traits or non-GMO), but not enough to break even at current prices.
- farmers are still forecasting a loss (for the fourth consecutive year) in 2016/17;
- balance sheets are coming under more pressure as equipment values are marked down (particularly farmers with a high proportion of rented land);
- renegotiating rents is extraordinarily stressful and time-consuming as most farmers have multiple landlords;
- lenders are becoming more risk averse as the cycle extends.
Finally, for the best indication of just how dire the future is, we look at what those who know the business best are doing in terms of investments.Here is JPM: “Based on data from the Bureau of Labor Statistics, investment in agricultural machinery peaked at $50 billion SAAR in Q4’13 and is now down 58% from peak at $21 billion, about in line with 2002 levels.“
While America was so focused on whether or not there is a recession in the US manufacturing and oil & gas sector, it completely ignored the depression in America’s farming heartland.
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