Bad Economic News Pouring In
Economic collapse for America seems inevitable
While people cheered the dead cat bounce in the market the underlying economy - what the market actually represents - is continuing to devolve. Here’s a selection of the most important economic stories for preppers in my opinion.
Blackrock - which is one of the largest financial institutions - is in the process of the “get woke, go broke” syndrome we’ve seen kill many a company.
Asset managers like BlackRock have lost credibility on ESG or Environmental, Social, and Governance investing. BlackRock has joined climate change initiatives, committing to pressure companies to reach net-zero greenhouse gas emissions. But when 19 attorneys general (co-led by Nebraska) questioned whether these commitments were legal, BlackRock said it hadn’t followed through on them. Fellow climate initiative member, New York City Comptroller Brad Lander, has inquired about this "fundamental contradiction between BlackRock’s statements and actions." Asset managers have a serious trust problem when investors managing billions of dollars can’t get a straight answer.
In other words, BlackRock put themselves between the rock of the potential wrath of the left and the hard place of their fiduciary responsibility to investors being legally enforceable. Follow through on the ESG and get sued and suffer legal penalties, don’t and the left will use their media and tech lackeys to destroy them. The article continues:
The history of social investing is replete with investments losses. The California Public Employees' Retirement System (CalPERS) has lagged its peers for a decade and ESG commitments have cost it billions. Overall, ESG has underperformed by 250 basis points for the past five years. Another long-term study noted that "ESG funds appear to underperform financially relative to other funds within the same asset manager and year, and to charge higher fees." Furthermore, adopting ESG policies does not cause improved company financial performance. This means asset managers have no financial basis for pressuring companies to adopt ESG.
Wall Street firms market themselves by referencing solid objects — a black rock. For firms making ESG commitments, the appropriate image would be a black box. Asset managers cannot have it both ways: either they maximize financial returns, or they push ESG and net zero. Lander and I both want asset managers to identify themselves. He wants to use the firms that choose ESG. I don’t. Over time, we will see whose returns are better.
John Murante is the Nebraska state treasurer and national chair of the State Financial Officers Foundation.
Understand what that means - the Nebraska state treasurer is saying that the suckers who have their money in BlackRock (retirement accounts) are going to make less money and pay higher fees all so some people in BlackRock feel good. So he’s pulling his government retirement account out of there and putting it somewhere else. This will negatively effect returns for BlackRock which is already not making as much money as non-ESG funds.
Do you know who manages your 401K?
Speaking of oil the US Oil and Gas Association tweeted this out:
Here SPR refers to the Strategic Petroleum Reserve which is what our nation uses in times of war and other emergencies. The victory lap above is because in essence OPEC is working with Russia to squeeze the west with high oil prices. Because of mismanagement our strategic reserve is at historic lows:
The nation's Strategic Petroleum Reserve had 416.4 million barrels in the week ended Sept. 30 – the lowest level since 1984 – after the Biden administration released another 6.2 million barrels, according to Department of Energy data.
Biden had tapped the emergency oil stash four times over the past year in hopes of lowering gas prices, including in March, when he ordered a record-setting 180 million barrels of oil released from the reserve – 1 million barrels per day over six months.
With the releases scheduled to finish this month, the White House said on Wednesday that it would release 10 million additional barrels in November.
The decision to further drain the oil reserves came hours after a coalition of oil-producing countries led by Russia and Saudi Arabia – known as OPEC+ – announced it would slash oil production by 2 million barrels, the first major cut in two years. The move – which came despite lobbying from U.S. officials to do otherwise – threatens to raise oil prices at a time when the world is already combating record-high inflation.
The White House condemned the production cuts, which threaten to push gas prices higher with midterm elections just one month away.
[…]
After hitting a record high of $5.01 per gallon in mid-June, a gallon of gas now costs about $3.86 on average, according to AAA.
And it only came down because we keep using our emergency oil. As that runs out prices will spike back up.
Apropos of nothing six million of our barrels of SPR were sold by Biden to … communist China. At a loss:
The Biden administration sold nearly six million barrels of oil from its Strategic Petroleum Reserve (SPR) since July 2021 to a Chinese state-run energy firm, according to a Daily Caller News Foundation review of Department of Energy (DOE) data.
From July 2021 until the end of June 2022, Biden’s energy department auctioned off 5.9 million barrels of strategic reserve oil to Unipec, the trading division of the Chinese state-owned Sinopec, in an effort to increase the supply of oil globally and drive down fuel costs in the U.S. that were exacerbated by the war in Ukraine and Biden’s climate policies. SPR oil is sold to the highest bidder, and some of the businesses entitled to make bids are American subsidiaries of foreign corporations like Unipec
The DOE sold four million barrels to Unipec in the fall of 2021, almost six months before Russia’s invasion of Ukraine, making over $252 million from the sale, according to the FY22 Emergency Drawdown No. 2 Successful Awards Report. Each barrel was sold on average for roughly $63, or over eight dollars less than the average price of oil per barrel that month.
Hey, what’s a $48,000,000 loss between friends? Right?
The “renewable” energy push isn’t fairing so well either:
General Electric is laying off 20% of its onshore wind workforce in the U.S. – part of its renewable energy business – resulting in hundreds of job cuts.
"We are taking steps to streamline and size our onshore wind business for market realities to position us for future success," a GE Renewable Energy spokesperson told FOX Business. "These are difficult decisions, which do not reflect on our employees’ dedication and hard work but are needed to ensure the business can compete and improve profitability over time."
The spokesperson added that the company is also reviewing its onshore wind footprint in Europe and the Asia-Pacific region.
As of the end of 2021, GE's Renewable Energy business had roughly 38,000 employees.
The theory that a “green boom” in the economy from all these wind and solar companies seems to have turned out to be smoke and mirrors. Emphasis on smoke:
The average millennial carries more than $100,000 in non-mortgage debt. And student loans are not the main reason:
Credit card debt jumped by $46 billion, or 13%, by the end of the second quarter of 2022, the biggest percentage increase in more than 20 years, according to the Federal Reserve Bank of New York. In addition to credit card balances, Americans also opened 233 million new credit card accounts during the second quarter, the most since 2008.
More than a quarter of survey respondents (29%) reported not paying their credit card bill in full every month and 23% of these delinquent borrowers have over $10,000 in debt.
"Among millennials, credit card debt tends to increase with age," the Real Estate Witch survey said. "Geriatric millennials, who are farther along in their credit journey, carry an average credit card balance of $6,048 — about 20% more than younger millennials."
I don’t know what a “geriatric” millennial is but it’s a dumb term. The real issue here is that for years millennials were told that things like basic home economics and financial planning were right wing plots against them. Now not learning that stuff in school is biting them in the butts.
The median wage in America can’t keep up with inflation:
U.S. wages are failing to keep up with rising prices. A study by the Federal Reserve Bank of Dallas showed median wages declined 8.5% in the second quarter of 2022 compared to a median decline of 6.5% over the past 25 years.
Researchers found 53.4% of all workers experienced real wage declines.
“While the past 25 years have witnessed episodes that show either a greater incidence or larger magnitude of real wage declines, the current time period is unparalleled in terms of the challenge employed workers face,” the Dallas Fed said.
The debt and wage story will rear up later this year as prices increase and we see waves of formally comfortable (but irresponsible) people impoverished or homeless. The ant and grasshopper fable will be re-enacted in real time.
And finally Swiss financial giant Credit Suisse is about to cause a 2008 style meltdown:
Here’s a better deep dive into what exactly is going on:
Watch your portfolios.