Auto and Housing Stocks Get Destroyed

The last few days have been days of reckoning for the stock market.  The question only remains: is this a small, short term stock market correction, or is this the beginning of a bear market that will take out much of the value that has been generated over the last ten years since the 2008 crisis.

HOUSING STOCKS GET HAMMERED

During the post 2008 “recovery” people were screaming hysterically about a housing market that was never going to go back down and that would continue to see prices grow year after year, forever.  But as home sales and prices began to slide and interest rates crept up over the last 60 days, another very serious trend has emerged without much attention: housing company stocks have been getting absolutely destroyed.  That said, most of the delusional “economist” commentators continue to insist that the “fundamentals” of the housing economy are strong.

“I think fundamentals are strong out there, but I think buyers are going to continue to be involved in the market particularly at the low end,”

How very 2008.

These “experts” seem to conclude that everything is ok–it’s just that rising interest rates are making a home purchase a little more difficult.  People for decades were purchasing homes at double-digit interest rates, in fact in 2008, the interest rate was around 6%.  But this time around we see the housing market beginning to look very shaky as interest rates hit 5%.  Throw on top of that Trump’s insane tax cut financed with $1.5 trillion in debt and that will eliminate deductions for many home owners, tumbling housing stocks and weak wage growth and there is no way for the would-be home buyer to keep up.  This is not healthy and interest rates can’t be the only thing we blame.  This is a massive failure of leadership.

More challenges to home builders:

“On the other side, homebuilders are facing massive increases in cost, they’re really having problems with finding skilled construction workers; they’re also having higher material costs as commodity prices go up. So you’ve got higher costs in building, higher prices from a consumer perspective, and that’s just really making the earnings growth tank,” Gibbs said Friday on CNBC’s “Trading Nation.”

In what world are these “fundamentals” strong?

AMERICAN AUTO COMPANIES GET WRECKED

The “big three” American auto companies have also been taking a lot of damage in this supposed “very healthy” and “best” economy in the “history of the world.” As has been discussed repeatedly on this blog, the insanely high prices, of even a pickup truck, these days is making it very difficult for the American consumer.  But instead of looking at why income isn’t keeping up with inflation or why costs are going way beyond what people can afford, the auto industry “expert” economists once again bring out the interest rate boogeyman and blame him for all of the auto companies’ problems:

So, why are Ford shares plummeting?

In the short-term, auto stocks are falling because interest rates are rising.

Actually, how about the fact that it now costs $50,000 for a fairly average pick up truck, which is basically the entire annual salary (before taxes) for the average American worker.  In what world is it a good business model to offer a product that nobody can afford absent a eight year financing loan?  When your entire business relies on your customers taking on a huge amount of debt in order to buy your product, perhaps the question should be about how to cut costs while still being able to make a profit instead of figuring out ways to just get your American chump to take on more debt and pay more interest.

Others now claim that auto stocks are “irrelevant,” but the reality is auto stocks usually take the biggest dump right before the economy.  They are the canaries in the coal mine:

“We all know before the whole economy goes south, autos do,” said Jon Gabrielsen, CEO of Cabo San Lucas, Mexico-based J.T. Gabrielsen Consulting LLC. “That’s why I think they’re dropping off on all the autos.”

The 2008 crisis came about because bad loans were being written to people who had no business getting them.  This time, loans are being offered to people who have no business getting them other than at the low rates that the loans were offered.  In other words, we went from an underwriting problem–where shitty loans were being offered to shitty people (in terms of creditworthiness)–to issuing loans to people who looked like they could afford them because the interest rates were so low.

As interest rates now begin to rise to reasonable and responsible levels, levels that in the history of finance are still low but closer to reality.  The problem is the entire recovery has been built artificially on the back of cheap money.  If not for the low interest rates, the recovery would not have happened the way it happened.  All these people are waking up and realizing that they can’t make the payment on their adjustable rate loans, that they did not save any money during the supposed “boom times” because they were too busy taking on more debt.  They realize they failed to get any meaningful wage growth (especially when inflation is factored in) over the last ten years, and that  they have been footing the bill for increasing healthcare costs.

Meanwhile, the greed at the top continues.  Their incomes grows and their tax burden falls while the rest of us eat cake.

The boom times are when you are supposed to put away money for a rainy day.  Average Americans on an individual level and their government at the group level did not do that.  The storm is coming and there is nothing in the piggy bank.

But hey, blame the Fed.  Blame the interest rates.  Blame anything other than your own  crappy financial decisions.

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Trump Destroyed The Economy, Now Blames Others For Being a Failure

Before the election, Trump repeatedly called the economy a bubble.  Of course, that was when the black guy was president:

But then as soon as he became president, suddenly it was the BEST ECONOMY IN THE HISTORY OF THE WORLD!!  the BEST STOCK MARKET IN THE HISTORY OF THE WORLD!!

The reality is when Trump took office he inherited an economy that has been propped up in the years since the financial crash by low interest rates which have created cheap money.  With that cheap money, people have taken on mountains of debt and purchased homes that they never could have afforded if-not for the low interest rates (cheap money).

And what did Trump do in the middle of what he used to call a “big fat bubble?” He decided to pass 1.5 trillion in tax cuts that he funded with debt (because we don’t have anything else left to pay for it with).

So during this “booming” economy, Trump continued along the Obama path of pumping up massive debt, and is upset that unlike Obama he will not have extremely low interest rates to keep everything propped up.  Naturally, he blames the Fed.  In reality, this is his own damn fault along with Obama’s.

The national debt is the alcoholic and Obama and Trump were the enablers and co-dependents.  The alcoholic needs to be allowed to hit rock bottom before the real recovery starts.  The co-dependent enablers, Obama and Trump, have never let that happen.  Can this country take rock bottom?

America’s Exploding Debt, Comparisons to the Pre-Great Depression Boom Times

One of the top economists in the United States, Robert Shiller, just compared the current economy to the insane boom times that preceded the Great Depression.  With the Dow blowing past its all time high today, the question seems more relevant  than ever.

“The 1920s is quite a legend that people are often thinking about,” Shiller said Friday on CNBC’s “Trading Nation.” “I look at 1929 particularly as the end of the roaring ’20s and it ended in a bout of speculation. Between May and September of ’29 the stock market went up over 30 percent in just a few months.”

Why the comparison?

“At that time it seemed like it was a kind of gambling. The word gambling was used a lot to describe the market at that time so it became vulnerable. We’re not exactly in that circumstance but we do have the market that has surged since 2009 so there is something of that spirit today,” he said.

The S&P 500 hit its market bottom in March 2009. Since those lows, the S&P 500 has rallied 334 percent in the longest stretch on record since World War II without dipping into a bear market.

In boom times, you save money and get everything in order to prepare for the bad times — winter is coming and you should be ready for it.  During this latest boom cycle, however, Americans are saving next to nothing, taking on more household debt than ever, while experiencing almost no wage growth.  Meantime, American corporations have also taken on record debt and have seen stock prices divorced from the actual value of their companies.

The American government has spent recklessly, passing a massive tax cut financed with debt, and blowing through trillions of dollars in spending with ease.  For fiscal year 2018, the gross national debt increased by $1.27 trillion dollars to a new high of $21.52 trillion in national debt.  And the debt is growing at a break-neck pace.

While we can push off questions about the sustainability of our national debt or ignore the issue during the good times, what happens when the economy tanks?  How will we be able to stimulate an economy if we are broke?  Will other countries continue to have faith in the U.S. economy (and thus U.S. currency) if the market crashes and a recession hits?  Will we be able to service this massive debt if interest rates continue to rise?  What happens if unemployment spikes and tax revenues dramatically increase?  What do we do about all these tax cuts we can’t afford?  What do we do about all the aging baby boomers and their exploding Medicare and Social Security costs?

We shall see.

Debt

Picture from the Surface of a Comet

This is a real picture from comet 67P.

MLW4plB

These photos were released today by ESA.  The photos come from the 2014 Rosetta Philae mission landing a probe on comet 67P.

Canadian astronaut, Chris Hadfield tweeted the picture:

A cliff approximately 430 feet high is visible in the picture, but a part of the cliff has since collapsed.  The bright spots in the picture are reflections from sunlight.

More photos from the mission are available here.

And some perspective on the size of the comet here.

More photos and animations:

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Trump’s Supreme Court Judge Pick Gets More Bad News

Up until the middle of last week the data points were interesting but not impossible to deal with for Brett Kavanaugh, the judge President Trump picked to sit on the Supreme Court.

One woman, Ford, came forward and claims that Kavanaugh tried to rape her when they were both in high school.  She put another man, Mark Judge, in the room during the incident in addition to Kavanaugh.  That second man, Judge, said that he did not remember the incident happening but also refused to go under oath to testify about it.  Kavanaugh for his part denied the claim very clearly but also had a few incidents that called his credibility into question.  We also learned of some other circumstantial evidence suggesting that part of Ford’s story–that Kavanaugh was a heavy partying drinker back in the day and was drunk when he sexually assaulted her–was true.

Last week things got more complicated.

First, we had a different lady post on facebook that she remembered talk about the incident back in high school.  She then incredibly went on to conclude that the incident “did happen,” even though in the sentence before she said that she had only “heard about it.”  Doesn’t make much sense.

The only information we can glean from that is that women, especially teenagers who already like to gossip, do sometimes talk among themselves even if they do not report the incident to authorities.  They warn other women–careful with that one, he’s physically aggressive, etc., but at the same time they are too full of shame or guilt to go forward with proper allegations to authorities.  It happens.

Second, we learned that Kavanaugh was a frat boy in a fraternity that some say is notoriously hostile to women.  Interesting.

Third, we learned that female law students were told by their professors, Amy Chua and her husband Jed Rubenfeld, that Kavanaugh likes female law clerks–eager newly graduated lawyers who go to work for a judge for a year before getting a “real job” (it’s very prestigious in the law world)– with a “certain look,” or who “look like models.”  And the particular professors would know, since their own daughter just scored a clerkship with Kavanaugh.  Creepy.

Then on Sunday, a big bomb dropped.  A second woman, Deborah Ramirez, came forward and claims that Kavanaugh put his dick in her face and forced her to touch it.  Her story had some similar data points as the first story–heavy drinking and aggressive sexual conduct by Kavanaugh after having gotten his target woman sufficiently drunk.

In that article about Ramirez, one man was quoted in saying that he remembered Kavanaugh frequently being “incoherently drunk” during their college years.  Not a horrible allegation in itself, but with the other data points does tend to show Kavanaugh had a close relationship with alcohol and getting drunk during his high school and college years.  This corroborates the alcohol part of the stories by the women coming forward.

We also learned in that article that Mark Judge, who is Kavanaugh’s friend, has said that he had never seen Kavanaugh act in the way that has been alleged by Ford (Ford says Judge is the second guy in the room when Kavanaugh allegedly sexually assaulted her in high school).  Elizabeth Rasor,  an ex-girfriend of Judge, however, says that Judge told her a story where he and a group of men got a woman drunk and then took turns having sex with her.  This would directly contract Judge’s statements, and is probably why Judge is refusing to testify under oath about all of this–even if it means his friend’s nomination to the Supreme Court could be threatened.

But then the big bombshell dropped Sunday night.  Michael Avenatti, the lawyer representing the porn star Stormy Daniels (Daniels says she had an affair with Trump that began within a month of his wife giving birth to Baron Trump), says he has been retained by a third woman who has claims against Kavanaugh. He also says multiple witnesses can confirm that Kavanaugh and his friends were known to get women drunk or high on drugs and then run a “train,” on them where groups of men would take turns having sex with the intoxicated woman.

And then there is this gem:

These are extraordinary allegations, and I don’t think anyone in their right mind can pass judgment on this until all the evidence is in.  This means the nomination should not be rushed through and the allegations should be investigated.  Only then can we draw some conclusions about all of this.

Supreme Court Nominee Kavanaugh and Sexual Misconduct Allegations

THE ALLEGATION

Christine Blasey Ford, a college professor, alleges that approximately 35 years ago, when she was about 15, and  Judge Brett Kavanaugh was about 17, Kavanaugh and another boy his age, Mark Judge, locked her in a room and did the following:

Speaking publicly for the first time, Ford said that one summer in the early 1980s, Kavanaugh and a friend — both “stumbling drunk,” Ford alleges — corralled her into a bedroom during a gathering of teenagers at a house in Montgomery County.

While his friend watched, she said, Kavanaugh pinned her to a bed on her back and groped her over her clothes, grinding his body against hers and clumsily attempting to pull off her one-piece bathing suit and the clothing she wore over it. When she tried to scream, she said, he put his hand over her mouth.

“I thought he might inadvertently kill me,” said Ford, now a 51-year-old research psychologist in northern California. “He was trying to attack me and remove my clothing.”

Ford said she was able to escape when Kavanaugh’s friend and classmate at Georgetown Preparatory School, Mark Judge, jumped on top of them, sending all three tumbling. She said she ran from the room, briefly locked herself in a bathroom and then fled the house.

THE EVIDENCE
The direct evidence thus far is Ford’s word against Kavanaugh’s.  Kavanaugh has categorically and unambiguously denied the allegations:
“This is a completely false allegation,” Kavanaugh said in a statement Monday morning. “I have never done anything like what the accuser describes—to her or to anyone. Because this never happened, I had no idea who was making this accusation until she identified herself yesterday. I am willing to talk to the Senate Judiciary Committee in any way the committee deems appropriate to refute this false allegation, from 36 years ago, and defend my integrity.”
Mark Judge, the second teenaged boy in the room (now of course a grown man) also denies the event took place.  However, Judge is refusing to testify under oath about it.  It is strange that Judge is not willing to testify because he can single-handedly clear this up.  The accuser put him in the room, therefore if he denied it ever took place it would turn into her word verses the word of two people.  But he’s not willing to do that.
THE ISSUE
When a case comes down to one person’s word over the other, and no other evidence exists, it is very difficult to prove what happened.  That said, circumstantial evidence can be looked at to see if it has any bearing on the case.  Secondly, the credibility of the witnesses will also be reviewed.  The credibility determination is crucial.  If one of the witnesses has a history of being less than truthful or failing to tell the entire truth or to have engaged in other deceptive conduct, then that will weigh heavily against that person.
THE CIRCUMSTANTIAL EVIDENCE
The circumstantial evidence seems to weigh against Kavanaugh:
  • Ford claims she first revealed the incident to a therapist in 2012.  However, she did not identify Kavanaugh specifically, and she says the therapist incorrectly noted that four people were present.
  • Ford’s neighbor said that Ford had mentioned the assault (without naming Kavanaugh) last year as the #metoo movement gained momentum.
  • Ford claims she took a lie detector test and that she passed the test.
  • Judge wrote about drinking heavily in high school and trying to hook up with girls, he also references Kavanaugh as a participant.
  • Kavanaugh’s yearbook contains quotes which back up Judge’s assertion that the two were heavy drinkers as early as the 10th grade.
  • Judge wrote that sometimes men need to use “uncontrollable male passion” when attempting to have sex with a woman who is not being clear or certain about consent (whether she wants to have sex or not).

The circumstantial evidence shows that Ford did not make up this allegation in connection with Kavanaugh’s nomination (that is not to say she fabricated it at some point in the past).  She had brought it up as many as five years before and likely within the last two to three years (but before Kavanaugh was nominated to the Supreme Court).  The lie detector does not certainly establish her truthfulness, but it does establish that she is willing to be probed for truthfulness.

Judge’s writings and Kavanaugh’s yearbook passages establish that both passed themselves off as “heavy drinkers” during their teenaged years.  This does not establish that they were in fact heavy drinkers, but does to a certain extent support Ford’s allegation that both were “stumbling drunk” during the incident: she says they were drunk and they both claim to have been heavy drinkers at the time.

Judge’s comment about uncontrollable male passion shows that he at least believes or asserts that men need to be sexually assertive when women appear uncertain or have not been clear on whether they would like to engage in a sexual encounter.  In other words, if she isn’t sure, push her into it.   This does not show that Kavanaugh felt the same way, but it does appear to be consistent with the alleged conduct: be aggressive sexually in order to gain a sexual conquest.

THE CREDIBILITY OF THE WITNESSES

This is probably the most important factor, and here Kavanaugh has not done himself any favors.  In 2006, when he was in hearing to be appointed as a federal judge, Kavanaugh was accused of having being involved in or receiving information related to emails stolen by Republican staffers from Democratic politicians in order to help push through Republican court nominees.

A senator asked Kavanaugh the following while Kavanaugh was under oath:

“Did Mr. Miranda ever provide you with highly specific information regarding what I or other Democratic senators were planning in the future to ask certain judicial nominees?”

Kavanaugh’s response was a as follows:

“Not at all, senator,”

In the hearing this month, however, emails were disclosed showing Kavanaugh had direct contact with the Republican staffer who had stolen the emails and that they had phone conversations regarding information contained in the stolen emails.  While Kavanaugh may not have participated in the theft, it is not wholly truthful for him to make a “not at all” statement.  There is a certain level of deception, though very mild, being practiced by Kavanaugh while under oath.

A second incident of deception also arose during the confirmation hearings this month.  Kavanaugh was asked if he was involved in anyway with the torture memos prepared by President Bush’s lawyers while Kavanaugh was working as a lawyer in the White House.  The memos are now widely seen as a poor attempt to justify the illegal torture of prisoners.

His response:

he was “not involved” in “questions about the rules governing detention of combatants.”

The evidence:

On Thursday, an email was released showing that Kavanaugh emailed John Yoo, the Department of Justice lawyer responsible for the Bush-era “torture memo,” about the program on Sept. 17, 2001. “Any results yet on the 4A implications of random/constant surveillance of phone and e-mail conversations of non-citizens who are in the United States when the purpose of the surveillance is to prevent terrorist/criminal violence?” Kavanaugh asked.

Here again, Kavanaugh is being less than forthcoming.  While he may not have been involved in formulating the legal opinion, he was indeed at least involved in discussions related to the issue.  He should have admitted that instead of making the blanket statement he was “not involved.”  Again, this shows that while perhaps not perjuring himself, he has been less than fully honest and has practiced at least a low level of deception when testifying under oath.

Other questions about his honesty can be read about here.

WHAT NOW?

The responsible thing to do at this point would be to have the allegation fully vetted by investigators and to delay the hearing.  Republicans are trying to instead get Ford on the record as soon as possible so they can close the hearing and immediately move Kavanaugh’s nomination through.  Democrats want to delay and already seem to believe the allegations are true.

While the allegations are unproven at this point, there is certainly enough circumstantial evidence and credibility issues to warrant a further review of the matter before the nomination goes forward and this man is put on the Supreme Court for the rest of his life.

Sacramento Deputy Sheriff Shot Dead

On September 17, 2018, at 1:44pm, deputies Julie Robertson and Mark Stasyuk responded to a disturbance call in Rancho Cordova.  Upon arriving on scene, the deputies were fired upon by the suspect and Deputy Stasyuk, 27, was shot dead.  He was a four and a half year veteran of the Sacramento County Sheriff’s Department and was assigned to the Rancho Cordova Police Department as a patrol officer. Deputy Stasyuk is survived by his wife, mother, father, and sister. He was preceded in death by his older brother.

The suspect is identified as Anton Lemon Moore, 38, was on probation for a gun crime.  The incident started with an argument at an auto parts store in the Sacramento area, authorities said Tuesday.

“As soon as they arrived and engaged the subject, he turned as if to run or flee and then immediately turned around and started firing without warning,” the sheriff said.