Authored by Bruce Wilds via Advancing Time blog,

Prepare for Retail Apocalypse Part II. While this could be considered a continuation of a trend that started years ago the number of closures about to occur will take things to a whole new level. “Soft underbelly” is a phrase that refers to the most vulnerable part of something, whether it be an organization, a system, or a physical object. This phrase was famously used by Winston Churchill to describe his idea of attacking Germany through Italy during World War II.

Today retailers closing locations across America are about to show retailing is a sector of the economy that has been given far less attention than it merits. Once these locations go empty, many may never again be occupied. This is a continuation of what started prior to the pandemic in response to Amazon and online commerce. The reality of this, for me, comes front and center when I think about the mall across the street from my office losing its last two anchor stores, Macy’s and JCPenny. Without them, the mall will be in dire straits.

While the news is focused on Artificial Intelligence, the drums of war, raising the debt ceiling, and speculation on who might run for President in 2024 few people are talking about the coming wave of retail closures. This round of forecloses will be far more devastating than what we saw in the first wave. Analysts estimate that by the end of 2023, the national brick-and-mortar footprint may be reduced by up to 20%. This is due to many retailers leveraging up when interest rates were low. This is exacerbated by the idea a recession is just around the corner.

Where money flows and who it enriches is a key component of economics, the failure to consider this is a blind spot many people have. Already many big box retailers, grocery stores, apparel chains, home goods companies, and big-name businesses like Burger King, GameStop, and Sephora have announced mass store closings in 2023. These companies are rushing to close under-preforming locations in an effort to limit the bleeding on their balance sheets.

Even while they may deny it, consumers are notorious for wasting much of the money they spend on frivolous unnecessary purchases. This means many consumers could cut their spending in a big way without drastically reducing their standard of living. When looking at the policies flowing out of Washington it is clear many politicians seem to have no idea that all consumer spending and purchases are not created equal. The fact is, consumers should take a long look at how their purchases will impact the economy over time.

Empty Buildings Harm Communities

This environment is where the predatory monster known as Amazon comes back to haunt communities. Online purchases in illiquid hard to find specialty items have a lot of merits. It expands our options, however, when used as a way to avoid visiting and buying from local merchants many negative ramifications come home to roost. While touting Amazon as a model of efficiency what people often forget is that its overall business model is far from efficient. Simply put, it is only after many local stores are gone that people will realize the hidden cost of buying online.  

Fans of Keynesian economics that encourage government spending to stabilize the economy during a downturn tend to discount the importance that where and how money is spent matters a great deal. While many readers may already be telling themselves, I don’t go or shop there anyway, retail closings will result in lots of other small businesses closing their doors. Not only will the retail employees lose their jobs but these stores support many local businesses. The ugly reality is that store retail store closures have a huge impact on communities. This is a cancer that will soon become apparent as rents fall, mortgages go unpaid, commercial real estate values fall, and the local tax base shrinks away. Defaults on loans and bonds in conjunction with the reduced local property taxes will also add to the pain. 

Two recent videos warn we are likely to surpass the number of closures seen during the pandemic when thousands of businesses collapsed. In the first, Clayton Morris delves into some of the chains shuttering locations. He focuses on 20 big retailers in the process of closing down:

In the other video is from City Prepping, it comes with the warning this will be big. The fella does an excellent job of putting into focus the many issues about to descend upon much of the retailing sector. 

Expect To See Less New construction

To make matters worse, this comes at a time when the boom in new restaurant construction based on easy cheap money is coming to an end. High labor cost, sluggish sales, shoplifting, and higher interest rates are all taking their toll on retailers. These factors have many retailers on their heels. Adding to the problem is the Fed’s high-interest rates have put pressure on small, or should we say most, banks in a position where they are cutting back on loaning out money to marshal their funds. These challenges also extend deep into the small business environment and communities. 

When all is said and done, this is an area that is vulnerable as consumer spending continues to weaken. This is not about having enough places to buy goods. It is about the sustainability of real estate prices, jobs, and the overall financial health of our communities. Considering retailing accounts for roughly 10 million jobs this is significant. When coupled with the current glut of office space it is easy to see that this is a harbinger of things to come. 

The concept of retail boycotts is far more often addressed among activists on the political left, primarily because they operate under the notion that they are the “underdogs” fighting against the system.  In reality, the political left is the system.  When almost every major corporation, every globalist foundation and every western government is funding and and enforcing your ideology, you are the oppressor, not the oppressed.

Conservatives, on the other hand, are finally learning that focusing solely on politics is a losing battle and that the “culture war” is in fact the most important issue of our era.  It’s sad that it took this long for the liberty minded to change strategies.  This doesn’t mean that they should give up on trying to put honest and sane leaders in government, it just means that relying on politicians is a gamble and taking direct action whenever possible is going to get better results.

In the past, leftists have tried to apply the mindset of strength in numbers to their own boycotts, almost always resulting in complete failure.  A recent example would be the highly publicized effort by woke activists to boycott Harry Potter writer J.K. Rowling’s media products.  Rowling is a well known progressive who probably helped to create the very intersectional social justice movement that is now trying to burn her at the stake.  But this is how these things usually go with Marxists – One day you are useful to them, the next day you are a threat to them and they’re putting you up against a wall.  

Leftists tend to rank individuals in terms of their “platforms,” meaning a person’s value to them is measured by their reach in legacy media and social media.  When someone with extensive reach (which they believe is the same as influence) suddenly disagrees with one of their tenets, they become enraged and viciously attack.  That person was just a tool they could use to spread their propaganda; that person is not allowed to have their own viewpoints.

Rowling committed the sin of sticking to her 2nd Wave feminist guns and declaring that only biological women can be women, defying the bizarre trans identity narrative.  In turn she made the woke mob an enemy for life as they proceeded to burn Harry Potter books and demand she be “canceled” from any media outlet that might give her a microphone.  This movement culminated in an attempt to push a mass boycott of Hogwarts Legacy, a newly released Harry Potter video game.  

The boycott failed miserably, with the game hitting record sales.  It was incredibly embarrassing for the political left, which often argues that cancel culture is “just the free market telling businesses what the majority wants.”  In reality, cancel culture is nothing more than a tiny minority of people extorting companies into removing content made by political opponents of the left.

This is why boycotts are a double-edged sword – If the tactic is even remotely successful, a group can use it to show they are the majority and gain influence over company policy.  If they fall apart, though, then the group has just exposed themselves as a paper tiger with little to no power.  

Leftist boycotts are often astroturf movements, puffed up and artificially inflated by social media noise and activist puppet accounts.  Also, leftists tend to have far less spending money, which means they have no market power.  On the other hand, conservatives are showing they do have extensive market power.  Bud Light sales across the country have collapsed by 25%-30% after partnering with trans activist Dylan Mulvaney to market their beer.  Cases of Bud Light are now priced for almost nothing as retailers can’t even give the beer away.

Target has lost over $10 billion in market cap in 10 days after they tried to sell pride month merchandise promoting trans ideology to young children, made by a designer who is an apparent satanist.  Leftists are so furious at the success of boycotts against these corporations that they are devolving into cry-bully mode.  They now suggest that the boycotts are actually a form of economic terrorism:

Boycotting target has turned into “economic terrorism, literally terrorism” according to MSNBC talking heads pic.twitter.com/sqihXCUbBd

— Drew Hernandez (@DrewHLive) May 30, 2023

The corporate media is engaging in full blown spin as they rush to demonize effective boycotts of woke propaganda, specifically trans propaganda.  The message is a familiar one:  “You must participate in the collective narrative.  If you don’t participate, this is the same as attacking society as a whole and that makes you a threat.  Silence is violence.  Voting with your wallet is violence.  Doing anything we don’t like is violence.”

Canadian PM Justin Trudeau is even getting in on the outrage, suggesting that it’s “scary what’s happening in the US,” equating the push-back against the social justice agenda in the US with “attacks on 2SLGBTQI+ people” (whatever that means), as if freedom for them means compliance and submission for everyone else. 

This is hilarious, Dictator Trudeau faking outrage over Americans boycott of woke brands.

But apparently the LGBTQTIAA++ has changed its name to 2SLATIBADKQ or whatever.

Listen to it roll off Fidel Castro’s sons tongue. 😂😂 pic.twitter.com/GSe270jp6e

— Concerned Citizen (@cotupacs) May 27, 2023

Target has moved many of its pride displays to the back of stores in an effort to avoid a Bud Light level crash in their sales, but has also recently doubled down on their social justice politics with claims that boycott supporters have “threatened” Target staff.  They have provided no proof of these threats so far.  Ironically, only leftist activists have used scare tactics against the company, including bomb threats, unless Target returns all of its child focused “Pride” merchandise displays to the front of stores.

Leftists argue that this amounts to censorship of LGBT products and businesses by conservatives, but of course it’s the same tactic they’ve been trying to use for years.  Conservatives just did it better.  The free market gets to decide what businesses succeed and what businesses go bankrupt; companies are not owed customer loyalty or financial survival merely because they virtue signal. 

Unlike progressive cancel culture which uses intimidation, stalking, doxxing and personalized targeting to frighten individuals and businesses into compliance, all conservatives have done is stop buying from particular corporations, and it’s working.  Whenever anti-woke efforts get good results, the goal of leftists is to then associate those efforts with some form of aggression.  

Keep in mind that the mobilization of Americans against trans concepts and social justice politics never would have happened if activists and activist corporations had simply left children alone.  But, they have decided to die on that hill instead and insist that your children are actually their children to indoctrinate as they please.  The backlash is only going to get worse for leftists from here on.

Authored by Irina Slav via OilPrice.com,

• Global crude flows have shifted completely in a relatively short period of time.

• Because of the resilience of oil demand Russia’s oil revenues are recovering, too.

• West-African crude flows to Asia have dropped as Chinese buyers are increasingly buying Russian and Iranian crude.

Asian oil imports were due for a marked rebound this month after the end of the maintenance season. Chances are that a lot of the additional oil would be coming from Russia, which has become one of the largest suppliers of China and India.

In fact, Russian oil flows are growing despite claims from Moscow that it has reduced its total oil production. According to Bloomberg, Russian oil exports actually hit the highest since the start of 2022 last month.

This is happening in the context of the most severe sanction push by the collective West against the country. And it is the clearest evidence yet of just how essential oil is for the functioning of the global economy.

Before the invasion of Ukraine, Russia’s biggest oil clients were European countries. For China and India, it was a minor supplier. Since last year this has changed dramatically.

Now, China and India are the two biggest buyers of Russian crude. The two together took in as much as 80% of Russia’s total oil exports last month, according to the International Energy Agency. And the total, at 8.3 million barrels daily, was markedly higher than the annual average for both last year and the year before that.

What’s more, Europe, which placed an embargo on direct Russian oil and fuel imports, has been taking in more fuels made in Asia—notably India. In fact, it seems to be taking in a lot of these fuels if the EU’s top diplomat Josep Borrell had to call publicly for an end to this practice.

Indeed, India’s fuel exports to Europe over the past 12 months have jumped by over 70%, Reuters reported earlier this month. The report also noted that there is precious little the EU could do to change this without plunging the European economy into a deep recession brought on by fuel price inflation.

So, while until a year ago, Russian crude and fuels were going mostly to Europe directly, now almost all crude oil that Russia exports ends up in China and India. From there, processed into fuels, it goes to Europe. The routes have shifted. Oil demand has not.

It is because of the resilience of oil demand that Russia’s oil revenues are recovering, too. In a recent report, Finland-based energy think tank Centre for Research on Energy and Clean Air said Moscow’s oil export revenues have rebounded to the highest since last November over the past couple of months.

The authors noted that total budget revenues were down in April on an annual basis, but added that “Russia was able to export its main crude oil variety, for the first time, at prices that were systematically above the price cap level set by the U.S., EU and allies.”

There has been a lot of reporting about how China and India were benefiting from the discount at which Russian crude sells because of the sanctions. Most of that reporting has had an optimistic spin along the following lines: sanctions and the price cap are working because Russian oil is flowing, keeping global prices in check and bringing in lower revenues for the Kremlin.

What the optimistic spin omits is that Russian oil prices remain tied to global prices, and as global prices recover, so do the prices of Russian crude, as stated by the Centre for Research on Energy and Clean Air. In other words, global oil demand, and Asian oil demand specifically, is so inelastic that no amount of sanctions can sap it.

In further evidence of this inelasticity, Bloomberg reported recently that close to a third of China’s and India’s total oil imports came from three countries: Russia, Iran, and Venezuela. That was up from a modest 12% a year ago, the report noted.

Now that bargain oil imports are so much higher, oil from other sources such as West Africa and the United States have dropped by over 40% for West African oil and 35% for U.S. oil, the report, which cited data from Kpler.

According to the U.S. Treasury Secretary, the sanctions and the price cap are working as intended, reducing Russia’s oil revenues while keeping the international market for oil well supplied. Indeed, from that perspective, they are working as intended. Yet the shift these sanctions have prompted in global oil trade routes is much more important.

It has made Russia more dependent on just two oil-importing countries, analysts have noted. At the same time, it has made Europe more dependent on China and India for its fuels, even with U.S. fuel imports at a record earlier this year.

The two Asian economies are unanimously expected to be the biggest drivers of global oil demand growth over both the short and the long term, along with other Asian nations. This secures demand for Russian crude over the long term, likely to the chagrin of the EU.

Perhaps this would motivate an even faster push to lower oil consumption in the bloc—even if the success of the current push into electrification is not exactly living up to expectations. But whatever the EU decides to push, global oil demand is going nowhere.

Via The College Fix,

‘My fellow Republicans wanted me to lie,’ Cheney said during speech

Former Republican Congresswoman Liz Cheney was booed and protested as she gave a commencement speech Sunday at her alma mater Colorado College — even though she condemned her GOP colleagues in her address.

While she received some applause and support, a contingent of students booed her and turned their chairs around so their backs faced her during her speech, apparently because the former Wyoming congresswoman is Republican, according to news reports.

“When Cheney was introduced – mostly to applause – about half the graduates turned their chairs 180 degrees and sat with their backs to the former Wyoming congresswoman for the entirety of her speech,” the Gazette reported.

The Daily Mail reported Cheney was booed by some grads despite the fact that she was a vocal critic of former President Donald Trump:

“One graduate’s message to Cheney was splashed on her cap. It read: ‘Why listen to a racist, imperialist, transphobic, war monger?? Your hate is loud.’”

As The College Fix reported in March, Cheney has accepted an appointment to serve as a professor at the Center for Politics at the University of Virginia for the fall 2023 semester.

Cheney’s job will include participating in university-wide lectures, serving as a guest lecturer in student seminars, and contributing to the Center for Politics research.

During her speech, she repeated her attacks against Trump and fellow Republicans.

“After the 2020 election, and the attack of Jan. 6, my fellow Republicans wanted me to lie,” Cheney reportedly said.

“They wanted me to say that the 2020 election was stolen, that the attack of Jan. 6 wasn’t a big deal, and that Donald Trump wasn’t dangerous. I had to choose between lying and losing my position in House leadership.”

“No party, no nation, no people can defend and perpetuate a constitutional republic if they accept leaders who have gone to war with the rule of law, with the democratic process, with the peaceful transfer of power, with the Constitution itself,” Cheney said.

“You may find yourself confronting challenges that you could not have imagined, with very few allies by your side,” she said.

“And this morning I want to tell you a secret: When the path ahead is obscure and unclear, you can find your way by resolving to do the next right thing. Resolve to do what is right, even when it’s hard, you’re alone, even when you’re afraid — especially when you’re afraid.”

Freight carriers are in focus after a new report by the Wall Street Journal indicates that retailers – stuck with tons of inventory coming out of the Covid pandemic – have finally started to chip away at their excess goods and may be looking to take on new product this fall. 

Inventories at retailers like Walmart and Target are lower by 9% and 16% respectively from a year ago as cutting prices has helped open up space in their supply chains and make room for new product. 

Product first started to back up after retailers took on more supply to try and quench the massive increase in demand they saw during Covid, thanks to stimulus payments and pandemic relief funds. 

Walmart Chief Executive Doug McMillon said a couple weeks ago on Walmart’s conference call: “In terms of inventory, we’re in good shape. In-stock is improving, and excess inventory keeps coming down. We see it in the numbers, and I’m seeing it on store and [Sam’s Club] visits.”

At one point last year, the report says, Walmart had 100,000 shipping containers backed up at ports waiting for the company’s supply chain to open up. 

And Target Chief Operating Officer John Mulligan similarly said that overstocking was “in the rearview mirror”, though it is unclear how the recent controversy surrounding the company’s “Pride Month” merchandise may currently be affecting the company’s inventory. 

Before Target lost nearly $10 billion in value due to the recent “Pride Month” controversy, in Mid-May, Target CEO Brian Cornell said: “As we sit here, today we’re excited about back-to-school and back-to-college. We’ve got great plans for the holiday season.”

Drew Wilkerson, CEO of Charlotte, N.C.-based logistics services company RXO told The Wall Street Journal: “We’re seeing that the retailers are in a much better position than they were a year ago. Now the question is around the consumer. With everything going on with the macro economy, we still have to make sure the demand is there from the consumer.”

Hapag-Lloyd said on its most recent conference call that it is starting to send trends pick up: “I don’t think that means that we’re now going to see a very quick recovery. But I do think that underlines the point that destocking is slowly but steadily coming to an end, and at some point in time we quite likely will see a bit of pickup in demand.”

J.B. Hunt said this month that while customers are talking about restocking, larger shipping volumes have yet to materialize: “Many of them are reporting or sharing with us that they feel like, by and large, their inventory issues are or have been mostly corrected. But we’re not yet seeing that inbound flow.”

Authored by Katabella Roberts via The Epoch Times,

The Texas Legislature passed a bill on May 28 that could pave the way for locally elected prosecutors to be removed from office for misconduct if they fail to enforce certain laws.

House Bill 17 (pdf) was introduced by Republican state Sen. Joan Huffman earlier this year and it passed the Senate Sunday in a 20–11 vote after passing both legislative houses in April.

It now heads to Gov. Greg Abbott’s desk to be signed into law.

Under the legislation, Texas residents who have lived in a county for at least six months may file a petition against a prosecuting attorney accusing them of misconduct if the top local prosecutor fails to “prosecute a class or type of criminal offense under state law,” or if they instruct law enforcement to “refuse to arrest individuals suspected of committing a class or type of offense under state law.”

The legislation defines a prosecuting attorney as a district or county attorney with criminal jurisdiction, while misconduct is defined as “intentional, unlawful behavior relating to official duties by an officer entrusted with the administration of justice or the execution of the law.”

According to the legislation, a public statement from the prosecuting attorney stating that they plan to adopt or enforce a policy in which they fail to enforce certain laws “creates a rebuttable presumption that the prosecuting attorney committed official misconduct,” and means they can face a removal trial for official misconduct.

The legislation also removes pretrial “diversion programs” which allow for conditional dismissals of cases when permissible under state law.

Abortions, Thefts Divide Prosecutors

If found guilty, a judge may order the attorney’s removal, according to the bill’s text. Once removed, Abbott can appoint a prosecutor’s successor until the next election.

“On receiving a petition for removal of a prosecuting attorney … the presiding judge of the administrative judicial region shall assign a district court judge of a judicial district that does not include the county in which the petition was filed to conduct the removal proceedings,” the bill states.

The legislation comes after a group of attorneys nationwide, including five from Texas, signed an open letter (pdf) stating that they would refuse to prosecute any cases that criminalize abortion in the wake of the Supreme Court’s decision overturning Roe v. Wade in June 2022.

Under Texas law, abortion is a felony, except in cases where the mother is suffering from a “life-threatening physical condition” or there is “a serious risk of substantial impairment of a major bodily function.”

Some prosecutors, including Dallas District Attorney John Creuzot, have also said they do not plan to pursue charges of low-level thefts, such as those involving personal items under $750 that are stolen out of “necessity,” or first-time marijuana offenses.

“Unfortunately, certain Texas prosecutors have joined a trend of adopting internal policies refusing to prosecute particular laws,” Huffman said at a committee hearing in April.

“These actions set a dangerous precedent and severely undermine the authority of the Legislature.”

Elsewhere, Republican state Rep. David Cook, who introduced the House version of the bill, has said the legislation is needed to “reign in rogue district attorneys” and remove politics from prosecution.

Democrats Oppose Legislation

Speaking to The Dallas Morning News in April, the GOP lawmaker said HB17 “makes it crystal clear the rule of law must be respected and enforced in Texas.”

“I support prosecutorial discretion and know it is a central element of our criminal justice system,” Cook added.

In a statement on May 19, the Texas Senate GOP said the bill will ensure prosecuting attorneys follow the law and “not their political agenda.”

However, Democrats and civil rights groups in the state have argued that the bill is unconstitutional.

Texas state Rep. Ana-Maria Ramos, a Democrat, voiced opposition to the bill earlier this month during a hearing on the legislation.

“It is very clear what Texans are saying: They want to choose who their district attorney is,” Ramos said.

“What they don’t want is a grandstanding legislator to say ‘no, we are not going to allow you to have this … voice.’”

Elsewhere, state Sen. Sarah Eckhardt, a Democrat from Austin, said the bill amounted to a violation of the state’s separation of powers, calling it “one piece to an unsettling pattern of top-down power-grabbing.”

“Tools like prosecutorial discretion are critical—especially in a state like Texas, where our local district attorneys are directly elected by the people,” Eckhardt said.

In a recent town hall meeting at the University of Winnipeg, Canadian Prime Minister Justin Trudeau engaged in a lengthy Q&A with constituents which focused largely on socialist policies and woke ideology, eventually culminating in a rhetorical screed about the American public’s push-back against social justice agendas.

A member of the audience identifying as a “two spirited trans woman” says he is “horrified” by the growing US movement to stop identity politics from taking over the national culture, asserting that this makes trans people “feel like they are irrelevant in this world.” 

He then goes on to ask what Trudeau is going to do to protect Canada’s youth from the anti-woke trend (Starts At 1:14:00):

Trudeau labels the reversal of woke politics in the US as “scary” and an “attack on 2SLGBTQI+ rights” (they apparently added even more digits to their club) as well as an attack on women’s rights. He promises his government will protect such groups and guarantee their freedoms.   

It’s important to understand, however, that when trans activists talk about “protection” and “freedoms” what they really mean is government stepping in to enforce gender ideology on the public.  What they want is to be free from criticism and skepticism, which is not a right that any person is entitled to.  

The notion stems from the argument that wide public acceptance is required in order for woke activists to feel safe, and lack of acceptance is the same as violence or “genocide.”  That is to say, if you refuse to bow to the demands and opinions of trans people, you are violating their liberties and are “literally Hitler.”  It’s backwards and the definition of special privilege. 

It is not the job of society to make insecure people feel “relevant” in their life choices or their delusions.  It is certainly not the job of government to use its power to legislate acceptance of subjective theories. 

Not all concepts are meant to be tolerated or embraced.  Specifically, the targeting of young children with woke propaganda.  There is no attack on LGBT people in the US.  Every law passed in red states has been specifically to protect children from indoctrination and sexualization.  The blocking of sex-change surgeries for minors as well as baseless gender fluid concepts in public schools does nothing to harm the gay community.  

The mainstream political narrative conveniently and constantly omits the fact that red state laws revolve around children only.  This is not a mistake.  The goal is to construct a false assumption in the public mind that LGBT rights are being eliminated when no such thing has occurred. 

This is an international disinformation campaign that seeks to “shame” Americans for not complying – “The rest of the world is laughing at us…” leftists say. 

But what if the rest of the western world is waiting for Americans to take the lead and fight back against the narrative?  It’s something to think about.              

Authored by Jeffrey Tucker via The Epoch Times,

I’m not going to be one of those prognosticators who finds evidence of my predictions regardless of the facts. True, I said two months ago that the U.S. economy would be in a solid statistical recession by late summer. This is based on existing industrial trends and weakened labor markets at the high end but most especially by the declining money supply as measured by M2, the only indicator left.

Since financial deregulation, and the redefinition of what constitutes money, we’ve never seen anything like this, nothing close to it. The Fed likes to bury news of the money supply even though maintaining and managing is its only job. It does matter, just like the supply of everything else. And right now it is actually sinking.

Previous increases in 2020 through 2021 have become part of commercial life, endemic in virology or inebriated in substance abuse. The real shock comes when you take the punch bowl away, which is what has been happening. We are at 5 percent declines per annum—not yet like the 10 to 15 percent we saw at the onset of the Great Depression but this is a possible repeat eventually.

(Data: Federal Reserve Economic Data [FRED], St. Louis Fed; Chart: Jeffrey A. Tucker)

The Fed has a major problem. It must let rates rise to meet some termination point, which means above the rate of inflation. But in so doing, it creates the conditions that lead to a genuine decline in the supply of money itself, which creates serious upheaval of an unpredictable sort. There is no winner in this game.

Keep in mind that this is happening even as price inflation is still intolerably high, with the Fed’s favorite measure (the Personal Consumption Expenditures index) hitting records for the year. That was not supposed to happen. This is called stagflation.

It strikes me as impossible that we can avoid a serious recession with such monetary shocks going on. To be sure, we’ve never seen anything like this in the postwar period—either the pumping in or the sucking out of money—so this could be wrong. We’ll see. But generally, starving the economy of that on which it has come to rely will topple lots of illusions.

But here’s what is interesting. The macroeconomic data—which is always behind—is already starting to show that the recession is here. Mish Shedlock draws our attention to Gross Domestic Income, which tends to forecast the Gross Domestic Product by a month or two. At least, it always has before. The latest data show that the GDI has been through two declining quarters. Indeed, it is anomalous for the real GDI and real GDP to diverge this much.

(Data: Federal Reserve Economic Data [FRED], St. Louis Fed; Chart: Jeffrey A. Tucker)

We’ve seen huge pullbacks in the higher end of the investment and corporate sectors, which is exactly what we would expect in the downturn of a Fed-inspired business cycle. Major corporations are reporting missed earnings, including Home Depot and Costco.

Mish also point outs:

• Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $151.1 billion in the first quarter.

• Profits decreased of $60.5 billion in the fourth quarter.

• Profits of domestic financial corporations decreased $25.4 billion in the first quarter, compared with a decrease of $59.0 billion in the fourth quarter.

• Profits of domestic nonfinancial corporations decreased $109.3 billion, compared with a decrease of $22.9 billion.

There is surely far more to come.

How do we know? A friend pointed out to me that after many years in the investment world, he has never seen a product/service mania take hold in the midst of a cycle of rising interest rates. He is speaking of course of Nvidia, which has more than doubled its stock price in less than a year.

After the consumer interfaces for “Artificial Intelligence” went live, capital went nuts chasing the toy, with vast amounts of spare cash being dumped on the company for web integrations.

How do we know this is a mania? Spend a few days with ChatGPT. It is a very useful tool with very obvious limits. It is preachy, inaccurate, behind the times, and full of useless blathering. To be sure, it is great for cheating. It gets you the basic facts and some reliable information on non-controversial topics much more quickly than any search engine.

It is particularly useful since search engines have been wrecked by censorship. I personally find Google to be nearly useless. This is not only due to how the company signed up as a tool of the national security state. It’s also because the internet is completely clogged with amazing nonsense and no algorithm can distinguish what’s valuable from the trash.

Back twenty years ago, it was common that when you found a good website or page, you would bookmark it within folders by topics so you could return to it when you needed it. Over time, that practice seems far less necessary because we had reliable search engines that would give you exactly what you needed.

Those days are gone and users are back again to bookmarking everything. Whereas localized search was once essential and then became unnecessary, they are now necessary once again. I know for sure that I can get the news that matters via The Epoch Times’s own search engines but the same content eludes Google completely.

This is where ChatGPT is valuable. It cuts through the nonsense and provides the essential information you need for basic facts in history. It can also be a delight in composing poetry. For example, I asked for a poem about The Epoch Times in the style of Oscar Wilde and got this in 10 seconds:

Oh, Epoch Times! Thy prose so fine,
Thy headlines bold and crisp as wine.
Thy pages filled with news so fair,
Whose stories ring like truth, so rare.

As Wilde once said, “The truth is rarely pure,
And never simple, but always obscure”.
But thou, Epoch Times, art like a beam of light,
Which pierces through falsehoods with all thy might.

Thy reporters, like knights in shining armor,
Uncover secrets and expose with ardor.
Shining a light on the darkest of corners,
With pen and paper replacing swords for honor.

Oh, Epoch Times! Thy voice so clear,
A beacon of hope in a world of fear.
Thou art the watchman of our times,
A friend of truth, amidst all the lies.

And as Wilde would say, “The truth is rarely pure,
And never simple, but always obscure.”
Yet, Epoch Times, thou dost show us the way,
To seek the truth, and follow it each day.

So, sure, it is fun. It is erudite in ways people are not anymore.

Ironically, what it is not is intelligent, despite the name. It creates nothing, of course, but it is not even particularly insightful, much less intuitive, on what it is you are asking. Sure, it will improve over time but I’m not exactly feeling the earth move under my feet here.

Can we really believe that Nvidia should have a $1 trillion market cap? Count me as skeptical. This looks for all the world like a bubble to me. This should not be a time of bubbles but rather shrinkage across the board. Instead we see once again a mad rush into the new thing.

This suggests that there is a lot more fluff to be squeezed out of the financial markets. Getting off the drug of cheap credit is not easy. While everyone hopes for a soft landing, the Fed is nowhere near capable of achieving that given the situation today.

There’s every indication that as we slog through summer and enter the fall and beyond, we will face a recession the likes of which this generation has never faced before. I might argue in detail that we never left the forced depression of March 2020 and everything else is an illusion. But that is for another time.

But let historians learn this lesson. It is not free markets that create the boom-bust cycles. Rather it is the interventions in the form of central-bank manipulation of money and credit that created these cycles. This contrasts to the theory of the late 19th and 20th centuries. Now we surely know that the physician is not the healer but the source of the problem.

Let us hope that the lesson has sunk in.

After declining in April, the Conference Board’s consumer sentiment index was expected to accelerate its drop (after peaking in Dec 2022 for this mini-cycle). The picture is murkey however as the headline print beat expectations (102.3 vs 99.0 exp) but that is down from April’s final print of 103.7 (revised up from 101.3). Under the hood, both current and future expectations indices declined (from revised higher prints)…

Source: Bloomberg

That is the lowest headline confidence print since Nov 2022 and lowest ‘current conditions’ print since Dec 2022.

Meanwhile, May’s results show consumer inflation expectations over the next 12 months decline modestly from 6.2% to 6.1% – although that level is down substantially from the peak of 7.9 percent reached last year, it is still elevated…

Source: Bloomberg

Finally, the Conference Board’s measure of labor market tightness improved slightly (less jobs plentiful vs hard to get) in May…

Source: Bloomberg

This is not at all what Powell wants to see.

By Adam Andrzejewski, author of the Open The Books Substack

The chaos on America’s southern border has had unintended consequence – a human catastrophe hurting tens of thousands of unaccompanied, defenseless children. 

Despite generous taxpayer funding, the federal infrastructure to provide for these children and ensure their safety is woefully incompetent.

The U.S. Department of Health and Human Services, Office of Refugee Resettlement (ORR), a part of the Administration for Children and Families, provides social services for unaccompanied children crossing the U.S.-Mexico border.

Earlier this year the office came under fire for reports children were being placed with abusive “sponsors” and made to work full time in grueling conditions, violating child labor laws. An Inspector General report released in 2023 additionally criticized the agency for not conducting background checks on employees and contractors charged with caring for children.

Our auditors at OpenTheBooks.com found that the agency spent $2.7 billion to “sponsor” unaccompanied minors – a staggering $18,000 per child. Roughly 150,000 unaccompanied minors were encountered at the southern border in fiscal year 2022. 

However, today, reports indicate that up to 85,000 “sponsored” children are missing – their locations and whereabouts are not known.  

Background

Unaccompanied children are defined as those under 18 who have no lawful immigration status in the U.S. and who do not have a parent or legal guardian that can provide custody.

According to the agency’s Unaccompanied Children (UC) Program website, the office oversees making placement decisions for these minors, releasing them to “qualified sponsors and family members,” and providing the children with legal representation and advice, among many other responsibilities.

Big Spikes in Federal Funding

OpenTheBooks auditors found that between 2012-2022, the program has doled out $12.8 billion in grants, with a substantial increase in 2018 and again in 2022.

Grant spending in this area has increased by about a billion dollars in 2022 over 2021. This year the budget is $2.7 billion, up from $950 million in 2017.

Most spending on unaccompanied minors takes place in Texas ($7.8 billion) followed by New York ($1.4 billion) and Florida ($660 million).

The biggest grant recipients have collected over $3 billion from FY2012-2022:

• Southwest Key Programs ($3.7 billion)
• Baptist Child & Family Services (BCFS) Health and Human Services ($3.1 billion)

Three other organizations have split another $1.3 billion in funding:

• Comprehensive Health Services ($484 million)
• Cayuga Home For Children ($453 million)
• Lutheran Immigration and Refugee Service ($395 million)

85,000 Missing Children And Allegations Of Child Trafficking

Earlier this year ORR came under fire for reports from the New York Times that children were being placed with abusive “sponsors” and made to work full time in grueling conditions, violating child labor laws.

The report also noted that while the agency is supposed to check in with children one month after being placed with their sponsors, 85,000 children could not be contacted.

A Florida grand jury report also accused the agency of “facilitating the forced migration, sale, and abuse of foreign children, and some of our fellow Florida residents are (in some cases unwittingly) funding and incentivizing it for primarily economic reasons.”

An Inspector General report released in 2023 additionally criticized the agency for not conducting background checks on employees and contractors charged with caring for children.  

In 2021, Tara Lee Rodas worked on Operation Artemis, a plan by the Biden Administration to get control of the humanitarian disaster on the U.S.-Mexico border. In April, Rodas blew the whistle on child trafficking with detailed testimony to the House Judiciary Committee accusing the U.S. of being the middleman in a billion-dollar child trafficking operation:

“I thought I was going to help place children in loving homes. Instead, I discovered that children are being trafficked through a sophisticated network that begins with being recruited in home country, smuggled to the US border, and ends when ORR delivers a child to a Sponsors – some sponsors are criminals and traffickers and members of Transnational Criminal Organizations.

Some sponsors view children as commodities and assets to be used for earning income – this is why we are witnessing an explosion of labor trafficking. 

Director refuses to answer or doesn’t know key information

In April 2023, Robin Dunn Marcos, the director of the Office of Refugee Resettlement – the office responsible for the unaccompanied child program– was asked about operations and the 85,000 children the agency reportedly lost contact with.

During questioning, Marcos said she did not believe the sponsor vetting system was inadequate. However, Marcos would not state whether the 85,000 missing children number is accurate.

Additionally, Marcos did not know the rejection rate of sponsorship applications.

https://www.c-span.org/video/?527458-1/refugee-resettlement-director-testifies-unaccompanied-children-us-mexico-border

Summary

There is little accountability or transparency. 

Leadership cannot answer basic questions. Bad actors are taking advantage. Non-profit social service organizations are reaping billions. 

Taxpayers are left paying the skyrocketing bill for a corrupt and overwhelmed system.