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Thursday, August 15, 2019

Ruh-roh

Is GE the new Enron?
An accounting expert who raised red flags about Bernie Madoff ’s Ponzi scheme has a new target: General Electric Co.

In a research report posted online Thursday, Harry Markopolos alleges the struggling conglomerate has masked the depths of its problems, resulting in inaccurate and fraudulent financial filings with regulators. The report, which numbers more than 170 pages and was reviewed by The Wall Street Journal, is a mixture of detailed financial analysis and sweeping claims.

Mr. Markopolos said, in an interview ahead of the report’s release, his group found GE’s insurance unit will need to bolster its reserves by $18.5 billion in cash and faulted the way the company is accounting for its oil-and-gas business. All told, he said, the accounting problems amount to $38 billion, or 40% of the conglomerate’s market value....

The report claims that policy premiums paid to GE are low compared with what rivals typically receive and that GE isn’t receiving any premiums at all on more than a quarter of policies, because those contracts are considered paid in full. The group says that, even after the $15 billion boost, GE’s reserves are well below what would be expected for such a troubled group of policies. GE in the early years front-loaded gains from the long-term-care business by collecting premiums when policyholders were young, the group claims, but failed to properly record reserves as the covered population aged and claims ran at higher levels than originally expected.
As we pass the recent stock market peak and enter a new correction or bear market, a lot of fraud is going to be uncovered. This is almost certainly just the start of an ongoing series of accounting revelations.

85 comments:

  1. The breakdown and breakup of the American Empire is going to be lit, Boomers hurt the worst.

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  2. GE has been a joke in a lot ways anyway as one of those companies where you can't hardly ever tell if they actually make something, or just license out the brand.
    I just checked and did not realize that "GE Appliances" is no longer art of General Electric, but ... Chinese owned since 2016, with rights to use the GE brand until 2056.
    Phony almost all the way down.
    I asusme they still make their own jet engines power generation/distribution equipment, but who knows these days?

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  3. This is the obvious outcome from a "shareholders first" economy. If you can't cook the books, you can't optimize the stock price.

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  4. GE, it should be noted, is heavily politically connected, particularly with the last administration. As is the usual when a corporation is so, there are usually financial irregularities hiding on the books. Lehman was connected as well, and when they detonated in spectacular fashion, no one went to prison for it. Lehman was not alone in getting off scott free, no one went to prison for the decade long orgy of fraud that was the mortgage bubble.
    -Unknownsailor-

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  5. The crash and subsequent wipe out shall be epic. People will look at the Great Depression with nostalgia.

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  6. GE does make its own heavy equipment.

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  7. Does GE still make Miniguns?

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    1. I think Dillon Aero took over that business.

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  8. I'm not involved in that side of their business.

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  9. As the Supreme Dark Lord said the other night, when the tide goes out, we will see who's been swimming naked.

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  10. Grandfather worked at GE for decades, and gave all his kids his stock when he died. Mom was getting nice checks quarterly for years. Last year, she got 1 check for $5. This year she expects even less. It's not worth the paper it's printed on.

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  11. Never trust a gecko who speaks with a limey accent. Every. Single. Time.

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  12. @3 anorganicbear

    I don't think that the problem is prioritizing shareholders -- after all they are in theory a from of accountability. Rather the main problem is that the overall result of tax policy tends to favor capital gains over dividends. Stock valuations can be manipulated w accounting BS that kicks the can down the road a few quarters on bad news, but dividend cash cant be faked at least not for long. End result is more speculation than old school "investing".

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  13. I worked in corporate IT at GE from 2009-2013. First as a contractor (HCL, token middle aged white guy), later as an employee.Their IT standards and processes were the best I've ever seen but the flip side was that it enabled massive use of H1B's. Ambitious people were quickly advanced but management was ruthless about measuring performance and getting rid of employees deemed underachievers. It was rather like a cult. I don'tmiss working there.

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  14. Always is the question: Is this THE turn?

    My guess is that the last time credit creation played a large role in the skyrocketing of asset prices were the twins: John Law's Mississippi Scheme in France, followed closely by England's South Sea Bubble...300 years ago. Neither episode held a candle to the last 38 years, neither in amplitude nor duration. Neither episode allowed an entire galaxy of industry to arise under such artificial conditions. The SSB preceded a 64 year bear market on the London Stock Exchange, according to Prechter. I don't think Boomers will ride out that kind of volatility.

    What happens to a vast network of greenhouses growing roses in Fargo, ND during January when the power company no longer will accept the (thought to be) no-limit MasterCard in payment? After most of an adult's lifetime of "greenhouse expansion," we have no idea what of today's industry can survive Nature's actual condition.(*)

    Since 1981, for each dollar borrowed and spent into the "GDP-counting" economy, a second dollar, seemingly a gift from the dollar fairy, came into being as an asset, a receivable, on the lender's balance sheet. As bond prices rose in a bull market, there was an insatiable appetite to lend, and so a galaxy of bonds (and other IOU's like--ahem--public pensions and expansions to Medicare/Medicaid) was issued.

    Everybody got rich, right?

    PS: Packing up US industry, shipping it overseas and importing tens of millions of people (labor) suppressed wage & CPI inflation, so all that credit just flowed into asset prices. Destroying the Middle Class was a feature, not a bug for folks like the Koch Bros, but don't let that bother you, as recently as yesterday someone wrote another hagiography of (for) them, suggesting that they're the real-life incarnation of Milo Enterprises. (Catch-22 reference, not the current guy.)

    (*) As more and more agriculture is owned by absentee landlords (in NYC, Palm Beach and Beijing) I'm reminded that Ireland was a net exporter of foodstuffs during the infamous Potato Famine. We in Flyover Country might want to remember that.

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    1. Difference then and now is then the members of the military that enforced the exports were British.

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  15. @10 Who's swimming naked?

    I suspect all of us. As our host notes often, there is no Nation of the USA. There are at least several, only barely on peaceful terms even as the band plays on while deck chairs re-arranged. Wait until the mad scramble for the few lifeboats begins, because when the water's 40 deg F and full of sharks, nudity will be the least of anyone's concerns.

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  16. GE's been playing money games for a long time. They were one of the recipients of the bail-outs of 2009, which they promptly used to take on more debt (hey! its low interest rates!) in order to buy back stock to boost its price (and reward senior management). I think this time they will go down for the count, with their profitable divisions (jet engines, power generators, etc.) being spun off as separate companies.

    All of the post Jack Welch CEO's have been parasites.

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  17. I worked for a publicly-traded company for a few years, and one of the C-level financial guys was quite open about their capacity to manipulate and control the stock price from within the organization.

    After this guy talked about those tools, our stock went up! But that doesn't mean we did better as an organization. It doesn't mean that our products were better or that our company actually had more value.

    Yes, shareholders were happier, right, but it was manipulation, not a reflection of value.

    I'm pretty sure I don't want to work for any publicly-traded orgs in the future... anything that draws focus away from providing a product or service to your customers is almost certainly a corrupting influence.

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  18. All of the current conglomerates are a result of FED cheap money. They are the manifestations of bubble economics. They will go away just like the conglomerates of the 1970's did (which were a product of a different phenomenon and time - 1970's stagflation).

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  19. @dc, the massive drop we have seen in bond yields recently (30yr Treasuries just broke below 2 percent which is an all time low) will likely delay the Turn for a bit longer. It has already sparked a new round of refi activity in the housing sector and also given a reprieve to giant corporate debtors like AT&T.

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  20. This comment has been removed by the author.

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  21. #15" I'm reminded that Ireland was a net exporter of foodstuffs during the infamous Potato Famine."

    More fiction. The foodstuff in Eire was being sent from Ireland to England under armed garden by order of the small hats. Research the Irish Holocaust by Chris Fogarty.

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    1. I already knew this but have been looking for a good book on the subject-THANKS.

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    2. Also, if you're interested in Irish history there are several good books on the original Irish slaves to America & the W Indies on Amazon.

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  22. I guess they have run out of taxpayers money. Ultimate Rent Seekers.

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  23. @20 I change the direction of causality. Painful, costly experience taught me that stocks can't fully give up their credit-bubble levitation act until collective trust in that galaxy of IOUs ends.

    Bonds. It is ALL about bonds.* The bond market dwarfs the stock market, and is where most intangible "value" currently resides. Intangible value is a pure product of mass (mob) psychology, nothing more. What happens when your money is entirely debt-based and the collective trust in debt being honored begins to burn like hydrogen in the Hindenburg, and it is quite literally IMPOSSIBLE to monetize the amount of existing debt without openly issuing banknotes with skyrocketing numbers of zeroes on their face? Oh, and electronic transfers of money are in everyone's pocket?

    Totally uncharted waters we navigate.

    *This is the massive point of departure for me with Prechter.

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  24. @20 The yield decline on the short side (3-month T-bills) is killing me. I really hate this system where wealth is simply stolen as a matter of course by "special" entities, owned by "special people" associated with politics and banking.

    The simplest way to hide theft and promote criminality is to debase money via credit. Unfortunately, this only works as a con game, because the marks (people like you and me) have to go along with it (or better, our fellowmen all go along with it and we're dragged along without our consent.)

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  25. GE can't even make decent light bulbs anymore. Total mess of a company.

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  26. @24 It is all about bonds

    Indeed. Did you see Trump's tweet yesterday?

    "CRAZY INVERTED YIELD CURVE!"

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  27. @25 - The yield decline on the short side (3-month T-bills) is killing me.

    I hate to be the barer of bad news but 3-mth Tbill rate are going to zero.

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  28. The yield decline on the short side (3-month T-bills) is killing me. I really hate this system where wealth is simply stolen as a matter of course by "special" entities, owned by "special people" associated with politics and banking.

    "I have seen the enemy and he is us." Everyone blindly piles their savings into the system via 401k's, pension funds, mutual funds, ETF's, etc. ERISA has the entire US middle class propping up the system.

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  29. @28 Maybe so. Multi-year CDs above 2% are starting to look attractive. There's always a voice inside my head that refuses to believe this FantasyLand has yet ANOTHER turn of the wheel in it...but with the 30-year lurching to a new All Time Low yield, that's the message it's sending. Truly my fellowmen are IN.SANE. I can't wait to read Denninger's purple-faced rant.

    Maybe Glassman was right all those years ago. Dow 36,000 no longer looks daffy. But just because Clown Airlines has enough fuel for another airshow doesn't mean I want to hitch a ride at this altitude.

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  30. Second check today: No heartbeat. Twice in one year.

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    1. Prayers sent. For strength and hope.

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    2. @ Zaklog

      Praying for you and your wife, that God will bless you with his healing grace and strength, that you and your beloved will feel the comfort of his hand in this time of grief and mourning.

      You are not alone, brother. Your little one is beyond the reach of the prince of this fallen world, and rests in the arms of the King of Kings.

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  31. Hmmm, I wonder if the Devil Mouse also has accounting irregularities?

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  32. So the Fed is supposed to "lower rates" even as the "economy" is supposedly firing on all cylinders and stocks are sailing above the stratosphere?

    Here I thought Peak Crazy was men having their genitals amputated, getting boob jobs and having a pseudo-orifice (that they have to keep from naturally closing up by twice-daily insertion of a painful spreader) and declaring themselves girls.

    Literally the only reason people are bidding up the 30-year is a reach for capital gains, it's a short position on rates (and the very existence of that galaxy of debt is the largest naked, synthetic short of the dollar...or of anything...in history.) @30 Andrew, you are right, it is a positive feedback loop system.

    Bull market psychology is run by the part of the brain that does not do reasoning. It is close to the seat of emotion, and gets its rationalizations for action from observing the herd. Never has there existed such a mammoth industry cranking out one rationalization after another, "explaining" why trannies aren't crazy, why gays are normal, why kids aren't harmed by sex or exposure to pornography, and why it doesn't matter how much debt is issued, IT'S ALL TRUSTWORTHY, as are ALL of its issuers.

    I mean, who's not to trust in the US Congress? Or GE, GOOGL, MSFT, or any C-suite?

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  33. The foodstuff in Eire was being sent from Ireland to England under armed garden by order of the small hats.

    I've heard of Savage Garden but never Armed Garden.

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  34. @dc - people are bidding up the US bond market because it's the only game in town. The other main bond markets, i.e. Europe and Japan have negative yields!

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  35. @30 Do you read Hussmanfundscom? I think a decline of historically high profit margins while boomers retire is the point of vulnerability for stocks and bonds via wage inflation. The markets seem more sure of a recession than the Fed. The Fed needs a recession first and they have not been good at predictions. The Fed just follows along.

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  36. “GE in the early years front-loaded gains from the long-term-care business by collecting premiums when policyholders were young, the group claims, but failed to properly record reserves as the covered population aged and claims ran at higher levels than originally expected.”

    Great, so when the company does go tits-up a lot of demented old people will suddenly lose their long-term care insurance, forcing their families or the state to pick up the tab. I wonder how far the financial rot has penetrated the Boomer retirement complex, and just how fragile the latter truly is. Getting oneself and one’s family through is going to require men of unusual strength.

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  37. The Gaelic Lands wrote:More fiction. The foodstuff in Eire was being sent from Ireland to England under armed garden by order of the small hats.

    Does that make Ireland not a net exporter of food?

    The fact that Englishmen, or Jews, or whatever was stealing the food out of the mouths of Irishmen doesn't change that the food was being sent abroad.

    Or did I miss something?

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  38. The financial rot is widespread, GE is not the only guilty party. This is the Scarlet Letter and currently GE is the only one in the spotlight. I have a family member who worked for GE and money games were the rule, not the exception. Follow the money.

    Joe Middle Class is largely locked into 401K's by the various tax regulations. Today there is essentially no other retirement investment opportunity.

    The Boomers, but also the generations that follow them will loose their retirements when the currency implodes. But rather than debt forgiveness the government will attempt to save all the serfs by nationalizing all retirement funds and making rules about what is fair and what is not. Don't have too much schadenfroid about the boomers because they will drag the rest of us with them.

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  39. Remember that story about how General Dynamics was given a contract to produce military aircraft by a mafia-influenced President in order to recoup 300m of mob investment money?

    General Electric has worked like that for even longer as far as I know, although their products have supposedly had at least passing quality unlike GD's.

    "The other main bond markets, i.e. Europe and Japan have negative yields!"

    Which would be natural state for a money supply that is either fixed, increasing more slowly than its dependent population, or directly proportional to its dependent population. Money doesn't come from nowhere, unless it's based on nothing.

    In this case the illusory financial system is a manifestation of public faith in the system's priests. It's not even Mammon these days, his worship's just a facade for The Liar behind. Literal evil miracle, especially considering that said faith is fraudulently propelled.

    This only turns around when there are no more suckers to prop it up, and you know what they say about suckers... except in this case the system only exists by exponentially sucking suckers dry unto death, so at some point there really will be no more suckers.

    Those who will not hear, and will not see, and will not know are the chosen sacrifices; these whom will become dust.

    Want to avoid? Play your resources close to the chest, invest close to home with people that there is no avoiding your knowing.

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  40. Angantyr wrote:Does GE still make Miniguns?
    No, Dillon Aero has the military contracts now, and handles support for legacy units. Dillon Aero is an offshoot of the Dillon ammunition reloading press company. Dillon Aero broke into mini-gun field by re-engineering the feeder/delinker, making the unit more reliable and fixing a few undesirable design quirks.
    -Unknownsailor-

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  41. "Don't have too much schadenfroid about the boomers because they will drag the rest of us with them."

    They'll die the same way they celebrated woodstock, on the ground, in filth. Only this time there will more pain and no drugs or fornication.

    They're physically past the point where they can do anything sufficiently significant for themselves anymore, and anyone else'd be damned before they'd help the typical Boomer out at this point.

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  42. The dragging part is already done, and the draggers are about to be cut loose as dead weight.

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  43. GE is in trouble because Hillary lost.

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  44. Negative yields are a bet that yields go more negative (AKA bond price will rise even higher than they already are.) I think you're confusing price of stuff and yields on debt.

    No one EVER lends money at a guaranteed loss. Or do you think that if you're losing money on every unit, you can make it up on volume? If originators of long term debt were forced to hold it to maturity, all this stupidity would cease on a dime. In the meantime, it's just like that con artist Charles Prince said, "as long as the music is playing, we've got to get up and dance."

    In a hard-money or stable money regime, prices would decline as innovation occurs, all other things being equal. Stable deflation, a backdrop for historically widespread abundance, peace and rising living standards.

    Then along came the bankers...especially Central Bankers (and other assorted parasites...)

    These days we've even been treated to a rationalization that claims that people can have a negative time preference for money. In other news, up is down and trannies are sane.

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  45. dc.sunsets wrote:No one EVER lends money at a guaranteed loss.

    If money is something that you can create from nothing by lending it, and it costs you nothing to do that, why not lend it?

    For the central banks, that is how it works. They can create unlimited amounts of money, as long as they can find suckers to borrow. So, lend a million, get 900k back, and you wind up 900k ahead.

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  46. @45

    "No one EVER lends money at a guaranteed loss"

    Unless the commie governments force them (they are forcing them)

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  47. Time for Golman-Sachs to buy out some more balance sheets and get the paper mill back on three shifts. Maybe the wheels come off this time.

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  48. Robin, there are some protections at the state level for GE/Genworth LTC insurance policyholders. The state guaranty association would end up on the hook if Genworth goes belly up. Definitely a bad situation, but not a complete loss to the policyholder.

    That has happened in the past. I had heard of a study done on an LTC insurer in Pennsylvania where they failed and the state's guaranty assn took over. The policies remain in effect with something like 97% retention.

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  49. re: "bond yields"

    EU nations are playing the same kind of currency devaluation games China is trying to beat Trump's more aggressive use of trade barriers.

    It's a last ditch effort by the EU's socialist governments to "#resist" Trump's agenda.

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  50. @31 Zaklog:
    Prayer that God will pour out His grace and comfort upon you and your wife; and that He will console you both in this time of grief.

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  51. dc.sunsets

    The market is taking a hit because the Fed did not lower the federal funds rate like it should have.

    Look at the entire yield curve for treasury rates here:

    https://www.barchart.com/economy/interest-rates

    This is what happens when the federal funds rate was at 2.45% and the bank prime rate was at 5.5%.

    The Fed is driving this inverted yield curve because the Fed has set the shortest term interest rate at above the level of the 30-year bond.

    The Fed started raising the federal funds rate and, lo and behold, they've destroyed the credit market. They did the same thing with the housing market and the nasdaq.

    The US is still outperforming other economies because of his supply-side tax cuts.

    The increase the the 10-year bond futures isdue to a mathematical relationship between interest rates and bond prices. A government bond trading in the secondary market before maturity whose coupon rate is above the market interest rate, will sell at a premium to par because that is how the math works out.

    The increase in price, however, is not a signal in a greater demand for a bond. Therefore, there is no guarantee a bond will sell at that price.

    Rising government bond prices due to falling interest rates means falling demand for credit and is actually a negative signal.

    Trump is restructuring the economy:

    Gold and Oil are global indicators, and with gold going up and oil going down, that indicates a slowdown. The US 10-year treasury going up indicates a fall in the demand for credit.

    US unemployment, however, is going down and wages and compensation has gone up because of Trump's tariff plans and his tax cuts which are redirected toward benefiting the US economy.

    If the Fed had left the Federal funds rate alone, we'd be at over 5% growth right now.

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  52. @53

    This is ignoring the flight of capital from the rest of the planet to the US, largely due to Trump's trade policies, which abandon Obama's position of using the US Economy to prop up the rest of the world.

    The effects of the rest of the planet piling into the US markets for safety should be obvious, so it's rather amusing to see dc.sunsets acting as if these dynamics don't exist.

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  53. Angantyr wrote:
    Does GE still make Miniguns?

    No, Dillon Aero has the military contracts now, and handles support for legacy units. Dillon Aero is an offshoot of the Dillon ammunition reloading press company. Dillon Aero broke into mini-gun field by re-engineering the feeder/delinker, making the unit more reliable and fixing a few undesirable design quirks.
    -Unknownsailor-

    ========================

    Thx for that info. Ah, the fun that could be had with a minigun... particularly at an Antifa rally....

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  54. "This is almost certainly just the start of an ongoing series of accounting revelations."

    Oh boy, you ain't kidding. A personal anecdote, if I may be so bold:

    We put solar panels on our house back in 2016 with Solar City (since merged with Tesla). When we did a refinance, we decided to use some equity to pay the panels off. No problem. Except that when SC and Tesla merged, we started getting emails from Tesla saying our payments were late. But we showed them the "Paid in full" letter from SC and all was well. For a while. Until they did the same thing three or four more times. That became very annoying.

    We sold the house back in March, and showed the buyers the "Paid in full" letter. Come a week ago, though, the new owners apparently called Tesla because they hadn't completed the operational transfer or whatever they had to do to coordinate the change in home ownership with the electric company. We then get an email from Tesla saying we owe them the entire amount of money that we already paid them, because the payment we sent back in 2017 got reversed a month after they received it.

    The problem, of course, is we didn't send the payment. It went straight from the Title Company to SC. I called the Title Company, and they have record of the wire transfer going out, but no record of any money coming back. Nor did their bank request the transfer be reversed.

    So the question now is what the hell happened to that $25k? I'm letting the Title Company run with it for now, but isn't the SEC doing some investigations of Tesla? Think I remember reading about that a little while back. Given that, this turn of events smells like someone scrambling to cover up for embezzlement or some other kind of malfeasance.

    I could be wrong, I suppose. It could just be an honest mistake. But how the hell does a company not notice a $25k chargeback for more than 2 years?

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  55. "All of the post Jack Welch CEO's have been parasites."

    Of course. He's their role model.

    Wherever he goes, the company that hires him becomes a hollowed-out shell.

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  56. Martin Armstrong has pointed out that we are in a 5000 year low for interest rates and it's a different game afoot as we have never quite been in this pickle before. For hundreds of years from now, they will be writing about our times and wondering what the heck were they thinking! He believes there will be a great reset coming perhaps in 2021 but has not commented publicly on what he thinks that will look like. Let's just say we've already suffered through ten years of financial repression, hey what's a few more decades of it ... I'm not terribly optimistic about the state of rebellion against this. As Denninger says, we're acting like sheep. What's it going to take to shake enough people out of that?

    Regarding bond yields vs price vs cap gains, it can be a bit confusing for the layman. Let's just say it's a crowded trade in US Treasuries at this time. Most everyone jumping on board is looking for the capital gain and those have been rather good so far, but I wonder who's going to be left holding the bag when that ride ends sooner or later. Or what's going to happen when the price of the bond rises sufficiently to cross the line to nominal negative yield at maturity. That can happen long before actual negative rates. The little guy can trade some around this, but the big huge institutional players don't have that luxury.

    Regarding GE, well they've been doing a good job of falling apart and hiding it well for many years. Seems they can't quite zip that fly closed now. Look at the 20 year chart of its stock price. The last high $33 in 2016 never came close to the 2007 high $42.15 let alone the 2000 high $60.50. That alone ought to tell you something. Only a matter of time now before it plunges below the 2018 low $6.66 (ooh!) and likely breaks the 2009 low $5.73.

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  57. FWIW regarding GE and heavy equipment, this being what I hear when working on RR equipment. In the days of steam, there were a number of locomotive manufacturers. By the time deisel-electric took over, it was down to 4 companies. Fairbanks-Morse, Alco, EMD (GM) and GE. Alco (American Locomotive) bought their components from GE. Later GE stopped selling those parts, and Alco went belly up. GE started making some ginormous locomotives,4000 and even 6000 hp. You see them on the road a lot. In early 2019 GE merged its locomotive division with a company called Wabtec, and it is now known as Wabtec Freight.

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  58. RA,
    We know what they’re thinking. They’re traitors, deliberately destroying their own nations, impoverishing their own people.

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  59. Angantyr,

    Grazing fire is your friend, amirite?

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  60. @22 The Gaelic Lands

    >> @15" I'm reminded that Ireland was a net exporter of foodstuffs during the infamous Potato Famine."

    > More fiction. The foodstuff in Eire was being sent from Ireland to England under armed garden by order of the small hats.


    This is what is known as A Distinction Without a Difference.

    What you just described is... as @15 said.. a NET EXPORT OF FOOD.

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  61. @55: Or this from Hickock45: https://invidio.us/watch?v=HtK5gB6po_U

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  62. @58

    "As Denninger says, we're acting like sheep. What's it going to take to shake enough people out of that?"

    Everybody is waiting for somebody ELSE to be the first to literally shoot up the C-suite floors of a couple Wall Street financial businesses (which one(s) doesn't really matter). Once there's a couple of copycats, then it's TSHTF time for everybody directly connected to the Fed.

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  63. wahr01 wrote:@53

    This is ignoring the flight of capital from the rest of the planet to the US, largely due to Trump's trade policies, which abandon Obama's position of using the US Economy to prop up the rest of the world.

    The effects of the rest of the planet piling into the US markets for safety should be obvious, so it's rather amusing to see dc.sunsets acting as if these dynamics don't exist.


    Look at the dollar-price of gold. It is actually ticking upward and it has broken the ceiling above it's trading range after the quantitative easing ended and it settled at its sideways movement.

    This indicates that, at the margin, people prefer to hold gold rather than dollars, a measure of a falling demand for liquidity.

    You are, however, not wrong. The euro-price of gold, the yen-price of gold, the renminbi-price of gold, the pound -price of gold is also rising...and rising even faster and more violently than the dollar-price of gold.

    So, the capital flight out of foreign currencies and foreign economies is even sharper and faster than for the United States...which is a benefit to us.

    Again, the tax and trade policies Trump is pushing is designed to cannibalize the rest of the world.

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  64. Re: "the tax and trade policies Trump is pushing is designed to cannibalize the rest of the world." No. It is designed to END their cannibalization of us. If an impenetrable wall fell around the borders of the USA and our territories we would still survive in comfort. If said wall fell around the borders of the Anglosphere we would survive in even greater comfort. AMERICA FIRST!

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  65. The book "The Tenth Generation" George E Mendenhall (1973) is well worth studying in the light of the present historical circumstances. It is an analysis of the rise and fall of civilizations and kingdoms based on the history of the nation of Israel in the Bible. The thesis is that on average, nations only have a life of about 300 years, ten generations, and then they are destroyed from within. This conclusion was based on a study of I think 21 ancient civilizations, some of which, like the Hittites, vanished from the pages of history until exhumed by archaeologists like Mendenhall. He summarizes his findings as follows (P 217):

    "The Tenth Generation witnessed and took part in the destruction of civilization. It seems possible -- both from direct historical evidence and by analogy with later periods of crisis which seem to be similar in other respects - to make some generalizations about that Tenth Generation." (Summarized.)

    "1. ... it is not characterized by poverty.
    2. ...it is characterized by a relatively high density of population...
    3. ...a breakdown in confidence in the existing social and political organization.
    4. ...a rejection of past ideologies and a desire for something new.
    5. ...there is a loss of sense of direction.
    6. ...an increasing resort to illegitimate force and violence, which is almost inevitable following the loss of confidence in the political organization which by definition is the "monopoly of force."
    7. ...the increased insecurity of everyone in the areas is deeply felt, and there may be a sense of foreboding, of impending doom.
    8. Doom comes: by whatever agency is perhaps by now irrelevant. The political, social, and economic structures of society are destroyed or enormously weakened - usually by violence, either from within, or without. Society simply disintegrates.
    NB. That the destruction is caused in part by 'internal' agencies is demonstrated by Judges 9 and reinforced by the letter from the military official of Cyprus to the King of Ugarit in 'Ugaritica'...The universal destruction that attended the late Bronze Age cannot be attributed to one simple cause.
    9. ...deurbanization takes place. Cities are abandoned...a high percentage of the population lose their lives and what we call civilization - writing, art ...wealth, literature,...institutionalized religion - either cease to exist, or disappear..."

    "Large social organizations 'seem' at least to be absolutely necessary to support a large population, but large social organizations rapidly tend to become intolerable to the populations, the real persons whom they dominate and whose well-being the effectively determine, whether good or evil."

    At the age of sixteen I became a Christian and after reading the Gospels decided that Christ's eternal Kingdom was the only one worth belonging to, working for and giving my life to. That was almost 70 years ago and I regret not one moment of it. I and my darling wife, have had a great life and marriage in service to our blessed Lord Jesus.
    (damac)

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  66. M king. A similar thing happened to my friend with his old house. Mortgage got sold, and THREE companies tried to foreclose at the same time.

    Lucky for him he had the stubs for all the payments and a good friend who is a lawyer, or he would have lost his house.

    My advice? get a lawyer now before Tesla forecloses on the property. Even if you don't own it, they will try to come after you.

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  67. rumpole5 wrote:Re: "the tax and trade policies Trump is pushing is designed to cannibalize the rest of the world." No. It is designed to END their cannibalization of us. If an impenetrable wall fell around the borders of the USA and our territories we would still survive in comfort. If said wall fell around the borders of the Anglosphere we would survive in even greater comfort. AMERICA FIRST!

    Yes, this is a better way to put it. The rest of the world will no longer cannibalize the United States.

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  68. @61
    You forgot one from the North American list - Montreal Locomotive Works. They made some real innovative diesel engines. They were the first to manufacture the blunt nosed "safety cab". Throughout the early and mid 70s most all the large Canadian railroads were purchasing their engines. However, by the early 80s Canadian National was pretty much the sole purchaser of their production line. Ultimately they ended up being purchased by Bombardier in 1985 and then , after only a few years they were sold to GE.. Sadly, no signs of their existence remain. Their large manufacturing plant was ultimately razed by GE and most of their engines have been scrapped..although there are a few obscure short lines that are running one here and there.

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  69. GE just sold its locomotive business. Same thing GM did a couple of years before it failed. The difference is that for the past two decades or so GE was the dominant builder, wheeas when GM sold EMD in 2005, it was selling the brand that was dominant from the late 1930's when railroads started replacing steam, until GE dethroned it.

    For a couple years GE had a monopoly on the locomotive business due to the "Tier 4" emissions regulations. The GE four-cycle "GEVO" diesel engine met the requirements, while the two-cycle EMD "710" did not. Today, EMD is marketing a Tier 4 compliant locomotive, with a new four-cycle engine, but there haven't been big orders coming in. Some railroads, principally Union Pacific and Norfolk Southern are rebuilding old units to increase their service life.

    In general, the locomotive business, respecially domestically has been extremely cyclical and the scope of products, but when you are the biggest fish in the pond, even if the pond is drying up a bit, that's a business conglomerates will normally retain. GE selling family jewels is telling.

    Always remember. Earnings are estimates, but cash is fact. I'm looking forward to reading the report.

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  70. Errata:

    scope of products has been constrained by the loss of four axle switchers and road switchers, as well as the absence of any significant Amtrak orders since the 1970's era EMD F40's were replaced by GE Genesis P42's in the early 1990's. State and municipal transit agencies have turned to niche builders like Boise Locomotive and now Siemens.

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  71. @61

    In the later (post 19011) steam days, there were three dominant builders, Baldwin, American Locomotive Company and later the Lima Locomotive works, which until the 1920's specialized in industrial and logging engines called Shays. There was also others such Climax, Heisler and Vulcan, but if you wanted big power, you went to Baldwin or Alco. In the 1920's, when the "drag freight" era came to a close, Lima became known as "The Scientist of Steam", noted for their "Superpower" designs.

    IN the 1930's, Baldwin continued to think that diesels would remain a niche product. They bought a small switcher maker-Whitcomb, but never thought that would be anything but a supplier for industrial and shortlines.

    Their efforts were too little and too late. Alco was a little more enthusiastic, but both were wedding to steam era ideas and physical plants. EMD rapidly dominated, with Alco (using GE electricals) a distant second. Baldwin struggled on, and finally exited the new locomotive business in 1956, after merging with Lima five years earlier in a marriage of two dysfunctional enterprises.

    By 1958, GE decided it wanted to have the whole enchilada (in part because of some issues with Alco "244" diesels failing while bearing "Alco-GE" on the owners manual) and it started offering the "Universal series". Alco exited the locomotive business in 1969, and due to extensive use in Canada, Montreal kept offering Alco designs until the mid 1970's.

    Fairbanks Morse was a late entrant and a minority builder that never really seriously threatened a lasting footprint. There were reliability and infamiliarity issues with their opposed-piston engines. Ironically, today F-M still makes O-P engines for marine anf industrial markets, and owns the rights to the Alco "251" which remains in service on some roads, fifty years after Schenectady closed its doors.

    In a further bit of irony, the space shuttle "crawlers" were powered by Alco 251's until replaced by the new Cummins QSK-95 engines.

    https://www.thisdayinaviation.com/tag/alco-v-16-251c/

    If you really want to understand the players and how diesel-electrics, being a different more versatile animal put the old steam builders, there's a book called From Steam to Diesel by Albert Churella (1998). Hardcopies are tough to find, though.

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  72. I grew up in Schenectady NY where GE once had its HQ. Those days, fantastic. Downtown was filled with business. My entire family worked there for generations and bought the stock through payroll deduction. As I found out later, several un married aunts and uncles willed their stock to my parents. We never knew this and lived an exceedingly modest life growing up. Used cars, very small home, no vacations and everything on sale. Parents grew up during the Great Depression and saved everything you could imagine like shoe boxes of buttons and rubber bands. Everyone passes away and as we are going through moms personal items, we find a good sized metal suitcase in the bottom of a clothing dresser. No keys so we drill it out. On top was bank passbooks from every known bank in the area. Newspaper clippings, then finally a huge stack of light green GE stock certificates from Bank of N Y Mellon. We had no idea these existed after growing up almost in rags. $2.1m at the end of the trading day at $40.00 a share. We knew it would never go high again as once neutron jack came in, there are 2 buildings left where there were dozens. Now it's a welfare town. The old ALCO plant is a casino for old people. GE was once a good company but like most things in the US, it gets destroyed. Don't get me started on unions.

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    Replies
    1. GE had nothing to do with unions. Management gutted the company after deliberately destroying the good relations between management and the larger community. They wanted management to have zero loyalty.

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  73. The GE story will be told when they write the decline and fall of the American Empire. GE had the best brand identity (lightbulbs and refrigerators in every home) and they blew it. For some reason Druckenmiller doubled down on GE even with this news.

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  74. Andrew wrote:The yield decline on the short side (3-month T-bills) is killing me. I really hate this system where wealth is simply stolen as a matter of course by "special" entities, owned by "special people" associated with politics and banking.

    "I have seen the enemy and he is us." Everyone blindly piles their savings into the system via 401k's, pension funds, mutual funds, ETF's, etc. ERISA has the entire US middle class propping up the system.

    And yet the middle class is the enemy of the elites: those they wish to wipe from existence.

    map wrote:US unemployment, however, is going down and wages and compensation has gone up because of Trump's tariff plans and his tax cuts which are redirected toward benefiting the US economy.
    Is this real, actual unemployment, or merely numbers-manipulation? I mean the ease of manipulation on this is obvious: imagine a small town of 100 people in the workforce that has only 50 people employed getting a big business moving in and creating 100 more jobs, but instead of hiring any of the unemployed of the town they import 100 workers — now the rate of unemployment is 25% [down from the 50%] but none of the townspeople benefitted.

    Dirk Manly wrote:"All of the post Jack Welch CEO's have been parasites."
    Of course. He's their role model.
    Wherever he goes, the company that hires him becomes a hollowed-out shell.

    I'm reminded of Mitt Romney.

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  75. OneWingedShark wrote:map wrote:US unemployment, however, is going down and wages and compensation has gone up because of Trump's tariff plans and his tax cuts which are redirected toward benefiting the US economy.

    Is this real, actual unemployment, or merely numbers-manipulation? I mean the ease of manipulation on this is obvious: imagine a small town of 100 people in the workforce that has only 50 people employed getting a big business moving in and creating 100 more jobs, but instead of hiring any of the unemployed of the town they import 100 workers — now the rate of unemployment is 25% [down from the 50%] but none of the townspeople benefitted.



    There is a question as to how real the employment numbers are since they have been layered with manipulations for decades. The thing is, the current measurements have not been altered so at least the unemployment statistical methods are carried over from previous administrations.

    One tell that the numbers are real is to observe the reaction of the Fed. A few months ago, there was a big increase in monthly wages by some unprecedented amount, the Fed freaked out, and the market was thinking that the Fed was going to raise rates...so the market tanked.

    As far as job growth going to foreigners...yeah...that is a problem but it can be corrected later. What matters is that the volume of economic activity as measured by wage and employment growth has gone up.

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  76. Stg58/Animal Mother wrote:Angantyr,

    Grazing fire is your friend, amirite?


    You are indeed... :-)

    ReplyDelete

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