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Monday, February 6, 2017

peak profit 2


PEAK PROFIT 2

At least five economic issues have resulted from the end of high energy oil.  Each issue adds to and increases all the other issues.  Added debt, less customers, more competition, Automation Peak and costs have increased.  All together make for Peak Profit.  The first, added debt, has been Business As Usual for the last thirty years.  The difference is that back then, debt was good.  Or, I should say, it was profitable.  The problem of course is that most guys running corporations are as dumb as a box of rocks ( and the gals desperately trying to out machismo them, as they lack any kind of testosterone producing testicles, act even stupider as they vainly try to build something without the proper tools in the box ) and being Type A personalities, they double down on stupid since they cannot ever admit to failure.  Once the central banker paradigm broke down give or take ten years ago, business didn’t try to get out of debt but kept getting into more and more.  Partially, because they are idiots, because they blindly follow the accepted business model, and partially because if you believe yourself incapable of making a mistake you’ll never think to change your behavior.  You and me, we see the hole getting deeper we stop shoveling.  These guys just puff out their chest and dig harder and faster ( me Ug!  Me strong! ).

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When extra energy isn’t added to the system, and interest cannot be paid, loans cannot be made.  But bankers need more loans to stay profitable.  So SOME loans are continued, mostly to government and big corporations.  Large companies might not be profitable, but they can pay the interest at least ( as long as interest rates stay low, obviously ).  Companies buy back their shares to inflate the value of the outstanding stocks, giving the illusion of profitability and keeping the stock market inflated.  CEO cash-outs are profitable, and the new suckers investing pay into the Ponzi scheme for paying the loans on the share buy-backs.  A better bad bet than trying to sell a good product.  But, as you might have noted occasionally as you took out too many Payday loans, too much debt can dictate all spending and all decisions.  All that debt you used to buy back stock or buy other companies so as to cash out on the previously widely appreciated brand name, in time it adds up to the point you simply cannot make a profit to save your life. 

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Less customers is obvious.  Less employment equals less money for customers to spend.  At times I actually wonder if the fudged employment numbers-5% at a time that no jobs are available and no one you know actually works makes for a VERY unbelievable number except for idiots like Beck and Limbaugh who think the unemployed are simply parasites ( because, you know, if everybody started their own radio talk show serving as the elites propaganda piece, nobody would be unemployed )- are not for the 99% living in the trenches but for the idiot corporate types.  They can’t see that money for consumption is shrinking so they help keep the system from failing as quickly ( the herd helping to profit the top tier mustn’t alter course ).  Anyway, unemployment needn’t stay at the previous ‘08+ levels of 25% to have the same effect.  Since far more folks are UNDERemployed, you still have enough idiots taking home a paycheck to forestall any uncomfortable Lamp Post List implementation.  Of course, when you don’t work enough hours you can’t exactly buy too much, now can you?

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Going globally, look at another effect of grain inflation and shortages.  When you are already poor-real poor as in not enough to eat, not American poor as in not enough disposable income to buy enough crack cocaine-and grain prices double, are you going to eat even less calories or stop buying goods from China?  Granted, this was never the Next Great Profit Center corporations looked forward to, but it adds to the First World job loss acting in concert to damper profits.  But I’d imagine that even in BRIC countries this has been a serious factor contributing to Peak Profit.  All those one billion Indians working the phones trying to explain to an American why their latest screw job is now company policy, they aren’t turning out to be as good of consumers as hoped.  First, some uneducated Dot Not Feather dude is smarter than most Americans with sixteen years of school, and they actually buy precious metals for saving rather than just consume money to avoid inflation.  Second, new consumer BRIC paradises were idiotic from their very conception.

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What part of finite planet don’t they understand in their quest for infinite growth?  Back in the ‘90’s, you could read about how if every consumer in China drank an extra beer or two, you’d exceed the worlds grain supply just for that one item.  How hard is it to extrapolate from there?  Evidently, from the Fracking Fags and the other optimists out there, very hard indeed.  Just remember, if you call yourself a prepper, you still actually have to make the right decisions to survive.  Just the title itself isn’t magic.  Not like with Papists who go to Heaven regardless of behavior.  And you know what?  Corporate types have no damn excuse for their ignorance.  Henry Ford, that lovable anti-Semitic social engineer that everyone in business loves all to pieces after he successfully turned biologic units into machine cogs, he himself warned your workers needed enough wages to buy the product they manufactured.  Why isn’t he being listened to?   Evidently you cannot pay heed to your Prophets when Peak Profits have become the new normal.  Continued tomorrow with the last three of the five contributing factors in profits taking a big squishy.

END

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7 comments:

  1. Of course, if most people, most of the time, cant afford most of the products on the shelves, J.I.T. delivery makes more sense, and the shelves look like they are staying full (even if the janitor needs to dust the shelves now instead of polishing the floor that has gone almost unused).
    And then when the new models come out, you send back the old items for recycling into the new model reducing the need for new ores and other resources.
    I imagine if this system could keep going on we would eventually see all sorts of pretty new items on the shelves all the time, always just made from minimally recycled old items (change the case and packaging colors and call it model VI).
    Unfortunately this doesn't work for products people NEED - like food and consumables (toothpaste, toilette paper, etc).

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    1. Actually, given the taste of most fast foods and frozen foods, I'm thinking they DO recycle the food.

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    2. Oh sure they try, but turning shit into food via machine is still experimental and takes more energy than it is worth. Turning empty calories and filler into something that can pass for food is much easier and cheaper.

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    3. Which is why I say everyone should have a small garden or least grow there own sprouts from the wheat you recomend they store- vitamins are much greater from your own garden then anything you can buy from the store. Homegrown produce and protein are the only ways I have been able to keep any weight off. Store bought veggies and meat always leave me with cravings that can only be fulfilled by homegrown produce or high calorie store bought foods.

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    4. I think right there is the national overweight issue-no nutrients so we just keep eating.

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  2. I love the point about Henry Ford paying his workers enough to buy what you make. I've been banging on about that for years. Our politicians, propagandists in MSM and heads of industry just don't "get it". They seem to be pig ignorant of the Paradox of Thrift. Hell, I almost scream at people who get all excited about government spending to much / government debt. If the government were to start "paying off the national debt" we'd plunge straight into a depression.



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    1. Too much debt is like too many carbon emmissions. After a certain point, it just doesn't matter as collapse is now Built In.

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