28.   When Dementia Replaces Meritocracy – Unravel the Numbers for an Insight

The American energy crisis is totally the result of Biden’s Executive Order cancelling the Keystone Pipeline and his other attacks on fossil fuels.  Remember 18 months ago when we were energy independent?  Quite a contrast with Biden now going around the world begging for oil from foreign countries while proudly claiming “America is going through a healthy transformation” 

Another indication of idiocy passing for good decision making in the Biden Administration, Biden has sold oil from our Strategic Petroleum Reserve (SPR).  You will remember that the SPR was created to buffer our country in the event of an emergency.  This is not an emergency; this is a self-inflicted crisis.  Because of different reports, I am not sure how much has been sold.

Some reports are that the SPR oil was sold to a Chinese company owned by a Chinese investment firm partially owned by Hunter Biden.  That is consistent with my perception the USA is the Biden family piggy bank just like it was for Obama and the Clintons.

Last week we began to see the front edge of the impact of Biden’s attack on fossil fuels.  The Biden Administration cheered the employment report by the Department of Labor which showed a 372,000 increase in jobs for June with an odd slight increase in the unemployment rate.  The ADP survey of private households told a different story reporting job loss.   The month of June ended with a 10% decrease in a gallon of gas and mortgage rates declining to 5.7% from almost 6%.  A mixture of data.  Let us unravel it here.

A young, single mother of four that is my favorite server at my favorite restaurant last week had about half the normal tables occupied (another data point).  During my meal, she paused her activities long enough to sit at my table and ask me if the recent decline in gas prices was temporary or the beginning of a trend.  She explained that the pay she was receiving no longer covered her cost of gas to drive to and from work.   My reply – “Temporary, because our government is in the control of highly educated idiots who have no real-world experience.  With your real-world experience, you would do a better job than any of the Democrats in office, elected or appointed”.

Folks, we are watching capitalism balance supply and demand in the midst of an economic bubble and anarchy with our leadership Administration dementia having replaced meritocracy.

1. The demand for gasoline is down because the price at the pump rose so high so fast that households had to reduce the amount of gasoline they bought because they also had to buy other necessities.   
2. The combination of rapidly increasing mortgage rates and rapid increase in home prices has destroyed much of the demand for buying a home – traffic is down, sales are down, and mortgage applications are down.
3. Several home builders reported to me last week that their material prices are stabilizing or declined but the cost of labor is soaring. Obviously, labor still catching up to inflation.
4. In our conversations, all of the home builders described to me the ways they are trying to hold onto their trained employees. They are in the same boat as all business currently.  But employment is a lagging indicator and the layoffs have started but will surge this fall.
5. The ADP report and the slight increase in the Unemployment Rate means that we are witnessing the return of the 20% of Americans that have happy paid not to work. They are re-entering the workforce just as layoffs begin.  UGLY.

Meanwhile The Fed is full of “Hope” for a soft landing, but they must continue to tighten monetary policy despite the Atlanta Fed having stated that the adjusted 1st Quarter saw a-1.6% GDP growth and the 2^nd Quarter saw a -2.1% GDP growth.  Please note that we have met the definition of Recession with two consecutive quarter of declining GDP but also the rate of decline accelerated.  While a soft landing is doubtful in my mind, The Fed raising Federal Funds Rates in a Recession this month while public companies probably report poor to middling second quarter results is absolutely a predictor of a horrendous stock market. 

With the central bank for Europe about to begin raising interest rates and the Chinese economy melting this will be a global recession with stagflation, a combination with the potential to be EPIC.  Mr. Jaime Diamond, the greatest banker on the global scene since J. P. Morgan, was quoted a month go saying “We are headed into an economic hurricane”.  Remember my description of heading into the Bermuda Triangle during a category 5 hurricane on a little sailboat with a senile captain?  I am an optimist – “This will be a memorable experience”.

Please pray:

1. That God exercises his control over our government at all levels.
2. For the “Forgotten 599” surviving Americans being held as political prisoners by Biden and the Demented Marxists in hell hole conditions in the DC Gulag.  
3. For honest elections because without them we are not free.
4. For the valiant Ukrainians.

Let’s Go Brandon!

“The sea became rough because a strong wind was blowing. When they had rowed about three or four miles, they saw Jesus walking on the sea and coming near the boat, and they were terrified.  But he said to them, “It is I; do not be afraid.” Then they wanted to take him into the boat, and immediately the boat reached the land toward which they were going.”

(John 6:18-21)   New Revised Standard Version, Oxford University Press)

Stay healthy,

Ned 

July 11, 2022        

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