So I took a break from the chain restaurants and decided for a more regional sandwich chain that is fairly new to the area Jersey Mike’s. You guessed it, they are from Jersey and are embarking on a huge nationwide expansion. Here is my review.
Jersey Mike’s traces its history back to 1956 when a young Mike Cancro (17), on advice from his mother, decided to buy Mike’s Submarines. He rebranded it as Jersey Mike’s in 1987. And today there are more than 1,000 locations, with a bunch more to come.
Locally, Jersey Mike’s is located at the Elk Grove Mall, oh, I mean Delta Shores by I-5. Like many regional chains that go nationwide, you are always worried about expanding too fast or the concept not catching on, let’s see how they do.
Ambiance: Typical sub sandwich place, limited seating, you order at the counter. That being said, I really enjoyed the maps and pictures on the wall of New Jersey; they even had a surf board on the wall, pretty nice touch. It has a very relaxed vibe, think like Starbucks, but with quick serve sandwiches as opposed to coffee. You place your order with a server, he writes it on his pad, and hands you the ticket to take to the other end of the counter to pay. It’s similar to Subway as far as the order process goes, I will get into this later. 4.1/5 on the ambiance, had some nice touches.
Food: Here is the biggest difference from Subway and Firehouse Subs, Jersey Mikes, takes the hunks of meat out deli-style and cuts them in front of you. They do this with the cheese as well, yup, right on the sub, directly in front of you. That is the definition of fresh. If you ordered a hot sub they place the meat on a hot grill and prepare separately and bring it out later. That being said the condiment choices are pretty standard, and you can order “Mike’s way” which is lettuce, tomato, onion, mayo, and “the juice” which is oil and red wine vinegar. You can add jalapeño, but I have grown to appreciate limited choices. I don’t know why but Jersey Mike’s gives off a fresher vibe. The bread choices were limited too; white, wheat, and rosemary parmesan, you also could have it gluten free. I ordered a chicken bacon ranch hot sub Mike’s way and it was fantastic. 4.7/5, very fresh and not skimpy at all on the meats, and toppings.
Chicken Bacon Ranch made Mike’s way.
Overall: This was a thoroughly enjoyable experience. The fresh cut meat and cheese was a great touch. Limiting the bread and toppings was a smart move also. They had a signature way of having your toppings, and a streamlined approach conducive to both freshness and speed. The key is that I never felt rushed, and found out later the very nice man at the front taking orders….that was the franchisee. It wasn’t an absentee owner collecting his money while leaving the shop to be minded by kids. The price point was perfect for a 9 inch hot sub about $9. Quality was great and again, I never felt rushed or hurried. As an added bonus, they had a nice selection of chips, your typical ones, but also some specialty one’s and had some special root beer options as well. This was a nice break from your typical limited selection. They also had Tastykake (pronounced “tasty cake”) as a dessert option which traces its roots to Jersey as well. 4.6 overall
Comparing to Firehouse Subs: Firehouse is more of a grab a bite and a seat with your co-workers, where Mikes is more of a grab n’ go about your day place. Firehouse has more sub options and more exotic ones, whereas Mike’s is more of an old school deli shop. Firehouse is made behind a counter out of site, Mikes is made right in front of you. I think both are great. You cannot go wrong ordering from or owning either, so much so if I had the $$$ I would become a franchisee because I love the product.
Back when he was first starting out, Rush Limbaugh used to joke that the perfect place to hold the Homeless Olympics would be in Rio Linda, California. Rio Linda was often described as a place with cars on blocks in the front yard, random televisions and shopping carts strewn about, along with other assorted debris. In short, the place was a mess. Rush wanted the people there to clear the place up and take some pride and ownership of their neighborhood. Rush offered to leave them alone if they renamed the place Rio Limbaugh which they never did.
Concerning the Homeless Olympics, Rush envisioned various events while taking well-earned shots at homeless advocate Mitch Snyder.
Mitch Snyder 1943 – 1990
Proposed events would be things like dumpster diving, races carrying a televisions (simulating their theft), relays pushing shopping carts, etc. Here’s an example from 1989.
“One of the things I want to do before I die is conduct the homeless Olympics,” he told his audience. Events would include “the 10-meter Shopping Cart Relay, the Dumpster Dig and the Hop, Skip and Trip,” he said as the audience erupted into laughter and applause.
This quote above was from Limbaugh’s Rush to Excellence Tour.
At the time, one person wrote the Los Angeles Times concerning the above article and said:
Making fun of homeless people is a “traditional value”? Well, excuse me, but where I come from, that is nothing more than nastiness and meanness–behavior befitting a bully.
If you thought this was nonsense, insensitive, and mocking the homeless, then guess what? You were wrong.
There really is a Homeless Olympics. However, it’s not called that lest Rush get some of the credit for the idea, the official name is the Homeless World Cup. It began in 2003 and represents 70 nations.
To be a player you must meet the following qualifications:
Be at least 16 years old at the time of the tournament
Have not taken part in previous Homeless World Cup tournaments
Also, must be any of the following:
Have been homeless at some point after the previous year’s tournament in accordance with the national definition of homelessness
Make their main living income as a streetpaper vendor
Be asylum seekers currently without positive asylum status or who were previously asylum seekers but obtained residency status a year before the event
Currently be in drug or alcohol rehabilitation and also have been homeless at some point in the past two years
California has one third of the homeless population in the United States due to its great weather and even better benefits. It’s no surprise to me that from the shadows of Rio Linda comes three athletes making the trip to England to compete in this year’s events.
Rio Linda is on north side of Sacramento metro area
Three Sacramento women will soon be representing Team USA in this year’s Homeless World Cup.
Now, she and two other women will be representing the U.S. in the sporting spectacle known as the Homeless World Cup where 500 players will be representing 50 proud nations.
So thirty years after the prediction, Rio Linda folks are participating in a worldwide homeless competition to see who brings home (if they had one) the gold medal.
Elon Musk’s second quarter report card is due tomorrow (07/24/2019). As such, he dropped a few more nuggets for the faithful about what he might be able to do in the future, probably because the present is such a miserable place to be right now.
Future performance not indicated by past results
Elon is touting patents of technology that might become a reality at some future date, whether he’s the one still alive to do it or not is a debatable point. One involves automobile wiring harnesses and the other stamping body panels. Neither is anything other than a concept right now.
Elon Musk doesn’t want past performance to be used as indicator of Tesla’s future
Please note the tone of the opening paragraphs.
Elon Musk believes the way to usher in a new age of EVs is by going back to square one and tackling the fundamental issues with production.
Tesla just designed and patented revolutionary new wiring architecture, which will enable robots to build the upcoming Model Y.
Now another patent has revealed that Tesla is also moving to a new, full body aluminum casting design; rather than a series of stamped steel and aluminum pieces.
Oh, the headline is deceptive because Tesla has no such casting machine, only a patent on a concept for one which is a very different proposition. All that’s missing from the above article is Billy Crystal’s line from City Slickers that “Life is a do over.”
Apparently, Elon is signaling that he blew it with what he’s done at Tesla and needs another paradigm. Translation: give me yet more time. Like a stopped clock, the faithful hope that he eventually will get it right.
Next nugget, Apple hired Tesla’s VP in charge of design.
Apple Inc. has hired Steve MacManus, at least the third Tesla Inc. engineering executive to join the Cupertino, California-based technology giant in the last year.
MacManus, a Tesla vice president in charge of engineering for car interiors and exteriors, left the carmaker recently and has since joined Apple as a senior director, according to his LinkedIn profile. He worked at Tesla from 2015, after stints at Jaguar Land Rover, Bentley Motors and Aston Martin. His interior-design skills may be applicable at Apple beyond the development of a car.
This should fuel even more rumors about the mythical “Apple Car.”
Apple Car
Sales data sliding
The last nugget which is related to the previous one is that Tesla sales are tanking on their high end vehicles.
The luxury sedan that put Tesla Inc. on the map is starting to show its age, with new registrations of the company’s Model S plummeting 54 percent in the second quarter in California, The Wall Street Journal reports.
Similarly, new California registrations of the Tesla Model X fell by about 40 percent in the second quarter, the Journal reports, citing data from the Dominion Cross-Sell Report.
California is Tesla’s single largest market in the U.S., accounting for about 40 percent of Model S sales last year alone.
The Palo Alto-based automaker has shifted its focus to the Model 3, which is half the price of the Model S.
Meanwhile, the company itself says production and sales of the Model S and X have plummeted.
This time last year, Tesla built 24,761 Model S and X cars — a number that fell 41 percent to 14,517 cars in its most recent quarter.
Analysts say that’s partly due to Tesla’s decision not to update either car.
So the chief car designer for Tesla leaves and goes to Apple and then surprise; a story emerges that Tesla hasn’t updated their higher priced cars since they were introduced and as a result their sales are tanking. Sounds like Elon is lightening the payroll to me.
Maybe those rumors of Apple buying Tesla should be given another look. Tim Cook could do it with his lunch money and still have enough to buy Intel’s mobile chip business.
First they banned plastic bags, then straws, and now the environmental wackos want to ban toilet paper. The Natural Resources Defense Council (NRDC) has declared war on toilet paper—at least if it is soft and squeezable—and especially if it is sold at Costco.
If you recall, under Islam, a thief will have his right hand amputated. Why? Because thru most of history, the right hand was used to eat and the left to wipe your butt.
Press play to watch a guy go “old school” in Italy
Next time you read about Jesus judging mankind at the final judgment remember this. Verses like below have just a bit more meaning when you read:
When the Son of man shall come in his glory, and all the holy angels with him, then shall he sit upon the throne of his glory: And before him shall be gathered all nations: and he shall separate them one from another, as a shepherd divideth his sheep from the goats: And he shall set the sheep on his right hand, but the goats on the left. Then shall the King say unto them on his right hand, Come, ye blessed of my Father, inherit the kingdom prepared for you from the foundation of the world:
Then shall he say also unto them on the left hand, Depart from me, ye cursed, into everlasting fire, prepared for the devil and his angels:
Matthew 25:31-34, 41
NRDC Truth Claim
Here’s the meat of the article against T.P. (Oh, can I say the word “meat” when talking about environmental wackos?)
The manufacture of bathroom tissue — particularly the soft, fluffy kind marketed for American bottoms — is one of the most “environmentally destructive” processes on the planet, according to the NRDC.
“Future generations are going to look at the way we make toilet paper as one of the greatest excesses of our age,” NRDC scientist Allen Hershkowitz told the Guardian in 2009. “Making toilet paper from virgin wood is a lot worse than driving Hummers in terms of global warming pollution.”
Folks saying anything is worse than a Hummer—especially since they succeeded in getting them outlawed—is really fighting words. It communicates just how serious these guys are to outlaw toilet paper.
Toilet Paper by the Numbers
The article then goes on to introduce the math portion of this article.
The boreal forest is a vast landscape of aspen, evergreen and birch trees covering more than half of Canada, but since 1996, 22 million acres — an area roughly the size of Indiana — have been cut down to produce virgin fiber pulp, the key ingredient in premium toilet paper and hand tissues. With the exception of China, no country uses more tissue products than the U.S. despite the latter having only about 4 percent of the world’s population.
From 1996 to 2019 is 23 years. Since they can’t have complied statistics for this year yet, it is safe to say that we are talking about 1 million acres per year going to toilet paper production for sale in the U.S. market.
And of course, loggers—not having any interest in the sustainability of the forest since they work for evil corporations—would never think to replant trees to replace the ones they harvested.
Per the Canadian government, their country has 347,069,000 hectares of forest land.
Using a conversion tool found on the Internet this equals 857,626,176 acres of forest land in Canada.
Microsoft Excel icon
Plugging these two numbers into my handy copy of Microsoft Excel yield a whopping 2.56522 percent of Canadian forest has been harvested in 22 years for toilet paper production.
Put another way, if 1milion acres a year is harvested for toilet paper and there are 857,626,176 acres of forest land then the forest will all be converted to toilet paper in a mere 857 years—assuming nothing is planted to replace the harvested trees!
Oh, the Hypocrisy
Please note that this article which is critical of Canadian forest management is from San Francisco. Yes, a California based environmentalist is criticizing folks in other countries that may actually know what they are doing.
Last year, 2018, California lost 1,893,913 acres —much of it forest land—to wildfires. I don’t know about you, but the thought of wiping my back side with smoldering ashes or Charmin is a stark and clear choice for me.
California has the worst managed forest land on the planet and they want to impose their values not only on other states but other countries. Oh the hubris.
But the article yields even more nuggets of wisdom.
The boreal forest is critically important because it serves as an effective check on climate change, according to the NRDC-Stand.earth study, dubbed “The Issue with Tissue.” Cutting down millions of trees each year erodes the forest’s ability to absorb man-made greenhouse gas emissions. In addition, logging releases immense quantities of carbon safely stored in forests’ soil and vegetation.
“Most Americans probably do not know that the toilet paper they flush away comes from ancient forests, but clear-cutting those forests is costing the planet a great deal,” Anthony Swift, director of the NRDC’s Canada Project, said in a news release. “Maintaining the Canadian boreal forest is vital to avoiding the worst impacts of climate change.”
Toilet paper creation caused the release of greenhouse gases while wildfires in California have no detrimental effect on the release of carbon.
Carbon by the way is an essential element of all life on the planet except maybe a few bacteria (Unless you believe in silicon based lifeforms as found in Danish brothels or movie characters named Commander Data, Terminator, or Alien.)
The Bottom Line
The American way of life is somehow destroying the planet just so our butts can be clean and fresh.
In 2012, CNBC reported that toilet paper was Costco’s top-selling product, its “crown jewel,” with more than a billion rolls sold per year.
The three companies with the largest market shares in the tissue business — Procter & Gamble, Kimberly-Clark and Georgia-Pacific — use virgin pulp almost exclusively for at-home tissue brands. In 2017, those brands made up 80 percent of all toilet paper sales in the U.S, a study published in Statista found.
Oh, let’s consider the so-called virgin forests. Words have meaning so I guess the virgin forests are raped by the evil corporations. The virgin forest is defenseless and thus needs to be protected by guilty Western Liberals that have benefitted from the progress afforded them by Christianity and its economic engine, Capitalism.
Oh, if nature is so superior, sacrosanct, and needing to be followed, why do us humans put out the fires that nature starts that burn her own forests? Aren’t forest fires part of the natural order? Why should we not bow at the power of nature? Who are we to interfere with this goddess? Isn’t this the lesson; nature knows, man interferes?
Conclusion
Most of the world does not enjoy the luxury of toilet paper and those that do rarely get as good a quality as we can buy. When I was in Europe many years ago, all you could buy was stuff that looked like the crape paper used here to decorate for parties and felt like sandpaper.
Russia paper
These attacks are yet another attempt to limit people’s freedom, take our way of life down a few notches, and give more power to the State. If people in California really cared about the forest they would allow timber to be harvested and properly managed. Much of what passes as old growth or virgin wilderness in various parts of the world really is not, but once cultivated land that has gone feral from neglect.
This issue is very much a religious one. If you believe the Bible then you can’t be a rabid environmentalist or statist. God commanded man to make the whole world into The Garden. This mandates us to manage the planet and its resources not neglect them and let them burn.
I’m tired hearing about kids in cages. Frankly, it’s a very American thing to do. It’s so commonplace that folks just accept it as normal. Here’s some examples:
We separate kids from their parents and keep them in cages every Monday thru Friday from about 8 AM to 3 PM about nine months out of the year. It’s called school. Oh, you think that’s being harsh to say that? Ok, how do said children or parents gain access to the facility? They enter thru gates and checkpoints and while doing so may be subject to random inspections and metal detectors too. During school times many campuses have police present or on call to protect the site and civilian safety monitors patrol the grounds—especially at recess—to prevent unauthorized crossing of perimeter fencing.
For many parents, school is often just a government provided babysitter that warehouses children while parents are otherwise occupied. Many parents rejoice that the government requires that they are separated from their children on a regular basis. Parents who don’t agree are often visited by government agents if they don’t comply with this separation.
At my son’s school, the gates are locked and signs directing me to his location are frequently wrong. I often joke (lament might be a better word) with other parents that the school needs an app to locate your child. I can’t tell you how many times it’s taken me 10 to 15 minutes of running around from place to place to locate my youngster and extract him from his campus.
Kid Cage #1
Other examples of forced separation abound. Heck even the local health club has gotten in on the action. They don’t allow children to be with their parents, instead forcing them not to follow their folks healthy example but sit in a separate, guarded area with, yep, a fence around it—completed with barbed wire.
Kid Cage #2
Please note that the barbed wire in photo is to keep kids from escaping not directed to keep people out of the children’s area.
Caging children and separating them from their folks is not always a bad thing. Depending on the circumstances, many folks just consider it part of daily life. I submit for your consideration that if it weren’t for lawyers and criminals running free on our streets that there would be a lot less fences separating people from each other.
If you haven’t been out of state much, it might surprise you that in many neighborhoods, houses are not separated by any type of fencing. Whole blocks have backyards as one contiguous grass area with nothing but swing sets and play structures as far as the eye can see. Children have whole subdivisions as their play area.
When folks enter our country in violation of the law, they have committed a crime. This is no secret. They know it is wrong but purposefully do it anyways. When they get caught there can be consequences. It seems that many are willing to take that risk. Those arresting them will segregate people as they see fit, often for health and safety reasons. If children are separated then I have to believe there is a good reason.
FILE – In this June 18, 2014 file photo, two female detainees sleep in a holding cell, as the children are separated by age group and gender, as hundreds of mostly Central American immigrant children are being processed and held at the U.S. Customs and Border Protection Nogales Placement Center in Nogales, Ariz. President Donald Trump has seized on an error by liberal activists for tweeting photos of detainees at the U.S.-Mexico border in steel cages and blamed the current administration for separating immigrant children from their parents. The photos were taken by The Associated Press in 2014, when President Barack Obama was in office. (AP Photo/Ross D. Franklin, Pool)
The bottom line is that the current controversy about kids in cages is a contrived, emotional argument. It was perfectly fine when a Democrat President was in charge. I know of no photos of this alleged phenomenon since Trump took office. Not to say that one may not exist but the ones recently put out by Congressional Democrats to publicize their hearings on this issue were all removed from their websites and Twitter accounts as each was proven to be photographed when Obama was President. Congressional Democrats have yet to put forward one photo created after the current Administration took over. Funny how that works.
OAC and the gang think they are the political version of Charlie’s Angels but those of us in the Heartland think they’re nuts (or something worse). President Trump nailed them on Twitter a few days ago. Trump’s stock with average Americans has risen sharply since then. OAC says her gang is “The Squad” but clearly the name is missing an adjective to describe them further.
Reps. Alexandria Ocasio-Cortez, D-N.Y.; Ilhan Omar, D-Minn.; Ayanna Pressley, D-Mass.; and Rashida Tlaib, D-Mich., have collectively come to be known by that label since taking office in January. The four have found common cause on a number of issues, most recently by becoming the only Democrats to vote against the House version of a border funding bill that was backed by Speaker Nancy Pelosi.
You know there’s a dumpster fire in the Democrat Party when Donald Trump is defending Nancy Pelosi‘s character from these crazy chicks. But its been entertaining to watch.
While discussing these events at work earlier today, a female coworker made a suggestion that fits in so many ways. Her solution was to call them “The Broad Squad.”
I like Donald Trump and think he’s doing a good job despite encountering the strongest headwinds of any President in my lifetime. But the one thing he does that I fear will blow up in his face is taking credit for the great performance of the stock market. By taking credit for the highs in the market he also becomes the owner of the lows when they occur at some point in the future.
Trump doesn’t really get to decide how the market does. He can get the government out of the way of certain sectors by reducing regulation or imposing tariffs but that’s about it. He is more of a cheerleader for corporate growth but that’s about all he can do.
The good thing about this is at least Trump seems willing to own the things that happen while he is in office. In contrast, Obama blamed every bad thing on his predecessor, G.W. Bush, until after his reelection. Trump is a good man and I’m glad he is in our corner.
Elon Musk is in the news again with another distraction so it must be about time to report Tesla’s second quarter earning’s reports.
First, the distraction.
Neuralink, the secretive company bankrolled by Elon Musk to develop brain-computer interfaces, will provide its first public update later today in an event streamed over the internet.
“We’re having an event next Tuesday in San Francisco to share a bit about what we’ve been working on the last two years, and we’ve reserved a few seats for the internet.”
This could be the big reveal of what the mysterious company has been up to since Musk announced it two years ago, and hired a pack of leading university neuroscientists to pursue his goal of connecting human brains directly to artificial-intelligence software.
Elon wants to hook your brain to a computer for some unknown reason. MIT—authors of the above article—speculated that Elon would demo a monkey playing a video game. Based on what I know, it doesn’t take much brain power to play video games so Elon will have to do better than that to get my attention on this project.
Meanwhile, several pieces of Tesla news have surfaced in the last few days.
Sales
Tesla has been claiming that sales are up so of course to they announced another price cut. This is contrary to common sense but this is the company fathered by Elon Musk.
Tesla delivered more electric cars in the second quarter than any three-month period in its history, alleviating concerns that demand is waning for its stylish vehicles as tax incentives in its main U.S. market begin to phase out.
Despite the heartening news Tuesday, Tesla still hasn’t proven it can consistently make money despite repeated promises from CEO Elon Musk to reverse the company’s long history of losses.
Musk himself has already acknowledged Tesla will post a loss for the past quarter, but forecast profits after that—something he also did last year, only to be proven wrong. Analysts polled by FactSet are predicting the company will absorb a loss of about $228 million for the second quarter. If those projections hold true, Tesla will have lost nearly $1 billion during the first half of this year.
Tesla workers have told CNBC that, in order to meet Elon Musk and Tesla’s delivery quota for the second quarter, that they were subjected to unfathomably harsh conditions and took numerous manufacturing shortcuts.
This “bombshell” should come as no surprise anyone who has followed the Tesla story.
However, Tesla operates its manufacturing business in what is called an “open-air tent factory,” and employees told CNBC that they were forced to work through freezing nighttime temperatures, excessively hot daytime temperatures, and even unhealthy air quality brought on by wildfire smoke.
Elon Musk doing his Captain Blith impersonation
Whereas most legitimate automobile manufacturers rely excessively on robots and other automatic means of production to meet delivery estimates, these employees said they themselves had to bypass the robots and put the cars and battery packs together themselves.
This included the use of electrical tape to fix some defects. Great. That should rival being able to trick an autopilot-enabled car with table salt.
The grander point about how Tesla is being run is a referendum on Elon Musk. If these same stories came out of any other legitimate car manufacturer, the entire industry would be in an uproar.
Managers would get fired, senior management would be forced to resign, the stock of that particular company would fall, and government regulators would be all over that company in less time than it takes a BMW to go from 0 to 60.
This isn’t even the first time we’ve heard about worker conditions. It’s been going on for two years.
But because this is Tesla and Elon Musk, everyone seems to turn a blind eye.
Mark my words: If vehicles were delivered in this quarter under the conditions that these employees describe, consumers should worry that they are going to suffer from higher-than-average mechanical and recall problems.
Autopilot claims scaled way back amidst programmer mutiny
A day after Elon Musk suggested that auto-driving Tesla cars might not be sold to the public and could instead be hawked as robotaxis, a report dropped revealing that in recent weeks nearly a dozen Tesla Autopilot engineers had already hit the eject button.
You can’t make this stuff up.
Tesla Engineers: We’ll Drive Ourselves Home As many as 11 individuals on Tesla’s software Autopilot team departed the company during the past few months, according to The Information, continuing a purge which began when Elon Musk booted the team’s leader in May.
The significance of these Autopilot departures cannot be overstated. One of the highest profile functions of future Tesla vehicles is its ability to drive itself.
While there are other competitors in this market, for 10% of this division’s workforce to get up and leave means that they do not believe the timeline that Elon Musk has set for the product is in any way realistic.
And that’s not the only problem: There has always been doubt regarding the safety of Tesla’s Autopilot system, not only in its supposed ability to reduce crashes, but also in the numerous crashes in which it has allegedly played a part.
The article above calls followers of Musk a “cult.”
This should tell investors and consumers a lot about company culture. It is a personality cult. The product itself has a cult-like following. Tesla is all about Elon Musk.
Musk certainly has cast a spell on the true believers of his utopian dreams. He has made an irrational and emotional connection with people that willingly follow where he leads. These folks are convinced that Musk is singlehandedly transforming the world and the cosmos. They can’t wait to follow him to Mars.
My problem with Musk is that he doesn’t risk his own money to do anything, he always manages to fund his ventures with tax dollars and gullible investors. He starts much and finishes nothing. He is the 21st Century P.T. Barnum.
P.T. Barnum
Musk claims economic miracle
Oh, if you thought Burger King and Bill Clinton had cornered the market on whoppers try this from Elon:
Tesla Inc.’s Elon Musk is standing by a claim that the company’s electric cars will be appreciating assets once they’re capable of driving themselves.
Musk, Tesla’s chief executive officer, first made the claim in a podcast interview in April that the company’s vehicles will gain in value because they’ll eventually be capable of fully autonomous driving. He stood by this in a reply to a follower who wrote Tuesday that he was unsure if the CEO was joking or making a “really dumb” statement.
Quinn Nelson, the owner of a media company that produces videos about tech products, kept engaging Musk in a debate over the claim, which Nelson said “makes no sense.” The CEO replied that Tesla is bundling full-self driving — or FSD — into all cars the company builds, and that Tesla will be unable to keep up with demand when the vehicles are capable of complete autonomy.
With the exception of collectors’ cars and other rare cases, depreciation has been a fact of life for automakers, dealers and rental-car companies for decades. While Kelley Blue Book has handed Tesla a best resale value award for its Model 3, for example, the car-shopping researcher estimates the sedan retains about 69% of its value after three years.
The wheels are falling off the Tesla dream. Musk would rather be doing other things than running this company and it shows. His attention and passion are elsewhere. He is a butterfly searching for the next colorful flower to pollinate.
The sequel to Jaw has the tag line, “Just when you thought it was safe…”
They’re back. Yep. Subprime loans are back and more prevalent than ever. If you thought Bush, Obama, and “too big to fail” were relics of history, you’d be as clueless as the 90-Day Guy or the naïve written about by other bloggers on this site. The truth is that subprime lending and non-traditional (non-bank) loans are even more prevalent than ever. This is true for both corporate and consumer lending.
Below are some articles outlining the threat that subprime lending poses to the financial system.
Definition: Subprime Credit
Subprime credit is typically composed of subprime borrowers with low credit ratings, high debt levels, a record of delinquency, defaults or bankruptcy, no property or assets that can be used as a collateral. Lenders use a credit scoring system, like FICO scores, to classify subprime borrowers based on the probability of repayment. Different creditors use different rules for what constitutes a subprime loan, but FICO scores below 600 have typically been classified as subprime in the past.
Subprime credit is financed by repackaging subprime credit card debt, auto loans, business loans and mortgage into pools and selling them investors as asset-backed securities, like collateralized debt obligations and mortgage-backed securities.
During the housing boom in the early 2000s, lending standards on subprime mortgages were relaxed, with NINJA loans being made to borrowers with no income, no job and no assets. When the bubble burst in 2007, the quantity of subprime credit in the financial markets contributed to the subprime meltdown and the subprime crisis, which triggered the Great Recession.
Consumer advocates say subprime credit is a social good and provides finance to low-income households. Yet it increases the risk of credit booms and busts. In the U.S., banks tightened lending standards after the financial crisis. However, auto finance companies have since used low interest rates to fuel a boom in subprime auto loans. This helped the economy to recover. However, auto loan delinquencies hit crisis levels in 2017, even as subprime auto-lending continued to boom, leading to speculation that this another credit bubble that is set to burst.
The article that I saw today has political as well as economic implications. Read these excerpts and then see if you agree with me.
Lower-income U.S. consumers are showing signs of weakness despite the strong market, and if the economy enters a recession, any possible credit crunch could be “material,” according to UBS.
Strategists led by Matthew Mish and Eric Wasserstrom wrote in a note Thursday that they’re worried about lower-income consumers who have seen little net worth improvement since the financial crisis. Debt burdens for many of those households have grown as credit card interest rates hit record highs and student loan borrowings surged. UBS expects that the consumer credit cycle can extend but a future downturn could be worse than the one seen in 2001 and 2002 thanks to subprime consumers’ growing debt loads, higher losses and the growth of “fragile” non-bank lenders.
A UBS survey found that households reporting credit problems like loan application rejections matched a survey high of 40%, up 4 percentage points from a year earlier. Consumers’ likelihood of missing a loan payment in the next year increased 1 percentage point to 13% …
Even though the Treasury rally has sent U.S. interest rates sinking, the strategists say many U.S. households are still seeing their interest burdens rise, similar to what occurred in the years before the crisis. The higher rates may come from a shift in what kind of debts consumers have: household debt was a record $13.7 trillion in the first three months of 2019, and most of the post-crisis growth in obligations has come from non-mortgage debts like student loans that carry higher interest rates.
UBS’s consumer credit analysts expect some deterioration in delinquency rates, but say positive wage growth should help most consumers stay current on their obligations. They’re more concerned about long-term trends because consumers’ finances aren’t recovering as well as their credit scores might indicate. They estimate some $2.6 trillion of U.S. household debt is subprime, and any future downturn would likely affect lower-tier U.S. consumers, instead of a more systemic problem like 2008-2009.
The article seems to indicate that in the next economic downturn that the rich will do fine and the poor will get hammered. The poor are living on borrowed money and when the economy goes down, the credit tap will be shutoff while interest on existing debt will go up. This will cause poor folks to default on their debt and due to the amount of debt, it will send shockwaves thru the economy. In the end, the rich will stay rich and the poor will be even poorer.
This in turn, will feed into the socialist narrative that is being propagated by much of the Democrat Party. Poor folks will once again vote to relinquish their freedom for security, and as a bonus, they can hope to screw the fat cats in the process.
Non-Bank Lenders
Another soft spot in the financial world is the rapid rise of non-bank lenders. These guys exist to make money via loans that traditional banks won’t touch. They loan to both businesses and individuals. Many of these loans would be viewed by traditional metrics as subprime. Please note in the articles quoted below that half of all mortgages are controlled by these non-bank entities. They are not subject to regulation by banking or securities laws. They exist… in the shadows.
When the dotcom bubble burst, Chuck Doyle smelt an opportunity — arranging loans for companies shunned by big banks and too small to tap the bond market. It proved very fertile ground.
His company, San Francisco-based Business Capital, says it has since helped hundreds of smaller companies raise money to keep afloat, finance their inventory or expand. But Mr Doyle, an avuncular former fibre-optic salesman, says conditions in the non-bank, non-bond “private debt” market have never been more frenzied.
Chuck Doyle
“We’ve been through a few cycles, but this one is crazy,” he says. “We’ve seen unbelievably explosive growth. We’ve seen deals that banks wouldn’t have done even before the financial crisis.”
The post-crisis explosion of the US corporate bond market, and more recently the leveraged loans industry, have hogged the attention of analysts, investors and regulators. But it is arguably the underbelly of the American debt market that has seen most change in recent years.
“It’s a wild west space, where everyone competes for every deal,” says Oleg Melentyev, head of high-yield credit strategy at Bank of America Merrill Lynch. “The whole thing has exploded in size, and everyone is getting into it.”
There is no clear definition for so-called private debt, which is often also called direct lending or mid-market lending. It broadly consists of bespoke loans made by specialised lenders such as fund managers, insurers and tax-advantaged vehicles known as “business development companies.”
Borrowers can range from sizeable international groups to small companies seeking money for a new store — or just a shot of cash to keep trading for another quarter. Unlike leveraged loans, private debt is typically not widely traded, and unlike bonds, the market is largely unregulated and opaque.
“Direct lending has been the strategy du jour — when we see stresses we’ll probably see it there first,” says Jim Smigiel, head of portfolio strategies group at SEI Investments, near Philadelphia. He doubts the market is extensive enough to cause systemic problems, but “a lot of people will lose a lot of money”, he predicts.
Private debt investors admit that the flood of money has dramatically eroded both standards and returns. KKR estimates that the average private debt yield has now fallen to about 6-8 per cent, down from the low teens a few years ago. That is only slightly higher than in the mainstream junk bond market, which is actively traded and far more transparent.
“What’s the biggest risk to the system right now? After listening to Fed Chief Jay Powell, who made a lot of sense today, I’d say it’s non-bank lending,” Cramer said Wednesday on “Mad Money.”
In the speech, Powell characterized non-bank lenders as imprudent and a potential problem for the credit markets and the broader financial system.
Fed Chief Jay Powell
Even so, Cramer thought the rapid-fire rise of institutions like Quicken Loans, PennyMac and LoanDepot, three of the largest non-bank lenders, posed a near-term threat.
“There are many non-bank institutions making home loans that could collapse in value,” Cramer warned. “These companies came out of nowhere. They now control about half of the current mortgage market — that’s a trillion dollars’ worth of mortgages a year.”
Worse, if those lenders can skirt regulations meant for big banks with similar lines of business and make loans without enough documentation or money down, “that could be a serious problem,” the “Mad Money” host warned.
It’s not surprising that people are drawing parallels. The leveraged loan market is just shy of $1.3 trillion, the size of the subprime market at its peak. As did subprime, it has experienced rapid growth and even more rapid deterioration in underwriting standards, with the most highly leveraged companies accounting for a growing share of the market. Also like subprime, it relies on an “originate to distribute” model meaning the lender originating the loan does not retain major risk if the borrower defaults, but rather passes that risk on to investors, frequently by pooling them and selling securities backed by their cash flows in a “collateralized loan obligation (CLO).”
Like subprime, which catalyzed distress in the broader mortgage market, leveraged loans could also precipitate problems in the broader corporate debt market. Non-financial corporate debt as a percentage of GDP is at an all-time high. A record number of companies are rated just above junk and thus are exposed to system-wide downgrades to sub-investment grade status if the ratings agencies get spooked by a high profile default.
And the risk of that happening is not inconsequential. Leveraged borrowers are not obscure companies but include such household names as American Airlines (AAL), Hilton Hotels (HLT), and Burger King (QSR), according to the trade association that represents leveraged loan lenders.
Folks, I hope reading this will cause you concern that everything is not peachy keen in the financial world. I think the availability of these alternative funding sources in a quest for higher returns, might be part of the reason that the 90-day cycle is so important. People want to know their risky investments are paying off or they might be tempted to cut their losses and pull their support.
You know the drill. A man retrieves a small recording device from an unexpected place. He hits play and is given a seemingly impossible task—usually to save the world or prevent an international incident. The recorder finishes delivering its message and self-destructs. A match lights an old fashioned fuse which starts to burn as the Lalo Schifrin theme song begins. You know the next hour will be full of twists, turns, and deceit. Buckle-up and let the intrigue begin.
Oh, the message for today’s episode goes something like this:
Message delivery
Greetings Mr. Newsom, your mission as passed on from your predecessors, Schwarzenegger and Brown, is to outlaw the internal combustion engine within the boundaries of California by 2030 2040. Know that you have the full support of Democratic state Assemblyman Phil Ting of San Francisco, state Air Resources Board Chairman Mary Nichols, and a large block of the Legislature. Your mission, should you decide to continue this quest, is to secure the necessary legislation and resources to make all vehicles in your State electric powered by this deadline. The fate of the planet is in your hands.
Air Resources Board Chairman Mary Nichols
As mentioned above, the recorder vaporizes and the credits roll. When the story continues, we find the Governor assembling his team. The team is commissioned with implementing a plan to force people into electric vehicles. After consulting with Warren Buffett, Elon Musk, Alexandria Ocasio-Cortez, the Sierra Club, Green Peace, and a host of interested parties, the team presents the Governor with a list of proposals.
Increasing gasoline taxes
Raising the vehicle emission standards
Denying new permits for gas stations
Increasing regulation of refineries
Tax incentives for electric vehicles and charging stations
Increased DMV registration fees
Allowing electric vehicles to use HOV lanes
Subsidize even more public transportation
Tax all vehicles per mile driven
Outlaw barbeques and fire places
Outlaw gas powered lawn movers, blowers, and trimmers
Outlaw privately owned fuel storage tanks after 2040
Ban privately owned aircraft and tax the crap out of commercial air travel
Anyway, you get the idea. Use the power of government to force people to change their behavior. It sounds so good, what could possible go wrong?
While California seems on the cusp of making this self-imposed dream a political reality, the bigger issue is can an all-electric vehicle mandate be done?
While Sacramento, used to issuing orders, believes it can simply command a fully electric automobile fleet through votes and the stroke of a governor’s pen, the same way it believes it can decree that the entire state must switch to renewable sources for electricity, it can’t escape the reality, which says it can’t be done. There aren’t enough raw materials available.
This answer many surprise you. In England, a similar mandate has been adopted with a date further into the future, 2050 as opposed to the preliminary date of 2040 in California. The United Kingdom (i.e. England, Scotland, Ireland, etc.) has 38.2 million vehicles as opposed to 25.6 million in California. Doing the math, California has 2/3 as many vehicles as the U.K.
A statistical study was published to see just what it would take for the U.K. to achieve their goal. The study was quoted by Steve Milloy on the website Junk Science.
British researchers say that if the United Kingdom is to meet its electric car targets for 2050 it “would need to produce just under two times the current total annual world cobalt production, nearly the entire world production of neodymium, three-quarters the world’s lithium production and at least half of the world’s copper production.”
Adjusting other statistics for California’s market yields:
134% of current global cobalt production
67% of current global neodymium production
50% of current global production of lithium
And 34% of current global production of copper
With governments all over the world scrambling for the same scarce resources, it’s just “not possible,” Milloy concludes, for California to go all-electric. Have policymakers even considered this in their haste to outlaw conventional cars and trucks?
The article I’m quoting concludes:
Lawmakers can legislate, expect, wish, hope, and mandate until they collapse from exhaustion onto the capitol’s marbled floors. But they are bound by the pace of technological advancement. They can no more decree an EV fleet to be so than they can change the color of the sky.
The statistics in the U.K. study are mind blowing.
Again, as is my habit, I will quote extensively in case the URL I’m citing should be deleted, moved, or placed behind a pay firewall at some point in the future. Remember that this study assumes only the U.K. is implementing this goal. The economic reality of other actors–be they California, China, or whoever–places even more demand on these resources.
The metal resource needed to make all cars and vans electric by 2050 and all sales to be purely battery electric by 2035. To replace all UK-based vehicles today with electric vehicles (not including the LGV and HGV fleets), assuming they use the most resource-frugal next-generation NMC 811 batteries, would take 207,900 tonnes cobalt, 264,600 tonnes of lithium carbonate (LCE), at least 7,200 tonnes of neodymium and dysprosium, in addition to 2,362,500 tonnes copper. This represents, just under two times the total annual world cobalt production, nearly the entire world production of neodymium, three quarters the world’s lithium production and at least half of the world’s copper production during 2018. Even ensuring the annual supply of electric vehicles only, from 2035 as pledged, will require the UK to annually import the equivalent of the entire annual cobalt needs of European industry.
The worldwide impact: If this analysis is extrapolated to the currently projected estimate of two billion cars worldwide, based on 2018 figures, annual production would have to increase for neodymium and dysprosium by 70%, copper output would need to more than double and cobalt output would need to increase at least three and a half times for the entire period from now until 2050 to satisfy the demand.
Energy cost of metal production: This choice of vehicle comes with an energy cost too. Energy costs for cobalt production are estimated at 7000-8000 kWh for every tonne of metal produced and for copper 9000 kWh/t. The rare-earth energy costs are at least 3350 kWh/t, so for the target of all 31.5 million cars that requires 22.5 TWh of power to produce the new metals for the UK fleet, amounting to 6% of the UK’s current annual electrical usage. Extrapolated to 2 billion cars worldwide, the energy demand for extracting and processing the metals is almost 4 times the total annual UK electrical output.
Energy cost of charging electric cars: There are serious implications for the electrical power generation in the UK needed to recharge these vehicles. Using figures published for current EVs (Nissan Leaf, Renault Zoe), driving 252.5 billion miles uses at least 63 TWh of power. This will demand a 20% increase in UK generated electricity.
Challenges of using ‘green energy’ to power electric cars: If wind farms are chosen to generate the power for the projected two billion cars at UK average usage, this requires the equivalent of a further years’ worth of total global copper supply and 10 years’ worth of global neodymium and dysprosium production to build the windfarms.
Solar power is also problematic – it is also resource hungry; all the photovoltaic systems currently on the market are reliant on one or more raw materials classed as “critical” or “near critical” by the EU and/ or US Department of Energy (high purity silicon, indium, tellurium, gallium) because of their natural scarcity or their recovery as minor-by-products of other commodities. With a capacity factor of only ~10%, the UK would require ~72GW of photovoltaic input to fuel the EV fleet; over five times the current installed capacity. If CdTe-type photovoltaic power is used, that would consume over thirty years of current annual tellurium supply.
Please note that many of these rare-earth metals are mined by poor people in third world nations that are slaves or politically oppressed. The workers’ pay with their blood while the ruling class line their pockets with the proceeds.
