Economy – Page 17 – Really Right

California Conservatives Voting with Their Feet

Many years ago, a young man seeking to improve his lot in life was given the advice to “go west, young man”.

Now, a hundred odd years later, folks in California are echoing Davie Crocket, “you may all go to hell and I will go to Texas”.

About 130,000 more residents left California for other states last year than came here from them, as high costs left many residents without a college degree looking for an exit, according to a Sacramento Bee review of the latest census estimates.

They most often went to cheaper, nearby states — and Texas. Since 2001, about 410,000 more people have left California for Texas than arrived from there. That’s roughly equivalent to the population of Oakland.

California has seen more than 15 consecutive years of net resident losses to other states. The trend was sharpest at the height of the housing boom between 2004 and 2006. It slowed markedly during the housing bust but quickened again during recent years.

California lost more residents to other states than it got last year

Folks the conservative trickle will become a tsunami under Gavin Newsom as the middleclass seeks refuge elsewhere as Gavin does for the State what he did to San Francisco.

However, lest you think the grass is greener, this warning from Texas.

When economist James Gaines gave a talk recently about the economy and the real estate market, his biggest audience response came from an unexpected topic.

Gaines, chief economist at the Real Estate Center at Texas A&M University, told hundreds of local real estate agents what to expect in the years ahead regarding the state’s population growth and demographic changes.

“Do you know what Texas looks like in 30 years?” Gaines asked the audience.

“California,” he offered as the whole ballroom of folks groaned and rolled their eyes.

Nothing gets a bunch of Texans more riled up than to tell them they are turning into California.

“I’m serious about it,” he said. “The problems, the issues, politically, socially, economically, land use, housing resources — go down and tick off the issues. We are going down the same path.”

A house in Texas’ most expensive metro area — Austin — that will cost you just over $300,000 will go for twice that in Los Angeles and more than $1.5 million in San Francisco.

With soaring home and apartment prices on the West Coast and a shortage of affordable labor, no wonder everyone, from recent college grads to Amazon’s top brass, is looking east for greener pastures. And Texas is at the top of their shopping list.

Say it ain’t so: Is Texas turning into California?

Bottom line: Liberalism doesn’t work here so don’t take it with you when you leave. Don’t turn the rest of the country into a third world cesspool like California. If you aren’t willing to adopt traditional American values, stay home.

FBI’s Tesla Criminal Investigation

Despite what some fan boys have told me about how ingenious Elon Musk is, Tesla is once again in the news for blowing smoke. Being that they make electric cars, that in itself is quite a feat.

Following the recent spanking by the Securities and Exchange Commission (SEC), the Federal Bureau of Investigation (FBI) is looking into Tesla for lying to investors.

Federal Bureau of Investigation agents are examining whether Tesla misstated information about production of its Model 3 sedans and misled investors about the company’s business going back to early 2017, people familiar with the matter say.

Action in the criminal investigation, headed by the U.S. attorney’s office in San Francisco, has intensified in recent weeks after the Securities and Exchange Commission settled separate civil charges with Tesla and Chief Executive Officer Elon Musk, the people said.

Tesla had disclosed on Sept. 18 that it had received a “voluntary request” for documents from the Justice Department, 10 days before the company and Mr. Musk struck a settlement with the SEC of civil charges on in a separate case involving controversial tweets from Mr. Musk. But it hasn’t been previously reported that the Justice Department is focusing on Tesla’s Model 3 production issues dating to early last year and that the criminal securities-fraud probe is intensifying.

In February 2017, after reporting fourth-quarter 2016 results, Tesla laid out an aggressive production plan to bring out the Model 3, with plans to ramp up to 5,000 vehicles a week in the fourth quarter. On a conference call that month with analysts, Mr. Musk said he was pushing suppliers to be ready for a weekly run rate of 1,000 vehicles in July to 2,000 in August and 4,000 in September.

A few months later in July, Mr. Musk sounded confident that Tesla would be producing 20,000 Model 3s a month in December 2017, in line with his previous pledge of having 5,000 vehicles a week by year’s end. “Looks like we can reach 20,000 Model 3 cars per month in Dec,” he tweeted on July 2, 2017, days before the first Model 3 rolled off the production line.

Tesla ended up producing 2,700 Model 3s for all of 2017, and 793 in the last week of 2017.

Now the FBI is comparing the company’s statements with its production capability during 2017. Authorities are homing in on whether the company made projections about its Model 3 production knowing it would be impossible to meet the goals, people close to the situation say.

Tesla faces deepening criminal probe over whether it misstated production figures

Give Musk’s erratic behavior recently and his supposed genius I.Q. it makes me wonder if he wants to be kicked off the Tesla Board so when the proverbial wheels fall off the company he can avoid the blame. I don’t recall that being the captain’s strategy when the Titanic hit the iceberg but then again you can only go down with your ship once.

Why is SEARS Going Bankrupt?

Sears Corporation will be filing bankruptcy as early as Saturday, or as late as Monday morning. Sears is the definition of a former retail/corporate powerhouse. Look at some of these companies that used to be a part of Sears: Dean Witter, Allstate, Discover Financial, Morgan Stanley (later merged with Dean Witter), Orchard Supply Hardware (OSH) AKA (rest in peace, liquidated 2018) spun off: Sears Hometown, and Sears Canada in 2015. Wow look at that list! In its heyday, (think 1960’s) Sears sold everything from toys to hardware, to mail order houses, now its circling the drain at ramming speed. What caused all this death spiral you might say? Well a series of poor decisions that began with the ill-advised merger with Kmart in 2004. This is because while Sears competed in the middle to higher end, Kmart catered to the lower end customer seeking value and low prices. A fatal mistake is Sears began cross selling its most valuable brands in Kmart stores such as; Craftsman, Kenmore, and Diehard. By doing this they cheapened their brand, and due to needing to sell the product at a lower price had to cheapen their product.

Craftsman was a very trusted top of the line name in the tool category, they also came with a lifetime guarantee if it broke, by the way, it was actually good for life, not a certain number of years. As a young child, Craftsman tools were a large part of my father’s childhood. He and his father would always be working on or fixing something with Craftsman tools in hand. He always told me he could count the number of times a tool broke on one hand and usually have 3 or so fingers to spare. When it broke you simply went to the local Sears and presto, no questions asked it was replaced. No such luck anymore. The tools are made of cheap material from China that resembles the graphite found in a number 2 pencil. There is a reason they are sold at discount prices, they break with ease. Similar to when you hire folks from LaborReady or whatever they are called now, if the directions call for 1 wrench you better buy 3. Oh, and getting the tool replaced…get ready to gear up for a fight over that “lifetime warranty” means. Cheap crappy tools.

Back to a central part of this blog, the real reason for bankruptcy is CEO Eddie Lampert.

If you are thinking the same guy who runs hedge fund ESL investments, your right. Lampert has never run a retail business, he just knows how to buy lots of stock in a company, force changes, and cash out when he makes a tidy profit; think Buffett, Icahn, and Nelson Peltz.

Lampert has actually been running a liquidation sale over the last decade to tell you the truth. He is a hedge fund guy, the only thing they know how to do is monetize assets and suck every dollar out of a company as humanly possible. Lampert inherited a company which albeit was struggling but had 3,500 stores, the company now has 700, planning to close another 150, keep 300 open and decide the fate of the other 250 in due time. This is too small a footprint to compete, more on this later. Lampert over the past few years has spun off most of Sears property (the ground/building) not the name into a different company to monetize its real estate, spun off Lands’ End into a stand-alone, mostly inside of Sears stores business, selling Craftsman to Stanley Black and Decker (by the way now available at Lowe’s, Home Depot, and pretty much everywhere). He also has loaned the company money through his fund ESL investments. By doing this he can charge a corporate bond interest rate think 8-12%, so he can suck more money out of the company. Lampert may own quite a bit of Sears stock, but he is very wise, shareholders are last in line in a bankruptcy, the banks are close to first, his loans essentially make him a creditor, and thus he will get most of his money back. Now here we are today, with Sears owing a $134 million dollar debt payment October 15^th, they have no way to pay it. Enter Lampert again; offering to loan the company the money to make the payment, in exchange for Kenmore and several real estate plots the stores currently sit on. Sounds like a pretty good deal for Ole Eddie. The board is contemplating this, and I think they won’t go for it.

The moral of the story is this, we here at ReallyRight.com don’t like to see anyone lose their livelihood or see stores close but Sears hasn’t been relevant in at least 15 years. Honestly, they got rid of the Christmas (or is it Holiday) Catalog, likely to save money, bought a chain known for selling cheap crap with Blue Light Specials, and viola, it’s over. Cheapen your core brands to the point no one wants them or make it so they are now available anywhere not just exclusive to your store. In addition, ask yourself this question, what can you get at Sears that you can’t get cheaper elsewhere? Or better yet what do you go to a Sears to buy? Sears is the new Toy’s R Us, except that when it goes out of business it won’t be back, rumor has it Toy’s might be risen from the ashes like a Phoenix. It doesn’t help when you have a blood sucking hedge fund manager out only for himself who owns and runs the company.

Tesla Has Been Framed: Elon Musk is a Genius

I was invited to a social function last Friday to celebrate the fall ritual of Octoberfest. I engaged a person that I know at the party in conversation. The subject of Elon Musk came up, partially because the person hosting the party just purchased a Tesla. I recounted the production difficulties, Elon getting kicked off the board of his own company, and the quality control problems of Tesla which are well documented. Boy did I get an explanation from an alternative world.

I was told that Elon Musk was screwed by the big three automakers because they fear him. The reason his manufacturing plant is not producing enough units (cars) is as follows:

This person told me that he knows for a fact that the company that sold the manufacturing robots to Tesla purposely sabotaged the equipment, so it would not work. He claimed that Tesla hired a South Korean company to rewrite the robot’s software and that the manufacturing problems have been resolved. He assured me that Tesla is exceeding its manufacturing goals and is really making money hand over fist.

I asked about the Wall Street Journal article and others stating that most cars were defective and required repairs, before they could be sold. Also, that Tesla is not making enough units to be profitable. He told me that this too is due to the Detroit automakers controlling the media because they spend so much on advertising that they have arranged it so that Tesla only gets bad and untrue reports in the popular media.

At this point, I’m thinking this guy is channeling Preston Tucker.

I asked about our friend’s car. “Yeah he likes it,” I was told, “It did have a defective paint job, but they fixed it right away and now everything is great.”

I commented that there is not enough infrastructure to make Tesla the car of the future. His spin was that Tesla’s will be people’s second car i.e. commuter car and everyone will own one.

He then brought up the subject of self-driving cars. I was promised that self-driving cars would be widely available in five years. The commuter lanes would be only for self-driving cars and they would be computer controlled and drive 120 miles per hour and be four inches from the car in front of them. They would be like impromptu trains that speed up and down the freeways (think NASCAR on steroids.)

I was assured that in five years it would be commonplace to see vehicles with no drivers or passengers zipping around the highways and byways of America (Think Jetsons meets Bladerunner.) I asked about the many wrecks of self-driving cars and was told that once again it was just bad public relations. I was assured that every Tesla crash was driver error even when autopilot was engaged. He assured me that other companies have technology far beyond what Tesla is using and they are ready to deploy it now.

My comment was that humans are better drivers and that you can’t have a mixture of humans and robot piloted vehicles on the same roadway. He laughed and said the computers were far safer drivers and stopped just short of saying that we would all have to surrender our driver’s licenses. He just said that the next generation will not even have a license because computers will be driving everything real soon.

So, there you have it. Cue Rod Serling’s voiceover because the way that conversation went, I think one of us was “in the Zone…”

Rod Serling welcoming us to the Twilight Zone

Musk Out at Tesla…Well Sort of

The Securities and Exchange Commission (SEC) has issued the following edict:

Elon Musk has been forced to step down from the Board of Tesla but he will remain CEO. Translation, he is figurehead of the company but can be out voted if he wants to do stupid stuff.

Within 45 days, an independent chairman will replace Musk, who will be ineligible for reelection for the next three years. Tesla will also be required to appoint two new independent directors to its board, in addition to putting into place controls to oversee Musk’s communication.

Tesla’s Elon Musk, SEC settle fraud charges

Is Musk really that out of control or does he want to be off the Board when the company financially implodes?

Dick Less Profits

Sales at Dick’s Sporting Goods tanked in the last quarter while most retailers are doing better with increased consumer spending. This was due to the store caving in to political correctness.

Comparable-store sales fell 4%, Dick’s said. Not adjusting for the 53rd week last year, the company’s same-store sales declined 1.9%.

The weaker-than-expected results bucked a trend in the retail sector, which largely has benefited from a surge in consumer spending fueled by a booming economy.
Consumer confidence for August, measured by the Conference Board’s consumer-confidence index, was the highest it has been in about 18 years.
That sentiment, along with other factors, has powered companies such as Walmart Inc. and Target Corp. to their best quarterly results in more than a decade.

Dick’s said part of the company’s sales problems were a result of Under Armour’s decision to sell in more stores including Kohl’s. Under Armour declined to comment.

Also hurting sales was Dick’s decision to tighten its policy on gun sales after 17 people were killed in a February shooting at a Parkland, Fla., high school. The retailer halted sales of any firearms to people under age 21 at all of its 845 Dick’s and Field & Stream stores and stopped selling assault style weapons at Field & Stream.

Dick’s Says Under Armour, New Gun-Sales Policy Dragged on Results

Question: Which of these is an assault weapon?

Answer: Neither. They are the same gun. Ruger 22

Ruger 22 is semi-automatic rifle. The stock clip holds ten bullets. It fires one bullet at a time.

Please note that there is no such thing as assault-style weapons. Anything used as a weapon can be used to attack or defend a person, family, or property. Claiming that a special class of weapons called “assault-style weapons” is the myth of illiterate Liberals and city folks. Fully automatic weapons have been illegal since the days of John Dillinger. Thus, all guns commercially since the 1930’s are only capable of firing one bullet at a time. So, Dick’s claiming to stop selling assault-style weapons is a bald-faced lie.

Dick’s has limited buying options, limited who they will sell too, and let gun loving folks everywhere know they are openly hostile to them. As a result, their sales fell. No surprise here. Had they done nothing they would have shown a profit last quarter. I hope this is a trend that hurts them in the pocketbook.

Verizon Wireless a Firefighters Worst Nightmare

Loyal followers know that The Chief very seldom holds back when it comes to hot takes, but this story actually had blood gushing out of my eyes. Verizon Wireless serves many purposes, largely they are known as a wireless provider “allegedly” they also are the second largest of wireless provider behind AT&T. Fun fact: Verizon is actually a former “Baby Bell” spun off from the breakup of the old AT&T. As almost anyone with a cell phone knows, every so often you get the dreaded message “You are close to going over your data limit” or “You must upgrade your plan to get faster download speed” knows you generally must relent and agree to the additional charges. As far as I am concerned, I don’t have much of an issue with this practice, since usually a swift change in your lifestyle will yield your old plan working just fine.

Here is my “chief issue” with Verizon, they used a similar practice on firefighters fighting a blaze in Mendocino County. They used a term called throttling which in laymen’s terms means reducing the data speed rates that are used by folks surfing the internet. While I disagree with data throttling and other manipulation, to do it to firefighters, in the midst of fighting a major forest fire, is downright despicable. Verizon Wireless in their infinite wisdom, cranked down the data usage by our firefighters fighting a huge blaze. Yes, you read that correctly, they were in Mendocino fighting the biggest fire in state history—which as of this writing is still only 67 percent contained—one where communication among everyone was key. Just to clarify for all of you from Rio Linda as Rush likes to say, this was not a drill, or a daughter or son texting their boyfriend or girlfriend and causing a data overage, this was a real life or death situation.

Mendocino Complex Fire – currently combined 425,177 acres have burned

In order to get more data for their command center in the midst of fighting this fire, they had to agree to pay double
their current monthly bill even though they supposedly had an unlimited plan.

Verizon says the fire department was subscribed to an “unlimited” data plan that was limited. The company has come under fire for its use of the word “unlimited” while placing limitations on plans. In this case, the plan firefighters were under was “unlimited” until they hit a certain data point, then their data would be throttled to a slower speed.

Fire Chief: Verizon Throttled Data During Mendocino Complex Fires

Look at this quote from Santa Clara Fire Chief Anthony Bowden “This throttling has had a significant impact on our ability to provide emergency services. Verizon imposed these limitations despite being informed that throttling was actively impeding County Fire’s ability to provide crisis-response and essential emergency services .”

Per KOVR’s report, the fire Chief went on to say:

“Verizon representatives confirmed the throttling, but rather than restoring us to an essential data transfer speed, they indicated that County Fire would have to switch to a new data plan at more than twice the cost and they would only remove throttling after we contacted the Department that handles billing and switched to the plan.”

At this point, Bowden says fire personnel had to rely on their own personal devices rather than the mobile command center. Verizon eventually lifted the throttling, but not until the department signed up for a new plan.

Editor’s Note: In the same testimony the fire chief listed other fires he had fought where Verizon did the same thing to them in the midst of firefighting.

How many additional structures burned as a result of this action Verizon took? Also, one firefighter died; was he trying to get into contact with his colleagues but unable to due to “data overage?” While I am no fan of investigations led by the government this is one that needs to happen. Was Verizon responsible for any structure being destroyed or fire fighter deaths? If so they should be charged criminally, very similar to how PG&E was held liable for some of the fires their wires started. Verizon may actually be the lowest of the low, Warren Buffett may be blushing. Verizon has since come out and apologized, interesting that the apology was issued as Congress announced they would be investigating. Also, this has not been reported but Verizon announced today, they would offer a new program with unlimited “emergency data” to first responders plan for about double the normal price for an unlimited data plan, I guess as Rahm Emanuel said, “never let a good crisis go to waste.”

Verizon messed up badly, and likely are responsible for additional millions in damage and likely the death of a firefighter due to their “greed.” Exceptions can and should always be made, and during emergencies is one. While most people run from fire, firefighters run towards the fire with every intent to save structures and any people in its path. Verizon halted that, all due to corporate greed. They put additional structures and people in harm’s way all in the name of profit. In all likelihood they will be fined, both federally, the state will also get their pound of flesh, a couple of counties may get a pay off as well, but nothing will change. No lessons will be learned, apologies do not bring back memories or loved ones unnecessarily killed or destroyed. I’m sure Verizon has their legal department on overtime looking for ways that their insurance policy can cover this. Who is more morally bankrupt? Wells Fargo, PG&E or Verizon……I’ll take all of the above.

The lesson here is life goes on, regardless of whether your possessions or loved ones do, corporate profits are far more important, got to hit next quarter’s numbers!

Editor’s Note: Hey Chief, if they do this for a rural fire what do they do when we finally get hit with “the big one” and much of L.A. or San Francisco is in rubble?

Elon Musk Can’t Deliver

“You’re a legend in your own mind.”
—Clint Eastwood as Dirty Harry in Sudden Impact (1983)

Elon Musk is not just a legend in his mind but for many that uncritically accept his claims. Musk follows the axiom of selling the sizzle not the steak . The difference is that Musk is finding that he can’t deliver and a few folks that he has bewitched are waking from their stupor to find that reality is a cruel thing.

Below are some quotes pulled from a New York Post story on Musk and Tesla.

Musk is walking a razor wire, another source says, between the things he’s promising and the things he can actually deliver. Until recently, Tesla investors and employees bought into Musk’s vision, even though Musk was “saying things that don’t make sense, because he’s accomplished so much.”

“He is very difficult to move off his stance,” says the source. “He’ll say, ‘The car can do X, Y or Z,’ And yes, that is possible — two decades from now,” the source said. “He bases his argument on the physically possible rather than the practical reality.”

One insider … says that when Musk tweets about a new functionality or feature, it’s often in response to a fan who has asked when such a thing might be available. Musk, says this source, will often email the tasked department, then tweet back to the fan the date it will be done, no matter how unrealistic the request.

Meanwhile, Tesla’s current great hope, the (relatively) affordably priced Model 3, is having its own issues, as is the sales force responsible for moving them.

On Tuesday, Business Insider reported that although Tesla hit its production goal of 5,000 Model 3s by the end of June, 4,300 of those vehicles required substantial fixes. That’s 14 percent making it through “first pass yield,” or an initial production line that requires no fixes at all.

This Tesla employee isn’t surprised.

“The Model 3s come in [to the showroom] scratched or damaged,” he says. “They don’t fit together properly. If you look at the panels, they’ll be mismatched. They won’t line up.”

On Thursday, Business Insider reported that Wall Street analysts tore apart a Model 3 to find multiple failures, including “inconsistent gaps & flushness throughout the car, missing bolts, loose tolerances, and uneven & misaligned spot welds … The results confirm media reports of quality issues & are disappointing for a $49k car.”

Even as doubts fester within Tesla’s factory walls, few want to believe the trajectory may be downward.

“Elon emails us directly, saying ‘We’re on top, we’re going to prove [everybody] wrong,’” this employee says. “Everyone realizes it’s f–ked up, but everyone’s afraid of losing their job before Tesla ‘hits it big.’ It’s a mess.”

URL: Tesla insiders say ‘it’s a s–t show’ under beleaguered Elon Musk

Sorry but I’ve never believed all the hype on Elon Musk but I remember John DeLorean too.

Vision and success are two very different propositions.

Crime Pays What?

Doubtless you are familiar with the phrase “Crime doesn’t pay” but actually is does; just not much unless you are in elected office.

I came across the latest wage schedule of what prisoners earn per hour when working inside the prison system. When compared to what Apple pays people to make iPhones, these guys are really doing well.

Depending on which report you believe, Apple pays somewhere between five to thirty dollars in manufacturing costs to assemble each phone. The hourly wage is estimated to be about $1.78. The guy in China making $1.78 per hour is probably having to support a wife and their government permitted one child plus all his household expenses.

California Adds 800 Jobs in June

Yeah, that’s what was published in the Los Angeles Times last week. California the fifth largest economy in the world per the same LA Times ( California is now the world’s fifth-largest economy, surpassing United Kingdom ) added a mere 800 jobs last month and the State is spinning this as a victory.( California gains just 800 jobs in June; unemployment remains at record low )

Does anybody out there have a problem with these numbers? Oh, per the article, April jobs were 26,000, May 7,200 and June 800.

Am I the only one seeing a trend in the wrong direction here?

The Party line is summarized by Michael Bernick, former Director of EDD, “California has a broad and diverse economy, and we’re now in our 99th month of employment expansion,” he said in an email.

Once again, I invoke the saying, “there are lies, damn lies, and statistics”.

So where were the growth areas in June’s job report? Government, tech and Hollywood. All other sectors lost jobs.

Last month, employers in four of California’s 11 industry sectors added jobs.

The education and health services sector gained the most, growing by 8,000 jobs. The information sector, which includes tech companies and Hollywood studios, grew by 4,600 jobs.

Employers in the government sector and the professional and business services sector also added jobs.

The other seven sectors saw job losses. Leisure and hospitality cut 4,000 jobs. The construction sector shrank by 2,900. Trade, transportation and utilities lost 2,600 jobs. Employers in manufacturing, finance, mining and logging and “other services” also trimmed payrolls.

Given the above, the bean counters in Sacramento are offering two explanations but choosing neither.

Option 1

The slowdown could signal that California is simply reaching full employment. Employers are struggling to find workers.

Option 2
It’s Trump’s fault because he is starting a trade war with Wal-Mart, oops, I mean China.

Bernick and others said that the economy appears mostly healthy despite the poor June numbers. But Bernick said federal trade policy could hamper further job growth.

“A widening trade war is the main threat to California’s continued employment expansion,” he said.

If you drill down into the numbers, only government or things that it subsidizes are growing. The private sector is clearly contracting. Given our tax burden this is not a surprise.

Only government creates jobs in California

If California’s economy is so great, then why is the California economic news all about homeless people and illegal immigrants when we are supposed to be at full employment? Full employment means that everyone has a job and wages are increasing due to a shortage of qualified workers.

We have millions of able bodied people on the dole in our State. California has one third of all welfare cases in the United States, a huge chunk of illegal aliens, and a large portion of the nation’s homeless. Liberals admit that these problems are getting worst not better but on the other-hand, these same folks are claiming we are at full employment. Can you say logical disconnect?

The reality is we have a shortage of housing that normal people can afford. Heck, apparently folks in San Francisco are so miserable that they can’t even afford toilet paper and indoor plumbing.

This is one of the results of socialism. Under socialists and totalitarians, there is an elite group of haves and another of have-nots. The middleclass all but disappears leaving a huge gulf between rich and poor.

The real story here is that California is a mess and that Gavin Newsom may end up having his utopian hands ties by an economic downturn caused by Sacramento’s draconian tax policies.