SPX, COMPQ, and SPX Again: You Have Too Much Freedom

Yesterday, SPX confirmed the rare WXY pattern.  Experts warned that such patterns would become more common due to climate change, and this pattern JUST HAPPENED (it's clearly become common; aka: recency bias), thereby proving that:

1. Climate change is real and therefore every statement we make about it is also true.
2. Anything real is also automatically a "crisis" as long as we repeat the term "crisis" over and over while simultaneously silencing all contrary views.
3. You have too much freedom.
4. Actually, ALL Americans have too much freedom.  We need to figure out a way to gain control over them since the democratic process is not to be trusted.
5. Maybe we can convince them to let us take away their cars?  
6. And their stoves and heat.
7. And their food.
8. And drive their cost of living through the roof.  By fiat if we can't sell them on it.
9. That would learn 'em.  
10. Err... we mean, totalitarianism would be better for us.
11. Wait!  We mean that stuff will help solve the "crisis" we just proved exists!  Refer back to #1.

(The above rant, in part, illustrates how bad logic and propaganda work:  Just because WXY was proven true, it does not automatically follow that every -- or any! -- statement we link to WXY is also true.)

SPX found support at the blue trend line:

COMPQ broke below red, but also held its blue trend line (so far):

Finally, we probably shouldn't entirely ignore the fact that there is a bull option here:

I want to lean toward the bear options, because the world is going to hell in a handbasket and we all know it, but the deck chairs on the Titanic can always be rearranged before it sinks.  Trade safe.

Climate "Crisis" Part III: Are "Renewables" Good for the Environment?

"At what point then is the approach of danger to be expected? I answer:

If it ever reach us, it must spring up amongst us. It cannot come from abroad. 

If destruction be our lot, we must ourselves be its author and finisher."

-- Abraham Lincoln, Jan. 27, 1838

Most people have busy lives and full-time careers that leave little time for deep dives into scientific research, so, often out of necessity, we find ourselves trusting the news and politicians to tell us what "The Science" is.  And, since we're not cynics, we presume they're doing this in good faith.  In recent years, we've heard many claims about "renewable" energy, which is almost always presented as an unalloyed good.

So, today we're going to examine an aspect we hear little about, in an attempt to answer a simple, yet fundamental, question:  

Are "renewables" good for the real environment?

When I say "real" environment, I am referring to the environment that can be objectively measured and observed through scientific methods. This means that the impacts are verifiable and not dependent on hypothetical scenarios or speculative models that can be manipulated for financial or political gain.

In other words:  Good old fashioned hard science.  

Stay through the end for some shocking revelations, but if you've already read Parts I and II, you can skip past the italics immediately below.

(Previously, on Is There a Climate "Crisis":  In Part I, mainstream paleoclimatology showed us that the Arctic is notably colder today than it was a mere 7-10,000 years ago.

In Part II mainstream science from the IPCC, NOAA, NASA, et al, debunked the claim that extreme weather has "gotten worse due to climate change."

Finally, as we've discussed previously, "change" and "crisis" are two very different things.  There's a scientific consensus on climate change, but there is zero consensus that this change represents any sort of "crisis."  The use of the term "crisis" originated with politicians and media and is not shared by (not all, but) most scientists.)

There's plenty more to examine in terms of climate, but for today's deep dive, we will simply look at "renewables" to see whether they are indeed "good for the planet."  Since we've all heard the argument in favor (which essentially begins and ends with "renewables don't emit CO2 during operation"), we're not going to rehash that argument here and will instead examine the aspects of renewables that are less common knowledge, starting with:

Wind Power

According to the Wall Street Journal, one single wind turbine requires 900 tons of steel, 2,500 tons of concrete and 45 tons of plastic.  

Thus, a larger wind farm requires hundreds of thousands of tons of concrete, steel, and plastic.  Obviously, that's not a "green" operation -- but we haven't even gotten to the good stuff yet, because the biggest thing wind requires is land.  How much land?  Prohibitive amounts, because wind is not a dense energy source like nuclear, gas, and oil.  

To meet present electricity needs for the continental United States, wind turbines would need to cover an incredible 12% of the country's land mass.

That's 374,000 square miles of wind turbines.  

Since it's hard to envision how large 374,000 square miles is, here's ~369,500 square miles outlined in black on Google maps (some of the lines have extra squiggles because I got tired of starting over):

Envision a massive wind farm that basically covers all of the following states:  New York State, New Hampshire, Vermont, Connecticut, Rhode Island, Massachusetts, Pennsylvania, New Jersey, Delaware, Virginia and D.C., Maryland, North Carolina, South Carolina, Georgia, and all of Florida, including the panhandle.

(Yes, I know they wouldn't put them there (at least, I hope), but we're trying to envision how much land is involved.)

In other words, we'd have to plaster wind turbines across every inch of the original 13 Colonies, plus Vermont and Florida -- and then we'd ALMOST have enough to meet the electricity needs of the United States.

Does that sound like a pipe dream?  Of course it does.  But even if it didn't... does that sound like it would be at all "good for the environment"?  Especially when we remember that every single wind turbine needs its own massive 2,500-ton concrete base.  A quick calculation suggests we'd need about 40 million tons of concrete for this windfarm, enough to pave over the entirety of several whole states with a durable 4-inch-thick concrete slab.  Sounds great for wildlife and plants, yeah?

(Also:  If one is concerned about CO2 emissions, then one should be aware that cement manufacturing already accounts for about 8% of global emissions.)

I mean, we could probably just stop there on wind, because anyone who's looked at these logistics knows that wind is largely just "feel good talk" ("wind talk is just a lot of wind" - ha!) -- but we won't, because as the full picture emerges, we'll see that wind doesn't even qualify for that.  

To understand the impacts of local wind use, let's explore how devastating wind power is to wildlife:

As we see above, wind turbines effectively become the apex predator in whatever ecosystem they're introduced to... but it gets worse.  

The following screenshot was from the Spanish Ornithological Association (I can no longer find the original link since their previous website crashed and is being rebuilt, but here's a link to an abridged version of the original article, reprinted at Save the Eagles International).

TL;DR -- the meat of their report is this:

In 2012, breaking the European omerta on wind farm mortality, the Spanish Ornithological Society (SEO/Birdlife) reviewed actual carcass counts from 136 monitoring studies. They concluded that Spain’s 18,000 wind turbines are killing 6-18 million birds and bats yearly. 

Extrapolating that and similar (little publicized) German and Swedish studies, 39,000 U.S. wind turbines would not be killing “only” 440,000 birds (USFWS, 2009) or “just” 573,000 birds and 888,000 bats (Smallwood, 2013), but 13-39 million birds and bats every year!

Wind turbines are particularly deadly to birds because there's something of an optical illusion at play with the center of the blade moving slowly, so it's hard for even humans to realize how fast the edges of the blades are actually spinning:

Cover that dying bird with oil and we'd have a week of news coverage of the environmental catastrophe, instead of complete silence from corporate media and our leaders.

Oh, and since "offshore wind turbines" are now being promoted, let's discuss those, too.  First off, of course, you still have the issue of what is, essentially, a large industrial site being installed at sea.

Some environmental groups claim that offshore wind farms kill whales, but, surprisingly, those who promote offshore wind farms (businesses who sell wind tech; governments and their rubber-stamp "science" organizations) claim they don't.  

Having personally listened to humpback whale song for many years while snorkeling off the west coast of Maui, I do not find the claim (made by several environmental groups) that "the noise of wind farms and wind farm construction damages whales' ears and confuses them" to be at all outlandish.  I'm not saying it's a correct claim, because I just don't know -- I'm simply saying it makes sense to me, and since the government is not a disinterested third party here, I'm inclined to be skeptical of their claims that "installing massive industrial structures in the ocean has no impact at all on whales!"  That claim, at least, seems outlandish on its face.

Postscript:  In researching this further, I just discovered that NOAA has, for a single wind project survey, in essence authorized the potential killing of: 

• 42 Whales 
• 2,534 Dolphins 
• 142 Porpoises 
• 1,472 Seals 
• Total = 4,190 adversely impacted marine mammals

And that's just for the survey!  Not for the construction or long-term operation phase, which is undoubtedly far more disruptive and would stretch far into the future.

So I take back what I said earlier:  Apparently, it's a known fact that offshore wind farms kill marine life and those advocating for this agenda are well aware of that but are deliberately deceiving the public for PR purposes.

In the further quest to answer this question in an unbiased (though now decidedly annoyed) manner, I found this study from Nature to be helpful.  In all, Nature identified 867 findings of environmental pressures and ecosystem impacts due to offshore windfarms, the vast majority of which were negative.

So negative environmental impacts due to offshore wind farms (OWF) are significant -- and as the study from Nature stresses, there are still many unknowns:

Impacts may spread far from the OWF area (e.g., lower number of organisms of migratory populations at the final destination), as is the case for land-based wind farms. It is, therefore, fundamental to consider the spatial and temporal distribution of the most sensitive species when determining the risks associated to a given project. For the adoption of such an approach, better data is required.

I think we can safely speculate that the "unknown" environmental impacts will likewise end up being predominantly negative.  Thus, I'm sure offshore wind farms appeal to politicians and businesses who don't care about the environment, but for those of us who truly love the ocean and marine life (I chose to live in Hawaii for a reason!), offshore wind farms are an abomination.  

In conclusion, wind power:

• Requires unfathomable amounts of land, which devastates the environment the same way any other large commercial or industrial site does.
• Would kill millions of birds and bats each year (though I imagine it would kill fewer each year, until eventually there are few birds alive wherever they constructed these monstrosities).
• Damages the ocean ecosystem, including the ecosystem far away from the physical site.
• Will kill otherwise-protected and/or endangered marine life.

So... what's the idea here?  We're going to "save the planet" by destroying it?  Keep in mind that these are real impacts on the real environment -- not speculative "doomsday scenarios" that have little-to-no basis in hard evidence.  It's a bit like burning your house down solely because you're worried that your house might burn down, so you decide to "take charge" and make certain it's done right.

Either we've lost our collective minds... or... and bear with me here... maybe this agenda isn't really about "the environment" at all.  I'm not going to go too far into the woods here, but suffice to say we don't need to speculate in that regard, because they've told us it's not about the environment:

So why aren't we listening?  I have no answer for that.  Truly.

[Note:  Just before publication, but two days after I wrote this piece, the Biden Administration announced a plan to promote environmental "justice" -- the spirit of which sounds exactly like the agenda disclosed above by Ottmar Edenhofer way back in 2010.  They've been telling us plainly what this is really about, and it sure ain't "the planet."  So, again:  Why aren't we listening?]

Anyway, I don't want to digress, so let's return to hard data that doesn't make us uncomfortable.

I believe we've seen enough to eliminate wind from "green" energy contention, but one last tidbit:  Wind turbine blades usually only last about 20 years and are typically made of composite materials that are difficult to recycle due to their size, shape, and composition. As a result, many blades end up in landfills or are incinerated, which releases harmful chemicals into the environment.  Calling wind turbines "renewable" energy should be classified as false advertising.

It doesn't require binoculars to see that the politicians pushing for wind power are not "green" -- they are the opposite of "green," and are either completely ignorant of these issues (in which case, it's their literal civic duty to educate themselves), or they have zero regard for the real environment.

But next time you see wind turbines, see them for what they really are:  A massive industrial power plant, serenely chopping birds to death and destroying the environment.

Solar Power

Is solar any better?  We'll start by looking at the same issue of land.  According to the Solar Energy Industries Association, an association involved in promoting solar (i.e.- they want to paint solar in a positive light), solar requires 5 to 10 acres of land per Megawatt (MW):  

So let's average that and say 7.5 acres of land per MW.  By way of comparison, the Palo Verde nuclear power plant in Arizona is the largest nuclear power plant in the United States with three reactors and a total electricity generating capacity of about 3,937 MW.  Which means that in order to replace that one single nuclear reactor with solar, it would require 29,527 acres, which is 46 square miles.  Which is why a study from Princeton University concluded that solar needs 300-400x more land than traditional sources; in fact, as Michael Shellenberger explores: Solar needs 379 times more land than nuclear:

A 200-megawatt wind farm,” notes Bloomberg, “might require spreading turbines over 19 square miles (49 square kilometers). A natural-gas power plant with that same generating capacity could fit onto a single city block.

There's a lot of competing information about how much land a national solar farm would truly require, but on the low end of the credible estimates (i.e.- not made by vested interests, and accounting for weather and for the fact that solar panels decrease in efficiency every year), we have the National Renewable Energy Laboratory estimating that the nation could generate enough power by covering "just .6%" of the United States with solar panels.  Well!  That doesn't sound like much.  Lemme do the math here... okay, so that's "just" 22,780 square miles! 

Let's see how that looks on the map:

Okay, simple.  So basically, we could just level the whole corridor from Boston to D.C., including the entire states of Connecticut, New Jersey, Rhode Island, and Delaware, pave over all that land with solar panels, and voila!  "Green" energy!

So, in that scenario, Pennsylvania (where I grew up) would go from this:

to this:

Lovely!  I can hardly imagine anything "greener"!  Or better for the natural environment!  Can you?  Plants and animals would undoubtedly thrive with their habitats entirely paved over by solar panels.  We are truly "saving" the planet now, yes?  Who needs forests anyway?

"Oh," I hear readers object through my screen, "but they would NEVER replace forests with solar panels!"  

They already are.  Killing forests to put up solar, that is.  And we're nowhere near the end game of "Net Zero" yet -- in fact, we've barely started.

This "tiny" (by comparison to the amount of energy it's generating) solar plant used to be a forest in Montana:

And this little "solar forest" is in North Carolina:

There are plenty more, but you get the picture.  Just keep in mind how little power those giant solar plants are generating when compared to nuclear or natural gas.  

"Oh, but we could just install solar panels out in the desert Southwest where no one lives."  

Okay, but "no one" is not "no THING."  I lived in the desert Southwest for years, and there's plenty of life in those vast stretches we describe as "desert."  Unlike what many East Coasters think (I know because I used to be one of them), most "desert" is not rolling sand dunes like the Sahara, it's small plants and animals as far as you can see.  Just because it's not as pretty as a forest doesn't mean it's not still a living part of Earth's natural environment and ecosystem.

(Above: The stereotypical landscape of the "desert" Southwest)

Besides, the Southwest is prone to hail and very high winds -- up to and including tornadoes! -- and solar panels aren't exactly known for their durability.  Imagine a nation without reliable power for an indefinite time period after a hail storm:

Or after a windstorm:

Is it really a good idea to level 22,780 square miles of the environment, then pave over it with a million of these things, only to have them entirely wiped out a year or two later by Mother Nature, leaving us high and dry?

So, while solar power may not be quite as devastating as wind power on environmental land (only because it doesn't require as much land), it's still plenty bad, and too fragile to rely upon.  In cold weather and in hospitals, people will be in real trouble if the grid goes down for any meaningful length of time.  Major weather events have always and will always occur with regularity.  Our large, fragile "national solar farm" would be all-but guaranteed to be destroyed, probably several times.

And of course, even if we put our giant solar or wind farms NIMBY ("Not in MY Backyard!"), we still have to get that power to the rest of the country.  And that requires a lot of new power line infrastructure.  Here's Princeton/Bloomberg again:

So, in order to convert to wind and solar, we'd not only need to level entire-states worth of environmental land, but we'd need to more than triple the number of power lines. Princeton describes power transmission lines as "the most difficult land use challenge," even worse than the solar/wind power plants themselves.

Not to mention, the manufacturing process for solar is very energy intensive, and panels require silicon, glass, nickel, copper, silver, indium, and tellurium, the latter several of which require significant mining. 

But who cares, let's pretend we're politicians and skip right over that.  After all: We need to do this because some speculative model that's failed at every prior prediction said so!  You darned "science" deniers with your concerns about the stupid environment!

Instead, we'll talk about solar panel disposal, because these things only last (at best, if there's ZERO significant weather in the meantime) 25-30 years -- a shorter lifespan than your home's metal roof -- and panels decrease in efficiency every year they're in use.  But unlike your home's roof, which is easily recycled, there's little solar panel recycling occurring in America (see:  Researchers and Companies Are Preparing for a Looming Tsunami Full of Photovoltaic Waste), so most solar panel waste ends up in landfills.

Which means, just like wind, solar power is anything but "renewable." 

Referring back to the Wall Street Journal piece quoted earlier, by 2050, solar panels alone would more than double the tonnage of the entire world's plastic waste: 

If we think we have a problem with plastic in the oceans now, how will that be with more than double the plastic?  And that's just from solar panels.  That would dwarf the global plastic from plastic straws by an order of magnitude, yet we're told straws are "bad" but solar is "green."

To make matters worse, some solar panels are considered Hazardous Waste by the EPA.

[D]ifferent varieties of solar panels have different metals present in the semiconductor and solder. Some of these metals, like lead and cadmium, are harmful to human health and the environment at high levels. If these metals are present in high enough quantities in the solar panels, solar panel waste could be a hazardous waste

So, here again, we've been sold a bill of goods by vested interests.  

Solar panels in "Net Zero" quantities would: 

• Destroy entire-states-worth of natural habitats.
• Produce massive amounts of waste (including hazardous waste, as well as doubling the tonnage of global plastic waste), which would be ongoing, creating more and more waste at each future replacement cycle.
• Require significant mining and manufacturing processes.
• More than triple the number of power lines in the United States.
• Be prone to being entirely destroyed by stormy weather.

To classify solar as "green energy" is pretty outlandish.  Unless one believes for-profit-and-politics doomsday models (that currently have a 0% success rate at future prediction) should be prioritized over, you know, the actual planet.

(And the actual reality of their hypothetical "doomsday" is going to shock you by the end of this piece.)

Both solar and wind also require giant banks of batteries, to store power for when the sun isn't shining or the wind's not blowing.

And we haven't even gotten to the batteries yet. (insert ominous music here)

"Batteries Not Included"

How many batteries does it take to store electricity for an entire country?  According to the Department of Energy, the answer is just over 6.0 TWh in the USA's "zero carbon" scenario.  Cool.  What does that mean?

Well, the easiest part to answer is the dollar cost, which, if purchased from Tesla, would be just over $2 trillion.  Trouble is, that order won't be filled anytime soon (if ever) -- at least not without a bunch of people going without power for a few decades -- because Tesla claims that after its newest Shanghai Megafactory comes online in 2024, then it will have global production capacity of 83 GWh per year.  

There are 1000 GWh in a TWh.  This means that (assuming this factory indeed goes online in 2024 without delay or snafu) it would "only" take Tesla 72.29 years to fill a 6.0 TWh order!  And that's if they ceased all other production and worked on nothing else!

This is one of the many reasons I laugh when people say things like, "We have the ability to switch to 'renewable' energy RIGHT NOW!"  No, we don't.  Again, though, saying "we don't" assumes we want a humane transition that doesn't involve the broader populace starving and freezing to death.  (And given what we're learning here, I'm not entirely sure it's 100% correct to assume that.  I'm kidding, of course!  (No I'm not.))  Anyway, those are the easy parts of the equation.

The real questions we need to address are the environmental impacts of battery manufacturing.

One of the worst environmental impacts of lithium battery manufacturing is the extraction and processing of the raw materials needed to make the batteries. Lithium is often extracted through a process known as evaporation, which involves pumping approximately 500,000 gallons of water (to extract each and every single ton of lithium) into underground lithium-rich brine deposits. This can cause contamination of groundwater, soil, and nearby ecosystems:

Here’s a thoroughly modern riddle: what links the battery in your smartphone with a dead yak floating down a Tibetan river? The answer is lithium – the reactive alkali metal that powers our phones, tablets, laptops and electric cars.  

In May 2016, hundreds of protestors threw dead fish onto the streets of Tagong, a town on the eastern edge of the Tibetan plateau. They had plucked them from the waters of the Liqi river, where a toxic chemical leak from the Ganzizhou Rongda Lithium mine had wreaked havoc with the local ecosystem. 

There are pictures of masses of dead fish on the surface of the stream. Some eyewitnesses reported seeing cow and yak carcasses floating downstream, dead from drinking contaminated water. It was the third such incident in the space of seven years in an area which has seen a sharp rise in mining activity, including operations run by BYD, the world’s biggest supplier of lithium-ion batteries for smartphones and electric cars. After the second incident, in 2013, officials closed the mine, but when it reopened in April 2016, the fish started dying again.

Cobalt, another key component of lithium batteries, is often mined in the Democratic Republic of Congo, where child labor and other human rights abuses have been regularly reported.

The mining and processing of cobalt can also lead to water and soil pollution, habitat destruction, deforestation, and loss of biodiversity. In addition to the environmental impacts of raw material extraction and processing, the manufacturing of lithium batteries also requires significant amounts of energy.

So, here again, we find that absolutely nothing about the mining, extraction, and/or manufacturing process of electric batteries is the least bit "green."  

The justification for the environmental destruction and human rights abuses that are both inherent in "green energy" is entirely predicated on the assumption that a bit more CO2 (which is not a "pollutant," CO2 is the most important gas for life on Earth, but that's a whole 'nother can of worms) will cause the planet to warm slightly, which in turn, is speculated to be "bad."  Despite the fact that (as I covered in the last piece), the hard evidence that anything "bad" is actually happening is nearly nonexistent.

In other words, support for "green" energy can only be achieved by keeping the populace in the dark about all this, and/or by some serious mental gymnastics.

But hey, okay, sure, whatever, batteries destroy the environment, so what -- at least they're reliable sources of power, right?  RIGHT?  

SA Wind Farms, Big Tesla Battery, Fined Nearly $4 Million over Separate Breaches

Hornsdale Power Reserve was fined when its Tesla battery in Jamestown failed to produce power during an unexpected outage in Queensland.

Three other South Australian wind farms, including those at Snowtown, Hornsdale and Clements Gap, have been previously fined a total of more than $2.5 million for similar breaches.

In a separate judgement, Justice Besanko fined Hornsdale Power Reserve --- which owns the 150-megawatt Tesla battery at Jamestown -- $900,000 for failing to provide grid stabilization services that it had been contracted to provide. The failure was identified when an unexpected outage at the Kogan Creek coal plant in Queensland in 2019 caused grid disturbances. At the time, the battery had been paid to be on stand-by to rapidly produce power to help restabilize the grid in the event of such outages.

 But he said the battery did not power up when needed.

And that's what's happening right now out in the real world where people are just trying to use this stuff as backup power.  So yeah, if we actually tried to make this transition, be prepared for a complete nightmare of unreliable power, constant blackouts, and unforeseen problems.

Further, as everyone already knows, lithium-ion batteries are toxic waste -- and sometimes catch fire and/or explode.  I wonder what sort of environmental catastrophe would occur if the USA's massive 6.0 TWh battery bank were to catch fire and explode?  (Not to mention the long-term power outages.)  Don't worry, I'm sure they'll have some solution for that, which, since this is the U.S. Government we're talking about, will fail spectacularly in practice.

Here's some more interesting information from the EPA:

Li-ion batteries are made of materials such as cobalt, graphite and lithium which are considered critical minerals. Critical minerals are raw materials that are economically and strategically important to the U.S., have a high risk of their supply being disrupted and for which there are no easy substitutes.

In other words:  

These minerals are called critical because their supply chains are complex and their availability is limited, which makes them vulnerable to geopolitical tensions, market fluctuations, and supply disruptions.

Oh.  So we'd be making ourselves completely dependent on something we might not even be able to replace in an emergency, or even when it reaches the end of its use cycle in 15 odd-years.

Which immediately makes me picture a worst-case scenario, because, as I've warned my youngest son many times:  "It's easy to picture what happens if things go perfectly-right -- but remember that one out of every so-many attempts, everything will go precisely wrong.  Plan for it."

So, here's what I immediately pictured.  Imagine this:

It's the 15-year anniversary of the day the last fossil fuel plant in the USA was finally decommissioned and dismantled.  Although our power grid has been unreliable and prone to problems, at least we're no longer emitting CO2!!!, so the minor inconvenience of a handful of our friends and relatives freezing to death has been worth it.  At least that finally made our Thanksgiving cheaper, since we only needed to buy a small bug-based turkey-substitute last year.  

But now, there's trouble in Paradise:  Our worst adversary knows our replacement cycle and sees that we are in a weakened economic state due to stagflation.  War looms on the horizon and this hostile power has blockaded our access to critical minerals... at exactly the wrong time.  Our batteries are dying and desperately need to be replaced.  But alas, we have no way to replace them and are growing weaker by the day.  And the weaker America becomes, the stronger our adversary grows in comparison.  A few months later, the power grid can no longer be sustained.  The USA goes dark.

Permanently. 

Chaos ensues as all services (police, fire, medical) and food supply lines cease operation.  Starving populations riot; roving gangs pillage others for survival.  But in cities, even the stolen food runs out quickly.  Ultimately, only a handful of people will survive, primarily those who defied the bans and kept their old gas-powered cars hidden away despite the threat of felony convictions.  

But even they will eventually be hunted down and captured or killed by the enemy.  

America, once the shining city on the hill, is no more.

Yes, sure, that's a worst-case -- but the general idea is not so far-fetched as to be a zero-percent chance.  In fact, given that the one constant throughout world history has been regular and cyclical war, I would say that while the timing is unknown, a similar event would almost be guaranteed to happen eventually.  

In my view, it's myopic and stupid to even consider making our nation's very survival entirely dependent on the actions of foreign governments.  For me, this ends the discussion entirely, frankly.  Solar, EV, wind, whatever -- it's fine for people who don't know any better or who don't care about the environment to use that stuff as supplemental power, but it's out of the question for this nation to make itself critically dependent on resources that lie beyond its borders.  

*****

Slight digression there, but in any case, I think we're answered the question we set out to answer:  "Are 'Renewables' Good for the Environment?"

The answer is a resounding and emphatic "NO."  Frankly, when I started writing this piece, I knew "renewables" had some environmental issues, but even I had no idea how truly horrendous and destructive they really are.  Renewables are not even "somewhat" good.  Renewables are absolutely devastating to the real environment.

So, with that answered, let's drive it all home and conclude with:

What Would Net Zero Accomplish?  How Much Would Temperatures Change?

Now here's where it really gets interesting.  And shocking.  

According to the U.N., if our fossil fuel use continues on its current trajectory, global temperatures are predicted (let's assume they get a prediction right for once, for sake of argument) to rise a total of 2.7 °C by 2100.  Now, keep in mind that this is not "an additional 2.7°C from today," because these targets are always backdated to pre-industrial temperature levels.  

Temperature has reportedly already risen 1.1°C from pre-industrial levels, so the "1.5°C target" we often hear bandied about is actually only a 0.4°C increase from today.  (Let's ignore the complete and utter absurdity of all this and just run with their numbers.)

Using their numbers above, we've had 1.1°C rise already, so, with a 2.7°C target, they're speculating that temperatures may increase another 1.6°C from today.

Okay, so let's assume that's all correct.  What percentage of that 1.6° would come from the USA if nothing changed from our current way of life?  

The USA is responsible for 14% of global emissions, so the answer is approximately 14%.

Thus:  1.6°C x 14% = 0.224°C

So, if the USA went dark tomorrow, then, according to the UN, that would stop... err... 0.224°C of "global warming" over the next century.  

Silliness, right?  But wait, it gets better.

According to the U.S. EIA, electricity generation from fossil fuels in the United States only accounts for 31% of U.S. emissions!

So we have to take 0.224°C and multiply that by 31%, which means that if the USA did all the destructive "green" energy stuff we just spoke about in order to completely eliminate fossil fuel from the power grid, then, using the UN's own alarmist figures and assumptions about CO2, it would stop the global temperature from rising by... 

0.0694°C ! (add more exclamation points here as needed)

That's right, less than seven-hundredths of a degree.  Not even one-tenth of one degree.  THAT is what all this would accomplish. 

I mean, really, stop and think about that for a few minutes.

Now, since you're not (I assume, correct me if I'm wrong) a politician who's seeking to influence votes via fear or a vested interest that stands to make a huge profit on "green" energy, ask yourself:  

Does destroying the real environment in all the ways we just discussed make any sense whatsoever in order to potentially avert a hypothetical 0.0694°C temperature rise?

Does it make sense to put the USA's very sovereignty and independence into a compromised position to possibly avert the dreaded prospect of... a 0.0694°C warmer planet?

While you're wearing your "Question Authority" cap, ask yourself:  Even if they're 100% right, would less than one-tenth of a degree REALLY "destroy the planet"?  Would it make any difference at all to the planet?  I mean, really?  

I'll tell you right now:  No.  No, it wouldn't.  I don't care how much doomsday speculation they throw at us, I'm done pretending that it would matter one iota.  I know this will create cognitive dissonance in some, because we're expected to abdicate all common sense to every doomsayer who invokes the term "science," but the temperature difference between 9 a.m. and noon is considerably more significant.  And, for crying out loud, this planet and every species alive on it today, including humanity itself, already survived an 18°F (10°C) temperature increase in the course of only a single decade!

So no, the climate isn't changing "faster" now (obviously).  Things aren't somehow "worse than ever" today.  Nothing happening today is even close to being "unprecedented."  It's all fearmongering, anti-scientific baloney.

Sorry, helplessly watching us railroaded into this garbage upsets me sometimes, because if they succeed, it's going to cost many human lives.  Mark my words.

Anyway, to sum it all up:

• on one hand, we have hard science conclusively demonstrating how devasting and destructive renewables are to the real environment, no speculation needed.
• on the other hand, we have speculative "science" running around screaming that if the United States doesn't switch to "renewables" right now, then Earth's temperature will rise 0.0694 degrees, which (if it happened) would somehow magically be worse than all the real and measurable damage that "renewables" are 100% guaranteed to do.

It's complete absurdity.  

And I think we've put this issue to bed: "Renewables" are anti-environment and, at scale, nonsensical.

To be completely blunt:  After more than two decades and thousands of hours of research into the "climate" topic, I've concluded that if there's a true threat to the planet (and particularly to the well-being of humanity), then that threat comes from the powerful interests who are pushing this agenda.

*****

Epilogue:  I have made every effort to ensure the accuracy of the information provided, but few sources openly highlight the downsides, so it's painstaking research and I will gladly correct errors if there are any.  Incidentally, unlike those who are (in my view) working against humanity's interests, I gain nothing by writing these pieces.  They're very time consuming, earn me 0 dollars, and sometimes make me unpopular.  I do it as a public service because people cannot make informed decisions without access to the whole truth, and neither our media nor our leaders are providing that to them.  These climate pieces carry a personal cost for me; my motivation is the slim hope that if enough people are educated, then maybe we can avert the environmental, economic, and humanitarian disaster we're being railroaded into under the false guise of "saving the planet."  I cannot sit idly by and do nothing, even if it hurts me to speak up.  I hope this inspires others to, to quote Glengarry Glen Ross:  "Go and do likewise, gents.  Go and do likewise."

Are Stocks Headed Toward a Generational Bear Market? And a Look at Real Estate

"You cannot get something for nothing unless you have previously gotten nothing for something."

-- The Acrobats: Why the Central-Bank-Driven "Prosperity" Must Eventually End

"TANSTAAFL:  There Ain't No Such Thing As A Free Lunch."

-- Robert Heinlein, The Moon is a Harsh Mistress

In this piece, we're going to look at equities, bonds, oil, real estate, inflation, and more, and attempt to tie it all together in a sort of Unified Field Theory of Everything.  I can't promise that ambitious effort will be entirely perfect, but hopefully it will at least provide food for thought.

In December, I began to speculate that the end of the 12+ year bull market was drawing near, and I've made no secret of my bearish long-term outlook in the months since.  But while I've obliquely covered some fundamentals in that time, I've primarily continued using the charts as my justification.  This is at least partially because the fundamentals didn't look too bad in December (more evidence that charts lead the news), so, initially, there really wasn't much to talk about from a fundamental standpoint.

Fundamentals tend to be reported on a lag, to the point that the Fed typically doesn't recognize when a recession begins, except in hindsight.  The stock market is a leading indicator, so you simply can't predict a leading indicator by using lagging data.  You can, however, do the opposite.

Nevertheless, some folks believe charts to be mumbo jumbo (they aren't) or a form of voodoo (I can't comment on this without permission from the High Voodoo Priestess, or I risk being expelled from the... what am I saying?!?  Ha ha!  I meant to say: "Of COURSE chart reading isn't voodoo!"), so today I thought it might be worth taking a deeper dive into the... fundamentals.  (Insert ominous music here)

And some more charts.

Because hey, you can take the analyst out of the technical, but you can't take the technical out of the analyst.  (Or whatever.)

I'm also going to provide an in-depth analysis of the real estate market and discuss why it may hold up better than equities.

Anyway, before we get into the fundamentals, I want to briefly touch on one of my historic charts for any new readers, and for the "charts are voodoo" folks.  

It was years ago now that I began presenting my chart-based thesis that we were headed toward a long-term peak in equities, and below is my preferred count (Elliot Wave-speak for "favored prediction") as published in early March 2020:  Note the rapid crash to ~2100 was predicted, the bottom at ~2100 was predicted, the recovery to new all-time-highs was predicted, and the completion of Cycle 5 was predicted to arrive around the beginning of 2022.  All of it has since played out (though to be fair, we won't know for certain that Cycle 5 has indeed marked a major top (five waves at Cycle degree complete a larger wave at Supercycle degree) until it's in the rearview mirror).  

Can fundamental analysis do all (or any) of that?  Especially in a fast-moving and at times panicky market? 

So here we are, in 2022 (though again, for new readers, I began suggesting that it was time to sell the rallies back in December 2021).  At that time, however, nobody was particularly bearish.  Boy, that has sure changed over the past few months, as the Fed has turned uber-hawkish, inflation has skyrocketed, bonds have plummeted, and the frailties in the system have begun to bubble to the surface for all to see.

Let's look at some of the fundamental issues, starting with the 10 year yield:

The 200 MA on the chart above lines up reasonably well with the very-long-term trendline on this all-data log chart from Worth Charting.  This trend line has contained yields for 40 years.  40 financially-prosperous years for the United States, we might add, in a largely low-inflationary environment.  A sustained breakout might thus signal a sea change from those conditions:

Next, the current Treasury drawdown (courtesy of SentimenTrader): 

And next, the trimmed mean inflation ratio, courtesy of Your Friends™ at the Dallas Federal Reserve:

So all of that looks pretty sickly, wouldn't you say?  This is not a great start to any sort of "soft landing."  It's more like what you might expect to see at the start of a crash landing.  Or just a crash.

In fact what we're seeing is the worst bond crash since 1987 and 1994:

Fund flows into bonds have been net negative, though not yet worse than 2020, 2018, and 2013.

Something that jumps out on the chart above is that fund flows into equities are still high -- it jumps out because it suggests downside potential in equities is also elevated.  (Though I'm not sure how "downside... is... elevated" works out from the standpoint of the English language.)

Of course, if we were The Federal Reserve, we might shrug that off and talk about how amazingly incredibly just unbelievably WOW "strong" the labor market is.  Unless we looked at the next chart, which is weekly earnings adjusted for inflation.  Which has fallen off a cliff.  This is why all the talk of the so-called "strong economy" just isn't resonating with voters:  People don't look at BLS job numbers to judge the economy, they look at their own checking accounts.  And their checking accounts are shrinking fast.

(On the bright side, we probably won't be hearing anything about how we're saving 16 cents on a pack of hot dogs this coming Fourth of July, given that a pack of premium hot dogs now costs more than your average used Chevy did three years ago.)

The graph above helps explains the graph below, which is consumer sentiment.  Again, despite the headline numbers, people know that something is going wrong because their own finances tell them.  Consumer sentiment hasn't been this low since just after the "Great" Recession ended.

We've all seen the headlines that "inflation is the highest it's been in 40 years," but many people aren't aware that the way inflation is calculated was changed (several times, in fact), and if we use 1980 methodology, for example, inflation is even worse.  The chart below comes from ShadowStats and uses 1980 methodology to calculate current inflation (blue line).  Inflation is now running near 17% if calculated on that basis:

Of course, the Federal Funds Rate was 21% back in 1981.  Right now, the effective Federal Funds Rate is 0.50%.  Because the Fed is Very Serious About taming inflation!

I find it almost comical that recent inflation seems to have come as a surprise to so many of the people who are put in positions of power specifically to anticipate this stuff.  Killing domestic oil supply causes the price of oil to increase.  And flooding the money supply via stimulus and deficit spending creates too many dollars chasing too few goods.  This causes dollars to be worth less (the price of goods isn't actually increasing, the value of dollars is decreasing), as the new dollars steal their value from the old dollars, resulting in a net-zero effect -- no wealth is created by printing money, it's just moved from old dollars to new dollars, making all dollars, both old and new, worth less.  We call such a situation "inflation."  This has been well known as a basic tenet of economics for longer than I've been alive.  It's hardly rocket surgery.  As I warned back in July of last year (in Why the Fed Will Be Powerless During the Coming Supercycle Crash):

For starters, Covid, or more correctly, our government's response to Covid, has hastened our demise. The Federal Reserve and the American government's kneejerk reactions led them to "lockdown and debt-up" with abandon. This destroyed untold thousands of small businesses and buried us in record debt, so we are now left with permanent long-term problems in the wake of those short-term temporary "solutions." The only way out of this mountain of debt is for the Treasury to inflate its way out (i.e.- pay back yesterday's debt with tomorrow's dollars, which will be worth a fraction of yesterday's dollars, courtesy of inflation).

This means that, regardless of what they tell us, inflation is likely here to stay (for as long as market forces will allow, anyway) -- because it's the government's only way out, and they know it.

So why did so many people get it wrong?  I suspect due to simple complacency.  It wasn't too long ago that certain people we're supposed to take seriously were still entertaining MMT (Modern Monetary Theory; aka: "Magic Money Tree") as if it weren't completely ludicrous.  As I wrote nearly a year ago now (May 10, 2021):

[I]nflation is picking up a pretty solid head of steam, which will be interesting, inasmuch as the Fed really hasn't had to deal with any inflation since the beginning of Quantitative Easing in 2009. It's obviously easier to print money in a deflation, since liquidity is being destroyed faster than it's being created, leaving you lots of wiggle room.

[Y]ears of deflation have led naïve politicians to believe there are no consequences to money printing, so, as so often happens, the current generation is ill-prepared for what seems to be developing. Young people often believe that "old-fashioned" wisdom is outdated, when it should instead be viewed as the collective lessons that humanity has learned through thousands of years of trial and error. 

“Tradition is a set of solutions for which we have forgotten the problems. Throw away the solution and you get the problem back. Sometimes the problem has mutated or disappeared. Often it is still there as strong as it ever was.” ― Donald Kingsbury

As we've discussed on many previous occasions, bull markets breed complacency and carelessness, and those attitudes are always a recipe for trouble.

The bottom line is, despite the Fed's talk of 2022 having "the strongest labor market in forever oh-my-gosh-just-wow," things are already worse than many headlines suggest.  And most people know it, on some level.  And the thing is, the Fed rate increases haven't really even started yet, nor has the Fed attempted to taper Quantitative Easing.  What we're seeing now seems to be simply what happens when the Fed stops buying Treasuries via QE and the market is allowed a taste of true price discovery.

In other words, this is only the beginning, the first ripple in the pond.

Oil

When the Fed says they need to control inflation, in one sense, what they're really saying is that they need to bring down the price of oil.  At face value, oil prices impact the cost of shipping, which bleeds over into everything that has to get from one place to another (in other words: everything), including most of our food.  And of course, it impacts the cost of electricity, which again impacts the cost of everything, including the refrigeration needed to preserve our food.

But a level deeper, we find that oil is a key component of plastic, which is found in everything from computers to food packaging to the bristles on our toothbrushes to the acrylic in our house paint to the nylon in our shoes and clothing.  Oil is also a key component of many pharmaceuticals, of the ink in our pens, and of literally thousands of other hard goods that have nothing to do with fuel.  

A massive portion of the economy requires oil in order to function, both literally and figuratively.  When the price of oil rises, then the price of virtually everything must rise with it.

As we see on the chart above, oil broke above its prior trading range just after the 2020 election and hasn't looked back.  The market always anticipates the future; that timing is not coincidental.

One problem here is that while destroying domestic oil supply can be done in seconds by a politician with a pen, increasing the supply of oil takes years, and most people do not realize how involved it is.  Federal permits alone take 140 days.  A land or ocean survey takes up to two years (sometimes longer), and that's before even exploratory drilling can commence.  From there, it takes an average of 5.5 years to bring any oil to market -- and it takes an average of 17 years for an oil field to reach full production. 

"As a matter of cosmic history, it has always been easier to destroy than to create." 

-- Mr. Spock, in Star Trek II (TOS)

But what we're witnessing today goes beyond simple logistics.  The Wall Street Journal lays out some of the major hurdles facing domestic oil producers in even more detail, in a piece titled Biden's U.S. Oil Embargo, quoted in part below:

The Administration has halted onshore lease sales. Producers are developing leases more slowly since they don’t know when more will be available. Offshore leases were snapped up at a November auction because companies expect it might be the last one. Interior’s five-year leasing program for the Gulf of Mexico expires in June. Yet the Administration hasn’t promulgated a new plan. 

Then there’s the not-small problem of financing. Companies can’t explore and drill, or build pipelines, without capital. Biden financial regulators allied with progressive investors are working to cut it off. The Labor Department has proposed a rule that would require 401(k) managers to consider the climate impact of their investment holdings. 

The Securities and Exchange Commission is expected to issue a rule requiring companies and their financiers to disclose greenhouse gas emissions. Mr. Biden has nominated Sarah Bloom Raskin, of all people, to be the Federal Reserve’s top bank supervisor. Her top priority is using bank regulation to redirect capital from fossil fuels to green energy. 

Large energy producers are buying back stock and redirecting capital to renewables because they see the Administration’s writing on the wall. Small independent producers are eager to take advantage of higher prices but can’t get loans. Many relied on private equity during the last shale boom, but now these firms are cutting them off. 

Progressive outfit Global Energy Monitor gleefully proclaimed Tuesday that $244 billion in U.S. liquefied natural gas projects are stalled because they “are struggling to find financiers and buyers” amid “pressure from cheap renewables"—i.e., rich green energy subsidies that Democrats want to make richer—and “tightening climate commitments.” 

It’s almost a miracle that any oil and gas production is occurring in America amid this political hostility. The Ukraine crisis ought to be an inflection point that causes the Biden Administration to do an energy reset. Instead, the President says it “should motivate us to accelerate the transition to clean energy” and reduce our dependence on fossil fuels.

Mr. Biden bemoans today’s skyrocketing gas prices, yet he remains hostage to the green-energy donors whose policies guarantee higher prices. The President is enabling Vladimir Putin’s energy leverage even as he claims the opposite.

And it is by this road that it has now fallen to the Federal Reserve to attempt to bring down the price of oil, and thus to quell inflation, by tightening monetary policy.  This is the wrong tool for the job, akin to using a hammer to fix a leak.  You might be able to pound the leak closed, but you're going to do a great deal of collateral damage in the process.

In the end, all of this self-inflicted pain may well crash the entire economy, bringing with it a widespread pain an order of magnitude worse.  Which would, ironically, almost certainly bring down the price of oil.  At which point:  "Mission accomplished," I suppose.

Speaking of, let's talk about the stock market.

Stock Market

Most readers know that the Fed has been engaged in Quantitative Easing since 2009, and that inflation has now forced them to end that.  Here's the Fed's balance sheet, which is currently sitting near $9 trillion -- that's $9 trillion pumped directly into the market, with $5 trillion of that coming just since 2020:

Quantitative Easing is ostensibly not "for stocks," it's for Treasuries and Mortgage Backed Securities -- but a lot of that money has found its way into equities.

And now it's ending.

Eventually the Fed even promises to reverse it.  In the past, I might have wryly mused that they'd fire up the QE printing press at the first sign of trouble because in the past they would have, but as I outlined in Why the Fed Will Be Powerless During the Coming Supercycle Crash (which I will quote below), they will no longer have that luxury.  The forces of chaos are at the door, and the Fed cannot pump QE without driving oil (and thus inflation) into the stratosphere.

The unpleasant truth is: No matter what the Fed does, markets cannot maintain a trajectory of permanent bullishness, because there are forces acting upon reality that are far more powerful than the Fed. 

The advance of civilization is not linear -- it is nonlinear and often asymmetrical. And while it may appear to have "advanced without ceasing" (at least in terms of technology) from the limited perspective of our brief lifetimes, we know from history that civilizations do not rise endlessly. They rise for a time, then they contract for a time (this occurred in America as recently as the Great Depression). Then they may rise again -- or they may fall entirely. 

But either way, they do not advance without ceasing in a steady upwards march. In part because of outside forces, and in part because of internal forces (outlined in broad strokes herein): 

1. Good times create excesses in the economy, which breeds complacency and arrogance in our leaders 
2. Complacency and arrogance lead to short-sighted policies that will, unavoidably, ultimately precipitate bad times 
3. Bad times turn old excesses into scarcity and lack, which creates a new mindset of prudence and conscientiousness in our leaders 
4. After the old slate has been wiped, prudence and conscientiousness then lead to new growth And the whole cycle repeats 

[We've been in stage 2 of this cycle for a while now, as I'll outline directly.]

Stage 2 of the cycle:  Complacency and arrogance lead to short-sighted policies that will, unavoidably, ultimately precipitate bad times.  See previous discussion on the self-inflicted oil crisis, which is now precipitating the monetary crisis, which is in turn precipitating the bond crisis, all of which will soon precipitate the stock crisis, which will then precipitate an economic crisis.

We are destroying ourselves in a blind fit of misdirected "do-gooder" rage, while blaming "the Existential Crisis that isn't" and "Putin" and [insert anything other than "ourselves" here].  "We must destroy ourselves to save ourselves" seems to be the paradoxical mantra of our leaders, and that this attitude has gone mainstream has been apparent for some time.  

Ideas have consequences.

As I also wrote in that same piece:

So we've built a massive asset bubble on top of a mountain of debt on top of the ever-shifting sands of normal existence. And, in the process, we have left ourselves virtually defenseless against any future problems. We have left ourselves completely exposed to both the whims of fate and the folly of our fellow man. 

We've built a house out of eggshells in the middle of an earthquake zone. 

The next crash will take this entire fragile construct down in a fashion that exposes and exploits each and every weakness in the system, known or unknown. Problems that were papered-over on the way up will compound themselves on the way down, as the entire destructive frenzy feeds upon itself cannabalistically, until it has finally devoured all the excesses we've poured into it. And more. 

Alas, there is nothing the Fed can do to stop this once it begins in earnest. The Fed likes to talk about its "tools," but all its tools are currently running at full capacity just to keep the market from collapsing under its own weight. There are no more tools to call upon. 

All it will take is a catalyst. 

Later, people will blame the catalyst as if it were the "cause" (you and I know they will do this because they do it every time) -- but we'll know it was not the cause. Our short-sighted choices were the cause. Our inability to recognize, appreciate, and properly manage our good-fortune was the cause. 

In short, we ourselves were the cause. We have met the enemy, and he is us. 

The catalyst will only be the trigger that forces the reckoning.

The first catalysts have arrived.  And our response so far has been to compound our errors.

I'm bearish because of what I see in the charts, but I'm also bearish because of what I have seen developing in our nation itself, and in our leaders.  This has been a long time coming.  

To better explain this, I'm going to quote from another of my prior works (in which I was still intermediate-term bullish on stocks, incidentally), titled: Is America Approaching the End of a Supercycle Rally?

Our country was founded on solid principles. Those principles led to our success. They predated it; they created it. As we grew in stature, we began to forget the underlying principles, but we continued to live in the systems those principles created, so we continued to grow stronger: We were embodying the core principles, whether we understood them or not. 

But over generations, we've drifted further and further from those principles. Few in the modern world seem to even understand those principles -- and we certainly won't value what we don't understand. And... some are actively rooting for destruction though they do not and cannot realize that's what they're rooting for; they bear destruction in the name of "progress" (because they truly believe in what they're doing). 

We have, in essence, discarded the very principles that brought us success in the first place. 

Since we, as a nation, are (as with all entities) merely the sum total of our ideas, this deterioration of our core principles cannot and will not continue without consequence. 

The center cannot hold. 

This, I suspect, is the last thing we see as a Supercycle Peak approaches.

Bottom line:  In my estimation, between the Fed's long-term juicing of the market, the deterioration of both logic and ethics in the general populace, the unwillingness of our leaders to value their people more than they value controlling them through fear -- among other things -- we have brought this upon ourselves.  And will continue to do so, because we have become both addicted to, and trapped by, our own hubris.

Have you ever seen someone engage in self-sabotaging behavior?  We're presently witnessing an entire nation engaged in such behavior.  And we are unlikely to course-correct, since we seem unwilling or unable to accurately diagnose the problem.  Perhaps the silver lining is:  Sometimes the only thing that can save someone from themselves is to hit bottom.

Let's look at a chart that draws on past fractals to speculate one generalized roadmap of how this might go.  The beauty of real-time analysis is that we really don't need to see 5 years into the future, we just need to know the basic idea right now.  For example, if we crashed down toward 3000, I would hope to identify any inflection zones as they arrived, and, if need be, we can reanalyze based on the pattern as it sits then.

On a shorter time frame, the zone where I would reconsider the thesis that the Supercycle peak has arrived remains near the upper black trend line:

On the very short time frames, nothing has changed in any material fashion from Wednesday's update, so I'm not going to rehash that here.

Finally, "and now for something completely different": I do have a piece of potentially positive news, so we can end this on a high note (if that's possible).

Real Estate

I don't usually cover real estate, but it's a hot topic these days, and I've seen a lot of people predicting a real estate crash.  Presumably this is because folks remember 2006-2011, when real estate and equities crashed in close proximity to each other; and because it seems natural to assume higher mortgage rates mean housing prices will have to come down (for payments to remain equal); and because the Case-Shiller Index is higher now than it was before the last crash, and because, once again, we have a Fed that helped overheat the real estate market.  So at a base level of analysis "all that must mean housing is in another bubble and ready to crash."

Well... I don't think it's that simple.  First off, we have to remember that the real estate crash that began near 2006 was part of what led to the Great Recession and the subsequent stock market crash.  During most recessions, real estate holds up fairly well.  From 1970 to 1980, for example, housing prices more than doubled, thanks in part to the tailwind of high inflation.  During the 2000-2002 equities bear market and dot.com bubble burst, real estate likewise continued rising.  It pays to remember that the 2008 stock market crash didn't "cause" real estate to crash -- real estate was already crashing.

The last housing bubble was significantly different than the current housing market in some key ways, which I'll attempt to outline below.  

For one, thanks in part to government mandates (see: Community Reinvestment Act, etc), lending standards had become incredibly lax heading into the prior crash.  Government intervention essentially forced lenders to issue loans that wouldn't have flown at most other points in history, including today.  Nearly 40% of all mortgage loans pre-crash were subprime/Alt-A.  And anyone remember NINJA loans?  NINJA stood for "No Income No Job No Assets" (even though that's technically "NINJNA").  Point is:  In 2006, there were a lot of unqualified (by historical standards) buyers living large in their McMansions.  That is not the case today.

Same goes for adjustable-rate mortgages.  More than 50% of mortgages in 2005 were ARMs, while they've made up only between 8-18% of mortgages in the years since the bubble burst.  When rates are near historic lows, there's little incentive to get in via ARM.  In fact, borrowers who bought or refinanced in 2020-21 are sitting especially pretty right now, with loans that will become easier and easier to service as inflation outpaces their mortgage rates.

As further evidence, check out the chart below, which is self-explanatory:

Mortgage debt service payments as a percentage of disposable income are now near the lowest levels they've been in 40-years, and about half of what they were at the peak of the 2006 real estate bubble.  That alone suggests that the current housing market is not like 2006.

The next chart is also interesting.  The Case-Shiller Index is well known, and people who look at the CSI with no further analysis might conclude we're in another bubble, because that Index has reached new all-time-highs.  But as I'm outlining, analysis of complex markets often requires a multivariate approach; the chart below adjusts Case-Shiller for both inflation and mortgage rates, and thus paints a much less alarming picture than the raw CSI data:

Housing supply is another difference, with current inventory being roughly one-third to one-half what it was in 2006.  

And yet another difference between the housing bubble and today is that, for the most part, housing today is being bought by families (and investors), not by pure speculators hoping to "flip" a house for "massive gains" via a strategy they learned about in the course of one late-night infomercial.  This means that as the music stops and mortgage rates rise, we have a much different dynamic in play this time.  Rising rates do, of course, have an impact on future affordability -- but they have no impact on families already in a home (presuming these families have a fixed-rate mortgage, which, as we already covered, the vast majority do).  If anything, rising rates might tend to inspire people to hang on to their homes longer instead of putting them up for sale, which would have a tightening effect on inventory.  After all, if you're in a mortgage at ~3%, what possible incentive do you have to ever exit that loan with inflation running above or near 8%?

As I mentioned earlier, inflation should provide a tailwind for housing -- in more ways than one.  If my reasoning above is in the right ballpark, then rising rates may, perhaps counterintuitively, provide impetus for inventory to ultimately balance.  Houses might spend more days on market due to fewer buyers, but if fewer homes are being brought to market in the first place because families are incentivized to stay put (or to turn their old 3% mortgage home into a long-term rental), those seemingly-opposed forces could tend to counteract each other. 

Rents are another factor that impacts housing values.  Rental rates are "sticky" since many leases are 6 months to a year (or longer) -- but as rents are being renewed, we're seeing current rental rates rise, with a 17% YoY jump in February.  This, again, is a difference between the bubble and today; in 2005, rents were markedly lower than mortgages in many markets, making renting the more attractive option.

An X-factor that differentiates the current market from past markets is that many jobs are now allowing remote work, especially post-pandemic.  This alone motivates people to have a place to call their own, and, in my opinion, will help drive an exodus from some of the big metro markets.  Thus, I wouldn't be surprised to see housing prices ultimately start falling in certain local markets (housing is, in the end, always "local") -- but I'm going to go out on a limb here and state that I suspect overall, real estate will hold up fairly well for the foreseeable future.

Bottom line:  It wouldn't surprise me if prices level off somewhat as mortgage rates rise, with potentially some corrections along the way, but I don't believe we're in a bona fide housing bubble the way we were 15 years ago, so I don't believe we'll see a real estate "crash" from current valuations.

So as of December, I'm a major equities bear, but I think real estate will not suffer the same fate yet (this analysis of real estate is not intended as a super-long-term prognostication, only "the foreseeable future" as things will likely change somewhere down the road, of course.  For example, if unemployment hits 26% in 2025, obviously that would become a new input in the equation).  

But, in the end, as I've said on our forums:  I'm so bearish on equities (and the implications that might have for the broader economy) that I end up coming full circle to where, in regards to my family home, anyway, I just don't care if real estate goes up or down -- in the sense that I personally would not want to be renting if things get as bad as I suspect they might.

On the bright side, Supercycles do typically take some time to unfold completely, sometimes a decade or longer.  For example, in 2011, I predicted oil's Supercycle decline would eventually take it all the way down to 25, and it then took 9 years for that target to be reached.  Even if we have indeed already seen the peak of equities and our economy, we may get a crash and a recovery within the Supercycle bear -- essentially a cyclical bull market within the secular bear market -- before the BIG third wave down wipes out everything.

Or maybe I'm way off and everything will suddenly turn around; I have three kids, so I'd rather it did.  This is one of the rare occasions when I genuinely hope I'm wrong.  Trade safe.