The Habit of Breaking Promises

Marital Infidelity and Professional

Misconduct Linked, Study Shows

AUSTIN, Texas — July 30, 2019 -- People who cheat on their spouses are significantly more likely to engage in misconduct in the workplace, according to a study from the McCombs School of Business at The University of Texas at Austin published today in the Proceedings of the National Academy of Sciences of the United States of America.

The researchers looked at the records of police officers, financial advisers, white-collar criminals and senior executives who used the Ashley Madison marital infidelity website. Operating under the slogan “Life is short. Have an affair,” Ashley Madison advertises itself as a dating service for married people to have “discreet encounters.” Despite promises of discreetness, the data were put in the public domain through a hack in 2015 that included 36 million user accounts, including 1 million paid users in the United States.

The study, “Personal Infidelity and Professional Conduct in 4 Settings,” by McCombs finance faculty members John M. Griffin and Samuel Kruger, along with Gonzalo Maturana of Emory University, found that Ashley Madison users in the professional settings they studied were more than twice as likely to engage in corporate misconduct.

“This is the first study that’s been able to look at whether there is a correlation between personal infidelity and professional conduct,” Kruger said. “We find a strong correlation, which tells us that infidelity is informative about expected professional conduct.”

The researchers investigated four study groups totaling 11,235 individuals using data on police officers from the Citizens Police Data Project, data on financial advisers from the Financial Industry Regulatory Authority BrokerCheck database, data on defendants in SEC cases from the Securities and Exchange Commission’s litigation release archives, and data on CEOs and CFOs from Execucomp.

Even after matching misconduct professionals to misconduct-free individuals with similar ages, genders and experiences and controlling for a wide range of executive and cultural variables, the researchers found that people with histories of misconduct were significantly more likely to use the Ashley Madison website.

Their findings suggest a strong connection between people’s actions in their personal and professional lives and provide support for the idea that eliminating workplace sexual misconduct may also reduce fraudulent activity.

“Our results show that personal sexual conduct is correlated with professional conduct,” Kruger said. “Eliminating sexual misconduct in the workplace could have the extra benefit of contributing to more ethical corporate cultures in general.”

https://news.utexas.edu/2019/07/30/marital-infidelity-and-professional-misconduct-linked-study-shows/

Facts about Deforestation

Deforestation, clearance, clearcutting or clearing is the removal of a forest or stand of trees from land which is then converted to a non-forest use. Deforestation can involve conversion of forest land to farms, ranches, or urban use. The most concentrated deforestation occurs in tropical rainforests. About 31% of Earth's land surface is covered by forests.

Deforestation can occur for several reasons: trees can be cut down to be used for building or sold as fuel (sometimes in the form of charcoal or timber), while cleared land can be used as pasture for livestock and plantation. The removal of trees without sufficient reforestation has resulted in habitat damage, biodiversity loss, and aridity. It has adverse impacts on biosequestration of atmospheric carbon dioxide. Deforestation has also been used in war to deprive the enemy of vital resources and cover for its forces. Modern examples of this were the use of Agent Orange by the British military in Malaya during the Malayan Emergency and by the United States military in Vietnam during the Vietnam War. As of 2005, net deforestation rates had ceased to increase in countries with a per capita GDP of at least US$4,600. Deforested regions typically incur significant adverse soil erosion and frequently degrade into wasteland. 

Disregard of ascribed value, lax forest management, and deficient environmental laws are some of the factors that lead to large-scale deforestation. In many countries, deforestation—both naturally occurring and human-induced—is an ongoing issue. Deforestation causes extinction, changes to climatic conditions, desertification, and displacement of populations, as observed by current conditions and in the past through the fossil record. More than half of all plant and land animal  species in the world live in tropical forests.

Between 2000 and 2012, 2.3 million square kilometres (890,000 sq mi) of forests around the world were cut down. As a result of deforestation, only 6.2 million square kilometres (2.4 million square miles) remain of the original 16 million square kilometres (6 million square miles) of tropical   rainforest that formerly covered the Earth.[10] An area the size of a football pitch is cleared from the Amazon rainforest every minute, with 136 million acres (55 million hectares) of rainforest cleared for animal agriculture overall.

More than 3.6 million hectares of virgin tropical forest was lost in 2018. 

Causes

According to the United Nations Framework Convention on Climate Change (UNFCCC) secretariat, the overwhelming direct cause of deforestation is agriculture. Subsistence farming is responsible for  48% of deforestation; commercial agriculture is responsible for 32%; logging is responsible for 14%, and fuel wood removals make up 5%.

Experts do not agree on whether industrial logging is an important contributor to global deforestation.  Some argue that poor people are more likely to clear forest because they have no alternatives, others that the poor lack the ability to pay for the materials and labour needed to clear forest. One study found that population increases due to high fertility rates were a primary driver of tropical deforestation in only 8% of cases.

Other causes of contemporary deforestation may include corruption of government institutions, the inequitable distribution of wealth and power, population growth and overpopulation, and urbanization. Globalization is often viewed as another root cause of deforestation, though there are cases in which the impacts of globalization (new flows of labor, capital, commodities, and ideas) have promoted localized forest recovery.

In 2000 the United Nations Food and Agriculture Organization (FAO) found that "the role of population dynamics in a local setting may vary from decisive to negligible", and that deforestation can result from "a combination of population pressure and stagnating economic, social and technological conditions".

The degradation of forest ecosystems has also been traced to economic incentives that make forest conversion appear more profitable than forest conservation. Many important forest functions have no markets, and hence, no economic value that is readily apparent to the forests' owners or the communities that rely on forests for their well-being. From the perspective of the developing world, the benefits of forest as carbon sinks or biodiversity reserves go primarily to richer developed nations and there is insufficient compensation for these services. Developing countries feel that some countries in the developed world, such as the United States of America, cut down their forests centuries ago and benefited economically from this deforestation, and that it is hypocritical to deny developing countries the same opportunities, i.e. that the poor shouldn't have to bear the cost of preservation when the rich created the problem.

Some commentators have noted a shift in the drivers of deforestation over the past 30 years. Whereas deforestation was primarily driven by subsistence activities and government-sponsored development projects like transmigration in countries like Indonesia and colonization in Latin America, India, Java, and so on, during the late 19th century and the earlier half of the 20th century, by the 1990s the majority of deforestation was caused by industrial factors, including extractive industries, large-scale cattle ranching, and extensive agriculture. Since 2001, commodity-driven deforestation, which is more likely to be permanent, has accounted for about a quarter of all forest disturbance, and this loss has been concentrated in South America and Southeast Asia. 

Reforestation

In many parts of the world, especially in East Asian countries, reforestation and afforestation are increasing the area of forested lands. The amount of woodland has increased in 22 of the world's 50 most forested nations. Asia as a whole gained 1 million hectares of forest between 2000 and 2005. Tropical forest in El Salvador expanded more than 20% between 1992 and 2001. Based on these trends, one study projects that global forestation will increase by 10%—an area the size of India—by 2050.

In the People's Republic of China, where large scale destruction of forests has occurred, the government has in the past required that every able-bodied citizen between the ages of 11 and 60 plant three to five trees per year or do the equivalent amount of work in other forest services. The government claims that at least 1 billion trees have been planted in China every year since 1982. This is no longer required today, but 12 March of every year in China is the Planting Holiday. Also, it has introduced the Green Wall of China project, which aims to halt the expansion of the Gobi desert through the planting of trees. However, due to the large percentage of trees dying off after planting (up to 75%), the project is not very successful. There has been a 47-million-hectare increase in forest area in China since the 1970s. The total number of trees amounted to be about 35 billion and 4.55% of China's land mass increased in forest coverage. The forest coverage was 12% two decades ago and now is 16.55%.

An ambitious proposal for China is the Aerially Delivered Re-forestation and Erosion Control System and the proposed Sahara Forest Project coupled with the Seawater Greenhouse.

In Western countries, increasing consumer demand for wood products that have been produced and harvested in a sustainable manner is causing forest landowners and forest industries to become increasingly accountable for their forest management and timber harvesting practices.

The Arbor Day Foundation's Rain Forest Rescue program is a charity that helps to prevent deforestation. The charity uses donated money to buy up and preserve rainforest land before the lumber companies can buy it. The Arbor Day Foundation then protects the land from deforestation. This also locks in the way of life of the primitive tribes living on the forest land. Organizations such as Community Forestry International, Cool Earth, The Nature Conservancy, World Wide Fund for Nature, Conservation International, African Conservation Foundation and Greenpeace also focus on preserving forest habitats. Greenpeace in particular has also mapped out the forests that are still intact and published this information on the internet. World Resources Institute in turn has made a simpler thematic map  showing the amount of forests present just before the age of man (8000 years ago) and the current (reduced) levels of forest. These maps mark the amount of afforestation required to repair the damage caused by people.

                                       https://en.wikipedia.org/wiki/Deforestation

Solar Energy Directly to Biofuel

Uppsala University – July 26, 2019 -- Soon we will be able to replace fossil fuels with a carbon-neutral product created from solar energy, carbon dioxide and water. Researchers at Uppsala University [located in Sweden] have successfully produced microorganisms that can efficiently produce the alcohol butanol using carbon dioxide and solar energy, without needing to use solar cells.

This has been presented in a new study published in the scientific journal Energy & Environmental Science.


We have systematically designed and created a series of modified cyanobacteria that gradually produced increasing quantities of butanol in direct processes. When the best cells are used in long-term laboratory experiments, we see levels of production that exceed levels that have been reported in existing articles. Furthermore, it is comparable with indirect processes where bacteria are fed with sugar, says Pia Lindberg, Senior Lecturer at the Department of Chemistry Ångström Laboratory, Uppsala University.


The knowledge and ability to modify cyanobacteria so they can produce a variety of chemicals from carbon dioxide and solar energy is emerging in parallel with advances in technology, synthetic biology, genetically changing them. Through a combination of technical development, systematic methods and the discovery that as more product removed from the cyanobacteria, the more butanol is formed, the study shows the way forward for realising the concept.


We already know it is possible to produce butanol using this process (proof-of-concept). What researchers have now been able to show is that it is possible to achieve significantly higher production, so high that it becomes possible to use in production. In practical terms, butanol can be used in the automotive industry as both an environmentally friendly vehicle fuel - fourth generation biofuel - and as an environmentally friendly component of rubber for tyres. In both cases, fossil fuels are replaced by a carbon-neutral product created from solar energy, carbon dioxide and water.


Even larger industries, in all trades, that currently produce high greenhouse gas emissions from carbon dioxide will be able to use the process with cyanobacteria to bind carbon dioxide and consequently significantly reduce their emissions.


Microscopic cyanobacteria are the most efficient photosynthetic organisms on earth. In this study, we utilise their ability to efficiently capture the sun's energy and bind to carbon dioxide in the air, alongside with all the tools we have to modify cyanobacteria to produce desirable products. The results show that a direct production of carbon-neutral chemicals and fuels from solar energy will be a possibility in the future, explains Peter Lindblad, Professor at the Department of Chemistry Ångström Laboratory at Uppsala University who is leading the project.


Research at Uppsala University is part of the larger EU Photofuel project (http://www.photofuel.eu) being coordinated by vehicle manufacturer VW whose aim is to develop the next generation of techniques for sustainable manufacture of alternative fuels in the transport sector.


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The article Modular Engineering for Photosynthetic 1-Butanol Production in Cyanobacteria was published in Energy & Environmental Science, doi.org/10.1039/C9EE01214A

                 https://www.eurekalert.org/pub_releases/2019-07/uu-seb072619.php

Dogs Really Do Love Us

Study finds first evidence of inter-species hormone exchange

Reuters – April 18, 2015 -- Dog lovers everywhere, rejoice! They really do love us on a chemical level. Dogs were found to make use of the “lovers’ hormone,” Oxytocin, to sneak their way into our hearts. That’s the first time the mechanism was observed between species.

We know it as the love hormone: it spikes when we hug, kiss and make love. It also exists between a mother and infant, as they gaze into each others’ eyes. But oxytocin is more than that. The hormone is one of the most important evolutionary bonding mechanisms known to man. Without it, affection, trust and altruism, as we know them, would never have been possible.

So imagine the surprise at Azabu University’s School of Veterinary Medicine in Sagamihara, Japan when Miho Nagasawa, Takefumi Kikusui and their colleagues found that the bond works both ways between our species: dogs just love to peer into our eyes, as we do into theirs.

The mechanism is known to be a loop in humans. For instance, a mother’s gaze into a child’s eyes prompts the look of happiness in return. Both release oxytocin and reinforce it, feeding off of the feeling.

Dogs are already renowned for their ability for companionship and understanding us in a way that no other animal can. But if the implications of the new findings are correct, they are huge, and will go toward explaining the age-old question of how dogs became our “best friends” thousands of years ago.

“I love my dogs, and I always feel that they’re more of a partner than a pet,” Kikusui , who’s owned a dog for 15 years, was quoted as saying in a news piece by Science magazine, which published the study this week. “So I started wondering, ‘Why are they so close to humans? Why are they connected so tightly to us?’”

"[Our] findings support the existence of an interspecies oxytocin-mediated positive loop facilitated and modulated by gazing," Nagasawa said in the study. She has three human-canine relationship studies that support her theory.

Kikusui and Nagasawa invited 30 of their friends with pets to test the theory. First the team had each dog and owner interact separately with each other in a room for 30 minutes, recording them. The researchers then scanned for oxytocin levels in the urine in both species to see if they had changed. 

They immediately found that the more a dog gazes into a human’s eyes, the more pleasure and child-like feelings of adoration it experiences.

That spike was mirrored in the owners. A previous study from 2009 corroborates this (scientists then found a strong basis for the new research when the effect of looking into a dog’s eyes was demonstrated in humans).

To find out whether the feeling was mutual, the team sprayed either oxytocin or a simple saline into the noses of 27 of our furry friends and placed each dog in a room with its owner and two complete strangers. They found that the dogs sprayed with oxytocin spent significantly more time gazing into their owners’ eyes than the other ones, and that the effect was mysteriously absent in male dogs. Researchers speculate this could be because of increased sensitivity to the hormone.

Further to this, the effect in the owners of the dogs was also increased, even though the owners did not receive the hormone artificially. It follows that even an artificial oxytocin increase in the dogs signaled the release of the hormones in their owners.

“It’s an incredible finding that suggests that dogs have hijacked the human bonding system,” Brian Hare, an expert on canine cognition at Duke University, North Carolina, who was not involved in the research, was quoted as saying in a Science article. “A finding of this magnitude will need to be replicated because it potentially has such far-reaching implications,” he said. It is also Hare’s view that oxytocin could be at the very core of why dogs are so useful in treating autism and people with post-traumatic stress disorder.

The team’s study has been supported by an editorial from Duke, whose authors believe the discovery “is a powerful mechanism, through which dogs win our hearts – and we win theirs in return.”

No other inter-species oxytocin link has ever been observed, so the dog-human bond, for now, is a truly unique thing. It should also put a lot of sceptics at ease: dogs really do love us as deeply as we love them.

                           https://www.rt.com/news/250485-dogs-love-humans-hormone/

Blinded by Faith

Religion as Institutionalized Ignorance

From Church and State UK

This post by Tim McGettigan originally appeared in OpEdNews.

For those who govern through the strictures of faith, doubt is equivalent to disobedience. Not only does doubt connote a certain degree of disrespect for sacred beliefs, but doubt also weakens the organizational structures that are founded upon blind obedience to faith. In other words, doubt implies that deductive faith-based belief systems are somehow inadequate. As such, doubt also portends a skeptical, inductive quest for knowledge that lies outside the authorized realms of inquiry. By thinking outside the box, it becomes possible for doubters to generate novel observations that are not only distinct from, but that are often directly contradictory to established beliefs. As a result, free-thinkers tend to evoke antipathy among those who maintain a vested interest in the status quo. For example, Darwin’s ideas about evolution were so ground-breaking that, more than one hundred and fifty years after the publication of On the Origin of Species (1859), many people still refuse to accept Darwin’s basic precepts.

Charles Darwin is one of the most widely revered and enduringly controversial figures in the history of science. Both are exceptional feats for such a mild-mannered gentleman. Much of the controversy surrounding Darwin concerns the presumptive truthfulness of his evolutionary theory. Darwin’s theory was so radical that, at first, even leading members of the scientific community expressed doubts. For example, initially, Charles Lyell was only willing to accept evolution as an explanation for the transmutation of “lower animals,” but not for humans. Nevertheless, evolutionary theory gradually won over the scientific community. Scientists embraced evolutionary theory because, as a scholar, Darwin was rigorous to a fault. Throughout his career, Darwin made lengthy and exacting inductive observations and, only then, constructed theories that corresponded closely with the facts. On the other hand, Darwin’s creationist detractors have consistently encouraged “the faithful” to interrogate facts deductively through an artificially-narrow lens of Christian dogma.

The problem with deductive logic is that it tends to reinforce ignorance. Deductive reasoning tends to privilege evidence which supports one’s preferred dogma while discounting countervailing evidence. As such, deductive reasoning does not endeavor to explain so much as it demands faithfulness to a prescribed ideological cul-de-sac. For example, no matter how well evolution may explain the relevant scientific facts, from the creationist standpoint evolutionary theory appears wrongheaded—precisely because evolution puts facts before theory. All too often, facts tend to be judged, or deduced relative to one’s cherished beliefs. For example, if evangelical Christians believe that God created the universe in six days, then creationists of this stripe simply deduce that God also sculpted the Grand Canyon, complete with all of its fossil-laden stratigraphy, in naught but the blink of an eye. No matter how scientifically implausible such a conclusion may be, creationists are content to deductively shoehorn even the most damning evidence into the mind-numbing confines of their biblical cosmology. For creationists, deductively sustaining their ignorance is vastly more important than inductive intellectual honesty.

Ignorance-inspiring as biblical cosmology may be, in a free society people should be at liberty to embrace any cockamamie ideas that they wish if—and this is an enormously important proviso—and only if individual-level ignorance does not trespass on the rights and intellectual freedom of others. And it is for this reason that the Texas Board of Education should be subject to intense public censure and, as soon as possible, disbanded.

If the willfully ignorant evangelical Christians on the Texas Board of Education were content to respect the establishment clause of the US Constitution—and, thereby, zealously avoid imposing their Bible-inspired folklore on public school curriculum—then there would be no need to censure or disband the Board. However, the fundamentalists on the Texas Board of Education have done everything in their power to abuse their public offices as bully pulpits from which to corrupt the minds and educations of kids all across the US. The Texas Board of Education exerts undue influence on public education nationwide because, as one of the largest purchasers of K-12 textbooks, publishers are excessively attentive to the peccadilloes of the Bible-thumping members of the Texas Board of Education. Thus, the anti-science majority on the Texas Board of Education have repeatedly objected to the fundamental tenets of Darwinian biology and, as a result, textbook publishers have obsequiously distorted scientific truths in order to appease a small group of caterwauling Christians. Worse, the willful distortions that publishers incorporate into their textbooks end up corrupting the education of kids all across the US. This is because the Texas market is so vast that publishers kowtow first and foremost to the whims of the Texas Board. Once textbooks have been “customized” to tickle the fancy of fundamentalist Texas Christians, purchasers in smaller markets (i.e., schools throughout the other 49 states) are left with no choice but to purchase adulterated textbooks.

In a free society, one person’s rights end where another person’s begin. If fundamentalist Christians want to marinate in a stew of ideological ignorance, then more power to them. However, Texas evangelicals should not be permitted to foist their stultifying biblical folklore on kids who have a right to a decent education. Deductive religious ignorance produced 1,000+ years of intellectual darkness in Europe. It required a revolutionary new age of secular scientific inquiry to put those dark days behind. Apparently, the religious zealots on the Texas Board of Education would like to return to the good old dark days, but I think we owe it to ourselves, our kids and our future to do better. If we want to create a better, brighter future, then we need to put religious ignorance in its place once and for all. If religious zealots insist upon making schools a battleground in the culture wars, then the rational scientific community needs to mount a major counteroffensive to scour the schools of every form of religious ignorance: No prayers, no songs, no celebrations, no anything that in any way promotes religious ignorance at the expense of a scientifically-enlightened educational environment.

If the Bible encourages its followers to believe that dinosaurs accompanied the preposterous menagerie on Noah’s ark, then I think we can safely conclude that the bible is not a tool of enlightenment, rather, it is an instrument of intellectual stultification. In an information society, we simply cannot allow the schools to become indoctrination centers for religious gibberish. If Christians in Texas want to believe that T-Rex was Noah’s bunkmate, then they are welcome to embrace that fantasy. However, such delusions should not be permitted to corrupt the science curriculum in the public schools. Schools need to equip kids with the intellectual tools to become committed critical independent thinkers. As such, the Bible is only useful to rational, critical thinkers to the extent that it teaches students how NOT to think.

Evolution may never win a national popularity contest, but it will persevere by doing precisely what it does best: dissipating unscientific ignorance by helping new generations of truth-seekers to find better, more convincing ways to explain life, the universe, and everything through a scientific lens. If that rubs Creationists the wrong way, then so be it.

May the fittest paradigm survive.

Tim McGettigan is a professor of sociology whose written work, both fiction and non-fiction, often explores the dynamic boundary that lies between fantasy and reality.

http://churchandstate.org.uk/2017/10/blinded-by-faith-religion-as-institutionalized-ignorance/

Tesla, Boeing and Lemmings

I Got It, Nothing Matters. Tesla, Boeing, Other Stocks: It’s Like the Whole Market Has Gone Nuts

by Wolf Richter • Jul 24, 2019 • 223 Comments • Email to a friend

Story stocks, momentum stocks, hyperventilation stocks, consensual hallucination stocks, financial engineering stocks: anything but reality.

You see, Tesla is different. It just reported another doozie, a loss of $408 million in the second quarter, after its $702 million loss in the first quarter, for a total loss in the first half of $1.1 billion. In its 14-year history, it has never generated an annual profit.

It has real and popular products and surging sales, but it subsidizes each of those sales with investor money. And here’s where it’s different this time: investors don’t care. They dig how the company has been consistently overpromising and underdelivering. They dig the chaos at the top. They dig everything that should scare them off.

Yeah, its shares plunged [TSLA] 11% afterhours today, but that takes those shares only down to where they’d been on May 1. Big deal. Shares are down 32% from the peak. But their peak should have been a small fraction of that. Even today, the company is still valued at over $40 billion.

Tesla lacks a viable business model in the classic sense. Its business model is a new business model of just burning investor cash that it raises via debt and equity offerings on a near-annual basis because investors encourage it to do that, and love it for it, and eagerly hand it more money to burn, and they’re rewarding each other by keeping the share price high. It’s just a game, you see. And nothing else matters.

Then there is Boeing [BA]. It just reported the largest quarterly loss in its history of $2.9 billion due to a nearly $5-billion charge related to its newest bestselling all-important 737 Max, two of which crashed, killing 346 people, due to the way the plane is designed. The flight-control software that is supposed to mitigate this design issue is not working properly. And a software fix that is acceptable to regulators remains elusive.

The plane has been grounded globally since March. No one, especially not the regulators, can afford a third crash. So today, Boeing announced that it may further cut production of the plane or suspend it altogether if the delays continue to drag out. This is big enough to start impacting US GDP.

The entire 737 Max episode has been tragic from the first minute, and the cost in human lives has been huge, and it has cost and continues to cost billions of dollars to deal with, among calls that the plane should never fly again.

And what does Boeing’s share price do? It dipped 3% today and is up 2% from a year ago, before all this happened. In essence, two crashes and the grounding of its bestselling plane, and the potential suspension of production of this plane, and its uncertain future … and the stock has ticked up over a 12-month period.

Instead of spending the resources necessary to design a modern plane from ground up, Boeing kept basing its new models on versions of its many-decades-old 737 airframe that wasn’t designed at all for what it is being used for today. This was a decision Boeing made to save some money and pump up its share price.

But here we go: From 2013 through Q1 2019, Boeing has blown a mind-boggling $43 billion on share buybacks (buyback data via YCharts):

Boeing Share Buybacks in $billions

     2013: $2.8B

     2014: $6.0B

     2015: $6.8B

     2016: $7.0B

     2017: $9.2B

     2018: $9.0B

     2019: $2.3B (first quarter only)

Blowing these $43 billion on share buybacks has caused Boeing to have a “total equity” of a negative $5 billion. In other words, it has $5 billion more in liabilities than in assets. This company is out of wriggle room. If it can’t borrow enough money to make payroll, it’s over.

But nothing matters.

If Boeing had invested some of this money that it blew on share buybacks to design a new modern plane from ground up to replace the ancient 737 airframe, these tragedies could have been prevented, and Boeing wouldn’t have this nightmare on its hands. But the corporate cost-cutters and financial engineers, rather than real engineers, had the final word.

Markets don’t care about any of this. They don’t care about real engineers either. They love corporate cost-cutters and financial engineers. They want share buybacks, and if something bad happens, they’ll overlook the $5 billion to pay for the fallout because it’s just a “one-time item.”

And now Boeing still has this plane, instead of a modern plane, and the history of this plane is now tainted, as is its brand, and by extension, that of Boeing. But markets blow that off too. Nothing matters.

Companies are getting away each with their own thing. There are companies that are losing a ton of money and are burning tons of cash, with no indications that they will ever make money. And market valuations are just ludicrous.

A tiny maker of fake-meat hamburgers and hot dogs with just $40 million in sales in the last quarter, its best quarter ever, generating $6.6 million in losses, after 10 years in business, Beyond Meat [BYND] has a stock price that values the company at $12 billion because it will change the way the universe operates, or whatever.

Anything goes: story stocks, momentum stocks, hyperventilation stocks, consensual hallucination stocks, and financial engineering stocks that generate mind-boggling share prices that give these companies incomprehensible market capitalizations, and the mere mention of “fundamentals” gets naysayers ridiculed and thrown out. It’s like the whole market has gone nuts.

In the most important US market of the Tesla Model S and Model X, the plunge in registrations far outpaced their already stunning global decline.

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Blog Comment:

Jos Oskam

Jul 25, 2019 at 1:30 am

This Boeing affair is making my hair stand on end.

I am an engineer. Years ago, I voluntarily quit a very well remunerated job, sold everything, packed up and moved to a dilapidated ruin in France that I’m slowly doing up. Don’t ask about my current income. At least my engineering background is still of some use.

The reason I quit my profession can be summarized as: disgust with managers, specifically the beancounting variety. Over the course of my career the notion of “shareholder value” entrenched itself in the companies I worked for. With the foreseeable consequences. More and more short-term decisionmaking based on this year’s profit figures, stock option valuations and bonuses. Less and less weight to arguments having to do with engineering, customer loyalty, social responsibility, whatever. The suits do what they can and the engineers suffer what they must.

When the 737max was grounded, I thought this would be a wake-up call to a system in which financial engineering had become the only engineering deemed important. Finally, a clear and unequivocal message to the beancounters that there really IS an end to only squeezing dollars from a product with little regard for anything else. Adages like “penny wise, pound foolish” resurrected. After all, it won’t be long before Boeing will have lost more money on the 737max affair than it would have cost them to develop a completely new airframe from scratch. Serves them right, I say.

In such a situation, I would expect to see consequences. Like collapsing stock prices. Fired managers. CEO departing in disgrace, if not outright deposed. Announcements of drastic strategy changes. Serious blowback, you know.

But no. Some bad figures are published, some compensation is promised, some corporatespeak issued. The stock price holds up, people are working on the problem, nothing to see here, move along people.

I am completely flabbergasted. And disgusted. I feel like I have been beamed to another universe where different natural laws apply. I am obviously losing contact with reality. Which might be a good thing, actually.

I’m off, got to do some roof repairs before the next rain.

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Another Blog Comment:

TruckMan

Jul 25, 2019 at 12:37 pm

My first para would be the same as yours, except not France.
I used to lecture both on flight control systems and systems design. There at least 7 major errors Boeing has made with the MCAS, the software being only two of them. I do not see it flying in the US before next year at the very earliest (and maybe never). It will be another year before it flies elsewhere.
Must go also, as I have an entire roof to replace ;)

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Another  Blog Comment:

MC01

Jul 25, 2019 at 2:43 am

I must intervene here. I hope people won’t take it the wrong way: this is just a friendly correction.

Boeing did not opt for the MAX series to have more money to use on share buybacks. It’s far more near-sighted than that.

In 2005 Boeing decided to develop a completely new family of airliners to replace all of their existing models, informally called ‘Yellowstone’.

Yellowstone was to consist of three models: Y1 to replace the 737 and 757, Y2 to replace the 767 and the 777-200 and Y3 to replace the 777-300 and the 747.

This family was to make as much use of common technologies as possible, thus reducing development costs and times.

At the time no new narrowbody (or ‘Little Boy’ in Boeing parlance) engine was available to offer serious improvements over the existing CFM-56 used on the 737, to it was decided to give priority to Y2, which became the 787 Dreamliner.

In February 2011 with new narrowbody engines such as the Pratt & Whitney PW1000G in the final stages of development, it was decided to greenlight the Y1, with the goal of having it in revenue-generating service by 2020. This was a very conservative schedule which could have been well met even assuming troubles during engine development.

However in December 2010 Airbus had launched the A320neo, nothing more than the plain old A320 with new engine options. While it promised conspicuous fuel savings over the old variant, it was no match for the proposed Y1 using advanced technologies aimed at cutting not merely fuel consumption but also airframe maintenance costs.

We’ll never know exactly what happened, but in August 2011 the Boeing leadership decided to “freeze” Y1 development and to launch a modest re-engineering of the existing 737 model (the New Generation or NG) provisionally named 737-RS which became the 737 MAX.

The MAX was introduced in revenue generating service in 2017, saving Boeing a measly 3 years over the Y1, but at a terrible cost.

Even before the two deadly accidents the MAX was seen as an “also run” or a “second choice” and several faithful Boeing customers felt like the US company committed what Henri Ziggler of Breguet and later Airbus fame called “the capital sin of commercial aviation”: designing an aircraft after minimal consulations with the airlines that will have to use it daily for years.

Airlines wanted the Y1, and big Boeing customers like Ryanair and Southwest wanted a saying during the design phase. Instead they got a lot of compromises and an aircraft they didn’t really want.

But the alternative was either that or get in line for the not-exactly groundbreaking A320neo. Or wait at least a decade for China or Japan to design a remotely palatable narrowbody, if any.

Leaving financial conditions aside, Boeing displayed some nigh-on unbelievable leadership flaws which should have made potential shareholders extremely wary and existing shareholders extremely angry. Those flaws were repeated with the 777X, another masterpiece of flip-flopping and near-sightness which is being rightly punished by markets. Should Qatar Airways or Emirates experience the same problems Etihad has experienced and cancel orders it will be really funny to see how the Boeing leadership will flip-flop its way out of another fiasco.

I honestly don’t know what modern day stock market jockeys are drinking/smoking/sniffing. Paint stripper doesn’t destroy brains so throughly.
Boeing is one of those companies, just like Deutsche Bank, which may be too big to fail but are also too big to bail out. It’s not merely just a matter of government snapping its fingers to make everything right because Wall Street is throwing a temper tantrum.

Boeing needs strong, competent leadership with a vague idea of what they are doing, not these two-bit financial alchemists, and only shareholders can get the right leadership on board.

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Another Blog comment:

HR01

Jul 25, 2019 at 6:43 am

MC01,

You’ve pretty much nailed it with respect to Boeing’s decisions. The 737MAX will remain James McNerney’s legacy. This was his call as President, CEO and Chairman of the Board back in 2011. He owns it. Should we be surprised? Not in the least. He was the first without an aviation background or engineering degree to run the company (B.A. from Yale and an MBA from Harvard).

My only disagreement pertains to your final bit:

“…and only shareholders can get the right leadership on board”.

No, shareholders won’t set anything right since institutional investors are complicit in the short-term decision-making which will serve to maximize profits in the here and now, not five or ten years down the road.

Boeing is just one more vivid example of the void in leadership, ethics, integrity, honesty, humility and common sense that our world faces. Doesn’t matter if one looks for these characteristics in the business world, political arena or religious institutions. They’re not to be found (with rare exceptions).

The world will have to encounter its next big crisis and upheaval before a new Age of Consequences arrives and then great character will rise to the top again.

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Another Blog comment:

Kasadour

Jul 25, 2019 at 4:38 am

The 737 Max 8 belonging to Ethiopian Air was going 700mph when it crashed in an almost vertical nose-down pitch. It’s hard to imagine anything in the debris field remotely resembled a commercial airliner. The reason it crashed at such a high speed was because the thrust levers were left at full take-off power. Even if the pilots monitored air speed it wouldn’t have changed the outcome. There’s been a lot of criticism of the pilots for not disabling STAB TRIM, or not knowing they should, but the CDR revealed they did disable it.

As for Tesla- it’s been tapping the debt markets for years and Musk has been making unkept promises just as long. Investors know by now that Tesla cannot deliver on Musk’s promises. The market does not support it and Teslas have ongoing quality control issues. So why do investors keep throwing good money after bad? One possible answer is that they expect the Fed will keep buying Tesla stock through its primary dealers. Deutsche Bank has been buying up Tesla stock for months now.

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Another Blog comment:

Lance Manly

Jul 25, 2019 at 6:47 am

Boeing…. What might be ok software practice for some web site is not acceptable when peoples lives are on the line

https://www.bloomberg.com/news/articles/2019-06-28/boeing-s-737-max-software-outsourced-to-9-an-hour-engineers

“Increasingly, the iconic American planemaker and its subcontractors have relied on temporary workers making as little as $9 an hour to develop and test software, often from countries lacking a deep background in aerospace — notably India.”

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Another Blog :comment (this one by the writer of the entry and owner of the blog):

Wolf Richter

July 25, 2019 at 12:40 pm

Not sure if this the best explanation, but it’s easy enough for non-engineers like me to understand:

“Boeing designed the system after discovering during flight testing that the 737 MAX engine placement—higher and farther out on the wing than on the previous generation—could pitch the plane upward in certain conditions, increasing the likelihood of a stall.”
https://www.wired.com/story/boeing-737-max-8-ethiopia-crash-faa-software-fix-lion-air/

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Another Blog comment:

·         Frank K

Jul 25, 2019 at 3:33 pm

Wolf got is right. In order to save fuel consumption as AIRBUS 320 NEO, they constructed bigger fans. But the bigger fan construction nearly touched the ground , so they moved them as described. This caused some stability issues which they tried to compensate for with the mentioned software MCAS.

I have been informed by a pilot I know.

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Another Blog comment:

RD Blakeslee

Jul 25, 2019 at 3:56 pm

This theory is supported by a video of one of the crashes, showing the aircraft in an extreme pitch-up mode, stalling, and crashing:

https://www.youtube.com/watch?v=V7jIQYu85-0

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Link for this entire post and selected comments:  https://wolfstreet.com/2019/07/24/i-got-it-nothing-matters-tesla-boeing-stocks-like-the-whole-market-has-gone-nuts/?unapproved=196112&moderation-hash=a966d614c7c946937d6f07cdda93f1e2#comment-196112