THE MORNING RANT: Buck Shots - Corporate Follies Edition

Creative Accounting: It’s What All the Cool Companies Are Doing Again

The purpose of accounting is to report financial information. When Balance Sheets and Income Statements are manipulated to disguise financial performance, the most meaningful information conveyed is that the executives producing this information are not being honest with investors.

Business Is Slowing, So Companies Are Juicing Profits [WSJ – 6/01/2023]

Reallocate costs. Unwind charges. Delay depreciation. Companies are using nontraditional ways to boost the bottom line.

SEC Is Focusing on Earnings Manipulation by Companies [WSJ – 3/10/2023]

Regulators are scrutinizing whether companies are manipulating financial results to meet Wall Street targets, as a profit-squeeze amps up pressure on executives to “make the numbers.”

This earnings season has been marked by falls in both reported profits and expectations of future returns. With more than 99% of S&P 500 companies having reported, fourth-quarter earnings are down 4.65%, according to FactSet. That is the first year-over-year decline since fall 2020, at the height of the pandemic.

Corporate America is plagued by a morally superior yet fundamentally dishonest class of people in the C-Suites. Their woke moral preening provides cover for mismanagement and ethical shortcomings.

Does Cracker Barrel Serve Bud Light?

How intense is the ESP pressure that is put on publicly traded companies if Cracker Barrel is now saturating itself in Pride Month imagery?

When I want a catfish dinner and some old time candy, I could not possibly care less about the sexual behaviors of the restaurant’s staff or patrons. I’d be grossed out if Cracker Barrel was devoting a month to celebrating heterosexual sex.

It may not just be ESG pressure, there is every possibility that Cracker Barrel hired an Ivy League MBA to work some magic on its brand image, just like Bud Light did.

Whatever the case, Cracker Barrel stock is now in free fall.

At the beginning of June Pride Month, Cracker Barrel stock (CBRL) was trading at $102 per share. It is now down to $91 per share, losing $4 per share on Friday alone.

Like Target and Anheuser Busch, Cracker Barrel is committing stock market seppuku. In barely a week (during which the stock market rose) Cracker Barrel lost 11% of its value.

Oh well, even if heartland American stop going to Cracker Barrel, maybe those lost customers can be replaced by coastal leftists who are all wrapped up in sexual identities. So long as Cracker Barrel pivots to serving sustainable, organic, locally sourced, GMO-free fare in hip, urban settings, there should be no problem replacing the customer base that is being run off.

2008 Is Calling

Mortgage lenders are rolling out mortgages again that require negligible downpayments from those whose income is lower than the median for its area. So far Rocket Mortgage and United Wholesale Mortgage have rolled out such products.

What could possibly go wrong?

Rocket Rolls Out Conventional 1% Down Home Loan Program [5/22/2023]

A buyer using this program who’s purchasing a single-family home, and whose income is equal to or less than 80% of their area median income (AMI), is only required to make a down payment of 1% of the purchase price. The Detroit-headquartered lender will cover the remaining 2% needed to reach the required threshold for conventional loans, Rocket Mortgage said Monday.

Rocket “will cover the remaining 2%” which means it intends to collect the other 2% elsewhere, presumably in higher interest rates, or in fees built into the financing. That would have the effect of making the mortgage have a loan balance exceeding 100% of value.

Those fees and interest do not get collected when the loan defaults.

The great power of a meaningful downpayment is that it not only ensures that the borrower has skin in the game, but the equity allows the customer to sell the collateral if he finds himself unable to make payments. A borrower who only puts up a negligible downpayment and who has no equity will likely just surrender the property, allowing it to be foreclosed.

I sure hope Rocket knows what it’s doing…

In the first quarter of 2023, Rocket reported a $111 million adjusted net income loss, following a $197 million loss in the fourth quarter of 2022.

Don’t worry. I’m sure this will all work out better than in 2008. And if it doesn’t, you taxpayers will just have to cover all the loans that go bad. And you taxpayers will also have to pay billions of dollars to a Wall Street mega bank to assume the loans that haven’t (yet) gone bad.

The masters of the universe who will enrich themselves from this debacle, using your tax dollars, have the audacity to call it “capitalism.”

Airlines and the Carbon Offsets Fraud

With corporate America and its awful class of executives fully embracing the climate hoax, it’s only natural that they are scamming their customers with fraudulent “climate saving” products.

Have you ever bought “carbon offsets” when you bought airline tickets?

If you’re reading this blog, you’re probably wise enough not to fall for that gimmick. But a lot of people have been scammed by airlines selling this fraudulent product. Some of the marks are finally wising up.

Delta Air Lines Hit with Lawsuit Over Claims of Carbon Neutrality [US News – 5/30/2023]

A consumer class action lawsuit filed Tuesday claims Delta Air Lines inaccurately billed itself as the world's “first carbon-neutral airline” and should pay damages. The complaint in federal court in California alleges the airline relied on carbon offsets that were largely bogus.

“Largely” bogus? Heh. Carbon offsets are completely bogus.

Companies around the world buy carbon credits to cancel out their carbon releases with projects that promise to absorb carbon dioxide out of the air, or prevent pollution that would've happened. But they've been under the spotlight in recent months with claims their benefits are exaggerated.

One of the most despicable things about the climate hoax is the existential fear it has caused in people. I almost feel sorry for this plaintiff, as her belief in the climate apocalypse has caused her great stress and allowed her to be exploited by those who financially profit from the climate scam:

A writer for Nickelodeon, Berrin told The AP she is about to enter her thirties and climate anxiety is pronounced in people her age.

“I felt comfortable paying more because I was neutralizing when I needed to travel for work or to see my family,” she said. She said she felt frustration and regret when she began having doubts about Delta’s offsets.

On the other hand, if you know any true believers who are genuinely compelled to be scammed by the carbon offset industry, please have them contact the Throckmorton Carbon Offset Company. We are accepting payments.

Carbon Offsets Are A Fraud – continued

In that piece I wrote about the Throckmorton Carbon Offset Company, I linked to a story about the world’s largest carbon offset company facing criticism for selling “phantom credits,” and I gave an example of how the scam works.

The funny part of the scam is that the “offset” is payment for rain forest that isn’t cleared in a given year. So if I own 10,000 acres of rain forest and plan to clear 1,000 acres this year, I can sell a “carbon offset” for the 9,000 acres of land I wasn’t going to clear anyway. After I clear the 1,000 acres, the suckers who paid me get to claim that they somehow offset their own carbon production.

The CEO of that company has now resigned. If he had any honor, he resigned out of shame.

But I know better. There is no honor in those profiting from the climate scare.

CEO of Biggest Carbon Credit Certifier to Resign After Claims That Offsets Are Worthless [The Guardian – 5/23/2023]

The head of the world’s leading carbon credit certifier has announced he will step down as CEO next month. It comes amid concerns that Verra, a Washington-based nonprofit, approved tens of millions of worthless offsets that are used by major companies for climate and biodiversity commitments, according to a joint Guardian investigation earlier this year.

In a statement on LinkedIn on Monday, Verra’s CEO, David Antonioli, said he would leave his role after 15 years leading the organisation that dominates the $2bn voluntary carbon market, which has certified more than 1bn credits through its verified carbon standard (VCS).

The Incredible Shrinking Local Paper

In the cities I have lived in over the past two decades, the announcement of job cuts at the local dying newspaper has been a recurring event.

There is always great consternation about the civic importance of the paper, and how the staff reductions will have a deleterious effect on local news coverage, and on the paper’s vital role in holding local officials accountable to the citizenry, etc.

Yet no matter how many cuts are made, there remain local editors writing about national politics, and the local reporters are still obsessed about national political figures and national political stories.

L.A. Times to Cut 13% of Newsroom Jobs, Union ‘Outraged’ Over Layoffs

The Los Angeles Times, facing declining ad revenue and readership, is eliminating 74 editorial jobs, representing about 13% of the total newsroom staff.

“Declining readership…” Heh.

Why would anyone read a local paper to find out what its hyper-partisan journalists think about national politics. We already know.

Until the LA Times eliminates every writer and editor who scribbles about national politics, the cuts have not gone far enough.

I genuinely miss 20th Century local newspapers. Mine were always left-leaning, but they still had many journalists and reporters who proudly tried to maintain a professional level of non-partisanship, their focus was on state and local news, and they didn’t apply a political context to every story.

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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