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Central planners are at it again. In September, China ordered the country’s top state-owned energy companies to secure supplies for this winter at “all costs.” Now they’re telling households to stockpile food ahead of winter, sparking wild conspiracies among netizens about heightening tensions with Taiwan.

According to Bloomberg, the Ministry of Commerce told households Monday to stock up on food in case of emergencies after a resurgence of the virus pandemic, heavy rains that sparked vegetable prices to jump, and the onset of colder weather.

The commerce ministry directive is similar to the one released ahead of the holidays at the start of October, which told local governments to secure food supplies. The order comes as a coronavirus outbreak prompted fresh lockdowns.

The directive was released on the government’s Weibo account, a similar platform to Twitter, stated: “Ministry of Commerce encourages households to stockpile daily necessities as needed.” It had more than 17 million views as of Tuesday. Some netizens were concerned that an impending invasion of Taiwan was the reason for the stockpiling directive.

“As soon as this news came out, all the old people near me went crazy panic buying in the supermarket,” wrote one Weibo user.

The Economic Daily, a Communist Party-backed newspaper, told netizens not to have “too much of an overactive imagination,” adding that the directive’s purpose was to make sure citizens could feed their families in case of a lockdown.

The weather has been a significant concern in China. China Meteorological Administration (CMA) warned last month of a La Nina weather pattern which has already brought in the first round of cooler weather.

…click on the above link to read the rest of the article…

No Trucking Way

November 2, 2021

No Trucking Way

The financial economy and real economy used to live with each other happily: now they are in a long-distance relationship reliant on logistics to keep in touch. What happens when those logistics break down? (Very bad things, as I was discussing here the other day.)

We have covered the ocean-carrier side of this crisis (‘In Deep Ship’), and the new fee equivalent to $1m a day, and rising $1m each following day, for a 10,000 TEU vessel whose cargo is stuck in LA/LB port. However, we stressed in that report that the supply chain issue is more systematic. So, allow me to share quotes from an article exposing there is ‘No Trucking Way’ we are about to return to normal:

So when the coastal ports started getting clogged up last spring due to the impacts of COVID on business everywhere, drivers started refusing to show up. Congestion got so bad that instead of being able to do three loads a day, they could only do one. They took a 2/3 pay cut and most of these drivers were working 12 hours a day or more…

…click on the above link to read the rest of the article…

China Rations Diesel Amid Nationwide Fuel Shortages

November 2, 2021

China Rations Diesel Amid Nationwide Fuel Shortages

‘Your grocery stores are like museums’: Then and now

November 1, 2021

‘Your grocery stores are like museums’: Then and now

About 15 years ago I helped to host a group of Russian entrepreneurs during one stop on their tour of the United States, a tour sponsored by the Chamber of Commerce. As we hosts accompanied our visitors, we naturally fell into conversation with them. One of them noted a contrast with Russian life that stuck with me because it was offered in terms that were so unexpectedly strange. He said that compared to Russian grocery stores, “your grocery stores are like museums.”

Just as fish don’t notice they are swimming in water, we Americans are prone to think of our spacious (by world standards) grocery stores with their carefully arranged and brimming shelves; colorful produce sections; fulsome meat counters; and well-stocked frozen dessert cases—all festooned with artfully crafted point-of-purchase displays—as merely utilitarian platforms for obtaining our daily provisions.

Fast forward to today and we find that some grocery stores are unexpectedly moving even closer to the museum model, but not in the good way my Russian acquaintance had in mind. We are, of course, not surprised to see pretty pictures in museums rather than the objects those images depict. Now, in some of grocery stores in Great Britain, pretty pictures are being used to cover over gaps in the produce and dry goods sections.

The cause for those gaps is put down in part to the logistics challenges facing Britain as it adjusts to altered trade flows in the wake of its withdrawal from the European Union.

But I am now seeing noticeable gaps opening up in the shelves of my local grocery stores in Washington, D.C. And, there are others noticing the same phenomenon. The situation is not yet critical. Basic foodstuffs still appear to be easily and widely available.

…click on the above link to read the rest of the article…

The Fed’s Inflation Is behind the Supply Chain Mess

November 1, 2021

The Fed’s Inflation Is behind the Supply Chain Mess

It seems supporters of the Biden administration finally settled on a narrative they like for explaining away supply chain shortages.

Here’s the administration’s talking point: the US economy is rolling along so well that Americans are demanding huge amounts of goods. That’s overwhelming the supply chain and causing the backups roiling America’s ports and logistic infrastructure.

For example, transportation secretary Buttigieg this month declared “Demand is up … because income is up, because the president has successfully guided this economy out of the teeth of a terrifying recession.”

Similarly, White House spokeswoman Jen Psaki told reporters supply chain problems are occurring because “people have more money … their wages are up … we’ve seen an economic recovery that is underway.”

This position has been mocked by a number of conservative politicians—including Senator Ted Cruz—and commentators, who find this to be an absurd assumption. Indeed, Cruz and other critics could point to a variety of factors ranging from the weight of government regulations to the problem of covid lockdowns limiting the productivity of supply-chain workers.

Yet the administrator’s defenders are right about consumer demand and spending—even if for the wrong reasons. As Mihai Macovei showed earlier this month, the global volume of trade and shipping volume in 2021 have actually exceeded prepandemic numbers. For example, in the port of Los Angeles, “loaded imports” and “total imports” for the 2020–21 fiscal year (ending June 30, 2021) were both up when compared to the same period of the 2018–19 fiscal year.

In other words, it’s not as if little is moving through these ports. In fact, more is moving through them than ever before. That suggests demand is indeed higher.

But why is it higher? It some ways, it’s true that, as Psaki says, “people have more money.” That, however, is where the veracity and usefulness of Biden’s defenders end in explaining the problem.

…click on the above link to read the rest of the article…

Intermission: The Machine Stops?

October 31, 2021

Intermission: The Machine Stops?

‘I have seen the hills of Wessex.’

“The Machine,” they exclaimed, “feeds us and clothes us and houses us; through it we speak to one another, through it we see one another, in it we have our being. The Machine is the friend of ideas and the enemy of superstition: the Machine is omnipotent, eternal; blessed is the Machine.”

– E. M. Forster, The Machine Stops, 1909

Samhain, in old Ireland, was one of two annual festivals (the other was Beltaine, in May) in which the veil between the world of humans and the otherworld of the Aos sí – the ‘fairies’ in modern parlance – was said to be thin. Fires were lit, and the burial mounds were opened to allow the dead to move freely between the worlds. Some of the neolithic tombs here have portals which are aligned with the rising of the sun on the eve of Samhain – the 31st of October.

Neopagans still take Samhain fairly seriously, but in today’s Ireland the tradition has been almost entirely subsumed by the modern American festival of Halloween. As across much of the Western world, Halloween has moved far from its origins in either Samhain or the Christian festival of All Hallows, and has mutated into a month-long deluge of consumer crap, built around a few Hollywood horror franchises and aimed at getting children to buy as many sweets, pumpkins, plastic witches’ hats, Harry Potter Quidditch broomsticks, inflatable ghost toys and zombie-themed biscuit selections as humanly possible.

Not this year, though. This year, you couldn’t find a cheap, Chinese-made plastic vampire mask in the shops around here for love or money. You couldn’t find much at all, in fact…

…click on the above link to read the rest of the article…

There’s No ‘Supply-Chain Shortage,’ Or Inflation. There’s Just Central Planning

October 30, 2021

There’s No ‘Supply-Chain Shortage,’ Or Inflation. There’s Just Central Planning

It’s great that so many have copies of Adam Smith’s The Wealth of Nations, but very unfortunate that so few have read it. The alleged “supply chain” problems we’re enduring right now were explained by Smith in the book’s opening pages.

Smith wrote about a pin factory, and the then remarkable truth that one man in the factory working alone could maybe – maybe – produce one pin each day. But several men working together could produce tens of thousands.

Work divided is what enables the very work specialization that drives enormous productivity. If this was true in an 18^th century pin factory, imagine how vivid the truth is today. Figure that something as basic as the creation of a pencil is the consequence of global cooperation, so what kind of remarkable global symmetry leads to the creation of an airplane, car, or computer? The kind that can’t be planned is the short answer, but more realistically the only answer.

Please keep this in mind as you read media coverage of the so-called “supply-chain disruptions” resulting in “shortages” that are said to be causing “inflation.” If you want a bigger laugh, read about what President Biden wants to do in order to get “supply” back on the market with an eye on replenishing U.S. retail shelves that are increasingly bare. He’s decreed 24-hour port operations! Yes, thanks to the 46^th president we now know what held the Soviets back, and ultimately destroyed the Soviet Union: their ports weren’t open long enough; thus the shortages of everything…

All of the above would be funny if it weren’t so sad. Media members, “experts,” economists, and politicians don’t even disappoint anymore. To say they do would be to flatter them.

…click on the above link to read the rest of the article…

China Rationing Diesel

October 30, 2021

China Rationing Diesel

China has begun to ration fuel amid the ongoing energy crisis. As reported by the BBC, trucks in China may only fill their tanks with 100 liters (10% capacity) of diesel, with other areas reportedly only allowing 25 liters. The city of Fuyang is limiting purchases and charging drivers a surcharge of up to 300 yuan to fill up their tanks. The fuel shortage will affect both domestic and international goods as trucks simply cannot drive to their destinations. Despite surging demand, all fossil fuels are in tight supply and have seen drastic upticks in price. Jeremy Stevens, Chief China Economist at Standard Bank, told the BBC from Beijing that companies have already begun using diesel generators to maintain factory operations. World leaders are urging this instant switch to renewable energy and net-zero emissions, but the technology does not currently exist to power the world. The energy crisis will contribute to supply shortages worldwide.

Truckers Wanted

October 28, 2021

Truckers Wanted

It seems that the state of Florida is doing more to address the supply chain crisis than the entire Biden Administration. The American Trucking Association reported that their industry now has a record shortage of 80,000 drivers. Truck drivers are essential to maintaining a steady supply chain, and despite the climate change narrative, fewer trucks on the road mean that businesses cannot be supplied with the essentials they need. Distributors in Florida are now offering salaries of up to $110,000 a year with sign-on bonuses as high as $15,000. Even referral bonuses have been going for between $3,000 to $5,000. The plan to attract workers comes shortly after the state announced that their ports are open for business.

Nearly half of America’s small businesses are feeling the effects of the supply chain crisis. Ships have been forced to turn around from ports, rerouting back to Asia, as there have not been enough workers to transport products. The trucking industry has been warning that Biden’s policies would lead to disaster. “I’m pretty discouraged. I don’t know how anybody can think an anti-capitalist agenda can be good for transportation,” David Owen, president of the National Association of Small Trucking Companies (NASTC) told Transportation Nation Network (TNN) in January. The entire trucking industry has been hesitant since Biden stepped into office, and with good reason.

The Democrat-controlled House voted to raise the motor carriers’ liability insurance minimum requirement from $750,000 to $2 million, eliminating competition for larger trucking companies. Biden’s climate change agenda resulted in the Keystone Pipeline XL cancelation. His plans to reduce carbon emissions producers and fracking also resulted in higher prices at the pump. Ending the supply bottlenecks requires the US to put more trucks on the road, and truckers should be treated with dignity rather than criminals who are destroying the climate.

Why Supply Chain Disruptions Will Persist

October 27, 2021

Why Supply Chain Disruptions Will Persist

Just-in-time (JIT) is a production model used by companies to create items for immediate demand. The point of JIT is to avoid the waste associated with overproduction. But when supply chain snarls appear, JIT has become a significant headache for US companies such as Ford who has had to shutter multiple vehicle plants because of their inability to source semiconductor chips.

Companies are rethinking their production model to just-in-case inventory (JICI), a more suitable model in today’s challenging environment that allows more inventory to be stored and will help ensure future orders are filled.

JIT still dominates the corporate world, but JICI could make a strong comeback due to global uncertainties. Bloomberg has provided an in-depth view of various US industries and their potential disruptions in foreign supplies.

Foreign supply-chain production is the largest in textiles, basic metals, electrical equipment, motor vehicles, and electronics. Many of these industries are entirely reliant on production from China. The problem with that is Beijing has ordered energy-intensive factories to shutter operations to conserve electricity amid a massive energy crunch. This will complicate the picture for firms that source a majority of their goods from the country. On top of this all, port congestion on either side of the Pacific continues to increase to record levels.

JIT is a flawed production model when supply chains break. Maybe companies will learn to transition to JICI and hold inventory in case of a rainy day.

For more insight on when global supply chain bottlenecks will subside, Dubai’s DP World, one of the biggest international port operators, Chairman and CEO Sultan Ahmed Bin Sulayem told Bloomberg earlier this month that disruptions could last for another two years.

…click on the above link to read the rest of the article…

Brace For Shortages of Oil, Natural Gas, Propane, and Coal: It’s Only Going to Get Worse

October 24, 2021

Brace For Shortages of Oil, Natural Gas, Propane, and Coal: It’s Only Going to Get Worse

Shortages & Hyperinflation Lead to Total Misery

October 23, 2021

SHORTAGES & HYPERINFLATION LEAD TO TOTAL MISERY

At the end of major economic cycles, shortages develop in all areas of the economy. And this is what the world is experiencing today on a global basis. There is a general lack of labour, whether it is restaurant staff, truck drivers or medical personnel.

There are also shortages of raw materials, lithium (electric car batteries), semi-conductors, food, a great deal of consumer products, cardboard boxes, energy and etc, etc. The list is endless.

SHORTAGES EVERYWHERE

Everything is of course blamed on Covid but most of these shortages are due to structural problems. We have today a global system which cannot cope with the tiniest imbalances in the supply chain.

Just one small component missing could change history as the nursery rhyme below explains:

For want of a nail, the shoe was lost.
For want of a shoe, the horse was lost.
For want of a horse, the rider was lost.
For want of a rider, the battle was lost.
For want of a battle, the kingdom was lost.
And all for the want of a horseshoe nail.

Cavalry battles are lost if there is a shortage of horseshoe nails.

The world is not just vulnerable to shortages of goods and services.

BOMBSHELLS

Bombshells could appear from anywhere. Let’s just list a few like:

Dollar collapse (and other currencies)
Stock market crash
Debt defaults, bond collapse (e.g. Evergrande)
Liquidity crisis (if money printing stops or has no effect)
Inflation leading to hyperinflation

There is a high likelihood that not just one of the above will happen in the next few years but all of them.

Because this is how empires and economic bubbles end.

The Roman Empire needed 500,000 troops to control its vast empire.

Emperor Septimius Severus (200 AD) advised his sons to “Enrich the troops with gold but no one else”.

…click on the above link to read the rest of the article…

“People Are Hoarding” – Supermarkets Are The Next Supply Chain Crunch As Food Shortages Persist

October 20, 2021

“People Are Hoarding” – Supermarkets Are The Next Supply Chain Crunch As Food Shortages Persist

It’s been 19 months since the virus pandemic began, and supply chain disruptions continue, making it more difficult for customers to find their favorite item at supermarkets nationwide. Simultaneously, the psychology of empty store shelves and President Biden’s inability to normalize supply chains forced some people to panic hoard this fall as uncertainty about food supplies mount.

Chris Jones, Senior Vice President of Government Affairs & Counsel of the National Grocers Association, told Today, “shopping early for the holidays is a wise strategy, especially under current conditions.”

“There’s plenty of food in the supply chain, but certain items may be harder to get at certain times due to a nationwide shortage of labor impacting manufacturers, shippers and retailers. Additionally, lack of enforcement of antitrust laws in the grocery marketplace have allowed dominant retailers to secure more favorable terms and ample supplies of high-demand goods while leaving many smaller retailers with limited selections or, in some cases, bare shelves,” Jones said.

In a separate report, USA Today listed items that customers are having trouble finding at grocery stores.

Ben & Jerry flavors

This frozen treat is usually the perfect dessert, but in an email on Sept. 14, Ben & Jerry’s parent company, Unilever, cited labor shortages as the reason for reducing the amount of flavors produced. The company said it will focus on producing its most popular flavors. Phish Food lovers, you have nothing to worry about.

Carbonated drinks

Fertilizer plants, which lead to the production of carbon dioxide, had to reduce their output because of rising costs, causing shortages in food and other products, Per Hong, senior partner at consulting firm Kearney, told CNBC.

…click on the above link to read the rest of the article…

Are the US Supply Chain Disruptions Deliberate?

October 20, 2021

Are the US Supply Chain Disruptions Deliberate?

(Image by © Reuters / Alan Devall)

Deputy Treasury Secretary Wally Adeyemo may have accidentally leaked the cause of America’s supply chain issues. “The reality is the only way we’re going to get to a place where we work through this transition is if everyone in America and everyone around the world gets vaccinated,” Adeyemo admitted in an interview with ABC News. Starve them out, let the dissenters suffer, and those who bought into this agenda will turn against them. Adeyemo said that the Biden Administration has already provided “the resources the American people need to make it to the other side.” Basically, everyone should give into the vaccine mandate or face the consequences. They are masking authoritarianism as utilitarianism. The vaccine has not been mandated at the federal level in the US, yet, but it is apparent that the government plans to make life as difficult as possible for those who do not obey.

Echoing the Fed, Adeyemo said that inflation is “transitory,” and “as part of the transition we are seeing higher pieces for some of the things people have to buy… That’s exactly why the president was focused in the American Rescue Plan in ensuring on getting stimulus into the hands of the American people, so they’d be able to buy the products they need.” Yes, the government expects us, the Great Unwashed, to be thankful for their measly handouts to purchase unavailable products at an all-time high. There is a reason people have recently nicknamed the president “bare shelves Biden,” with the hashtags #BareShelvesBiden and #EmptyShelvesJoe becoming a viral sensation.

Although the Biden Administration met with the Ports of Long Beach and Los Angeles, which handles 40% of the nation’s goods, the promise of a 24/7 operation has not yet occurred.

…click on the above link to read the rest of the article…

China Export Curbs On Fertilizer Could Worsen Global Food Price Shock

October 20, 2021

China Export Curbs On Fertilizer Could Worsen Global Food Price Shock

China’s move to impose export restrictions on fertilizers will be felt worldwide. Beijing’s increased scrutiny comes as global fertilizer markets have been battered by plant shutdowns and skyrocketing prices that may continue to boost food inflation well into 2022. Chinese Communist Party officials have called for stable fertilizer supplies and food security amid overseas turmoil.

On Oct. 15, Beijing implemented a new rule requiring additional inspection of fertilizer exports. The General Administration of Customs added new inspection requirements on urea to ammonium nitrate, according to Bloomberg.

Last month, a statement published on WeChat by the National Development and Reform Commission, China’s top economic planner, urged local authorities to ensure stable prices by keeping fertilizer plants operating despite widespread power cuts. This call for adequate fertilizer supplies is critical for the country to sustain agricultural production amid mounting food security risks.

Despite export curbs, Urea futures in Zhengzhou recently hit a new record high.

Bloomberg sources said some recent Chinese fertilizer cargoes had been delayed by customs for additional checks to obtain new export certificates. They said some shipments would be rerouted for domestic markets or face further delays.

A reduction in exports from China (a country that controls 30% of the global fertilizer market) could cause shortages in India, Pakistan, and Southeast Asia, the biggest buyers of its fertilizers. Higher prices could force farmers to plant less and or have to raise crop prices. The UN’s global food tracker is at a new decade high and may continue to soar higher.

Signs of a fertilizer shortage have already emerged. Europe may face difficulties sourcing fertilizer supplies at multiple domestic plants that have shuttered or reduced the output of the nutrients because of high natural gas prices. China’s export restrictions will make it harder for the euro area to import supplies…

…click on the above link to read the rest of the article…

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