The U.S. Supply Chain Crisis Will Get Worse - As Will Inflation
By now it is obvious to everyone that the U.S. has a supply chain problem.
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The highly optimized 'lean' transport chain from producers to consumers has clogged up.
This is a consequence of the two shocks the pandemic has caused in consumption patterns. Orders dropped hard at the start on the pandemic when people went into lockdown. A second shock came when consumption recovered to a higher than ever levels.
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The higher consumption was not for services as restaurants were often still closed. Instead the money went into buying things. Things that are produced elsewhere.
Any lean supply system without reserves and redundancies will break down under such impulses. The supply chain has many critical points. Producers in Asia need containers to ship their goods. The containers must go to harbors. Ships must be available as well as loading capacity. The harbor at the receiving end must have capacity to unload the containers and to store them. Trucks must be available as well as container trailers. The goods then go to distribution centers where there must be capacity to repack them and to send them out again. The empty containers must travel back to their origin to get filled again.
All these levels need people capable and willing to work. If one element of the chain reaches its maximum capacity and clogs up all others will be affected. Meanwhile demand for goods continues to be strong. More goods are still coming in while every element of the system that still had reserves is clogging up too.
The supply chain from Asia to the U.S. has reached that point. Other global supply chains are also straining from side effects of the pandemic and may well clog up too.
One major problem are the U.S. harbors on the west coast. Even before the pandemic they were already the least efficient of the world:
In a review of 351 container ports around the globe, Los Angeles was ranked 328, behind Tanzania's Dar es Salaam and Alaska's Dutch Harbor. The adjacent port of Long Beach came in even lower, at 333, behind Turkey's Nemrut Bay and Kenya's Mombasa, the groups said in their inaugural Container Port Performance Index published in May.The total number of ships waiting to unload outside the two adjacent ports hit a new all-time record of 100 on Monday. Americans' purchases of imported goods have jumped to levels the U.S. supply chain infrastructure can't handle, causing delivery delays and snarls.
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Government control, 24/7 operations and automation help make many non-U.S. ports more efficient.
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Southern California port executives are coaxing terminal operators, importers, truckers, railroads, dock workers and warehouse owners to adopt 24/7 operations in a bid to clear clogs that have backed up dozens of ships offshore and delayed deliveries to stores and e-commerce fulfillment centers.
Describing the problems at every level of the U.S. side of the supply and distribution chain Ryan Johnson, a twenty year truck driver, explains why going to 24/7 will not help and why the problems will get worse.
Truck drivers have to sleep, at least once a while. They also have to make money. They get paid by the load, not for the time it takes them to load it, drive it from A to B and to unload it. If there are hours long lines for loading and unloading the work is simply unprofitable:
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. While carriers were charging increased pandemic shipping rates, none of those rate increases went to the driver wages. Many drivers simply quit. However, while the pickup rate for containers severely decreased, they were still being offloaded from the boats. And it’s only gotten worse.
The U.S. once had a well regulated transport system. But that has long been neo-liberalized to death.
The system will not unclog itself because the incentives are set all wrong. The people who have an interest in removing the blocks are the freight buyers and sellers. But the container owners, harbors and distribution centers and freight carriers are now simply increasing their prices for prioritized goods without delivering more capacity. They even can ask for penalties from those who have containers stuck in their system. They refuse to pay more for their workers and drivers and to hire and qualify additional ones.
It will take some strong political initiative, or a lot of time, to rearrange and unclog the current system. The political initiative is simply not there. The Biden administration guy who is responsible for the issues says he can not do anything:
US Transportation Secretary Pete Buttigieg predicted on Sunday that supply chain issues plaguing multiple industries at the moment are going to continue as long as the coronavirus pandemic does.Confronted about the supply chain issues by Fox News’ Chris Wallace – including the fact that standstills at the Port of Los Angeles have only worsened after it began operating on a 24/7 basis – Buttigieg could only say that businesses should expect relief from the issues when the pandemic ends as the problems are a “direct” results of the virus’ strain on the world.
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“Fundamentally, it's up to the producers, the shippers and the retailers and we're doing everything we can to help them move those goods across the infrastructure that's often outdated,” he said.
Buttigieg's 'can't do' attitude will have political consequences. The supply chain crisis will continue well into next summer and fall. Discussing Ryan Johnson's piece Yves Smith remarks:
The severity of the supply chain crisis combined with the near-certainty that the only actor that could partially (stress partially) clear this logjam is the Feds. They are guaranteed not to do enough even if they understood how the moving parts interconnect.So it is now a safe bet that the Democrats will suffer a wipeout in the midterms, even if Biden gets his big bills passed (some stimulus!) and there is no Covid surge. Worsening supply shortfalls, particularly of drugs and medical staples, will make the bad press of the Iran hostage crisis look tame.
President Joe Biden's job rating has already sunk to 42%.
The supply chain crunch will lead to price increases and will have strong inflationary effects.
The central bankers, which have doused the economy with way too much money, have yet to understand that the supply chain problem is systemic and will have long term consequences:
The world’s top central bankers acknowledged that inflation, which has spiked higher across many advanced economies this year, could remain elevated for some time — and that though they still expect it to fade as pandemic-related supply disruptions calm, they are carefully watching to make sure that hot price pressures do not become more permanent.Jerome H. Powell, the Federal Reserve chair, spoke Wednesday on a panel alongside Christine Lagarde, president of the European Central Bank; Andrew Bailey, governor of the Bank of England; and Haruhiko Kuroda, head of the Bank of Japan.
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“It is frustrating to acknowledge that getting people vaccinated and getting Delta under control, 18 months later, still remains the most important economic policy that we have,” Mr. Powell said. “It is also frustrating to see the bottlenecks and supply chain problems not getting better — in fact, at the margin, apparently getting a little bit worse.”“We see that continuing into next year, probably, and holding inflation up longer than we had thought,” Mr. Powell said.
Powell and his colleagues still see the inflationary effects as transitory and rejected to act on them. But the supply chain crunch will have not only temporary price effects. It shows that the U.S. transport system is too 'lean' and too cheap in its current configuration. It needs updated infrastructure, better paid people, the right incentives and more redundancies. All of these will continuously cost more money and have long term inflationary effects.
In a (paywalled) Financial Times piece economist Steven Roach recently warned of such complacency:
Echoes of an earlier, darker period of economic history are growing louder. When I warned in early 2020 of a 1970s-style stagflation, my concerns were primarily on the supply side. Today a full-blown global supply shock is at hand: energy and food prices are soaring, shipping lanes are clogged and labour shortages prevalent.One popular theory is that supply disruptions and price spikes are transitory glitches related to the pandemic that will ultimately self-heal. The inflationary build-up of the early 1970s was also presaged by a focus on transitory events: the Opec oil embargo and El Niño-related weather disturbances.
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This has lured [central banks] into a “sequencing trap” — responding to surprises, such as inflation, first through a tapering of asset purchases and then by raising the benchmark policy interest rate in baby steps. Yet aggregate demand is likely to be far less sensitive to central bank balance sheet adjustments than to the real cost of money, and monetary policy actions have a long lag time. This is particularly worrisome for the Fed, which has embraced a new “average inflation targeting” approach designed to delay policy responses to compensate for earlier undershoots of inflation.
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The lessons? Inflation is unlikely to peak soon. What seems transitory now will last longer than we think. And it will take far more monetary tightening than financial markets are expecting to avoid stagflation 2.0.
Roach is not the only one who warns of economic stagnation combined with high inflation. In his remarks at last week's G20 summit Russia's President Vladimir Putin made it his major point. He emphasized that the necessary changes in monetary policies must be accompanied by social measures:
Last year the economic authorities of the G20 member countries and many other countries decided to significantly increase their budget deficits against the backdrop of the deep crisis caused by the pandemic, which allowed for launching global economic recovery. However, such extraordinary measure accompanied by securities buyouts by central banks should be limited in time. In fact, this is what was said here earlier.
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Excessive stimulation has resulted in the general lack of stability, growing prices of financial assets and goods in certain markets such as energy, food, etc. Once again, significant budget deficits in the developed economies are the main cause of these developments. With these deficits persisting, there is a risk of high global inflation in the medium term, which not only increases the risk of lower business activity but reinforces and exacerbates the inequality that was also mentioned today.That is why it is important to prevent aggravating stagflation and instead do what can be done to normalise the budgetary and monetary policies, improve the quality of demand management in the economy and update economic priorities – and primarily prioritise overcoming inequality and boosting public welfare.
Higher taxes for the top 1%, who have profit most during the pandemic, can correct the budget deficits. The central banks can then stop the securities buyouts that have financed the deficits and doused the rich. They can raise the interest rates to starve of inflation before it increases further. A part of the additional money the states take in must be distributed to the lower income people who are most affected by the increase of basic prices.
While that may sound like a reasonable plan one thing is assured. It will not be acted on.
The current lack of government action to fix the supply chain issues shows that things will only change after a total breakdown has happened. We ain't there yet but it is by now assured to happen.
Posted by b on November 1, 2021 at 19:30 UTC | Permalink
next page »The supply chain problem is a class war problem where distributors simply do not want to pay drivers a worthy wage but rather pay per mile. The cab of a tractor/trailer is a sweat shop. And has been since deregulating the industry under Carter.
Posted by: yancey | Nov 1 2021 19:41 utc | 2
B wrote
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They refuse to pay more for their workers and drivers and to hire and qualify additional ones.
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Its all about profit and we need to decide as a species what parts of a mixed economy we don't want provided for profit and manage them accordingly....because the LIE that private folks can do things better/cheaper than properly managed public versions is just that, a LIE.
Think about all the bean counters having wet dreams about the PROFIT that "they" will make because of this CONSCIOUSLY CREATED crisis.
Humanity is in a civilization war about whether finance should be controlled by a private global cult or by sovereign nations like CHINA. China's culture is forcing this war on the global private finance cult that has run our world for the past few centuries.
The supply chain crisis we are watching did not have to happen and can be fixed by doing the right things instead of what makes the most money/power for those in control of the economic levers.
Posted by: psychohistorian | Nov 1 2021 19:53 utc | 3
thanks b... thanks also to @ norwegian in the previous thread who linked to the 20 year driver in your article link here and to @ c1ue who had another article from this past weekend..
i have a problem with bankers and financial types... they are always ''on the lookout'' for inflation... if anyone still believes that b.s., then they can keep on listening to them, but i call b.s. on all the economic talk from these phony soothsayers.. they are looking after the 1 % you want to tax and the 1 % will not be taxed because they control the gov't and banking system... it is that plain and simple... nothing is going to change.. our outlook on all this has to change.. maybe its okay there is a supply chain going on? maybe it is ultimately helpful for the planet to take a break from getting supplied via all the long distance transportation systems, and instead we live, create, build and relate locally instead... of course this same 1 % doesn't want that... spend, spend, spend... consume, consume, consume... give it a break i say! get a book out of the library instead of funding amazon... go for a walk.. find local alternatives to all this suppy chain madness..
Posted by: james | Nov 1 2021 19:59 utc | 4
Inflation raises its (ugly) when too many consumers chase too few products. But in the current (US) situation, soon there will be no products, at any price. And something worse than inflation may raise its head.
And while people can get mad in not buying able to buy a new TV set, or having to wait weeks and months for a new gadget, some may start dying in large numbers, for not getting access to essential stuff, like medication, and I don't know what will happen next.
Posted by: marcel | Nov 1 2021 20:03 utc | 5
how about we switch from a society that is constantly throwing stuff into the garbage into one that builds stuff to last?? nope... the corporations can't have that... used to be you could have a hot water tank last 100 years - copper... now, you are lucky if they last 10 years... same deal all the appliances being made... we are a throw away society... the supply chain supports this... i hope the supply chain completely breaks down and we are forced to learn how to re-use, as opposed to recycle into garbage... or that we make something that actually lasts, as opposed to not...
Posted by: james | Nov 1 2021 20:04 utc | 6
food... it is another part of the supply chain... how about we buy locally instead?? supply chain problem immediately solved.. no, we have become reliant on others.. a weak crumbling society that can't stand on its own feet and have to be fed and looked after by others, from our food to everything else..
Posted by: james | Nov 1 2021 20:06 utc | 7
“It is frustrating to acknowledge that getting people vaccinated and getting Delta under control, 18 months later, still remains the most important economic policy that we have,” Mr. Powell said.
Yes, firing people for having a mind of their own is certainly having an economic effect, it helps maximising the supply chain problem.
Posted by: Norwegian | Nov 1 2021 20:16 utc | 8
Central banks shouldn't be tightening right when demand for dollars as means of payment is at its highest. That's stupidly recessionary. If there's demand for dollars, you can create them without inflation.
Posted by: Anonymous | Nov 1 2021 20:25 utc | 9
Thanks for the "driver" article. Enlightening, to say the least.
Same old problem, the malignantly greedy being themselves again. Life is so much easier for all when workers are paid fair wages, a lesson, not yet learned, by many so called "elites".
Thanks, Ayn Rand.
Posted by: vetinLA | Nov 1 2021 20:45 utc | 10
I want to echo James in putting the question out there as to why we need the consumer culture anyway?
Why do we want it to continue so badly?
And why do so many here feel so comfortable using the word "neoliberal" without ever thinking to say "globalism." I know b has not used that term in a very long time, if ever.
Friends, face the facts.
For America to regain control of itself, it will have to shake globalism for reinvigorated, local manufacturing.
This means more protectionism and less China.
Less China means less globalism means politicians are again working at our behest (i.e. labor and not the white-collar, globalist neoliberals).
We are suffering the death pangs of a fading globalist paradigm. That much is true. At a certain point, the value of China's currency will make it so that it becomes reasonable to make stuff here again. This is a fact and it is happening right now.
Why can so few see it clearly and why are we so doom-and-gloom with this prospect?
When labor regains a foothold in the powerstructure, you inherently see decentralization and the reemergence of local systems and supply chains. Regions abandoned during globalism are reinvigorated, they become larger players, and, Presto-chango, we are no longer ruled by the internationalist class that have their penthouses in New York and LA. All you have to do is look at see the EU crawling back to Vladimir for gas. Looks like the boot is on the other foot.
The end of globalism is worth cheering on. But what so few seem to realize is that their precious China will no longer be the great "extracting" partner with Uncle Sambo. But what other outcome was ever going to emerge? Trading partners come and go. Boats are lifted. Some crash on rocks. The teleological end of neoliberal, globalist capitalism means the reemergence of decentralized nationalism, precious-metal backed currency, and the final nail in the coffin of the leviathon behemoth golem.
Posted by: NemesisCalling | Nov 1 2021 20:48 utc | 11
Nothing against a hefty tax increase for the one percent, or better yet the richest 10 percent, accompanied by measures against all the global letterbox company havens. But even if that were really done, it would not solve the problem.
The problem is structural. The excess of goods over purchasing power, i.e. overproduction, comes to light when it is no longer concealed by massive market interventions. The central banks' interest rate policy has no alternative. Any other policy would drive zombie companies to ruin and destroy millions of jobs. The stock market crash that would then inevitably occur would eat up a good part of the wealth to be taxed and severely reduce trade and income tax revenues. After more than a decade of dragging out the crisis with measures contrary to the system, a depression now lurks. That is, a self-feeding slump that no one knows how to end.
Posted by: pnyx | Nov 1 2021 21:13 utc | 13
Truck drivers paid by the load instead of by the hour ... so the union busters like Hannity and Kudlow who wax eloquently about preserving the 'independent trucker' are turning our ports into warehouses.
Here is where the govt could step in. If they agreed to pay truckers by the hour for the downtime, they could at least incentivize more trucking. BTW not saying that's even a good idea, just that Buttigieg is an idiot to throw up his hands. The govt could look into the issue and come up with custom solutions.
Posted by: Christian J. Chuba | Nov 1 2021 21:16 utc | 14
NC 18; Now THAT, is a great rant. Right on point, and direction.
Too bad our so-called "leadership" can't, or won't, echo that direction......
Posted by: vetinLA | Nov 1 2021 21:41 utc | 15
I think now it is clear why they eliminated the railroads..
today they are removing farms so natural food cannot be transported from farms to markets. They are making urban people drink recycled water so they can inject into the drinking water whatever they wish. or just turn the water supplies off, if things get too hot for them.
Whatever they want, they do.. but always they want the victim of their folly to pay. but they give the immigrant $450k each?
Posted by: snake | Nov 1 2021 22:03 utc | 16
Inflation targeting and unregulated supply chain system are the most root causes of the collapsing supply chain. And it all start from low truck wages and high prices, and one sided penalties to truck owners.
The system must collapse so that, yes, a system with social responsibility is more important.
This neo liberal system is a farce, a real failure.
Posted by: Dipeba Charles Matul | Nov 1 2021 22:19 utc | 17
Yahoo news is full of shit. I've worked at the port of LA/LB for 17 years. We've always run the port 24/7. The truckers are seriously exploited. Shipping companies rape their customers and won't hire more longshoreman. There are thousands of workers waiting to be hired for full time work.
Posted by: fnord | Nov 1 2021 22:27 utc | 18
My initial response to b's outstanding article was to shout "Let's all hear it for Profit over People!" but Oldhippie @1 clearly beat me to it in a more articulate fashion. Yes, this is a clear case of Neoliberal disease, and note that no Neoliberal has a sensible solution to offer. They still don't recognize what caused the 1970's Stagflation--the combination of escalating Vietnam at the same time as trying to implement The Great Society, LJB's version of BBB, all before the Feds began lying about economic performance.
There's no way the current crop of those ruining the USA can fix this problem because so many other problems need drastic fixing too. To use the allegory Crooke uses in his current article, after many years and several very close calls, the water in the Neoliberal Frog's pot is nearing the boiling point.
The USA's problem has nothing to do with supply and/or demand. Both sides are wrong. It is the same problem with Europe's access to gas.
Bigger ports, wider roads and more and well-paid truckers will not solve the USA's problem. Nor will psychological factors such as consumerism, greed, panic etc. etc. All of this have zero influence over this crisis - or, indeed, any crisis in the history of capitalism.
Bourgeois economy is a failed science by design. It presupposes capitalism is a system in equilibrium - and equilibrium between supply and demand. This was mathematically enshrined in the infamous Phillips Curve.
The dirty secret here is that the presupposition that supply=demands is pseudo-science. It has absolutely zero evidence supporting it. On the contrary: all the evidence shows it must not be true.
The scientific truth here is in Marx's Theory of Value. It explains everything, anywhere, anytime, any circumstances in capitalism. It is the absolute truth, no matter how many people deny this. Let me explain the basis of Marx's theory applied to this specific case so as to not write the longest comment in MoA's history by a large margin.
1 - Assume some product has infinite supply (let's always assume perfect circulation and distribution, i.e. everybody has access to it whenever and wherever they want, in the quantity they want, because it doesn't matter here, but it would also work with imperfect circulation and distribution). Everybody gets the product and satisfy their needs this product fulfills.
What would Bourgeois Economy (doesn't matter if neoliberal, Keynesian, left, right or center - they all share the same foundations) state in this case (#1)? That this product would have a price equal to zero, because supply is infinite (demand here could either be treated as infinite or zero, philosophically that would be the same). This product is still capital, that is, it is still a commodity - just a commodity with price zero. The STEM person would find this very elegant and correct, and would applause the bourgeois economist who came out with this mathematical wonder. Except that this is not correct - that's not how the social world (the world of "humanities") works.
Marx's explanation to #1 is that, in such a situation, this product would not be a product, therefore not a commodity, therefore not capital, therefore the concept of value would not apply, therefore it would have no price. It would not have value equal to zero - it would have literally no value. This "product" would be simply a gift of nature, of the objective material world (the Universe, if you want to be poetic). It would be merely a windfall, something that transcends society and History.
We have such example: the atmospheric air we breathe. No human being has to work to produce air, therefore zero labor is used for the atmospheric air to exist, and it is available to all human beings, who breathe it according to their necessity, without having to do socially necessary work to get it. It is therefore just the fruit of dumb luck, the mere chance of planet Earth existing the way it is and we existing in it. It has no value, it transcends humanity.
Another example: all the minerals in the planet Mars. They have no value, because they're out of reach of the capitalist system. Bourgeois economists can project value over them because they can use accountancy devices to imagine they have value, but they don't. That's why headlines like "asteroid with USD 100 trillion in platinum passes near Earth" are absurd by definition. No, if those "USD 100 trillion" in platinum were on Earth, they would not be worth USD 100 trillion, but much less, because human beings would need to work less hours to get a single unit of platinum (because there would be more platinum on Earth).
Why is Marx's theory correct and the Bourgeois Economy's theory wrong? After all, those USD 100 trillion in platinum plummeting in prices could be easily explained by supply and demand.
The reason why Marx's theory is the correct one is because it explains the factors of the development of the productive forces of any phase of capitalism, its relation with the societal organization of capitalism and, most importantly, why it is never in equilibrium, i.e. why there are crises.
Let's take this case of the USA with its shortage of goods. The author of this blog claims that, if the USA simply builds a bigger port, enlarge the roads and pay the truckers (i.e. create the demand), the goods will flow (i.e. the supply will come). In fact, California is dropping some USD 600 million to enlarge its main port. But that will not happen: those goods will not come.
They will not come because the value isn't there for the exchange. The USA does not produce anything the rest of the world wants (mostly), or at least not nearly in enough amount to receive what it needs back. As a result, it is printing USDs in order to force the rest of the world to sustain its purchase power, therefore transferring value to the USA. It's not that the ports were small, the roads narrow, and the truckers underpaid, but the fact the USG printed and distributed checks for every American citizen, unconditionally.
The fact that they spent it all on gadgets from overseas instead of restaurants doesn't matter: if the restaurants were open and they all spent it on them, the only thing that would change would be the drama story: from an overloaded port to an overloaded farm. It would only change the place of the glut, not the glut itself. According to bourgeois economy theory, this glut should not happen, because money printing simply rises inflation, not demand, since the amount of already existing commodities (supply) is the same (from the point of view of the money printer, i.e. demand); after all, if you have the necessary money, you should have the commodity, regardless of the price.
Marx's theory explains the glut first because it predicts there would be a glut in such situation (value transfer and equalization between capitals, in this case, entire nation-states), but it also explains why the USA acted exactly the way it did in an extremely elegant and logical way: the USA simply consumes much more than what it produces, therefore the only way it can attract extra value by doing what it can do as the financial superpower in a fiat system: printing money.
The MMTers/Keynesians didn't just won a coin flip against the neoliberals/Austrians: to crunch money printing would mean the undermining of the very material foundations of the USA, it would be like the scorpion not stinging the frog during the river crossing, wouldn't make any sense.
The reason why California is coughing insane amounts of money to expand their port is also easily explained by Marx's theory: it would help California because the port is located in California. This is a Californian infrastructure, a productive enterprise (freight is a productive activity, even though it falls as costs of circulation to the capitalists of the other sectors) that generates value to the Californian economy. The port must also be insanely profitable or become so because of the glut, thus justifying the extra investment (so nothing to do with some magical enchantment of extra demand).
Marx's theory also predicts there's a material limit to this money printing by the USA. This limit is the absolute amount of value the USA can produce, versus the amount of money it will keep printing. There will come a moment - which is mathematically demonstrable, but we don't have the data to calculate it - where the rest of the world will either go bankrupt (in the limit) or crash the USA by diverting value elsewhere. According to bourgeois economists, this scenario is impossible, because demand for the USD should be indefinite (i.e. close enough to infinite but not infinite, so as to demand not to fall to zero), which means an extra printing of USDs should automatically force the rest of the world to equally expand production by the same amount (ironically, this presupposes an underlying factor - value).
This fake 'supply chain crisis' is just a giant psy-op, a kind of false flag event, even. The supply chain has been in a state of latent collapse for many decades. Keeping the wages of 'working class' people to a minimum generally fosters a condition of latent collapse. This enables the Pervasive Shadow Dictatorship (PSD) to covertly collapse the system while blaming the decrepit supply chain system, rather than letting the blame fall upon Wall Street. It's sort of clever.
What has really happened is that the lunatic PSD oligarchs have 'off-shored' far too many elements of the Western productional system, but the recipients of said system have now elected to simply withhold the products of this system for their own benefit. So how do the PSD oligarchs explain this vast cock-up to the destitute masses? Simple! It is just a 'supply chain crisis'! A few obscure dominoes were tilted over and the supply chain, always on the hairy edge of a latent collapse, suddenly collapses. It's nobodies fault, of course. It's merely a convergence of a few very unfortunate coincidences. Of course...
Too bad that the age of cheap hydrocarbon energy has come and gone, so the Western productional system cannot be reconstituted. But this time, it cannot be blamed on Wall Street. So at least there's that.
Shortages of trucking capacity are normally accompanied by increased sales of heavy trucks. Here's the data
https://fred.stlouisfed.org/series/HTRUCKSSAAR
After the predictable dip in 2020, it recovered to roughly the historically typical high level, an annualized rate of 0.5 million units/year in May 2021, and then turned around and has been falling since then. Is it parts shortages, driver shortages (honestly a little hard to believe), or something else?
In any case the chain of events started by Covid continues, and will take tens of months to work its way though the system. I'm actually surprised things are not more seriously disrupted, but it has been relatively mild so far, to be honest.
Posted by: ptb | Nov 1 2021 23:16 utc | 22
Two stellar comments back to back:
#28: "They will not come because the value isn't there for the exchange. The USA does not produce anything the rest of the world wants (mostly), or at least not nearly in enough amount to receive what it needs back. As a result, it is printing USDs in order to force the rest of the world to sustain its purchase power, therefore transferring value to the USA."
- Wow, so we are forcing China to send us their products and accept $$ in return, are we? Your conjecture is that the ports are cluttered because we can't pay China for the stuff that's cluttering the ports? In whose mind does this make sense?
#29: "What has really happened is that the lunatic PSD oligarchs have 'off-shored' far too many elements of the Western productional system, but the recipients of said system have now elected to simply withhold the products of this system for their own benefit."
- Err, no ... we should WISH that they would "simply withhold" ... the problem is in fact we are getting far more crap sent us from China than our decrepit ports and inadequately paid workforce can deal with. China remains willing to drown us in crap forever, and they remain as willing as ever to take as many IOU $$s as we will print.
Posted by: Caliman | Nov 1 2021 23:17 utc | 23
You do realize that this is happening right now.... in the UK.....
It is not only the USA that swallowed the Kool-Aid... all of NATO did too....
"Dutch Customs seizes 55,000 doses of Ivermectin in 950 shipments from India, Singapore, & Bangladesh... to private citizens..."
"Ivermectin is not to be used outside of clinical trials..."
Apparently, Dutch livestock need not be wormed this year.... Farmers... citizens... be damned!
INDY
Posted by: George W Oprisko | Nov 1 2021 23:33 utc | 24
@ James and Nemesis, et al.
Agree 100%. Teach permaculture at school. Each class has a garden and learns about herbs, veggies, seasons, etc. Local growers' markets and fixing things to last. Basic solar and battery tech, less consumption, local libraries (yes!), community allotments, rostered contributions toward their maintenance, keep chooks and geese, walk more, cycle more, decentralised communities, acoustic local music (bluegrass man!)... I have to stop because I get so depressed about the current insanity and corruption. It truly is a satanic world we suffer under.
Posted by: Patroklos | Nov 1 2021 23:38 utc | 25
Thought along those same lines blues but recently the PSD will not own up to losing a trade war and have kept all tariffs and sanctions in place to demonstrate how little they know about tit for tat retaliation. Laying siege to a country that produces very little is child's play when you can balk on production along with owning the port. You see "look over there at that long back up of container ships", yeah you gonna pay more now and be glad to get it.
Posted by: George | Nov 1 2021 23:39 utc | 26
As #29 said it already, this whole "Supply chain crisis" is a psy-op, designed to eventually "get the attention of the US government" who will then decide that "made in China" is bad and will demand that manufacturing is brou8ght back to USA. Step 2 just started, with US Corporate Owned Media now devoting articles and attention to it. Step 3 (which is coming up very shortly) is for the "US government to get involved and to insist that US companies begin producing things in USA once again".
US shadow gov thinks they will hurt China by bringing back manufacturing, which is of course a fallacy and a wishful thinking BS.
Posted by: Hoyeru | Nov 1 2021 23:45 utc | 27
NemesisCalling @ 18:
I agree that all countries, not just the US, need to revive local manufacturing even if that means bringing in protectionist-style policies in the short to medium term. Such policies can always be fine-tuned over time.
Proper inventory systems also need to be brought back rather than the just-in-time systems that the West copied from Japan (without understanding the Japanese context in which JIT worked: the compact nature of the country's physical geography and the high concentrations of population in areas close to industry, the subcontractors industry relied on, government, the finance sector and transportation hubs - and all of these physically close to one another - allowed JIT to develop and thrive) and this means extra warehousing must be built, and proper transport networks and nodes (and the highway networks that allow those to operate) must also be built.
All of these systems and networks will require people trained and able to do these jobs. I'm not sure how much of the work now requires people to have some computer literacy. A lot of the work that was done manually even 10 years ago might now be done using robots or AI-operated and controlled systems and databases.
There's also a possibility that many labour shortages are arising because many industries involved in supply logistics now require mandatory COVID-19 injections and many people are refusing the shots for various reasons.
Also with decentralisation and emphasis on local manufacturing and supply networks, people still need to be paid decent wages and there must be the legal and other industry regulation structures to support workers' rights. Decentralisation and local manufacturing will not benefit the population at large if governments and corporations use prison labour or import foreign workers on low wages or zero-hour contracts to do the work that local citizens could do and are prepared to do if there were the proper rewards (decent pay, decent working conditions and hours).
To some extent the consumer culture is needed because it helps underlie the pull force (through price movements) in classic supply-demand economics. If you don't know what buyers want, how can you know what to produce and how much that they will buy? Where will they buy the produce and what are they prepared to pay for it? Of course to know what consumers really want, they need to have, uh, certain freedoms and rights - freedoms and rights that, um, governments and large corporations would prefer they not have.
The supply chain / supply logistics crisis is a symptom of a much larger existential crisis facing the West.
Posted by: Jen | Nov 2 2021 0:12 utc | 29
If China has shown signs of preparation to withhold products for its own benefit, that could explain the untimely reckless Taiwan harassment situation.
"... Of course to know what consumers really want, they need to have, uh, certain freedoms and rights - freedoms and rights that, um, governments and large corporations would prefer they not have ..."
I should have said @ 37:
"... Of course for suppliers to know what consumers really want, consumers need to have, uh, certain freedoms and rights - freedoms and rights that, um, governments and large corporations would prefer they not have ..."
Freedoms and rights such as the right to know that what they are buying is free of toxins or dangerous parts, or does what it is supposed to do.
This of course presumes consumers are sufficiently educated about their rights and responsibilities as consumers. That might mean giving them an education that (among other things) teaches critical thinking and logic, and which equips people with understanding of risk, probability and statistics.
"... There's also a possibility that many labour shortages are arising because many industries involved in supply logistics now require mandatory COVID-19 injections and many people are refusing the shots for various reasons ..."
I should have made clear that those refusing mandatory shots are either being sacked or stood down, or are leaving those industries requiring mandatory injections of their own volition.
Posted by: Jen | Nov 2 2021 0:22 utc | 31
Someone has to say it: Biden had to put Buttigieg somewhere; too many superrich and billionaire LGBT+ Democrat donors, intimates of Hillary's, demanded it. They had poured billions into his candidacy because he was a married gay guy. Transportation seemed a quiet harbor for someone who was a figurehead - no matter his incompetence. To the extent that the federal government should be able to help in this crisis, I suspect that Peter Buttigieg's personnel rearrangements is a factor of significance.
Posted by: Anonymot | Nov 2 2021 0:35 utc | 32
Cost of gasoline and Biden's war against U.S. oil production.
Under Trump U.S. oil production reached a peak of 13M bpd.
Under Biden it has plummeted to 11.3M bpd. A stunning decline of 15%.
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
# sarcasm # sarcasm # sarcasm #
I love how dis-info becomes accepted wisdom in the U.S. I post this fact to every FOX business host to no avail. In fact, I offer an alternate solution, how about we consider ending our unnecessary trade embargo against Iran / Venezuela? This would add 4M bpd a day to supply vs our measly 1.7M bpd.
Nope. Not a word of this will ever be uttered by any host on any show.
Posted by: Christian J. Chuba | Nov 2 2021 0:39 utc | 33
@ Posted by: Caliman | Nov 1 2021 23:17 utc | 31
In fact, it is. There's data that demonstrates the USA (and the rest of the First World) indeed does receive more wealth than it produces, including from China (which is in deficit with the rest of the world). China is indeed being drained - that's why it is refocusing its economy on finance (away from the USD Standard) and internal consumption.
The key here is that the USA doesn't drain everything from China, just a portion. The USA cannot kill the goose that lay the golden eggs.
--//--
@ Posted by: Jen | Nov 2 2021 0:12 utc | 37
It wouldn't work. Again, Marx's Theory of Value explains why.
Economic growth is, nothing more, nothing less, than economic output beyond the economic output needed to keep what already exists. That means you can only grow once you already replenished what you spent in the first place.
Industry inherently has more value than services or agriculture. This means that, in order for any given nation-state to industrialize, it needs an output of value that is necessarily beyond the total value it already produces, that is, growth is a presupposition of industrialization.
But that alone is not enough. You can't buy a fraction of a machine - you can only buy it whole (hence the concept of "aggregate value"). So, not only the deindustrialized nation-state already has to be growing - it has to grow to such an extent that it can accumulate surplus value in quantities large enough to import industry. That's why Third World countries - even when they grow beyond the First World countries - cannot industrialize.
To make things even worse, non-manufactured goods - since they have less "aggregate value" than manufactured goods - can only expand extensively, even when they do so intensively. The fact that they're basic needs goods also put a ceiling to the aggregate value they can have per unit, so the tendency is for prices of the commodities to fall vis-a-vis the prices of the manufactured goods. Not only non-industrial nation-states will never accumulate enough value to buy industry, they'll also tend to have deficits with the already industrialized nation-states. That's because, since value must be replenished before it is surplussed, industrial nations will always receive more value produced worldwide.
Besides, capitalism operates through rates of profit, not national idiosyncrasies. It will organize the world according to what's most profitable in each nation-state. The USA already is the financial center of the world - why create a redundancy by re-industrializing it?
There are only three ways a nation-state can industrialize:
1) being the first ever capitalist nation-state. This was England, so this route is closed;
2) protectionism. A nation-state closes its foreign trade and do whatever it takes to build its own industry, and forces its people to consume its products (no matter if they're worse). Do this for how long it takes. That's what the USA did;
3) gaining imperial favor in a Cold War scenario (i.e. in an existential threat to capitalism, fight against socialism). The industrial superpower then gives up some part of its own industry to industrialize borderland nation-states so they can withhold in their long struggle against socialism. This is what happened to some post-war Western European nations (the birth of the welfare state), Japan and, later, South Korea, Taiwan and Singapore.
@ Posted by: Caliman | Nov 1 2021 23:17 utc | 31
Forgot to answer the second part of your question.
The glut happened because the USA, using the fact that we live in the USD Standard, printed and distributed USDs to its people. Its people then bought goods, necessarily from overseas (don't need to be from China), because the USA consumes more than it produces.
Marx's theory would state that this glut happened because extra USDs printed forced the rest of the world to transfer extra value to the USA. This extra value, however, had no counterpart, so they found themselves in the same shitty USA of yesterday (before the money printing). The wealth of goods didn't find its correspondent social context (an equally wealthy society, that really needs, and therefore can absorb, those goods).
Bourgeois economy theories claim that the extra printing of USDs would either just rise the prices of already existing goods (neoliberal branch) or simply induce a new cycle of industrialization and production of goods to meet the correspondent extra amount of money printed (Keynesians, MMTers). In none of those cases the empty shelves/glut scenario is predicted - in fact, they both consider it impossible under capitalism. That's why the bourgeois economists merely consider this crisis as pure greed, incompetence, mass hysteria and/or corruption (the so-called psychological explanation).
The pandemic is not going to end in the West anytime soon; not until the virus and humans adapt to each other. But this will take years and the vaccines could well facilitate more lethal variants. The health of American and European workers is simply of no concern.
There are shortages now in the USA & the UK. Natural gas price is spiking in the EU even before winter. People are stockpiling necessities. If you need and can’t get it then the item becomes priceless; especially medicines if it keeps you alive.
The ruling global private-jet-set is an updated Brahman caste/cult that simply does not give a damn for the untouchable underclasses. They basically cannot understand why there is a shortage of goods and workers. It is outside of the belief system that only money has value. Thus it is totally impossible for the western rulers to fix it. Either everything goes to crap or there is a system change.
The only way to preserve western enlightenment civilization is to restore the Republics. Subjugate corporations and trade institutions. Rebuild functional governments. Assure the Life, Liberty, Equality and Fraternity of the western peoples.
Posted by: VietnamVet | Nov 2 2021 1:44 utc | 36
Vk - No nation can "receive more wealth than it produces" except by force, as in old fashioned colonialism and recent fashioned third world extractionism. But the majority of the goods/imports we're talking about here causing logjams at our ports are from China and other major producers, surely selling willingly for a mutually agreed upon beneficial price.
As we have become a more and more crony capitalist service and especially Wall Street economy, what we sell is subtle but profound: we sell the security of the US $. This makes for a very thin and brittle economy, not interested in the kinds of investments in workers and infrastructure that would prevent the problem discussed by b.
Posted by: Caliman | Nov 2 2021 1:45 utc | 37
Choke points at us ports? No problem! Give it afew years and the us consumer cant afford to buy china products. The same way they cant currently afford us products….they cost too much. Give another few years and a native industry will grow to provide products cheaper than china….because the us worker will be paid less. This is what us politicians have creayted for their people …
Posted by: James j | Nov 2 2021 1:58 utc | 38
@ Posted by: Caliman | Nov 2 2021 1:45 utc | 45
Kinda.
On one side, in a fiat currency system, it is a necessity for the capitalist system to have one main currency. Money is the universal commodity, the commodity that can morph into any other commodity: that's why it is like the Highlander (there can be only one). The bimetallic was a transitional system that existed when the world market was not yet fully formed.
On the other side, you're correct in the sense that, in order to decide which fiat currency will be the standard, force must be used. That's why the USA doesn't give up the industrial sector that is responsible for its military (the MIC). But notice the USA is glowingly increasing the portion of its budget to its military: no industrial sector can survive isolated indefinitely and the MIC is a very long and complex manufacturing chain.
Spain must be the standard reference when speaking of inflation, especially since their inflation was due to gold injections into an economy that had little chance of matching the new money amounts with new or more products. The english were in the throws of the industrial revolution at the time , and they were quick to siphon off spains excess gold, in return for english products.
Hhhhmmmm, sounds like chine siphoning off the excess us dollars. The dollars cant buy much in the us , since they no longer produce things …but oil payments are still in us dollars for now….
Posted by: James j | Nov 2 2021 2:10 utc | 40
Spain must be the standard reference when speaking of inflation, especially since their inflation was due to gold injections into an economy that had little chance of matching the new money amounts with new or more products. The english were in the throws of the industrial revolution at the time , and they were quick to siphon off spains excess gold, in return for english products.
Hhhhmmmm, sounds like chine siphoning off the excess us dollars. The dollars cant buy much in the us , since they no longer produce things …but oil payments are still in us dollars for now….
Posted by: James j | Nov 2 2021 2:10 utc | 41
From ZeroHedge article, trucker's perspective on supply chain: "Many supply chain workers are paid minimum wages, no benefits, and there’s a high rate of turnover because the physical conditions can be brutal (there aren’t even bathrooms for truckers waiting hours at ports because the port owners won’t pay for them. The truckers aren’t port employees and port owners are only legally required to pay for bathroom facilities for their employees. This is a nationwide problem)"
Earlier this week I read that Canadian Parliament passed a mandate to provide bathrooms for truckers at loading and delivery locations. My first thought was to recall a book I read back in Communist Poland (left on a park bench, translation from Russian) "The working people of Soviet Union have more rights that in any other countries. In fact, every year they get several new rights". So Canada is playing catch-up? Several new worker rights for 2021? But apparently, the idea that truck drivers are human, with ALL human needs, is indeed a novelty.
------------
Buttiegieg in charge. A man who could well be President, if only his last name was shorter and people with IQ below 150 could spell it or even pronounce. When Grand Titans, Great Poobahs and Noble Ancient Raccoons of Democratic Party had to pick a single candidate with name that does not start with S, there were only three, Biden and two young fresh names whose last names could make most ardent Democrats choke, wheeze and collapse (Boo, Boo, Boo, Klo, Klo, Klo), thus with meager chances to attract so-called Independents. But with a brilliant work on the Supply Chain Crisis, Buttie[???] could gain such an acclaim and name recognition that he could handily defeat Harris and subsequently, a Republican humanoid in 2024. Now he is like the main figure in the Landscape With The Fall Of Icarus by Pieter Bruege (everybody busy, nobody pays attention to a tiny drowning figure).
Posted by: Piotr Berman | Nov 2 2021 2:25 utc | 42
Posted by: James j | Nov 2 2021 2:10 utc | 48
Almost correct. Spanish New World flooded Europe with silver, and gold was less important. The era was pre-industrial (manufacturing had its original meaning, making things manually), and the main producer was Lower Countries that got uppity and United Provinces seceded from Spanish monarchy. Their goods had higher quality and lower production cost than Spain and Portugal. Their ports were already main European trading hubs, so they could get food and materials from everywhere. For 100 years, Netherlands were steamrolling like China today. Then England took over, Netherlands keeping the role of financial center for a while while England was industrializing.
Now UKUS is financializing, China industrializing, so in 100 years China will turn into a decrepit if glittering finance center and new industrial powers will rise all over Africa. Thus in 200 years, humanity will approach its end of history -- no more candidates to continue this cycle.
Posted by: Piotr Berman | Nov 2 2021 2:37 utc | 43
No magical thinking and tin-foil hat conspiricy theories are needed here.
This simply cause and effect in action (plus oligarch media obfuscation).
The (USA) 1% has sold the rope to hang the (USA) 99% with.
And to rub in the salt, they joyride above the natural laws in Jeffrey Epstein's ‘Lolita Express’ massage service, or now a man-boy group tug in a phalic jaunt to nowhere and back.
Posted by: imo | Nov 2 2021 2:43 utc | 44
The solution is obvious. Ask the Chinese to build a brand new silk railroad from mainland China to mainland USA via Russia, Alaska and Canada. Surely they cannot discriminate against anybody asking to be part of BRI. Bring BRI back!
Posted by: Robert Macaire | Nov 2 2021 2:46 utc | 45
@ Posted by: Piotr Berman | Nov 2 2021 2:37 utc | 51
Now UKUS is financializing, China industrializing, so in 100 years China will turn into a decrepit if glittering finance center and new industrial powers will rise all over Africa. Thus in 200 years, humanity will approach its end of history -- no more candidates to continue this cycle.
Only if it turns out China is capitalist. If it continues to be socialist, then that cycle won't repeat.
It's a global "Junk Mail System." In order to get actual/meaningful goods transported it is necessary to have a lot of crap sent along with those goods in order to help pay for the shipment. Kind of like US trucking requires a lot of POVs paying road taxes to help make transport affordable.
It's been moving in this direction for some time: always, the model was to dump products abroad (China is the today's leader of this, whereas in the past it has been other countries, most notably the US).
With population growth we have to increase our outputs. Need more meaningful goods? Well, that requires cranking up the factories that produce cheap crap for use as, if you will, stocking stuffers: this is NOT a slam on China; it's The System.
Our [I'm speaking US-centric here] veins -shipping ports, roadways- are becoming clogged. Keep in mind that the roadways require more and more POVs on them to help subsidize trucking: for an extra curveball figure that an increase in EVs means less road tax [historically paid at the fuel pumps].
The perpetual growth machine requires more and more "returns" in order to fulfill "contracts" ("investments" or "pensions"). The future continues to be increasingly burdened- it WILL end, either through collapse or from a "collective" change.
Resource depletion is also starting to weigh heavy.
Add it all up and there should be no surprise that the ruling elite are looking for the next "reset." I no more blame them for this situation (they were crafted to fit it) than one can blame a zebra for its stripes. If the ruling elite were honest about wanting to correcting things in a manner that is fair to all then they'd give up their accumulated wealth as a good faith gesture. AND, the common person ought to also go forth in good faith. Everyone will have to transform. How it will or ought to happen is something that can only happen with full and open dialog (no one carries any more weight than the next).
Posted by: Seer | Nov 2 2021 2:59 utc | 47
Great piece as always. Thanks Mr. Moon of A.
Posted by: Wayne van der Naald | Nov 2 2021 3:22 utc | 48
the article on medium, written by a truck driver, understandably focuses on wage structures and inequitable profit sharing. but the overall discussion rather misses the boat. the most efficient ports are fully automated, with robots connected to 5G, and multiple crane operators working remotely from off-site.
plenty of YouTube vids, this is just one of the shorter ones
https://youtu.be/BEr2Ze4Lxqw
the capital requirements to do this are of course high -- not to mention needing 5G which the US does not have for industry use. the US port operators, transport, and warehouse system have no incentives to reform and actually just charge higher rates during congestion.
notice that bidens plan for infrastructure has no discussion of this. buttplug the transportation head has nothing to say about it.
Posted by: mastameta | Nov 2 2021 3:39 utc | 49
Posted by: Robert Macaire | Nov 2 2021 2:46 utc | 53
Now that's lateral thinking, I like it, congratulations.
On another note, the supply chain problems and the consequent shipping delay problem cause demurrage which cause price increases which causes inflation. It's like a dog chasing its tail.
Further, I understand from reliable US sources that polling indicates 30% of republican voters believe violence is actually the only solution to US problems.
Posted by: Paul | Nov 2 2021 4:10 utc | 50
If the US prints money, distributes them to people, the people exchange this money with goods coming from overseas, doesn't that mean the US as a single entity has bought these goods for free because the money were printed out of nothing?
Posted by: Man | Nov 2 2021 4:18 utc | 51
Re globalisation and the supply chain:
I am cooking some 'kai moana' [seafood - Te Reo Maori], it is my favorite Prawn Laksa, with sambal oelek [Malaysian], it has sweet NZ John Dory fish, Australian king prawns, Peruvian scallops, Singapore fine noodles and it is cooked in an excellent American [Lodge, Tennessee] cast iron pot.
All this while drinking a great Russian Baltika strong [8%] beer. What could go wrong?
Nobody wins a trade war.
Posted by: Paul | Nov 2 2021 5:20 utc | 52
The danger is that the US will look to starting WW-3 as a way to get itself out of this mess, or the very least distract public attention away from the ruling elites.
Hence the rising tensions and constant seemingly senseless provocations against China and Russia, hoping at least one might take the bait and drop the gloves.
Posted by: Moses | Nov 2 2021 6:02 utc | 53
If you watch this 6 minute interview between Jon Stewart and Janet Yellen, you will come to understand why the USA appears to be entirely insane to its workers and people and to the rest of the world. Imagine Putin or Xi observing this insanity.
There is much more than a supply chain problem here!
The Yellens of this world need to do some time in Guantanamo Bay meditating on the cockroaches.
Posted by: uncle tungsten | Nov 2 2021 7:44 utc | 54
mastameta #57
the capital requirements to do this are of course high -- not to mention needing 5G which the US does not have for industry use. the US port operators, transport, and warehouse system have no incentives to reform and actually just charge higher rates during congestion.notice that bidens plan for infrastructure has no discussion of this. buttplug the transportation head has nothing to say about it.
Thank you, precisely that. The USA has been profiting and traveling on borrowed infrastructure,time and money. This will not end well or anytime soon IMO. The flaws of a capitalism based on all take and no give are writ large here and the idiot predators and their gullible political class have failed to invest in the future of the nation and its people.
Posted by: uncle tungsten | Nov 2 2021 7:52 utc | 55
@tungsten 62
I didn't listen to the whole thing, since it's maddening, but we can see that even tho Stewart presses the issue, the parameters of public discussion are such that it is unthinkable that the US could have taken over the troubled banks and administered them in ways that actually served the people. unthinkable.
Posted by: mastameta | Nov 2 2021 7:54 utc | 56
For those advocating the revival of local manufacturing.
This cannot happen unless and until we undo/alter the fiscal/legislative framework. Tariffs will not change this. Tariffs will merely increase costs to the consumer.
Offshoring happened for a reason. The reason is fiscal/legislative.
Posted by: guidoamm | Nov 2 2021 9:13 utc | 57
SMEs provide the bulk of employment.
SMEs have been devastated and decimated by an increasingly stifling fiscal/legislative framework thereby facilitating the rise of conglomerates.
As conglomerates expand, barriers to entry into business and industry rise thereby driving the monopolization of the economy and the offshoring of those tasks that once were carried out locally.
Posted by: guidoamm | Nov 2 2021 9:19 utc | 58
If the US prints money, distributes them to people, the people exchange this money with goods coming from overseas, doesn't that mean the US as a single entity has bought these goods for free because the money were printed out of nothing?
Posted by: Man | Nov 2 2021 4:18 utc | 59
Not unless they hang onto it. They can still spend it for other stuff as long as they don't wait for inflation to make it worthless. When you print money, it dilutes the value of the money. What inflation does is make money less valuable. When I was a kid an excellent hamburger cost 18 cents. You cannot get such a hamburger now, or such french fries (15 cents.) Cheeseburger 24 cents. You could watch him cook it, slice the tomato and onions, put it al together. He was a Korean vet.
China is building its belt and road with our exported dollars, that's likely to be pretty good value for the money.
Posted by: Bemildred | Nov 2 2021 9:48 utc | 59
The drums have been beating for months now about the big beast ‘inflation’ coming to terrorise the jungle. And therefore the need to ‘raise’ interest rates to battle it.
That has been the narrative manufacturing.
Even when it was shown that people aren’t spending but saving. They are repaying outstanding loans and not taking on new ones.
What and why?
Interest rates HAVE to increase otherwise the fairytales of money that we have been fed for centuries unravel as easily as the tales told to us as children are designed to - Santa Claus and tooth fairy - so we feel we are now grown up and the rest of these fairytales we accept are real ! God for most, Money for the rest.
Capitalism and Marxism (anti-capitalism) are mere constructs too. Created to replace God as Science marched on - uncontrollable by Priests or Princes and the Forever Slave owners who have always owned the real Wealth of the World and History - by laying claim to it, a ‘God Given’ right!
So we are told ‘Winter’ is coming!
Inflation and Interest rate rises are where we will hand over our bits of wealth to the Owners and if we haven’t got any they will arrange a loan for us with the interest that we can pay off over a generation.
The price of petrol didn’t have to go up months ago - when there were oil tankers parked for months due to all facilities being full. The price of beer didn’t have to go up when pubs and restaurants were not operating normally and brewers had to cut supply. They are now fully open.
Inflation has been constructed. The bankers are running their hands at the interest rate rises - for them at least Santa still exists.
Posted by: D.G. | Nov 2 2021 10:01 utc | 60
And while people can get mad in not buying able to buy a new TV set, or having to wait weeks and months for a new gadget, some may start dying in large numbers, for not getting access to essential stuff, like medication, and I don't know what will happen next.
Posted by: marcel | Nov 1 2021 20:03 utc | 5
Marcel!
There's an enormous reality check arriving worldwide thanks to globalization.
You have pointed out the most devastating one!
Interesting times as the curse goes ahead wherever we live.
Posted by: JPC | Nov 2 2021 10:01 utc | 61
how about we consider ending our unnecessary trade embargo against Iran / Venezuela? This would add 4M bpd a day to supply vs our measly 1.7M bpd.
Nope. Not a word of this will ever be uttered by any host on any show.
Posted by: Christian J. Chuba | Nov 2 2021 0:39 utc | 33
Pragmatism or "Real politik" doesn't seem to get a look in these days Christian!
Posted by: JPC | Nov 2 2021 10:14 utc | 62
vk @ 28
We have such example: the atmospheric air we breathe. No human being has to work to produce air, therefore zero labor is used for the atmospheric air to exist, and it is available to all human beings, who breathe it according to their necessity, without having to do socially necessary work to get it. It is therefore just the fruit of dumb luck, the mere chance of planet Earth existing the way it is and we existing in it. It has no value, it transcends humanity.
vk,, you have not incorporated into your long winded theories the criminal involvement of the nation state system in capitalism. First the law makers pass laws that make the methods used to produce things, private property owned by the criminal thugs dressed in white shirts and driving big cars.
The removal of the railroads in favor of Teamster trucking was done in preparation for this scarcity outcome and it was orchestrated in Washington, DC by elected thugs who passed laws, and directed the FED reserve to print money that indebted the American people to make this happen.
Further, it is matter of time, before some one of the thugs discovers how to remove oxygen from air, and to then bottle the removed oxygen and sell it back to you..to be mixed with the aoxygen air, hope you rich enough to buy some. chok chok..
When I was growing up, everyone had water, some was not too clean or whatever but basically water was plentiful, free for the taking. Today the only water worth drinking is in a bottle owned by one of the beverage providers and it cost big bucks.
When my father pulled into a gas station to fill his car's gas tank, the station owner pumped the gas and checked the air in the tires of the car. If the tire needed air, the station owner would pump it from the gas station owned pump free to all even if no gas was purchased. It was part of the cost of doing business.. about 1974 pay for air pumps appeared, the station owner said pump the gas yourself, pay by credit card, and pay for the air to fill you tires, with coins from your pocket, cause the bankers now own the air pumps.
Posted by: snake | Nov 2 2021 10:14 utc | 63
Its all about profit and we need to decide as a species what parts of a mixed economy we don't want provided for profit and manage them accordingly....because the LIE that private folks can do things better/cheaper than properly managed public versions is just that, a LIE."
Posted by: psychohistorian | Nov 1 2021 19:53 utc | 3
Profit is a measure of economic inefficiency.
Picture two equivalent economic activities, say, manufacturing of kitchen blenders, A and B.
A has to deliver profits to owners.
B doesn't, because it is not privately owned.
B, everything else being equal, will have more funds available for reinvestment in the economic activity itself, will have one incentive less to cut corners, and potentially better savings to ease economic shocks.
It is self-evident.
Posted by: Misotheist | Nov 2 2021 10:18 utc | 64
If i get @vk 's point:
Glut is increasing in USA supply chain because a greater supply (printing) of money chases a current productive capacity that also hit by covid and can only deliver a certain amount of good.
So the main broken link is the USA money supply that obeys political laws and not commerce laws?
Posted by: altbreeze | Nov 2 2021 10:25 utc | 65
Unfortunately the economic reality doesn’t agree with the well meaning B’s prescription. Taxing the rich won’t fix the general inflation. They are in a different market segment. It may lower the also high inflation in the luxury market. Also, helping the majority who suffer the general inflation by distributing money will only exacerbate the problem. Unplugging the supply chain by paying more to the truck drivers might help.
Posted by: RJB | Nov 2 2021 10:35 utc | 66
Yet again: Biden's poll numbers are a direct result of mainstream reporting which is to say not so much reporting as gratuitously negative coverage as warranted by their priority of supporting and promoting the GOP. Yes, bad numbers matter, sure, but also important is to remember the cause.
Posted by: Hart Liss | Nov 2 2021 10:50 utc | 67
Yet again: Biden's poll numbers are a direct result of mainstream reporting which is to say not so much reporting as gratuitously negative coverage as warranted by their priority of supporting and promoting the GOP. Yes, bad numbers matter, sure, but also important is to remember the cause.
Posted by: Hart Liss | Nov 2 2021 10:50 utc | 65
Yes, and if on the other hand, Biden and the Democrats were to deliver on the promises made to get him elected, then they would win in 2022 and again in 2024 in a landslide, but that is not what they want. Obama had it all and did nothing, everybody saw that.
Posted by: Bemildred | Nov 2 2021 11:30 utc | 68
Here are the ports ranked by the Container Port Performance Index 2021
The maths which is very relevant here is queuing theory which can have surprising repercussions.
Let's have an example which has very little slack in the system and is therefore "efficient" on staff wages.
Suppose a small bank has only one teller. Customers take an average of 10 minutes to serve and they arrive at the rate of 5.8 per hour. What will the expected waiting time be?
Intuitively most people will see that in one hour we can serve 6 customers on average, 5.8 is less than 6 so we need just one teller to serve this volume of people. On average the average wait time is actually 5 hours with 28 people queuing! This is because some people will take much longer than 10 minutes causing the queue to grow beyond our ability to service it.
Adding a 2nd teller will reduce wait times to only 3 minutes. Interestingly if we double the rate of new customers to 11.6 per hour. Now wait times are 2.3 hours. The 2nd teller means that if one teller has a problem customer which is taking a long time to resolve, the 2nd one can be hopefully servicing the customers who will take a more reasonable time.
This was an extreme example with very little slack, but shows how slight disruptions can quickly change how smoothly things run. Something we probably all see during rush hour when some traffic lights or other impediment causes huge delays.
Posted by: Mighty Druken | Nov 2 2021 13:13 utc | 70
Many times I think I am the only one who even got as far as reading Das Kapital.
English acquired Spanish gold and silver by piracy. State sponsored piracy. England had nothing to sell to Spain. Possibly they might have sold ships or shipyard service, no such thing happened so it is moot.
Primitive accumulation anyone?
Posted by: Oldhippie | Nov 2 2021 13:17 utc | 71
@ Posted by: RJB | Nov 2 2021 10:35 utc | 64
Taxation of the rich would help alleviate the situation because they would have to pay the fiscus in cash (and not in some worthless financial asset), therefore the State would be able to use this cash to spend somewhere else (including, yes, infrastructure). But that would not save capitalism, you cannot create a perpetual motion machine out of taxation (as the MMTers state). The problem here is profitability: capitalism must always accumulate to be viable as a system.
--//--
@ Posted by: altbreeze | Nov 2 2021 10:25 utc | 63
No, that's the bourgeois economy position - more specifically, the MMT/Keynesian position. They're the ones blaming COVID-19 for their money printing not working. Money in itself never induces production; it is production that induces money generation.
Marxist theory states the opposite of that, i.e. that there's a material limit to money printing. You can only cheat the system up to a certain point.
--//--
@ Posted by: Misotheist | Nov 2 2021 10:18 utc | 62
Profit is surplus value measured against total capital invested.
You can claim surplus value is a disequilibrium in relation to the previous stage of development, but it is because of this that capitalism was able to develop the productive forces so much, so fast.
Marx's point is not that profit is good or bad, but that this system has a limit within itself, i.e. an entropy, which is socially - not naturally - determined.
--//--
@ Posted by: D.G. | Nov 2 2021 10:01 utc | 60
All science is a human construct. The truth in itself is independent of human conscience.
So it is now a safe bet that the Democrats will suffer a wipeout in the midterms ...
The Supply Chain is only one of many failures of the inept Biden Administration. In addition, over-reach of the Left has energized the Right.
The extent of the ineptitude and over-reach will create a perfect in the next few years that helps to move USA to the right.
Close observers of US politics may see this 'perfect storm' as orchestrated. The Democratic Party routinely fails in delivering progressive measures and the Deep State would prefer a more conservative leaning USA as they conduct their new Cold War.
Consider: Biden's pretended severe mental problems; 'border czar' VP Harris has never been to the border; Biden's silence as Democrats proposed $3.5 trillion spending package is reduced by more than half; the shambolic withdraw from Afghanistan; a 'woke' and 'trans' craze that is offensive to most Americans; 'missile gap' scaremongering; etc.
<> <> <> <> <>
Sadly, when confronted with developments suggesting the hidden hand of 'managed democracy' (like the planned demolition of the Left), establishment political thugs (aka partisan pundits) rush to 'prove' it ain't so and most others just shrug.
!!
Posted by: Jackrabbit | Nov 2 2021 13:53 utc | 73
@ Posted by: snake | Nov 2 2021 10:14 utc | 61
Pressurized air into your tire is a completely different thing than air you breathe, from the social point of view. That's one aspect of humanities people from STEM or Biology have great difficulty in understanding: when we talk about the social world, we're talking about objective and subjective categories. Pressurized air is different from air you breathe because they fill different roles in society, therefore they are subjectively different.
Being subjective, the nature of the commodity changes with the development of the productive forces. The air we breathe freely today may become a commodity tomorrow, if a technology capable of turning the air private property is developed.
Private property is communal property expropriated by force. Communal property comes first; private property is a subtraction of communal property. That's its historical origin.
--//--
@ Posted by: D.G. | Nov 2 2021 10:01 utc | 60
Inflation, most of the cases, is just a symptom of the problem, not the problem itself.
However, there is a Marxist theory of (structural, not punctual) inflation. It was elegantly demonstrated by Michael Roberts and Guglielmo Charchedi. It goes more or less as follows:
1) as Marx demonstrated, the Law of Value determines capitalism will always tend to rise its organic composition of capital (OCC);
2) as OCC rises, profit rate falls and wages rise relatively in terms of purchase power;
3) to counter the effects of #2, the capitalist class, acting through its clerical class (central bankers, politicians, armed forces), prints money in order to depress wages, thus stopping for a while or at least slowing down the trending of the fall of the profit rate.
That means inflation is a tool used to counteract the Law of Value.
The Marxist theory of inflation also elegantly explains why capitalism, historically, abandoned the gold standard and adopted the fiat currency standard: it is harder to control the supply of money with the gold standard (you would have to slowly debase the coins, and, in case you want to value them up again, you would have to slowly melt them and mint new ones in a larger purity). With the fiat currency system, the capitalist class has almost instant, almost absolute, control over money supply.
The elephant in the room - not so far mentioned (but detailed in a link provided a couple of weeks ago by C1ue) - is the restrictive exhaust emissions requirements of the State of California, which exclude two thirds of trucks from operating. In one fell swoop when that law was enforced the majority of trucks in the US authorised to enter the State of California to pick up containers was eliminated. It had nothing to do with Covid-19, was fully predicted years before Covid-19, and several corporations including Amazon, Walmart, UPS, FedEx, Samsung, The Home Depot and Target took action years ago to uproot and re-route their entire supply-chains to avoid California before Covid-19 even arrived.
There will be no solution that does not address the extreme shortage of available trucks authorised to operate in California.
Also not mentioned so far (I think) is the global shortage of empty containers, because too many empty containers are trapped in the ports in California (another link provided by C1ue in September) which have caused slow-downs in shipments in Europe and especially Asia because of the lack of current containers, exacerbated by a slow-down in production of new containers.
Another highly relevant link provided by C1ue a week ago (he's been active!) is here The Last Days of The Romanovs at the Port of Los Angeles (and Where Is Everybody?). That article fills in a lot of crucial details as to how (nearly) everything fits together [or doesn't fit together, in this case], and where the knock-on problems are.
If I was trying to solve this crisis at a federal level the first thing I would do is to impose massive punitive financial penalties to force those most responsible for the existence of the crisis - and for its exacerbation - to jump into action to find and quickly implement solutions:
(1) Impose hefty daily financial penalties on the State of California for every container that delayed in its delivery outside California, every empty container from outside California delayed on return up to the day they are loaded on board ship, and every ship that is delayed in unloading and loading. The root cause of the problem lies with California, they need to be forced to take responsibility for resolving it. Having introduced such stringent emissions standards, they had the responsibility to ensure that there were no serious consequences such as shortages of qualified trucks, and responsibility to upgrade transport infrastructure to ensure smooth operation.
(2) Completely annul all port storage fees, and fines to trucking companies for late pick-up or delivery of containers, retrospectively to October 2020 and in effect until the backlog is 90% eliminated, at the two California ports which have so far taken little or no meaningful action to resolve the problem and which are meanwhile profiteering on storage fees and fines. For affected inland hubs and rail hubs etc where congestion is building up as a knock-on effect from the two ports impose - or threaten the possible imposition of - moderate and proportional restrictions on storage fees sufficient to ensure that there is no profit incentive to allow delays to build up and no profiteering from it.
(3) Ensure that the income from these financial penalties goes towards subsidising the increase in nationwide availability of container-capable trucks compatible with California emission standards.
Those most responsible need to be incentivised to act quickly.
In addition I would urgently look for suitable unused land near the ports for temporary storage of containers so that the clogged working areas of the ports can be cleared and brought back into operation. If the land is federal/military make it available; if it is state owned/corporate/private twist arms.
Why have effective actions not already been taken to resolve the crisis, and why have actions thus far been such a pitiful farce? In the context of Covid-19, its farcical mis-handling from the start, ominous connections to events in years prior to the emergence of Covid-19 (including patents on every allegedly "novel" aspect of the virus), extreme profiteering by Big Pharma, connections with the "Great Reset", legal changes imposing greater authoritarianism, "vaccine passports", lack of recognition of immunity from prior infection, inequality of recognition of vaccines, and so many other remarkable factors ... one really has to ask whether this shipping crisis might not have been planned, calculated and deliberately effected by Davos/Gates/Soros etc?
Posted by: BM | Nov 2 2021 14:16 utc | 75
JR - "So it is now a safe bet that the Democrats will suffer a wipeout in the midterms ... The Supply Chain is only one of many failures of the inept Biden Administration."
This is why the U.S. is going to lose every Cold War we are fighting. We weaponize every problem we have against ourselves. This is our karmic payback for doing this to other countries. We have turned ourselves into the hammer that only knows how to hit nails.
Don't mean to pick on you JR. This thinking has saturated the air we breath. From now on, every defeat we have will be used to bludgeon our opponent and make us less willing to be objective.
Posted by: Christian J. Chuba | Nov 2 2021 14:32 utc | 76
or to quote one of my favorite movies of all time ...
'The German army has been molded by defeat after defeat followed by impending defeat', delivered by James Mason, does anyone care enough to name the movie?
Anyway, this is the state of the empire.
Posted by: Christian J. Chuba | Nov 2 2021 14:36 utc | 77
I find it remarkable some posters would believe if manufacturing is somehow brought back on shore then all ills of the world would be solved...
Its also remarkable to suggest if manufacturing is brought back on shore then "China junk" will simply disappear from the shelves. This is a rash externalization of core problems.
There are more people, more factories, more engineers and simply a more synergistic environment for production in China. One day in the distant future this may go to India or Africa but its not changing anytime soon.
Unless you want to pay $10 for a roll of toilet paper, the west can only remain competitive on high tech or luxury goods where brand equity is of import. The former is being addressed by education and technology sanctions and the latter is marketing. In the long term, neither will not work.
China is fully capable of producing quality and long lasting products. The junk image is simply a manifestation of western corporate buyers' decisions on what to stock. Face it, low price sells, so don't externalize the problem. The west in all their grandeur are just cheapskates when they roll up to the checkout. If indeed quality is what's actually demanded then quality products will come.
The west was lamenting about the quality of Japanese goods in the 50s and 60s, then it was the Koreans.... This old record is getting boring.
The supply chain clusterfk right now has been brewing for a long time. Put simply the economies are valuing logistic labor as unskilled. Costs are being squeezed and bulk freight automation isn't being developed. Ports and bulk freight are controlled by a relatively very few players and the status quo suits them just fine.
In regards to land freight, there is a big disconnect between the drivers' perception of skill (that they should be paid for) and the customers view of it being unskilled (and therefore dirt cheap). There is no solution but pay up or automate. The last mile is already automating with drones, it'll only get more prevalent.
Covid is just the scratch that busted open this festering puss pool.
Posted by: A.L. | Nov 2 2021 14:45 utc | 78
@ Posted by: BM | Nov 2 2021 14:16 utc | 73
Your post is contradictory because first you state there's a logistics problem in California, only to propose a monetary solution (fines, fees).
Supply does not equal demand. High inflation doesn't mean there is a sea of goods just waiting to reach the American household - if it wasn't for those pesky Californians. This is the bourgeois economy's siren song.
The truck driver does not have the whole picture. If you interview one, he of course will say the problem is with the port. The truck driver sees the pile of containers will see a pile of commodities - but that's just his point of view.
The American people does not have the divine right to cheap goods. The USD is a fiat currency, it does not and cannot have a fixed, quintessential purchase power, that's an optical illusion from the post-war era.
Posted by: Mighty Druken | Nov 2 2021 13:13 utc | 68
Suppose a small bank has only one teller. Customers take an average of 10 minutes to serve and they arrive at the rate of 5.8 per hour. What will the expected waiting time be?
Intuitively most people will see that in one hour we can serve 6 customers on average, 5.8 is less than 6 so we need just one teller to serve this volume of people. On average the average wait time is actually 5 hours with 28 people queuing! This is because some people will take much longer than 10 minutes causing the queue to grow beyond our ability to service it.
_____________________________________________
The teller can service 48 customers in a day and you are saying only 46 show up. For the teller to get behind by 28 customers more than half of the days total of 46 customers would have to show up all at same time.
If 3 to 9 customers show up in any given hour then the most the teller will fall behind in that hour is 3 customers and if the combined stats of that hour and the next works out to close to average the wait line will return to zero by the end of the second hour.
Its only when the actual customer arrivals and transaction times deviate enormously from the average that the teller could get behind by 28 customers.
Posted by: jinn | Nov 2 2021 15:19 utc | 80
One reason of the US port congestion is the critical shortage of container chassis.
I hear rumors that US used to buy low cost high quality chassis from China, but the Chinese company went on the US sanction list and other suppliers are too expensive. If that is true, the US has effectively managed to sanction itself :-D
Posted by: Norwegian | Nov 2 2021 15:23 utc | 81
Covid is just the scratch that busted open this festering puss pool.
Posted by: A.L. | Nov 2 2021 14:45 utc | 76
Agree. I figured we were screwed around April 2020 when it was clear "it" had escaped into the global population. This because a.) we would try to "weaponize" it, and b.) our health care system would botch it, and our economy would not be "resilient". Resilience, as several people have mentioned, requires redundancy, you need spares of everything.
The only reason we made it this far is China also took some responsibility for the role it plays globally and kept its economy cranking, something we cannot do, because we are so "efficient".
Posted by: Bemildred | Nov 2 2021 15:35 utc | 82
Marx's theory of value has no applicability here...
To make it quite simple...
The US did not allocate $$ to dredge it's ports to accomodate the newest classes of Container/Bulk cargo ships which have much greater draft than previously.
These larger ships became practical when the Panama Canal built new and larger locks.
Long Beach/Los Angeles are the preferred ports because routes east go south of the rockies over much flatter terrain. Other ports... SFran Seattle.... Portland... Houston.... New Orleans... Jacksonville... Norfolk... NYC... Boston could be used but getting there from Asia takes more fuel.. more time... more costs...
Moving freight from ships to consumer goes through lots of hands... most of whom are poorly paid.
Denninger believes there are 1.2 million excess deaths among the working age population in the US alone. Hence the labor shortage... exacerbated by vaccination mandates... which the population is simply refusing to follow...
China invested $$$$ in transport infrastructure including fully automated ports....
The USA invested $$$ in Afghanistan.... Iraq... Libya.... Syria... little at home....
Now the bill is coming due... There is no quick fix... Fed funds will be needed big time... but who will convince 535 corrupt legislators that spending the $$$$ is in everyone's interest...
Also....
Exactly how will the USN fight and win a sea war against Asia??? With what???
Exactly how will the US Army get to the battlefield to fight in Asia??? With what???
Exactly how long will the USAF current inventory survive combat?? With what???
Time to get real...
INDY
Posted by: George W Oprisko | Nov 2 2021 15:57 utc | 83
Oldhippie @69--
And before the Royalist-sponsored piracy there was Enclosure, which continued until it was exhausted, and the internal slavery it promoted--expropriation and exploitation simultaneously that along with the piracy provided the nascent capital for British industrialization. Yes, it was very brutal and one could say genocidal. If the result from 1588 had gone the other way, our present would be different, but how much so is unknown.
@ Posted by: George W Oprisko | Nov 2 2021 15:57 utc | 81
It does apply because it explains why this is happening with the USA and not, say, Gabon. Why, of all the countries in the world, only the USA is suffering from a goods glut in its ports?
Only Marx's Theory of Value can explain these kind of geographic inequalities between nation-states.
George W Oprisko @81--
You hit on several excellent points, George! One particularly important consumer item can be singled out to see what industry didn't do--the family automobile. Compare basic 1970 models with those of 1950, and you'll see very little in the way of engineering advancement aside from the introduction of the sub-compact and mandatory inclusion of seat belts and primitive emission controls--the engines, chassises, aerodynamics, and overall design characteristics remained mostly static, pick-up trucks being an excellent example. While on the infrastructure front, the interstate highway system was begun as the vast network of interurban trams, trollies and trains were dismantled to facilitate the enforcement of the suburban sprawl development template across the USA. One can see when reviewing that history where the FIRE sector got its huge boost from both federal and state governments. Those having The End of Suburbia: Oil Depletion and the Collapse of The American Dream DVD collecting dust on their shelf will want to pull that 2004 film out and revisit it for clues to our current dilemma and ideas about how to mitigate it somewhat.
What happened to Detroit is it allowed foreign automakers to set the trend and didn't really care/appreciate what was about to happen to it--the politically contrived energy/gas crisis found them very unwilling to adapt and compete with what were primarily Japanese entrants to the market. I recall one of my close highschool buds getting a new 1971 Ford Pinto, which was an excellent small car; but it and the Chevy Vega were outliers at the time and were outcompeted by the Honda Civic two-door Hatchback and VW's Rabbit of a similar design as they were less expensive to buy and operate.
The auto industry is only one of too many sad examples of what the Outlaw US Empire did to itself. At some point during the 1960s, the Empire lost the ability to properly plan for the future wellbeing of its people, or perhaps lost is the wrong term. How about planning for the long term wellbeing of the nation was no longer considered a requirement--just leave it all to the bankers and FIRE sector for them to figure out.
Buttigieg is proving to be as clueless and useless as he appeared in his campaign for the Democratic Party presidential nomination. The man is an empty vessel. And speaking of empty vessels, there is Anthony Blinken, the US Secretary of State. I didn't think that there could be a SoS dumber than Mike Pompeo, but Blinken proved me wrong in record time.
Posted by: Rob | Nov 2 2021 16:43 utc | 87
Buttigieg is proving to be as clueless and useless as he appeared in his campaign for the Democratic Party presidential nomination. The man is an empty vessel. And speaking of empty vessels, there is Anthony Blinken, the US Secretary of State. I didn't think that there could be a SoS dumber than Mike Pompeo, but Blinken proved me wrong in record time.
Posted by: Rob | Nov 2 2021 16:43 utc | 88
The Covid recession is not a US only phenomenon. At occures worldwide. Currently it takes the form of various local crises (US supply crisis, ES gas crisis, China coal crisis). The most serious crisis will not take place in the first world, though, but it will be the coming food crisis in the developing countries. This might lead to serious political instability and send some countries into a downward spiral.
Anyway, the coal crisis in China shows clearls that tha main cause of this is the Covid recession. Anything else are just contributing factors. "Neoliberalism", "speculation" etc. etc. as the allged cause of the crises is just an artifact of the MoA echo chamber that has nothing to do with the economic reality.
It is, however, entirely correct that a loose monetary policy won`t solve any economic problems but only worsen them. The current Covid recession isn`t caused by an imbalance of parts of the financial sector like in 2008. The Covid recession is caused by the quarantine and lockdown measures that have brought economic activity physically to a halt. No amount of printing of money can remedy this situation, only revoking the quarantine and lockdown measures can achieve this. Even than one can forget about a v-chaped recovery by now. Much of the economic damage of Covid will be permanent and only regular (slow) economic growth will eventually overcome this.
So will will have "stagnation" for a while anyway, worldwide, like it or not. With the "Build Back Better Plan" at least the USA will have inflation, too. Stagflation.
This is a problem for the whole world since the US dollar is currently the "world currency", the medium of international exchange. Domestically induced high inflation rates for the US dollar threaten to slow down the recovery of international trade and to aggravate the economic problems in many parts of the world.
It will also create preassure for "competitive devaluation" for other countries.
Posted by: m | Nov 2 2021 17:01 utc | 89
@Jackrabbit #71
You say it is conspiracy, I say it is chickens coming home to roost.
There is no one physical factor behind the supply chain chaos. Stroller is right that overly lean, oligopoly dominated trucking and shipping didn’t have enough slack, but this would not have been as much of an issue without the massive stop/start chaos induced by the lockdowns (not COVID directly).
The trucker isn’t wrong either - but look at it from additional data: who are the people least likely to have new, CARB emissions compliant trucks? I’d bet money it is the low end truckers that likely do the bulk of port work - BT said Union trucker’s own admission. And of course the stop/start nature (several times) impacted retail and wholesale consumers, hence their suppliers, hence manufacturers etc immensely.
So what is happening IS a perfect storm, but one arising from decisions made by government people at all levels - Democrat more often than not in the COVID lockdown sense.
Conspiracy theory today is generally like “ether” references in the past: in the absence of data, superstition and mysticism.
Posted by: c1ue | Nov 2 2021 17:04 utc | 90
Butt-gig is CIA, and conspicuously so. He was supposed to be PotUS 46, at least before the American voters screwed up the CIA's plans. Butt-gig was supposed to be the pinnacle of the "Identity Revolution", but those plans are all in disarray now.
PotUS 44 = female identity representation
PotUS 45 = Black identity representation
PotUS 46 = gay identity representation
Stupid voters screwed those plans all to pieces.
Posted by: William Gruff | Nov 2 2021 17:09 utc | 91
My biggest gripe with all of this is calling it a "shortage." I noticed b used supply chain crisis, but the Denny's sign, as well as elsewhere, refer to it as a shortage when it is simple a bottleneck. A shortage implies a lack due to unforeseen or unavoidable conditions, whereas this bottleneck is due either to incompetence or to malfeasance, or both.
In a similar vein, for I cannot understand why some people love to blame current conditions on "the" pandemic. A disease may be a natural occurrence, but a "pandemic" response and the ensuing BS is pure legislative policy. Again, nothing but incompetence.
Posted by: Justin | Nov 2 2021 17:10 utc | 92
"Uncharted Waters: US Gripped by Labour Strikes, Resignations Amid Pandemic" provides a supplement to b's article. I've read numerous articles now detailing the fundamental econoimic problems within the Outlaw US Empire as being structural and systemic, which are close to being the same thing. The falsification of economic stats that attempt to cover-up the severity of the problem themselves contribute to it as this exemplifies:
"An estimated 20 million US workers resigned from April to August, according to the latest federal data, a phenomenon that has been dubbed 'The Great Resignation'.
"The rate of resignation was highest among workers in the technology and healthcare sectors and other fields experiencing pandemic-induced spikes in demand for their products and services, a Harvard business school analysis revealed."
Unemployment stats meanwhile showed the government reported jobless rate fell from 15 to 5% over that time period during all those resignations, while the real unemployment rate is closer to 25%. The next set of labor stats are due out this week. ShadowStats today reports "Third-Quarter ShadowsStats Corrected GDP Contracted by 0.05%" while the government and financial press are touting growth. Much will depend on how the courts rule on the many vaccine mandate lawsuits. IMO, retail will take a big hit over what's usually its most important sales time of the year.
To add to the above:
I have my own trucker story. The man who has been helping my mother for many years - started a a boy moving her lawn - is a trucker and has been since before COVID. But what he does is more like “higher end” trucking (high end is like utility company gear or government/defense moving). He is doing great because his company does contract moves for well off to rich people - these customers rent an entire truck to move their households or even just an expensive car cross state.
The ongoing supply chain chaos has pushed many new types of corporate customers into the customer list for that company. Should we be surprised that truckers are leaving the low end, crappy, oligopolies and commodified part of trucking for jobs like his
I would not be surprised if this isn’t happening across the board. It is neither sustainable nor healthy, but represents a very damaging positive feedback in inflation.
The interruptions in work caused by COVID were clearly also a factor. I have run a biz which was reliant on low hourly wage labor: the explicit bargain there was that the low wages must be offset by reliable and long working hours. COVID induced biz failures and shutdowns absolutely broke this contract for all in retail and restaurant industries; labor demand in manufacturing is drawing off a lot more.
Posted by: c1ue | Nov 2 2021 17:25 utc | 94
m @87 tries to tell us the Outlaw US Empire's economy wasn't already in recession when Covid-19 appeared, a fact many of us commented on at the time. Genuine GDP Y/Y has shrunk since the S&L criminal fiasco in 1986-7, which is matched by the decline in real earnings over that period, while monetary inflation bubbles boosting real estate and Wall Street are touted as genuine overall GDP growth when in reality they are negatives to be subtracted from genuine GDP--artificial inflation of Million/Billionaire's portfolios isn't economic growth, but that's what it's sold as. That's why so many people express that they don't want to return to the pre-Covid economy as the article I linked @91 and many others show.
@ Posted by: Justin | Nov 2 2021 17:10 utc | 90
If we adopt Marxist theory, there is a shortage (a worldwide one). In response to this shortage, the USA is printing money to divert the goods around the world to its own territory, against the rest of the world's will. Since this diversion of value is without any economic justification (just the serendipity of the USD Standard existing), those goods are getting clogged in the USA's outdated ports and other transportation infrastructure.
So, there is a shortage, which is being intensified by the USA's forceful redirection of value (goods) to its own territory. The generation of misery in the rest of the world is being met with and excess of goods in the USA. It's a vicious cycle, where the rising shortage of goods increases the USA's gluttony for such goods (centralization of wealth).
Yes, there is some seasonal factor in the production side ("supply side") because of the pandemic (Vietnam is already to reopen all of its factory to this day) and because of Global Warming (heavy rains blocking China's coal mines; harsher than usual winter to spike Eurasian demand for Russian gas). But all of these factors make the excess of goods stuck in the American ports even more paradoxical (if there are less factories working, then why are there more, and not less, goods on the American shores?). Again, bourgeois economy theories cannot explain this.
Just a quick observation to those who still have not realized this: the USA cannot rise interest rates because, if they did, its corporations would go bankrupt.
The reason for this is that the American Big Business is neck-deep in debt. All of this debt is to the Fed, and all of it is denominated in USD. The private sector of the USA is as indebted as the public sector.
The USA cannot - and will not - rise its base interest rate (those symbolic, half-arsed 0.25% raises do not count).
karlof1 @ 84: "...At some point during the 1960s, the Empire lost the ability to properly plan for the future wellbeing of its people..." I would say that it happened definitively with the assassination of Robert Kennedy, who would have become president. I remember his campaign being based upon that specifically - and I do not remember Johnson having made any attempts at social concerns once he was well into the Vietnam struggle. It was either one or the other and the citizenry became... not consumers but consumed.
As we consider how Biden was forcibly selected, we ought to remember how Nixon too was way down the line as a rational choice, needing actual assassinations and the shortcomings of other Democratic candidates to be seen as a legitimate choice. Something else was taking over at that point, as you say. And we became the supply chain for it.
Posted by: juliania | Nov 2 2021 17:58 utc | 98
"m @87 tries to tell us the Outlaw US Empire's economy wasn't already in recession when Covid-19 appeared, (...)"
I have never said anything like that.
Posted by: m | Nov 2 2021 18:27 utc | 99
@vk #95
Incorrect.
The Federal government is fully capable of subsidizing those corporations outright if it so chooses to.
Posted by: c1ue | Nov 2 2021 18:28 utc | 100
The comments to this entry are closed.
There would be no way to overstate how extremely hostile the ruling class is and will be to ever paying for work. They will watch the entire house of cards collapse before even thinking about paying truck drivers. Paying millions of truck drivers ten thousand dollars a year more adds up to chump change. The rulers will take a trillion dollar hit to the economy before giving a scrap to the untermenschen. Or a ten trillion hit. They can always create more money. They have all the money, why bother with petty accounting. Sharing the wealth, no, never.
Posted by: Oldhippie | Nov 1 2021 19:40 utc | 1