Thanks to California regulations and vaccine mandates, supply chain problems continue to plague America. Here’s an update on those disruptions and other topics related to the wondrous Biden Economy.
Not only is inflation bad, it’s about to get much worse. Unprocessed goods are up 56% from a year ago. “At the current rate of increase, regular unleaded gasoline will hit $6/gal (National Average) by Easter.”
China’s trade balance may have just hit a record on the back of resurgent exports and slowing inflation, but the favorable impact to China’s mercantlist economy was more than wiped out by the just released record PPI and resurgent CPI.
China’s National Bureau of Statistics reported that in October, CPI rose 1.5% Y/Y, higher than the 1.4% expected, and a 0.7% sequential increase from the September print; the CPI increase was evenly split between base effect and sequential growth.
At the same time factory gate, or PPI, inflation hit a fresh all time high of 13.5%, steamrolling the 12.4% consensus estimate, and rising at the fastest pace since records began in November 1995.
While the gradual increase in CPI is alarming, and the NBS said that it was affected by weather, commodities demand and costs – it was the producer price inflation that was far more alarming, soaring as a result of a tight supply of energy and resources. In reality, however, there was just one key variable – thermal coal, which as we said last month indicates that PPI will continue rising far higher, although judging by the recent sharp reversal in the price of Chinese thermal coal (if only for the time being), this may be as high as PPI gets.
Or so Beijing should hope because with the spread between PPI and CPI hitting a new all time record, virtually no Chinese companies that use commodity inputs – which in China is a vast majority – are making any profits.
DHL releases service announcements every week so shippers in their network know what to expect at ports all around the world. The most recent announcement came out today, and it shows that the situation at America’s top West Coast port complex is not improving. Here’s DHL’s summary of the port conditions at Los Angeles/Long Beach:
Ships are waiting 13-22 days to catch a berth. Currently there are 72 vessels waiting for a berthing spot. Both ports are seeing record volumes month after month and the ships at anchor are delayed an average of 4 days. Delays forcing the ships to wait at anchor are expected to continue for the remainder of the year. All terminals remain extremely congested and evaluating a reduction on their window for export cargo acceptance from four to three days. The expected spike on imports generated by the peak season and cargo pre-shipped is already here making the operation more complex. Local trucking delays have been reduced and are being closely monitored. The LAX/LGB rail operations from all terminals and the off dock ramps continues to deteriorate as demand exceeds capacity, therefore inland moves by rail can suffer considerable delays.
That’s not an encouraging description, and there has not been movement in the right direction. The waiting time and number of ships waiting have been steady for over a month now, according to DHL. If anything, they are getting slightly worse. Here’s how those estimates have changed over time:
“Port congestion has been a problem for months now, and we’ve yet to see signs of improvement.”
So, not only will you have to wait literal months for products you’ve ordered to finally make it to their destination, now it looks like you’ll be lucky if any of these things make it to your house because homeless people are stealing from unprotected parked trains.
Truckers should be making money hand-over-fist to solve the supply chain crisis. Port constraints mean They’re not:
We have covered the ocean-carrier side of this crisis (‘In Deep Ship’), and the new fee equivalent to $1m a day, and rising $1m each following day, for a 10,000 TEU vessel whose cargo is stuck in LA/LB port. However, we stressed in that report that the supply chain issue is more systematic. So, allow me to share quotes from an article exposing there is ‘No Trucking Way’ we are about to return to normal:
“Think of going to the port as going to WalMart on Black Friday, but imagine only ONE cashier for thousands of customers…Most port drivers are ‘independent contractors’, leased onto a carrier who is paying them by the load. Whether their load takes two hours, fourteen hours, or three days to complete, they get paid the same, and they have to pay 90% of their truck operating expenses…I honestly don’t understand how many of them can even afford to show up for work…In some cases they work 70 hour weeks and still end up owing money to their carrier.
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…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 ‘experts’ want to say we can do things like open the ports 24/7, and this problem will be over in a couple weeks. They are blowing smoke, and they know it.”
The author also points out a crippling shortage of truck chassis; warehouse workers, again due to low-pay and Covid, so unloading takes longer; and warns soon there will be less, not more truck drivers. Crucially, he bewails that ocean carriers, ports, trucking companies, warehouses, and retailers are all making great money – so won’t invest before the system collapses further. If so, this book-ends the 1980 deregulation of the US trucking industry under President Carter.
Meanwhile, Senator Manchin just said ‘No Trucking Way’ to the White House’s fiscal plans, again, which already fail to address the above logistical problems. Perhaps it’s time for US economists to study what weak, share-cropper logistics and on-off fiscal and central-bank liquidity largesse do for emerging markets’ macroeconomic and financial stability?
Indeed, Bloomberg reports: “Chinese households are encouraged to stock up on a certain amount of daily necessities, such as vegetables and meat, in preparation for the winter months, according to a notice from Ministry of Commerce aimed at ensuring supply and stabilizing prices of such items for the next few months. Major agricultural distributors are encouraged to sign long-term contracts with producers. Reserves of meat and vegetables will be released on a timely basis to replenish market supply.”
The biggest number of clearinghouse violations by far — 56 percent — are for marijuana use, according to federal data. (Amphetamine and methamphetamine violations account for 18 percent, while cocaine and various opioids account for 15 percent and 4 percent, respectively.) Some argue that because marijuana can stay in the body for up to 30 days, testing does not accurately reflect whether a person is driving while under the influence.
As Mario Loyola laid out, “The World Economic Forum rates America’s shipping-industry regulations as the most restrictive in the world, chiefly because of the Jones Act. Stifling regulations have left America with the most inefficient ports in the world. A recent review of container-port efficiency ranked the ports of Los Angeles and Long Beach below ports in Tanzania and Kenya, near the bottom of the list of 351 top ports. America’s ports are effectively third-world. The 50 most efficient ports in the world are mostly in Asia and the Middle East; none are in America.”
Loyola continues, “Above all, it is the shortage of truck drivers that’s causing the current crisis. And why do we have that shortage? One reason, according to truck drivers, is that the restrictions on their access to ports are too onerous. The Jones Act has made that problem worse, too. The Jones Act ‘has made coast-wise shipping prohibitively costly and therefore put additional pressure on alternative inland transit such as trucks and trains,’ Lincicome writes. “In practice, this means badly needed rigs that could be servicing U.S. ports currently are instead stuck on I-95 ferrying oranges from Florida to New York.”
Earlier this year, Heavy Duty Trucking reported that the Biden administration had imposed a tariff on truck chassis (the framework that provides the truck base that includes the wheels and axles) made in China; “chassis or sub-assemblies imported from China for the next five years will be subject to tariffs/duties that would add up to more than twice the value of the actual chassis itself.”
Weston LaBar, executive director of the Harbor Trucking Association in California, told Heavy Duty Trucking that that, “The [U.S. International Trade Commission] really botched their decision, at a time when our industry is needing to inject more equipment, both for capacity and for folks trying to retire older equipment. Now people have to stretch out the useful life of existing equipment, which isn’t an ideal thing from a safety standpoint. And now we’ve created scarcity and increased the cost.”
California imposed regulations requiring trucks built before a certain date to replace their engines or not operate in the state.
Our Dominic Pino observes that the Biden administration wants to make two-man crews for freight-train engines standard, forever — no matter what technological advances occur. The unions for the train crews argue that trains are like planes and require two engineers — unlike a freight truck, which can be safely driven by one person. “As the Association of American Railroads says, plenty of other trains operate just fine with only one person at the controls. In the European Union, Australia, and New Zealand, one-person crews are the norm, and even in the U.S., passenger trains are commonly driven by one person.”
A view from the trenches by (of all people) Dukakis campaign manager Susan Estrich:
I’m exactly the sort of person who should be up-to-the-minute on what the senators from Arizona and West Virginia are doing and whether the progressives will go along and whatever else it is that has caused Congress to accomplish absolutely nothing under supposed Democratic control. But I’m not.
I’m up-to-the-minute on the price of eggs. And the cost of cans for cranberry. And the likelihood of empty shelves when I shop for all the children in my life come December.
I’m up-to-the-minute on all the big ships you can see lined up just waiting to unload at San Pedro, which is pretty far south of where we’re sitting.
Twelve dollars for a dozen eggs. At the farmers market on Sunday, I did my own survey. Three stands were $11. The rest were $12. Ten minutes ago, they cost $6.
One hundred dollars. That’s how much it cost my handyman to fuel up his truck.
They’re warning that the price of canned cranberries is going to be 50% higher this year because of the scarcity of aluminum for the cans.
Remember overnight deliveries from Amazon? Notice that all those overnight specials now take three days, and certain products are already being slated for January delivery.
everyday items have started disappearing, leaving the stores with nothing to replace them with.
Belton resident Laura Zarate said it started slowly.
She’d go to her local store to buy groceries and the store didn’t have something she needed.
Now her shopping list is getting lighter as more items move to her can’t get list.
“When I walk in, on the shelves I see they don’t have a lot of things anymore that we used to buy. They’re kind of empty sometimes. It worries me,” Zarate said.
And it should worry all of us. In a global economy that lives or dies by its dependence on consumer spending, transportation becomes a vital link in getting products to consumers through something called “the supply chain”.
The supply chain is a network of transportation that takes goods from factories to airplanes and eventually to warehouses and eventually us.
And what’s the weak link here?
“The breakdown is in the supply chain in general,” a Port of Los Angeles longshoreman said.
However, this supply chain didn’t just have weak links, it looked like a roving gang with bolt cutters tore into it.
Take Christmas for instance, those decorations that didn’t show up in August could be the only thing we get.
“The cut-off was probably about a month ago,” said a L.A. warehouse manager, talking about when most of Decembers merchandise should have been here.
But that supply chain, that network, now has holes in it and empty store shelves prove it.
What are stores doing about the supply chain problem?
Frankly, everything they can and everything they can think of because if they aren’t selling, they aren’t making any money.
Stores blame shipping companies and shipping companies blame overseas companies, who blame the shipping companies and it goes round and round until it just becomes background noise, leaving Laura Zarate, paying more for much less to buy.
People started noticing it when ships mysteriously started dropping anchor off the coast of California.
A backup caused by only so many parking spots and so many employees unloading the ships.
“Everything. Everything on paper, your shirts, your shoes, your bike, computers, air conditioner, everything. Everybody’s waiting for,” said dock workers when asked about the growing problem.
The world shutdown is the cause but experts say we added to the problem by believing stories shipping companies spun of how their super-efficient delivery system meant you didn’t need a stockpile of stuff.
“We’ve had a lot of shortages, truck drivers and high utilization of our supply chains since the pandemic started. When you put all that together plus the shift of consumer spending from more services more towards goods, which has created more demand so it’s kind of like a perfect storm really says everything that could go wrong did go wrong and all at the same time,” said Michael Bomba, Ph.D., of the G. Brint Ryan College of Business, at the University of North Texas.
He says we will soon have to address the issue of better pay for truck drivers, another by-product of shifting spending and COVID.
Supply Chain Dive has a Port of LA and Long Beach tracker, though right now it seems heavier on policy announcements than actual action to relive congestion. One positive change: “The City of Long Beach is waiving container stacking rules for 90 days to help with port congestion. Previously, stacks could only be two containers high. Now, the city is allowing stacks of up to four containers, or up to five with a special permit.”
— Congressman Greg Murphy, M.D. (@RepGregMurphy) October 30, 2021
Locally, the luncheon meat shortage at HEB seems mostly over, but Sam’s doesn’t appear to be stocking 12 oz cans of Diet Dr Pepper, only 20 oz bottles and cans of Dr Pepper Zero Sugar, which has a different formula. So far I don’t like it as much…
Another week, another roundup on the supply chain issues plaguing America and the world.
The supply chain problem is one of the big reasons economic growth dropped to an anemic 2% in Q3. The Trump boom/post-Flu Manchu recovery has ended, and the Biden economy has kicked in.
1. Starting with the 24/7 gates. The terminal has not even discussed them with the crews. There is no plan in place to launch them. 2. For all of second shift they are seeing >50 trucks most nights. None are coming in after midnights. They have had nights with zero trucks… 2/
A ship they would normally work with 4-6 cranes they have 2 on. Those still do 30+ containers an hour per crane. 5. They are loading empties out. That isn’t a restriction. But with only 2 cranes they run out of time and have to cut the ship loose. …4/
8. There are chassis. The problem though is as they issue them out, and they break, there is no way to fix them. 9. Those chassis are mostly for an on-wheels premium service but they can’t put the containers onto the chassis because they have nowhere to stage them. 6/
11. They are not intentionally slow working. COVID is not an issue. There is no intentional labor slowdown. They want more shifts. They are bored and want to work. 8/
Again. This is one team, from one shift's perspective at one hard-working terminal. But we MUST go and listen to them and every other piece of this puzzle to really get an idea of where we must make improvements.
One more point! Important to note that they blame no one. Really, they don't. They find it all very interesting but at the end of the day they clock in, do their jobs, and go home to their families. They truly love the work and are proud of what they are doing.
But remember: There’s no problem a government “solution” can’t make worse: “Biden hopes fines on lingering cargo containers ease congestion at major U.S. ports.” “The twin ports of Los Angeles and Long Beach will charge carriers $100 per day for each container lingering past a given timeline starting Nov. 1.” Yeah, that’s going to magically conjure trucks and drivers out of thin air.
Another problem is the change in containers, and the requirements for matching truck chassis types, has added still another point of failure (from 2015):
Ten years ago, the largest container vessels that entered the ports carried 8,500 twenty-foot containers, or TEUs. Each shipping company operated their own cargo ships. The containers inside were generally all the same, and they were loaded systematically for efficient unloading at each dock.
Now, the ships are much larger, carrying 14,000 TEUs, said Philip Sanfield, a spokesman for the Port of Los Angeles, adding that the ships are only getting bigger, and soon ships carrying 16,000 TEUs will enter the seas. The companies have begun forming alliances with one another to share these larger ships. Each company’s cargo containers are different – so it takes longer for dock workers to sort and unload them. It saves the shipping companies money, but makes for longer hours for dock workers and truckers.
“That’s an inefficiency in the system that is driven by an efficiency: the move toward larger vessels,” says Thomas O’Brien of the Center for International Trade and Transportation at Cal State Long Beach. “But the impact is felt on the dock side.”
One example of how this plays out: a truck driver spends hours waiting at the docks for the container he or she has been assigned to haul, which has to be moved from the bottom of a tall stack of other containers.
But even before waiting for a cargo container, the driver must be matched with a chassis – the trailer that the container sits on top of. That process also involves a lot of waiting, and often some hunting. Drivers have to find one that will match the cargo container that he or she has been assigned to haul.
In the past, this matching process was relatively simple because the shipping companies also owned their own chassis fleets and managed them from their shipyards.
But during the recession, the shippers got out of the chassis business, turning them over to third-party companies to lease and maintain. The transition has created scattered mix of chassis on various terminals, and ultimately, a chassis shortage at a time when bigger ships are showing up with more cargo. Truckers told KPCC it’s difficult for them to know where they can find a chassis that will match the container they are assigned to haul, and often find themselves on what amounts to a wild goose chase.
“There were times, when we would have 10 to 15 guys looking for one particular chassis, and we just had to wait,” said Danny Lima, the employee truck driver. “I heard stories that there are no chassis at one certain terminal because they were all at another terminal. “
“I’m praying that there is going to be a chassis,” says Rafael, the independent trucker. “Because I can spend an hour driving around the terminal looking for chassis.”
California had some of the most stringent COVID-19 limitations of any state in 2020 when the horrendous backlog began. There was a need for more workers as demand for imported goods was skyrocketing, but California had far fewer available due to drastic government restrictions.
In addition, overly generous government unemployment payouts reduced the need or incentive for people to work, reducing the available supply of willing truckers or longshoremen.
When the supply chain is pinched like this, inflation rears its ugly head.
Federal Reserve Chairman Jerome Powell has blamed recent inflation on supply chain bottlenecks. When these bottlenecks occur, consumers and businesses soon experience shortages of basic commodities and goods like new and used cars, washing machines, or medical supplies. Inflation soon follows.
Unfortunately, many bottlenecks in supply chains occur because of government meddling.
Politicians’ recent alarm over the Port of Los Angeles should be focused on how government officials forced docks and logistics companies, and everyone else, to follow everchanging, arbitrary COVID-19 restrictions, which worsened repeated green and labor mandates that have gummed up supply chains for years.
A trade group for air cargo giants like UPS and FedEx is sounding the alarm over an impending Dec. 8 vaccine deadline imposed by President Joe Biden, complaining it threatens to wreak havoc at the busiest time of the year — and add yet another kink to the supply chain.
“We have significant concerns with the employer mandates announced on Sept. 9, 2021, and the ability of industry members to implement the required employee vaccinations by Dec. 8, 2021,” Stephen Alterman, president of the Cargo Airline Association, wrote in a letter sent to the Biden administration and obtained by POLITICO.
The letter, sent to the Office of Management and Budget , asks the administration to postpone the deadline until “the first half of 2022.” At issue is the requirement by the Biden administration that federal workers be fully vaccinated by Dec. 8. Unlike private businesses, companies that act as federal contractors cannot opt out by instead submitting their workforces to frequent Covid testing.
Our vulnerability to supply chain disruption clearly predates the Biden Administration, forged by the abandonment of the production economy over the past 50 years by American business and government, encouraged and applauded by the clerisy of business consultants. The result has been massive trade deficits that now extend to high-tech products, and even components for military goods, many of which are now produced in China. When companies move production abroad, they often follow up by shifting research and development as well. All we are left with is advertising the products, and ringing up the sales, assuming they arrive.
Unable to stock shelves, procure parts, power your home, or even protect your own country without waiting for your ship to come in, Americans are now unusually vulnerable to shipping rates shooting up to ten times higher than before the pandemic. Not surprisingly, pessimism about America’s direction, after a brief improvement Biden’s election, has risen by 20 points. The shipping crisis is now projected to last through 2023.
Not everyone loses here. For years the American establishment saw China as more of an opportunity than a danger. High-tech firms, entertainment companies, and investment banks profit, or hope to, from our dependency, becoming in essence the new “China lobby.” Behind the scenes these representatives of enlightened capital often work to prevent condemnation for the Middle Kingdom’s mercantilist policy, and its joint repression of democracy and ethnic minorities.
After all, the pain is not felt in elite coastal enclaves, but in Youngstown, south Los Angeles, and myriad other decaying locales. Meanwhile, by enabling China’s focus on production, and the conquest of technologies related to making goods, we have devastated large parts of our country. This shift has cost us 3.7 million jobs since 2000. Throughout the period between 2004 and 2017, the U.S. share of world manufacturing shrank from 15 to 10 percent, while our reliance on Chinese inputs doubled, even as our dependence on Japan and Germany shrank.
Snip.
Some businesses are catching the drift. McKinsey and Company surveyed supply chain executives last year and found that nearly all respondents agree that their supply chains are too vulnerable. According to March 2020’s Thomas Industrial Survey, COVID-19 supply chain disruptions accelerated the search for locally-sourced materials and services. Up to 70 percent of firms surveyed said they were “likely” or “extremely likely” to re-shore in the coming years.
The exodus from China also includes Asian and other foreign firms. UBS projects 20 to 30 percent of all Chinese capacity moving, which on $2.5 trillion of Chinese exports would imply $500 billion to $750 billion shifting elsewhere, notably to the big market of North America. Last year, Taiwan Semiconductor Manufacturing, the world’s leading chip foundry, decided to build a $12 billion new plant in Arizona, and Samsung, a huge Korean chipmaker, is also shopping in the United States for a $17 billion plant. This would remove one of the most devastating causes of supply chain problems, which has dramatically slowed auto production.
Some major American companies, including Black and Decker, Whirlpool, General Electric, Apple, Caterpillar, Goodyear, General Motors, Little Tykes, and Polaris have begun to reshore some production. They are not alone. In 2019, for the first time in a decade, the percentage of United States manufacturing goods that were imported dropped, notes a recent Kearny study, with much of the shift coming from east Asia.
The “Made in China” label is ubiquitous in the United States, stamped on everything from industrial machinery to a pair of flip flops. But risks — from rising costs, to a trade war, to a pandemic — have prompted companies to rethink their relationships with suppliers and China.
“We’ve realized that we put too much power in a single country,” said Dawn Tiura, CEO of Sourcing Industry Group.
Snip.
The same risk factors that drove supply chains to diversify also drove them to think about reshoring to the U.S. Proximity allows shorter transit times, lower emissions and the ability to tout a “Made in USA” label. Import duties are no longer a concern. Total cost of ownership is often lower.
A Thomas study that polled respondents in March found 83% of manufacturers are likely, very likely or extremely likely to reshore, up from 54% in March 2020. But reestablishing manufacturing bases in the U.S. could prove challenging, after decades of standing them up in Asia and Latin America.
“It is extremely difficult to reverse the 30+ year trend of outsourcing and offshoring manufacturing to emerging market countries,” a chemical manufacturer in the Thomas survey said. “We no longer have the talent and expertise nor capital equipment to effectively manufacture key critical components of major products and assemblies.”
“Ace Hardware Shelves Go Bare While Supply Chain Crisis Rages.” “We order twice a week. Normally it just takes two or three days to get back in stock on something…But during the pandemic and then with a certain category being out of stock, we’ve been out of certain products for three or four months.”
More on part supply shortages:
Just wait until these "lower your expectations" people have their heaters go down in December and find out the parts are 3-4 months out.
Hey Jen, we’re also running out of iv catheters, iv tubing, syringes, etc. for sick babies due to the supply chain crisis. Is that funny too? https://t.co/mN7cXPb8at
As far as local conditions in Texas, I can say that I’m only seeing small disruptions in the grocery store supply chain at my local HEB. Luncheon meat was very short there on a recent visit, but I didn’t notice any other particular absence. A few weeks ago, the big Member’s Mark store brand toilet paper at Sam’s was completely out, but it had been completely refilled a week later.
Reminder:
Just a reminder that Biden already spent $2 trillion on the American Rescue Act and all we have to show for it as an economic crisis, an inflation crisis, and a supply chain crisis.
Here’s a piece that says lazy crane operators are to blame, according to some truck drivers. “The crane operators take their time, like three to four hours to get just one container.” Eh, something about this doesn’t ring true. Maybe they had to wait three or four hours for the operator to get their container off the stack.
Deputy Treasury Secretary Wally Adeyemo may have accidentally leaked the cause of America’s supply chain issues.
“The reality is the only way we’re going to get to a place where we work through this transition is if everyone in America and everyone around the world gets vaccinated,” Adeyemo admitted in an interview with ABC News.
Starve them out, let the dissenters suffer, and those who bought into this agenda will turn against them.
Adeyemo said that the Biden Administration has already provided “the resources the American people need to make it to the other side.”
Basically, everyone should give into the vaccine mandate or face the consequences. They are masking authoritarianism as utilitarianism. The vaccine has not been mandated at the federal level in the US, yet, but it is apparent that the government plans to make life as difficult as possible for those who do not obey.
Echoing the Fed, Adeyemo said that inflation is “transitory,” and “as part of the transition we are seeing higher pieces for some of the things people have to buy… That’s exactly why the president was focused in the American Rescue Plan in ensuring on getting stimulus into the hands of the American people, so they’d be able to buy the products they need.”
Yes, the government expects us, the Great Unwashed, to be thankful for their measly handouts to purchase unavailable products at an all-time high. There is a reason people have recently nicknamed the president “bare shelves Biden,” with the hashtags #BareShelvesBiden and #EmptyShelvesJoe becoming a viral sensation.
Although the Biden Administration met with the Ports of Long Beach and Los Angeles, which handles 40% of the nation’s goods, the promise of a 24/7 operation has not yet occurred. There is no ETA for when the ports will begin 24/7 operations either. Some ships are allegedly waiting 12 days at anchor before reaching the dock, and over 60 vessels are idled in the San Pedro Bay at the moment. With one of the nation’s busiest shopping holidays approaching (Black Friday) followed by ongoing seasonal shopping, this matter is likely to turn ugly.
Other voices of the same opinion
The reason the Biden Administration has not solved the supply chain crisis is because they don’t want it solved.
Biden is bumbling, borders are crumbling, bankers are plotting, and Art is out. Welcome to another Friday LinkSwarm!
Stephen Green finds out the real reason behind the supply chain SNAFUs: California Democrats changing the rules because they weren’t getting enough kickbacks and graft from an efficiently functioning transportation system.
The immediate problem, the one in Los Angeles, has been caused by the state’s vindictively regulatory state government.
We’ll get to the trucker shortage in just a moment, but California also faces a shortage of trucks for them to drive.
Twitter user Jerry Oakley reminds us that “Carriers domiciled in California with trucks older than 2011 model, or using engines manufactured before 2010, will need to meet the Board’s new Truck and Bus Regulation beginning in 2020.” Otherwise, “Their vehicles will be blocked from registration with the state’s DMV,” according to California law.
Snip.
As a result, trucks aren’t being purchased to replace the ones being regulated out of business.
But even if there were plenty of trucks in California, there wouldn’t be enough truckers to drive them — and it isn’t because the truckers are too old.
“Traditionally the ports have been served by Owner Operators,” Oakley says, who are non-union. But under AB-5, “California has now banned Owner Operators.”
Just like the union longshoremen, union truckers work under a whole host of work rules that simply can’t accommodate crisis conditions like the ones in Los Angeles.
In fact, those work rules helped create the crisis conditions.
The exact language of AB-5 was copied and pasted into Presidentish Joe Biden’s $5 trillion (Or: Five Million Million Dollar) “Build Back Better” bill currently stalled in the Senate.
It’s one thing for Californians to screw themselves over, but AB-5 is hurting the entire country’s economy — and Washington Democrats want to take AB-5 nationwide.
Social Justice doesn’t want to win, it wants to destroy you:
If you’re unaware, [David] Shor was canceled for accurately summarizing the contents of an academic paper. Shor made a point that he felt was important for the messaging of the Democrats. At the time the country was exploding in riots aligned with BlackLivesMatter and driven by anger over the deaths of George Floyd and Breanna Taylor. Shor linked to a paper that argued that riots have bad political consequences for Democrats. This would not seem to be particularly inflammatory; people indiscriminately burning and smashing shit has little obvious utility for the marginalized or anyone else. But Shor lost his job for tweeting that paper and agreeing with its thesis. Similarly, the Intercept’s Lee Fang was absolutely mobbed for the crime of recording an interview with a young Black man who was critical of the riots and the protest movement from which they sprang. He almost lost his job, as well.
(Here’s a fun tip for you all: if you have the power to get someone fired or otherwise ruin their life you are not a powerless, marginalized Other.)
Not that they had rebutted a particularly coherent pro-riot argument. There was little in the way of defense of riots in 2020 at all, really. Many attempted to invoke Martin Luther King in that regard, which is hilarious and bizarre concerning a man who among many other critiques of riots said that they “are not revolutionary but reactionary because they invite defeat; they offer an emotional catharsis, but they must be followed by a sense of futility,” and that close to the end of his life. (In their defense, almost no one who invokes MLK has actually read him.) But what Shor and Fang were guilty of was not of breaking with some intellectual mandate within liberalism but with speaking out of turn, with criticizing the wrong people. The difference between Shor and Fang’s criticism of the pro-riot side and the behavior of those who rose against them is that Shor and Fang never tried to destroy anyone, didn’t tweet at anyone’s boss in an attempt to get them fired, didn’t have the inclination or the power to punish those who dared to disagree with them. But those who targeted them were operating in a bizarre liberal discursive culture where, if you dress up what you’re doing in vague language about oppression, you can operate however you’d like without rebuke and attempt to ruin the life of whoever you please.
Snip.
The left-of-center is in a profoundly strange and deeply unhealthy place. In the span of a decade or less a bizarre form of linguistically-radical but substantively-conservative identity neoliberalism descended from decaying humanities departments in elite universities and infected social media like Tumblr and Twitter, through which it conquered the media and entertainment industries, the nonprofit industrial complex, and government entities as wide-ranging as the U.S. Department of Education’s Office for Civil Rights and the brass of the Pentagon. That movement now effectively controls the idea-and-story generating power of our society, outside of explicitly conservative media which exists in a large silo but a silo all the same. On any given day the most powerful institutions in the world go to great lengths to mollify the social justice movement, to demonstrate fealty, to avoid its wrath. It’s common now for liberals to deny the influence and power of social justice politics, for inscrutable reasons, but if the current level of control over how people talk publicly is insufficient, I can’t imagine what would placate them. Are most of these institutions false friends? Of course. But that, too, is not much of a defense.
This tendency to be promiscuous in enthralling elites and powerful institutions should be a clue to the fact that, despite its radical self-branding, the contemporary social justice movement fundamentally serves to empower the status quo. Effective left politics are about convincing various people who are unalike that they have a shared self-interest, that society can do best for them when we do best for others, too. That’s how you build a mass movement, by appealing to people’s sense of self-interest and showing them how they can help their neighbors while they help themselves. But because the social justice movement’s first dictate is to establish a hierarchy of suffering, and to tell those that are purported to suffer less that their problems aren’t problems, no such mass movement is coming. The social justice movement is not just incidentally antagonistic to organizing everyone and recognizing all kinds of people as worthy of our compassion and support. That antagonism is existential. When you ask many people within the movement, “what could we do to convert the white working class to our values?,” they will simply tell you that they don’t want to convert them, that they are not worthy of being a part of their movement. They would rather have targets than converts, to lose as an exclusive moral caste than win as a grubby populist coalition.
Core to understanding this moment is to realize that the vast majority of people who enforce these politics don’t actually believe in them. They don’t, that is, think that social justice politics as currently composed are healthy or just or likely to result in tangible positive change. There’s a core of true-believers who do, and there’s a group of those who profit directly from the hegemony of social justice politics in elite spaces. (The former two groups have some overlap, but it’s not a perfect circle.) There’s conservative critics, who are both the most natural targets of social justice ire and yet those the social justice movement seem least interested in targeting. There’s an island of misfit toys of left and leftish critics of social justice politics like me. And then there’s the great big mass of people who are just scared.
Do global elites have incentives for pushing “Green Energy”/”Climate Change” nonsense? $150 trillion of them.
Now, in case someone is still confused, none of these institutions, and not a single of the erudite officials running them, give a rat’s ass about the climate, about climate change risks, or about the fate of future generations of Americans (and certainly not about the rising water level sweeping away their massive waterfront mansions): if they did, total US debt and underfunded liabilities wouldn’t be just shy of $160 trillion.
So what is going on, and why is it that virtually every topic these days has to do with climate change, “net zero”, green energy and ESG?
The reason – as one would correctly suspect – is money. Some $150 trillion of it.
Snip.
How much would this green utopia cost, because if the “net zero”, “ESG”, “green” narrative is pushed so hard 24/7, you know it will cost a lot.
Turns out it does. A lot, lot.
Responding rhetorically to the key question, “how much will it cost?”, BofA cuts to the case and writes $150 trillion over 30 years – some $5 trillion in annual investments – amounting to twice current global GDP!
At this point the report gets good because since it has to be taken seriously, it has to also be at least superficially objective. And here, the details behind the numbers, do we finally learn why the net zero lobby is so intent on pushing this green utopia – simple answer: because it provides an endless stream of taxpayer and debt-funded “investments” which in turn need a just as constant degree of debt monetization by central banks.
Consider this: the covid pandemic has so far led to roughly $30 trillion in fiscal and monetary stimulus across the developed world. And yet, not even two years later, the effect of this $30 trillion is wearing off, yet despite the Biden’s admin to keep the Covid Crisis at bay, threatening to lock down society at a moment’s notice with the help of the complicit press, the population has made it clear that it will no longer comply with what is clear tyranny of the minority.
And so, the establishment needs a new perpetual source (and use) of funding, a crisis of sorts, but one wrapped in a virtuous, noble facade. This is where the crusade against climate change comes in.
Imagine a central banker, destroying your bank account through hyperinflation…forever.
Controlling (barely) all three branches of government, you wouldn’t expect Democrats to show this much panic.
he results in 2020 came as a shock to Democrats for several reasons. First, Joe Biden’s official margin of victory, while slightly larger than Obama’s in 2012 at 51.26% to 46.8%, was half the size that polls, such as Nate Silver’s 538, had showed, at 51.8% to 43.4%. But even more concerning for Democrats, the locations of the polling error tended to be not in places where Democrats were strong, but rather either in swing areas where they hoped for gains, or areas where Obama had done well in 2008 and 2012, but Trump had won in 2016. In effect, Democrats won areas they felt were moving in their direction such as Arizona, Pennsylvania, Nevada, and Wisconsin by far less than they expected, and lost states they thought were close such as Iowa, Ohio, and Florida by much larger margins.
The implications of this in the Presidential race were obscured by the fact that the numbers showed Biden won. But they were keenly felt in the Senate races, where Democrats lost races in Iowa and North Carolina where they believed they were favored, and their candidates did worse than Biden even where he won, such as in Michigan and Maine. The result at the time was to leave the Senate at 50 Republicans and 48 Democrats, a situation transformed by the victory of Democrats Jon Ossoff and Raphael Warnock against a dysfunctional Georgia GOP in January 2021. Nonetheless, it was ominous and it set the tone for Democratic behavior in 2021.
In light of these results, we can understand that the reason Democrats are now obsessing the filibuster is not because they have a mere 50 seats in the Senate. When Senator Chris Murphy of Connecticut calls out Joe Manchin and Kyrsten Sinema for blocking legislation that 48 Democrats support, he is doing so not because he believes they are likely to be 50 or 52 Senators for it in the future but because he is pretty sure 50 is as good as it is going to get. In 2008, Democrats won 60 Senate seats, and while with hindsight we can see this was a high-water mark, at the time Democrats dreamed bigger. After all, Mitch McConnell had only won 53%-47% in 2008. There were also open seats in states Obama had won in 2008 such as New Hampshire, North Carolina and Florida coming up in 2010, and there was a path to a Democratic supermajority.
That is not the case after 2020. In 2020, only Susan Collins won reelection in a state won by the Presidential candidate of the opposing party. Democratic challengers, including strong ones such as Montana’s two-term governor, Steve Bullock lost, and lost badly (by 10% in Bullock’s case). This was also not just a 2020 phenomenon. Despite a good year for Democrats overall in 2018, Democratic incumbent Senators lost in Florida, Indiana, and Missouri that year.
Biden’s underperformance scared Democrats because it indicated a ceiling, rather than a floor for their strength.
In 2022, Democrats will be defending Senate seats in Arizona, Georgia, Nevada, and New Hampshire, all states that went to Biden, but within margins whereby strong GOP challengers, which exist in all those states, could win. More problematically, the list of Democratic targets includes only Pennsylvania and Wisconsin among states Biden won, and North Carolina and Florida among states Trump won by less than landslide margins. Matching Biden exactly would get the Democrats a gain of two seats; but even in 2020 most Democratic candidates ran behind Biden, and Biden is himself deeply unpopular today.
The situation in the House is, if anything, worse for the Democrats. Democrats lost 12 House seats in 2020. The impact of redistricting is overblown – Republicans will gain a marginal advantage from the lines, but census results show the areas growing most quickly lean Democrat – yet nonetheless, the Democrat position is so weak that any deterioration in Biden’s position will be fatal to their 2022 hopes.
In effect, the 2021 Democratic majorities are on a “death watch,” and Democrats’ confused attempts to deal with that realization is determining their current erratic behavior.
The split in the party is not so much between the moderates and the progressives. It is between progressives and moderates who desire political futures and those who know they have none. Pelosi is able to generally pass left-wing legislation in the House despite her narrow majority because many of her moderates know they are doomed no matter what, and are willing to cast their votes for the progressive agenda. In turn, AOC and the Squad feel free to sabotage any compromises because their own seats are safe and they believe they have time to fight another day, even if it is ten years from now. By contrast, both Sinema and Manchin seem to resent the efforts of other Democrat officials to pressure them to commit political suicide or behave as if they personally are doomed, just because it is true of some of their colleagues. In particular, rhetoric out of the Democrat caucus that Manchin is “probably in his last term anyway” or that Sinema “won’t win reelection” seems predicated on the idea that both should act as if they are finished and behave accordingly.
But think about the deeper implications of that statement: All moderate Democrats (with the possible exceptions of Manchin and Sinema) are aching to do The Will of the Party and push the most radical, leftmost agenda possible if only it weren’t for the pesky problems of winning elections. Even moderate Democrats are leftwing radicals.
Biden: The war against terror is over! Supreme Court: Then why are you still doing all these things that are only legal if a war’s still on? Biden Administration: Yeah, when we said the war against terror was over, we didn’t mean it was over over…
You know Merrick Garland’s social justice warrior problem? It gets worse:
We learned, too, that Merrick Garland’s son-in-law, through his company, Panorama Education, sells CRT materials to public schools. And yesterday, it turned out that Panorama is also spreading material calling Trump and his supporters “white supremacists”
Alexander “Xan” Tanner, a very White man, is married to Merrick Garland’s daughter. Tanner co-founded Panorama Education, which purports to provide a data platform that delves into students’ psychosocial issues in order to help schools intervene in problems and improve the school climate. In a word, it’s creepy…
The educational workshop released by Panorama Education, co-founded by Alexander “Xan” Tanner, the group’s president, revolves around “systemic racism” and includes an article as a resource that states the Ku Klux Klan and attendees of Trump’s rallies are both “examples of white supremacy.”
Garland should be forced to resign.
“More Hunter Biden Questions: Art Gallery Repping Him Gets Big Federal COVID Loan.” Try to contain your shock.
A husband and wife were arrested for trying to sell U.S. submarine secrets. “Navy nuclear engineer Jonathan Toebe, 42, and wife, Diana, 49, were charged Saturday with selling secret information to an unidentified foreign country.” Bonus! “The woman arrested with her Navy nuclear engineer husband for allegedly selling secret information about nuclear submarines to an undercover FBI agent appears to be vocally in support of Black Lives Matter and ‘resistance’ movements on her social media.” There’s a lot of shocked face in this LinkSwarm…
Investigators determined Trenae Myesha Rainey, 28, a facility employee, did not contact residents as set by procedure and instead filled out the applications and forged the resident’s signature to each application….
Investigators determined Nancy Juanita Williams, 55, planned to control absentee ballots for legally incapacitated persons under her care by fraudulently submitting 26 absentee ballot applications to nine identified city and township clerks.
Morgan Freeman still isn’t having any of your defund the police lunacy. “I am not in the least bit for defunding the police.”
Democratic Virginia gubernatorial candidate and Clinton toady Terry McAuliffe lies again.
Democratic gubernatorial candidate Terry McAuliffe incorrectly stated on Thursday night that there were 1,142 children in Virginia’s intensive care unit beds, a gross overestimation of the virus’s current impact in the state.
“We in Virginia today, 1,142 children are in ICU beds,” McAuliffe stated during a roundtable discussion with local reporters. The statistic is a massive overestimation. Virginia Department of Health statistics show that there are a total of 443 people of all ages currently in ICU beds, a fraction of the figure McAuliffe put forth for children.
The state database shows the number of Virginians in ICU beds infected with COVID-19 has never come close to 1,142 since the first hospitalizations in March 2020—the peak of individuals hospitalized in the ICU with COVID-19 was on Jan. 13, when there were 587 cases. State records show that just 1,094 individuals younger than 19 years old have been hospitalized with COVID-19 since the beginning of the pandemic. Children, who rarely get seriously ill from the virus, have never made up a significant chunk of hospitalized individuals.
McAuliffe also said during the roundtable Virginia had “8,000 cases on Monday,” another exaggerated statistic. On Monday, Oct. 4, Virginia saw 1,220 “confirmed” cases and 864 “probable” cases, according to the Virginia Department of Health.
The state has never seen 8,000 confirmed cases in a day. According to the department, Virginia’s 7-day moving case average peaked at 5,904 on Jan. 8, 2021—a number thousands short of McAuliffe’s case assessment.
“Longtime politician Mark Ridley-Thomas and the former dean of the School of Social Work at a university in Southern California were indicted today on federal corruption charges that allege a bribery scheme in which a Ridley-Thomas relative received substantial benefits from the university in exchange for Ridley-Thomas supporting county contracts and lucrative contract amendments with the university while he served on the Los Angeles County Board of Supervisors.” This is the fed indictment notice, so it doesn’t mention that he’s a lifetime Democrat, in addition to being an LA City Councileman and former state rep.
Art Acevedo out in Miami. Sounds like a mixture of BS and real Acevedo stupidity. And it’s generally not a good idea to compare Miami Cubans to commies…
“Buy an electric vehicle,” they said. “They’re just as good and you’ll be saving the earth,” they said. Well surprise! “UK Readying New Law Mandating Home EV Chargers Be Shut Down During Peak Hours.” Also: “Beginning May 30, 2022, all chargers that are installed must be ‘smart’ chargers connected to the internet, allowing their functions to be limited between 8am to 11am and 4pm to 10pm.” Big brother in his squad car’s coming near…
Communist China demands that Christian pastor denounce himself for daring to preach the gospel in violation of state doctrine. Oh wait, did I say Communist China? I meant “Canada.”
Texas House passes Save Girls Sports act to keep them from having to compete against men.
UK: “Sir David Amess: Conservative MP stabbed to death. Police said a 25-year-old man was arrested on suspicion of murder after the attack at a church in Leigh-on-Sea.” Police seem awful tight-lipped on details about the murderer…
When the federal government banned sliced bread, supposedly due to helping the war effort in World War II. But nobody would admit who ordered it, or what scarce wartime commodities it was supposed to save, and the ban was lifted after two months. Sound familiar? Well, except for that whole “admitting the mistake and quickly reversing course” part…
Supply chain problems have gotten so bad that Derek Thompson at The Atlanticdeigns to notice them:
The coronavirus pandemic has snarled global supply chains in several ways. Pandemic checks sent hundreds of billions of dollars to cabin-fevered Americans during a fallow period in the service sector. A lot of that cash has flowed to hard goods, especially home goods such as furniture and home-improvement materials. Many of these materials have to be imported from or travel through East Asia. But that region is dealing with the Delta variant, which has been considerably more deadly than previous iterations of the virus. Delta has caused several shutdowns at semiconductor factories across Asia just as demand for cars and electronics has started to pick up. As a result, these stops along the supply chain are slowing down at the very moment when Americans are demanding that they work in overdrive.
The most dramatic expression of this snarl is the purgatory of loaded cargo containers stacked on ships bobbing off the coast of Los Angeles and Long Beach. Just as a normal traffic jam consists of too many drivers trying to use too few lanes, the traffic jam at California ports has been exacerbated by extravagant consumer demand slamming into a shortage of trucks, truckers, and port workers. Because ships can’t be unloaded, not enough empty containers are in transit to carry all of the stuff that consumers are trying to buy. So the world is getting a lesson in Econ 101: High demand plus limited supply equals prices spiraling to the moon. Before the pandemic, reserving a container that holds roughly 35,000 books cost $2,500. Now it costs $25,000.
The container situation is even weirder than it looks. With demand surging in the United States, shipping a parcel from Shanghai to Los Angeles is currently six times more expensive than shipping one from L.A. to Shanghai. J.P. Morgan’s Michael Cembalest wrote that this has created strong incentives for container owners to ship containers to China—even if they are mostly empty—to expedite the packing and shipping of freights in Shanghai to travel east. But when containers leave Los Angeles and Long Beach empty, American-made goods that were supposed to be sent across the Pacific Ocean end up sitting around in railcars parked at West Coast ports. Since the packed railcars can’t unload their goods, they can’t go back and collect more stuff from filled warehouses in the American interior.
And what about the truckers who are needed to drive materials between warehouses, ports, stores, and houses? They’re dealing with a multidimensional shortage too. Supply-chain woes have backed up orders for parts, such as resin for roof caps and vinyl for seats. But there’s also a crucial lack of people to actually drive the rigs. The Minnesota Trucking Association estimates that the country has a shortage of about 60,000 drivers, due to longtime recruitment issues, early retirements, and COVID-canceled driving-school classes.
In short, supply chains depend on containers, ports, railroads, warehouses, and trucks. Every stage of this international assembly line is breaking down in its own unique way. When the global supply chain works, it’s like a beautifully invisible system of dominoes clicking forward. Today’s omnishambles is a reminder that dominoes can fall backwards too.
However, there are two important words missing from Thompson’s analysis: “vaccine” and “mandate.”
Like other manufacturers, petrochemical companies have been shaken by the pandemic and by how consumers and businesses responded to it. Yet petrochemicals, which are made from oil, have also run into problems all their own, one after another: A freak winter freeze in Texas. A lightning strike in Louisiana. Hurricanes along the Gulf Coast.
All have conspired to disrupt production and raise prices.
“There isn’t one thing wrong,” said Jeremy Pafford, managing editor for the Americas at Independent Commodity Intelligence Services (ICIS), which analyzes energy and chemical markets. “It’s kind of whack-a-mole — something goes wrong, it gets sorted out, then something else happens. And it’s been that way since the pandemic began.’’
The price of polyvinyl chloride or PVC, used for pipes, medical devices, credit cards, vinyl records and more, has rocketed 70%. The price of epoxy resins, used for coatings, adhesives and paints, has soared 170%. Ethylene — arguably the world’s most important chemical, used in everything from food packaging to antifreeze to polyester — has surged 43%, according to ICIS figures.
The root of the problem has become a familiar one in the 18 months since the pandemic ignited a brief but brutal recession: As the economy sank into near-paralysis, petrochemical producers, like manufacturers of all types, slashed production. So they were caught flat-footed when the unexpected happened: The economy swiftly bounced back, and consumers, flush with cash from government relief aid and stockpiles of savings, resumed spending with astonishing speed and vigor.
Suddenly, companies were scrambling to acquire raw materials and parts to meet surging orders. Panic buying worsened the shortages as companies rushed to stock up while they could.
Expecting these problems to be transitory? Dubai’s largest port operator says to expect supply chain problems to extend in 2023.
A global energy crunch caused by weather and a resurgence in demand is getting worse, stirring alarm ahead of the winter, when more energy is needed to light and heat homes. Governments around the world are trying to limit the impact on consumers, but acknowledge they may not be able to prevent bills spiking.
Further complicating the picture is mounting pressure on governments to accelerate the transition to cleaner energy as world leaders prepare for a critical climate summit in November.
Translation: Green energy mandates = blackouts.
In China, rolling blackouts for residents have already begun, while in India power stations are scrambling for coal. Consumer advocates in Europe are calling for a ban on disconnections if customers can’t promptly settle what they owe.
“This price shock is an unexpected crisis at a critical juncture,” EU energy chief Kadri Simson said Wednesday, confirming the bloc will outline its longer-term policy response next week. “The immediate priority should be to mitigate social impacts and protect vulnerable households.”
In Europe, natural gas is now trading at the equivalent of $230 per barrel, in oil terms — up more than 130% since the beginning of September and more than eight times higher than the same point last year, according to data from Independent Commodity Intelligence Services.
In East Asia, the cost of natural gas is up 85% since the start of September, hitting roughly $204 per barrel in oil terms. Prices remain much lower in the United States, a net exporter of natural gas, but still have shot up to their highest levels in 13 years.
Wait, you mean relying on Russian benevolence wasn’t an optimal strategy? Do tell.
There’s also panic buying to secure winter supplies, especially in China, where “the central government there has given state-owned energy companies a directive to secure winter energy supplies at any and all costs.”
Steel, roofing and insulation materials are some of the most difficult products to get right now, said Ken Simonson, chief economist at the Associated General Contractors of America. Bar joists, which are used to frame roofs, can have lead times of anywhere from 10 months to 14 months.
Costs have also soared, with the index for steel mill products rising 123% YoY in August, according to the Bureau of Labor Statistics’ Producer Price Index. Copper and brass mill shapes jumped 45.3% YoY, while plastic construction products saw increases of just under 30% YoY.
A few weeks ago I spoke with several people intimately involved with large companies in my industry and they all agree that we have probably another year of supply chain disruptions and problems. That wasn’t exactly music to my ears as the last year and a half has been an intense marathon trying to keep my buildings full of product that my dealers need. The reasons are everything that you have heard before here and on other media outlets – labor shortages, raw material issues and now, chip problems.
The chip problem could be a really big issue as those chips go into printed circuit boards that control furnaces – and we need furnaces now for Fall.
My one large exception mentioned above is that my inventory levels are absolutely enormous and we are setting new records daily. This is killing my turns and as a result cash, but this is the new model. We simply can’t predict when things will come in so we have to pile in sometimes a full years worth of a widget. We are absolutely bursting at the seams and it is extremely stressful trying to keep everyone happy. We don’t dare cancel any orders as we would go to the back of the line, so it is what it is.
Freight is a major issue right now. We get damage all the time and the LTL lines are all extremely slow and sloppy. Hardly a day goes by where we don’t have a freight problem.
Parts don’t really seem to be an issue. Sure, there are certain things that we have problems with, but in general the parts world is OK so there is that silver lining.
This year, a devastating drought in North American oat fields has resulted in the lowest harvest for the cereal grain in years, pushing prices to record highs, a warning sign that breakfast inflation is imminent.
Scorching heat waves in Candian oat fields slashed production to an 11-year low. Canada, the world’s biggest exporter, ships most of its oats to the US, its largest consumer.
The result so far has been a new record high in oats futures trading on the CME. The sudden spike in prices has yet to ripple through supply chains to affect consumers, though that will be coming.
According to Bloomberg, “the situation for North American farmers was so dire in the summer that many cut their losses and harvested damaged plants to be sold as feed for animals.”
What this means for consumers is that dwindling supplies and record-high prices will soon affect foods like cereals, oatmeal, and granola bars, all popular breakfast items.
Randy Strychar, president of Ag Commodity Research and Oatinformation.com, said Cheerios, the US’ most popular cereal, is made entirely of oats. He said there’s no substitute for the ingredient: “You can’t make a Cheerio out of barley.”
General Mills, the maker of Cheerios and Nature Valley granola bars, nor Quaker Oats Company, the maker of oatmeal, among others, have yet to announce price increase of their oat products, but that could be imminent or at least create an illusion of stable prices through shrinkflation.
Before retailers can make their sales, they need stuff to sell. That’s where the trouble is this year. Container ships are packed, ports are clogged, contracts with carriers are falling to the wayside. And the rush to ship goods for the holidays is only adding traffic to what was already intense congestion.
“There aren’t enough containers. There aren’t enough ships. There aren’t enough trucks or trains. There is more volume now than any part of the supply chain pipe can adequately handle,” Burlington Stores Chief Financial Officer John Crimmins told analysts in late August. Trying to accelerate and pull forward orders “even further increased the pressure on the supply chain, helping to drive even higher rates,” the executive added.
So not only are retailers competing with each other for sales, they are competing just to get cargo space to ship goods into the country. Freight has skyrocketed as a result, and shipments still lag or even fail to materialize. Many of the bottlenecks are tied to the unexpectedly swift surge in consumer demand in the U.S. this year, combined with capacity shortfalls at numerous points along the supply chain.
Soldiers told us there have been cartel gunfights in Ciudad Miguel Aleman, the Mexican city across from Roma, TX, frequently in recent days and weeks. The soldiers heard gunfire and explosions two days ago and showed us this video of smoke billowing after the gunfight. pic.twitter.com/yow1pPvJS8
Indeed, Biden’s poll numbers are so low that even CNN has noticed. “Just 32% of independents approved of how Biden is handling his job while 60% disapprove in a new Quinnipiac University national poll… In 2010, the Republicans picked up 63 seat, with being up 19 points among independents.”
Short-term debt limit extension bill passes. Tastes like chicken…
The reconciliation bill is deeply hostile to marriage. Well, it’s no surprise, since happily married couples with children are increasingly an obstacle to Democratic Party control…
U.S. Attorney General Merrick Garland recently instructed the FBI to begin investigating parents who confront school board administrators over Critical Race Theory indoctrination material. The U.S. Department of Justice issued a memorandum to the FBI instructing them to initiate investigations of any parent attending a local school board meeting who might be viewed as confrontational, intimidating or harassing.
Attorney General Merrick Garland’s daughter is Rebecca Garland. In 2018 Rebecca Garland married Xan Tanner. Mr. Xan Tanner is the current co-founder of a controversial education service company called Panorama Education. Panorama Education is the ‘social learning’ resource material provider to school districts and teachers that teach Critical Race Theory.
So far, all we have is his press conference and other such made-for-media huff-puffing. No such rule even claiming to be legally binding has been issued yet.
That’s why nearly two dozen Republican attorneys general who have publicly voiced their opposition to the clearly unconstitutional and illegal mandate haven’t yet filed suit against it, the Office of the Indiana Attorney General confirmed for me. There is no mandate to haul into court. And that may be part of the plan.
According to several sources, so far it appears no such mandate has been sent to the White House’s Office of Information and Regulatory Affairs yet for approval. The White House, the Occupational Safety and Health Administration (OSHA), and the Department of Labor haven’t released any official guidance for the alleged mandate. There is no executive order. There’s nothing but press statements.
Let the lawsuits against private companies firing people for refusing the vaccine for which no mandate exists begin!
Scientists from Wuhan and the US were planning to create new coronaviruses that did not exist in nature by combining the genetic codes of other viruses, proposals show.
Documents of a grant application submitted to the US Defense Advanced Research Projects Agency (Darpa), leaked last month, reveal that the international team of scientists planned to mix genetic data of closely related strains and grow completely new viruses.
A genetics expert working with the World Health Organisation (WHO), who uncovered the plan after studying the proposals in detail, said that if Sars-CoV-2 had been produced in this way, it would explain why a close match has never been found in nature.
Here’s a novel thought: How about you not do that?
Did I mention that Wuhan scientists also wanted to genetically engineer coronaviruses that were more infectious to humans and release aerosols containing “novel chimeric spike proteins” among cave bats in Yunnan, China? And they also applied DARPA grant! Who the hell was asleep at the grant proposal switch while Chinese biological warfare scientists were going full Frankenstein?
Masks are not mandatory now in classrooms in: UK, Iceland, Denmark, Sweden, Finland, Norway, Switzerland, Austria, Netherlands, Belgium (12 & under), Russia, Poland, Hungary, Bulgaria (up to 5th grade), most of South America, etc. Masking children in the U.S. isn't science.
Facebook’s fake “Whistleblower” Frances Haugen was part of the election meddling team that suppressed the Hunter Biden laptop story. Also: “She’s receiving ‘strategic communication guidance’ from former Obama aide Bill Burton’s public relations firm Bryson Gillette, which is run by Democratic operatives. White House Press Secretary Jen Psaki was a senior adviser there until September 2020.” Basically she’s a pawn to let Facebook suppress even more conservative stories.
WOW! This is the moment Acting Senior Sergeant Krystle Mitchell QUITS Victoria Police.
"I can't remedy in my soul anymore how the organisation I love is being used [to enforce health tyranny]… and the damage it's causing to the community."
“Tesla is moving its headquarters from Palo Alto, California, to Austin, Texas, CEO Elon Musk announced at the company’s shareholder meeting on Thursday.” Given how crappy California’s business climate has become, this was pretty much a forgone conclusion. Come on down, Elon.
Amazon is looking at leaving Seattle. “After years of deteriorating relations with their home city of Seattle and its ultra-progressive city council, Amazon’s CEO [Andy Jassy] made it known that the online giant may look for greener pastures. Citing the city’s hostility toward their presence, Jassy suggested that the suburbs are looking better and better for a new home to its 50,000-employee home base.”
Speaking of Seattle, over 400 police officers may be facing termination over refusal to get vaccinated. Good thing Seattle is a peaceful utopia where there are never any antifa riots…
The China/India border is getting frisky again. “Sources mentioned that patrol parties of both the countries came face-to-face in Arunachal Pradesh, which led to some jostling before they disengaged. The incident took place last week near Yangtse in the Tawang sector.” Arunachal Pradesh is basically the complete opposite end of northern India from where most of last year’s clashes occurred.
Did China lose coal shipments waiting for docks to open up to India? Source is a little “rah-rah India,” so grains of salt are probably in order.
Are you using the wrong plunger? This plumber seems to think that this one is the new hotness for clearing toilets.
Greetings, and welcome to the Halloween season! Manchin and Sinema are the only thing that stands in the way of a giant, economy-destroying meteor of leftwing pandering, energy crises ramp up in China and Europe, Biden nominates a commie, and more Flu Manchu shenanigans.
Inflation hits a 30 year high, yet Democrats are furious two of their own party aren’t letting them run even bigger deficits.
West Virginia Democratic Senator Joe Manchin calls the giant runway Porkulus fiscal insanity.
“What I have made clear to the President and Democratic leaders is that spending trillions more on new and expanded government programs, when we can’t even pay for the essential social programs, like Social Security and Medicare, is the definition of fiscal insanity,” Manchin said in a statement Wednesday.
Manchin says that any reconciliation bill must include a Hyde Amendment to bar federal taxpayer funding of abortion. I’m pretty sure Democrats would prefer kicking Manchin out of the party than give compromise on their holy of holies.
‘What if — and hear me out here,” writes Robert Reich, “we stopped letting two corporate Democrats singlehandedly block every single progressive policy we elected Democrats to pass?”
Okay, Robert. But how, exactly? The Democrats have 50 seats in the Senate. To pass a bill through reconciliation, the Democrats need 50 votes in the Senate. Two of the people who hold those 50 seats do not agree with the rest of the party on “every single progressive policy.” If the other 48 senators do agree — which is far from clear — the Democratic Party will have 48 votes for its agenda, two short of what it needs. Those two, not the Robert Reichs of the world, are the ones with the power to “stop” things.
“Should all of this just hinge on those two?” Representative Cori Bush (D., Mo.) asked yesterday. “Absolutely not.” But should doesn’t enter into it. The question is does “all of this” hinge on Sinema and Manchin? The answer is yes. Yes it does. And why? Because, again, “all of this” requires 50 votes in the Senate, and two of those votes aren’t on-board.
Underneath the complaints that Reich and Bush have leveled sits the erroneous implication that, come election time, American voters are obliged to press a button marked “Republican” or “Democrat,” and that, having done so, they are shipped a drone-like representative of the winning team from a central repository in Washington, D.C. Reich complains that “we elected Democrats.” But this is correct only in the aggregate. In fact, 50 different “we”s elected one hundred senators and 435 Representatives, who between them make up our majority and minority parties. There is nothing in this deal that obliges those emissaries to agree with one another.
Senators Manchin and Sinema are not a pair of uninvited interlopers who are unexpectedly gumming up the gears; they, themselves, are among the gears. This being so, the duo cannot be said to be “blocking” the Democrats’ de facto Senate majority so much as they are sustaining the Democrats’ de facto Senate majority. Why? Because their decision to caucus with the Democrats rather than the Republicans is the only reason that majority exists in the first place. To hear progressives talk, one would assume that in order to take one’s place within the firmament one must first swear a blood oath to Dick Durbin. Shockingly enough, one is obliged to do no such thing.
If there’s one thing we know about the looming debt limit crunch and the warnings about the dire consequences of default, it’s this: The government is not going to default.
The recurring brinksmanship over the debt limit and the partisan refusal to get Republican fingerprints on the increase don’t say much for our political class. But the U.S. Treasury isn’t full of stupid people, and they’ve been through this drill before. Back in July 2011, when the debt ceiling of $14.3 trillion was about to be reached, the Washington Post reported:
The Treasury has already decided to save enough cash to cover $29 billion in interest to bondholders, a bill that comes due Aug. 15, according to people familiar with the matter.
You can bet they’re making similar plans today. The difference is that 10 years later the debt ceiling is $28.4 trillion, just about doubled, and we’re about to bump into it again.
Back in that summer of discontent I talked to a journalist who was very concerned about the “dysfunction” in Washington. So am I. But I told her then what’s still true today: that the real problem is not the dysfunctional process that’s getting all the headlines, but the dysfunctional substance of governance. Congress and the president will work out the debt ceiling issue, probably just in the nick of time. The real dysfunction is a federal budget that doubled in 10 years, unprecedented deficits as far as the eye can see, and a national debt (more accurately, gross federal debt) yet again bursting through its statutory limit of $28.4 trillion and soaring past 120 percent of GDP, a level previously reached only during World War II.
The Cornell University law school professor [Saule Omarova]’s radical ideas might make even Bernie Sanders blush. She graduated from Moscow State University in 1989 on the Lenin Personal Academic Scholarship. Thirty years later, she still believes the Soviet economic system was superior, and that U.S. banking should be remade in the Gosbank’s image.
Snip.
Ms. Omarova thinks asset prices, pay scales, capital and credit should be dictated by the federal government. In two papers, she has advocated expanding the Federal Reserve’s mandate to include the price levels of “systemically important financial assets” as well as worker wages. As they like to say at the modern university, from each according to her ability to each according to her needs.
In a recent paper “The People’s Ledger,” she proposed that the Federal Reserve take over consumer bank deposits, “effectively ‘end banking,’ as we know it,” and become “the ultimate public platform for generating, modulating, and allocating financial resources in a modern economy.” She’d also like the U.S. to create a central bank digital currency—as Venezuela and China are doing—to “redesign our financial system & turn Fed’s balance sheet into a true ‘People’s Ledger,’” she tweeted this summer. What could possibly go wrong?
The FBI’s annual report Monday made official what most unfortunately presumed: The United States in 2020 experienced the biggest rise in murders since the start of national record-keeping 60 years ago.
The Uniform Crime Report detailed a murder increase of nearly 30 percent.
The previous largest one-year change was a 12.7 percent increase back in 1968. The national rate of murders per 100,000, however, still remains about one-third below the rate in the early 1990s.
The FBI data show around 21,500 total murders last year, which is 5,000 more murders than in 2019. More than three-fourths of reported murders in 2020 were committed with a firearm, the highest rate ever reported.
Now before you start jumping to conclusions about a correlation between the leftist fever to defund the police and a huge jump in the nation’s murder rate, you should probably be aware of the fact that the Democrats want you to know that there’s no problem at all.
That’s right, the same people who want us all to live in mortal fear of being breathed on by a stranger at Kroeger are trying to poof away a pile of bodies.
Speaking of Flu Manchu, here’s NBA player Jonathan Isaac calmly explaining why he doesn’t feel he needs the vaccine:
This is a calm, intelligent, respectful statement as to why @JJudahIsaac is hesitant about getting the Covid vaccine. Instead of screaming at those who are still figuring it out, listen to his response. pic.twitter.com/Q1xMLw8boX
The Lancet just gives up on trying to determine the origins of Flu Manchu, much like OJ has given up on finding the real killers.
China is trying the classic idiot price controls strategy for its self-inflicted energy crisis:
China is officially panicking.
Now that the global energy crisis has slammed China’s economy, leading to the first contractionary PMI since March 2020 as a result of widespread shutdowns of factory and manufacturing, not to mention hundreds of millions of Chinese residents suffering from periodic blackouts, Bloomberg reports that China’s central government officials “ordered the country’s top state-owned energy companies to secure supplies for this winter at all costs.”
Translation: Beijing is no longer willing to risk social anger and going forward China will be subsidizing coil and nat gas, which will lead to even higher prices, which will lead to even higher prices for other “substitute” commodities such as oil, which is why oil surged on the news.
The news follows a report on Wednesday that China will allow soaring coal prices to be passed on to factories in electricity prices. But prepare for a surge in PPI, which will likely not be allowed to be passed on to CPI due to ‘common prosperity’. Which logically means margin collapse, and shutting down – so even more structural shortages. Unless we get state subsidies of some sort, or differential pricing for the foreign and domestic market. There used to be a name for that kind of economy. Wall Street used to pretend it didn’t like it.
“We don’t want normal,” said activist Earnest Greer. “We want radical change. What if everything goes back to the way it was without us completely dismantling and rebuilding the system?”
Liberals saw the pandemic as an opportunity to get people less clingy to individual freedom and more accepting of government planning significant parts of everyone’s lives. Normal would mean relinquishing that power, which is anathema to the Left.
Residents in three north-east Chinese provinces experienced unannounced power cuts as the electricity shortage which initially hit factories spreads to homes.
People living in Liaoning, Jilin and Heilongjiang provinces complained on social media about the lack of heating, and lifts and traffic lights not working.
Local media in China – which is highly dependent on coal for power – said the cause was a surge in coal prices leading to short supply. As shown in the chart below, Chinese thermal coal futures have more than doubled in price in the past year.
There are several reasons for the surge in thermal coal, among them already extremely tight energy supply globally (that’s already seen chaos engulf markets in Europe); the sharp economic rebound from COVID lockdowns that has boosted demand from households and businesses; a warm summer which led to extreme air condition consumption across China; the escalating trade spat with Australia which had depressed the coal trade and Chinese power companies ramping up power purchases to ensure winter coal supply.
Then there is Beijing’s pursuit of curbing carbon emissions – Xi Jinping wants to ensure blue skies at the Winter Olympics in Beijing next February, showing the international community that he’s serious about de-carbonizing the economy – that has led to artificial bottlenecks in the coal supply chain.
There are over 60 container ships full of import cargo stuck offshore of Los Angeles and Long Beach, but there are more than double that — 154 as of Friday — waiting to load export cargo off Shanghai and Ningbo in China, according to eeSea, a company that analyzes carrier schedules.
The number of container ships anchored off Shanghai and Ningbo has surged over recent weeks. There are now 242 container ships waiting for berths countrywide. Whether it’s due to heavy export volumes, Typhoon Chanthu or COVID, rising congestion in China is yet another wild card for the trans-Pacific trade.
Snip.
A major driver of congestion on both sides of the Pacific Ocean: Landside capacity (terminals, trucking, rail, warehousing) is limited, but the vessel capacity of a single ocean trade lane is highly flexible.
While the number of ships in the world is finite, operators can shift ships to wherever they make the most money. And the trans-Pacific is now a particularly lucrative trade: Spot rates including premiums can top $20,000 per forty-foot equivalent unit (FEU).
“These assets [ships] are super-mobile,” said Sundboell. “What’s happening now is the opposite of what dogged the industry for the past 20 years. Five years ago, people were asking: How can the trans-Pacific rate drop from $2,000 to $1,500 [per FEU] in the space of just six days? It was because you could take a vessel from one place and sail it someplace else, and suddenly there were more ships and a price war and rates dropped.
“Now we’re seeing the opposite,” he said. As ship operators pile more capacity into the trans-Pacific, congestion rises, delays mount, the incentive for shippers to pay premiums is supported, and all-in rates remain at record highs.
Despite the backlog, the busiest U.S. port still shuts down for hours on most days and is closed on Sundays, the Wall Street Journal reports. “Tens of thousands” of containers remain stuck at the ports of Los Angeles and Long Beach. More than 60 ships are lined up to dock, the report says.
More than 25% of all American imports pass through one of the two ports. LA and Long Beach collectively manage 13 private container terminals. Long Beach officials finally said last week they would try operating 24 hours a day between Monday and Thursday. LA says it’s going to keep existing hours and wait for the rest of the supply chain to extend their hours first.
More data points:
The Global Supply Chain is a &#$*ing Mess—in 4 JPM graphs
1. Dozens of containerships stacked up outside LA 2. Shipping rates to the moon 3. Global delivery times at 25-yr highs 4. Our surging demand for WFH and home improvements imports —> wild surge in eastbound freight rates pic.twitter.com/feeEzZKz7U
Finally, the Biden’s Administration’s vaccine mandate is about to make things much worse. “The looming federal mandate on COVID-19 vaccines for large employers could make hiring goals more difficult to reach for warehousing and distribution operations, which are already short on employees, some supply chain experts say.”
Keep in mind: None of the supply chain issues are the result of Flu Manchu, but almost all are the result of government overreaction to it.
All across the world, supply chains that were disrupted by Flu Manchu lockdowns don’t seem to have fully recovered. Maybe it’s because some political entities are still doing lockdowns, or maybe it’s because vaccine mandates are making critical worker shortages worse. Here are a few data points:
Remember The Great Toilet Paper Panic of 2020? It’s back!
Costco warned customers this week about a toilet paper shortage as the wholesale retailer is having challenging time stocking shelves due to supply chain disruptions, according to Fox News.
Costco told Fox News via an email statement, “Due to increased volumes, you may see a slight delay in the processing of this order.” The retailer noted that the company is “working to fulfill everything as quickly as possible.”
Costco announced purchasing limits on some products but didn’t mention specific items, saying, “some warehouses may have temporary item limits on select items.”
Some shoppers have reported other items of Costco warehouses are either in short supply or there are purchase limits.
Bottled water seems another shortage item.
As for myself, I made sure to start picking up one of the giant megapacks of toilet paper every trip to Sam’s back when lumber prices started spiking, on the “wood = paper” theory, so I’m set for a while.
The semiconductor shortage is getting worse. “A wave of delta-variant cases in Malaysia, Vietnam and the Philippines is causing production delays at factories that cut and package semiconductors, creating new bottlenecks on top of those caused by soaring demand for chips.” Eh, the slice-and-dice portion of the business is some 20 orders of magnitude less demanding than the actual fabrication process, so I expect that hiccup to be overcome quickly. The fab capacity constraints are going to be with us until next year when more capacity starts coming online (or the Biden Recession starts driving the smaller fabless design houses out of business, freeing up foundry capacity). And Biden Administration threats to invoke the Defense Production Act over semiconductor shortages shows that they have no frigging clue how the semiconductor industry works. The auto manufacturers screwed up by cancelling foundry runs last year, which means they’re paying the price this year. No bureaucratic inquiry is going to result in expanded fab capacity, any more than nine women can get together to produce a healthy baby in one month, and there’s no “hoarding” going on.
Shortages are also reported of big rig and diesel parts:
Everyone's worried about computer chip shortage for graphics cards, personal vehicles, but they all forget… The supply line that runs it.
Big diesel trucks. The chips are so short handed now trucks are sitting for weeks. pic.twitter.com/LgTEm3cgtV
On the ammo shortage front, I’m hearing from friends that it’s still pricey, but can be found a bit more readily than last year. According to this report, handgun ammo is starting to be more available, but rifle ammo is still very scarce with hunting season looming.
Finally, from back in August, here’s a piece on how supply chain disruptions were going to get worse.
The demand for shipping containers greatly exceeds the supply, and this has pushed global shipping container rates to levels we have never seen before.
And once shipping containers are delivered to U.S. ports, there isn’t enough port workers to unload them all.
It can now literally take months for products that are made in China to get to the U.S. retailers that originally ordered them.
Some data points for your consideration rather than attempted prognostication on whether things are getting better or worse.
I’ve been writing about China’s bubble economy for over a decade, from the housing bubble to the Ghost Cities and even ghost collateral. And now China’s entire house of cards appears to be trembling thanks to a company called Evergrande, which owes more than $300 billion.
China Evergrande Group, until recently the world’s largest property developer, owns dozens of stalled sites like Sunny Peninsula across China. Buckling under more than $300 billion in liabilities, the company is close to collapse, leaving 1.5 million buyers waiting for finished homes.
That’s why Evergrande has reached its Lehman moment:
Instead of Evergrande making the announcement, it was the entity that will soon control the massively overlevered property developer that made it for them: the Chinese government.
According to Bloomberg, Chinese authorities told major lenders to China Evergrande Group not to expect interest payments due next week on bank loans, which takes the cash-strapped developer a step closer the nation’s largest modern-day restructurings, and guarantees that China’s “Lehman Moment” is now just a matter of days, if not hours.
According to Bloomberg, citing unnamed sources, the Ministry of Housing and Urban-Rural Development told banks in a meeting this week that Evergrande won’t be able to pay its debt obligations due on Sept. 20, and instead most of Evergrande’s working capital in now being used to resume construction on existing projects, the housing ministry told bankers, according to a Bloomberg source.
And since nonpayment of interest and principal will represent an event of default, the company is unlikely to make any subsequent interest, or principal, payments either since it will have already default even though Bloomberg claims that “Evergrande is still discussing the possibility of getting extensions and rolling over some loans.” It won’t, especially since the developer will also miss a principal payment on at least one loan next week, which means it’s game over.
Meanwhile, as reported previously, Chinese authorities are already laying the groundwork for a debt restructuring of the $300 billion company (which recently hired Houlhan Lokey to advise it during the upcoming historic bankruptcy), assembling accounting and legal experts to examine the finances of the group. With senior leaders in Beijing silent on whether they will allow Evergrande creditors to suffer major losses, bondholders have priced in slim odds of a rescue infuriating countless investors and creditors who have mobbed the company’s offices across the country and also gathered at its HQ, demanding the company “return their money.” It won’t happen.
Not only is Evergrande possibly facing complete liquidation, but word came down that the company might make payments on Chinese-owned debt, but stiff foreign debt holders.
But the word this morning is that the Chinese government is now telling them to avoid default on dollar-denominated bonds. After all, if investors worldwide decided that all Chinese debt was potentially toxic, that would leave connected Chinese communists in a world of hurt.
And we can’t have that.
The unusual thing about Evergrande is that they owe money to everyone:
It seems to me that what is interesting about Evergrande is not so much the magnitude of its debt problems but their variety. Evergrande owes money to Chinese banks. It owes money to foreign hedge funds, and foreign investors own its stock. It owes money to suppliers, and to Chinese retail investors in those wealth management products. And it owes apartments to buyers. And the retail investors who bought Evergrande wealth management products were often also Evergrande homeowners, because the products were sold at Evergrande buildings.
It even took out short-term loans from its own employees. Also, it’s evidently stopped paying some employees. I don’t know about you, but for me both those would be signs it was time to look for another job.
When a big company runs out of money, the basic questions are (1) who gets paid and who doesn’t and (2) should the government pay its debts for it? Those questions are interconnected. There is an ordinary way to answer the first question, some waterfall of claim seniority. You look at the company’s capital structure and say “well these people have senior claims and will get paid back, and these people have junior claims and won’t, and these other people are somewhere in the middle and might get some recovery.” And there are complex and subtle questions about the best way to preserve value in the business: Perhaps you have the legal right to stiff customers (perhaps their deposits aren’t particularly senior claims), but if you do that you’ll never get any more customers, so you treat them better than you are legally required to. And the managers of the business and the creditors and the lawyers work together to figure out a plan that maximizes the recovery for everyone.
But if the ordinary process to answer the first question ends up with an answer like “sympathetic ordinary people lose their life savings,” or “politically connected people lose everything,” or “the banking system loses a lot of money and becomes undercapitalized,” or for that matter “housing prices collapse,” then that is a good reason for the government to step in. And if the government is stepping in, there is no particular reason to assume that the ordinary claims of seniority will apply. If the government steps in to rescue small investors or the banking system or housing prices, that doesn’t necessarily mean it will also rescue foreign hedge funds.
Bloomberg’s Joe Weisenthal and Tracy Alloway did an Odd Lots episode with analyst Travis Lundy about this, in which he gives his best guess at a waterfall of repayment. “I think that if you start from the ranking of who ends up coming out well on this, if you had to ask, this is the Communist Party of China who’s the most important stakeholder in this,” he says, and then goes through a list of claimants ordered by, basically, how politically sympathetic they are. This seems like a more reasonable analysis than, like, looking at the corporate structure and legal document to see which claims are more senior.
After the subprime meltdown in 2008, steps were taken to reduce systemic risk in the American and European economies. China? Not so much.
Whatever the ultimately resolution of Evergrande, the Chinese real estate market still seems both way over-leveraged and horribly opaque.
That wasn’t Evergrande, but a dizzying succession of other firms:
The original developer was Kunming Xishan Land and Housing Development and Operation (Group) Co., Ltd. (hereinafter referred to as Kunming Xifang). The project covers an area of about 340 acres. It is planned to have residential, commercial and office buildings. It is divided into 4 plots for development and construction, namely A1, A2, A3, and A4. Among them, the A1 and A3 plots are commercial, and the A2 and A4 plots are residential, with a total construction area of approximately 630,000 square meters. Among them, the delivery of four high-rise residential buildings on the A2 plot has been completed, with a construction area of about 136,000 square meters.
In 2012, due to the break of Kunming Xifang’s capital chain, the project was taken over by Yunnan Tin Industry Real Estate Development and Management Co., Ltd. (hereinafter referred to as Yunxi Real Estate). The project was renamed Yunxi·Gemdale. In July 2013, due to various reasons, Yunxi Construction of Sikkim Land was suspended. 2014 was originally the delivery time for the A2 plot of Yunxi Jindi, but due to the suspension of the project, the delivery did not begin until March 2015. In addition to the 4 high-rise buildings in the A2 plot that have been delivered, the remaining three plots A1\A3\A4 totaling 15 high-rise buildings have been suspended since the end of 2013.
In order to solve the problems left over from the unfinished project, the government restarted the project through the listing and transfer of the Yunnan Provincial Property Rights Exchange. On December 29, 2020, Yunnan Honghe Real Estate Co., Ltd. obtained the right to develop the project through equity transfer.
According to Sun Zheng, general manager of Xifang Group’s Liyang Star City Phase II Project, on January 6 this year, Yunnan Honghe Real Estate Co., Ltd. acquired 100% of Kunming Xifang’s equity and 23,068,600 yuan of debt at a transfer price of 979 million yuan. At present, West Real Estate is a wholly-owned subsidiary of Honghe Land. In order to maintain the continuity of project development, Liyang Star City Phase II will continue to use West Real Estate as the main development entity.
Got all that? That’s just one development in one city you’ve never heard of. How many other ghost developments are there in China? Hundreds? Thousands?
Another real estate boondoggle: Why Shanghai Tower failed. “The Shanghai Tower is owned by Yeti Construction and Development, a consortium of state-owned development companies which includes Shanghai Chengtou Corp., Shanghai Lujiazui Finance & Trade Zone Development Co., and Shanghai Construction Group.”
Remember that declines in real estate holding values were huge drivers for Japan’s bubble bursting as well as the subprime meltdown that took out Lehman Brothers and Countrywide (among others).
Could China’s house of cards finally collapse in the same way? Very possibly. But remember this caveat:
China's economy can be about to collapse longer than you can remain short.
Hunter Biden is the gift that keeps digging: “The Russians have videos of me doing crazy f***ing sex!’ Hunter Biden is seen in unearthed footage telling prostitute that Russian drug dealers stole ANOTHER of his laptops.” 1. Hunter has more Russian-related felonies in a single weekend than Donald Trump had in his entire lifetime. 2. I don’t lose pennies the way Hunter loses laptops…
The obvious fact is, however, that this corrupt corporate press and the Jennifer Rubin “conservatives” of the world are the ones who propped Cuomo up as “the gold standard,” to use Joe Biden’s words, even describing themselves as “Cuomosexuals.”
Cuomo’s “radical transparency” made him a “terrific bureaucrat,” they said. Cuomo is “inspiring, uplifting, fascinating,” and truly “magnificent,” they insisted. He’s “honest, direct, brave,” and what “real leadership” looks like. Elites gave him an Emmy and blessed him with softball interviews and comedy-hour airtime, with left-wing activists working behind the scenes to discredit Cuomo’s accusers.
Tuesday’s resignation signals it’s the end of the road for Cuomo — for now. But if the media can sit and twiddle its thumbs — or worse, kiss keister and perform comedy sketches with giant Q-Tips — while thousands of elderly folks die in New York nursing homes and women in the double digits tell of a gropey governor’s disgusting habits, we must ask: How many other Andrew Cuomos is the media covering for?
Covering for elite misconduct is a perpetual problem in the media; it didn’t start with Cuomo. As Federalist Political Editor John Daniel Davidson wrote on Tuesday, the media did the same with Harvey Weinstein, Jeffrey Epstein, and Theodore McCarrick. Don’t forget Bill Clinton or Roman Polanski, either.
“Everyone knew. No one cared. No one said anything until forced to. Then the feigned shock and outrage, the concern about the treatment of women, the hand-wringing and Me Too-ing, the performances on social media,” Davidson wrote. “As long as sexual harassment, assault, abuse, even the sex trafficking of underage girls stays quiet, then [the media] stay quiet, too.”
You read all this and think: The governor is a letch, a creep, a dirty old man. But also a nut—a high-functioning one, a politically talented one, but a nut. Only a nut would do these things, and only a nut would think he wouldn’t be found out.
No one in New York is walking around saying “I don’t believe it” or “That’s not the Andrew I know.” It’s apparently the Andrew Cuomo a lot of people knew.
(1) When they say inflation will "spike" or increase this year, and then "come back down next year", what they are saying is the price will skyrocket…. AND THEN the price will remain high.
(14) They didn’t. Consumer prices did not increase.
Trump knew they wouldn’t because essentially those trading partners responded in the exact same way the U.S. did decades ago when the import/export dynamic was reversed. pic.twitter.com/FyID9YCSwN
(16) To retain their position, China and the EU responded to U.S. tariffs by devaluing their currency as an offset to higher export prices. It started with China, because their economy is so dependent on exports to the U.S.
Baltimore professor arrested for dealing math. “Prof. Edward C. Ennels taught math at Baltimore City Community College but appears to have been offering a running lesson on supply side economic theory. Ennels reportedly was selling grades on a sliding scale depending on your worth and your ambition: $150 for a C; $250 for a B; and $500 for an A. He has now earned jail time after pleading to 11 misdemeanor charges, including bribery and misconduct in office.”
Speaking of Baltimore schools failing their students: Some Baltimore high school students test at grade school levels.
Dan Crenshaw slams Jennifer Ruben for a huge mistake:
You’re a liar and an idiot. The number you referenced is TOTAL hospitalized since the beginning of the pandemic. Not newly hospitalized. https://t.co/1I7CRES2qA
That’s a hell of a correction. “When we wrote Nolan Ryan struck out 383 batters in a single game, we meant he struck out that many in a single season…”
