Posted on 01/22/2022 12:52:27 PM PST by blam
The breakdown of global supply chains is well-known by now. Whether it’s finding groceries in your supermarket, buying a new car or buying appliances like dishwashers and refrigerators, goods are scarce. Also, deliveries take forever and choices are limited.
Many people wonder why the problem isn’t going away. Here’s the answer:
The supply chain is a complex dynamic system. When any complex system collapses, you can look for specific causes but that’s usually a waste of time. Systems collapse internally because they are too large and too interconnected and require too many energy inputs to keep going.
Any specific cause is more likely to be a symptom than a true cause. It’s frustrating, but that’s the answer.
Most Americans’ first encounter with the supply chain meltdown was in the spring of 2020 during the first wave of the coronavirus pandemic. Shoppers noticed that items like hand sanitizer and paper goods at Costco and other big-box stores were cleaned out.
It seemed that Americans who were locked down and quarantined at the time were hoarding these products because they had no idea when they would be allowed to venture out again.
The shortages were real, but were limited to specific products. The other aisles at Costco were stocked and so were all the other stores around (at least those that were allowed to remain open).
Now It’s Everything
But it’s not just Costco this time. It’s every supermarket, convenience store and other retail outlet from coast to coast. And it’s not just cleaning products and paper goods. Your local supermarket might have bare shelves for eggs, peanut butter, milk and other staples.
It’s not a case of being stocked out of all goods all the time. Your store is like a box of Cracker Jack – you never know what’s inside.
Many items are available, but many are not. It’s a case of stockouts of certain goods from time to time. But you can be sure that something will be missing and some of the shelves will be bare.
Still, there’s a narrative around that the crisis is temporary, that steps are being taken to alleviate shortages and backlogs and things will soon be back to normal.
The narrative blames the shortages on the pandemic and the number of workers home with COVID. It says that things will clear up when the virus is under control. That’s the narrative, but it’s not the reality.
The evidence is that the supply chain crisis is just getting started. It’ll be with us for years and have huge negative economic effects.
All Connected and All Collapsing at Once
No one doubts that the pandemic, especially the Omicron variant, has had a major impact and has caused millions to fall ill and miss work. It’s also likely that the missing employees due to illness are part of the reason shelves are not fully stocked.
But they are not a prime cause of the supply chain chaos.
Even if stores were fully staffed, there would still be shortages and delays due to everything from a shortage of truck drivers, late container cargo shipments from Asia, manufacturing delays due to lack of inputs, energy shortages and many other impediments.
That’s the point.
The supply chain is collapsing at every stage due to bottlenecks at every other stage. Commodity inputs are scarce, partly due to energy shortages at mines. Manufacturing is behind due to lack of commodity inputs. Deliveries are behind due to manufacturing delays. And finally, shelves are bare due to nondelivery of orders and a worker shortage.
It’s all connected and it’s all collapsing at once. So don’t believe the happy talk about a “temporary” supply chain crisis.
I’ll say it again: The crisis will last for years with predictable negative effects on economic growth.
The “Factory to the World” Is Closing Down
One major concern is China. China is currently pursuing a COVID Zero policy. This means that China has zero tolerance for even a single case of COVID.
If COVID appears, China will isolate the individual, do a massive track-and-trace operation and then forcibly remove entire neighborhoods to quarantine camps outside the city limits for mandatory lockdowns of 14 days or more.
If more than a few cases are detected, China will follow the same procedure but on a much larger scale. They will relocate hundreds of thousands of people if needed and shut down entire cities. This has already happened in Xi’an, a city of 1.5 million people and a major manufacturing center.
A new lockdown just arose in Henan province, which is the center of Chinese electronics production. China has also locked down the port of Ningbo, which is the second largest port in China after Shanghai, and one of the largest in the world.
China has also required that crews on arriving vessels must be confined to the vessel and are not allowed onshore for normal rest and recreation. Since these crews often spend six months or more at sea, vessel operators are starting to schedule trips that avoid China.
That means that even when goods are produced, they cannot necessarily be shipped because of a shortage of vessels and crews. The situation is getting worse, not better, and will deteriorate even more as we move toward the Beijing Olympics and the Lunar New Year holidays in China.
In effect, the “factory to the world” has decided to shut down the factory, or at least large parts of it for months to come.
This will continue to impact the U.S., which Americans are not accustomed to or prepared for.
Forced Labor
Americans associate bare shelves with Third World countries or perhaps East Germany during the Cold War. That last time Americans have had to deal with shortages on this scale were the gas crises of the 1970s and rationing during World War II.
Importantly, the phenomenon is not limited to the United States – it’s a global event. And it’s leading to extreme government measures. Take a look at Australia.
As in the U.S., Australia has large numbers of unemployed workers. They receive benefit payments similar to welfare and unemployment from an agency called Centrelink.
Well, the government has now declared that unemployed benefit recipients must work several hours per week to restock supermarket shelves in order to keep their Centrelink benefits. So, social benefits are being used to draft forced labor to deal with a supply chain problem.
Australia has become a kind of prison camp based on government dictates concerning the virus. It’s a good example of how COVID has empowered governments to dictate every aspect of citizens’ lives. This won’t be the last government mandate in Australia or here. And there’s a powerful lesson to be learned here:
Once governments get a taste of neo-fascism, they always want more. That’s true even in a liberal democracy like Australia. We’re seeing similar phenomena play out in western European democracies as well.
A Race Against Time
The other thing we can be sure of is that these mandates will slow the economy and destroy wealth.
The bad news for investors, again, is that this situation will persist for years. It’s not easy to correct and definitely not something that can be corrected quickly.
In markets, this will play out as higher costs, lower earnings and ultimately lower stock prices.
With markets still close to all-time highs, this could be a good time to lighten up on stocks before the supply chain reality catches up with the stock market bubble.
When it does, it won’t be pretty.
The problem with the supply chain is the government is trying to manage with the usual results and it is hampered by the Biden Administration Who are using shortages to further their political goals for the Great Reset.
I haven’t seen any shortages in Idaho (July to December) or the California Bay Area (January). There are a few gaps here and there, but they get filled during the night stocking.
It feels like this is just more ginning up of fear and hysteria.
I ordered a repair part for our ten year old microwave oven. It arrived in a few days. Almost all Amazon orders arrive in one to three days. Gasoline stations are full (at horrible prices).
I was at Kohl’s yesterday and there were no shortages of clothing, but plain old Dockers are $72 each! Last time I looked they were around $49.
“Just in time” is not a robust system. But everybody adopted it. It has failed, along with Democrats the world wide, practicing policies of the “government knows best”, caused this.
It will indeed take years to recover, if at all. We had it in our grasp and we let the Democrats of the world “piss it away”.
Disagree. I am seeing shortages at random. The Walmart hasn’t had chicken in a week. Rice is picked clean and rarely stocked. And a power brake booster I ordered took ten days.
I pulled up to a Taco Bell at 5:05 pm to be told it was closed due to staffing.
The Walgreens looks like a going out of business sale the shelves are so empty.
Other restaurants that are open are routinely out of normal items. This is in a very big midwestern city. recent travels to surrounding states look the same.
This is definitely happening.
Government controls are the problem. Unleash the entrepreneurial markets and get government out of the way.
This has NOT happened in Australia. I am really getting sick of the lies people are telling about my country.
What has been suggested is that those who are currently unemployed might be able to find short term work as supermarket shelf stackers. It would be voluntary and they'd be paid for it at the normal rate for the work. In other words, they'd be getting a job.
It’s amazing how regional and local the shortages are. Honestly, I’m not seeing it here in the Bay Area. Maybe it’s because many of the ships from Asia dock in Oakland...wait, that can’t be it. They are stacked up all over the Bay and Ocean.
Entenmann’s double chocolate frosted donuts are scarce right now
“The problem with the supply chain is the government is trying to manage with the usual results and it is hampered by the Biden Administration Who are using shortages to further their political goals for the Great Reset”.
You are exactly right. System wide collapse on a world wide scale is their goal and they’ll do everything possible to make that happen.
My Walmart has plenty of chicken. We have a shortage of frozen potatoes of all sorts, hash browns, French fries, etc.
The supply chain is a complex dynamic system.Lots of moving parts. Who is John Galt?
I haven’t seen those in years! Have had to settle for just the chocolate donuts.
Saw my first empty meat section at a Walmart last week. Weird. Not widespread around here, but it does happen. The system is a bit messed up. We are a hop, skip, and a jump from huge numbers of chicken farms and a rather large chicken “processing” plant. But no chicken at the nearest Walmart. Weird. I’m blaming Joe Brandon.
If we let prices do their job, and get government out of the way, these problems would be fixed. Long live the free market.
For those who need batteries (such as AA AAA, etc.) - don’t wait too long, at least if my local Sam’s is any indication. Practically sold out, except for their store brand...but that was low, also.
There are nations that are hostile to the United States.
They can’t risk fighting us militarily.
This is one way they are attacking us.
As with any significant event, there will be winners and losers. Winners in USA will be domestic producers with secure supply chains of raw materials and other critical bill of material items. Similarly, suppliers and service providers who can participate in restoring of American industry are going to be in demand. This is easier said than done. Much of our critical and strategic materials are foreign made . Thank the Lord for Donald Trump’s efforts to re shore our critical and strategic industries and to drive for American energy independence. Despite the Biden Admin’s best attempts to destroy the Trump efforts at repatriation of American manufacturing industrial base from foreign countries and his efforts to make us energy independent, most of the plans are still in progress due the covid supply chain disruptions, the instability of China and the realization by Corp leaders of the downside risks of offshoring of mission critical assets. On the energy side, despite the Biden Admin’s attempts to destroy our domestic petrochemical industry, Trump has shown the way and we can rapidly rebuild what Biden has tried to destroy. The rebuilding of America’s domestic petrochemical base for petrochemical self sufficiency is the single most critical issue to allow America to weather any systemic crash for two reasons. The first is the obvious ability to supply domestic needs. The second reason is strategic and perhaps just as critical - in any serious scarcity, foreign oil prices are going to skyrocket and the resulting massive price shocks will kill the American economy across the board. The Biden Admins willful attempts at destruction of our petrochemical industry are borderline treason as we may soon discover
Now It’s Everything
But it’s not just Costco this time. It’s every supermarket, convenience store and other retail outlet from coast to coast. And it’s not just cleaning products and paper goods. Your local supermarket might have bare shelves for eggs, peanut butter, milk and other staples.
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Strange shortages at my local supermarket today. No baby aspirin, in fact about half the aspirin section was empty, and no dental floss!!! What the heck!
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