Signs, portents

Well, this certainly doesn’t sound very good.

Back in 2007, there were hints that a financial disaster were coming, it’s just that many of them were simply missed, even though they were obvious in hindsight. As a firefighter, I saw them: Multiple families living in brand new, expensive homes without a stick of furniture. They could barely make the payment on their adjustable rate balloon mortgage, so they certainly couldn’t afford furniture. All it took was an increase in gas prices to set off the entire mortgage collapse.

There are again signs of an impending financial disaster, and they are everywhere. For example:

My in-laws were in Maine for the summer. They returned last week. Just before they returned, my wife went over to their house to prepare it for their arrival. While she was there, she smelled something odd, like rotting garbage. The smell was coming from the refrigerator. Even though the display on the door said it was cold, it was not. All of the food had rotted.

After a rather nasty cleaning session, the in-laws returned home. They went shopping for a new refrigerator, and there were not many to be had. It turns out that there is no supply coming from overseas, where most of them are made. The ones that ARE getting through are not enough to meet demand. There are lengthy backorders.

Yet another sign that the economy is grinding to a halt is coming from the auto industry. GM and Ford have suspended the production of pickup trucks because of the shortage in computer chips. This is a disaster for Ford Motor Company. All Ford makes is trucks, SUVs, and the Mustang. Ford reports that its sales are down 32 percent.

Total Ford Motor Company sales during July 2021 decreased 32 percent from last July, selling only 120,053 units. Sales of cars were hit hardest, with a 78% reduction to 4,365 units. Trucks were down 38 percent to 72,574 units, and SUV sales dropped 35 percent to 43,114 units.

That news was bad enough, but was ever worse for August, as Ford sales dropped 33 percent in August from the same month last year.

If this is a disaster for Ford, it is also a disaster for the US economy. Ford is the 21st largest company in the USA, and GM is the 22nd.

We are seeing shortages in all sorts of things: supplies are hard to find. Chicken, lumber, microchips, gas, steel, metals, chlorine, and ketchup packets are all in short supply. We shut down the world’s economy, and it is not wanting to restart. We can’t even get people to return to work.

“Experts” can argue about it for months, but no matter the cause, the result is the same. This slowdown of the economy is going to continue for months, perhaps several years. How many businesses will fail as a result is anyone’s guess. One thing is for sure, though. The economy is going to get much, much worse. Inflation is going to increase markedly as the law of supply and demand begins to take hold. Once Suzy Soccermom figures out that there is a problem, expect panic buying and even more shortages as she begins to panic shop for things.

Another thing I spent most of last year shrieking about was the mind-bending catastrophe that must follow from the hamhanded attempt to assert control over a national economy far beyond the comprehension of ProPol hacks, whose negligible intelligence and ability are routinely dwarfed by their stupendous arrogance. Again and again, I insisted that the onset of this ruinous interference would likely be delayed at first, allowing time for the damage to slowly spread throughout the most effective prosperity-generation system ever known to man and, eventually, break the machine down completely. Even when Trump seemed to miraculously revivify the economy last fall, I felt the reprieve could only be temporary, kind of like the way terminal patients can rally unexpectedly and against all odds—inexplicably acting, looking, even feeling much better for about three days or so, before their condition drastically worsens and the patient finally succumbs. More from Brandon Smith:

We are at an impasse. With incessant fear mongering over the latest covid variants and the government obsession with 100% vaccination, the pro- and anti-vaccine groups are squaring off .  It is a conflict between those who see their submission to the vaccination as a badge of personal responsibility and civic-mindedness versus those who see it as merely an excuse for authoritarianism. Unless pro-vax people choose to stand down and walk away from the fight, our economic future will grow increasingly unstable.

This is the foreboding backdrop of our economic tale, and it is important to keep in mind that the technocratic exploitation of the covid non-crisis as a push for supremacy is going to color EVERYTHING that happens in our financial system from now on. You cannot talk about our economic condition without including the effects of the pandemic theater.

I believe that the next year in particular is going to be adrenalized and chaotic beyond what we have already seen in 2020-2021. Like I said, there are two sides of America that are now completely opposed in almost every way. Something is going to snap, and I suspect this will happen in 12 months or less.
The U.S. economy is itself an underlying disaster in the making and in many ways the Covid issue is a convenient distraction away from a much larger threat.

The pandemic response has conjured an even greater crisis because the shutdowns of vast parts of the service sector led to trillions more in stimulus just to keep an array of businesses from closing permanently, let alone the trillions of dollars that are STILL being printed to boost unemployment checks.

All of this monetary trickery is going to end, and when it does, there will be a fiscal reckoning beyond anything the world has seen in centuries.

Here are some of the most immediate dangers as I see them in the next 12 months, and what they mean for our future…

Itemized analysis follows, all of it astute enough and also totally depressing, but the closer is what hammers in the proverbial Final Nail.

Vaccine Passports Will Be The Death Rattle Of Small Businesses
Small businesses make up around 50% of the U.S. retail market and are a big part of jobs numbers. I find it less than coincidental that nearly every single action on the part of the government in terms of the Covid response has led to a retail apocalypse that has eclipsed the small business sector while keeping the corporate retail sector alive. The last nail in the coffin for smaller service providers will be vaccine passports, if they are allowed to take root.

Biden’s latest and predictable announcement of a vaccine passport executive order apparently applies only to companies with 100 employees or more, but this represents a large number of small to moderate businesses, and if Biden gets his way ALL businesses will be included eventually.  I will be writing extensively on this in my next article.

Many retailers are already sounding the alarm over the fear of possible vaccine passports for customers because they know that they will lose at least half of their customer base in response. The enforcement of such rules would require extra costs that will grind down their profit margins. And let’s not forget that if a customer sneaks through security measures, that business might be held liable and fined into oblivion. It’s a lose/lose for business owners which means, again, that many thousands more businesses will close down.

America’s economy will be annihilated.

We all know that the government under Biden is not going to give up on vaccinations or the mandates. They will continue to press until they get what they want (or until the public stops them). Don’t get too comfortable in the relative calm that we have enjoyed until recently as far as Covid restrictions are concerned.

And, well, here we all are it comes.

A couple nights ago I said: You do not, MUST NOT EVER willingly lay Principle on the altar of Safety, no matter what cause, what purported emergency, is put forth as justification. Addendum: You do not, MUST NOT EVER allow people who have never run a private-sector business, met a payroll, or done an honest day’s work at a productive, useful job in their entire lives get their ignorant, incompetent mitts on the national ecosystem.

Of course, asking a ProPol to kindly refrain from meddling in affairs which are much too big for him is about as useful as asking a horse to fly; the question presupposes certain requisite traits which are nowhere in evidence among the species. In the case of despecta politicus, the absent trait is humility.

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HazHap

The damage done by the ignorati who thought they could flip the economy off and then back on again like a switch has been immense. Pretty much none of them have ever worked in a for-profit private enterprise in their entire lives, so their lack of understanding is not a surprise. But as you correctly noted, their lack of humility in not recognizing that there are things they do not know has resulted in the biggest self-inflicted economic disaster in history.

The only real question is how much of it was intentional. And after the past 20 months or so, “most of it” is certainly looking like the answer. They want the masses reduced to penury, the better to control (and then eliminate) them. They seem to think their cushy lives will continue unchanged somehow, that technology and infrastructure and consumer goods will continue to be available even as the entire system breaks down. Maybe they truly believe the whole “robots will do all the labor” BS. The end result will not be good for them, however much fiat money they think they have.

Last edited 3 days ago by HazHap
kennycan

People think electricity is made in the wall and food is made in the grocery store so they probably think those robots make themselves at Walmart.

Hint: They have to build factories to build robots and then have a delivery system to get the robots from the factory to the store.

All that infrastructure goes nowhere when there is no capital to build it and maintain it.

Last edited 3 days ago by kennycan
HazHap

The maintaining part is a big aspect. The robots have to be designed, built, programmed, and serviced/maintained. I guess the ruling caste thinks that robots will handle that part, too. Along with self-driving trucks doing all the deliveries, robots unloading stuff at ports, self-navigating cross-ocean cargo shipping, etc.

None of these technologies is actually beyond the very early alpha stages, if that even. The economic situation is incentivizing rapid developments in these areas, as well as the demographics situation in places like Japan. But much of it is still quite a ways off in the future.

Barry

“…quite a ways off in the future.

Yep, way off. In spite of the technological advances along many fronts, the day of the self building robot is decades away.

We’ll see pieces, assembled by humans with robotic aids, continue to increase until it’s all there. And then the human participation will diminish. That’s if we survive the great reset.

kennycan

The irony of it all was that the Fed was raising rates but was so far behind the curve and late to the party that there was a double whammy of Gasoline Prices through the roof while interest rates were at a decade high and other inflation was STILL rising, meaning credit spreads to those high Fed Rates were increasing, adding a triple blow to highly leveraged long mortgage backed bonds and derivatives that had paid handsomely when home prices were rising. All home prices had to do was to stop rising and those rate resets would come crashing down on those leveraged home owners, sending the double leveraged bonds and derivatives crashing down on themselves.

To have borrowed heavily on homes was one problem. When the Lenders also Borrowed heavily to make those loans it meant double leverage with a tiny sliver of equity backing it. Throwing in derivatives that were leveraged plays on leveraged bonds on leveraged houses meant there was TRIPLE the borrowing on any given overpriced house.

HazHap

I’ve been concerned for some years now that we are going to get a big deflationary shock at some point, with some key event causing a drop in real estate/housing and then ripples spreading outward through all the loans and derivatives based on real estate/housing. An awful lot of “money” would vanish into nothing practically overnight, overwhelming even the Fed’s ability to print.

I still think that is likely to happen, but we are seeing inflationary shock first. I had expected deflationary shock, then inflation as the Fed tried to print its way out of the crisis. Switching the order of the twin collapse is not going to make it any less ugly, though.

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