And not in a good way…
The whole Red Sea issue is and will continue to impact the USA, even if it is half a world away.
Turmoil in the Red Sea is taking a turn for the worse, and may create new bottlenecks in an already strained global supply chain.
Why it matters: The situation has become another wild card for a world economy increasingly wracked by instability.
Catch up fast: The U.S. and U.K. conducted targeted strikes in Yemen against Iran-supported Houthi rebels on Thursday, in reprisals for their incursions in the Red Sea.
The impact: The tensions have sent oil prices on a tear, and complicated shipping for a number of companies — including Tesla, which suspended production in Germany to grapple with supply chain troubles.
Full article and links HERE from Axios.com
When everything has been ‘offshored’ for manufacturing, just getting product becomes an issue, even moreso when you look at the number of companies that now use just in time (JIT) warehousing of goods, like WalMart.
If you remember last year, the chip shortage from the far east just about crippled auto manufacturers like Ford who had thousands of vehicles parked waiting computer chips and the car lots were pretty much bare, to put it mildly.
These days, the US actually manufactures very little. Almost no steel of any type, many drugs are offshored, and most types of chips are also offshored.
Add to this the perturbations caused in the global supply chain by having to either go around the Horn, or Transpac and attempt the Panama Canal (which is having issues with low water and restricting the number of TEUs per ship due to depth issues and the time it takes to refill the locks limiting the number of ships per day, and you’ve got an additional 10-20 transit days to get product moved.
This doesn’t bode well, especially if we have as bad a winter as some are predicting, and with this administration bumbling around, could and probably will drive inflation even higher than it already is.
The sad part is that salaries, pensions, etc. are not even close to keeping up with inflation now, much less if it continues rising, even as product becomes less available.
All I can suggest is hunker down, make sure you get refills on your medications at every chance, keep as much cash handy as you can, and limit the amount of credit you use until we figure out where we’re going to end up for the next year or so…
And stock up on staples that will last, and look around to make sure you have people you can trust near enough to pool assets with if required.
I’m no expert, don’t play one on TV, and I didn’t stay at a Holiday Inn, so YMMV…
Tesla should only ship their cars on electric powered ships. Just saying.
On a serious note, not sure why bombing the shhh out of some rebels in a backwater country that produces nothing should affect the price of anything.
Maritime shipping insurance. When not one (Houthi), but two (Us/Uk/others) are throwing ordinance around, the price for each vessel goes stratospheric.
I look at the wars occurring in Ukraine, the rocket and missile attacks against US troops in Syria, Iraq, and the threats from China against Taiwan and the missile attacks from the Houthis as well as US and British response as the beginning of WW3. All that is needed to bring the world war into complete focus is for China to invade Taiwan and then everyone will realize that much of the political leadership in America has put us in danger of being overtaken by Russian and Chinese military. I hope and pray this does not happen but the morons in the White House and Pentagon have allowed the weakening of American military to occur.
It hinges around money, be it the almighty dollar, the satisfied yen, or the damnable digital widget. At least, that’s the thinking. My own thoughts, such as they are, is that we, the U.S. of A., aren’t accounting for the religious fanatics that are leaning on the buttons east of Suez.
This latest problem with Yemen and the Houthi rebels surfaced in the early 1990s, and it could have been put to rest back then – but no one wanted to. Now Allah has decreed that these rag heads get bolder and monkey with the supply chain, so guess who gets to put paid to that?
I have no real idea what it costs to run a carrier group, but I’m guessing plenty. Between this and similar problems, we might as well power an aircraft carrier with c-notes into a firebox and boiler arrangement.
Manufacturing in the U.S. is dead due to the cost of labor and productivity. Add to that labor union attitudes towards management and the Luddites opposing any form of automation, and it’s little wonder we don’t manufacture anything in the U.S.
In fact I once worked for a major manufacturer of rodenticides (rat poison). The company tried opening a plant in Mexico, but the place went broke. The reason? In Mexico, it’s cheaper to hire someone to sit around your house or barn and whack the rodents with a stick than it is to poison them. No, I’m not kidding, and no, I haven’t been drinking. Yet.
I’ve been bracing for a major, major depression for several years now, and not much has happened. My thought is that I’ll live just long enough to see the beginning, but not the end. Kind of like Moses and the Promised Land.
Good luck with your hearing problems. A friend of mine has the same sort of thing and now wears hearing aids, which he enjoys. He tells me it makes life easier for him.
You note cost of labor, but you also need to include the EPA and OSHA. They made companies offshore to countries that didn’t have those two bureaucracies, simply to survive. As an example, look at what the Nuns in NYC had to go thru to try to put in an elevator, before they gave up.
I’ve often wondered if killing US industry via Red Tape was the unstated intent of those laws by the people proposing them. Certainly killing things via regulation because they couldn’t pass a law, is an established tactic of the left.
Another point of view.
Ford is down 10% from a year ago after announcing the F-150 E trucks were a loss and were cutting production. Ford sales of new vehicles are up 7.1% and the company is out performing the other Big 3 competitors.
As for the Red Sea- Gulf of Aden, yes sir that will cause problems.
I’ve been watching Ward Carroll on Youtube. He’s had folks on to discuss the impact on commercial shipping since the Hamas attack on Israel. Highly recommended.
Ward Carroll is a retired USN Captain
For all those folks who stock up on rifles, having one or two around that take 7.62x54R might be fun – just in case you get a chance to steal some from the bad guys. Same may go for 7.62×51 NATO, in case the blue-helmets invite themselves over and set up “checkpoints” along US interstates. (The Davos crowd prolly has *no* idea how badly that would go for them…)
I don’t think we’ll ever have a real “World War” like WW1 or 2, (especially pitched battles or the tank battle of Kursk) because after WW2 we got out of the habit of Congress actually declaring “war” and instead got into an interminable series low-intensity, messy, and distant skirmishes that are excellent for feeding the military-industrial complex. Just like therapists avoid completely curing the client, the international issues that fuel these tensions are never fully eradicated and instead are carefully cultivated so as to re-ignite from time to time so that expensive ordnance and countermeasures have to be continually expended and/or upgraded if they go obsolete if never used. And there are plenty of weapons the world is grateful or ignorant of for never having been “used.”
Joining WL Emery here to say best wishes with your ears; I worked at a foundry for a number of years and while that was God-awful fun at times I ended up with a “flat spot” in my hearing range. I don’t know if you’re into amateur radio but there are fun, free software apps that can listen in and convert CW into traces on a screen ( look into “CW Skimmer” screengrab at: http://www.dxatlas.com/CwSkimmer/Cw3kHz.gif ) so I can stay in practice copying even if I’m not actually transmitting.
This is being done on purpose. I don’t know who is backing it (Iran, China, or possibly even Russia – though I doubt that). I’d heard rumors on some of the more ‘out there’ sites a year or two ago that because we got everything from overseas now, that disruptions to our supply chain would be cheap to create and cause extensive damage to our economy.
Back then people were speculating Iran would be the ones behind it.
But it doesn’t matter who’s doing it. Which it becomes apparent that you can easily destroy a powerful country, without directly engaging, for pocket change, you’re going to do it.
And they are.
‘Free Markets’ are never free.
Giving others the control over all of your goods gives them control over you. And sooner or later someone is always going to yank on your leash to bring you to heel.
Well, they’re yanking. Shipping is only going to get worse from here.
Time for the Saudi’s to put all their toys to use and go in and clean house. Likely won’t happen.
And almost everything that’s happening is PLANNED. The left has an agenda and a blueprint to achieve that goal. And the insanity that’s been transpiring is deliberate, part of thee plan to implement the agenda
All- Thanks, you do raise some interesting points. Everything that is going on IS drawing down our war reserve, stretching deployment schedules, and putting maintenance further behind, in addition to the troop losses/low enlistment rates. We’re sucking hind tit and I don’t see it getting better in the next year.
Euro manufacturing is in trouble – car plants are being idled due to lack of components
https://news.yahoo.com/red-sea-shipping-attacks-halt-174206192.html
And the Germans have sent a frigate to help shoot down red sea drones. Also people have noticed that the Houthis are not attacking PRC ships, which is just weird and clearly just a coincidence (/sarc)
Oil futures appear to be settling down after their spike. Worth watching, but I suspect it will be a blip, unlike some of the other impacts.
https://www.oldsaltblog.com/2024/01/maersk-to-partially-bypass-panama-canal-backlog-by-shifting-to-panama-railway/
Regarding China and Taiwan:
https://youtu.be/oupSYGUL0dE
If true, that situation might cause things to get a bit quieter, as more people get up to speed on it.
The Chinese have an ongoing cultural problem. Endemic, really. I rather doubt they will ever be able to fix it to an acceptable level. In a pre-industrial society you can get away with widespread corruption, but once they have tech to play games with, hiding it gets too easy. That’s when it will bite you big time.