The economy: order, counter-order, disorder

 

There's tremendous disagreement right now over whether or not we're careering towards an economic cliff, and about to fall over the edge.  Much of the evidence offered is convincing, but much is duplicitous propaganda designed to stampede us into precipitous action before we've had a chance to think things through.  If anyone says to you, "This is how it's going to go down!  Guaranteed!", I suggest you ask them what they're selling, because they're out to convince you to buy it.

Rather than advance my own views on our and the world's economy (which are and have for some years been negative, as regular readers will know, but for very different reasons than the Iran war alone), here are a few articles that caught my eye over recent weeks.  I suggest you read each of them, and make up your own minds.  I've included a few key paragraphs beneath each link.

1.  We’re on the brink of a global recession, but it’s not Iran we need to worry about

With the Strait of Hormuz impassable, a widespread inflation spike is looming, which would seriously damage the global economy.

Along with a fifth of the world’s oil and gas supplies, this dual Iran-US blockade also prevents a third of the world’s seaborne fertiliser feedstocks from reaching global markets.

That points to lower crop yields this summer – a serious energy-price spike with a food-price surge too.

A third of global helium supplies – which is is vital when making semiconductors – pass through the strait. Those chips, comparable in strategic terms to oil, enable trillions of dollars of downstream economic activity – from manufacturing to energy structures, wireless and computer data storage and defence.

On top of all that, multiple sovereign bond crises are brewing across the G7, as Western nations struggle with high fiscal deficits, tightening demographics and big government, while failing to constrain runaway welfare spending.

2.  U.S. Wheat Futs Hit Two-Year High As Wall Street Sounds Alarm Over Drought Shock

Hard red winter wheat climbed to a two-year high by the end of the week, as our coverage of the drought shock now hitting America's Breadbasket raises serious alarm bells on commodity desks.

The concern is not just reduced crop yields and quality. It is colliding with fertilizer shortages and elevated diesel prices, creating a broader inflationary transmission channel that could work its way through the food supply and translate into higher supermarket prices down the road.

3.  I Am Calling It Now: THE EVENT Has Happened

Michael Yon has spoken of "flash-to-bang"—that delay between seeing a distant explosion and feeling/hearing its shockwave. I witnessed this firsthand in Iraq. Out on the highway in front of COB Speicher, a massive car bomb detonated miles away. I saw the giant mushroom cloud rise first—a silent, horrifying spectacle—before the low, guttural bass thump finally rolled in. You feel it in your chest as much as hear it. The bigger the blast, the longer the delay when you're observing from afar.

That same principle applies here with the Strait of Hormuz. The "flash"—the initial explosions, ship attacks, blockades, and seizures—has already lit up the horizon. The "bang"—the full economic, energetic, and societal shockwave—is still traveling toward us. It will hit hardest in the months ahead as fuel shortages cascade into transportation failures, fertilizer disruptions, higher food prices, and broader supply chain collapses. Global food systems are already under pressure, and this energy crunch could tip vulnerable regions into outright crisis.

I know extremely hard times lie ahead for millions. In places like the Philippines, the challenges will be especially brutal—not just because of external shocks, but because of deep cultural and societal realities on the ground.

4.  The Economic Destruction of Trump’s War Goes Far Beyond High Gas Prices

A lot of economic pain has already been locked in by this war. But to really understand it, it’s necessary to keep a few important economic truths at the front of our minds.

First is the fact that the entire purpose of the economy is to produce goods and services that consumers value enough to pay for. All of the production happening anywhere in the economy is geared towards that end ... Every consumer good can be viewed as the end of a long chain of production stretching all the way back to the cultivation of raw materials like iron or timber, or the creation of basic components like resins or plastics. Economists call those basic capital goods at the beginning of the chain higher order goods.

. . .

And second, production takes time. That’s true for the production of any given good, but it’s especially true if we look across that entire chain of production. The higher order goods that are currently being produced won’t help bring about finished consumer products until months or even years down the road.

All of this is important to understand and keep in mind because the war with Iran is, so far, primarily impacting the production of higher order goods. And it goes far beyond oil.

And, to show how left-wing "thinkers" (you should pardon the expression) are relating economic issues to their own pet ideological hobby-horses, here's what a New York Times opinion columnist had to say about older people and the economy.  The original is behind a paywall, so the link goes to an archived copy.

Older Americans Are Hoarding America’s Potential

It is not ageist to ask whether older people should be required to give more to younger Americans and national priorities — it is critical to the future of our democracy and society. America needs to confront gerontocracy before the system collapses under the weight of its inequality and injustice.

Older Americans deserve a say over the future even when they might not live to see it. But they do not deserve the stranglehold over it they currently enjoy through overrepresentation in elections, which produces too many regressive policies and too many seniors in the highest offices.

Older Americans are owed the care that everyone else funds. Indeed, they should get more of it than they get now — including funding for long-term care at home or in nursing homes. But they also need incentives to give up accumulated housing, jobs and wealth.

Considering that I'm now numbered among "older Americans", that does not give me warm fuzzy feelings about my economic future under a progressive left government in this country, should one come to pass.  The above screed sounds more to me like "We're young!  We don't want to wait our turn!  Give us the keys to the kingdom right now!  And while you're handing them over, give us all your money as well!"  Greedy, much?

I'll give the last word to the inimitable Karl Denninger.

How Much Further?

The real problem for ordinary people in the economy is that anything that is unsustainable over a sufficient amount of time will blow up in your face.  But when will it blow up?  That's a more difficult problem.  For example we know that housing is largely locked up in a large part of the country -- indeed, most of it.  In those places where it sort-of-isn't there are other serious problems including property tax and insurance concerns that might as well have it locked up from a standpoint of actual affordability.  Add to this that many formerly thought of as "safe" professions which earn a nice wage, including computer science and medical, are rapidly being destroyed in terms of forward earnings capacity by both AI and foreign worker imports.  There are plenty of stories already of people living quite high on the hog having accumulated a lifestyle with mandatory monthly spend commensurate with $250,000 wages suddenly being laid off and finding no replacement for that wage at even half what they formerly made.  If you've managed to get yourself into a leveraged position with a forward requirement for such earnings and they disappear you're in very serious trouble indeed.

True dat.

Peter

Memes that made me laugh 309

 

Gathered from around the Internet over the past week.  Click any image for a larger view.

Sunday morning music

 

I'm not generally a fan of jazz and blues music;  it's a uniquely American music genre, and my exposure to it growing up and as a young man was minuscule.  Nevertheless, I've learned to enjoy some performers and their music.  The subject of this morning's post, Justin Johnson, was highlighted by fellow blogger Zendo Deb a couple of months ago.  I hadn't heard of him before, but it seems he's very well-known, with a guitar instruction Web page, his own YouTube channel, and many other points of contact.

I selected three of his pieces for this morning's post.  You'll find many more online.  Let's start with "Swamp Groove".

Next, a more rock music sound in "Six Of One".

And finally, some excellent slide guitar work in "Low Country Slide".

He also makes (and sells) a 3-string shovel guitar, and has videos showing him playing a cigar box guitar, one made from an ammo can, and more.  He's obviously a tremendously versatile and very skilled musician.  I'm sorry I hadn't heard of him before Zendo Deb's Blog post, but I'll be making up for lost time!

Peter

So much for the work ethic

 

I was both sympathetic and very annoyed to read a woman's account of how she set about demonstrating that her job was meaningless.

It was around then, as the company went through various rounds of restructuring, that I developed a nagging suspicion that my role was irrelevant and futile ... No one – my new manager included – really knew what my role was meant to entail. I looked at what I was doing day to day, hour to hour, and looked at what everyone else was doing, and it all started to feel like a convoluted farce.

So, I decided to conduct an experiment. Out of protest, I resolved to stop working and to see how long it would be before anyone noticed.

. . .

This was in the era before working from home, so I knew I’d have to go to my office each day and at least appear to be working.

I quickly realised, though, that there is no greater ruse in a modern office than the spreadsheet.

People walk past, see all that small text and columns, and just assume you’re working. What was I actually doing? Meticulously planning 10 months of travel: day-by-day itineraries, budgets, where we’d stay, what trains to get, things to see. My now-husband and I had always planned to travel; I was simply using company hours to prepare for it.

Of course this involved a lot of Googling, so I always had a page that looked like work ready, so that I could minimise my travel research quickly. I’d angled my monitor, but I was lucky to be sat in front of a window, away from any footfall, so it was rare that anyone saw my screen.

To leave a paper trail – so that if anyone asked, I could point to tasks I’d completed – I’d send a couple of emails during the week. I’d pad the basic questions about some account or other out with extra thoughts, so that it seemed like I’d considered the subject at length. Sometimes I’d create a document based on whatever was exchanged in the email. Other times, I might even turn the email contents into a PowerPoint presentation. With about 15 minutes of effort, I would have earned my crust.

If I hadn’t done even that, half an hour before my weekly one-to-ones with my manager I would spend 15 minutes knocking up a page of something, typically a presentation with figures I knew he wouldn’t bother to follow-up on. Then I’d deliver my updates in a convincing tone, using the appropriate buzz phrases. “I’m making great progress... the stakeholders are on board…”

My manager would nod: “That all sounds great! Carry on.”

In that way, I did no work for an entire year. The experiment ended not because anyone exposed my idling, but because I finally left.

There's more at the link.

She doesn't appear to have worried at all that it might be unethical to take an honest day's wage for a dis-honest day's work.  That was the infuriating part.  On the other hand, there was also sympathy for working in such a meaningless, dead-end environment (which I experienced more than once during my years in the business world - not to mention the military).  On average, I'd say that the companies and institutions where I worked probably had a good 30% of staff who were basically redundant, hindering the company rather than helping it, soaking up resources that could have been better applied elsewhere.

I remember when Elon Musk took over Twitter.  I understand he shed about 80% of its workforce, some through being dismissed, others through encouraging them to leave through buyout offers, and not a few resigning in outrage that the left-wing ethos of the company was being stripped away.  For a couple of years Twitter was in financial difficulties, but it bounced right back, and is currently profitable - but still a much smaller company in terms of headcount.  What were those people doing who were removed?  How could Twitter have justified keeping them on the payroll when clearly it could have functioned - and is now functioning - just fine without them?

I suppose part of the problem is that too much of one's corporate status is dependent on how many people and/or functions report to you.  The more people a given level of management supervises, the more senior it's deemed to be, and the greater the rewards and incentives offered to its manager(s) to hire even more and expand even further.  Very few companies seem to value managers who reduce headcount and economize on corporate resources.

On the other hand, small companies seem much more focused on their purpose.  Every employee has to contribute measurably to their success, financially or otherwise.  If someone's a freeloader, he or she will be identified much more quickly as such, and probably shown the door within a matter of weeks.  That's as it should be.  A small company doesn't have the accumulated resources to carry unnecessary bodies with it.  It has to be lean, mean and economical, because its proprietor's income is utterly dependent on himself and his small group of workers.  Any loss of focus will cost money out of his pocket - a very good incentive to keep a tight rein on outflows.

I guess there are too many companies who end up with employees like the author above, but tolerate them for all the wrong reasons.  We really need to have concrete, specific ways to evaluate how every job contributes to the mission of the company/department/etc.  If your output can't be measured, how do you know you're doing something worthwhile?  And how do you know that about those who work for you?

Peter

Kat really needs our help

 

Late last month, I wrote about Kat Ainsworth Stevens.

She's a friend and occasional member of the North Texas Troublemakers, and an active gun writer - you've probably read articles by her if you read gun mags or several well-known Internet sites.  When last I wrote about her, she was facing imminent surgery for breast cancer, and since she's a free-lancer, she doesn't have medical insurance to help.

She's had her surgery, which was massive - double mastectomy, every lymph gland in sight, all that sort of thing.  She's recovering from it at present, and is facing both radiation and chemotherapy to knock down any remaining traces of the cancer.  To make matters worse, her four-year-old son developed some sort of intestinal disorder that required him to be hospitalized as well:  but Kat can't visit him much, because her wounds are still draining and the risk of infection is simply too great.  That's a very tough row to hoe.

Kat's received her first bill from the hospital.  It's well into the five-figure bracket, and it won't be the last, either, what with chemical and radiological therapy still to come.  Her friends have therefore organized a raffle for a Foxtrot Mike Ranch Rifle (description at link).

The one on offer in the raffle has been upgraded even further, making it a very desirable firearm.  Click the link to see it in more detail, with more and larger images, and enter for the raffle.  Any donation up to $100, no matter how small, gets one ticket, and multiple tickets are given for larger donations - details at the link.

Kat's good people, and deserves our help.  Please donate whatever you can afford, either to the raffle, or (if you prefer) to the original GiveSendGo fundraiser, which is still in operation.

Thanks, friends.

Peter

"Pie in the sky" prepping - or, getting real about our chances

 

I'm a relative lightweight in the "prepping" world.  I have emergency food, water and other supplies to keep my wife and myself alive for a few months in a disaster situation, and (hopefully) enough to share with friends for at least the short term;  but that's based on "bugging in", staying in our home and not venturing far unless and until it's safe to do so.  We don't have a "bug out" location, or remotely stored supplies, or anything like that - it's simply unaffordable for us.

Nevertheless, I'm often surprised to hear from people who are very much in our situation that they have these grand plans to "bug out" to the sticks, establish a survival homestead from scratch, grow their own food, herd a few cows, steal a travel trailer from somewhere as a place to live, and so on.  Frankly, I think they have no idea at all of just how much effort will be involved in making that plan work.

Eaton Rapids Joe has put up a couple of recent blog posts in which he lays out precisely what skills and resources are needed (and vitally important) if one is to homestead successfully.  In the first article, "A man has to know his limitations", he looks at all the skills needed to successfully homestead (some required all the time, others for specific situations).  In the second, "Why 'Russian' Dachas all look alike", he examines what successful country farms have in the way of facilities and equipment, and also what they don't have (because it's either way too expensive, or too resource-heavy, or unnecessary).  Both articles, and both of the lists he provides, are well worth reading.  If, after reading them, anyone still thinks it'll be easy to set up an emergency homestead . . . well, you're probably going to learn the hard way how wrong you are!

Another aspect of the problem is that too many people stock up on "second-best" gear, food and equipment for emergency use, because it's cheaper and they can afford more of it.  Commander Zero discusses this approach with respect to firearms:

... if you need to resort to your hideaway stash becase you can’t get to your primary gear, then its safe to assume that your life has just taken a turn for the spectacularly ungood, agreed? So, in that time of (literally) existential crisis doesn’t it seem to make sense that you would want the best gear you can have?

It does, indeed, make sense.  That's a lesson I learned the hard way in Africa over many years.  If you know, beyond a shadow of a doubt, that Mother Nature is a stone cold bitch who's out to kill you, wouldn't you want the best gear you can get in your emergency stash, to help you withstand her advances?  Quality can save your life.  Economy can kill you.  That applies to all our emergency preps, not just firearms.

(On a related subject, Commander Zero recently bought some land in the back country of Montana, and is beginning to set it up as a private retreat.  He recently blogged about his first weekend excursion to begin preparing it for use.  So many things went wrong that one can almost feel his pain, but he's not afraid to discuss all the mistakes he made, and what he's learned from the experience that he'll apply in future visits.  A very useful discussion, and a very useful reality check for the rest of us.)

Preparation isn't just physical.  One's outlook on everyday living - and what it costs - is a foundational element.  SNAFU links to a social media comment from a teacher who's complaining that she can't come out on $7,500 net income per month - while spending over $1,500 on a vehicle payment, and over $3,000 on rent!  Some commenters at his site question whether the original post is truthful, because the payments seem extraordinarily high, but he makes the very valid point that "Financial Education needs to be a REQUIRED course in school (along with NOT chasing luxury items to impress people that don't give a damn)".

On that subject, here's some brutally frank (and very truthful) advice from the TV series House Of Cards.  Kevin Spacey plays Frank Underwood, a highly immoral yet realistic politician.

Yes, that is brutal advice:  but in this world of easy-fulfilment dreams, hire purchase, leasing, and all the other debt instruments out there, it remains true.  If you're in debt, you're a financial slave to those who own your debt, and most of them will be utterly ruthless in coming after you to get what they're owed.  Being prepared for emergencies is as much about financial preparation as any other type of preparedness:  and one of the first and most fundamental steps in financial preparation is to get out of debt as far as possible.  As Spacey's character says, "The moment you get in debt, you're enslaving yourself until you buy back your freedom with interest."  Believe it.  It's true.

(Sometimes, of course, we can't afford not to go into debt.  We had to replace my wife's car in early 2022, because her old one had been driven into the ground until it was no longer viable.  The impact of COVID-19 had led to a drastic shortage of all types of vehicles, partly due to the reduction in dealer inventory, partly due to the shortage of used vehicles thanks to President Obama's "Cash For Clunkers" scheme, which scrapped tens of thousands of otherwise worthwhile cars.  We ended up buying a new car, and paying above the manufacturer's MSRP, because nothing else worthwhile was available to us:  and, to finance that very expensive purchase, we took out a loan.  It was a loan neither of us wanted, but under the circumstances, it was necessary.  Under such circumstances, one does what one must.  We bought an entry-level model without all the luxury features, and that helped lower the price and keep payments down.)

All of the above articles are food for thought.

Peter