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.
The things that begin to skyrocket in price and see scarcity will probably not make sense. Remember the toilet paper shortage of last year? Like that, but with more products being involved.
I am getting completely out of the stock market. We began a complete sell off last week. As soon as funds are released, we are moving into other investments, things that are not based in the US dollar.