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.
it's just Boris · September 13, 2021 at 9:16 am
“We can’t even get people to return to work.”
Well, when you pay people more to not work than if they work … UBI by any other name? And, again, you get more of what you subsidize. In this case, unemployment.
Re the stock market, we started moving out of it also. The problem is finding a safe harbor. I’m not sure there is one at this point in time.
Jonathan · September 13, 2021 at 9:36 am
Food for thought. I’ll have to think about it.
My first reaction is that the market is where lots of Fed injections ended up, so it will likely keep going up.
I’d be more worried about housing values and investments, especially in or near urban areas that have a tendency to boom and bust (and especially those suburbs with idiot leaders likely to allow destructive riots and policies again).
Any money you pull from the market, I’d use a portion for food, water, etc preparedness items.
Divemedic · September 13, 2021 at 10:12 am
In order for the Fed injections to continue working in the face of an economy where no one is selling and buying, they have to get progressively larger. This is a recipe for hyperinflation. Anything owned that is denominated and valued in dollars will be worth more and more of those dollars, even while they fall in real value.
Who cares if your stock in Ford is worth $20,000 a share, if that is coincidentally the same as what it costs to buy a cheeseburger?
SiG · September 13, 2021 at 10:52 am
The Fed is doomed to fail by the Marginal Utility Function, but since they’re economic illiterates they won’t realize that. When they print the first billion dollars, printing a second billion makes a lot of difference; when they’ve printed trillions, that next billion they give away means pretty much nothing; less than 1/1000 of what they’ve already printed.
Which means they have to print trillions and more on top of that, which is the definition of hyperinflation. It’s always a monetary policy issue. ALWAYS.
Next topic: I was listening to Glenn Beck this morning. He has some good free market guys on staff and one found that the Fed stopped printing their regular GDP update news suddenly. But there are 12 Fed banks, not just the big one in DC, and one of them published their own report. They showed the GDP shrank by 41%. I think that’s last quarter, but I don’t know if it’s an annualized number or just what.
Divemedic · September 13, 2021 at 11:32 am
A 30 percent annual reduction in GDP wouldn’t surprise me. Look around you. The local fast food restaurants in my area have closed their indoor dining and gone to drive through only because of staffing issues. Many indoor dining establishments are operating at reduced capacity, also for lack of staff. As bad as that is here, people are coming here in DROVES because it is even worse elsewhere.
I am not sure that the US economy can survive. First hit was the lockdowns shoving our economic head underwater. The second hit is this administration, accompanied by leftie controlled state and local governments, holding our economic head under the water until the bubbles stop.
Whether intentional or not, if one wanted to destroy this country, I can’t see where they would be doing anything differently.
Guy · September 13, 2021 at 9:49 pm
The spike in the repo markets and the fed’s response in September of 2019 were foreboding, although American monetary policy has been moving towards an eventual crackup for a long time now. The actions taken during the pandemic seem like an attempt to control who fails and who survives this downturn, and provide cover for those responsible.
As does a lot of the social engineering: make sports fans hate sports and crash those leagues and everything around them, publically hate on cops/military and get them to abandon pensions, destroy restaurants and fast food. Allow big companies to prosper small ones to fold.
Guy · September 13, 2021 at 9:52 pm
Which is to say, if you were going to have a massive crash the question might be what don’t we need?
The problem is you can’t just shutdown what you want, that’s not how it works, but these Keynesian idiots probably think they can just push demand towards more”essential” things and ignore the malinvestment made over decades
Steve S · September 13, 2021 at 11:11 am
Re: refrigerators. Ran into the same thing with upright freezers last year. And these were being made in Ohio. When the plant wasn’t shut down due to covid and Rhino Governor. And microwaves, cooktops and vent hoods. Are we having fun yet?
Toastrider · September 13, 2021 at 5:17 pm
If they immediately hit the brakes on the B.S. — kill the lockdowns, kill the ‘stimulus’ packages, and make it clear unemployment is next on the chopping block — they MIGHT be able to pull out of the dive.
The chances of that are mighty slim.
joe · September 13, 2021 at 6:16 pm
part of it is the chip shortage…damn near everything electronic has a chip of some kind in it…there are ships off the coasts full of stuff that have been there for weeks…shortages of shipping containers…weather issues have caused shortages in foods from crops to meats…covid started it and it’s been slowly going down hill since…and it ain’t going anywhere for awhile…i was lucky and just got my new truck a month ago, had to order it and wait 3 months for a tacoma…good luck getting one now…and yes, everything is going to come crashing down soon and it won’t be pretty…it’s the food part that scares me…living in tx you can’t keep shit cold when the grid goes down, on purpose or lack of workers…this is all part of the reset and life as we knew it will probably change forever…
Don in Oregon · September 13, 2021 at 8:42 pm
China is deliberately restricting exports to the US. Last month they shut down the Ningbo-Zhoushan port, the primary export facility to North America. The pretext was a single covid case.
nick flandrey · September 13, 2021 at 10:05 pm
We have a bunch of money locked up in college funds for the kids. They are state of TX based, so there is some small hope but they are denominate in dollars. The money we saved for retirement will vanish in the US just like it did in Venezuela in the space of only two years.
Russia and China are moving to kill the petrodollar and with it our status as the reserve currency. That was based on a respect for rule of law, and the petrodollar acting as a sort of gold standard (poor substitute but it was linked to actual physical resources). Rule of law is dead and everyone can see it. Between the two, we lose the reserve currency status. Then we’re just another banana republic printing scrip.
Productive land might be good, if you own it outright (and it produces enough to pay the taxes.)
Gold as a store of value until a new economy emerges? Warehouses full of antibiotics? Maybe a little of each?
I wish you luck with your attempt. I got out early and “missed the run up” but I’ll also miss the crash. I’ve slept better for the last few years because of it.
Home Place · September 14, 2021 at 8:01 am
When I see reports of shortages from what I believe are credible sources, I’ve been making sorties to see what I see locally. These trips in the last several weeks have been limited to grocery and home improvement stores. I haven’t seen evidence yet here in the midwest of shortages. Are shortages regional at this point? Thoughts, theories?
Divemedic · September 14, 2021 at 8:41 am
Post coming on that.
redcabinsteve · September 14, 2021 at 10:31 am
Very good poast. My tiny stock acct may as well be sold and used for real stuff. After trying to short the market several times since last Fall I’m realizing it’s a waste of time and money.
My wife is a high earner with substantial amounts in a profit sharing acct and a 401 acct. If anyone has the words to convince her to at a minimum take some $ off the table I’d appreciate it. She deflects my words like reverting back to mean, things go down, etc.
Divemedic · September 14, 2021 at 10:40 am
Monroe Pounds · September 15, 2021 at 8:33 pm
Useful info. Fortunate me I found your site by accident, and I’m surprised why this twist of fate didn’t took place in advance!I bookmarked it.
Carol Olheiser · September 16, 2021 at 3:46 am
Good post Sir! Thanks for posting that could be just the subject to give inspiration to anyone who want it! Carry on with the great jobs! Happy Blogging!
Joaquin Grzywacz · September 18, 2021 at 1:38 pm
Nice article Madam! Thank you for article that it can be just the piece to give inspirational to anyone who require it! Continue with the best jobs! Happy Blogging!
Comments are closed.