Goldman Sees Shortage Of Everything! You Name It We're Out Of It"
by Epic Economist
"In a time when social media is flooded with pictures and videos of empty shelves from all across the nation, Goldman’s head commodity strategist, who’s one of the most respected analysts on Wall Street, is saying that the extensive shortages faced by global commodity markets are simply unprecedented. We have a lot to discuss, so don’t forget to leave a thumbs up, subscribe, and turn on the notifications so you don’t miss future videos.
In a recent interview with Bloomberg TV, Jeffrey Currie revealed that global markets are "incredibly tight from a physical perspective," and warned on shortages of many commodities. “I’ve been doing this 30 years and I’ve never seen markets like this,” Currie said on Monday. “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.”
At this point, the shortage of virtually everything has translated into record price increases all across the board, according to Bloomberg’s Bloomberg Commodity Spot Index, which tracks the costs of 23 different energy supplies, metals, and crops. This extraordinary surge is being driven by soaring oil prices, which have hit the highest level since 2014, with the benchmark Brent crude oil rising as high as $94 today, assuring even more pain at the pump. All of this chaos on global markets is affecting an overwhelming majority of U.S. businesses, which are already under extreme stress due to the new vírus outbreak, labor shortages, and other supply chain bottlenecks.
In addition to paying more expensive prices for commodities and raw materials, a report released this week by the Goldman Sachs 10,000 Business Voices group found that 97% of U.S.-based businesses are reporting operational difficulties given the “perfect storm” plaguing their production. The survey exposed that 89% of business owners say that labor constraints are impacting their bottom line. Nearly 84% have been struggling with inflation and widespread price increases, with 76% of those respondents noting that higher prices are having negative impacts on their financial health. Meanwhile, shortages of materials and parts have led 37% of U.S. businesses to temporarily close or scale back operations.
Altogether, more than 90% of study participants - which included board members and leaders in the supply chain and procurement departments - report that raw material prices have risen significantly compared to a year ago. At least, 45% of these companies have recently been unable to operate at full capacity due to the lower supply of raw materials. In a note about the latest disruptions, Lecat, a Managing Director at Inverto, said: “In the short term, companies cannot escape rising prices, you can't beat the world market, and this crisis affects everyone – both internationally and the direct competitors. The most important thing businesses can do right now is to secure supplies in order to maintain delivery capacity.”
However, it’s safe to say that not all of them will be able to restock their inventories and afford premium prices. Almost 76% of all respondents expect strong growth in raw material costs throughout the whole year. So far, prices for aluminum rose 48% compared to a year ago, the same as iron, steel, and plastics. Paper rose 40%, copper 36%, chemicals 27%, electricity jumped 27% and oil prices increase 23%.
The consequences of shortages and price hikes for small businesses are threatening their survival. Within six months, hundreds of thousands of U.S. small businesses may be bankrupt. But conditions have gone so out of control that some big names are suffering as well. For instance, due to the scarcity of metals, parts, and semiconductors, major automakers have been severely impacted. According to one estimate by the US-based consulting firm AlixPartners, the global chip shortage will cost the auto industry $210 billion this year.
Last week, Ford announced that the worsening shortage is hitting the company’s production numbers, which is forcing it to halt operations in several plants across the U.S., Canada, and Mexico. Ford joins many other automakers and tech companies facing the same issues, including, Tesla, Apple, and Sony. But the scarcity of chips has hit a wide cross-section of industries, causing backlogs of orders for products that go way beyond vehicles, but also consumer electronics and household appliances.
On the other hand, we have many signs that consumer demand is already cooling off. As inflation roars and people’s purchasing power shrinks, recessionary forces are gaining steam, and the coming hike in interest rates will accelerate this downward trend even further. That’s to say, business owners should start preparing for the worst while consumers should brace for a very turbulent year."
“To everything there is a season,” Ecclesiastes informs us - winter, spring, summer, autumn. We must assume economies, stock markets - perhaps civilization itself - offer no exceptions. They too must roll in rhythm with the cycling seasons. A season may run for months. Or Years. Decades. Centuries. Today we turn our focus from the passing weather. It is the long view, the overall view - the seasonal view - that commands our attention. Economies and stock markets sprout, blossom, fade - and die. Sometimes summer extends far into autumn before letting go. And sometimes winter holds its iron grip deep into calendar spring.
Stock Market Seasons: The stock market winter of 1929 - for example - was so fierce the ice held 25 years. Only in 1954 did stocks thaw to pre-freeze levels. The years 1982–2000 - conversely - were extended summer for the stock market. Between August 1982 and December 1999, compounded real returns on the Dow Jones ran to 15% per annum. Chill northern gusts occasionally blew on in - as in 1987. But they blew out as rapidly. Investors believed they had discovered something approaching perpetual summer.
Yet summer yields inevitably to winter. Indian summer may delay winter’s onset, it is true. But soon or late, Mr. Jack Frost pays his visit. An arctic gale came barreling in, 2001–2002. Another - even icier - swept through in 2008–2009. The fiercest blast of all tore through in 2020, out of China. But the Federal Reserve dialed the furnaces to blistering levels…
Record Heat: Its record heat soon broke the ice. And today - despite recent chills - the stock market posts record warmth. Is it summer once again for the stock market? Or is it heading into a 20-year winter… similar to the 25-year winter of 1929–54?
Consider: By spring 1930, the stock market had made good many of its October ’29 losses. Thawings extended through 1931. As Jim Rickards notes: "Stocks rose 28.6% from Nov. 17, 1929 – April 20, 1930. They rose 13.2% from June 22 – Sept. 7, 1930. Stocks rallied again by 17.5% from Jan. 18 – Feb. 22, 1931. Finally, stocks rallied 22.2% between May 31 – June 28, 1931. Yet these proved fleeting thaws between deep, deep freezing-overs. Overall, the Dow Jones plunged 89.2% from 1929 – 32. Perhaps this post-pandemic recovery is merely a transient, artificial thaw.
Prepare for a Freeze: Mr. Raul Elizalde of Path Financial, writing in Forbes: "The stock market has been very generous in the past 13 years. The S&P 500 is six times higher than the financial crisis low of 2009 and every decline since proved to be an opportunity to buy. But the market generosity may have reached its limits. Historically speaking, U.S. stocks as an asset class are as expensive as they have ever been…
Adjusted for inflation, the price of the S&P 500 index is in fact higher than during the “irrational exuberance” days of the late 1990s’ dot-com boom, which was followed by a two-year dragged-out 50% slump from its peak."
Are you prepared for a 50% stock market freeze? If you are retired - or nearing retirement, you likely are not. Here is a warning of ice: And if one were to look for a reason why the next likely direction is not upward, it would be that the regime that supported increasingly expensive stocks is no longer in place. That is, the Federal Reserve is preparing to work the furnace settings back. Rate hikes and quantitative tightening are in immediate prospect. Can the market warm itself, spark its own flame? We are not confident it can.
A 20-Year Winter? Given present stock market valuations… how long might winter last? Mr. Michael Carr instructs technical analysis at New York Institute of Finance. Says he: “Starting from this level, stocks are likely to disappoint over the next 20 years.” Twenty years? That is correct:
When the P/E ratio is near all-time highs, as it is now, the S&P 500 delivers annual returns averaging about 5% over the next 20 years. When the P/E ratio is near all-time lows, returns are about three times higher, averaging 15.4% a year over the next 20 years.
Yet as we have stated before: Climate is what you can expect. Weather is what you actually get. Perhaps the Federal Reserve will back off, perhaps it will extend the summer season, perhaps it will hold the sun up in the sky a bit longer. Yet all indications run the other way…
Entering the Winter Phase: The Daily Reckoning’s Charles Hugh Smith argues winter may be closing in. Charles believes the world is now marked by “souring social mood, loss of purchasing power, stagnating wages, rising inequality, devaluing currencies, rising debt, political polarization and elite disunity.” “These are all characteristics,” Charles laments, “of the long-wave social-economic cycle that is entering the disintegrative (winter) phase.”
Charles leans on the work of historian Peter Turchin. This fellow explores historical cycles of social disintegration and integration over 50-, 150- and 200-year cycles in his civilization almanac, Ages of Discord. Turchin identifies three primary forces pushing these cycles: an oversupply of labor that suppresses real wages; an overproduction of parasitic elites; a deterioration in state finances. These cycles are as natural as the seasons - and perhaps as inevitable.
Real American wages have held essentially flat for decades. Evidence suggests the bottom half of American adults earn no more than they did in the 1970s.
An overproduction of parasitic elites? We append no comment.
A deterioration in state finances? The Treasury groans under a $30 trillion national debt that is growing - daily.
We could continue… but mercy forbids it. The Horae - the Greek goddesses of the seasons - are fickle and capricious beings. We have our winter apparel ready. Do you? More tomorrow."
"What's happening at the center of the Trifid Nebula? Three prominent dust lanes that give the Trifid its name all come together. Mountains of opaque dust appear near the bottom, while other dark filaments of dust are visible threaded throughout the nebula. A single massive star visible near the center causes much of the Trifid's glow. The Trifid, cataloged as M20, is only about 300,000 years old, making it among the youngest emission nebulas known.
The star forming nebula lies about 9,000 light years away toward the constellation of the Archer (Sagittarius). The region pictured here spans about 10 light years. The featured image is a composite with luminance taken from an image by the 8.2-m ground-based Subaru Telescope, detail provided by the 2.4-m orbiting Hubble Space Telescope, color data provided by Martin Pugh and image assembly and processing provided by Robert Gendler."
Dublin, Ireland - “Love and work are the cornerstones of human happiness.” ~ Sigmund Freud
“If you worked for me, I’d slap your hand with my trowel,” Mick told us with a smile on Friday. We were working with him on the stone wall on the west side of our garden. The wall is designed to keep out deer… and break the cold winds coming off the Atlantic. And while we have worked off-and-on at DIY masonry projects for many, many years, we never had any proper training.
“Never put the pins in like that,” Mick explained. For what it is worth, the little stones – known as ‘pins’ – used to fill in the gaps between the big stones, should not be set upright, but on their sides. Every day, the wall comes closer to completion. And every day, we look out at 8 am with growing satisfaction; Mick and his helper, Connie, are on the job. They are getting something done. Something of value.
And every day we wonder: what have Silicon Valley and Wall Street done for us lately? We see the value of what Mick and Connie are doing; but as to America’s leading industries… we’re not so sure. Do our hamburgers taste better, thanks to the money-masters at Goldman Sachs? Does our roof shed water thanks to the whiz kids who work for Google? Is the view from our dining room more fetching… is our back still stiff? Is our hair still disappearing?
Yes, now we can stream movies at home. But is that really so much better than going to the theater? And we can ‘chat’ on-line… for hours and hours. But is that an improvement on getting together for a drink? Or actually, hanging up and getting some work done? Is the electronic media just souped-up TV? Wasting our time, and leaving us poorer?
Anti-Social Media: Young people, 16-24, spend an average of 21 hours per week – equal to half of a full-time job – on social media. Unlike our money, time can’t be faked. Wouldn’t it be better to use it learning something useful?
But people vote with the money. (Who are we to tell them how to spend it?) And they’ve voted heavily in favor of Netflix, Google, Amazon… and a whole ticket of internet-based candidates. But they can change their minds. The S&P 500 went down 10% in January. The Nasdaq, where the techs tend to reside, fell 15%. Facebook dropped 25% in a single day last week, marking the largest one day loss for an American company in the history of the US stock exchange. Mr. Zuckerberg, Facebook’s founder, saw his personal net worth plummet by $31 billion... roughly the GDP of Estonia. How does one man “lose” an entire country’s annual output in a single day? Where did it go?
And what about Peloton? The company sells an exercise bike, with a computer screen mounted on the handlebars, for $2,000. It took a loss of almost half a billion dollars last year. And its stock – once the darling of the tech investors – dropped 85% since December 2020.
What happened? And what made them so valuable in the first place? The business plan for almost the whole Silicon sector – including Google, Facebook and Peloton – was the same: capture someone’s ‘eyeballs’ and you’ll be able to sell him more stuff. At first, it worked beautifully. Unlike its rivals in the print media, the new companies didn’t have the expense of printing or delivering paper. Neither did they have to pay for ‘content;’ users provided the cat videos and mindless commentaries themselves. And finally, they could target their advertising much more precisely, allowing customers to choose only what they wanted to see and allowing them to tailor ads to the reader’s individual interests. That’s why ads seem to ‘follow you around’ as you cruise the worldwide web.
A TikTok to the Face: But the model had built-in limits. The industrial revolution increased incomes, giving consumers more money to buy the new output. But the Internet revolution has done no such thing. Consumer incomes have been mostly flat… and are now, after inflation, declining. Time remains constant. So, the new companies were never actually creating new wealth; they were just taking eyeballs and ad revenue from traditional media. Then, when the low-hanging fruit had been picked, they scrapped with each other for market share. That’s why TikTok is such a threat to Facebook… and why its price fell so sharply when word got out that it was losing the battle.
Drawing back, we see more dots to connect, and a more ghastly picture: While investment in the tech sector soared…capital was drawn away from ‘old industries.’ Now, there is more and more ‘click bait’ on the internet, but we’re running out of real stuff.
Yesterday came this news item from Bloomberg: "Jeff Currie, the closely-followed head of commodities research at Goldman Sachs Group Inc., says he’s never seen commodity markets pricing in the shortages they are right now. “I’ve been doing this 30 years and I’ve never seen markets like this,” Currie said in a Bloomberg TV interview. “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.”
Real things need to be coaxed out of the ground… heated and hammered… distilled and distributed… by real people. But what’s this? People are so busy on their cellphones, they don’t have time for real work. Here’s a report from 60 Minutes… "The government's jobs report released [in early January] tells us what has happened: well over 20 million people quit their jobs in the second half of 2021. Some are calling it the "big quit," others the "great resignation."
Huh? Commodities vanishing. People leaving their jobs. Another report shows the “labor participation rate” back to where it was in the ‘70s… before women went to work, en masse. And today, one out of every eight working-age men is unemployed.
Alive… but not kicking (in): Last week’s employment report also showed that those still working aren’t working as much as they used to. The “aggregate hours worked” figure is still below 2019’s level. Then there’s this chart, from the Federal Reserve Board of San Francisco, which shows the percentage of retired individuals as a share of labor force nonparticipants.
(Source: Federal Reserve Board of San Francisco)
What to make of it? Dots all over the place. At first, they seem unconnected, like marbles loosed onto a concrete floor. But wait…. The closer we look… the more the pattern becomes clear… Prices rising… workers idle… a parasitic elite… transfer payments increasing… An ugly scene. Stay tuned...
"The Supply Chain Ate My Homework - No Solutlon Till 2023"
"The supply chain problem is affecting everyone. This is only getting worse. This will be destructive towards businesses throughout the rest of 2022. There will be no solution at all until the new year."
“It goes against the American storytelling grain to have someone in a situation he can’t get out of, but I think this is very usual in life. There are people, particularly dumb people, who are in terrible trouble and never get out of it, because they’re not intelligent enough. It strikes me as gruesome and comical that in our culture we have an expectation that man can always solve his problems. This is so untrue that it makes me want to cry - or laugh.”
"The small group of devoted followers gathered around Chicago housewife Dorothy Martin sat in stunned silence as the clock on her suburban living room wall struck midnight on the twentieth of December, 1954…and nothing happened. Many had left jobs and spouses and given away all their money and possessions in order to await the arrival of alien beings from the planet Clarion, who Martin had assured them would descend at that appointed hour, carrying the faithful few off in their flying saucers just before huge floods engulfed the planet Earth. Finally, four hours after their scheduled departure time, Martin broke her silence.
As the group readjusted their bras, belts, and zippers - having been instructed to discard any metal objects which might interfere with the aliens’ telepathic radio transmissions - their tearful host revealed the reason why their intergalactic rescuers had failed to appear: Apparently it had all been only an elaborate test of faith, and the group’s advanced state of enlightenment had saved the entire planet from a watery destruction!
Surprisingly, only one or two of Martin’s followers were unconvinced by this perfectly rational explanation. Among them, however, was social psychologist Leon Festinger, who had secretly infiltrated the group. Festinger would later write about Martin - using the pseudonym of Marian Keech - in his groundbreaking 1958 book, "When Prophecy Fails." (Not surprisingly, Festinger is credited with coining the psychological term ‘cognitive dissonance.’)
Following publication of Festinger’s book, the group predictably collapsed under the weight of public ridicule. Martin fled to Peru to warn the clueless natives about the imminent re-emergence of Atlantis, before later resurfacing in Arizona, where she joined crackpot L. Ron Hubbard’s nascent pseudoscientific movement, Scientology.
It seems that for as long as people have inhabited the world, they have anticipated its imminent demise. (In fact, the oldest known apocalyptic prediction is depicted on Assyrian tablets from 2800 BC.) In what may be the earliest example in European folklore, a Frankish villager wandered off into the forest in 591, only to be accosted by a swarm of ravenous flies. Overwhelmed, the poor fellow completely lost his mind and returned to his village clothed in animal pelts, claiming he was Jesus Christ, sent to gather his flock before the coming Rapture. (Perhaps resenting the competition, a local bishop hired a gang of thugs to capture the Lord of the Flies, who they rapturously hacked into little bits.)
The failure of one apocalyptic prophecy not only failed to deter its devoted followers but in fact spawned several entirely new religions. When the world failed to end as predicted in the ‘Great Disappointment’ of 1843-44, Massachusetts preacher William Miller’s tens of thousands of followers splintered off to found the Seventh Day Adventists, as well as the obnoxious doorknockers known as Jehovah’s Witnesses. When the next fateful year of 1874 passed without the desired fireworks, the latter’s charismatic founder, Charles Taze Russell, explained that Jesus had indeed returned, but was invisible to all except the truly devout. (Predictably, few dared admit to being lacking in the requisite level of faith.)
The founder of Mormonism, Joseph Smith, had declared way back in 1832 that 1890 would be the year of Jesus’s long awaited return engagement. (Later jailed for fraud, Smith somehow failed to predict his own deliverance by an angry mob at age 39.) Russell revised the fateful year to 1881…then 1914…and finally, 1918. (The latter dates spanned World War I and the Spanish Flu epidemic, events that while apocalyptic for many, fell short of being world ending.)
Our own time has seen the horrors of the Peoples Temple - in which 914 adults and children committed suicide in the jungles of Guyana in 1978; the Branch Davidians, an offshoot of the Seventh Day Adventists - 75 of whom died in the FBI standoff at Waco in 1993; Aum Shinri Kyo -whose poison gas attacks on the Tokyo subway in 1994-95 left 19 innocent people dead; and -neither least nor unfortunately, last - Heaven’s Gate, 39 of whose members committed suicide in 1996, fully expecting (like Dorothy Martin) their spirits to be carried away by aliens hiding in the wake of an approaching comet.
It was probably no coincidence that all of these cults were acting in anticipation of an impending Bible-inspired Day ofJudgement. One is tempted to blame these kinds of incidents on the delusions of a small minority of misguided religious fanatics, except that millions of people alive today are expecting an imminent Biblical apocalypse. In a 2012 global poll, fully one out of 7 people said they thought the world would end during their lifetime - and rather ominously, Americans topped the list of doomsayers at 22%. Since their government has the means to fulfil their death wish many times over, one can only hope their gloomy prediction won’t one day become a self-fulfilling prophecy. Just call it a bedtime story for humanity."
“When the pain of leaving behind what we know outweighs the pain of embracing it, or when the power we face is overwhelming and neither flight nor fight will save us, there may be salvation in sitting still. And if salvation is impossible, then at least before perishing we may gain a clearer vision of where we are. By sitting still I do not mean the paralysis of dread, like that of a rabbit frozen beneath the dive of a hawk. I mean something like reverence, a respectful waiting, a deep attentiveness to forces much greater than our own.”
"We Have Never Been More Vulnerable, And The Stage
Has Now Been Set For A Complete And Total Economic Collapse"
by Michael Snyder
"Teetering on a precipice can seem exciting until something comes along that knocks you over the edge. Unfortunately, the events of the past couple of years have perfectly set the stage for a global economic collapse of unprecedented size and scope. Inflation is out of control all over the planet, the worst global supply chain crisis since World War II continues to get worse with each passing day, and the vast majority of the global population is just barely scraping by from month to month. In other words, we have never been more vulnerable than we are right now.
Even in the United States, a shockingly high percentage of the population literally lives on the brink of financial disaster. According to a brand new survey that was just released, seven out of every ten Americans are currently living paycheck to paycheck… "In these tough financial times, a new study finds it’s getting harder and harder for people to save any of their money. In fact, seven in 10 Americans say they’re living paycheck to paycheck. A recent survey of 2,007 adults found that 63 percent don’t see themselves reaching a level of financial security that will allow them to live the lifestyle they want."
Most people do not have a sizable financial cushion to fall back on. And even though our leaders in Washington have absolutely flooded the system with new money over the past two years, more than two-thirds of the country is living paycheck to paycheck. As bad as things have been, it is only a matter of time before another major crisis of some sort comes along. So what is going to happen when the other shoe finally drops?
During this pandemic we have also seen global supplies of just about everything get tighter and tighter and tighter. In fact, the head commodity strategist for Goldman Sachs just publicly admitted that the world is now facing shortages of virtually all major commodities…
In a time when social networks have been swamped with photos of empty shelves from across the nation, Goldman’s head commodity strategist and one of the closest-followed analysts on Wall Street, said he’s never seen commodity markets pricing in the shortages they are right now. “I’ve been doing this 30 years and I’ve never seen markets like this,” Currie told Bloomberg TV in an interview on Monday. “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.”
Read that last paragraph again.
This is a really big deal.
You may not realize it yet, but this isn’t just a temporary global supply chain crisis. This is the beginning of a global supply chain collapse. So what is going to happen when the other shoe finally drops?
All over the planet, way too much money is chasing way too few goods and services. This is driving up prices at a staggering pace, and we continue to get more troubling news with each passing day. For example, even though meat prices have already gone up very aggressively, Tyson Foods just announced that it will be raising prices yet again… "Stock of Tyson Foods, the world’s second largest processor and marketer of chicken, beef, and pork after Brazil’s JBS S.A., is soaring 9%, hitting an all time high and is one of the S&P’s best companies this morning after the company reported blowout earnings (thanks to passing on surging food prices) and announced that it is raising prices even more as it grapples with a tight labor market and smaller livestock herds. According to the report, beef prices jumped by 32% in the quarter, with chicken up ~20% and pork 13%."
Of course similar things are happening in other industrialized nations all over the globe. One British news sources is telling us that the economy in Germany “is in freefall” and that “devastating” price hikes are causing a tremendous amount of pain for consumers over there.
So what is going to happen when the other shoe finally drops? Needless to say, a lot of people can see what is coming and they are taking steps to get prepared. Earlier today, I came across a Wall Street Journal article that lamented the fact that so many Americans are engaged in “hoarding”… "Alexis Abell recently walked out of a BJ’s Wholesale Club outside Buffalo, N.Y., with 24 boxes of Kraft Macaroni & Cheese, a box of 50 frozen mozzarella sticks, a 40-pound bag of basmati rice and a 12-can pack of garbanzo beans. “I don’t want to be in a position again where I can’t get something,” says Ms. Abell, a 41-year-old mother of five, who was laid off from her retail job at a quilt shop in 2020 and decided not to return to work."
I don’t call this “hoarding” at all. I call it being smart. The stupid people are those that expect the government to bail them out when everything starts hitting the fan. As I have discussed previously, the federal government has a very limited amount of food, water and generators at eight widely scattered FEMA distribution centers around the country. Other than that, the federal government purchases a very small amount of food that it distributes through foreign aid programs. In the event of a major national emergency, the government’s meager supplies will be totally gone almost immediately. Then you will be on your own.
We are rapidly moving into a time when normal people won’t be able to afford to eat meat on a regular basis. Once that day arrives, where will you get your protein?
Our world is changing at a pace that is absolutely breathtaking, but most people still want to believe that everything will go back to “normal” eventually."
"In a recent press conference held on the occasion of a visit to Moscow by Hungarian Prime Minister Viktor Orban, Russian President Vladimir Putin spoke about continued NATO expansion, and the potential consequences if Ukraine was to join the trans-Atlantic alliance.
“Their [NATO’s] main task is to contain the development of Russia,” Putin said. “Ukraine is simply a tool to achieve this goal. They could draw us into some kind of armed conflict and force their allies in Europe to impose the very tough sanctions that are being talked about in the United States today,” he noted. “Or they could draw Ukraine into NATO, set up strike weapons systems there and encourage some people to resolve the issue of Donbass or Crimea by force, and still draw us into an armed conflict.”
Putin continued, “Let us imagine that Ukraine is a NATO member and is stuffed with weapons and there are state-of-the-art missile systems just like in Poland and Romania. Who will stop it from unleashing operations in Crimea, let alone Donbass? Let us imagine that Ukraine is a NATO member and ventures such a combat operation. Do we have to fight with the NATO bloc? Has anyone thought anything about it? It seems not.”
But these words were dismissed by White House spokesperson Jen Psaki, who likened them to a fox “screaming from the top of the hen house that he's scared of the chickens,” adding that any Russian expression of fear over Ukraine “should not be reported as a statement of fact.”
Psaki’s comments, however, are divorced from the reality of the situation. The principal goal of the government of Ukrainian President Volodymyr Zelensky is what he terms the “de-occupation” of Crimea. While this goal has, in the past, been couched in terms of diplomacy – “[t]he synergy of our efforts must force Russia to negotiate the return of our peninsula,” Zelensky told the Crimea Platform, a Ukrainian forum focused on regaining control over Crimea – the reality is his strategy for return is a purely military one, in which Russia has been identified as a “military adversary”, and the accomplishment of which can only be achieved through NATO membership.
How Zelensky plans on accomplishing this goal using military means has not been spelled out. As an ostensibly defensive alliance, the odds are that NATO would not initiate any offensive military action to forcibly seize the Crimean Peninsula from Russia. Indeed, the terms of Ukraine’s membership, if granted, would need to include some language regarding the limits of NATO’s Article 5 – which relates to collective defense – when addressing the Crimea situation, or else a state of war would de facto exist upon Ukrainian accession.
The most likely scenario would involve Ukraine being rapidly brought under the ‘umbrella’ of NATO protection, with ‘battlegroups’ like those deployed into eastern Europe being formed on Ukrainian soil as a ‘trip-wire’ force, and modern air defenses combined with forward-deployed NATO aircraft put in place to secure Ukrainian airspace.
Once this umbrella has been established, Ukraine would feel emboldened to begin a hybrid conflict against what it terms the Russian occupation of Crimea, employing unconventional warfare capability it has acquired since 2015 at the hands of the CIA to initiate an insurgency designed specifically to “kill Russians.”
The idea that Russia would sit idly by while a guerilla war in Crimea was being implemented from Ukraine is ludicrous; if confronted with such a scenario, Russia would more than likely use its own unconventional capabilities in retaliation. Ukraine, of course, would cry foul, and NATO would be confronted with its mandatory obligation for collective defense under Article 5. In short, NATO would be at war with Russia.
This is not idle speculation. When explaining his recent decision to deploy some 3,000 US troops to Europe in response to the ongoing Ukrainian crisis, US President Joe Biden declared, “As long as he’s [Putin] acting aggressively, we are going to make sure we reassure our NATO allies in Eastern Europe that we’re there and Article 5 is a sacred obligation.”
Biden’s comments echo those made during his initial visit to NATO Headquarters, on June 15 last year. At that time, Biden sat down with NATO Secretary-General Jens Stoltenberg and emphasized America’s commitment to Article 5 of the NATO charter. “Article 5 we take as a sacred obligation,” Biden said. “I want NATO to know America is there.”
Biden’s view of NATO and Ukraine is drawn from his experience as vice president under Barack Obama. In 2015, then-Deputy Secretary of Defense Bob Work told reporters, “As President Obama has said, Ukraine should be able to choose its own future. And we reject any talk of a sphere of influence. And speaking in Estonia this past September, the president made it clear that our commitment to our NATO allies in the face of Russian aggression is unwavering. As he said it, in this alliance there are no old members and there are no new members. There are no junior partners and there are no senior partners. There are just allies, pure and simple. And we will defend the territorial integrity of every single ally.”
Just what would this defense entail? As someone who once trained to fight the Soviet Army, I can attest that a war with Russia would be unlike anything the US military has experienced – ever. The US military is neither organized, trained, nor equipped to fight its Russian counterparts. Nor does it possess doctrine capable of supporting large-scale combined arms conflict. If the US was to be drawn into a conventional ground war with Russia, it would find itself facing defeat on a scale unprecedented in American military history. In short, it would be a rout.
Don’t take my word for it. In 2016, then-Lieutenant General H.R. McMaster, when speaking about the results of a study – the Russia New Generation Warfare – he had initiated in 2015 to examine lessons learned from the fighting in eastern Ukraine, told an audience at the Center for Strategic and International Studies in Washington that the Russians have superior artillery firepower, better combat vehicles, and have learned sophisticated use of unmanned aerial vehicles (UAVs) for tactical effect. “Should US forces find themselves in a land war with Russia,” McMaster said, “they would be in for a rude, cold awakening.”
In short, they would get their asses kicked.
America’s 20-year Middle Eastern misadventure in Afghanistan, Iraq, and Syria produced a military that was no longer capable of defeating a peer-level opponent on the battlefield. This reality was highlighted in a study conducted by the US Army’s 173rd Airborne Brigade, the central American component of NATO’s Rapid Deployment Force, in 2017. The study found that US military forces in Europe were underequipped, undermanned, and inadequately organized to confront military aggression from Russia. The lack of viable air defense and electronic warfare capability, when combined with an over-reliance on satellite communications and GPS navigation systems, would result in the piecemeal destruction of the US Army in rapid order should they face off against a Russian military that was organized, trained, and equipped to specifically defeat a US/NATO threat.
The issue isn’t just qualitative, but also quantitative – even if the US military could stand toe-to-toe with a Russian adversary (which it can’t), it simply lacks the size to survive in any sustained battle or campaign. The low-intensity conflict that the US military waged in Iraq and Afghanistan has created an organizational ethos built around the idea that every American life is precious, and that all efforts will be made to evacuate the wounded so that they can receive life-saving medical attention in as short a timeframe as possible. This concept may have been viable where the US was in control of the environment in which fights were conducted. It is, however, pure fiction in large-scale combined arms warfare. There won’t be medical evacuation helicopters flying to the rescue – even if they launched, they would be shot down. There won’t be field ambulances – even if they arrived on the scene, they would be destroyed in short order. There won’t be field hospitals – even if they were established, they would be captured by Russian mobile forces.
What there will be is death and destruction, and lots of it. One of the events which triggered McMaster’s study of Russian warfare was the destruction of a Ukrainian combined arms brigade by Russian artillery in early 2015. This, of course, would be the fate of any similar US combat formation. The superiority Russia enjoys in artillery fires is overwhelming, both in terms of the numbers of artillery systems fielded and the lethality of the munitions employed.
While the US Air Force may be able to mount a fight in the airspace above any battlefield, there will be nothing like the total air supremacy enjoyed by the American military in its operations in Iraq and Afghanistan. The airspace will be contested by a very capable Russian air force, and Russian ground troops will be operating under an air defense umbrella the likes of which neither the US nor NATO has ever faced. There will be no close air support cavalry coming to the rescue of beleaguered American troops. The forces on the ground will be on their own.
This feeling of isolation will be furthered by the reality that, because of Russia’s overwhelming superiority in electronic warfare capability, the US forces on the ground will be deaf, dumb, and blind to what is happening around them, unable to communicate, receive intelligence, and even operate as radios, electronic systems, and weapons cease to function.
Any war with Russia would find American forces slaughtered in large numbers. Back in the 1980s, we routinely trained to accept losses of 30-40 percent and continue the fight, because that was the reality of modern combat against a Soviet threat. Back then, we were able to effectively match the Soviets in terms of force size, structure, and capability – in short, we could give as good, or better, than we got.
That wouldn’t be the case in any European war against Russia. The US will lose most of its forces before they are able to close with any Russian adversary, due to deep artillery fires. Even when they close with the enemy, the advantage the US enjoyed against Iraqi and Taliban insurgents and ISIS terrorists is a thing of the past. Our tactics are no longer up to par – when there is close combat, it will be extraordinarily violent, and the US will, more times than not, come out on the losing side.
But even if the US manages to win the odd tactical engagement against peer-level infantry, it simply has no counter to the overwhelming number of tanks and armored fighting vehicles Russia will bring to bear. Even if the anti-tank weapons in the possession of US ground troops were effective against modern Russian tanks (and experience suggests they are probably not), American troops will simply be overwhelmed by the mass of combat strength the Russians will confront them with.
In the 1980s, I had the opportunity to participate in a Soviet-style attack carried out by specially trained US Army troops – the ‘OPFOR’ – at the National Training Center in Fort Irwin, California, where two Soviet-style Mechanized Infantry Regiments squared off against a US Army Mechanized Brigade. The fight began at around two in the morning. By 5:30am it was over, with the US Brigade destroyed, and the Soviets having seized their objectives. There’s something about 170 armored vehicles bearing down on your position that makes defeat all but inevitable.
This is what a war with Russia would look like. It would not be limited to Ukraine, but extend to battlefields in the Baltic states, Poland, Romania, and elsewhere. It would involve Russian strikes against NATO airfields, depots, and ports throughout the depth of Europe.
This is what will happen if the US and NATO seek to attach the “sacred obligation” of Article 5 of the NATO Charter to Ukraine. It is, in short, a suicide pact."
"For what seems like a long time now, we have been reporting the apparently endless shortages that U.S. producers, retailers, developers, and many other businesses have been facing over the past couple of years. Today, we decided to share the view of those who are actually inside the industry and see problems compounding on a daily basis. The supply chain crisis is a very complex issue that affects each and every one of us, and the longer it persists the more harm it brings to our lives, our society, and our economy.
In a recent exposé, the financial and economic writer and analyst, Wolf Richter shared the realistic and revealing observations of an Ohio-based manufacturer, whose company operates in several states, about the ongoing supply chain chaos. Todd Miller, the CEO of Isaiah Industries, a company that produces metal roofing shingles for residences and commercial buildings and sells them under several brands, such as Classic Metal Roofing Systems, in North America, Japan, and the Caribbean, has recently sent a letter to Richter’s blog Wolf Street, in which he explained by the supply chain system is broken.
Miller describes that over the past decade, he has seen several situations where raw material supplies, especially metal, were very tight and led to disruptions in the company’s operations. “However, we’ve never seen anything like we’re experiencing now as it goes beyond just metal supply,” he said. Today, the industry’s bottlenecks are affecting the supplies of pretty much everything. “The days of being able to place orders and know that we will receive the supplies we need when we need it are long gone. Manufactures now tell us how much they can sell us. And even at that, they are often delayed on shipments. It really isn’t supposed to work this way! The system is broken,” he said.
The problems faced by his company are similar to what many other businesses have been experiencing in recent months. The biggest worry, however, is how these disruptions are affecting one industry all of us rely on: the food industry. All over the nation, food retailers are struggling with worsening labor and product shortages that can potentially threaten America’s food security. The latest wave of confirmed virus cases has left a dent in the labor market, as millions of workers have been calling in sick and new protocols are reinstituted on food manufacturing plants. In January, the economists estimated that employee absenteeism had hit about 30 percent of staffers at some stores. Now that number is over 50 percent and is continuing to rise by the day.
As the situation worsens, small and medium-sized grocery stores won’t be able to stay open, which will compromise food security in rural and remote areas that depend on independent grocers, they warned. One grocery store owner said that the shortage of workers is putting his business on the edge of closure. “If we have to keep sending people home, at a certain point stores are not going to be able to operate,” he said.
The truth is that the truck driver shortage is an issue that has never been properly addressed. We can get millions of containers filled to the brim with goods coming from China and around the world, but if there are not enough truck drivers to distribute and deliver them to stores all across the country, then we will have to get used to seeing empty shelves for a long, long time.
If nothing is done to stimulate job growth in the sector, no matter how many supplies we can import, they won’t be delivered and prices and inflation will continue to skyrocket. If there was still any doubt remaining before, now it’s clear that the U.S. labor and supply chain nightmare is here to stay, and this crisis is far from over. In fact, a Resilinc survey found that supply shortages rocketed 88% last month, and rose 452% year-over-year. Resilinc said the top six disruptions were factory shutdowns, workforce disruptions, leadership transitions, and raw material shortages. “The conditions are spurring nations worldwide to look after themselves, hoarding locally-sourced raw materials. This will further negatively affect the supply chain as exports decline and countries that rely on those exports face shortages,” the firm noted.
Resilinc, monitors, and maps risk events for the supply chain, and just last year, it sent out 491 shortage alerts covering semiconductors, plastics, paper, and raw materials. All of these chokepoints on our supply chains will definitely make conditions a lot more complicated this year. It appears that the prophecy that few heard and no one believed had finally come true: Shortages will become commonplace in the world's wealthiest country, and the supply and demand imbalances we are witnessing are sowing the seeds for economic chaos in the coming months."
"US Debt of $30 Trillion Visualized in Stacks of Physical Cash"
"U.S. Attains Frightening Milestone"
by Jim Rickards
"Well, we did it! It took some hard work, but the United States finally managed to find itself with $30 trillion of government debt. But if anyone is actually thinking of celebrating this dubious accomplishment, I have some advice for you - get ready for the hangover. Let’s see how we got here…
The U.S. government bond market was invented by Alexander Hamilton early in the first administration of George Washington around 1790. The newly formed United States of America was facing claims from creditors who had financed the Revolutionary War. The Congress had a simple solution: Default! That’s the American Way. But Hamilton had a better idea. He said the new government should borrow more money and use that to pay off the old creditors. Once we did that, we would be deemed creditworthy and we could borrow even more money to pay off the money borrowed in the first round.
This plan was so successful that the U.S. Treasury market is now celebrating its 230th anniversary! That’s how long the U.S. has been borrowing new money to pay off old debt. In 1835, Andrew Jackson became the first and only president who cut the national debt to zero.
Inflation Is the Only Way Out: The story of U.S. debt is not one in which the debt went up steadily for 230 years. The actual history is that the debt went up in times of war and it was paid back in times of peace. Debt went up in the War of 1812, the Mexican-American War of 1846–1848, the Civil War, World War I, World War II, Korea, Vietnam and under Reagan to win the Cold War. (The only major debt increase without war prior to 2000 was during the Great Depression). But the war debt was paid off during times of peace including the 1820s, 1870s, 1920s and 1990s. It was only after 2000 that things went off the rails and government debt went straight up under George W. Bush, Barack Obama, Donald Trump and Joe Biden.
Now the debt is unmanageable without inflation. Inflation favors debtors because they get to pay back the debt with depreciating dollars. It’s easier to pay down debt because you’re paying back debt with dollars that are less valuable than when you originally borrowed them. So inflation eases the real value of debt. On the other hand, deflation increases the real value of debt. With deflation, the value of money increases, making it more burdensome to pay off debt. This is why debtors hate deflation.
The other way to deal with the debt is to default. But there's no reason for the U.S. to default because the debt is in dollars and we can print the dollars. That’s the great advantage of having the world’s leading reserve currency, what French Finance Minister Valéry Giscard d'Estaing termed the “exorbitant privilege” in the 1960s.
The Debt Death Trap: People who say, “We can’t pay off the national debt!” don’t understand this market. There’s no need to pay off the national debt. We just have to keep rolling it over. But to do that we need to maintain our credit standing, as Hamilton understood. Once our credit is called into question, the entire house of cards collapses.
This shows up first in higher interest rates, then in a devaluation of the dollar and finally in illiquid markets where the debt just can’t be sold except to the Fed. The final stage is hyperinflation and complete collapse of the currency and the bonds. It’s not going to happen tomorrow, but we’re getting closer to that endgame.
I’ve said before that the U.S. is caught in a debt death trap. Monetary policy won’t get us out because the velocity of money, the rate at which money changes hands, is dropping. Printing more money alone will not change that.
Fiscal policy won’t work either because of high debt ratios. At current debt-to-GDP ratios, each additional dollar spent yields less than a dollar of growth. But because it must be borrowed, it does add a dollar to the debt. Debt becomes an actual drag on growth. The ratio gets higher and the situation grows more desperate. The economy barely grows at all while the debt mounts. You basically become Japan.
The national debt is $30 trillion. A $30 trillion debt would not be a serious issue if we had a $50 trillion economy. But we don’t have a $50 trillion economy. We have about a $21 trillion economy, which means our debt is bigger than our economy. And it’s stalling.
A Small Rounding Error Away From Recession: Although we’re only about one-third of the way through the first quarter of 2022, the Federal Reserve Bank of Atlanta has published its estimate for first-quarter growth using the data we have so far. The result is a forecast of 0.1% GDP growth on an annualized basis. That’s a small rounding error away from a recession. That’s significant because the Atlanta Fed is known for its highly optimistic forecasts.
There are several reasons for this weak start to the quarter. The first is that strong fourth-quarter growth in 2021 was mostly a mirage. Almost the entire growth came from inventory accumulation. That does not represent final sales; it represents goods piling up in warehouses. If those goods get sold in the first quarter, they don’t add much to GDP because they were already counted in GDP when the inventories were purchased.
If the goods don’t get sold, it’s even worse because supply chain managers will cancel new orders while waiting for the inventories to run off (probably at steep discounts). Also, the economic impact of Omicron is just being felt now. It hit hard in December but did not have much impact coming that late in the year.
After Jan. 1, the quarantines, hospitalizations and lockdowns started to pile up, so the first quarter will bear the brunt of it. When you combine this intrinsic weakness with Fed tightening today and rate hikes in March, you have a recipe for recession in the first quarter.
Heading for a Sovereign Debt Crisis: In basic terms, in the bigger picture, the United States is going broke. We’re heading for a sovereign debt crisis. I don’t say that for effect. I’m not looking to scare people or to make a splash. That’s just an honest assessment based on the numbers. Tax cuts won’t bring us out of it; neither can structural changes to the economy. Both would help if done properly, but the problem is simply far too large. You can’t grow yourself out of this kind of debt.
So an economic time bomb is ticking. Velocity is dropping. Debt is growing while growth is slowing. The explosion will come in the form of asset bubbles bursting and stocks crashing. There’s no way out of the debt death trap except through inflation. Say goodbye to Hamilton’s master plan. Time to buy some gold before the rush into hard assets really begins."
"Liquid Mind" (aka Chuck Wild) originally wrote this music to deal with the anxiety and stress of overwork and the serious illness of friends. The gentle ebb and flow of the music has an immediate "slowing down" effect, providing a serene escape from tension-filled days. Ideal for stress relief, falling asleep at night and to enhance meditative and therapeutic practices. There are few composers with as much love for slowness in their music as Wild. Chuck draws from classical and pop influences as varying as Beethoven and Brian Eno, Bartok and Rachmaninoff, Bach, Chopin and Fauré, Duruflé and Brahms."
“The constellation of Orion holds much more than three stars in a row. A deep exposure shows everything from dark nebula to star clusters, all embedded in an extended patch of gaseous wisps in the greater Orion Molecular Cloud Complex. The brightest three stars on the far left are indeed the famous three stars that make up the belt of Orion. Just below Alnitak, the lowest of the three belt stars, is the Flame Nebula, glowing with excited hydrogen gas and immersed in filaments of dark brown dust.
Below the frame center and just to the right of Alnitak lies the Horsehead Nebula, a dark indentation of dense dust that has perhaps the most recognized nebular shapes on the sky. On the upper right lies M42, the Orion Nebula, an energetic caldron of tumultuous gas, visible to the unaided eye, that is giving birth to a new open cluster of stars. Immediately to the left of M42 is a prominent bluish reflection nebula sometimes called the Running Man that houses many bright blue stars. The above image, a digitally stitched composite taken over several nights, covers an area with objects that are roughly 1,500 light years away and spans about 75 light years.”
“Johannes Kepler is best known for figuring out the laws of planetary motion. In 1610, he published a little book called “The Six-Cornered Snowflake” that asked an even more fundamental question: How do visible forms arise? He wrote: "There must be some definite reason why, whenever snow begins to fall, its initial formation is invariably in the shape of a six-pointed starlet. For if it happens by chance, why do they not fall just as well with five corners or with seven?"
All around him Kepler saw beautiful shapes in nature: six-pointed snowflakes, the elliptical orbits of the planets, the hexagonal honeycombs of bees, the twelve-sided shape of pomegranate seeds. Why? he asks. Why does the stuff of the universe arrange itself into five-petaled flowers, spiral galaxies, double-helix DNA, rhomboid crystals, the rainbow's arc? Why the five-fingered, five-toed, bilaterally symmetric beauty of the newborn child? Why?
Kepler struggles with the problem, and along the way he stumbles onto sphere-packing. Why do pomegranate seeds have twelve flat sides? Because in the growing pomegranate fruit the seeds are squeezed into the smallest possible space. Start with spherical seeds, pack them as efficiently as possible with each sphere touching twelve neighbors. Then squeeze. Voila! And so he goes, convincing us, for example, that the bee's honeycomb has six sides because that's the way to make honey cells with the least amount of wax. His book is a tour-de-force of playful mathematics.
In the end, Kepler admits defeat in understanding the snowflake's six points, but he thinks he knows what's behind all of the beautiful forms of nature: A universal spirit pervading and shaping everything that exists. He calls it nature's "formative capacity." We would be inclined to say that Kepler was just giving a fancy name to something he couldn't explain. To the modern mind, "formative capacity" sounds like empty words.
We can do somewhat better. For example, we explain the shape of snowflakes by the shape of water molecules, and we explain the shape of water molecules with the mathematical laws of quantum physics. Since Kepler's time, we have made impressive progress towards understanding the visible forms of snowflakes, crystals, rainbows, and newborn babes by probing ever deeper into the heart of matter. But we are probably no closer than Kepler to answering the ultimate questions: What is the reason for the curious connection between nature and mathematics? Why are the mathematical laws of nature one thing rather than another? Why does the universe exist at all? Like Kepler, we can give it a name, but the most forthright answer is simply: I don't know.”
"When we're headed toward an outcome that's too horrible to face, that's when we go looking for a second opinion. And sometimes, the answer we get just confirms our worst fears. But sometimes, it can shed new light on the problem, make you see it in a whole new way. After all the opinions have been heard and every point of view has been considered, you finally find what you're after - the truth. But the truth isn't where it ends, that's just where you begin again with a whole new set of questions."
“Life has no victims. There are no victims in this life. No one has the right to point fingers at his/her past and blame it for what he/she is today. We do not have the right to point our finger at someone else and blame that person for how we treat others, today. Don’t hide in the corner, pointing fingers at your past. Don’t sit under the table, talking about someone who has hurt you. Instead, stand up and face your past! Face your fears! Face your pain! And stomach it all! You may have to do so kicking and screaming and throwing fits and crying – but by all means – face it! This life makes no room for cowards.”
