Given the response to my last post, I guess people do prefer more opinion. I will work on finding a balance between both. One opinion piece about education, and the elites, is a work in progress.
As a matter of irony, a couple of hours after finishing my last post, we already got something I mentioned on it. Every time China locks down its portuary regions, the shortage of containers increases. From here.
These lockdowns are possibly more severe than the initial quarantines in 2020 when COVID was first discovered,” Jon Monroe of Monroe Consulting told American Shipper. “Many people will tell you the ports are open. And this is true. But the port workers, factory workers and truck drivers are locked in their homes
Which ins’t exactly news, as I wrote in the last article, the roadmap for China dealing with Omicron was there since the start, but more precisely, second half of last year. Even the movement of containers transported by trucks has been severely disrupted, something rather “new”, because now there is a major delay of up to 12 hours, a measure not present to this class of workers before.
What this does mean in “real world terms” is, as I said before, those long line of ships waiting to unload the cargo will happen again, it took WEEKS for them to clear the last one. Not a big deal, in a way, correct ? Well, fuck no. The waves of ships will come, and build up right when there will be renegotiation of contracts, if anything goes sideways, ports will grind to a complete, and absolute halt. The lockdowns in 2020 will look like child’s play in comparison.
These are some of the goods that are sent from the region, and now you can have an idea what shortage might intensify in a few weeks.
What does all of this means ? Further inflationary trends, everywhere. This put further strain and complexity in an already fragile and overly reliant in a few spots. Maersk is already sounding the bells for further high freight costs.
The Chinese government will soon have come to terms, even if they know something about this virus, that the entire world doesn’t. “Open up, or shut up”, the population is growing severely discontent, as the Western population did last year, at least part of the population.
Panic buying is already happening in this region, and one may ask if it is merely a direct effect of the severe measures the Chinese Government unilaterally applies. And no, it isn’t, other regions who had lockdowns in January experienced deaths by starvation, because of the severe disruption in logistics to those cities. I won’t post here, but you can find videos of suicides, and people getting fed up with it from Chinese accounts on Twitter.
China is one of the biggest producers of literally everything the world needs to keep functioning, and there is no easy, and specially, quick way to substitute all that infrastructure, and the cost will be higher if done elsewhere, putting more, and more inflationary pressure in the world economy.
I have covered the global energy woes extensively now, but here I will add analysis, with opinion, and some forecasting. You should remember my framework, how I see systems. First a piece of news from 6 days ago.
Why is this important ? The current course of action is not led by decision-making. First, Black Rock has been aggressively pushing for “renewable”, and slowly removing capital access from fossils fuel players, they are partially to blame for this, second, climate activists, I will refrain from the politics of it, but which leads us to the third, and most significant point.
The current decisions made by the entire EU are purely an emotional response, politicians insulated enough to not hear, or see, or feel the angst of their population, are responding with the centuries old European pride. And apparently, they do not care that much how much pain the population suffer short term, as long as they “get off the Russia grip”. Which is impossible short term, given the laws of physics, and market dynamics.
LNG vessels in Qatar are idle, and nobody knows why, their production is also lower for the time period than usual, this is something I have been seeing a lot, an unconnected pattern. Important energy players, be they nuclear plants, LNG stations that fuel carrier, trucking companies that carry coal, all seem to be hit by “maintenance” at the worst possible times.
Some were programmed, but others were not. These emotional, misguided decision will lead Germany to ration gas, and one can expect fuel too. Austria did the same.
Also, China is making deals (long term contracts) to buy a lot of LNG from the US, and make no mistake, they will outbid everyone else, secure their own stock, and sell it when the profit is nice enough, make no mistake, this is a very nice hybrid war move. Continuous disruption of your adversary, and at the end, you still win in some level.
Why fuel rationing, and shortages, are so important ? Complex system collapse in two ways. EROI, spending more money/energy to get fuel/energy back, or complexity. We have both, a very complex society, and at this moment horrible EROI. I already mentioned bits, and pieces among numerous posts, but these shortages have the same whiplash effect in the system, as they did, and are doing now, in China.
Each region, each industry has a different overall impact on the entire system, there is already a shortage of, well, everything, but each time prices fluctuate too much, or when rationing becomes policy, it creates ripples, you can’t accommodate such volatility in supply and demand. Fertilizer, raw material for chip manufacturing, feed for animals, spare parts, tires, etc. The European Union will drive itself into a massive recession out of pride, and spite towards the Russians. Sri Lanka is experiencing a fuel shortage, that will impact not only its own economy, but all the exports, and one can argue, already in a recession.
Of course, the real model is non-linear, one thing feeds the other. As I advised some readers in a few Beyond Mathematical Odds posts, one way to circumvent, and hedge against, the continuous disruption is sourcing from multiples suppliers. Something that Tesla has done with nickel, which is obviously extremely hard to do for most companies, still, you can think creative ways on dealing with this.
Besides for analytical purposes, why I am mentioning all these data points ? Because if you are European, you should really consider an alternative fuel source for your uses. Maybe a few more propane tanks, solar panels (while they are still cheap, I have covered this before, the industry will suffer from disruptions as much as everything else). Having extra fuel while it is still possible is not only a decent hedge against further inflation, or disruption, but wise.
Americans should not think they are “energy secure” too. Well, they are, but prices will still be high, because Biden refuses to help. California will have blackouts, with the help of Mother Nature, without it (erratic weather), you can expect massive disruption.
Talking about the federal government, I have mentioned before they wouldn’t send water to help the Californian farmers, and now, gripped by drought, California proposed a $2.9 billion plan to pay farmers to reduce some of their planting to conserve water. Since drought will be a recurring theme the next few months, here is another inflationary trend, and very important.
Cotton is also used in baby, and woman hygiene products, as well, among other things such as animal feed, paper, a shortage that will only get worse. Paper is very essential to learning and memory, and I will cover this in my education piece.
I do not expect the weather to cooperate with everything else going on. There will be droughts severe enough to impact crops, and then rains severe enough to impact everything else, similar to Brazil. We had Winter days in Summer, massive rains of biblical proportions, severe drought. Among other weather oddities.
I may update my Year Without Summer 2 thread in a few weeks. And for last, since we are talking about Nature.
Avian flu has not abated from its progress in the US.
The U.S. layer flock typically expands ahead of the surge in demand for Easter and contracts during the summer months. But recent losses due to HPAI have combined with high feed costs and other challenges that are severely limiting flock size management.
The more expensive feed has been a recurring theme, in China, Europe, and elsewhere, it is even put pressure on rice prices, because of the surge in prices on all other feed types. The biggest problem with the spread of this HPAI strain is that it now has a wild reservoir, and this is how it’s mainly spreading following migratory patterns in the US.
It is incredible hard dealing with wild reservoirs, so this could turn for the worse, and the time to act was months ago, when this was a concern solely in China. Now Canada, Belgium have it, France is culling millions of its flock.
Fits very well with certain narratives, propelled by wealthy individuals, don’t it ?
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Bem, to no BR tambem.
2x desastre/Petropolis: porra, vc ja foi pra la? E loucura, ocorre a cada 2 anos, no Rio, ou em Teresopolis, ou outra cidade na região.
Pro BR, tenho 2 scenarios, não sei qual vai vencer:
1- Boom ++:
1-a O Classico Boom de commodities, mas ^2, 10 x como do Lula> 2003: exporta soja + minerio + celulose, o dinheiro jorra & 4x4 de luxo se multiplicam de Campo Grande pra Feira de Santana;
1-b Cadeia de importações fica quebrada: industria local prevalece, boom ^4.
2- ???: Capital/US Dollar quebra, com o Gold-ruble/yuan:
Como que o BRL sobrevive a queda do USD?
A principio bem. Ja ganhou 20% em 12 meses, voltou de 5.85 para 4,77 BRL/USD.
Se cair o USD: sumiço da divida em USD x destalibização dos ativos no sistema financeiro BR.
Não sei, cara, não sei.
Mas pelo menos aqui, ok, vamo interrar o EN-US com o PT-BR.
+ plantei feijão em pasto, estockando arroz & aceite, pois não se sabe.
“Raw material shortages, notably in metals and minerals and polysilicon are impacting the renewable energy industry
> The cost of solar panels, wind turbines, and EV batteries is climbing after years of declines
> Solar panel prices had surged by more than 50 percent in the past 12 months alone. The price of wind turbines is up 13 percent and battery prices are rising for the first time ever”