(Pamela Geller) The Democrats war on hard working Americans just ratcheted up another unimaginable notch. But this time, it not only puts the small businessman out of business, it throws in massive shortages (food, energy, supplies etc.), supply chain issues etc. It’s a catastrophe
Sadly, the U.S. Supreme Court denied a review on whether California Assembly Bill 5 (AB-5) violates the Federal Aviation Administration Authorization Act of 1994 as it applies to self-employed truck drivers.
(Sundance) A very interesting interview with Chris Spear, president and CEO of the American Trucking Association.
During a House Transportation Committee hearing on supply chain issues, CEO Chris Spear shares an internal survey showing that 37% of truck drivers “not only said no, but said hell no” to the Biden vaccine mandates.
The truth is starting to come out, and a lot of people aren’t going to like it. When the supply chain problems and the shortages began, government officials repeatedly assured us that they would just be temporary, and most of us believed them. But now it has become clear that they aren’t going to be temporary at all. In fact, during a recent interview with Bloomberg, U.S. Transportation Secretary Pete Buttigieg admitted that some of the supply chain problems that we are currently facing could last for “years and years”. I don’t know about you, but to me “years and years” sounds like a really long time.
(Jack Phillips) Several industry groups have warned world leaders of a worldwide supply-chain “system collapse” due to pandemic restrictions, coming as Federal Reserve Chairman Jerome Powell suggested that the current period of higher inflation will last until 2022.
In the last few weeks, ZeroHedge provided many articles on the evidence of creaking global supply chains fast emergingin China and spreading outwards. Anyone in supply chain management, monitoring the flow of goods and services from China, has to be worried about which regions will be impacted the most (even if the stock market couldn’t care less).
Deutsche Bank’s senior European economist Clemente Delucia and economist Michael Kirker published a note on Thursday titled “The impact of the coronavirus: A supply-chain analysis” identifying the effect of contagion on the rest of the world, mainly focusing on demand and spillover effects into other countries.
The economists constructed a ‘dependency indicator,’ to figure out just how much a country depends on China for the supply of particular imported inputs. It was noted that the more a country depends on China, the more challenging it could be for businesses to find alternative sourcing during a period of supply chain disruptions.
The biggest takeaway from the report is that, surprisingly, the European Union is less directly exposed to a China supply-chain shock than the US, Canada, Japan, and all the major Asian countries (i.e., India, South Korea, Indonesia, Malaysia, Vietnam).
It was determined that in the first wave of supply chain disruptions that “euro-area countries are somewhat less directly dependent on China for intermediate inputs than other major economies in the rest of the world.”
“The euro-area countries have, in general, a dependence indicator below the benchmark. This suggests that euro-area countries have a below-average direct dependence on Chinese imports of intermediate inputs (Figure 2).”
But since China is highly integrated into the global economy, and a supply chain shock would be felt across the world. The second round of disruptions would result in lower world trade growth that would eventually filter back into the European economy.
The US, Japan, Canada, and all the major Asian countries would feel an immediate supply chain shock from China.
Here’s a chart that maps out lower dependency and higher dependency countries to disruption from China.
To summarize, the European Union might escape disruptions from China supply chain shocks in the first round, but ultimately will be affected as global growth would sag. As for the US and Japan, Canada, and all the major Asian countries, well, the disruption will be almost immediate and severe with limited opportunities for companies to find alternative sourcing.
“First of all, our analysis does not take into account non-linearity in the production process. In other words, it does not capture consequences from a stop in production for particular product. It might indicate that given the dependence is smaller, Europe could find it somewhat easier substitute a Chinese product with another. But there is no guarantee this will be the case.”
“Secondly, while our results indicates that the direct impact from supply issues in China could be smaller for the euro area than for other regions in the world, the euro area could be hard-hit by second-round effects. With their higher direct exposure to China, production in other major economies could slow down as a result of disruptions in the supply chain. This not only could cause a shortage in demand for euro-area exports, but it could also impact on the euro-area’s import of intermediate inputs from these other countries (second-round effects). In other words, China has become a relevant player in the world supply chain and production/demand problems in China are spread worldwide through direct and indirect channels.“
News flow this week has indeed suggested the virus is spreading outwards, from East to West, and could get a lot worse ex-China into the weekend.
The mistake of the World Health Organization (WHO), governments, and global trade organizations to minimize the economic impact (protect stock markets) of the virus was to allow flights, businesses, and trade to remain open with China. This allowed the virus to start spreading across China’s Belt and Road Initiative (BRI).
Enjoy a riveting weekly news wrap up with Greg Hunter…