CNBC put up an interesting article (it's worth reading) about how, since men tend to die earlier than women, older women are likely to receive a lot of money and assets from their husbands who predecease them.
So far, so good.
Unfortunately, the headline CNBC's editor(s) chose was . . . not so good.
The giggling among financially inclined commenters has been epic.
Peter
Yesterday I ran into an acquaintance who lives in Lawton, Oklahoma. I'll call him Kumar (not his real name, for reasons of confidentiality). He manages a hotel along I-44 in Lawton, one of several owned by his extended family around the country. He was driving a brand-new Mercedes SUV, a big change from his normal run-down delivery van.
I asked him how he'd been able to afford the upgrade. He smiled, and said "We owe it all to the New York municipal council."
"Come again?" I asked, puzzled.
"Oh, they've rented both of our family's hotels in the city - every single room - to house migrants, almost since they started arriving in New York. We're making over a million dollars every month in gross revenue off the migrant surge! Sure, the expenses are high, too, but overall we've doubled our net family income."
He may have been exaggerating, but a quick Internet search shows he's pretty much on the mark.
In New York City, hotels that have converted into shelters for hordes of illegal aliens have been given over $1 billion in taxpayer money to keep them in business.
As reported by Fox News, the average hotel room for an illegal costs $156 per night, with some costing over $300 per night. As such, the city government has already spent at least $1.98 billion on housing for illegals, with 80% of that amount going to hotels or inns that have been converted into shelters, rather than to shelters operated by the city. Overall, the city has spent at least $4.88 billion on the mass migration crisis.
. . .
Business owners in the surrounding neighborhoods have noted the decline in economic revenue for their businesses and others around them, as the tourists that would normally stay in such hotels and subsequently patronize their own businesses have been replaced by illegals who have no money.
“Our taxes are being used to pay for the migrants, and where are we supposed to make revenue?” asked William Shandler, manager at the Iron Bar located across the street from the Row hotel. “How as a business could we function?”
Republican Councilwoman Joann Ariola also criticized the gutting of the tourism industry in favor of illegals, pointing out that hotels were built to be used by tourists, “not for sheltering the masses of people pouring over our borders every day.”
“These locations were meant to boost the economy of this city,” Ariola continued, “but instead they’ve become a net drain and are costing us enormously.”
There's more at the link.
Kumar's family came here from India about 40 or 50 years ago, if I understand correctly. His grandfather and grandmother slaved at any work they could find, and saved every penny they could, while pushing their kids to do well at school. By the end of ten years, they'd saved enough to buy their first motel, near a major Interstate highway in Pennsylvania. Grandpa and Grandma managed it, and made sure all the kids worked there before and after school, saving the cost of hiring workers. By the time most of the kids had graduated high school, the family could afford to buy a second hotel, this one in New Jersey. It went on like that until today, with three generations of the family involved, they own eleven hotels, all managed by family members, sharing their revenues so that the whole family enjoys the rewards of their hard work.
Well done to all of them - they've certainly demonstrated that the American dream is still within reach if you're prepared to work hard and go for it. I'm just annoyed that in the process, they've illustrated how fundamentally corrupt our local and regional governments have become. Look at the numbers cited above. One city is spending almost $5 billion - so far - to house migrants who should never have been allowed across the border in the first place; and all that money is coming from local ratepayers and businesses, most of whom desperately need it themselves! The only upside I can see is that Kumar's family is spending a lot of that windfall income to buy more hotels, and spread themselves out further in this land of opportunity. One can't blame them at all. In the process, they're providing a needed service, and that's something we can all appreciate.
Pity one can't say the same about New York City and its demented spendthrift policies . . .
Peter
When it comes to figuring out what our economy is doing, most of the high mucky-mucks of politics and finance are simply not to be trusted. They insist that things are all wine and roses, running along quite splendidly . . . and meanwhile they're making sure they won't be affected by the downturn they must surely know is coming.
I've been accused of being a financial alarmist, of issuing warnings that never seem to be realized in reality. Well, they mostly have already been realized, as regular observers of our economy will realize: and they continue to be realized, on almost a daily basis. To reinforce the message, here are five inputs from different sources that you can read and research for yourself, to figure out what's going on. I highly recommend that you take the time to do so.
First, from Quoth The Raven, interviewing Chris Martenson:
The US Is A "Runaway Train"
"We clearly have a runaway monetary fiscal train at this point in time, and it's just headed towards what I call the nuclear reactor critical mass runaway moment,” Chris told me. “Higher interest payments beget more borrowing, which begets higher interest rates, which begets higher interest payments. And you're on that spiral. That's the death spiral, which happens to companies, but it can happen to countries too.”He continued: “We could have probably kicked the can another cycle or two, but now you have the rest of the world backing away, if not trotting away from the U.S. dollar, and people don't get it yet. China's negatively hoarding their treasuries, they're dis-hoarding right now. So China's selling. Japan's in a world of hurt. I don't know if you see, but the yen's here banging around at the 160 level again. So they're selling, and their big bank has to probably sell some treasuries. Russia, obviously not buying any of our crap—they kicked that habit in 2018. But Saudi Arabia now not buying treasuries, dis-hoarding.”And he raised questions about where, exactly, treasury demand is coming from, telling me: “So who's buying? Well, you go to the Treasury International Capital Report. You find out, oh good, the Cayman Islands stepped in. Dude, we need an audit of the Fed right away. I don't think it's always suspicious to see it, no, because every time we need the Cayman Islands and the UK to step up and buy just hand over fist treasuries, somehow they do.”Finally, Chris — like most of us watching flawed policy unfold — says we’re definitely going back to QE: “But listen, here's a prediction. It's very easy to make for me. The Fed's going to have to go back to QE. It's not just lowering interest rates—that's going to do dick all for us at this point. They're going to go back to QE because we can't risk a treasury failure. We have $9 trillion of debt, new and existing, rolling through the auction market this next calendar year. And so the Fed's going to have to step in and start buying that stuff. Full stop. That's inflation."
Next, from CNN:
The world is sitting on a $91 trillion problem. ‘Hard choices’ are coming
The International Monetary Fund last week reiterated its warning that “chronic fiscal deficits” in the US must be “urgently addressed.”
. . .
Tackling America’s debt problem will require either tax hikes or cuts to benefits, such as social security and health insurance programs, said Karen Dynan, former chief economist at the US Treasury and now professor at the Harvard Kennedy School. “Many (politicians) are not willing to talk about the hard choices that are going to need to be made. These are very serious decisions… and they could be very consequential for people’s lives.”
. . .
In the United States, the federal government will spend $892 billion in the current fiscal year on interest payments — more than it has earmarked for defense and approaching the budget for Medicare, health insurance for older people and those with disabilities.
Next year, interest payments will top $1 trillion on national debt of more than $30 trillion, itself a sum roughly equal to the size of the US economy, according to the Congressional Budget Office, Congress’s fiscal watchdog.
Debt is a problem in itself, right enough, but it also boosts inflation, which is something affecting far more of us. Here's Jeffrey Tucker, who reminds us about "The Many Faces Of Inflation".
There is clearly no chance that inflation has been running 3 to 5 percent. Once you do all the corrections to the data, you can easily generate a number 3 times that level or perhaps even 4 or 5.
No one knows for sure.
It’s not just higher prices for the same goods and services you used to buy.
Tucker goes on to list numerous inputs to overall inflation:
He concludes:
All of this stuff is complicated for a reason. It’s because all companies today are hiding their charges from the customer for fear of a revolt. If they are hiding them from the customer, they obviously and easily hide them from the data mavens at the Bureau of Labor Statistics.
. . .
When you add it all up ... we find something approaching what used to be called hyperinflation. And this is taking place even as the business press is celebrating the end of inflation, and has been for fully two years!
Strange times indeed: the dollar is being gradually wrecked domestically while growing stronger internationally, and it’s never really been in the headlines.
This is why you feel so gaslit these days.
In another article a few days later, Tucker asks "Wait, How Much Have Groceries Gone Up?"
The most startling moment in the CNN debate last week between President Joe Biden and former President Donald Trump was not from the candidates. It was from moderator Jake Tapper, who said with a straight face as if it were just the science that grocery prices were up by 20 percent since President Biden was elected.
. . .
The trouble is that this fits with no one’s experiences. People on social media are posting receipts showing grocery prices up by anywhere between two and 10 times that rate.
In one viral video that offered receipts, a man bought 45 items (he says a full month of groceries) two years ago for $145. WalMart’s software allows him to reorder that now. He tried it just as a test. The new price: $414.
That’s an increase in two years of 185 percent! If we stretch that to three years assuming no inflation in the first, that’s an annualized increase of 61 percent. Over two years, it’s 92.5 percent.
Adding in some inflation in the first year, we can round it to 100 percent annualized, which is hyperinflation by any measure.
Commentators offered corrections that this is just one person’s experience. Maybe there was one item in there that went up vastly in price, changing the entire basket. All that is true. However, I tried looking at a few items that I bought in 2021 and found price increases of 54 percent. That’s just one item but a very normal one: lemon juice.
When all the anecdotal evidence points one way and all the official data points another way, we’ve got a problem. The distance between real experience and the official data is gigantic. And it raises the eternal problem first articulated by Chico Marx: “Who are you going to believe, me or your own eyes?”
. . .
What about the CPI? It excludes interest rate increases on everything: taxes, housing, health insurance (accurately), homeowners insurance, car insurance, government services such as public schools, shrinkflation, quality declines, substitutions due to price, or additional service fees. In particular, on the last point, a basket must compare prices in two periods. A new service and convenience fee or a simple charge for processing is not included because it is new.
People often ask: Is this all a deliberate obfuscation or is it the limits of data collection? I tend toward the latter explanation while granting that reports of a lower rate are politically advantageous. People loathe inflation. No one wants to report bad news, and that might be true of data collectors themselves.
The data collectors are sticking with systems that seemed to work in the past, but the way in which inflationary pressures have boiled through production and consumption structures this time, which is without precedent, has simply outrun the ability of old-fashioned systems of calculation to keep up.
In essence, the real world is blowing up the models.
. . .
My suggestion: Dig through your receipts. The good old days live in your digital archive. Do your own calculation and see what you come up with.
Finally, Vox Day mentions an example that I've heard from several other people over the past few weeks.
A reader notices that the credit card companies are rapidly reducing the amount of credit available to their more conservative cardholders.
My husband and I run a small business and have noticed an unusual practice by credit card companies over the last 4-5 months.
Our business is seasonal, and during our ramp up in from February to April, we usually max out 6 cards on supplies and improvements for the coming season. And then the profits from May and June pay those down, before we start making real profits July-October. We’ve been doing this for over ten years, and typically the result of the max-out and quick pay down has been an increased credit limit.
This year, as we have started the pay down, each large pay down amount, say $2000 on a $10,000 card for example, has come with a credit limit reduction of 50% – 100% of the amount paid. One card, upon paying it off in whole dropped from $2500 to $350 as the limit.
We have no personal reasons that our limits in particular would be getting slashed after so many years of increases. So I am wondering if this is a systemic attempt to use debt deflation to slow the rate of inflation without further interest rate increases.
More generally, if what I’m seeing is systemic, is this a correct understanding of debt deflation?
This is 100 percent debt deflation. And in some ways, it’s more worrisome than the leadup to the 2008 contraction. Whereas in 2008, there was a dearth of people willing to borrow, now it is apparent that the banks simply can’t afford to offer the credit if there isn’t a sufficient amount of interest to be gained.
Which suggests that the 2024 credit cruch and subsequent financial institution failures will be bigger and more consequential than we witnessed in 2008. It’s even possible that the federal government will not be able to bail out most of the failing institutions.
I had something similar happen to me during the 2007/08 financial crisis. At the time, I had a high-limit credit card on which I was carrying a large balance. Out of the blue, when I made a large payment to reduce the balance, my credit limit was slashed by more than 50%, to equal the remaining balance. When I protested, the card issuer informed me that they were reducing everybody's credit limit "due to the financial crisis", despite the fact that I'd never defaulted on a payment and was in good financial health. They then informed me that I would lose my favorable interest rate and have to pay a greatly increased one on my outstanding balance, and would be required to further reduce my balance within a few months. I closed my account rather than adhere to their ridiculous restrictions.
Unfortunately, it looks like more than a few people today are encountering similar policies. Apart from Vox's correspondents, I've heard similar reports from at least a dozen sources. If credit card issuers are being that cautious and restrictive, what does that say about their perspective on current and future economic conditions? They're clearly preparing for something not very good. Shouldn't we do likewise?
Food for thought. I can only suggest that we all take these factors into account now, while we may still have some financial "wiggle room".
Peter
Venezuela appears to be in a very parlous state, according to Peter Ziehan. The brief video below is worth watching.
That puts a different emphasis on Venezuelan President Maduro's threat to take over a resource-rich area of neighboring state Guyana.
Venezuela continues to build up military infrastructure and hardware close to the border with Guyana as President Nicolas Maduro and his supporters scale up their threats to annex an oil-rich piece of Guyanese land.
In a report shared with CNN, the Washington-based think tank Center for Strategic and International Studies (CSIS) warns that while the Venezuelan government “has little to gain and much to lose from a full-blown conflict” it continues to play “a dangerous game” over its claim over the densely forested Essequibo region.
“The constant drumbeat asserting ‘the Essequibo is ours,’ alongside the creation of new military commands and legal structures to oversee the defense of the region, is helping to institutionalize a sense of perpetual prewar footing,” it wrote.
There's more at the link.
That's a very old tactic indeed: distract one's population from severe internal or local problems by focusing them on an external grievance, war or other provocation. Argentina did it with the Falkland Islands when the former's military junta was about to lose control of the economy and drive the nation into ruin. An appeal to patriotism, particularly in a continent that fought a war over a soccer match (!), is almost guaranteed to divert attention.
Unfortunately, that won't help Guyana, which is much smaller and weaker than Venezuela; and it won't help peace and stability on the entire South American continent, where drug cartels and other evils will use the distraction to shore up their own positions (and, probably, fight with each other to gain "market share" in the perennial drug war). It might also drag the US into intervening in a war nobody except Venezuela wants.
This will bear watching.
Peter
We've spoken often in these pages about preparing for emergencies. Food supplies, weapons, security issues, and a host of other topics have been covered. However, there are several areas that are seldom mentioned in "prepping" circles: threats that are so everyday, so routine, that we lose sight of how they might escalate into a real problem - or make preparing for a real emergency harder to afford, because of other drains on our wallets. I've been discussing some of them with correspondents in recent weeks, and in this article, I'd like to tackle a few of them.
Let's take property and vehicle insurance. They've gone up a lot over the past few years: I've seen estimates that they're up more than 25% since 2020, and some estimates put it at over 40%. Certainly, my wife and I have seen ours go up steeply, but that's partly because our insurer calculates the replacement value of our home at a considerably higher figure than we do. I'm in the process of discussing that with our insurer, citing local costs and sales prices to prove our point. That should help to bring our premiums back down, but it won't erase the higher costs completely.
How does one "prepare" for such increased costs? It's important to watch your premiums closely, particularly notices warning you of an increase. Your insurer will rate the value of your home according to a formula for your area, which might add too much value for your specific town or location (e.g. a valuation formula for "Northern Texas" is not as focused as one for "Arlington TX" or "Muenster TX"). Don't be afraid to raise such issues with your insurer, and negotiate the replacement value of your home down to a more reasonable level - one that'll cost you less in premium increases. By doing that every year or two, the cumulative increase in your insurance costs over several years might be quite a lot lower than if you didn't.
Another option is to buy less expensive vehicles; either a smaller, cheaper new car, or a used vehicle at a lower price than a new one. Their insurance rate is calculated according to their value. Buying the higher-end model might cost as much as $50-$100 more per month to insure than buying the entry-level model - and does it really make that much difference to drive the less luxurious version? When considered along with all the other increases, those savings start to look attractive. (Until recently, given the outlandishly high prices being asked for used vehicles, it was in many cases cheaper to buy a lower-priced new one such as Kia's Soul or Ford's Maverick light pickup. Not only did they cost less than a used smaller SUV, but they offered similar interior space for passengers, and depreciation losses in today's market are minimal compared to years past. I know a number of families who did that, and they've generally been happy with the deals they got.)
How about electricity bills? They've been rising pretty steeply in our part of the world. Even though we aren't major consumers of electricity, we're paying several hundred dollars a month for it, particularly now as the heat of summer makes big demands on our HVAC system. There are many ways to save electricity, from shutting off major appliances like water heaters, not using ovens to cook, adjusting the internal temperature to levels that don't require as much electricity to maintain, and so on.
I'm seriously considering installing a mini-split air conditioning system for our main room in addition to the central HVAC system, because the former functions off a 120-volt circuit instead of 240, and consumes less than a quarter of the power needed by the central system. If we shut off our central HVAC system when we're out and about, and run only the smaller unit for six to eight hours a day, it'll keep the central part of the house at a comfortable temperature but consume a lot less electricity. I figure that in two years, the savings will pay for the entire mini-split system, including installation, and after that the savings are all gravy, so to speak. I've not made a final decision yet, but it's a tempting thought.
If your HVAC system is getting old and you're considering replacing it, it might be worth your while to look at installing two or more mini-split or multi-split systems instead of one big central system. The cost of installing the former can be half to two-thirds the cost of the latter, and their power consumption, even taken together, will usually be at least a third less than a central system. Add up those savings and it becomes a rather attractive option, provided your home is constructed in such a way that the smaller systems can be "plumbed into" it relatively easily.
What about municipal and/or county rates and taxes? It's worth checking on their valuation of your home, and contesting any sudden increases. Too many counties issue bonds to construct new infrastructure such as schools, emergency services, etc. and then clobber residents with big increases in their rates. These can be contested, particularly if actual sales prices achieved by comparable properties in your area demonstrate that the valuation is too high. A lower valuation leads to lower rates, saving you money.
These are just some ways one can economize on one's overall household expenditure. I'm sure readers have more they can contribute. If you do, please share them with us in Comments. We're almost all finding it hard to make ends meet these days. Why not help each other to make our dollars go further?
Peter
UnHerd has produced a masterly analysis of the trap into which government spending and subsidies has led much of American life today. Here's an excerpt.
Democrats and Republicans alike, under the cover of good intentions, have been passing laws that undermine the economic well-being of American families. Even more disturbing, these policies have created a whole new class of robber barons, who rely on government policy to enrich themselves. But these new robber barons aren’t railroad tycoons or rapacious oil companies. Indeed, many of them are non-profits: they include universities and hospitals, drug companies, insurance companies, K-12 school districts, and real estate investors.
. . .
This is how it works: Claiming to be the guardian of “quality”, policymakers put up barriers to entry, making it extremely costly, for example, to launch a new university or hospital. This is the restriction of supply. At the same time, in the name of “helping” consumers, they push billions of dollars into student loans or healthcare payments. This is the subsidisation of demand.
. . .
... all of the universities, including elite colleges in the Ivy League, have reaped billions of dollars in economic rents — excess profits — from student loan programmes, even as the value of many of their degrees has fallen dramatically.
At the same time, the universities operate an accreditation system which makes it extraordinarily difficult and costly to launch a new university that might compete with them. In fact, you usually can’t get your new university accredited until four-to-six years after you open. That means that your first students aren’t eligible for federal student loans — their subsidies — until you get your accreditation. It’s a huge handicap for anyone who wants to disrupt the current oligopoly of higher education.
These dynamics play out in all of the most important sectors of our economy. In healthcare, new hospitals in many states have to apply for a “certificate of need”. Often that certificate has to be signed by the other hospitals in the area — in other words, their potential competitors. Meanwhile, federal and state governments flood the healthcare system with subsidies that increase demand and drive prices up: almost 50% of health care spending comes from governmental entities in the US.
In housing, similarly, we restrict supply by making it harder and harder to build new units, especially in city centres where demand is the highest. Meanwhile, we subsidise demand by providing government-guaranteed mortgages and by offering huge tax breaks for anyone who purchases real estate, especially investors.
And in K-12 education, school districts around the country are trying to stamp out charter schools, which increase supply, while at the same time arguing for higher and higher per-pupil spending. The cost to educate one child for one year has increased 173% (adjusted for inflation) since 1970, and half the kids still can’t read.
The pathologies of these sectors all follow similar patterns. Politicians proclaim their desire to “protect” quality and “help” consumers. Industry lobbyists step up to write bills that restrict supply and subsidise demand. Prices go up. Providers become more and more reliant on the government for their profits. Consumers become more and more reliant on the government to afford homes, healthcare, and schools. Instead of investing in innovation, providers spend their money on political donations and lobbyists. Politicians become dependent on those donations. Consumers demand more and more help because prices are going up, and they’re getting ripped off. And the beat goes on. “It really is a self-reinforcing process,” says Kling. “People don’t understand that the subsidies drive up prices, so they keep demanding more.”
There's more at the link.
To all those negatives, add two more:
The only way to stop this perpetual motion machine is, of course, to take away many of the things it currently does that were never envisioned by the Founding Fathers. They'd be horrified if they saw the myriad things on which the federal government spends its money, things that were never envisioned in or authorized by the constitution, but which now consume the vast majority of government income and effort.
The problem, as always, is this: how do we break the cycle? If we cut off the subsidies, those deprived of them will scream blue murder, and vote against the politicians who acted responsibly by terminating them. That means the politicians dare not tackle the monster they've helped to create. Argentina is trying to do so by dismantling whole swaths of its national government, but that's because the problem had grown so great there that the state had become a behemoth that was strangling the country as a whole. President Milei has only just begun the job, and there's no guarantee his opponents - now united against him - will allow him enough space and time to finish the job. I wish him every success, but the odds are against him.
Do we have a President Milei who can do the same for us?
Peter
President Javier Milei has given a very interesting interview to The Free Press. In it, he discusses how "traditional" economic measures have landed Argentina in very troubled waters indeed, and how he's taking a wrecking ball to the State-dominated economy in an attempt to fix matters by restoring economic freedom. What's more, it seems to be working - unlike the Biden administration's feckless efforts to control our economy, which are driving it into the dirt instead.
Argentina today is in grave crisis. It has defaulted on its sovereign debt three times since 2001, and a few months ago, it faced an annualized inflation rate of over 200 percent—one of the highest in the world.
Why? What happened?
Argentina’s new president says it’s simple: socialism.
When Javier Milei took office in December 2023, he became the world’s first libertarian head of state. During his campaign, he made his views clear: “Let it all blow up, let the economy blow up, and take this entire garbage political caste down with it.” In case the chainsaw he wielded on the campaign trail left any question about his intentions, during his victory speech last year, he reiterated his vision: “Argentina’s situation is critical. The changes our country needs are drastic. There is no room for gradualism, no room for lukewarm measures.”
There is nothing gradual about what Milei is now doing.
He’s eliminating government ministries and services, cutting regulations, privatizing state-run companies, and purposely creating a recession to curb the out-of-control inflation.
This is why people voted for him: change. They saw someone who could shake things up in a way that could turn out to be lifesaving for the country—even if it meant short-term economic pain.
. . .
What really makes Milei unusual is that he is the ultimate skunk at the garden party. In a world of liberals and conservatives, he doesn’t represent either side. He is ultra-liberal on economics, but right-wing and populist on rhetoric. He is anti-abortion, but favors the legalization of prostitution. He wants to deregulate the gun market and legalize the organ trade.
He calls himself an anarcho-capitalist, which basically means he believes the state, as he told me, is “a violent organization that lives from a coercive source which is taxes.” Essentially, he’s a head of state who really doesn’t believe in states. Or at least, not theoretically.
. . .
BW: Can you explain why you think economic libertarianism and anti-wokeism—for lack of a better term—go together? Because for many people here in the States, that’s not a natural pairing.
JM: The way people have been educated has not been for full freedom. The world I’m proposing is a more free world. This is why the culture battle is so important. The culture battle is part of showing the world that for many years, it was mistaken. In fact, what is today politically correct is an abhorrent world because it has loads of socialism. The tendency will always be toward socialism, and that’s the big battle. This is why it is said that the cost of freedom is constant surveillance.
The state exists because humans have failed to live together in peace. And this is why the state government exists. These problems are something that technology could fix. So this is very important because the real world may start to look more like the anarcho-capitalist ideal as technological progress evolves. This is why I’m trying to foster and showcase all technological matters in Argentina, because that will accelerate the progress of freedom. But even economists have not been educated to understand this.
For now, it seems to be going very well, but what’s quite clear to me is that I will die fighting. I will not surrender.
There's more at the link. It's all interesting, and well worth your time to read or watch on video.
Peter
We've all seen the reports that vehicle insurance premiums are rising rapidly (I've seen numbers like a 20%+ increase in one year bandied about). An anonymous car dealer, posting on Twitter, explains.
We are in the midst of a "total loss" epidemic.
More than *20%* of vehicles are now declared a write-off by insurers after examining claims.
That's around *five* times higher than in 1980.
But why?
One big reason is that the cost of vehicle repairs has increased by almost 50% since the pandemic started—far exceeding inflation.
Another major driver?
Declining used car prices.
It may seem counterintuitive, but the rate at which used car prices have fallen over the past couple of years encourages salvaging instead of repair...
And all that contributes to an increase in vehicle write-offs.
There are lots of responses at the link, which are worth reading in themselves. A few examples:
I've had two vehicle insurance claims in the past year, one my own fault (backing into a brick postbox container that was hard to see behind my vehicle) and the other not (hitting a dog that ran out into the road, too close to miss it). In both cases, I was unpleasantly surprised at the quotes from repair shops. The insurance paid on both occasions, but I continue to feel ripped-off at the sums involved (particularly when the repair shops used third-party parts rather than original equipment).
That was confirmed to me by needing new headlights for my vehicle a few months ago. The dealership wanted $1,200 plus labor costs for OEM headlights, while a repair shop wanted $1,600 including labor to fit third-party headlights. (If I was in better physical shape, I could have done the installation myself, but I can't bend and twist like that any more.) By shopping around on eBay, then looking for a repair shop that charged a reasonable rate for the job, I got away with total costs of less than $600 - still expensive, IMHO, but much more realistic than the earlier quotes.
I think these figures indicate yet another reason to buy an older, cheaper vehicle as a runabout. Third-party-only insurance is a lot cheaper than comprehensive, and if you haven't paid a lot for your old car, it doesn't hurt as much to write it off and look for another one. Unfortunately, in the US at least, first Obama's "cash for clunkers" scheme, and then COVID-19's impact on sales, have clobbered the used car market, boosting values - or, rather, prices, because used vehicles just aren't that valuable as such - to insane levels. I guess there's no easy way out of this conundrum right now.
*Sigh*
Peter
In a recent issue of his regular Global Macro Update newsletters, Ed d'Agostino of Mauldin Economics interviewed Karim Hijazi, a cybercrime expert, about the current state of that field and the growing involvement of AI. It's a long, multipage newsletter, so I won't even try to go into all it says. Here's an excerpt to whet your appetite.
Ed D'Agostino: What is AI's role in all of this? Has it impacted effectiveness of bad actors at all?
Karim Hijazi: It has. I hate to say it. AI has probably been most embraced in terms of its creativity and its use by nefarious actors or threat actors because as usual, unfortunately, because it affords them the ability to force multiply themselves. That's the number one reason. What they would otherwise need a bunch of people to do they can do... one person can do a whole lot of work with an AI tool that generates an incredible amount of not only the narratives for a phishing email that we talked about, but also the malware itself. It'll actually write the code for the malware that is generally pretty well written. And there's a few tweaks here and there, but what would take weeks or months is done in days.
Ed D'Agostino: Can you talk a little bit, Karim, about what's at stake here? I mean, we talk about me sitting here in my remote solo office, I get a phishing email. I'm not hooked up to a big company network. Maybe I lose a little bit of data. I think that's how people think of it. Really what we're talking about is the country's critical infrastructure is at risk. What does that look like and how is it at risk?
Karim Hijazi: Exactly. The everyday person doesn't feel like it can affect them. A lot of where individuals are worried about when it comes to hackers and threats is their identities, maybe their credit card information, their social security number, back to identity. But what's interesting is that in the world we're in now, the interconnectivity between even your computer and mine, by definition, there is one, right? You're looking into your screen and I'm looking into my screen, my camera's picking up my image and sending it to you. There's effectively a link between us. So if you want to think of it from that perspective, right now we're connected. And so if there is, in theory, something on my machine, God forbid, and it wanted to sort of figure out, "Who's Ed?," and it goes into my email and it lurks around and it goes, "Ooh, Ed's got a lot of connections on LinkedIn," or, "He's got a really great follower base on YouTube. He's a good target for me to proliferate myself even further to his audience." So you think about it, that's the first step in terms of its reconnaissance risk. When you start thinking about yourself as a non-player when it comes to why you'd be interesting to a threat actor, you'd be surprised.
The second thing that's really interesting is this is just a micro version of the macro problem, which is supply chain. Supply-chain and third-party ecosystems are the number one challenge that we're having today because a small company leads to bigger company. A bigger company leads to government or critical infrastructure. The pathway, the daisy chain, if you will, is small company, bigger company, critical infrastructure. And from that small company… it could be a work-from-home individual that never left home after COVID because that was the policy of the company but because there's no security protocols at home, they're the easiest targets in the world to get into. The VPN is simply a hypodermic needle into the corporation. The corporation is now access to many other organizations and so on. That's just the super small taxonomy or treeing out of essentially the connections out all the way from the individual to government or critical infrastructure, unfortunately.
Ed D'Agostino: I think you'd mentioned that some really big cutting-edge technology has been bled out of corporations through this sort of process. Quantuum was one that we talked about yesterday. I thought that we were... I was sitting here looking at IBM thinking, "If IBM gets Quantuum right, this stock is going to go into the moon, maybe we should be looking at it. They seem to be the leaders." And then I spoke with you and you're like, "Well, China's already got all that."
Karim Hijazi: Unfortunately, China as a nation-state actor has focused heavily on intellectual property theft for years. That's definitely not a new agenda of theirs. It's been their focus for a very long time. I think we all know that from headline news. The problem is they've done it in a multipronged approach. They did it with implants of people, long-term "coverts" through academia that they've had planted for very long periods of time. They've augmented it with things like software and access to environments, through harvesting information electronically. And they've conned people into sharing information as well. That's the other part of this is that they've done a really good job with that. The other thing that's interesting is what people fail to recognize is that nation-state adversaries aren't islands unto themselves. They tend to cooperate. If a Russian or North Korean or Iranian nation-state actor has an initial access into something, they'll broker it to another country for a price. There may be one group in a nationstate adversary that has much better access to something than the other group does, but the other group can pay them for it, and they'll get in.
Unfortunately, there's been an onslaught onto our country in such a way that makes it very difficult for us to sort of manage all those beachheads. And so the asymmetry is very challenging, and it ties back to your AI conversation, which is how has that added to it? Just that, it's added this extra level of pressurization onto the systems that we believe were protecting us, and they are indeed failing. Sorry to be doom and gloom, but...
There's much more at the link. The entire newsletter is well worth reading if you're interested in computer and information systems security.
It's startling to realize how widespread and prevalent cybercrime has become. It's far more than just "phishing" e-mails or attempts to listen in on communications channels. It's now become an exercise in how to kinetically affect an entire nation or sector of a national economy. In another part of the interview, Karim Hijazi notes:
There's things like water treatment facilities that can have water levels… the pH change or the potability change just ever so slightly that'll cause a mass dysentery effect. Then you've got a flood onto the pressurization of a hospital environment in a specific location. And then as we've seen over the course of the pandemic, you conduct a ransomware attack and put the hospitals in a pressurization state where they can't function unless they pay a ransom, and you can really cause a cascading effect. And that's the doom and gloom scenario, of course. But you're completely right, the big concern is if there's that much access to these environments, what can they effectively do? And how much have we given to technology to take over?
And unfortunately, I know I said AI for the third time in this conversation, but here again is where our reliance on it and our over-excitedness to deliver the responsibility over to it, may be a little foolhardy at this point because once it's in the hands of something that really doesn't have any kind of emotionality or ability to identify... For example, in my company, I do employ a lot of automation and AI, but I also use human intuition and experience and talent to identify these problems that simply, at this point, can't be done through technology. And unfortunately for cost savings and a variety of other reasons, people are choosing to go in the direction where it's all automated. And automation's fantastic when there's nothing coming at it to use it maliciously, but when it can be leveraged against you, you’ve got an issue.
Worrying thoughts. Again, if you want to learn more about this field and how it might affect any or all of us, I highly recommend reading the full interview for yourself. I also suggest you subscribe to the newsletter (it's free). Mr. d'Agostino comes up with some very interesting and useful insights.
Peter
To my absolute lack of surprise, I learned that cruise lines have been carefully failing to inform their customers of additional fees, charges, imposts, etc. on top of their advertised prices. For once, California is doing the right thing by forcing them to disclose these charges.
Starting July 1, operators including Royal Caribbean International, Carnival Cruise Line, Celebrity Cruises and Princess Cruises will include the cost of port expenses, taxes and other fees in the price that potential passengers see. The additional charges can tack on more than $100 to the fare, or even double the cheapest base price on some short itineraries.
The changes kick in when California’s “Honest Pricing Law” goes into effect, restricting companies that do business in the state from advertising a price that is lower than what a consumer will ultimately have to pay.
. . .
For now, cruise lines like Carnival and Royal Caribbean promote bargain sailings, such as a seven-night Western Caribbean cruise “starting at” an average of $437 per person. But that number does not reflect the nearly $164 more that’s required for taxes, fees and port expenses and displayed in smaller print. A four-day Mexico cruise from Long Beach, Calif., shows the cheapest cabin for $234 - but the additional charges are an additional $240.
“The current ‘drip pricing’ technique where you show a low price and then tack on a lot of the extra fees later is a great attention disrupter but very misleading,” Doug Parker, founder of the podcast and news site Cruise Radio, said in an email.
Gratuities are also extra for most mainstream cruise lines, but tips will not need to be advertised up front. Cruise lines also offer optional drink or dining packages, shore excursions, and other add-ons that would increase the cost of a trip.
Parker said the cost of a seemingly inexpensive cruise can balloon with taxes, depending on the itinerary. He said the new policy will give families “a better idea on what the vacation will actually cost.”
There's more at the link.
I've been infuriated more times than I can tell to find unexplained, unauthorized charges tacked on to a bill or invoice. Hospitals are particularly egregious offenders. "Your procedure will cost you $4,999.99 out of pocket - your insurance pays for the rest!" Yeah . . . and then comes the anesthetist bill, the rehab bill, the clean sheets every day bill, and all the rest of it. Together they can add thousands of dollars to our costs, unforeseen and unbudgeted.
I'm glad this particular cesspool of financial chicanery will be drained; but I'm willing to bet the cruise lines will find new and innovative ways to screw yet more consumer dollars out of us. In their eyes, we're sheep to be sheared, and they're very good at shearing.
Peter
Remember the collapse of the Surfside condo complex in Miami, Florida, almost three years ago?
On June 24, 2021, at approximately 1:22 a.m. EDT, Champlain Towers South, a 12-story beachfront condominium in the Miami suburb of Surfside, Florida, United States, partially collapsed, causing the deaths of 98 people. Four people were rescued from the rubble, but one died of injuries shortly after arriving at the hospital. Eleven others were injured. Approximately thirty-five were rescued the same day from the un-collapsed portion of the building, which was demolished ten days later.
A contributing factor under investigation is long-term degradation of reinforced concrete structural support in the basement-level parking garage under the pool deck, due to water penetration and corrosion of the reinforcing steel. The problems had been reported in 2018 and noted as "much worse" in April 2021. A $15 million program of remedial works had been approved before the collapse, but the main structural work had not started.
There's more at the link.
The full impact of that tragedy is only now becoming evident in condo complexes up and down the Florida coast. The same neglect that led to the Surfside collapse has been found in literally hundreds of other buildings, and the repair bills are colossal - so much so that owners can't afford them.
Have a Florida condo? Can you afford a $100,000 or higher special assessment for new safety standards?
After the collapse of a Surfside Building on June 24, 2021that killed 98 people, the state passed a structural safety law that is now biting owners.
Not only are insurance rates soaring, but owners are hit with huge special assessments topping $100,000.
. . .
Those who cannot sell and don’t have the special assessment, will be evicted and their units seized for whatever the Associations can get for them.
South Florida listings have doubled in the past year to over 18,000. Few of those units will sell, and those that do sell will be at a huge haircut.
Again, more at the link.
The structural safety law is entirely necessary from any rational perspective. Unfortunately, many of those who bought condos in Florida - some of them decades ago, when prices were far lower - are now on the hook to pay for those repairs. Some can afford it, but others have had no choice but to try to sell their now almost valueless condos to buyers who aren't prepared to pay for the sins or omissions of the past. Many of them are now facing bankruptcy and possible homelessness.
What I find most infuriating is that the condo associations should have carried out normal preventive maintenance over the years; should have had their buildings inspected regularly to detect problems before they got out of control; and should have set aside adequate financial reserves to pay to repair them. That's nothing more than basic common sense: but it seems few did so. The condo owners didn't want the trouble or expense involved. To make matters worse, many of them now affected by the problem are trying to weasel their way out of it any way they can - despite the consequences of doing so being so starkly visible to everyone concerned.
State law previously allowed condos to waive reserve funding year after year, leading many buildings ... to keep next to nothing in their coffers.
. . .
Residents still meet ... to celebrate birthdays. But now, those gatherings are often charged with owners pooling documentation in hope of finding evidence that the assessments should be lower.
Some are worried developers may already be purchasing condos in the building for a potential takeover, where a developer tries to gain control of a building to knock it down and build a newer, more luxurious one. These condo terminations are happening up and down the state’s coastline. While the rules can vary by building, if enough people vote to sell their units, the others have to follow along.
One can't blame the developers. If a unit's value has plummeted thanks to the cost of repairs, of course those with money - and an eye to make more money - are going to take advantage of the situation by buying it at a fire sale price, and buying as many as they can, in order to outvote longer-term residents and make more money out of redeveloping the site and/or building. I'm afraid that's yet another consequence of owners refusing to invest in their condos during the "golden years", and now having to pay huge sums due to their previous neglect. What goes around, comes around.
I suppose this is yet another example of why it's foolish to trust one's home and finances to a group of owners who may not have the right priorities. The few responsible owners who would have been willing to pay for upkeep were undoubtedly outvoted by those who preferred to minimize maintenance in order to maximize their budgets, individual and corporate. Now that they're all in the same (sinking) boat, they don't want to acknowledge that it's ultimately their own fault. Human nature is still as self-centered as always . . .
*Sigh*
Peter
I was cynically amused by the outrage displayed by a shopper at Whole Foods in Boston.
A Boston-based influencer has sparked outrage over inflation after claiming she paid $7 for a single apple at a Whole Foods.
. . .
“Genuinely what economy are we all f–king living in that it costs 7 dollars to buy an apple?” she asked. “I could have sworn that some other like apple that I bought was not 7 f–king dollars. It’s crazy, like 7 dollars for a latte? OK. This apple better be tasting so f–king good.”
There's more at the link.
I agree with her: that price for a single apple is absolutely ridiculous - but so was her behavior in buying it. If she'd put it down and walked away, she'd have saved money and the store might have learned a lesson in consumer economics.
Something like this is behind quite a lot of inflation. Businesses aren't pricing their goods according to what they pay for them, plus a fair and reasonable profit. Instead, they're pricing them as high as they think they can get for the product. From a strictly capitalist perspective, of course, they're entitled to do so, because there's nothing forcing us to buy their products in the first place. We can always look for lower prices somewhere else. However, that becomes a lot more difficult when the availability of product is restricted (e.g. a breakdown in the supply chain, a natural disaster, etc.). Under those conditions, products that are critical to life, health and safety may be priced out of the reach of those who most need them. Is that just? Is that fair? "Pure" capitalism says it doesn't matter - that the market determines the price. Simple human decency (not to mention the teaching of a large number of religious faiths, including Christianity, Judaism and Islam) argues otherwise. There's no point in debating that here. Opinions are likely as numerous (and as diverse) as our readership.
Another aspect of that problem is corporations that enter a market offering deliberately low prices, even below cost, in order to gain dominance there. By doing so, they drive out of business other companies that can't afford to price-match them. As soon as their competition is gone, they increase their prices to normal levels - sometimes far above normal levels. Since consumers no longer have anywhere else (local) to go for what they need, they have little or no choice but to pay the now-inflated prices. I've seen that at work, too. A few years ago, back in Tennessee, a garbage removal company tried to enter our local market by offering rock-bottom rates. Our existing service, a small family-owned business, put out flyers to all its customers, pointing out what was happening and saying that if the new entrant succeeded, they'd have to close their doors, because they didn't have the financial resources to fight back. When a number of us checked, we found that the new entrant had used those tactics in a number of nearby municipalities, and then drastically raised its prices once customers were "locked in" to its services due to the absence of competitors. Most of us stayed with our existing supplier, and the new entrant, frustrated, took its efforts elsewhere.
In so many words, a lot of the inflation we experience from day to day is actually caused by manufacturers and vendors setting the highest prices they think they can obtain. They'll cite scarcity, supply chain issues, weather and anything else you can think of - but they won't reduce their prices unless and until market factors force that upon them. Fundamentally, it's greed at work . . . and greed is one of the Seven Deadly Sins. Unfortunately, many businessmen appear to ignore such factors.
One major exception to the rule is Waffle House, and they deserve a round of applause. I'm sure most of my readers have heard of the "Waffle House Index", a widely referenced measurement of how severely an area has been affected by a disaster. I've seen Waffle House at work through several hurricanes in the South, and one thing is very noticeable; they never gouge their customers on price. They get their restaurants back up and running as fast as humanly possible, and they maintain their pre-disaster prices no matter how much extra it costs them to bring in supplies over disrupted and sometimes hazardous routes. Kudos to them for offering their services to survivors and rescue workers who need them very badly. There are other stores that do likewise, but that's often at the discretion of local store managers. Waffle House is the only chain I know of that does so as a matter of policy. (If any readers know of other chains that do business that way, please let us know about them in Comments.)
Peter
It seems that Novo Nordisk, producers of Ozempic (a popular treatment for diabetes) and Wegovy (ditto for weight loss), has been gouging the hell out of US customers to subsidize much, much lower prices elsewhere in the world.
It costs Novo Nordisk less than $5 per month to produce its top-selling diabetes injection, Ozempic, even as it charges nearly $1,000 for a month’s supply before insurance, according to a new study.
. . .
The foundational price for a weekly dose of injectable semaglutide—the generic name for Ozempic—ranges from $0.89 to $4.73 per month, the study found. By contrast, a vial of human insulin can be manufactured at a cost between $2.37 and $5.94 per month.
A month’s supply of Ozempic is $935.77 for those in the United States without health insurance, according to Novo’s website. The Danish company’s GLP-1 weight loss drug, Wegovy, is listed as $1,349 per month.
. . .
Citing the findings, Sen. Bernie Sanders (I-Vt.) called on Novo to slash prices for both Ozempic and Wegovy, highlighting the price gap for the identical drugs sold in America and other developed countries.
“A new Yale study found that Ozempic costs less than $5 a month to manufacture. And yet, Novo Nordisk charges Americans nearly $1,000 a month for this drug, while the same exact product can be purchased for just $155 a month in Canada and just $59 in Germany,” the senator said in a statement ... “I am calling on Novo Nordisk to lower the list price of Ozempic—and the related drug Wegovy—in America to no more than what they charge for this drug in Canada,” he continued. “The American people are sick and tired of paying, by far, the highest prices in the world for prescription drugs while the pharmaceutical industry enjoys huge profits.”
There's more at the link.
I'm hardly in the same political camp as Senator Sanders, but I fully support him in this. Novo Nordisk is far from the only company to charge super-high prices to US consumers, only to provide the same medication to the rest of the world at a tenth, or less than a tenth, of those prices. The companies parrot the same line about it not being fair to compare non-insurance (i.e. full market) prices to those paid by people with medical insurance, but that misses the point. The medical insurance premiums we pay are much higher than they need to be, precisely because of the higher prices of medications, surgeries, etc. on the US market. If drug manufacturers were to lower their list prices to something more appropriate to their costs of research and production, we'd all pay a lot less.
It's easy to say that people can choose where to spend their money, and they can reject items that are too expensive - but medication is all too often essential, not optional, and that forces sick people to either pay the price, or accept decline and an early death.
We criticize US companies for exporting the production of their goods to Third World countries, thereby saving themselves a bundle but throwing literally millions of Americans out of work, or depriving them of work that pays (or used to pay) a decent wage. Yet, at the same time, we have little to say about the producers of essentials like medication who charge whatever the system says they can get away with, and relentlessly gouge the US consumer, while giving a subsidized ride (at our expense) to the rest of the world. Why are we not insisting that such companies justify their price differentials, and price their product more equitably in all their markets, including ours? Why are we allowing them to subsidize others out of our pockets?
Peter
Yesterday we spoke about how California's very high minimum wage for restaurant and fast-food workers was driving some of those establishments out of business. It seems a New York restaurant chain has found an alternative - and much cheaper - solution.
A new restaurant chain in New York City is outsourcing staff to the Philippines, using screens with hostesses on Zoom calls instead of in-person employees to greet customers and help with check-out.
The shops — which specialize in fried chicken and ramen — are taking advantage of the massive wealth gap between New York City, where the minimum wage is $16 per hour and a Southeast Asian nation where hourly pay is closer to $3.75.
But when customers check out at Sansan Chicken, Sansan Ramen, or Yaso Kitchen — with locations in Manhattan, Queens, and Jersey City — they’re still prompted to add a tip of up to 18% on top of their bill.
. . .
The dynamics of the operation seem to be cloaked in secrecy. It’s not clear if the hostesses work for the restaurant or a third-party company that hires them out.
It’s also not clear who owns the restaurants, and how much the hostesses are getting paid.
The Post could not reach the businesses’ owner, and employees would not divulge information about their bosses when a reporter asked.
There's more at the link.
That's certainly a win, cost-wise, for the restaurant chain; even accounting for the cost of trans-Pacific Internet links and computer hardware, they must be saving well over 50% on staff costs. It's probably also a win for the staff in the Philippines, who at least have steady employment at a local wage that can support them - although I'm sure they'd prefer to earn closer to the New York City mandated wage and salary scale. As for the customers? I'm not sure I'd like to deal solely with a screen for a sit-down meal, as opposed to a live human being. However, others may think differently about that.
What is certain is that this is yet another nail in the coffin of entry-level jobs, which have traditionally offered first employment to young people starting out to earn a living. Mandating a minimum wage too high for businesses to afford means they're going to switch to something they can afford, and in this case that means removing several dozen jobs from the local market. Other restaurants and fast food chains are moving towards robots to prepare the food and take orders for it, with only minimal human staffing to keep the robots supplied with ingredients and periodically clean up the place. Again, those jobs are lost to the local market, and I don't see them coming back.
One wonders what the millions of illegal migrants streaming across our borders are going to do when they can't find employment, due in part to such jobs no longer being available. One also wonders what our government - federal, state and local - is going to do to contain the resulting unrest and social upheaval. Are they blithely going to pay all those migrants enough money to live on, while ignoring the plight of American poor? At the moment, it certainly looks that way.
There's a thought . . . send your teenagers to Mexico when they graduate high school, and tell them to cross back into the USA on their own two feet, having destroyed their identity documents. They'll be given a smartphone, a ticket to the destination of their choice, and a pretty significant amount of money, plus free health care and low-cost education. It may not be fair to those who prefer to do things the old-fashioned way, but your family budget will look a whole lot healthier!
Peter
Problems with Pratt & Whitney's geared turbofan engine, used by most recent-production Airbus A320-family airliners, have grounded almost a third of the fleet.
Around three in every 10 jets powered by Pratt & Whitney’s PW1000G family of turbofans are now sidelined worldwide.
That is according to analysis of Cirium data, which reflects, though not perfectly, the extent to which airlines from all corners of the globe are finding their operations disrupted by P&W’s recall of its geared turbofan (GTF) engines.
P&W has said the number of jets parked due to the need for inspections and replacement engine parts will peak right about now, in the first half of 2024. The issue involves defects in metallic components introduced during a manufacturing process due to the use of contaminated powdered metal.
. . .
Carriers have made no secret about the scale of the problem. Several have said that one-quarter or more of their GTF-engined aircraft have been sidelined, causing financial pressure and prompting then to curtail expansion plans, revamp operations and seek replacement jets in an incredibly tight market. Airlines are also negotiating multi-million-dollar compensation packages with P&W.
“The problem of our aircraft being unproductive is the fact [that] we are paying twice. We have aircraft investments unproductive on the ground, and we have to rent, wet-lease [aircraft from] another company to produce the capacity in the market,” Swiss chief executive Dieter Vranckx said during a 4 April event in Washington DC.
. . .
On 29 March, Spirit said P&W had agreed to compensate it to the tune of $150-200 million, warning the issue will force it to remove “nearly all” its A320neo-family jets from service at some point. That package equates to P&W paying Spirit about $18,000 daily per grounded aircraft, financial firm Jefferies said in a 1 April report.
There's more at the link.
I wonder how much this is costing Pratt & Whitney overall, in terms of the repairs (which take 250-300 days per engine, according to the article, and must cost millions in themselves) plus the compensation they're having to pay airlines? Does their insurance cover this, or do they have to cover it out of their own resources? If the latter, can they afford to both pay the compensation, and stay in business? I imagine their Chief Financial Officer and his deputies are enduring sleepless nights trying to figure that out . . .
Peter
Not content with blaming businesses for crime, as in this morning's first blog post, it seems that the loony left - in San Francisco this time - wants to make businesses financially liable when they're driven out of business by street crime.
A pair of progressive San Francisco lawmakers are pushing a bill that would allow residents in the crime-ravaged city to sue grocery stores that close up shop if they don’t give six months’ notice.
The proposal by San Francisco Board of Supervisors members Dean Preston and Aaron Peskin would require business to either find a successor grocer or work out a plan with residents in the neighborhood to ensure the availability of supermarket options.
The Grocery Protection Act ... comes amid a rash of retail theft fueled by the city’s drug and homelessness crisis that has led to several business closures.
Whole Foods closed its Market Street location last year after there were 568 emergency calls lodged in a 13-month period due to incidents such as vagrants throwing food, yelling, fighting and attempting to defecate on the floor, according to the New York Times. At least 14 arrests were made at the location.
There's more at the link.
I marvel at the sheer blind stupidity of lawmakers who can blame others - in this case, businesses - for trying to get away from the intolerable conditions created by those same lawmakers. They appear unable to grasp the nettle and accept that the criminal, anti-social behavior of their own constituents is at the root of the problem. Just what does it take to get through to these critters? A clue-by-four? Wielded by a San Francisco street vagrant, just for equity's sake?
San Francisco police can't solve the problem, because their hands are tied by their own city council, and by a liberal progressive-left District Attorney who won't apply the law as it is written, and dismisses most such cases with a figurative slap on the wrist (if that). The courts can't solve the problem, partly because too many local judges (not to mention juries) are selected on the basis of their ideological purity, partly because local laws have been rewritten to favor offenders rather than law-abiding citizens, both corporate and private.
All I can say is, after this news, San Francisco is just about the last place in the world where I'd open a food-related business. Why should I try to make a living in a city that's actively encouraging others to steal it from me - and urging them to sue me if I won't stay there and let them rob me blind?
Peter
Looks like the lengthy drought in Texas is finally making its way through to the end of the food chain.
The drought last year had a drastic impact on farmers in the cattle industry and the aftermath can be seen now.
The harvest season is about to start, but many cattle farmers sold most of their cattle due to the drought last season.
“Last year and especially this year we have lower production because during the drought we sold all those cows or we sold more cows than we had,” Texas A&M AgriLife Extension Economist, Francisco Abello said.
The cost for farmers to raise and maintain cattle is higher due to less production.
“Now that we have lower production, we have lower supply which means higher prices,” Abello said.
The beef industry has faced the sharpest decline due to the drought with production being down an estimated 26 billion lbs and that’s not including the recent panhandle fires.
The true impact of the panhandle fires on agriculture and cattle has yet to be truly measured and experts say it will only add to the setbacks from the drought.
. . .
The price impact has not only impacted farmers but it’s affecting consumers as well.
“When I first started this say four years ago, the prices that we are paying now are double. If I could get beef say at $5.99 a pound, now it’s $9.99 a pound so then that goes over to the consumer normally who catches the full rift of that,” Davenports Grocery Owner, Rickey Lowe says.
“The market right now and the way the economy is, everybody is watching prices, everybody is watching the dollar, and if you’re not watching the dollar it slides out of your hand and into someone else’s and it just doesn’t come back as easy as it use to,” Lowe said.
. . .
The timetable for when the drought and cattle production will improve is still unknown.
There's more at the link.
I can tell you that when I drive through northern Texas or southern Oklahoma, I'm seeing very few cattle grazing in the fields compared to previous years - a lot less than half as many, I'd guesstimate. I'm also informed that where arrangements used to have to be made several weeks in advance to take cattle to local slaughterhouses, now it can sometimes be arranged in a matter of days, because the demand for their services is so much smaller.
I'm also seeing mostly cheaper cuts of meat (and generally lower quality meat) on offer at local supermarkets. One can get the "good stuff", of course, but one has to ask for it, and the cost per pound is a real blow to the wallet. In 2022 I was able to buy filet mignon for about $15 per pound. Now, it's more than double that for the best meat. (Not that we routinely buy filet mignon, you understand; I'm just citing it as an example.) I'm very glad that we filled our freezer with half a cow a couple of years ago, and added a lamb and some other meat as well. We still have a lot of it in store, and it'll keep us going through this year for sure. After that, we'll hope that prices come down to a more affordable level. (That may not work out for us, of course. If it doesn't, we'll be eating more vegetarian meals, I guess! Fortunately, I like vegetarian food if it's a good recipe, well prepared.)
What's the price and quality of meat like in your area, dear readers? Please let us know in Comments. It might be useful to compare notes around the country.
Peter
By now I'm sure we've all heard that the Francis Scott Key Bridge in Baltimore, Maryland, collapsed last night after being struck by a container ship. Casualty figures are as yet unknown, but are almost certain to be in double figures. Our sincere condolences to all involved.
However, the real impact of this bridge collapse is likely to be on supply chains serving the most populous part of the USA.
The bridge collapse has paralyzed a large swath of the largest inland port on the East Coast. The port is ranked 9th for total dollar value of cargo and 13th for cargo tonnage among US ports.
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The bridge spans the Patapsco River and carries an estimated 11.5 million vehicles annually. In this collapse, the only shipping lane in and out of the port was severed.
Baltimore is the most inland port on the East Coast and is connected to the I-95 highway network. With no commercial vessels sailing in and out of port anytime soon, this is catastrophic for port operations and could spark supply chain snarls in the Mid-Atlantic and Northeast.
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According to the Maryland government's website, the Port of Baltimore handled over 52 million tons of international cargo valued at more than $80 billion last year, ranking it as the ninth busiest port in the United States. The data shows that the port handled 847,158 autos and light trucks in 2023, the most of any US port. The port also handles farm and construction machinery, sugar, gypsum, and coal.
There's more at the link.
It's not just ships that will be affected. With so major a road transport artery shut down, trucks will be severely delayed by having to detour around the affected area (and, of course, by greatly increased traffic congestion due to everybody else having to take the same detour). Our supermarkets rely on truck transport to receive food and other essentials every day. This incident will almost certainly have a serious impact on consumers in north-eastern states. It'll take years to rebuild this bridge, and heaven knows where the money will come from. It'll almost certainly have to be borrowed, adding to our already excessive national debt.
Given all the existing pressures on supply chains, this is very bad news.
Peter
