Just to be clear; when I say "self inflicted" I'm not referring to the decision makers but rather to those of us who put them into positions of power. None of the decision makers are suffering the effects of the high prices that are decimating our businesses and lowering our living standards. In fact, many of them are actually doing way better than before. Many of my business owner clients are facing increased costs which are existential to their businesses and livelihood's. Unless the pain starts to infect the daily lives of Washington decision makers, things are very likely to get worse. I'm reminded of a quote from Thomas Sowell:
Those who claim that the mid-term elections will somehow compel lawmakers to take steps that would help the situation really haven't been paying much attention, have they? Does it appear that anyone in power cares at all? Even when they claim to care, how many of us have experienced the huge gap between what candidates say they will do and what they actually do once elected? I see no evidence whatsoever that the people in power have any incentive to make policies that would help Americans deal with these self-inflicted problems.
Last week we saw the largest single producer of Oil in the middle East (Saudi Arabia) go to zero production. Zero. Meanwhile, refiners in Russia who have been filling the Diesel gap for the last few months just stopped exporting because their refineries keep getting attacked and they're short. America has also stopped exporting Diesel because of massive shortages, many gas stations are plain out of Diesel at any price. US Truckers are calling for a nation-wide strike starting October 1st to protest the higher prices which will mean deliveries of, well, everything will stop cold causing shortages of anything that gets delivered by truck.
"We’re at the end of the line. After seven months of unprovoked warfare, the situation in the Middle East has ballooned into a full-blown crisis. Overnight, Saudi oil exports have fallen to zero. ZERO! Let that sink in for a minute. The “world’s largest oil producer” is presently exporting NO oil. Persian Gulf terminals are effectively shut down due to the war with Iran while the East-West pipeline—the main overland bypass that moves 4 to 5 million barrels per day to the Red Sea terminal at Yanbu—was blown up at nine different locations on Thursday (by Iraqi drones) and is no longer operable. That means no Saudi oil is going to market for the first time in history."
Even the Meat Puppets in Washington may just feel a pinch too but I doubt it.
I get that it's hard for Americans to find out what's really going on. It takes commitment, time and energy which is one of the main reasons I write this blog. Getting actual news means researching non-mainstream sources none of which are conveniently available. We can all see the prices at the pump which are already at eye-watering levels but it's much harder to understand their causes and when, if at all, they will be resolved. For example, everyone knows the Fed "raised" interest rates by 25 basis points (0.25%) but did you know the 10-year US Treasury which affects mortgages and many other bench mark interest rates is already almost 5%? The ever-escalating conflicts of choice that the US is engaging in is having a devastating affect on Inflation, supplies of critical materials and interest rates. We're being told it's all a small price to pay so that Iran doesn't get a nuke. Is it though?
Our dollars buy less every day. How can anyone budget or plan when the prices change so fast?
The economy is not the stock market, it is the diesel price. Supposedly, the fact that we're at all time highs on Wall Street shows that we're actually doing well. Really! AI and the data centers account for the vast majority of GDP growth and most of the stocks making new highs are all tech related but, after being told for years that AI would make all of our lives better and no one would need to work anymore that message has now changed:
So, not to make too fine a point here; most of us including the small business owners who are the focus of this blog post are facing serious, even existential problems. We are all being told to "suck it up" because if we don't Iran might just acquire a nuke. Got it? That is to say, you're business, living standard and your prosperity are an inconsequential price to pay so that a country 7000 miles away who never presented any meaningful threat to our country never gets a nuke.
These are not small or temporary problems. Our economy is weaker than it has ever been with $40 Trillion in debt and unpayable interest rates that consume the majority of what we take in tax revenue. I'm a lender who evaluates risk on companies every single day and I can say without reservation that, if America Inc were to make an application to my firm today they would be declined with prejudice. No lender in their right mind would extend credit to Uncle Sam right now.
There are still plenty of reasons for business owners to secure loans right now like, for example to acquire a stockpile of critical input materials in anticipation of shortages. Roofers would be wise to stock more roofing materials. Transportation companies would be well served to fill their fuel tanks and maybe even buy some extra storage for fuel on site. The risks I correctly describe all have opportunities attached to them which can and should be capitlized on when and if possible.
Until next week, good luck and God bless!