"Americans always do the right thing but, only after they have fully exhausted every other option" - Winston Churchill
Here's where things get a little tricky; while it is true that our country is now facing sever shortages of critical materials and feed-stocks for important tech manufacturing and mining such as Sulphur (for mining), Helium (for computer chip production), Urea (fertilizer) nobody seems to know about it or even care much. Most folks live by the "3-foot rule" which means if it's not with 3 feet of your personal space don't worry about it. Media hasn't been much help since they consistently ignore critical facts about what's happening and all the different ways it will effect us. Not everything is apparent right away such as the price at the gas pump which is well within everyone's 3-foot perimeter. Just like Wiley coyote always gets a few seconds after going off the ledge before gravity asserts itself.
There are some immediate shocks such as gas / Diesel prices suddenly shooting higher but there are also more mundane effects which take longer to feel inside our three-foot personal space perimeter. As citizens or business owners it's hard to relate to weapons systems shortages because those things aren't part of our daily lives as much as the price of gas price is. There are, however, quite severe shortages of the stuff we need to make more civilian technology build-outs (think AI Data centers) and weapons systems which are running on empty. Rare Earth minerals are available outside China however REFINED materials made from those Rare Earth minerals are almost ALL from China. And they're not very happy with us especially in the last few days where we have all been bombarded with official statements about "China influencing our Democracy". Here's a good sound byte:
"All eight missile systems rely on rare earth elements — there are no exceptions among modern US precision-guided weapons. The dependence is nearly universal because rare earth permanent magnets are irreplaceable for the high-performance actuators, guidance motors, and seeker gimbals that make these weapons accurate. And who controls the supply chain of these rare earth minerals? China!"
All of the above minerals might as well be named "Unobtanium" considering how completely dependent we are on another country for them. That country, China, now has a lot of what America needs and depends on to maintain it's current "quality-of-life" level. I can't imagine any country using it's strategic advantage against an adversary who just called them the "biggest threat" to their security, can you? lol
"WE ARE A MOVEMENT BASED IN REALISM, AND WE RESPOND TO THE WORLD AS IT REALLY IS RATHER THAN REACTING TO THE WORLD AS WE WISH IT WAS."
So to recap last weeks events from the perspective of small business owners a few things stuck out for me:
INTEREST RATES: They are stable for now but I'm nervous when I hear about them going down to sub-6% mortgage rates we saw a few years ago. I don't see that, the lending industry is moving in the opposite direction. In fact, the Treasury tried to "freeze" Credit Card interest rate at 10% and got their head handed to them in court. Result: The average CC rate is almost 26%.
INFLATION: Actual inflation is what we experience in our daily business and personal routines when we buy stuff. Media claims the inflation rate is below 4% when anyone not living in a cave knows it's higher that that. Way higher. According to NFIS small business owners name "inflation" as their biggest problem, the real inflation. Not the 3.7% BS. The rate is meaningless even if it was accurate (which it is clearly not) simply because it refers to the rate of change upward, not the actual rate of price increases. That is, we're measuring how much it's increasing rather than how much it is.
"Higher fuel prices work their way through the economy like water through a cracked basement wall. First you see a little dampness.
Then you realize the whole foundation is involved.
So yes, June’s inflation report was better.
But if the improvement came largely from falling energy prices, and energy prices are already moving back up, then families should be cautious about declaring victory."
Since this is a weekly blog and serious issues or potential third world wars don't always resolve themselves cleanly within a week it's possible I might repeat myself every so often. Sue me. I'm actually reading up on a lot of this stuff myself so it's not easy to remember all the points I made from a few weeks ago. Everything I write has been verified by at least two reputable sources before I use it but that doesn't make me an expert on oil or any other minerals. I'm a lender who also runs a business and I deal with the same issues all business owners have and more sometimes. I also have the immense privilege and pleasure of speaking with many business owners every week who generously share their hopes and fears with me.
What's happening now is a bifurcated version of the COVID madness where half the economy is experiencing major distress while at the same time other sectors thrive; Banks, Insurance and government services are still fine. Construction, Restaurants, Trucking and hospitality suck rocks. Owners are dealing with daily whack-a-mole reporting that doesn't paint an accurate picture so everyone is on their own to get good, actionable information.
The disconnect between what's reported and what's actually happening is getting wider every day. Regular newsfeeds are completely useless and all of the main sources are controlled. It's almost comical to hear military "experts" who have been part of the most spectacular US Military losses in history paraded around on "news shows" to opine about what we should be doing in Iran. Let's ask Mitch Mconnell!
Here area few interesting items I saw last week:
"The supply chain isn’t just about mining — it’s about processing, separation, and magnet manufacturing, which China controls:"
"New York Federal Reserve President John Williams now says inflation has likely peaked and that monetary policy is “well positioned” to bring inflation back toward the Fed’s 2% objective."
"Politicians can point to a lower inflation report, but they cannot explain why Americans are standing in grocery aisles putting food back on the shelf."
