What Will New Normal Be Like?

I read a lengthy article at The Frontier Post on Saturday. An Armor Conspired: The Global Shipping Freeze. It is quite long but it was Saturday after all. I think it is a useful piece. After all it is not often one finds Jim Morrison lyrics as the key to an idea involving international trade, unions, the economy, inflation, and stagnation, all in one place.

Plus, I had not known that armor also refers to the idea of doldrums. That frightening space where sailing ships encounter neither wind nor current.

I think there are lessons there and they are important to understand if one wishes to do well during this time of social, political, and economic malaise. At a minimum protect yourself.

From the article

The economy has stalled. There are hundreds of ships at anchor or drifting near ports because they cannot be unloaded for various reasons. One of them union rules.

Containers trapped on ships are not available for another rental.

  • Container rental prices have skyrocketed.
  • Lead time to get a container exceeds three weeks.

Some ports in China closed due to Covid restrictions.

  • Yantian for a week in June. Their capacity is 30,000 standard containers per day.
  • The Ningbo super-port for 2 weeks in August created a block in the supply chain.

Warehouses are full. Some shippers have begun to use both ships and containers as temporary storage space.

  • Charter fees for the ships remaining has risen dramatically.

Pallets are short supply and expensive

  • Some businesses design their shipments to be on wrapped  pallets.
  • Hardwood lumber prices rose 500%.
  • Many reusable pallets are in warehouses, alternative storage, or on container ships.

Prices for shipping have risen dramatically. What once was a $2,000 ticket for a 40-foot equivalent container, (FEU) is now as much as $25,000.

Some are expecting the problem to continue throughout 2022.

Where it leads in the next year or so

Christmas season shipments will be fewer.

Prices will be higher. Some much higher.

Some products manufactured here will be unavailable because key parts are unavailable. Automobile manufacturing has shrunk because of missing chips. There is no easy workaround for that. Some car dealers have almost no inventory. Take a look around. Prices are way up.

Large importers, like Home Depot have switched from common carriers to their own ships. Smaller businesses will not have that option.

The intermediate term look

People will come to notice that complex structures behave differently than simple ones. Few people have contact with complex structures except as a user of what they deliver. Shutting down a steel mill and restarting it is unlike shutting down a drugstore for the holidays.

Complex systems are very near being incapable of shutdown and restart. It takes weeks to rebalance the electrical grid after a shutdown. It will take a year or more to get the international supply chain under control. It is not the same as turning off the lights in your office. Politicians who thought a brief shutdown would work were incredibly naive. I hope they have learned their action was akin to giving a teenager a bottle of whiskey and the keys to the car.

The people will pay for their incompetence with higher prices, likely forever. Prices tend to rise faster than fall.

Expect doldrums

With inept leadership, change is devastating. You must protect yourself from the worst of it.

People expected a sharp increase in GDP because of the recovery from the 2020 pandemic chaos. It has not happened to the extent expected and may disappear entirely.

Prices are rising faster than expected and despite the rhetoric there is no end in sight.

Shortages will continue and increase. Expect to see empty shelves again. How like the USSR.

Politicians have been occupied with newfound power and have ignored the routine business of governing. They will be cast out for incompetence once the effects become clear. I remain concerned that no competent people will choose to run because of corporate and social media insanity.

How is it possible that many businesses have a problem hiring enough people while the unemployed number remains high?

Can you find a single government initiative begun in the past year that has been successful or has any reasonable prospect of being successful?

Governments are distracting themselves with the unimportant. Our troubles are not yet as devastating as the 64 C.E. fire in Rome which destroyed 70% of the city. Nonetheless, like Nero fiddling then, our politicians are fiddling with projects that have not the slightest short term impact, nor clear future resolution. Climate change, gender pronouns, immigration, intersectionality, defund the police, and equal pay as examples.  While I think planful effort works best, when the house is on fire, you don’t measure for new drapes. You set about reducing the damage.

Things do not change without action

Activity is not action

Activity is distracting though, and many people have not yet noticed that governments are presently near useless. Have you noticed the pandemic is 90 weeks old and the response to unreliable case numbers is identical to those of March 2020. In WWII, the Manhattan Project took 27 months, about 117 weeks, to design, build and test the first atomic bomb. The first of anything is difficult. This is not the first pandemic, although you would never know by watching the political action around it.

Emotion and rhetoric are not facts and reasoning. Is it even imaginable that corporate media has taken a time-honoured capability like reporting the news, and turned it into poorly conceived entertainment and propaganda?

Is it possible to imagine that it makes sense to take devices and systems like smart phones and the internet, holding the accumulated knowledge and wisdom of humankind, and turn them into ways to argue without facts, and share pictures of cats.

Does woke equal broke for businesses? Seems so. I expected government institutions, universities and colleges, and NGOs to become woke because there is no downside for them. Infighting is always more intense when the stakes are small. But businesses? The stakes are larger there. What’s up with that? Cowardice or stupidity?

Does bullying work. Sure it does for a while. My experience with bullies tells me they are insecure cowards. Governmental bullies are harder to dislodge but only if they can keep the resisters separated. There is no evidence in history that shows governmental bullies are working for the betterment of the people.

Division advances those in power. I recall 1950s New York Yankee managerial icon, Casey Stengel, explaining his job. “There are two groups of players on the team. The ones who hate me, and the ones who have not yet made up their mind. My job is to keep the undecided away from the others.”

Noticing activity when we need action 

You can know you have activity without action when you see:

  1. Division of the people into conflicting groups
  2. Hyperbolic expression of the value of what’s happening.
  3. No evidence or method of analyzing the information we have.
  4. Cherry picking information.
  5. Demonizing the people who disagree, have other evidence, or other interpretations.
  6. Misrepresentation. Disingenuous is old-fashioned. Outright lies now pass for information.
  7. Expectation that people will suspend common sense. “Open borders are good,” The budget will balance itself,” and “There is no real limit to government’s ability to borrow.” are toward the insane side of unlikely.
  8. Indoctrination of the young. There should be a law against that. Teach children and young adults how to find evidence and how to think about it. Teaching children what to think instead of how to think is criminal.
  9. Suppression of religion. I appreciate not all are, or want to be, religious. Some people find comfort in the idea of a higher power and higher objectives. It’s a mistake to assume that doesn’t matter. Some governments would like to become religion, but will fail. Probably quickly.
  10.  There is no such thing as “the science.” There is only science,. The fundamental intention of real scientists to make old science obsolete. It grows and replaces weaker ideas. It looks to not so much become right as to become less wrong or incomplete. To be science it requires the ability to be falsifiable. See Karl Popper.

The takeaway

The governmental emphasis on trivia and seizing power is depressing.

The governmental emphasis on autocratic proclamations is disturbing.

The complacency of the people is ominous.

We each author our own fortune and misfortune. To achieve success people must  address objective reality, not the Utopian and euphoric nonsense we are served daily.

Learn to think. The trick is not to be right in the beginning, The goal at first is to be less wrong. Discover cognitive errors and tendencies. Read Daniel Kahneman. See Wikipedia to begin. Cognitive Distortion. Few of us will feel comfortable after examining the list and the misconceptions that result.

Look past the superficial. Find meaning.

It won’t be easy. Future normal will be unlike old normal. Do your best to craft new normal to permit success and growth.

Learn more about crafting effective plans. Planning will matter more than it has in the past.

Get ahead of the planning, coming late to the party will hurt you. From the article, “Necessity being not only mother but father, sibling, master, and servant to invention, creative solutions poured forth from the private sector.” Find some creative solutions to the problems you can identify and act upon.

I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email don@moneyfyi.com

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