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2022-05-13 07:00 by Karl Denninger
in Macro Factors , 971 references Ignore this thread
Supply Chain Insanity
[Comments enabled]

All around the news media the latest problem is infant formula.

There are four (count 'em -- four!) factories that make infant formula in the United States.  A few months ago one of them was shut down after it was suspected (but not traced) that they had contaminated some of their batches and two infants died.  That was in February; today it is May and the plant remains offline.

Abbott, for its part, states that while yes, those kids were using that formula and admits that in non-processing areas of the building there was contamination, they deny it was in the formula.   I don't know if that's correct or not, but it doesn't matter because now one plant going offline has resulted in shortages across the United States.

One plant folks.  Think about that for a minute.

Then contemplate two other points: First, that we became so dependent on this in the first place that one plant could threaten the survival of children in this nation and then that the Biden Administration is shipping pallets of formula to the border for illegal immigrants who cross with young children -- and who need food.

Now granted -- babies are babies, and its would be monstrous to deliberately starve them no matter how they got here.  But when supplies are short who gets what they need first?  American citizens and their children or those who deliberately broke the law entering the US illegally and, on top of it, expected the United States to provide for the feeding of their infants?

Clearly the answer isn't American citizens and their children.

At the core of this is our government's belief that "supply chains are ok when stretched all over the place" with no capacity to be self-reliant, and then on top of it we let corporations put people into a situation where they prefer to feed formula instead of the way it has worked to feed babies since the first mammals showed up on this rock.  Certainly there are many women who can't breastfeed for one reason or another but it is also true that a huge percentage of said mothers use formula for convenience and both doctors and mothers are heavily marketed toward with the very intent of making new mothers dependent on said formula.  That crap was going on in the 1990s -- my kid was literally sent home after being born with a "free" sample of formula!

Once that choice is made for a given infant there's not a lot you can do to change it after the fact -- you're stuck with the decision to use formula quite rapidly, as a mother who doesn't breastfeed will soon have no milk to feed with at all.  Of course this suits Abbott and the other makers of formula just fine.

Would you mind explaining to me how this isn't worse than deliberately addicting someone to opiates?  In that case the victim (harmed individual) is the person addicted and as an adult they have agency.  In this case the harmed individual is an infant who most-certainly does not.  How is that not felonious?

There are no simple answers -- especially now.  But this is not the only example; we are, at present, exporting diesel fuel.  What, you might ask?  Yes, and we've been doing it for years.  It used to be that in the summer months diesel was cheaper than gasoline; the reason is that diesel is also heating oil (same thing) and of course you don't use any in the middle of summer.  Never mind that summer months are slower for truck deliveries, at least until we get into fall and the winter stock-up begins for Christmas.  Since a barrel of oil "cracks" to a relatively-fixed mixture of gasoline, diesel, lubricating oil and other components if the demand for diesel is lower then so is price and of course leisure travel by gas-powered cars rises with summer vacations.

But for the last decade or so this relationship, which was very reliable, has disappeared.  Why?  Because we're exporting the diesel.  Now, with the Russia/Ukraine war on those exports are into a bidding frenzy environment over in Europe.  Rather than keep our diesel here and keep its price under control which in turn would suppress inflation we claim there's nothing we can do -- at the same time we cancel leases for new drilling and otherwise obstruct those who would produce oil, driving up their costs.

All of this is intentional policy -- it is not an accident.

The solution to high prices is often high prices; high prices destroy demand.  But how much of that demand is inelastic and can't be destroyed?  There is no elasticity of note in baby formula; that infant needs food, and if you have started them on formula you really have little choice but to find some or else, never mind that switching to a different brand or type can be a problem too due to differences in the ingredients.

The same is true to a significant degree for diesel fuel that powers the last mile of delivery for virtually everything.  Whatever it costs, it costs -- and is reflected immediately into the price on the shelf.  If the trucking becomes uneconomic because firms have contracts and they simply can't operate without going out of business then they go out of business and the products don't get delivered at all.

Again this all comes back to a false promise we've had made to us by politicians and businesses: It's great -- and safe -- to offshore supply chains and not be self-sufficient -- that is, to eschew autarky.  Nothing bad will happen by being dependent on foreign oil, four factories that produce basically all of our infant formula, potash from other nations for fertilizer and similar.

How's that all working out and how do you feel about it when we have both a President and Congress who are willing to sit back and let it all happen, particularly when it comes to energy supplies?

This didn't happen in a week, a month or a year.  It happened over decades but government on both sides of the aisle has not only cheered it on so have you in the form of higher stock prices.  After all if it can be sold here for $4/gal or overseas for $5 then $5 it is even though that will cause the price to be $5 here too.

How wise was that, America?

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Wishiunderstood
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NY
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I suspect the closing of the baby formula plant could be related to the fires at food production facilities but I guess I'm probably just a conspiracy theorist. There is always homemade formula, not that our government would direct anyone to this site...

https://www.westonaprice.org/health-topi....
Shadowmask
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Policy makers are trying awfully hard to manifest those food shortages talking heads were predicting.
Cmoledor
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Akron Ohio FEMA region 5
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Morning all. Weve been had Id say.

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The whole world is one big ****ing scam
Why are you giving a vulgarity warning here? Our genial host is an advocate of both skull****ing and sodomy via rusty chainsaw. Credit to Rollformer
Notleftjeff
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Indiana
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Why aren't parents particularly women marching in mass to DC and their state capitals threatening to burn them down if this is not fixed immediately? @wishiunderstood, I think there was an article in the NYT that said feeding infants homemade formula was a bad idea. Good grief, these people want babies to die?
Ocdawg
Posts: 251
Incept: 2019-03-14

Let's go Brandon, WI
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Here here

My patience is GONE. BOOBUS AMERICANUS sits on his or her proverbial ass and bitches but does NOTHING... ABSOLUTELY NOTHING... and hence the **** show continues 🤔

This is now GUARANTEED to end one way... only when the pain felt by BOOBUS reaches TPTB... think they'll EVER let that happen? And what comes next?

smileysmileysmiley

But too many have been pushed too far... so....smiley to

smileysmiley

This will end badly for many... I got mine so let's go...
smiley

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"I have certain rules I live by... my first rule...
I don't believe anything the government says. The government doesn't lie; it engages in disinformation"
-George Carlin smileysmileysmiley
Aquapura
Posts: 2954
Incept: 2012-04-19

45th parallel
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My twins are beyond formula age thankfully but when they were I had our house stocked to the max on that stuff. The expiration dates, when fresh, extend out over a year. So I'd go to Costco and purchase 8+ tins at a time. Yes, that could easily be a $200 spend (then) which I get not everyone can do, but the one thing I loathe is being totally dependent on something - and that was something we were for a while. And when we transitioned off the stuff I had several unopened tins that I donated. Small price to pay for insurance in case something went wrong - like is happening right now.

Far too many in this nation have blind trust in the system to always work. Water always at the tap, meds always at the drug store, and food always at the supermarket. If the 'vid shutdowns taught us anything it should've been to not trust the supply chain. You usually get a pretty good advance notice a kid is coming. It baffles me that expecting parents haven't been stockpiling formula for months and/or preparing to pump every drop mom is able to provide.
Whitehat
Posts: 8517
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Right now those of us here can perceive this and understand the implications. The vast majority of Americans, including the smart ones and clever do not grasp it at our level.

Here is something which is never brought up, however on occasion it is here but not obvious. Local was also destroyed.

In my current community in a major city we had even up to the early years of my life, in decline of course, something called industry much on a small scale. Things like tools (yea, metal forgings and ultimate finished product), cars, housewares, clothes, food, milk products, personal care items, SOAP, even things like baby formula were produced in modern form a ten to forty minute drive from my current house. This was in a major city, and no it was not a stinking, horrible industrial hell-hole. We also did other big stuff. What changed?

A whole host of things from local taxation to enviro rules to what Karl discusses here caused the consolidation into the mega concerns. Thus, we find ourselves with three or four infant formula plants when local small business did make a superior product meeting or exceeding today's standards just fine.

Did you ever wonder if all of the rules, compliance and other excesses were funded or encouraged by those who would control large concerns, the only things which could deal with severe govt regulation and bury the other costs in economies of scale? Surely the politicos received lots of support from those who wanted things to go this way using of course the naive woke sjws of their day as dumb troops to help push the agenda.

Some of us have a chemical, food preparation and business background. It would be a dawdle to setup a plant in one of our commercial areas and employ people to make infant formula for a couple of communities and perhaps get really good and efficient at said. Now, take decades of regulation, costs and compliance hoops and press the STOP button. Only an existing giant, cemented in its position due to inflation and the above factors could do such a thing and would not at small scale.

The goal was to kill competition as monopolists like it that way.

Ask yourself why everything is like 100 years old, and why all of those stories of how companies got started, even those once local and long past, are ONLY in the past, not the present.

Then ask yourself why young men do not want to participate just to be slaves and make more slaves, and why the clever merely play the game to win.

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smiley
Quantum
Posts: 426
Incept: 2021-05-18

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Quote:
All of this is intentional policy -- it is not an accident.


If you destroy people's ability to survive, they're more receptive to solutions (that aren't really solutions at all).

Greenacr
Posts: 481
Incept: 2016-03-15

Northern Ohio
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Karl -

You hit on a great point. Much like prescription drugs, the medical establishment has been bought off by special interests to push formula over natural breast feeding despite obvious health benefits to the infant that come from nursing on Mother's milk. My wife breast fed all three of our children and our children have now breast fed our grandchildren. Can't imagine what the savings are from that.

There is also an emotional bond that develops between the mother and child during the breast-feeding process. Is breaking this bond a part of the reason for a decline of the family in America?
Synopsis
Posts: 32
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As far as the diesel supply chain goes, queue the always reliable refinery explosion. That alway seems to happen at the worst times.

The only time in recent memory this country pulled out all the stops for a supply issue was for those damn c19 ventilators? Stories on the news of Ford, GM and Tesla converting their assembly lines over to build ventilators. We all now know how important that was, right?

When it comes to baby formula shortages, they tell you not to try making your own because bad things will happen.



Orangecrush
Posts: 13
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United States
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Heard a radio news report this AM about the formula shortage. Cognitive dissonance was evident as the reporter hailed the government for shutting down the plant and 'protecting babies' after a couple of kids allegedly died from tainted formula.

..This from the same media that been wringing their hands over the recent Supreme Court Roe v Wade leak which could possibly lead to a few hundred thousands less babies murdered in utero annually...
Nadavegan
Posts: 534
Incept: 2017-05-03

The South
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Baby formula is made from rat turds and coyote semen, with just a pinch of autism powder. It has names like Similac and Enfamil that sound like villains in the Star Wars universe.

Maybe this will push mothers who have the option to not use formula (and I get it, for some people it is a necessity) to use or make better formulations.
Supertruckertom
Posts: 6946
Incept: 2010-11-07

USA
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@WH, I have watched the consolidation and mergers and outsourcing over the last 29 years that I have been in the trucking industry.

Factories within walking distance to downtown Atlanta closed and are now residential condos.
Entire industrial districts converted or razed and rebuilt.
Those manufacturing jobs gone to be replaced with paper pusher jobs and the neighborhoods gentrified.

Now farms are being paved over 50 to 100 miles out from the big city centers and warehouses built for imported goods and some local manufacturing for perishable or consumable items.
Big flour mill near me does 50 25 ton loads of flour a day for instance.
Delivers to bakers in 4 States.
25 drivers and about 20 Millers.

Enough to feed 10 million people concentrated in one flour mill.
Grain delivered by rail.


One other observation.
Amazon has a DC on I-20 South of Dallas.
It usually has trucks lined up along the access road for over a mile waiting to deliver.
Not Wednesday. Only 1 truck checking in at the gate.
The volume of double stacked container trains rolling through the NM, TX and AZ deserts has dropped also.
Seeing more mixed freight and one huge grain hopper train rolling West last week.

I do an ATL to SoCal run and return every week, for the time being.


Edit to Add.

Bastiat discussed this in the 1850's in The Law.
Regulatory Capture to raise barriers to entry and protect profits of the corporations who control the government.

Quote:
The Law

The law perverted!
And the police powers of the state perverted along with it! The law, I say, not only turned from its proper purpose but made to follow an entirely contrary purpose!
The law become the weapon of every kind of greed! Instead of checking crime, the law itself guilty of the evils it is supposed to punish!

If this is true, it is a serious fact, and moral duty requires me to call the attention of my fellow-citizens to it.






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Preparing to go Hunting.

Confused1
Posts: 85
Incept: 2021-08-13

Ohio
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And not only intentional, they think it's funny. Did you catch Biden's new press secretary laughing about the shortage? They know they have the population Stockholm syndromed, and so there will be no backlash.
Susanlauren
Posts: 1240
Incept: 2021-05-01

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The US government is not known for its wisdom, prudence and/or foresight. They are, however, known for their arrogance, evil, corruption, greed, hubris ... and so much more. Perhaps the current crisis is testing the limits of when/ where push back by the public will take place?

I find it oh so special that a number of physicians are now pushing the narrative that "home made formula is not safe - only manufactured formula will do." Umm, yeah. How many years was "homemade" the norm? Whatever are the babies to eat? Or perhaps TPTB want starving children in a very real and very literal sense.

Why aren't the parents and grandparents marching on state capitals and on DC in mass? What will it take?
Oliver1655
Posts: 336
Incept: 2012-08-02

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So 2 infants die and we shut down the factory.

Not downplaying the seriousness and tragedy of those losses in any way....BUT

How many have been killed or injured by the clot shot ? Yet were still pimping that mofo like there is no tomorrow, ignoring all safety concerns, and signals and refusing to acknowledge the idea that there may be a very bad problem with them.

We truly live in opposite bizzarro world.

Now for all the people talking about formula shortages. Instead of demanding that govt or somebody else "do something" about this "immediately", get off your ass and take action on your own. Quit demanding that govt fix a problem that they created which makes you ever more dependent on them to solve all your problems.

Oh BTW what was fed to newborns before all this formula was around all neatly prepackaged ? JHC will somebody talk to their grandmothers or great grandmothers and ask them what they used back in the day to supplement if they were unable to nurse.

Big boobs are everywhere and yet none of them are capable of providing milk or they just cannot be inconvenienced by using them for their designed function? Just more brain dead looking to only enhance their looks for social media exposure while damaging their natural ability to provide nourishment to your own flesh and blood.
Invisiblesun
Posts: 509
Incept: 2020-04-08

Maryland
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These supply issues are 100% regulatory capture. Crony capitalism at its finest.

The Federal agencies are destroying the country. They clearly do not serve the American people, but rather some depraved Communist agenda.

Enough

When in the Course of human events, it becomes necessary for one people to dissolve the political bands...
Katrinkayobotz
Posts: 7
Incept: 2021-10-18

Illinois
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After aborting her first child in the 1940s, my mother was unable to breastfeed the rest of us. I was fed "Pet" milk, i.e. condensed canned milk. When I became a mother the hospital was much more than merely a hinderance to breastfeeding. Even the pediatrician was so unfamiliar with nature that he was astonished when I admitted that my very healthy 5 month old was never given his baby food plan that started at 2 weeks!

Bottle feeding was pushed to "liberate" women even before the 1950s.
Indianarube
Posts: 551
Incept: 2020-03-22

NW Indiana
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On the diesel fuel exports, reading that prompted me to do an internet search for US diesel fuel exports. I stumbled upon this article written in early February. https://oilprice.com/Latest-Energy-News/....
Merlin
Posts: 82
Incept: 2017-07-25

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@notleftjeff
Quote:
Good grief, these people want babies to die?


Yes, they do. Just like they want all of us who don't agree with them to die.

And they're going to arrange it any way they can.


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Weve tried the Soap Box, They censored that.
Weve tried the Ballot Box, They stuffed that.
Weve tried the Jury Box, They tamper with that.
All we have left is the Cartridge box.
Shadowmask
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To be consistent with the "po pitiful hardworking immigrant" snow job, they should have went with illegals being "too poor" to afford formula instead. Breast milk is free, formula costs. But Americans are so dumb and lack critical thinking skills no one points this out. Never mind noticing how if Wetbackalina walked here with a baby why is she still fat?
Snowgirl
Posts: 15
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Upstate NY
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My mother passed away recently and when I was cleaning out her house I found an old recipe for homemade baby formula. I never considered that when I was an infant my mother was making formula at home. I'm not saying that baby formula was not mass produced in the 1950s because my mother was very frugal and might have chosen to make her own because it was less expensive. I glanced at the recipe before tossing it and I don't remember it being very complicated. I'm wondering if homemade formula was the norm 60 to 70 years ago.
Quietrally
Posts: 66
Incept: 2009-06-10

USA
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As we have been watching all of this unfold, the thing that has become glaringly obvious is not the weakness in our supply chain or the obvious delicacy of the interwoven systems we have created.

The deliberate lack of action of our leadership to address the unfolding disaster ahead of us is the tell. That our system is crumbling before our eyes because of its inherent weakness may not have been deliberate. That nothing being done at all to slow or stop it is.

In my opinion, this bus is careening toward a cliff, and our leadership is hell bent on preventing the brakes from being pressed.

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D+(R/Tea Party ) = Same Outcome
Whitehat
Posts: 8517
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Operation Escape from New York
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Since i do not follow mainstream media or social media, i will not know what is going around until my other sources tell me. Have not heard something yet.

We know that natural infant feeding is best, however there have always been ways to supplement said and the need arises from time to time for a variety of reasons.

My family has recipes for early infant feeding as i am sure that many others still do. They are surprisingly simple.

Have these found their way into social media?

Every so often i find the 1950s worship coming around. Is it not interesting that a lot of these things were introduced then?

Whites who do not know how to take care of their own on their own are not real whites. A consumer society needs people who must be told how to do this and that. Made or imported, we have become masters at profiting from helplessness.

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smiley
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