As we watch the US banking system totter and begin to collapse, like the proverbial Jenga stack, we need to consider the implications this has for the global financial system and its supply chains.
I’ll begin with the stellar work of David Korowicz published on
Overview
“This study considers the relationship between a global systemic banking, monetary and solvency crisis and its implications for the real-time flow of goods and services in the globalised economy. It outlines how contagion in the financial system could set off semi-autonomous contagion in supply-chains globally, even where buyers and sellers are linked by solvency, sound money and bank intermediation. The cross-contagion between the financial system and trade/production networks is mutually reinforcing.”
“It is argued that in order to understand systemic risk in the globalised economy, account must be taken of how growing complexity (interconnectedness, interdependence and the speed of processes), the de-localisation of production and concentration within key pillars of the globalised economy have magnified global vulnerability and opened up the possibility of a rapid and large-scale collapse. ‘Collapse’ in this sense means the irreversible loss of socio-economic complexity which fundamentally transforms the nature of the economy. These crucial issues have not been recognised by policy-makers nor are they reflected in economic thinking or modelling.” Financial system supply-chain cross contagion – a study in global systemic collapse
“Last year, vials of the decades-old chemotherapy drug fludarabine could be purchased for a wholesale price of around $110. Not so much anymore.”
“This year, one company—Areva Pharmaceuticals—has jacked the figure up to $2,736, Stat News reports.”
“What’s going on with the aging chemotherapy used to prepare patients for cancer treatment?
It all comes down to supply chain problems triggering shortages that affect the only other two suppliers of the drug in the United States—Teva and Fresenius Kabi.” Drug shortages aren’t going away any time soon, supply chain expert warns
The link above courtesy of David Ferraro author of the The Collapse Chronicle
In the video discussion below, recorded seven years ago between Professor Guy McPherson and myself we discuss the tenuous state of the supply chain.
Edge of Extinction: Disruption of Supply Chain
“By 2027 the world could be facing a 214 trillion calorie deficit, says Sara Menker, founder and chief executive of Gro Intelligence, an agricultural data technology company.”
Published in 2018, do the math: We Have Five Years To Save Ourselves From Climate Change, Harvard Scientist Says”
So which goes first? The Supply Chain or the Food?
When not if Industrial Civilisation collapses we lose the “Aerosol Masking Effect” as pointed out by one of my readers in the comments section below, hence this edit on March 15th.
“The impact of the aerosol masking effect has been greatly underestimated, as pointed out in an 8 February 2019 article in Science. As indicated by the lead author of this paper on 25 January 2019: “Global efforts to improve air quality by developing cleaner fuels and burning less coal could end up harming our planet by reducing the number of aerosols in the atmosphere, and by doing so, diminishing aerosols’ cooling ability to offset global warming.”
From the post: “Global Dimming keeping the planet habitable”
I'm an anti-imperialist, environmental activist and blue ocean sailor, who is passionate about the earth and all it's inhabitants without favour. Brace for imminent impact as we bare witness to the non-linear unraveling of the biosphere and habitability disappearing for most if not all complex life on the only habitable planet we know of. To quote President Niinistö in North Russia: ‘If We Lose the Arctic, We Lose the World’. Folks we have lost the Arctic.
Kevin Hester 
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Here’s another that will hurt the financial system:
To meet government ‘climate goals,’ the existing power grid needs to DOUBLE by 2040. The grid can’t handle more power without enormous amounts of ‘investment’ like more lines etc etc since it’s already sitting with finished projects waiting to be connected.
Came up on this:
https://weather.com/news/climate/video/existing-power-grid-cant-support-clean-energy-goals
Then this link goes to the official summary link:
https://www.iea.org/reports/electricity-grids-and-secure-energy-transitions
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More solar & wind will save us, right?
sealintheSelkirks
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“The conclusion of this report is that a decline in energy will almost certainly initiate a series of processes, at the end of which will be the collapse of our civilization. We are close to a point where world oil production will decline or may have already reached that point (peak oil).”
Peak oil was in 2018, hence all the wars breaking out as we fight over the last of the low hanging fruit.
” Our civilizational structure reacts unstably to a withdrawal of energy. In all likelihood, our globally interconnected civilization is on the verge of a surprisingly rapid and imminent collapse.”
The above quote is from a paper written by David Korowicz
Close examination reveals that climate change consequences haven’t been factored into this collapse hypothesis.
Making this set of living arrangements more precarious than portrayed in an otherwise good analysis.
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Yemen could be in the process of destroying half of the world’s supply chains.
https://rumble.com/v427he8-gaza-war-update-israeli-trade-destroyed-by-yemen-siege-resistance-targets-o.html?fbclid=IwAR1iY2Ul-gmeB-INUsHDbJQNxPdNdHNsXnqVG1rUHz6deK-ZA9o2PHQmp2Y
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“The report said that 158 vessels carrying over 2.1 million cargo containers have re-routed away from the Rea Sea as of Thursday morning. The value of this cargo based on MDS Transmodal estimates of $50,000 per container is reportedly $105 billion.”
The numbers are staggering!
https://www.bignewsnetwork.com/news/274074042/ocean-freight-rates-skyrocket-cnbc#google_vignette
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Extended Detours: Maersk Reroutes Services Around Cape of Good Hope/;
“Extended Detours: Maersk Reroutes Services Around Cape of Good Hope
Shippers and consignees whose shipments are traditionally routed through the Suez Canal can expect longer transit times for an extended period, as carriers have announced new schedules.”
“In a customer advisory this morning, Maersk Line reveals it has redirected every sailing on its Asia-Europe and Middle East-Europe services to go via the Cape of Good Hope through to mid-February.”
“For its eight Asia-Europe services and three Middle East-Europe sailings, this means every voyage from now until the onset of Chinese New Year on 10 February will suffer extended transit times of 10-14 days.”
https://oceancrew.org/news/extended-detours-maersk-reroutes-services-around-cape-of-good-hope_22-12-2023/#google_vignette
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Another cheerful round up of the great unravelling from Guy 🙂
The mere use of the term “Too Big to Fail” exposes the level of hubris, arrogance and denial being shown by our overlords in a capitalist paradigm that has been struggling along on life support since the 2008 Global Financial Crisis.
That ‘near’ collapse was triggered by too much debt. How did they resuscitate the banking system and global economy? Unprecedented levels of additional debt, in a stereotypical Ponzi scheme.
All fiat currencies in history have collapsed, all previous civilisations collapsed.
Central to those civilisations collapsing was imperial overshoot, triggering resource depletion, complexity (ring any bells) and sociopathic and psychopathic rulers disconnected from their people and reality.
https://guymcpherson.substack.com/p/the-price-of-oil-economic-collapse?utm_source=post-email-title&publication_id=1645569&post_id=139504381&utm_campaign=email-post-title&isFreemail=false&r=r3w0&utm_medium=email
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There will be no ‘energy transition’.
https://www.newscientist.com/article/2409679-much-of-north-america-may-face-electricity-shortages-starting-in-2024/?utm_medium=social&utm_campaign=echobox&utm_source=Facebook&fbclid=IwAR3iIuwVk5ijyZGtTPJ9FQMbNr6ZXzAuxUsB8a81VdD_6s9Uz7lizbmXzjE
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Every day the Ponzi scheme struggles along surprises me.
https://wallstreetonparade.com/2023/12/these-are-the-bank-bailout-charts-the-fed-hopes-youll-never-see-in-one-place/?fbclid=IwAR2rRc9LD8QD8MOrvKFgs_PcqbEHEBA6OngdzJGwBo8joMUPDuSEFJS3Zvc
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Another masterclass from Tim Watkins that delves into both the historical context of how we got here in the first place and the more recent complexity of our supply chains.
Tim has an incredible depth of historical knowledge that shines a spotlight on crucial moments in history.
A few details I’d add is that three of the most important choke points for global trade are the Panama Canal which is operating at a restricted schedule due to an ‘unprecedented’ drought in the region.
Large ships can no longer use the canal adding thousands of miles and weeks to the costs of the onboard freight.
The Suez Canal is under attack from the Houthi’s as a response to the ongoing genocide in Gaza disrupting all trade, especially oil tankers.
Iran could and will close the Straits of Hormuz when, not if the Apartheid state attacks it.
The first manifestation of these supply chain break downs will be inflation, but it will all be happening during an escalating outbreak of war around the planet.
I’m finding it impossible to say “Happy New Year”, because I know it can’t and won’t be ‘Happy’.
https://consciousnessofsheep.co.uk/2024/01/02/the-myth-of-redundancy/?fbclid=IwAR0mPN8wu5fqAnIElnLNusq0iAdmlBPQvDn5d703GqDPQl5_NPzLRi354Ik
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And then there is this which, if applied to the US as it’s proposed to apply to Russia, would have completely emptied the US treasury years ago for all the illegal invasions, wars started, and deaths of millions around the world.
Do as I say not as I do seems to be the rule in this country. This is a piece of shit article:
Seizing Russian Reserves Is the Right Thing to Do
Simon Hinrichsen / Financial Times
https://www.rsn.org/001/seizing-russian-reserves-is-the-right-thing-to-do.html
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The US never paid the reparations it PROMISED to Viet Nam. So why should anybody else? I live in a completely immoral country that I have no way of changing for the better, and that is a hard thing to swallow.
sealintheSelkirks
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Here’s another view of what this ‘financial’ is truly like:
Working Americans Go Viral on TikTok for Exposing the MYTH of the American Dream
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We ain’t seen nothing with the fucking neoliberal Reaganites in control of EVERYTHING.
sealintheSelkirks
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This was NOT the vid I thought I copied and pasted and have deleted…so no idea how to find it. It was a snip from the MeidasTouch that came up detailing that had a couple of tik-tok incorporated into the youtube vid of millennial women workers in dire economic collapse even working full time along with the ‘silver age’ depression that is coming from the Boomer retirements about to flood this country who have no money and no way to survive being old with no jobs and facing homelessness in a used motorhome that are being made illegal to live in all over the country….timelined through the neoliberalism introduced by Reagan to current conditions, and explains how it linked together…
In other words, Class War planned and executed wonderfully well…for the bad guys. Who rule us and own everything.
Sorry I haven’t been able to find it again and I’m going to bed because it’s after 3am my time.
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How this really good short speech from a real smart guy showed up instead I have no freaking idea!!! Looks a bit younger don’t you think?
sealintheSelkirks
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Oh this is too weird. It’s now showed back up and the video that was there (a Kevin speech in NZ) is gone. And it was the HR not Meidas Touch so no wonder I couldn’t find it.
Sorry!
sealintheSelkirks
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Meet the Plutocrats Buying Up the American Dream
How America’s wealthiest are systematically locking modest-income families out of the housing market.
https://www.truthdig.com/articles/meet-the-plutocrats-buying-up-the-american-dream/
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sealintheSelkirks
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Gails latest brilliance fits like a glove here:
https://gailtverberg.substack.com/p/2024-too-many-things-going-wrong?fbclid=IwAR09TarMSJBZ-nM2rnHZgmjpMoNhIkyWbg98mFMWVPU8jGCAXe1bA3q6_aI
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This one is dead-on:
The debt explosion: How neoliberalism fuels debt crises
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I’ve somehow managed to be nearly out of debt. Part of it was planned, part of it was luck. The no mortgage and drive old cars plan worked, which made some medical and other debt easier to knock down. As of this month I’m at less than a thousand bucks before everything but basic bills are zero’d out. No credit cards, nothing.
But of course in this country all it would take is some radical illness to bury me under again. Which is why I wear an N95 anytime I go off this property into some public space. We’ve got 2 million new infections A DAY in the US right now but I should put up the latest on your Covid thread, Kevin…
sealintheSelkirks
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10% of Egypt’s revenue comes from the Suez Canal and 11% of Saudi Arabia’s oil is exported through it.
The axis of resistance has leveraged that bottle neck brilliantly!
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Another brilliant collaboration between former US weapons inspector Scott Ritter and host Danny Haipong delving into the escalating chaos in the Middle East, or West Asia, as you prefer.
Ansar Allah have literally taken control of the Red Sea and by default the Suez Canal. They are in the process of flipping the global supply chains, contemporaneous with the Panama Canal being on restricted flow, due to an endemic drought in the region, limiting the size and number of ships that can transit the canal. This alone will be a huge driver of global inflation.
Few seem to grasp the interconnectedness of every aspect of the supply chains!
The volunteers in Ansar Allah and Hezbollah have been training for these days, in many cases for decades, they are led by patriots, not mercenaries’, this makes a huge difference on the battlefield.
Tactically they seem to be lightyears ahead of the invaders.
This is how the human story winds down to a close, war in the East, war in the West, war up North, war down South, everywhere is War.
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Another fascinating and thought-provoking article from Gail that would put the corporate media to shame.
I’d add that there are two ‘choke points’ in the global supply chains that are going to be crucial this year.
1) As the wars in the Middle East escalate, we will see more supply chain disruption as Ansar Allah take control of the Red Sea and by default the Suez Canal.
2) Due to an unprecedented drought the Panama Canal is severely restricted with the larger oil tankers and super freighters being diverted around South Africa.
3) These diversions and the increased insurance rates will have a direct effect on inflation.
4) The normally organised supply chains will be disrupted, expect lots of delays.
https://oilprice.com/Finance/the-Economy/2024-Will-Be-a-Critical-Year-for-the-Global-Economic-System.html
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Another excellent discussion on the pathology existing on Capitol hill.
The detail of Quatar stopping LNG shipments through the Red Sea and Suez Canal means even more energy issues for Europe following on from President Biden blowing up the Nord Stream pipeline!
Ansar Allah is leveraging their control of the Red Sea brilliantly in support of Palestine.
It’s in the process of flipping the planets supply chain contemporaneous with the Panama Canal working at reduce capacity due to a climate change fuelled drought in the region.
https://rumble.com/v4a2b8i-former-cia-analyst-ray-mcgovern-on-why-americas-leadership-is-delusional….html?fbclid=IwAR1lQD3eV1D03THz6YZzYZZrSHUd9uOhRdQ8jYo5onU-2LRaajnsvF72FBk
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“The recent attacks of Yemen-based Houthi rebels on ships in the Red Sea have paralyzed shipping through the Suez Canal, forcing exporters in the Black Sea region and elsewhere to consider alternative—and more costly—shipping routes. In early January, A.P. Moller-Maersk A/S, the world’s second-largest container ship company, announced it would suspend shipments through the Red Sea. Trade volumes in the Suez Canal are down an estimated 40% since the attacks began.”
“Such choke point disruptions to global shipping, while rare, have recently cropped up in diverse locations.”
https://www.foodsecurityportal.org/node/2672
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This video canvasses many of the issues in this blog including the effects on our supply chains.
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How the BTFP works
“Investors then feared that other banks would fail. Most US banks were similarly exposed to customer withdrawals and underwater bond portfolios, while the Credit Suisse collapse demonstrated the potential for contagion.”
https://theconversation.com/why-economists-are-warning-of-another-us-banking-crisis-224092?fbclid=IwAR3T0VIPpMX2_ZewkyEtXq4bcoFhSyrck56NsL9bY8NIpg1WyDI-DyiN6H8
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“If a major recession occurs, debt defaults and derivative failures can be expected. Some renters will default on their contracts. Bank failures can be expected, as well.”
One of my concerns in this scenario is contagion in the banking system!
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