John Wilder
has a great post today about the greater lesson (and impact, in all likelihood) of the Kung Flu of 2020.
RTWT.
This has been the greater lesson all along: the problem is not the Kung Flu getting here nearly so much as it's about the second- and third-order effects, here, of Kung Flu rampaging across China, there.
This is the Mel Brooks Comedy Theory, applied to economics: "Tragedy is me stubbing my toe. Comedy is you falling off a cliff."
They have 400,000,000 people in China (at last report) on house arrest, most of them in their industrial belt. If you get anything made in China, you won't be getting it, probably for the rest of 2020.
Period.
No Keebler elves making your crap means no Keebler cookies. Or anything else. Multiply that times the second largest economy on the planet, and we have a problem, Houston.
But the beauty of the Invisible Hand is that (assuming people who aren't lunchmeat for brains running the show) capitalism starts doing workarounds ASAP for all the things China cannot provide.
Kung Flu is going to be the Third World Full Employment Act of 2020, and entire industries elsewhere are going to reap the windfall.
Eventually.
In the short term, expect scattered PITA, with a chance of disasterpiece theatre.
Bonus: GMTA. Peter adds another 2¢ at Bayou Renaissance Man.
Blogs are on our bloglist for a reason.
22 comments:
Long-time listener, first-time caller (as they used to say in the radio biz).
Hahaha! Strongly resonate on your discussion (and John Wilder's) regarding global logistics in the face of the China virus.
Three years ago, the tiny little start-up I was working for decided to start manufacturing their product, the worlds best home wi-fi, in Vietnam.We were building in China, like every other Silicon Valley schmuck.We wanted to move to Vietnam because - get this -China was getting too expensive!!Sure, I thought. Spend $500K in NRE to save a nickel on each unit.I'm an engineer.
What do I know about supply chain logistics and assembly costs.
Then Trump imposed his tariffs and while the world screamed, we looked really smart.
So smart in fact, that last year the richest man in the world bought our crazy little start-up that makes the world's best home wi-fi.
They even sent their geniuses from Seattle HQ out to Hanoi to learn how this disruptive little band of ragamuffins from Silicon Valley did things.
But it didn't end there.With the corona virus affecting electronic products coming out of mainland China, we are still shipping nd even busy developing next generation products. We look like freakin' geniuses!!OK genius; but what about parts? I hear you asking.
Yes, our supply chains mostly run through mainland. And we are dealing with it.
Alternate sourcing from Korea, Japan and especially Taiwan.And also working to build up local domestic capabilities.For example, packaging comes from mainland China.Wait, what? You can't find a guy in Vietnam to make you a cardboard box? Turns out they are there - but quality sucks.No problem. Send an experienced packaging engineer with a degree from Michigan State over to the box factories in Hanoi. He teaches them about quality control, proper sourcing and 4-color offset printing.And you know what is the best part? Whereas the Chinese suppliers always have this arrogance... this obnoxious attitude of being better than anyone else and not wanting to admit that they are all puppets to the oppressive regime, the Vietnamese have this incredible attitude of humility. It is almost as if they know they are a turd-world country and really, really, really want to try hard to improve themselves. They have a willingness to listen and learn. They are fun and generally happy people. They dourness of the Chinese is noticeably absent.Oh - and as for Vietnam in general? Where China gives you boring food and choices from the 2 official party-approved beers, Hanoi has microbreweries, restaurants run by French and Australia ex-pats, delicious Australian beef and incredible prices.
Granted - we are lucky and getting people the worlds best home wi-fi is not the same as supplying critical antibiotics.For the other supply chains - YMMV.
But I still say; "Rage-on Corona Chan!"
Time to cull the herd.
It will be an exciting ride, but USA will come out stronger and Vietnam will be the better for it.
We may even do more now to bring "capitalism" to this and other southeast Asian nations than McNamara ever did.
Thanks for the bandwidth.
Have a great day.
- Clifford Clarke -
crazy old-school hardware engineer
coming to you from the belly of the beast in Northern California
(where freeways are not prefaced with a definite article)
P.S. The Mrs. is a college Econ teacher. The article "I, Pencil" is required reading. As is Hazlitt's "Economics in One Lesson". Mises, Rothbard and Say are on the list for upper-level students.
Fox News Live: President Trump holds Keep America Great rally in Phoenix (Live Stream)
https://commoncts.blogspot.com/2020/02/fox-news-live-president-trump-holds.html
I wonder how much the Viet's attitude is based on over a 1,000 years being next to China and using them as an example of "I don't want to be that guy"?
Happens all the time, Randy.
Go to Korea and ask them about Japan.
I could see in the mid-80s they were going to eat Japan's lunch, for the same reason.
Aesop, I know this is somewhat off-topic, but keep safe.
https://link.springer.com/article/10.1007%2Fs12630-020-01591-x
That's some serious PPE they're talking about, and people are going to be showing up in ERs ... :S ... God willing we don't take too big of a hit among our medical staffs.
Bpught some trail boots made in Vietnam . They are a year and a half of tough farm work and look like they are in for another year or two . Finest quality boot I ever had and I'm 70 .
Unknown @ 5:04PM
So what is the brand and model for "the worlds best home wi-fi"?
https://note.com/chocolat_psyder/n/n118cd46c1336
Diamond Princess is COVID-19 mill. How I got in the ship and was removed from it within one day
OT
Going back a few days you had a rather ornery comment left for you that said you can't wear a mask, stay home, etc.
Story time:
My son has a compromised immune system. The last time he got a cold, he went septic and almost died. I watched him get IVIG to finally end the 105f fever he was running.
I wear an N99 respirator every day. I wear it at work. I wear it grocery shopping. I have a robust immune system, but if I get sick, I can be directly responsible for killing my son.
My wife stays home with him, and we homeschool. He's 7. We try to travel and do fun things in the summer, but during cold and flu season, they stay home a lot. I mean, A LOT. Like they may leave the house once a month, other than walks when the weather isn't horrible. When a tutor gets sick they text us and stay out of our house for a few weeks.
When I go to the store, I wear my Vogg N99 mask and will usually wear a pair of tan nitrile gloves. There's a box of them on my passenger seat. I get stares, I get comments, I even got one guy who pretended to cough on me while I was walking by. When asked why I'm wearing my mask, I just tell them that my son is immuno-compromised and if he gets sick it could kill him. The questions stop.
I go to the same stores over and over. They know me now, and don't treat me any differently. Hard to be the grey man when you are the only one wearing a mask, but oh well.
So, for all of the booghadeen that comment about being willing to fight the government, but are afraid of some harmless social ostracism, I say you are a bunch of pussies.
I think one of the most worrisome things about the Kentaro Iwata information is that he visited the ship on 2/18, so the videos went up on ... what, 2/19? ... and have already been removed by 2/20.
https://www.npr.org/2020/02/10/803011944/preparing-for-the-end-of-the-world-on-a-budget?
Would love to read your criticism of this terrible idea. Too bad you're the wrong politicos to make a living at it. Reading your commentary the past two years is more entertaining than anything I've seen on television.
Jack: THAT is a mighty low bar to clear!
Jack
Is it absolutely horrible? I mean, if there's a map where I can look up the locations, then yes, it's absolutely horrible. But it's basically a renta-MAG. My concerns would be group cohesion and the strength of the leadership team in-place. If they suck as leaders, then the whole thing is going to spiral out of control. Are they requiring training sessions each year? Do they have group get-togethers? Are members screened beyond their ability to pay?
But yeah, I guess you could spend $1k as a member for a year and then just put it on your places to overthrow list if you already had a team setup.
The invisible hand will be working overtime - and I sense that there will be many a bankruptcy and many a fortune made in recovery.
I need to get my plastic dog poop factory online.
Probably want to short or unload any stock in Target or Wal-Mart too.
Gonna be a tough year for them. ;)
@Aesop:
"Blogs are on our bloglist for a reason."
Thanks for saying that - but I'm not on your bloglist! You're on mine, though.
:-)
I'm stingy about my list, but I've been meaning to amend it. Problem solved, Peter.
Aesop,
BTDT. Got multiple t-shirts (suits, shoes, bags...)
You forgot to add "and then duck".
Had to be careful to always refer to the "Sea of Japan" as "The Eastern Sea".
Aesop;
Referring to an earlier post about home made breathing masks. It is obvious that the N95 & N99 masks will be in very short supply and alternatives will be also, A thought came to my mind, I have read that the virus can be killed at 140 degrees f. If that is true, what about after use, placing a mask in an oven @ 160 degrees for a while to sanitize them?
"They have 400,000,000 people in China (at last report) on house arrest, most of them in their industrial belt. If you get anything made in China, you won't be getting it, probably for the rest of 2020.
Period."
The National Fireworks Association just issued an Industry Update. Sounds like time for a road-trip.
Rumor #2: Fireworks were made prior to Chinese New Year are now shipping. This is false
o There is no movement of fireworks from factories or warehouses happening. Nothing is being loaded and nothing is being sent to the ports. While there are stockpiles at storage warehouses, there are not workers to load them and there are no containers to put them in or trucks to move the containers.
Rumor #3: Shipping has or will resume soon. This is false.
o There is a new transportation permit system in place in China now and they have not begun to issue any permits.
o Shipping lines have drastically reduced the number of boats on the water as the limited production of many goods in China has decreased demand for boats significantly. Presently it is projected that instead of 2 fireworks boats a week the lines will only be sending one. This is critical – At a time when we need to move as much as possible as quickly as possible there is less space available.
The full announcement is on their FB and posted at distributor sites.
-Jim
Good morning, everyone!
Active hot-zone in Iran, and they are dropping like flies. 28 cases with 5 deaths in the last four days.
So much for the Hajj this year.
McFee. Our host has a way with words few can match. Capable of both educating and entertaining. Obviously it's a bad idea. So educating is not required. Still it would be most entertaining.
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