[galpinos]

Hospitality - Even the pretty highbrow places round here are struggling for staff (poncy south Manchester)

Wages - The problem with the current Tory rhetoric, that the scarcity of candidates will drive up wages, is that those costs will be passed on. In the case of lorry drivers, if the costs of transporting goods go up, the cost of those goods go up so the poor nurse trying to buy those goods has an effective wage decrease as cost of living has increased more than the oh so generous pay rise from the Government. (emotive job picked for full effect)

I'm not saying wages going up in some sectors is a bad thing, but the fact these are always talked of in simple isolated examples instead of acknowledging the interconnectedness of everything really gets my goat, especially in the current Tory u-turn spin of "we always knew Brexit would cause our supply chains/farming/fishing to collapse, if fact we wanted it to, so we can build a high wage industry out of the ashes" bollocks.

[petejh]

For sure the risk at the moment is stagflation (wage and price inflation spiral with low/no growth in GDP). The reward of stagflation, if there is one, is that government debt becomes massively lower just though the value of the pound/dollar/yen/groat debt being worth far less than before, even without any large scale pay-back of the debt. Convenient for central banks and governments worldwide in the long term... if damaging to the average person in the street in the short term.
What we're seeing is a global phenomenon and no-one's sure what's going to happen next.  People gnashing their teeth may as well gnash their teeth at the weather.

[seankenny]

emotive job picked for full effect

Only a little bit emotive! But probably more rhetorically effective than pointing out the hit to aggregate demand given that one in six workers are in the public sector. Given the post-pandemic chaos in loads of markets around the world, my guess is that firms that don't face labour shortages are going to keep wages down in the short term, so I suspect plenty of private sector workers are going to lose out too.

I'm not saying wages going up in some sectors is a bad thing, but the fact these are always talked of in simple isolated examples instead of acknowledging the interconnectedness of everything really gets my goat, especially in the current Tory u-turn spin of "we always knew Brexit would cause our supply chains/farming/fishing to collapse, if fact we wanted it to, so we can build a high wage industry out of the ashes" bollocks.

It's pure fucking bollocks. Increasing wages is great, but surely the best way to do it is to increase demand for goods and services rather than restrict labour supply. We're already seeing farms with wasted produce who are going to cut their production next year - so instead of increasing wages we're just seeing lower output.

The other issue with HGV drivers is that I can't see how much of their work can be automated, so instead of getting real productivity rises which lead to increased wages, instead we're just going to get the same work done at a higher cost (to everyone else). I'd actually be fine with seeing driver wages increase but through improvements in the minimum wage (maybe even a sectoral minimum wage), stronger labour laws with better implementation, and stronger rules to protect supermarket suppliers and prevent a race to the bottom. These could have been done at literally any time in the last decade and introduced gradually to prevent crazy wage spikes. But that would have required careful governance.

For a long time I've been convinced that the short run forecasts of Brexit chaos were perhaps a bit unlikely but the real risk was a long run hit to the UK economy, putting it on a low wage, low productivity, low growth track. I was entirely wrong in expecting that transition not to be very bumpy.

[petejh]

The other issue with HGV drivers is that I can't see how much of their work can be automated...

I won't be surprised if this comment doesn't age well beyond 2030 - I'd not be at all surprised to see development of some kind of dedicated driverless lane on motorways for the purpose of 24hr driverless HGVs transporting goods between warehouses and onward travel hubs.   

[teestub]

We’ve all been waiting very patiently for our jetpacks Pete.

[seankenny]

For sure the risk at the moment is stagflation (wage and price inflation spiral with low/no growth in GDP). The reward of stagflation, if there is one, is that government debt becomes massively lower just though the value of the pound/dollar/yen/groat debt being worth far less than before, even without any large scale pay-back of the debt. Convenient for central banks and governments worldwide in the long term... if damaging to the average person in the street in the short term.

Worth reading Nouriel Roubini on this:
https://www.project-syndicate.org/commentary/stagflation-debt-crisis-2020s-by-nouriel-roubini-2021-06

tl;dr - We could have 70s style stagflation with 2010s level of debt, not a problem for goverments (as Pete says here), but definitely a problem for indebted firms, households and eventually banks. (And also emerging markets whose debt is in dollars, euros or pounds.) Eventually you get high inflation which forces higher interest rates, so everyone with a lot of debt is fucked.

What we're seeing is a global phenomenon and no-one's sure what's going to happen next.  People gnashing their teeth may as well gnash their teeth at the weather.

Well, everyone's suffering a massive pandemic-related shock. But in addition the UK has subjected itself to another supply shock (remember we could have extended the Brexit transition period due to the pandemic but chose not too) which is clearly exacerbating the problem. Poor governance has further worsened our position, for example haulage industry groups have been telling the government this would happen for a long time, and it's clear they could have taken steps to deal with the problem, such as changing visa rules or subsidising entry into driving jobs. Thirdly, our competitors in the EU, US and China can call upon continent-wide supplies of labour* and expertise, putting us at a permanent disadvantage.



*Yes, I know there are shortages of truck drivers across the EU, but it's clearly a smaller problem for them than for us.

[Offwidth]

The other issue with HGV drivers is that I can't see how much of their work can be automated...

I won't be surprised if this comment doesn't age well beyond 2030 - I'd not be at all surprised to see development of some kind of dedicated driverless lane on motorways for the purpose of 24hr driverless HGVs transporting goods between warehouses and onward travel hubs.

Indeed... already heading that way in the US.

https://spectrum.ieee.org/this-year-autonomous-trucks-will-take-to-the-road-with-no-one-on-board

[seankenny]

I won't be surprised if this comment doesn't age well beyond 2030 - I'd not be at all surprised to see development of some kind of dedicated driverless lane on motorways for the purpose of 24hr driverless HGVs transporting goods between warehouses and onward travel hubs.

Researchers at US Bureau of Labour Statistics are less convinced:

https://hbr.org/2019/09/automation-isnt-about-to-make-truckers-obsolete

Even assuming you're right, I'm not sure that self driving trucks eight years in the future are going to calm inflation worries today.

[TobyD]

For sure the risk at the moment is stagflation (wage and price inflation spiral with low/no growth in GDP). ...
What we're seeing is a global phenomenon and no-one's sure what's going to happen next.  People gnashing their teeth may as well gnash their teeth at the weather.

In terms of broader economics yes. However the shortages in fuel, food and workers in many sectors is mostly though not entirely a result of leaving the single market.
There are a number of these things which are at least in part the result of political decisions, not the global economic situation.

[petejh]

Even assuming you're right, I'm not sure that self driving trucks eight years in the future are going to calm inflation worries today.

Something that nobody suggested. But well done for heading them off in advance.

[ali k]

I love how in a few short weeks we've gone from these issues with the supply chain and labour shortages being a worldwide problem and nothing to do with Brexit, to now being an integral part of the govt's planned shift to a 'post-Brexit high-wage economy'.

And how the 'old model' of free-market capitalism was the fault of business alone, so now this transition is something for business to sort out alone.

[TobyD]

I love how in a few short weeks we've gone from these issues with the supply chain and labour shortages being a worldwide problem and nothing to do with Brexit, to now being an integral part of the govt's planned shift to a 'post-Brexit high-wage economy'.

And how the 'old model' of free-market capitalism was the fault of business alone, so now this transition is something for business to sort out alone.

It's this aspiring autocratic government's cunning plan of getting into the shit, and then trying to make it all someone else's problem. See also immigration policy, N Ireland etc. It's now routine for Boris Johnson to tell everyone how terrible the N Ireland protocol is, whilst trying to blithely ignore the fact that he negotiated it.

Jonathan Freedland wrote a really good article about the gradual erosion of democracy under this government last week.

[TobyD]

BBC News - Conservative conference: Dominic Raab criticised for misogyny comments
https://www.bbc.co.uk/news/uk-politics-58814271

This man is apparently a qualified legal professional. 

[ali k]

Good summary of where I am with all this:
https://mobile.twitter.com/lbc/status/1445378612585185282

The mind boggles how some people can still have faith in this govt.

[SA Chris]

It's not even gaslighting, it's too bloody obvious to even be that.

[TobyD]

Good summary of where I am with all this:
https://mobile.twitter.com/lbc/status/1445378612585185282
The mind boggles how some people can still have faith in this govt.

It's not even gaslighting, it's too bloody obvious to even be that.

It's not just Brexit, although that's one of the main problems. Raab interviewed by the today program tired to say that the problem with pigs was trading with China; it took me about 2 minutes to confirm that he was lying with a look at industry figures.

The government just lies and obfuscates about everything. Boris Johnson was wittering about our glorious vaccine rollout in his speech yesterday, ignoring the fact that Spain, Portugal and many other countries have now vaccinated more of their population. We're on about the same as France which has a notorious problem with vaccine refusal. It's not awful but we're hardly world beating.

[TobyD]

This tweet and the accompanying rants are quite entertaining,  in a somewhat grim way.
https://twitter.com/Dominic2306/status/1448059195807440902?s=20

[Oldmanmatt]

This really isn’t the best time to be caught in the Brexit turmoil, be it short term or not. The scuttlebut in the shipping world is of impending recession, brought about (ironically) by the final resolution of the supply chain crisis, sparked by Covid, compounded by Suez blockages etc etc. It’s due to finally clear in February 2022. It’s notable that the shipping companies are expecting a massive drop in orders (are already experiencing such) due to a building inventory glut as 2020 orders finally arrive. Almost no new vessels have been commissioned and most currently operating were scheduled for scrapping before the crisis, patched up and thrown back out for a short term fix.
 It is not a coincidence that the RN has begun hosting Merchant Navy cadets aboard their warships for sea training, nor that the MCA has finally recognised such service as equivalent to service on a merchant ship, over the summer. The RN is fully expecting to end it’s manpower shortage during 2022/23, despite the current glut of job vacancies ashore. They think those vacancies will evaporate as the harsh impact of recent events catch up with us.
https://www.ft.com/content/6478625f-1d62-4bd0-8a27-5ee3de6f36bc?segmentID=ba5c37f3-1ef2-1603-ca72-c26f292ab7db&fbclid=IwAR0d6SYJHmXcPTCwKYLGKG2l7iI3_Y8QpQurH1xrmjUUVasOe45H_lbKNlo_aem_AYWIczglXKS4IcYJxZlQs-hRMLMK-ISN0Ckflyg1XAKzSBJP8kZHdJmYgnNkaxNh2oUIRx87OsGuJXIFVRv6Dgnb21x57G78vZRBqywRJagLIOvWgrVg85BPWsWi43ZRmXA

Edit:

Why?

Squid Games:

A preposterous story line, involving people gambling their very lives, in a series of ridiculous, childish, games, in order to obtain currency to pay off their debts and support their families etc etc.

Squid Games = Military Service.

(Me. I’m back in the games, at least on the side lines).

[TobyD]

Somewhat embarrassing for the government just before COP:
https://news.sky.com/story/uk-trade-deals-should-prioritise-economic-growth-over-environmental-protections-leaked-govt-document-12433808

Not a great surprise,  except that its actually written down so blatantly. 

[abarro81]

OMM - not everyone shares your view on shipping as far as I can tell, e.g. https://www.freightwaves.com/news/how-supply-chain-chaos-and-sky-high-costs-could-last-until-2023

[Oldmanmatt]

OMM - not everyone shares your view on shipping as far as I can tell, e.g. https://www.freightwaves.com/news/how-supply-chain-chaos-and-sky-high-costs-could-last-until-2023

To be fair, it’s not my opinion, it’s that of (for instance) the FT and others. Both articles rely on an assumption around the period beginning February 2022. The FT is, apparently, feeling generally negative to cautious about demand, whereas the AS article banks heavily on increasing demand after current/looming inventory gluts crash. I would note, though, the AS mention the increased lead times and the likely difficulty of actually replenishing inventory within reasonable timescales, without acknowledging one of the possible effects of that being shutdown/collapse of particular a manufacturing  sector in a particular region. Also, there’s mention of inflationary pressure, without much speculation on how that might dampen demand etc.

It’s all predicated on differing predictions of what post pandemic demand will actually look like and how different sectors choose to, well, gamble, on that.
I glossed over the ship building aspect in my paragraph above, with a “nothing on order”, where “nothing on order for short term delivery” would have been more appropriate (and “nothing” taken as hyperbole, too). I know of a few constructions that are both delayed (due to supply and manpower issues)and also being delayed by the ordering party trying to renegotiate contracts and delivery dates, such as to defer delivery.

My opinion? Honestly, it’s “fuck knows”.
Pete is probably our resident expert in hedging, I guess. I want (wish) to try and be ready for what is to come. The only thing I can be sure of, after fifty years, is that what actually happens, will still surprise me and somehow manage to incorporate all opposing predictions, good, bad, indifferent and improbable, into one big brown, sticky mess.
Some will “win”, some will “lose” and I reckon blind luck will have as much to do with which side anybody ends up on, as it will any “savvy” claimed by the winners.

[abarro81]

current/looming inventory gluts

I don't think there is any looming inventory glut unless demand drops off a cliff though? US inventories are incredibly low from what I've seen (not got links to hand).
Agree with "who knows"! Especially with wildcard of electricity rationing in China and how that plays out...

[Oldmanmatt]

current/looming inventory gluts

I don't think there is any looming inventory glut unless demand drops off a cliff though? US inventories are incredibly low from what I've seen (not got links to hand).
Agree with "who knows"! Especially with wildcard of electricity rationing in China and how that plays out...

Yeah, but I *think* Dizard isn’t talking about now, but a point in early 2022, when the backlog is mostly caught up. As in, most of the orders in transit now, were made in 2020/ early 2021 and that, currently, new orders are lacking. He’s predicting a short term glut (or, at least, complacency on warehouse levels over the next 5 months in anticipation of delayed orders) followed by a surge in demand (because the future orders should have been placed already) with a transport sector unprepared/unable to cope. I would point to the port infrastructure issues mentioned in the AS article, which I don’t think Dizard had adequately covered in his article; as further indication of problems ahead.
A minefield.
Possibly the world will wander through it, humming a silly little ditty, unharmed.
Or not.
🤷‍♂️

Oh, yeah. The bit in the AS about Xmas stripping out warehouses etc. Surely that’s mainly in the retail sector and light goods assembly etc, rather than heavy industry (which I take to include Car manufacturing and upwards in scale. Do car sales leap up over Xmas? Dunno).

[petejh]

Pete is probably our resident expert in hedging, I guess. I want (wish) to try and be ready for what is to come. The only thing I can be sure of, after fifty years, is that what actually happens, will still surprise me and somehow manage to incorporate all opposing predictions, good, bad, indifferent and improbable, into one big brown, sticky mess.
Some will “win”, some will “lose” and I reckon blind luck will have as much to do with which side anybody ends up on, as it will any “savvy” claimed by the winners.

I have a mid to long-term view on certain parts of industrial development on a global scale. Not really interested, from an investment pov, in short-term (< 1 year) events unless they have long-term consequences (which covid obvs does).
 
What I think is beyond doubt - versus what is just speculators' claims (e.g. uranium supply in the short term) and speculators profiteering on short-term squeezes (cobalt in 2018/9, supply of natural gas) - is there is a fundamental issue around long term demand for certain commodities needed in 1. chip-making (namely the tiny amounts of tin used for solder) 2. EV batteries (namely nickel sulfate, as well as tin) and 3. electrification (copper).
These relate to the 3 long-term wider themes below, which rely on the supply issues being solved.
1. build out the energy transition from oil/gas/coal to renewables.
2. introduce mass-scale EV transport.
3. build out the 'internet of things' by mass-scale adoption of industrial automation and consumer goods all connected to internet via 5g.

Toys for xmas, food in the aisles etc., I'm the wrong person to ask and don't really have an opinion. As long as I can get a pizza and a bottle of cider on a Friday pm I'm happy. What's that about ham you say...!


I assume all are aware of the MP murdered today. Fucking grim.

[Oldmanmatt]

Yeah.
Definitely grim and dampens the enthusiasm to discuss politics.