Blindspot #017 - Cognitive war, supply chain breakdowns & China warns citizens: Stockpile Food!

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This week we look at a common global Blindspot emerging in the form of food production snags, supply chain breakdowns, escalating fertiliser and fuel costs, and the outcome of it all: shortages.

Blindspot #012 looked at the woes of China’s property sector, and the risks faced by the global financial system as the behemoth developer, Evergrande, continue to falter, and splutter along, barely meeting its mountainous debt obligations.

But, more strange news. Recently the Chinese government called on citizens, as winter approaches, to stock up on food and other daily necessities. This sent the networld of analysts into an interpretive frenzy.

- Is it because of new Covid-19 lockdowns coming,
- Is it because of a dark winter looming with major energy shortages (not only in China, but also Europe, and the USA),
- Is a market or financial system cataclysm about to hit,
- Is it because of broken supply chains combined with inflation, or,
- Is it because China is prepping for the inevitable pounce to take back what it sees as rightfully Chinese, being the isle of Taiwan?

Blindspot asks: Which of the above interpretive efforts, or mixture thereof, will pan out as reality, if any?

As South Africa grapples with the crippling economic effects of lockdowns, the cost of corruption, and morose levels of inefficient public sector wastage, and the cost of a near permanent condition of electricity blackouts, the topic of inflation, the cost of fuel and food, will soon lead to escalating concerns about food security in South Africa.

In African conflict studies there is a well understood fact, being that basic human security is anchored in food and water security. TimesLive, in the past week, reported on a statement released by the Transvaal Agricultural Association of South Africa that issues a stark warning for what is yet to come down the agricultural production pipeline in this country. It indicates,

“According to calculations by Grain SA, the total variable cost of maize is expected to see an average increase of 20%-28% year on year,” said TLU SA. Potato farmers believe that their input costs will increase by an average of 30%, “which will obviously have an impact on the profitability of the product as well as the price on the market. If the government does not actively intervene and address the Eskom challenge, it is a further influence that will hamper production. Where there is insufficient power supply to irrigate lands, the result is permanent damage to yields and this factor entails further losses.’

Blindspot also looks at the food shortages hitting the USA, and to understand it all better we turn to Wolf Richter's Wolfstreet report.

One of the important factors outlined in the report is that the US Federal Reserve, and most of the mainstream market cheerleaders, blame supply chain ruptures, delays, and weirdness for spiking persistent inflation.

Wolf Richter, argues, contrarily, that the root of the inflationary spike & everything shortage evil, can be found at that very address - being the Fed. More specifically the ongoing printing party that feeds about 120bn USD into the system per month!

Two apt terms he coins to describe what is unfolding in and around the Fed as intended or unintended consequences are:
- The everything shortage
- The everything bubble (created by ongoing money printing)

Please engage with www.wolfstreet.com for more...