Folks, we have all watched the North American economic moves with great interest ever since the first discussions about reforming NAFTA were triggered by Donald Trump. Well, things are about to get even more interesting, and we will have a front seat to see how this plays out.

Joe Biden and Canada’s Justin Trudeau are in ideological alignment, willing to destroy the entire North American economy as they construct the new climate change energy systems for the U.S and Canada.  However, Mexican President Andres Manuel Lopez-Obrador (AMLO) has already indicated -including direct statements to Joe Biden at the White House– that he is not willing to put the Mexican economy into collapse and try to engineer an economic future on solar panels and windmills.

As a direct result of following an independent path, the Mexican currency has strengthened against the U.S. dollar providing AMLO with evidence his current strategy to stay away from the U.S. energy policy has benefit.  Factually, AMLO is a soft-socialist (immigration); however, he is also a strong economic nationalist who has previously expressed a strong dislike for the influence of multinational corporations in Mexico.  AMLO is not a World Economic Forum acolyte.  AMLO ideologically aligned toward team BRICS.

The U.S. and Canada are going to push every possible political pressure point in order to force Mexico to change energy policy.  The stakes are high. It is going to be remarkable to watch what happens as this battle takes place.  The Wall Street Journal starts to notice:

(Wall Street Journal) – A shake-up of Mexican trade officials has clouded prospects for a quick resolution of a dispute with the U.S. and Canada over what are seen as Mexico’s nationalist energy policies.

The changes at the Economy Ministry are part of an effort by Mexican President Andrés Manuel López Obrador to put people who support his stance in charge of negotiations, according to people familiar with the situation.

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A few months ago, amid all of the headline warnings about inflation and prices of essential products, CTH noted that if we were to continue waiting about six months, we would see a massive backlog of unsold goods and as a consequence the prices of non-essential durable goods would begin a rapid decline.  That exact scenario is about to unfold.

Keep in mind, this is not necessarily a collapse of total global economic activity; what we are seeing is a collapse of western nation economic activity that is impacting the rest of the world.  A great economic fracturing is taking place as the western nations intentionally shrink their economy.  The supplier nations are feeling the consequences.

Maersk is the international shipping company that delivers millions of containers of goods all around the world, mostly by ship.  They are warning that warehouses are full of previously delivered goods, unsold consumer durable goods, as retail sales have come to a standstill.

The amount of inventory in warehousing is so extreme, major wholesale and retail groups have run out of storage space (link).

COPENHAGEN, Aug 3 (Reuters) – Shipping group Maersk (MAERSKb.CO) expects global container demand to fall this year as sales of durable goods come to a “standstill”, leaving flat-screen TVs and furniture piling up in warehouses, the company said on Wednesday.

A surge in consumer demand and pandemic-related logjams holding up containers in key ports had boosted freight rates and profits in the shipping industry in recent quarters, yet the cost-of-living crisis has reversed that trend.

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We are seeing the cascading impacts of the energy-driven inflation starting to ripple throughout the globe, specifically worsening economies who are dependent on the export of non-essential durable goods.  South Korea manufacturing is the latest example.

The first quarter of 2022 started with a drop in U.S. consumer spending on non-essential durable goods like electronics.  The net result of contracted consumer spending was a 1.6% negative GDP.

Inventories of goods started to build and by April/May of 2022 the Consumer Price Index (CPI) showed negative inflation in those sectors as discounts to move inventory were offered.

In June major manufacturer Samsung, headquartered in South Korea, announced they had told suppliers to stop sending component manufacturing parts for finished goods. (link)

By the end of July, the second quarter GDP in the U.S. again showed a contraction of 0.9%. Energy inflation was now creating a consumer spending recession, demand for non-essential goods dropped fast over the first half of the year.

Today, South Korea announces July manufacturing output contracted for the first time in two years, matching the prior announcement by Samsung:

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Transportation Secretary Pete Buttigieg, a cabinet ideologue with zero experience in business or transportation, appears in the news admitted the high price of gasoline is part of the Biden energy agenda to push people into purchasing electric vehicles.  You’ll have a higher car payment, but you won’t pay for gasoline.  WATCH:

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It is very curious timing in this article from Newsweek, containing massive geopolitical implications, using identified Saudi Arabia sources, would come in advance of Joe Biden’s visit to the Kingdom of Saudi Arabia.

Is this strategic geopolitical pressure from Saudi leader Mohamed Bin Salman (MbS) ahead of the meeting with Biden; or is this a genuine possibility that looms as likely?  If the former, then Joe Biden is being geopolitically slow roasted by Saudi Arabia for his previous disparagements and ideological hypocrisy in his visit.  If it is the latter, well, then the tectonic plates of international trade, banking and economics are about to shift directly under our American feet.

We have been closely monitoring the signs of a global cleaving around the energy sector taking place.  Essentially, western governments’ following the “Build Back Better” climate change agenda which stops using coal, oil and gas to power their economic engine, while the rest of the growing economic world continues using the more efficient and traditional forms of energy to power their economies.

This article from Newsweek is exactly about this dynamic with Saudi Arabia now potentially joining the BRICS team.

NEWSWEEK – Finland and Sweden’s green light to join NATO is set to bring about the U.S.-led Western military alliance’s largest expansion in decades. Meanwhile, the G7, consisting of NATO states and fellow U.S. ally Japan, has adopted a tougher line against Russia and China.

In the East, however, security and economy-focused blocs led by Beijing and Moscow are looking to take on new members of their own, including Iran and Saudi Arabia, two influential Middle Eastern rivals whose interest in shoring up cooperation on this new front could have a significant impact on global geopolitical balance.

The two bodies in question are the Shanghai Cooperation Organization (SCO) and BRICS. The former was established in 2001 as a six-member political, economic and military coalition including China, Russia and the Central Asian states of Kazakhstan, Kyrgyzstan and Tajikistan before recruiting South Asian nemeses India and Pakistan in 2017, while the latter is a grouping of emerging economic powers originally consisting of Brazil, Russia, India and China (BRIC) upon its inception 2006, and including South Africa in 2010.

Here is the money quote:

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Keep all of the Biden administration visits to the Port of Los Angeles, Port of Long Beach and Port of Oakland in mind (aka the hide the ships program) as you review this pending issue with port labor unions.   The labor union contracts expired at 5:00pm today.  Massive wage increases, the result of inflation, are demanded by the unions and White House is likely to get involved (if they are not already).

In a very weird economic scenario, the Biden administration actually benefits from a port stoppage as imports are a deduction to GDP and the U.S. economy is presumably on the “zero” growth bubble.   If the Bureau of Economic Analysis (BEA) calculates a negative GDP in the second quarter (not likely for political reasons), the Biden administration would officially be responsible for a recession.  [Any delay in import quantification helps shape the economic statistics; however, Q2 ended yesterday.]

Additionally, port infrastructure specialist, John D. Porcari, is part of the Biden administration economic team.  Porcari shaped the response to the import and supply chain crisis in 2021 that formed the hilarious ‘hide the ships’ strategy.   Porcari works to prop-up the insufferable Transportation Secretary Pete Buttigieg who has no idea what he’s doing.

CALIFORNIA – LOS ANGELES, July 1 (Reuters) – The contract covering more than 22,000 workers at 29 U.S. West Coast ports expires late on Friday, dialing up worries that labor disruption could roil the nation’s battered supply chains, stoke inflation and threaten a weakening economy.

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It is quite remarkable to consider that almost 100% of these global issues could immediately disappear if the far-left ideologues behind Joe Biden would just unleash the American energy sector.  Alas, the seemingly religious cult of climate ideology will not allow it…. therefore we get these bizarre outcomes.

The U.S. has economic sanctions against oil exports from Iran, Venezuela and now Russia.  The EU is economically collapsing under their inability to power their economies without energy products, a specific outcome of the latest NATO and EU sanctions against Russia.

The green energy programs in the EU cannot sustain the needs of the population.  As a result, German Chancellor Olaf Schultz and French President Emmanuel Macron are asking Joe Biden to lift sanctions against Iran and Venezuela and let Iranian and Venezuelan oil replace the missing Russian oil.  Again, none of this would be needed if the U.S. just developed more oil and gas domestically; but Biden won’t change policy.

(Reuters) – The international community should explore all options to alleviate a Russian squeeze of energy supplies that has spiked prices, including talks with producing nations like Iran and Venezuela, a French presidency official said on Monday.

Venezuela has been under U.S. oil sanctions since 2019, and could reroute crude if those restrictions were lifted.  Indirect talks between Iran and the United States to revive a nuclear deal that could see sanctions on Tehran lifted and its oil exports resume have been on hold since March, but are due to resume in Doha soon.

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This is an update to an ongoing issue we started seriously discussing last October when it became clear that if the trajectory was followed, “the absence of food will change things.”

The International Monetary Fund (IMF) is continuing to send warnings with increased urgency about the very real possibility of widespread food shortages in regions where food instability is a historic issue. [SEE HERE]

“The war in Ukraine has triggered a sharp increase in energy and food prices that could undermine food security in the region, raise poverty rates, worsen income inequality, and possibly lead to social unrest,” the Fund said in its annual Regional Outlook for Africa.”

This is a recent warning around a topic that has increasingly gained international attention.  Indeed, experts in multiple related agricultural fields have openly started to discuss and predict a looming crisis as the majority of the global food supply is contingent on only one or two growing cycles per year for harvest.  Those harvests are facing multiple headwinds that could likely result in lower yields.

Against this backdrop we can be certain that all nation’s government interests are taking this issue seriously.  Now, we are starting to see a race for supply control by various governments.

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Another item in the long list of ‘thanks Joe Biden‘ stuff.  Shortages in natural gas in windmill chasing Europe have driven up the prices significantly.  The conflict between NATO and their targeted villain in Russia is only making matters worse.

As the EU prices jump to $33/$34 per million British thermal units (BTU’s), the U.S. natural gas selling at $6 per million BTU’s is an absolute bargain.

Liquify that stuff and send it across the pond says any smart energy capitalist.

However, that comes with a problem for us.  Our supplies of natural gas are depleting quickly, our exports are now almost three times more than our production.

LONDON, April 8 (Reuters) – U.S. gas prices have climbed to their highest level in more than a decade as strong demand from overseas has emptied storage and left inventories well below average for the time of year despite a mild winter.

Front-month futures for gas delivered at Henry Hub in Louisiana have risen to $6.40 per million British thermal units, the highest in real terms since 2010. Wholesale prices in the United States are still far below those prevailing in Northeast Asia ($33 per million British thermal units) and Northwest Europe ($34).

[…] U.S. LNG exports rose 13% in the three months from November to January compared with the same period a year earlier, while gas production was up by less than 5%.

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Robert Lighthizer was the U.S. Trade Representative (USTR) under the Trump administration.  Lighthizer was exceptionally strong in developing and structuring the America First trade policy that included the effective use of tariffs to get fair trade outcomes.

In this video Ambassador Lighthizer discusses the current trade policy of the Biden administration with former National Economic Council Chair Larry Kudlow.  The discussion centers around U.S-China trade policy, the phase-1 trade deal that was interrupted by the pandemic, and the future of the existing trade tariffs against Beijing that Biden is reportedly going to remove.  WATCH:

As noted by Lighthizer, if Biden drops the Chinese tariffs, it will only make the trade imbalance worse and push the U.S. deeper into the cycle of lost jobs and economic contraction.  He’s correct.

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