What is going on?
Broken supply chains
Globally integrated supply chains have been the buzzword and the reality of our fast-growing economy of the last 20 – 30 years. Just in time inventories, Tier-1 and Tier-2 suppliers of the automotive industry are just a few of the slogans of our “global economy”.
Covid-19 put fast evidence of the fragility of this system.
It simply broke down. Certain industries could just not produce anymore. Who would have thought that a break-down of the supply chain would happen and so bring entire industries to a still stand? Up to very recently it was not conceivable that you could simply not buy new cars because automotive producers do not get the parts to assembling the parts. Just try to buy a new car in Switzerland today!
No chips
According to the latest Deloitte report semiconductor shortages will continue throughout 2022 and probably into 2023. The message is simple: increasing demand + increasing demand + increasing demand + … = shortages.
Think about our lifestyle.
“No chips” has become the best running statement (and excuse?) for suppliers not to deliver and for producers not to produce.
Good coal business
“We expect coal production to rise by 48 million short tons (MMst), or 9%, in 2021 and by an additional 38 MMst (6%) in 2022. The increase in production reflects more demand and higher prices for coal in the electric power sector because of higher natural gas prices this year compared with last year.” (US Energy Administration)
Coal shortages have led to an energy crisis in China. And of course, China has been dramatically increasing its coal imports to cope with the domestic electricity demand. Many Chinese industrial regions faced (and are still facing) forced electricity shortages.
Much closer to us - in Europe - coal fuelled electricity production is increasing.
Indeed and yes - politically speaking - you cannot afford a “cold winter”. Then you rapidly forget whatever CO2 emission targets you may have. The message is simple: “its only a temporary” increase if the CO2 emissions. So…not surprisingly…even with CO2 … prices rising and record high prices for coal, coal powered electricity has increased in Germany in 2021 (and most likely in many other countries).
I have not been able to find reliable historical shipping data. Nevertheless,
The shipping data on December 26th, 2021, at 17:39 CET do not require further commenting.
An interesting data point I could find on the shipping industry: “if the shipping industry were a country, it would be the 6th – highest emitter of CO2 (more than Germany)”. I’m not saying that the industry is not working on its big emission problem: I’m just taking note that we all rely on goods shipped around the globe. We all consume these goods whose individual parts have been manufactured in some place on our planet, then shipped for assembly and finally shipped back to enter distribution chains. It’s just our model.
It’s also fascinating to check Flightradar24: Live Flight Tracker - Real-Time Flight Tracker Map. It provides us live another piece of the puzzle of our daily lives. No judgement call is made at all.
I’m personally part of the game as well. Sometimes I buy CO2 certificates to “calm my conscience”.
Please check What are CO₂ certificates? (myclimate.org)
Strong GDP growth and bullish stock markets
Despite all these news the world economy grew at almost 6% in 2021 and the good economic growth is projected to continue in 2022:
Most economists project a solid GDP growth in the range of 4% – 5%.
And – let’s face it – despite the many fundamental issues that our planet is facing – stock markets performed extremely well in 2021. Most analysts are still forecasting overall bull markets in 2022. Yes – there are some doubts as to if inflation could bump-up. Here again, most analysts are optimistic and do not see a strong rebound of inflation.
So – as if nothing happened – financial markets will continue to perform very well.