25 million people confined to their homes, manufacturing grinding to a halt,
with little moving in and out of the largest container ports in the world.
>> Any business that produces physical goods is being disrupted
by what's happening in China.
>> Nothing has emphasized the fragility of the global economy more
than the COVID era.
And while inflation seems to be the top subject on most of these economic shows or
an economic reporting, fact of the matter is there seems to be very little
attention to the fact that we rely heavily on manufacturing in China for
our goods here in the United States.
And guess what?
Huge portions of that country are currently on lockdown in response to
the omicron coronavirus variant.
So, I wanna give you the details on that, talk a little bit about
the ramifications and what we should be considering for the future.
So, as CNN business reported,
most alarming is the indefinite lockdown in shanghai, a city of 25 million and
one of China's premier manufacturing and export hubs.
The quarantines have led to food shortages,
inability to access medical care, and even reported pet killings.
They've also left the largest ports in the world understaffed.
So China has a zero COVID policy, they take coronavirus much more seriously than
pretty much any other country, certainly more seriously than the United States has.
But I would argue that they're on an extreme level that I would not be
an advocate for in any other country, in any other place in the world.
Especially because of the impact it's having on the people of China,
the lack of access to food as a result of this.
There's this mass effort by the government to send food to
individuals in the country as they're experiencing these lockdowns.
But there have been some reports showing what they're receiving and
it's not nearly enough for them to survive on really.
And so China's recent pandemic response is likely to cost at least
$46 billion in lost economic output per month or 3.1% of GDP.
And that's according to research from the Chinese University of Hong Kong.
But it's one thing to discuss the impact that it's having in China, which is dire,
which is terrible.
Remember, we're also connected,
we're all interconnected as a result of this global economy.
And so when we're discussing inflation, it's really important to consider that
the domestic policies in countries that we rely on heavily for
manufacturing will have a ripple effect on our own economy.
So the part of Shanghai for instance, which handled over 20% of
Chinese freight traffic in 2021, is essentially at a standstill.
Food supplies stuck in shipping containers without access to
refrigeration are rotting.
Incoming cargo is now stuck at shanghai marine terminals for
an average of eight days before it's transported elsewhere,
which is a 75% increase since the recent round of lockdowns began.
And more than 90% of trucks supporting import and
export deliveries by the way are currently out of action.
They're not operating as we speak.
And there are many major companies that we tend to think of as American, but
they do a lot of their manufacturing in China.
For instance, Sony and Apple supplier plants in and around shanghai or idle.
Quanta, the world's biggest contract notebook manufacturer and
a MacBook maker, has stopped production entirely.
The plant accounts for about 20% of Quanta's notebook production capacity,
and the company previously estimated it would ship 72 million units this year.
Tesla previously shuttered its Shanghai Giga factory,
which produced about 2000 electric cars per day.
Now, they are in the process of reopening, there's
been a significant amount of pressure to start opening up these factories and
these warehouses again, and get these workers back in action.
But what's really devastating to the workers in China is that they
have to work in conditions that are actually even worse than
the conditions that we've come to learn about in previous years.
Because the government is still trying to implement this zero COVID policy.
So what does it look like to be a worker in China that has to undergo lockdowns and
quarantines, but it's also pressured to go back to work?
Well, let's take a quick look at that.
>> Feeling pressure, the government asking businesses to restart operations.
Many creating job site bubbles, where workers sleep in offices for weeks.
Truck drivers subjected to daily testing, stuck at checkpoints for days.
China's lockdown could lead to an unprecedented tsunami of cargo entering
our country in the coming months.
It would look a lot like last fall, a major traffic jam at our nation's ports.
>> And I wanna focus a little bit on what is happening to Tesla workers
specifically.
Because as I mentioned, they're starting to open back up, they're starting to get
the workers to come back to work, but the conditions are pretty terrible.
So Tesla workers at the automaker's facility in shanghai will
be required to sleep on the factory floor as Tesla restarts production
after a three-week shutdown.
The location will be operating as a closed-loop system in order to
avoid further shutdowns amid China's zero-tolerance policy for
COVI-19 infections.
And so will they be provided with anything to make sleeping on
the factory floor a little more comfortable?
Well, Tesla will provide workers with a sleeping bag and mattress and
set aside a portion of the factory floor to be used as sleeping accommodations.
Workers will also be expected to work 12 hours a day with one day off
every six days, Bloomberg reported.
Previously, the employees would work eight-hour shifts with four days on and
two days off.
So not only are they being forced to sleep on the factory floor,
they're being forced to go back to work.
They're also being forced to overwork, I'm guessing to make up for
the fact that they've been doing these lockdowns and they've been quarantining.
This is not a system that I'm in any way in favor of, so
I feel terrible for the workers in China.
I mean we should have been already feeling terrible for the workers in China.
Because the whole reason why most of our manufacturing takes place in countries
like China, is so these corporations can take advantage of cheap labor.
And they can take advantage of these abusive environments for workers.
At the same time though, that also has a ripple effect on our own economy and
the global economy.
Because again, if we're relying on China to make these products and
they're shutting down as a result of COVID.
That means we're not going to have the supply that we typically would have of
the various products that are manufactured in these countries, countries like China.
And so what will the outcome of all of this be?
Well, American economic leaders believe decoupling is already underway.
Oaktree co-founder Howard Marks wrote in a memo in late March,
by the way that the pendulum has swung back toward
local sourcing and away from globalization.
Blackrock Chairman Larry Fink echoed the sentiments in
a letter to the company's shareholders.
The Russian invasion of Ukraine, he wrote,
has put an end to globalization we have experienced over the last three decades.
Now, I would venture to say that the statements coming from executives or
anyone working at places like Blackrock should be taken with a grain of salt.
Because they act as though globalization and
essentially outsourcing American jobs to various countries was just,
it just happened, it was like a natural thing that happened.
There were no economic forces behind those decisions,
when in reality all you have to do is take a step back and
see why these jobs were shipped to other countries in the first place.
Again, it was all about maximizing profit for
these corporations, it was all about ensuring that they were able
to manufacture these products as cheaply as possible.
And in order to do that you would need to rely on a workforce that is underpaid,
that is not unionized, that has really no say over their working conditions.
And what better place to do that than China, and
the workers have been dealing with this kind of treatment for quite some time.
Globalization isn't something that, they just out of nowhere decided to do and
there was no force behind it.
There were actual motivations behind it and
the motivation was to maximize profit, and to be quite frank that motivation
has led to the precarious situation that we're experiencing now with inflation.
Yes, the Russian invasion into Ukraine has a lot to do with this as well.
Especially when it comes to things like oil prices,
the amount of money we're paying at the pump.
When we talk about inflation, there are various different factors at play and
I think it's important to differentiate those factors.
When we talk about the housing market and the inflation we're seeing there,
that is very much the result of the Federal Reserve and
its quantitative policy, its quantitative easing policy.
Where it essentially provided liquidity to banks and more importantly, private
equity firms that decided to invest that money into residential real estate,
thus pricing ordinary people out of the market.
That's why we see inflation in the housing market.
When it comes to inflation in other areas, whether it be new and
used cars, electronics, things like that,
we really do need to consider the fragility of the global economy.
The fragility of having to rely on other countries to manufacture our goods and
more importantly,
understanding why those goods are being manufactured in other countries.
It's specifically done to maximize profits and what happens to these corporations.
Do they then turn around and say, listen, we've made poor decisions and so
we're gonna take a hit for this, we're gonna take a loss?
No, I mean, they get to raise their prices on the limited supply and
when it comes to basic necessities, Americans are either going to
shell out an insane amount of money to afford those necessities.
Or they're not gonna be able to afford them.
And that's the situation we're in, when we hear about inflation, yes,
domestic policy has a lot to do with it.
Emboldening and empowering these corporations to constantly go after profit
seeking over the best interests of the American
people is something that the government has done time and time again.
And they need to take responsibility for that for sure, but
to say that this is the end of globalization, I'm not buying it.
Because in order for this to be the end,
you need to understand what motivated globalization in the first place, profits.
And as long as we're living under this economic system that always prioritizes
profits over people, globalization ain't going nowhere.
They're always gonna look for the cheapest labor.
They're always gonna look to either do away with or
chip away labor rights here in the United States or find cheap labor elsewhere.
Anyway, I wanna talk about this in more detail in a little bit,
Nomi Prince will be joining me to talk about not just the global economy, but
what's been going on with the Federal Reserve here in the United States.
Before we get to that though, I did wanna read a few member comments since I'm not
gonna be able to do that during this next break.
Jim writes in our members section and says it's all about CEO's fiduciary
responsibility to their shareholders, and you're absolutely right about that.
When we talk about this financial system, when we talk about capitalism and
what the whole point of capitalism is, it's about maximizing profits.
And the system that we're living under literally states that
these companies have a legal responsibility to return as much
on investment to their shareholders, right?
And what is that gonna do?
It's gonna put workers at a disadvantage here in the United States.
It's gonna put workers at a disadvantage across the globe,
because again they're gonna be looking for cheap labor.
Kabuki Drakin says it's noon here on Maui, very jealous, I gotta say,
going to listen today while I work in my garden on this 420 tending to
the plants that helped me to tolerate this s show of a world, happy holidays TYT fam.
I am so jealous of you, that sounds lovely, I hope you're having a great time.
Terry says make Elon sleep on the factory floor since he likes not owning a home.
Jim says anybody who has ever been to Foxconn knows what a slave
labor camp looks like.
Exactly, I remember covering that story and also discussing the nets that they had
set up around that factory because people were literally jumping to their deaths,
cuz the working conditions were so terrible.
So this is the reality of the system that we're dealing with and
it's important to identify that especially since you're not gonna get that kind
of perspective in most of the corporate media or any of the corporate media.