Monday, February 1, 2016

The World Economy Is Slowing; Repeat of 2008 Coming?

 Last year, I came across this story that predicted the empty grocery shelves that have plagued Greece since its partial economic collapse in 2009 would come to America's shores.   The collapse was caused by a crushing debt burden the government could not sustain.  In 2015, the Greek government failed to make a payment back to the International Monetary Fund despite extreme (by European standards) austerity measures like raising the retirement age and hiking already steep taxes.

Store shelves are empty much of the time.  Pharmacies and hospitals are running out of needed drugs and supplies.  The standard of living has plunged, as has the average life expectancy.

Now, as the stock markets are in turmoil and economic activity slows down significantly, anecdotal evidence is mounting that we are heading toward another global financial crisis.

A recent article by Jeremiah Johnson illustrated the point:  Store shelves in big box retailers are showing signs that they are not being stocked as frequently.  Johnson reports that commenters on social media sites are reporting this phenomenon in different areas of the country.

[Regarding the] alerts about the current state of the RR industry. This is in line with what I’ve been noticing as I visited our local/regional grocery store, Walmart, and Target this week in WI. I worked in big box retail for 20 years specializing in Inventory Management. These stores are all using computerized inventory management systems that monitor and automatically replenish inventory when levels/shelf stock get low. This prevents “out of stocks” and lost sales. These companies rely on the ability to replenish inventory quickly from regional warehouses. As I shopped this week and looked at inventory levels I was shocked. There were numerous (above and beyond acceptable levels) out of stocks across category lines at all three retailers. And even where inventory was on the shelf, the overall levels were noticeably reduced. Based on my experience, working for two of these three organizations in store management, they have drastically/intentionally reduced their inventory levels. This is either due to financial stresses/poor sales effecting their ability to acquire new inventory, or it could be the result of what was mentioned earlier regarding the transporting of goods to these regional warehouses. Either way this doesn’t bode well for the what’s to come.  Stock up now while you can!” 

Add to this the fact that a number of companies, including Wal-Mart, have shuttered retail locations in an attempt to stay solvent, and the realization that a tipping point is approaching becomes clear.  This is further supported by reports that internationally, manufacturing is slowing as demand for products drops.

What Can You Do?

If you have the resources, I would suggest stocking up on food, over the counter medications, and household essentials.   If you can do so safely, store extra gasoline.  Gas is cheap now, but if an economic crisis causes the supply chain to collapse or become restricted, you may not be able to obtain a supply.  If you are a prepper, you undoubtedly have a stockpile already, but you may want to accelerate your purchases.

Here's a protip for men:  feminine hygiene products for your spouse or significant other are necessities.  If you haven't done so, investigate what products are in the cupboard and add them to the shopping list.  Likewise, toilet paper is not a luxury.

Plan to have paper products in case the power or water utilities become unreliable so you can live without washing dishes a while.

Devise a plan to protect your family.  Desperate times will cause even law-abiding citizens to resort to theft and other behavior that could threaten those you love.  Ensure that your family knows what to do if someone breaks into your home.   Practice the plan.

Good luck, and keep preparing.

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