Has A Massive Inflation Due To Commodity Prices Begun? Probably, Yes.

Implications: The American OEM automotive industry bankrupted its supply base in the last decade by refusing to accept price increases for commodities and specialty metals caused by huge increases in the demand for them from Asia. The OEM American automotive industry then replaced its bankrupt suppliers by outsourcing their work to Asia where low labor rates, for a time, masked the increases in raw material prices. Now with rising Asian labor rates, strategic and critical metals monopolized by Chinese located or owned sources, and the quality of Chinese durable goods rising American OEM heavy industry sees its days of being able to compete with global competition, even in the US domestic market, vanishing. In order to be able to get commodities no longer produced in the US American OEM heavy industry will have to pay the full price directly. Prices formerly subsidized by losses on the balance sheets of suppliers now have to marked to market. Inflation is on the way.

Analysis: The short sighted Wall Street pleasing quarterly bull***t called guidance is now impossible for American OEM heavy industry to carry off until it has found its true cost levels.

Surcharges are of course a true characteristic of an inflationary economy. A company that puts a surcharge on its products is telling us that they cannot predict their costs so that they cannot price their products correctly.

American OEM heavy industry has not prepared for the current commodity supercycle; they say it is because it was unpredictable. This is a coverup lie. All American OEM heavy industry was and is based on short term thinking. The Ford Motor company was so mismanaged that it didn't even hedge currency until just last year. The idea that such a foolish company would try to hedge against the risk of commodity price increase and against commodity shortages is risible.

But it is not just Ford it is the entire American OEM heavy industrial base that reasoned that commodities would always be available providing one was willing to pay the price. For them only the next quarter mattered. Besides you could always fob off price increases on your suppliers. Not only that but ultimately you could just raise prices and make the customers pay for your greed, short sightedness, and stupidity.

None of this ever took into account a truly global economy or a global economy where raw materials were in the hand of nations whose domestic growth was so strong that they could not afford to politically export those raw materials.

Inflation has begot surcharges; surcharges will give us noncompetitive pricing, and that will give our domestic market to foreign competition.

When a politician says he or she has a 'plan' it means that he or she doesn't have any idea what to do to maintain our standard of living.

This time though when the s**t hits the fan the fan will have been made overseas by a manufacturer who made long term plans to insure himself against the volatility and availability of the raw materials needed to make the fan. Only the s**t will be domestic.