The 2022-23 Economic Crisis Megathread

[The Larch]

Hey Sheilbh, here you have a representative of the Spanish farming industry blaming Brexit for your veggie shortages, in case it helps you change your mind. 

Alfonso Gálvez, who serves as general secretary of the Murcia branch of Asaja, Spain's biggest farming association, said he was puzzled by the media talk of weather-induced shortages.

"I've seen these articles but I don't understand why they're talking about shortages here," he said. "Things are normal so far this season so I don't know if it's more a problem of UK logistics since the Brexit regulations came into effect. There's enough produce to supply the market and the vegetable season is happening pretty normally."

While he acknowledged that rising costs had seen a drop in production for some growers, and that frosts had affected some artichoke and lettuce crops, Gálvez said those issues were not serious or widespread enough to have significantly reduced market supplies.

The current UK shortages, he suggested, may have more to do with bureaucracy and logistics than the weather.

"The sector adapted to the new [post-Brexit] export protocols set by the UK in coordination with the different ministries that are responsible," he said. "But there have been logistics and transport problems when it comes to export, such as a shortage of lorry drivers to service the UK market, and the problems we've seen with the queues to get into the country through Eurotunnel."

That, Gálvez added, may have led some export companies or co-operatives to focus more on the continental market than the UK market.

"On top of that, you've got the costs of all this bureaucracy and all these waits, which mean that perhaps the UK market isn't so attractive," he said. "But in any case, there are enough raw materials and produce to keep supplying the market."

A spokesperson for the Spanish Federation of Exporting Fruit, Vegetable and Live Plant Producers (Fepex), said that while production had dropped over recent weeks because of the weather, the situation had improved in recent days and vegetable production was "back to its normal rhythm". She added: "The effect of that supply normalisation will be seen over the coming weeks."

[Josquius]

There's been a fair bit of subsequent reporting pointing it out too.
One big stand out fact for instance- Morocco. We didn't used to be so reliant on Morocco for imports. This is a Brexit innovation.

[Tamas]

Hey Sheilbh, here you have a representative of the Spanish farming industry blaming Brexit for your veggie shortages, in case it helps you change your mind. 

Alfonso Gálvez, who serves as general secretary of the Murcia branch of Asaja, Spain's biggest farming association, said he was puzzled by the media talk of weather-induced shortages.

"I've seen these articles but I don't understand why they're talking about shortages here," he said. "Things are normal so far this season so I don't know if it's more a problem of UK logistics since the Brexit regulations came into effect. There's enough produce to supply the market and the vegetable season is happening pretty normally."

While he acknowledged that rising costs had seen a drop in production for some growers, and that frosts had affected some artichoke and lettuce crops, Gálvez said those issues were not serious or widespread enough to have significantly reduced market supplies.

The current UK shortages, he suggested, may have more to do with bureaucracy and logistics than the weather.

"The sector adapted to the new [post-Brexit] export protocols set by the UK in coordination with the different ministries that are responsible," he said. "But there have been logistics and transport problems when it comes to export, such as a shortage of lorry drivers to service the UK market, and the problems we've seen with the queues to get into the country through Eurotunnel."

That, Gálvez added, may have led some export companies or co-operatives to focus more on the continental market than the UK market.

"On top of that, you've got the costs of all this bureaucracy and all these waits, which mean that perhaps the UK market isn't so attractive," he said. "But in any case, there are enough raw materials and produce to keep supplying the market."

A spokesperson for the Spanish Federation of Exporting Fruit, Vegetable and Live Plant Producers (Fepex), said that while production had dropped over recent weeks because of the weather, the situation had improved in recent days and vegetable production was "back to its normal rhythm". She added: "The effect of that supply normalisation will be seen over the coming weeks."

Wrong thread anyhow.

[Sheilbh]

Hey Sheilbh, here you have a representative of the Spanish farming industry blaming Brexit for your veggie shortages, in case it helps you change your mind. 

No.

Here's Irish supermarkets (very similar business model to the UK - and one of the big three is Tesco) facing the same issue:
https://www.irishtimes.com/food/2023/02/21/supply-of-vegetables-to-ireland-disrupted-by-poor-weather-and-energy-costs/
https://www.dublinlive.ie/whats-on/food-drink-news/supervalu-tesco-lidl-among-irish-26296459

And some supermarkets introducing rationing:
https://www.irishexaminer.com/food/arid-41079614.html

Obviously the countries haven't both left the EU. So looking at common factors they both have similar supermarket sectors and consolidated their suppliers for those products in Spain, Morocco and the Netherlands. Perhaps as all the of the industry figures and journalists are saying that's the issue - and they're not all participating in a (now international) "conspiracy of silence" about Brexit?

Also that guy literally says "I don't know if it's more of a problem of UK logistics since the Brexit regulations came into effect" - but, understandably, explains why it could be from a distance. I feel like in journalism after someone's said "I don't know" the rest of what they say probably belongs more on the opinion pages

Edit:

There's been a fair bit of subsequent reporting pointing it out too.
One big stand out fact for instance- Morocco. We didn't used to be so reliant on Morocco for imports. This is a Brexit innovation.

But again I'm not sure that's true either. Our imports from Morocco are slightly lower now than they were before Brexit (but they bounce about a fair bit).

Our top three import partners for tomatoes are the Netherlands, Spain and Morocco in that order. The world's largest tomato exporters are Mexico, the Netherlands, Spain and Morocco in that order. I'm not really sure Brexit has much to do with it.

As I say this reminds me of the way Leavers talked about reporters not speaking about Brexit opportunities/upsides. It's wishcasting. There are lots of effects that it possibly has along the way in relation to farming in general or supply chains in general. But as economics reporters and industry figures are saying - it's mainly a story about energy and climate (which, despite Brexit, continue to be fairly important issues).

When economics reporters and industry say something's because of Brexit, I believe them; and I do the same when they say it's not really Brexit but  x, y or z issues.

[mongers]

The rail ticket I use most has gone up an inflation busting 10.1% today, instead of the 5.9% for general ticket prices that are controlled by government.

[HVC]

The rail ticket I use most has gone up an inflation busting 10.1% today, instead of the 5.9% for general ticket prices that are controlled by government.

Maybe you should consider driving

[Josquius]

The rail ticket I use most has gone up an inflation busting 10.1% today, instead of the 5.9% for general ticket prices that are controlled by government.

Maybe you should consider driving

That is what they're incentivising....

[Tamas]

I wonder why financial/bank stocks are collapsing today. Sure there was some news about a crypto "bank" going bust but that was a day ago and it's what, the 6th crypto ponzi scheme going down? Something is up.

[Admiral Yi]

All I've heard is 21,000 more jobless claims.

[Sheilbh]

It looks like SVB had a very bad day (possible fears about solvency too) and that has impacted other banks.

I think there is something interesting in generally very positive employment numbers, strong wage growth etc while also tech companies having huge issues as well as venture firms - and perhaps a slight issue that in the last decade we've mistaken VCs spanking billions on companies that don't make money for the economy?

[Tamas]

This thread attempts to explain it (Macro Alf is a great macro-focused guy on Twitter and Youtube BTW): https://twitter.com/MacroAlf/status/1633944102826909703

My understanding of it is: the combination of rate hikes, QT, and regulations pushing significant bank investments into bonds (corporate included) is starting to bite.

[The Minsky Moment]

I wonder why financial/bank stocks are collapsing today.

Many sellers, few buyers.

[Tamas]

I am seeing retweets showing that people are trying and somewhat succeeding in spreading the panic around the Silicon Valley Bank collapse. In particular they are at it with First Republic and seemingly managing to make people queue up at done branches yesterday.

One incompetent bank made for tech bros shouldn't scare people into triggering widespread panic.

Needless to say the UK government is moving far quicker on this than nurses and teachers' pay and allegedly already heavily considering stepping in to bail out UK tech companies affected.

[Sheilbh]

Surely you'd expect the response to a bank collapsing to be quicker than pay negotiations with unions?

SVB UK is a separate subsidiary with its own banking licences, balance sheets and regulatory approvals. Latest reports are the government's trying to engineer a takeover - FT are reporting there's a Middle Eastern buyer "with deep pockets" who's expressed interest. That would seem like a good solution.

One incompetent bank made for tech bros shouldn't scare people into triggering widespread panic.

And yet if any sector is capable of getting into a Twitter doom loop that accidentally starts a bank run it's surely tech, given that most of the last decade they've been getting in Twitter hype loops etc

It's not such a big thing here because there's no "Silicon Valley" ideology and it shouldn't be a surprise, but it is still a bit mad seeing people who are normally evangelical about individual innovation as the solution to all society's woes (plus crowing over industries that "can't survive"), suddenly pivot to demanding an immediate Federal bailout for this key sector that employs so many. You'd need a heart of stone not to laugh.

[Tamas]

Yeah an investor guy was panicking on the same Youtube channel I am going to link in a moment about how it is the Fed's fault. Right, because the Fed forced SVB to be reckless and don't insure against interest rates possibly coming up higher from zero.

These two guys run a great weekly macro-themed podcast, and in today's they managed to keep the finance-babble to a minimum in explaining what and why happened:
https://www.youtube.com/watch?v=45BXWBuQGUs