May 16, 2023

Yesterday we talked about the "consumer", but if we look at the producers things are just as bad.

Zombies and even companies that are not over-indebted are not able to make ends meet.

These are not your tiny companies, but companies with some significant investment in production.

We have an economy that is not growing and a working class increasingly unable to make ends meet.

Credit card debt is on the rise again, replacing re-mortgaging as the place for spending dollars. This is mostly because younger people do not have houses to borrow against.

We are told by the business press that buying has not declined. This is true only in the extent that buying is determined by room to borrow. While that room is not gone yet, it is fast approaching.

Capital seems to understand this implicitly.

Wholesale sales decreased in March according to StatCan data. Machines, agricultural equipment, and supplies used to make end-products are all in decline. The industry is also seeing a decline in computers that run those industries. This does not bode well for productivity gains.

The only thing to grow were the farm and building supplies. It is likely that the unseasonably warm weather increased the outputs in these sectors in Canada.

Why do we care about wholesales sales? Any increase in inventories indicates that prices will come down for those goods. Over production is a hallmark for capitalism and a regulating force (through crisis usually).

As companies go insolvent and inventories grow, there will be price-cutting going on.

Too bad that price cutting will be of things we probably do not need.

The exception to the above is the auto sector in Canada.

$570 million new General Motors and POSCO Chemical cathode active materials facility in Bécancour, Quebec

In spite of the (nasty) jockeying for profit subsidies from Stelantis (and other car manufacturers), there is investment.

The Canadian government is supporting massive investments in its "critical mineral strategy". The entire thing is a profit subsidy regime.

The new policy of up-front profit guarantees to inspire capital investment is pretty much the only reason we have investment right now.

Canada is slowly moving from mining oil to mining oil's replacement. Unfortunately, it is almost all a shift from getting some money back to simply giving away the mining rights with few strings attached. Those few strings are also not revenue for the state, but "ESG criteria standards".

• A report from StatCan shows the massive efforts needed to support homelessness in Canada.

As with other front line social support jobs, women are the main provider, outnumbering men 3-1. Indigenous and racialized workers make up a disproportionate number of support workers as well.

The numbers speak to what we all know, homelessness is growing in Canada. The number of workers it is taking to folks displaced from housing is an indication of the entrenchment of the issue.

Housing should be a right. It is extremely inefficient and a failure of society to have to apply so many working hours to support the lack of housing. Of course, it is a product of markets being applied to a fundamental need.