The Houthi Thing

[W8taminute]

thats why they're unmanned. 
and after they were shot down what happened to the launch site?

Well...they don't shoot them down very often.  One in 2019.  One last June and one now. 
It's not like it's a new thing.  Which sort of brings up the question: what do the Houthis get
out of this kind of loose-loose warfare?  It's not even asymmetrical; they can't actually
gain any real benefit that I can see.

Disruption of shipping on a heavily traveled route.  Then it can be used as a pretext for even greater inflation than we're seeing now.

Why would the Houthis care about inflation?

They don't but other players do.  Like Windy mentioned in his post, if the powers that be in the market can find a reason to bump up prices they will.

[Uberhaus]

The cost of shipping petroleum and other goods around the Cape of Good Hope rather than through the Suez Canal will contribute to their costs.  The Houthis are letting Chinese and Russian ships through.  The Houthis claim that they are threatening shipping over Israel's war against Hamas and hope their actions will lessen support in the West for Israel. 

[MengJiao]

The cost of shipping petroleum and other goods around the Cape of Good Hope rather than through the Suez Canal will contribute to their costs.  The Houthis are letting Chinese and Russian ships through.  The Houthis claim that they are threatening shipping over Israel's war against Hamas and hope their actions will lessen support in the West for Israel. 

I don't think any major petroleum shipping routes have gone through the Suez Canal in a long time.  Plus the Houthis have only been hitting rather small bulk carriers.  This might raise maritime insurance rates, but I don't see how it can directly impact oil prices.

PS...Oh...actually it appears the negative impact on Chinese exports to Europe (not oil) is pretty high
because:
a) Chinese exports to Europe do use the Suez Canal
b) and usually not on Chinese ships

And:  https://www.voanews.com/a/chinese-navy-escorting-commercial-cargos-in-red-sea/7469317.html

Or
China's navy has started escorting Chinese cargo ships through the Red Sea, according to a shipping company and Chinese state media reports. This comes as many cargo shipping companies have decided to avoid the globally important trade passage because of attacks from Houthi rebels.

Since November, Iran-backed Houthis have launched scores of drone and missile attacks on ships passing through the Red Sea, acts that they say are in support of Palestinian militant group Hamas in the war with Israel.

A U.S.-led coalition has responded to the attacks with missile strikes on Houthi positions, backed by a collective force from Bahrain, Britain, Canada, France, Holland, Italy, Norway, the Seychelles, and Spain. But they have so far not stopped ships from being targeted.

And while most ship companies have re-routed to go around Africa, doubling costs and shipping times, Sea Legend Shipping, a Qingdao-based company registered in Singapore, is actively promoting its cargo business through the Red Sea.

The company says that since January, the Chinese navy has provided security escorts for its five cargo ships in the Red Sea, making it one of the few still operating in the region, according to Chinese media.

In an emailed response to a request for confirmation and comment on the scope of protection being provided, Yuan Mu, a spokesperson for China's Embassy in Washington, referred VOA to departments directly responsible.

"On the whole, China stands ready to work with all parties to safeguard the safety of international shipping lanes," the spokesperson said in the emailed response.

Vessels with Russian fuel reportedly avoid route

Although the Houthis have said that ships from some countries, including China and Russia, can safely pass through the Red Sea, a British oil tanker carrying Russian oil was hit by a Houthi missile and caught fire last week.

Shipping news site oilprice.com reports that even tankers carrying Russian fuel are now avoiding the Red Sea.

About 40% of trade between Europe and Asia goes through the Red Sea and Suez Canal, and about 12% of the globe's sea trade in oil.

[Uberhaus]

From the article you quote:

And while most ship companies have re-routed to go around Africa, doubling costs and shipping times, Sea Legend Shipping, a Qingdao-based company registered in Singapore, is actively promoting its cargo business through the Red Sea.

The company says that since January, the Chinese navy has provided security escorts for its five cargo ships in the Red Sea, making it one of the few still operating in the region, according to Chinese media.

That would be quite the competitive advantage for time and fuel savings. As to the Suez not being a major petroleum shipping route, I'd say that "12% of the globe's sea trade in oil" is major.


Also from VOA on Jan 19.:https://www.voanews.com/a/houthis-won-t-target-chinese-russian-ships-in-red-sea/7446893.html 

A senior official of the Iranian-backed Houthi terrorist group says Chinese and Russian vessels will have safe passage through the Red Sea.

Mohammed al-Bukhaiti, a member of the Houthi political leadership, said in an interview with the Russian outlet Izvestia that the shipping lanes around Yemen are safe to ships from China and Russia as long as vessels are not connected with Israel, Agence France-Presse reported Friday, citing Izvestia.

From Reuters, Feb. 1:  https://www.reuters.com/world/middle-east/russian-oil-flows-through-red-sea-still-face-lower-risks-2024-02-01/ 

Tankers carrying Russian oil have continued sailing through the Red Sea largely uninterrupted by Houthi attacks on shipping and face lower risks than competitors, according to shipping executives, analysts and flows data.
Russia has become more dependent on trade through the Suez Canal and the Red Sea since it invaded Ukraine, which led to Europe imposing sanctions on Russian imports and forced Moscow to export most of its crude to China and India. Before the war, Russia exported more to Europe.
The number of Russian ships passing through the Red Sea has registered a slight decline since December, according to oil analytics firm Vortexa, but traffic last week was still around 20% higher than on average in 2023.

Even after the Houthi's hit a Russian oil carrier,  "Four tankers carrying Russian Urals crude passed through the Bab-el-Mandab strait with another three heading south through the Red Sea since the attack on the Trafigura vessel on Jan. 26, Kpler data show."

CNN breaksdown the increase in costs:   https://www.cnn.com/2024/02/08/business/red-sea-crisis-global-trade-explained/index.html

$1 million more per ship
Adding another few thousand miles to shipping routes has increased fuel and insurance costs, as well as charter fees and wage bills.

Sand at Xeneta estimates that it costs carriers — companies like Maersk and Hapag-Lloyd — an extra $1 million per vessel to make a round trip around the southern tip of Africa, with the vast majority of that figure accounted for by higher fuel costs.

[GDS_Starfury]

thats why they're unmanned. 
and after they were shot down what happened to the launch site?

Well...they don't shoot them down very often.  One in 2019.  One last June and one now. 
It's not like it's a new thing.  Which sort of brings up the question: what do the Houthis get
out of this kind of loose-loose warfare?  It's not even asymmetrical; they can't actually
gain any real benefit that I can see.

Disruption of shipping on a heavily traveled route.  Then it can be used as a pretext for even greater inflation than we're seeing now.

Why would the Houthis care about inflation?

They don't but other players do.  Like Windy mentioned in his post, if the powers that be in the market can find a reason to bump up prices they will.

current high prices on goods are more about record corporate profits then supply chains.

[Windigo]

thats why they're unmanned. 
and after they were shot down what happened to the launch site?

Well...they don't shoot them down very often.  One in 2019.  One last June and one now. 
It's not like it's a new thing.  Which sort of brings up the question: what do the Houthis get
out of this kind of loose-loose warfare?  It's not even asymmetrical; they can't actually
gain any real benefit that I can see.

Disruption of shipping on a heavily traveled route.  Then it can be used as a pretext for even greater inflation than we're seeing now.

Why would the Houthis care about inflation?

They don't but other players do.  Like Windy mentioned in his post, if the powers that be in the market can find a reason to bump up prices they will.

current high prices on goods are more about record corporate profits then supply chains.

But its the pretext... nudge nudge, wink wink.

[MengJiao]

But its the pretext... nudge nudge, wink wink.

   Well okay.  But let's look at the actual events:
1) almost no hits by Houthi munitions that have actually caused any significant damage
2) some amount of definite hits on the Houthi according to the Houthi
3) a steady build up of assets that can hit the Houthi or neutralize their munitions
4) very good information control from the defenders of the Red Sea routes (we really know
very little about what is actually being used to observe and neutralize the Houthi
5) Even the Chinese would like the Houthi to stop shooting at ships

So...this is like...what?  A public-relations version of terrorism?  Though in fact historically
hitting transport is the best move if you have limited firepower and need publicity for your
movement and its aims (though in the Houthi case, other than showing the Houthi exist, it is very
hard to see what their actual aims might be)

[Uberhaus]

We shall see if the Houthis have sunk their first ship.  https://www.bbc.com/news/world-middle-east-68363692



From the article: 

On Monday, Houthi fighters claimed to have sunk the Rubymar. It would have been the most significant incident since attacks on ships began in November.
But the BBC has obtained an image of the ship from Wednesday - which shows it still above water.
The vessel's operator said it was being towed to Djibouti but could still sink.
...

The Houthis say their attacks are a show of support for the Palestinians in the war between Israel and Hamas in the Gaza Strip.
The attacks have prompted many shipping companies to stop using the critical waterway, which accounts for about 12% of global seaborne trade.

Even with a "minimum threat", it's up to the shipping companies to be willing to sail the waters and find willing crews.  As to the Houthis' motivations, they say what they say; but with most of their weapons being supplied by Iran, the Axis of Resistance wants to inflict economic harm on the West.  Even better if these are perceived as tiny cuts and that the blame lies elsewhere.

Corporations are going to corporate, but the attempt at blockade will contribute to economic delays and pain, most especially in less affluent households which are already struggling with the costs of goods.

[Jarhead0331]

thats why they're unmanned. 
and after they were shot down what happened to the launch site?

Well...they don't shoot them down very often.  One in 2019.  One last June and one now. 
It's not like it's a new thing.  Which sort of brings up the question: what do the Houthis get
out of this kind of loose-loose warfare?  It's not even asymmetrical; they can't actually
gain any real benefit that I can see.

Disruption of shipping on a heavily traveled route.  Then it can be used as a pretext for even greater inflation than we're seeing now.

Why would the Houthis care about inflation?

They don't but other players do.  Like Windy mentioned in his post, if the powers that be in the market can find a reason to bump up prices they will.

current high prices on goods are more about record corporate profits then supply chains.

This is utter nonsense. The cost of goods is being driven up by inflation, which has nothing to do with "record corporate profits" and more to do with instability, insecurity, supply not meeting demand, shortages of raw materials, poor policy and leadership, COVID-19, war in Ukraine, etc. But that is not to suggest that both phenomenons are not happening concurrently. They aren't mutually exclusive, but one has little to nothing to do with the other.

[W8taminute]

1) almost no hits by Houthi munitions that have actually caused any significant damage

 W8taminute - Am I the only one that finds this odd?  Are they really that inept or are they being careful not to actually sink a ship?

2) some amount of definite hits on the Houthi according to the Houthi

W8taminute - I am wondering why their offensive capability hasn't been neutralized.  Certainly with our high tech military might it should be no problem to wipe out their threat in a matter of days?

3) a steady build up of assets that can hit the Houthi or neutralize their munitions


4) very good information control from the defenders of the Red Sea routes (we really know
very little about what is actually being used to observe and neutralize the Houthi

W8taminute - Agreed!

5) Even the Chinese would like the Houthi to stop shooting at ships

W8taminute - Notice no one dares shoots their ships in the area. And they're (the Chinese) acting like their the worlds gift to diplomacy with their trying to resolve the issue both in Gaza and the Red Sea. I don't like that and yes I'm paranoid when it comes to China.

[MengJiao]

W8taminute - Notice no one dares shoots their ships in the area. And they're (the Chinese) acting like their the worlds gift to diplomacy with their trying to resolve the issue both in Gaza and the Red Sea. I don't like that and yes I'm paranoid when it comes to China.

[/quote]

The Chinese don't have many ships in the area and they have good relations with the Israelis and everyone else in the region.  Why should anyone want to target the Chinese?

[GDS_Starfury]

This is utter nonsense. The cost of goods is being driven up by inflation, which has nothing to do with "record corporate profits" and more to do with instability, insecurity, supply not meeting demand, shortages of raw materials, poor policy and leadership, COVID-19, war in Ukraine, etc. But that is not to suggest that both phenomenons are not happening concurrently. They aren't mutually exclusive, but one has little to nothing to do with the other.

how far can I run with this?

[Windigo]

The cost of goods is being driven up by inflation, which has nothing to do with "record corporate profits"

Your thinking is a bit scrambled here JH.

Inflation is not a driver, but a measurement of the rise in cost of goods.

But that is not to suggest that both phenomenons are not happening concurrently. They aren't mutually exclusive, but one has little to nothing to do with the other.

Numerous recent studies (didn't pull some bullshit 1980's study out) have shown that current inflation is been driven as you said by multi phenomena, but the single largest driver of inflation is increased profits (https://www.forbes.com/sites/georgecalhoun/2022/09/30/what-is-really-driving-inflation-today/?sh=960864b80f91)

When people talk about greedflation I think they assume it represents most if not all of the current inflation rate, but at inflations peak (+9%) increased profits accounted for a little over 40% of the total. (IIRC)

It is the single largest consistent factor.

[Windigo]

This is utter nonsense. The cost of goods is being driven up by inflation, which has nothing to do with "record corporate profits" and more to do with instability, insecurity, supply not meeting demand, shortages of raw materials, poor policy and leadership, COVID-19, war in Ukraine, etc. But that is not to suggest that both phenomenons are not happening concurrently. They aren't mutually exclusive, but one has little to nothing to do with the other.

how far can I run with this?

Don't Do It.

Don't Do It.

Don't Do It.

[Jarhead0331]

Clearly, opinions on what is the most likely cause of inflation is going to be ideologically driven. For every article one posts suggesting the primary driver is corporate greed, there is one suggesting it is not.

See New Nonsense on Profit-Driven Inflation

I accept that reasonable minds can differ and the likely driver is a combination of all factors, of which high profit can be one.

I think we best leave it at that.