remember the little rice fiasco that never really was? Around here that was probably more of a test. In other countries, it led to near-riots.
BLSH, Italy really doesnt have an unemployment rate of 20% not even close. Other then that Italians households are amongst the least indebted of the entire industrialised world just to point out there are different factors at work to conclude how severe this downturn is striking down upon the average people.
A big "If" in there huh? If the company knows the supply staying constant... If you own a business selling something to Saks and they tell you they are not going to buy as much from you this year...do you keep making the same amount of stuff or do you cut back like they did?
Yeah...thats a short term strategy. Saks is doing this over the course of at least 1 year. That food company supplier, did not get its supplies cut because they were still purchasing. Saks is not. Saks suppliers will not continue making things over long periods of time if they are not going to sell it.
Cut in Supply does not increase demand. Take for example ammunition sales In a free market, a spike in demand shifts the demand curve right, finding a higher equilibrium price and quantity. Supply and prices are increased until everyone is satisfied. Ammo sales shot through the roof, supply has increased but Manufacturers are scared to overproduce for a temporary spike, so Instead price increases are making up where supply could have assisted in keeping prices lower. And so you have had ammo quadraple in price in a short span. Just like gas prices after an interruption, say in a hurricane. Hoarding happens when there is an external cap on pricing. Because Prices cannot rise to meet the "NORMAL" demand and supply has been cut you get rationing and hoarding. This is why price controls are failure. Also why government healthcare is a failure. Yes the demand curve may also shifts in these situations because it affects people expectations. But again Supply in it of itself does not affect demand thats why supply and demand are separate plot points. But it makes good press to prosecute price gouging when in reality price increases are necessary to allow for a more efficient distribution of supply. When prices are kept artificially low everyone in the supply chain loses out including consumers.