Baltic Dry

[Guest Jemmy Button]

Further confirmation that the World economy is grinding to a halt. Best get WW3 going. We can't be having unhappy shareholders can we?

[Eddie_George]

Now down 2.35% in one day ...down to 540.

Down nearly 31% this year and nearly nearly 51 % for the year to date.

http://www.bloomberg.com/quote/BDIY:IND

I remember that Robert Peston first reported a similar drop in 2008 as recalled below.

But we cannot properly judge that weakness until the new year holidays and factory shutdowns are over.

Chinese New Year innit? Have to wait and see if it bounces into March.

[zugzwang]

Chinese New Year innit? Have to wait and see if it bounces into March.

Don't hold your breath. US business inventories aren't exactly flying off the shelves.

[Errol]

China's COSCO Dis-Assembles 8 Ships Amid Glut As Baltic Dry Hits Another Record Low

http://www.zerohedge.com/news/2015-02-16/chinas-cosco-dis-assembles-8-ships-amid-glut-baltic-dry-hits-another-record-low

[zugzwang]

Red Kapitalism hits peak debt.

We now have something like four trillion worth of sovereign debt spread over Japanese issues, the major European countries that are trading at negative yields. Obviously, that is one, irrational and second, completely unsustainable. And yet, it’s another characteristic of what I call these disorderly markets. Investment is now coming home to roost. It will be driving a huge deflation of commodity and industrial prices worldwide. You can see that in iron ore, now barely holding $60 from a peak of $200. Obviously, it’s seen in the whole oil patch. Look at the Baltic Dry Index. That is a measure, one, of faltering demand for shipments and, two, massive overbuilding of bulk carrier capacity as a result of this central bank driven boom that we’ve had in the last 10 to 20 years. So that is going to be ripping through the financial system, the global economy, in ways that we’ve never before experienced. And so therefore, in ways that are hard to predict what all, you know, the ramifications and cascading effects will be. But clearly, it’s something that we haven’t seen in modern times or ever before – the degree of over investment, excess capacity, and everything from iron ore mines to dry vault carriers, aluminum plants, steel mills, and on down the line.

And then, finally, clearly, demand has run smack up against peak debt -- I think that’s the right word for it. We had a tremendous study come out in the last week or so from McKinsey, who do a pretty good job of trying to calculate, track and total up the amount of credit outstanding, public and private, in the world. We’re now at the $200 Trillion threshold. That’s up from only about $140 Trillion at the time of the crisis. So we’ve had a $60 Trillion expansion worldwide of debt just since 2008. During that same period, though, the GDP of the world saw a little more than $15 trillion from $55 or mid-$50s, roughly, to $70 Trillion. So we’ve generated, because of central bank money printing and all of this unprecedented monetary stimulus, we’ve generated something like $60 Trillion of new debt in the world and have barely gotten $15-17 Trillion of new GDP for all of that effort. And I think that is a measure of why the fundamental era is changing. That the boom is over and the crackup is under way when you see that kind of minimal yield from the vast amount of new debt that has been generated.

Now I’d only wrap this up by calling attention to the fact that within that global total of $200 Trillion, the numbers from China are even more startling. At the time of the crisis, let’s go back to 2000, China had $2 Trillion of credit outstanding. It’s now $28 Trillion. So we’ve had just massive 14X growth in 14 years. There’s nothing like that in recorded history, nor is there any plausible reason to believe that an economy, which is basically under a command-and-control system that is run from the top down to the party cadres, could possibly create $26 Trillion in new debt in that period of time without massive inefficiencies in waste and mistakes everywhere within the systems, especially since they have no markets. They have no feedback mechanisms. It all comes cascading down from the top and everybody lies to the next party above them. And I think the system is irrationally out of control.

http://www.peakprosperity.com/podcast/91810/david-stockman-global-economy-has-entered-crack-phase

[Si1]

Has Jim Rogers had much to say recently?

[200p]

I don't think so, if you are a regular follower. Latest:

https://www.youtube.com/watch?v=-5oFK9cOi3k

Not so bullish on gold, hope he would find buying opportunities. Looking at Russia, China, and Japan. More agriculture.

[Roman Roady]

Was 559, now 509.

[interestrateripoff]

Baltic Dry 'Bounce' Is Dead - Freight Index Lowest In 29 Years For Time Of Year

Since the mid-July peak, when Jim Cramer warned the market's "last shred of hope was the freight index holding up," The Baltic Dry Index has been in free fall (at a time with very positive technicals). In fact, today's drop to 809 is the lowest in over 3 months and the lowest for this time of year since 1986!!

[ccc]

Has a massive drop like this for the index ever been 'wrong' in terms of announcing a massive worldwide recession on the way ?

[Errol]

This time is different.

[sikejsudjek]

Clearly the solution to another recession is more debt, lower wages, more billionaires not paying tax, more deregulation, and yes - no one could have seen it coming.

[Meerkat]

Clearly the solution to another recession is more debt, lower wages, more billionaires not paying tax, more deregulation, and yes - no one could have seen it coming.

Indeed, matey, so people start taking responsibilities for their actions rather than taxpayers. Other than that, all the problems you have accounted for is a consequence of all the marxist interventions. If you think jumping out of a frying pan into fire is a solution, best of luck... Einstein did say smth about insanity didn't he .

[geezer466]

Clearly the solution to another recession is more debt, lower wages, more billionaires not paying tax, more deregulation, and yes - no one could have seen it coming.

Or maybe escalation in a Middle East armed conflict with some hefty super powers fighting proxy wars in the region could be another solution.

Nothing sorts out a recession better than a good war.....

[zugzwang]

Indeed, matey, so people start taking responsibilities for their actions rather than taxpayers. Other than that, all the problems you have accounted for is a consequence of all the marxist interventions. If you think jumping out of a frying pan into fire is a solution, best of luck... Einstein did say smth about insanity didn't he .

Marxist interventions?! When did Marx ever advocate the rolling over of bankers' gambling debts?

[ccc]

Just read an article from March where some bloke said the lowly nature of the index was more a result of an oversupply of new ships - rather than a lack of demand signalling the start of a big dip in world trade.

****** knows if he has a point or not.

[ccc]

http://www.economist.com/blogs/economist-explains/2015/03/economist-explains-7

[Gigantic Purple Slug]

Just read an article from March where some bloke said the lowly nature of the index was more a result of an oversupply of new ships - rather than a lack of demand signalling the start of a big dip in world trade.

****** knows if he has a point or not.

Tried to point this out here but the perma bears don't like their meme trampled on :

http://www.housepricecrash.co.uk/forum/index.php?/topic/206092-we-are-facing-another-global-financial-crisis-of-epic-proportions/?p=1102776332

The "story" of the BDI tanking and being a forward indicator of a massive worldwide economic slump is simple and makes superficial sense. Like most of these things though, if you dig deeper, it's more complicated than that. There are other additional reasons why it can vary, without it necessarily being an indication of boom/recession.

[Errol]

Just read an article from March where some bloke said the lowly nature of the index was more a result of an oversupply of new ships - rather than a lack of demand signalling the start of a big dip in world trade.

****** knows if he has a point or not.

There's been an oversupply of ships for a long time now. I've pointed it out on various occasions. This contributes to the issues but doesn't explain them entirely.

[TheCountOfNowhere]

Clearly the solution to another recession is more debt, lower wages, more billionaires not paying tax, more deregulation, and yes - no one could have seen it coming.

AreTheShiresCrashing ‏@ShiresCrashing 28s29 seconds ago

Fav HPC Post of the day: Clearly the solution to another recession is more debt, lower wages, more billionaires not paying tax

[billybong]

In the run up to the financial crisis, as the world economy boomed and rates hit new heights, shipowners ordered a huge tonnage of bulk carriers. These hit the waves during the post-crisis slump that was already weighing heavily on demand for ships, which pushed charter rates lower still. Just as scrapping and a slimming of the order book was eroding the oversupply of ships, an uptick in Chinese coal imports in 2013 prompted another rash of orders.

Interesting that there's no mention in the article about bankruptcies or employment in the industry due to some of them getting the ship ordering wrong and the low rates. It wouldn't necessarily alter the amount of ships as another owner might take them over but it would be a reflection of how well the industry is doing in combination with the BDI. For example the SSI Redcar steelworks' bankruptcy has been headlines for months and even years now but there's been little or nothing mentioned about any UK shipping companies affected by the downturn - maybe the UK's shipping sector is too little to count these days. Mind you the same could be said of the steel industry.

Edited October 14, 2015 by billybong

[Errol]

The UK doesn't have a shipping sector, does it?

[billybong]

Not much of one compared to the past

https://

www.ukchamberofshipping.com/membership/member-list/

https://

en.wikipedia.org/wiki/List_of_freight_ship_companies

Even so there's quite a lot of shipping companies listed there - enough to constitute a shipping sector. Presumably some cargo shipping as well. Maybe not enough to count.

Then there's

http://

www.lloydslist.com/ll/sector/finance/article467926.ece

London International Shipping Week kicks off with the opening of the London market and an open invitation for shipping to list in London

...

...

“I hope to see many more maritime companies listed on the London Stock Exchange, backed by a government creating one of the world’s best business environments,” added Mr Goodwill.

“We want our maritime sector to continue to grow and we will do whatever it takes to secure that growth. The UK is ready for the evolution of world trade over the next decade and beyond”.

So there's a small shipping sector there as well although they also refer to it as a maritime sector.

Edited October 14, 2015 by billybong

[interestrateripoff]

"Let's Just Hope Shipping Isn't Telling the Real Story of China"

“For dry bulk, China has gone completely belly up,” said Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo, talking about ships that haul everything from coal to iron ore to grain. “Present Chinese demand is insufficient to service dry-bulk production, which is driving down rates and subsequently asset values as they follow each other.”

[dances with sheeple]

"Let's Just Hope Shipping Isn't Telling the Real Story of China"

“For dry bulk, China has gone completely belly up,” said Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo, talking about ships that haul everything from coal to iron ore to grain. “Present Chinese demand is insufficient to service dry-bulk production, which is driving down rates and subsequently asset values as they follow each other.”

Excellent. Knew a guy years ago that said the only reason he got married was to have "a guaranteed lay every night". That is how we have been treating the planet, as a guaranteed lay, never complaining, always giving. Mama earth wants a rest, f*uck the financial rapists and their never ending quest for yield.