Tuesday, July 24, 2012

Bubble asset deflation under way

Value plunge in ships without precedent: HSBC

From HSBC, the banksters to terrorists, rogue states and drug cartels, a survey showing how prices of shipping have plummeted. Harbinger of worse to come, with world-wide economic depression and trade wars not far around the corner, I suspect. "Daily earnings for very large crude carriers (VLCCs) plunged 99.53 per cent from a high of US$290,336 in December 2007 to US$1,363 as of July 20, Clarkson data show. Capesize vessels are earning US$1,862 a day, a 99 per cent slump from a 2008 high of US$218,955 daily." 2007 was the wrong time to get a mortgage on a boat

Posted by stuartking @ 11:10 PM (3337 views)
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20 thoughts on “Bubble asset deflation under way

  • Nothing to do with property? It has, shipping is one of the major lead economic indicators. When it collapses, the knock-out effect isn’t far away.

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  • Drawing an analogy with property: in shipping there has been a huge increase in the supple of vessels, not matched by demand. They’re the equivalent of flats in Nevada.

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  • Add in the fact fuel costs are much higher than the bubble years, despite the impemding recession. It’s devastating. Especially because it means a massive net decrease of imports of plastic tat we don’t need.

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  • mark wadsworth says:

    Hash Speed Barbiturates Crack.

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  • @1: “nothing to do with property…”

    For me don’t let that stop you posting articles on the wider global economy (especially commodities, excluding gold!) as we cannot see the UK housing market in isolation from the rest of the world. It can also give a lie to those who believe in either autarky or in just trading with the English-speaking world — as you have just proved!

    We are therefore tied to Europe and if that goes down our banks go down and with it the forced sale of UK assets…

    It’s very much related to housing. Good spot and keep up the good work.

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  • i notice several companies started a massive ship building scheme around 2007-2008

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  • general congreve says:

    @5 – For me don’t let that stop you posting articles on the wider global economy (especially commodities, excluding gold!) as we cannot see the UK housing market in isolation from the rest of the world. It can also give a lie to those who believe in either autarky or in just trading with the English-speaking world — as you have just proved!

    Naturally, we can treat gold in complete isolation to the rest of the interconnected global economic and financial system.

    we hold onto ideas that hurt us because we want something to blame.   We have irrational fantasies about how the world works and why we can’t have what we want.   We don’t like to be told our beliefs are wrong because it is a slippery slope.   We like to have what we know affirmed, not to learn anything new.   If we are to start examining our beliefs and finding errors, how many more will we find?   Normally, our ego’s cannot handle more than a minor correction, unless we believe someone else to be at fault.   Ideas are woven out of complex networks of assumptions and observations, altered to fit our current belief system.   These beliefs literally shape who we are and how we make decisions. To pull a block from the structure can make the whole structure unstable and that stresses people out, therefore, it is less painful in the short term to ignore symptoms, truths, indicators, inconsistencies and problems, paving them over with our current belief systems inky, black tar.   The plain and simple truth? We do dumb things because it’s easier.

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  • I thought it took about two years to build a cargo ship. Why is it only now that the over-ordering of ships in 2007-8 is affecting ship values?

    With regard to shipping being an economic indicator the shipping indices measure the cost of shipping various commodities as well as their quantity. The focus of the article is on the over-production of ships reducing the cost of shipping. But what matters as an economic indicator is quantity, and it’s logically possible for shipping costs to go down while quantity goes up.

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  • general congreve says:

    This story reminds me of a very wise man (who once worked in the city and retired young after making a mint), who once told me that I was a fool with my warnings of economic collapse and that global recovery was just around the corner.

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  • sibley's b'stard child says:

    That’s the great thing about irony GC, it writes its own jokes.

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  • general congreve says:

    @10 – Of course, the statement can be twisted anyway an individual feels suits them. But still, we can all take a little something away from it, if we think on it hard enough.

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  • general congreve says:

    @10 – Or were you recalling the situation at @9, were after a severe berating in June 2011 about how I should have invested in the FTSE 100 instead of gold in early 2009? The one where I was apparently a total loser because the FTSE was 1% ahead in percentage gains in the same time frame? The FTSE started trending down hard the following day. What a difference a day makes, aye?!

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  • GC have you thought about moving from gold to water?

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  • general congreve says:

    @12 – about a severe beating even. This thing needs an editor. Likes and dislikes would be good too.

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  • general congreve says:

    @13 – I did consider it, but I had trouble holding it in my hands.

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  • general congreve says:

    @13 – In all seriousness though, I’m not one for counterparty risk in this environment. And as water is the most essential thing for life, it’s one of the most likely investment to be nationalised by a government under pressure, whether at home or abroad.

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  • general congreve says:

    @17 – I have now. Did make me chuckle, very good lads, very good. Shame my own stash is about a millionth of the size in the picture!

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  • @7 my comments about excluding gold are serious. Even during the gold standard up to 1914 strenuous efforts were made not to move gold. Countries went to great lengths to set up a multilateral trading system, computing the net amount of gold to move after the mesh of all bilateral trading accounts had been computed (the idea being to reduce the need, cost and risk of moving gold).

    My point is that you need to understand how much *useful* commodities are moving around to gauge world trade. But the movement in gold per se may be of interest to gold bugs, but it doesn’t really tell a useful global economic story. That is my point.

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  • general congreve says:

    @19 – A complete straw man argument. What has the mobility of gold got to do with it’s use as a store of value and a hedge against systemic financial risk? Of course, they weren’t shifting gold for every transaction, they waited to the end of the trading period and netted everything off, just like the big banks net their liabilities off at the end of the day against each other in our fiat system.

    Meanwhile looking at trade in *useful* commodities, as you put it (gold has a use BTW, an essential one, sound money), is not necessarily a good measure of global trade, as the recent Chinese stock piling of raw materials for a rainy day, or the speculators buying up oil when it fell in price and storing it on container ships, proves.

    Finally, your point was this:

    For me don’t let that stop you posting articles on the wider global economy (especially commodities, excluding gold!) as we cannot see the UK housing market in isolation from the rest of the world.

    You weren’t referring to the flow of trade anyway, but the wide global economy in aggregate, so give it a rest.

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