Vaughn sent me some really interesting links. Something called the Baltic Dry Index is showing stupendously staggering losses of 93%. But what is it?
It’s the index of cargo shipments of raw goods from around the world.
The Baltic Dry Index which is a direct indicator of the health of vital worldwide shipping and supply activity as well as the potential health of the global economy has recently slipped more than 93%. Its value has gone from over 11,000 to less than 800 with little except for a floor of zero to suggest the slide will stop in the near future. This means that worldwide, the demand for cargo ships and more importantly raw materials that go into producing the everyday items that consumers buy has come to a near standstill. This is an indicator of a massive worldwide slump and likely foreshadows more economic woes for not only the US, but also the entire globe.
To understand the Baltic Dry index one has to approach this economic telltale from multiple angles. Basically, the index is set where the supply of raw materials meets the demand for ships to be booked to carry those materials from country to country or continent to continent. The index is broken down into different segments that take into account the size of the ship and the type of the cargo that is being shipped.
On page two, you’ll read:
Another interesting point about the BDI is that is not currently a tradableand can therefore not be manipulated by speculators and short-sellers. This means that it is fairly well insulated against inaccuracy and can be used as an excellent barometer of actual market conditions.
Well worth reading — and pondering what this is going to mean in the months and years ahead. Many more links from Vaughn on this:
It’s not a terribly exciting subject, but the question needs to be asked:
Still thinking that things won’t get worse or that materials required to make things won’t become even more scarce or perhaps even the food you eat will still be there on the store shelves in the coming months?
Baltic Dry Index Falls 93% (December 1)
‘Are We Heading into a Global Recession or Possibly a Worldwide Depression?’
“The Baltic Dry Index which is a direct indicator of the health of vital worldwide shipping and supply activity as well as the potential health of the global economy has recently slipped more than 93%. Its value has gone from over 11,000 to less than 800 with little except for a floor of zero to suggest the slide will stop in the near future. This means that worldwide, the demand for cargo ships and more importantly raw materials that go into producing the everyday items that consumers buy has come to a near standstill. This is an indicator of a massive worldwide slump and likely foreshadows more economic woes for not only the US, but also the entire globe.”
Shipping crisis as global economy slows down
“As a result there has been a collapse in the Baltic Dry Index, which tracks the cost of chartering ships to shift raw materials such as iron ore, coal and grains. Since June the index has fallen by more than 90 per cent.”
I’ve often been accused of being ‘unbelievably doom’, and this blog (and the author) has been called ‘wacked out’ by quite a few, but there has always been solid data to back up my claims. I’m seeing what most are simply refusing to see. Another reader wrote me privately and said:
I will never understand why nobody sees all these dynamics. I am dead certain we are accurate in our thinking. It is stunning to see the level of denial at both the active and implied level.
I’ve reached the point where I simply do not care at all what other people think. I don’t even care if they buy food from me, I really don’t. I don’t care about much of anything else anymore except getting ready as fast as I can for collapse, which I’m absolutely certain is going to happen very soon, ALL the indicators are flashing red, over and over again.
2009 is shaping up to be horrific. The slack in the system will be all used up and we’ll be looking at deaths door all over the world. You cannot shut down the global system without this being the actual outcome.
My ‘prediction’ as it will be called, rightly or wrongly, is we have very few months left, and that’s all. I am not expecting a magical rescue from any avenue, no pie in the sky, no politician, nothing. We are on our own, we’ve always been on our own.
More from Vaughn, definitely related:
There are alarm bells ringing where the global economy is concerned….
“A SLUMP in credit availability is causing a fire-sale of tankers by owners of oil production ships.
One owner has already sold two tankers for drop-down prices of around $10m each and another two are up for sale.
Brokers said more idle tankers owned by floating production storage and offloading vessels operators will go up for auction in 2009 as contractors are squeezed by the lack of credit, rising costs and falling demand.”
“The eight vessels, all of the CV 65 class, will be laid-up this month, predominantly in Asia, and remain mothballed until May and June of next year.”
– snip –
“Other major liner operators, such as Neptune Orient Lines, have also started to lay up vessels, while brokers estimate that more than 100 containerships with a combined capacity of 270,000 teu are currently inactive.”
“CHINA International Marine Containers. the world’s largest marine container maker, has brought forward its year-end holiday and suspended the production of dry marine containers due to exceptionally slow demand.”
Cancellation rate at German yards nears 25% (subscription – part story)
Cosco Dalian agrees to axe bulker orders (subscription – part story)
“VALE, the world’s largest iron ore exporter, has axed 1,300 jobs as part of measures to reduce production in its core business by 10%.”
No one needs steel? Holy crap.
Stumbled on this and had to laugh….
This article is written by complete morons who obviously don’t do their homework. Forget that fact that shipping itself is seeing a severe downturn and that Genco has cancelled orders for ships….for a moment. These goofballs wrote in their latest article, dated today; “Last month, ‘Hetepheres’ tapped Genco as a way to get paid while you wait: “I see this one as being able to weather the current storm (so to speak) and do okay in the long run. In the meantime, DIVIDENDS.”
Really. Dividends. Hate to break it to these guys, but apart from Genco canceling orders for ships, they can kiss their dividends goodbye as Genco may be going private. News that was out TWO DAYS AHEAD of the above linked article. Motley Fools indeed. Idiots still need to play the markets I see and drag the lemmings over the edge with them. Ho hum.