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Baltic Dry Index Nosedive

Discussions about the economic and financial ramifications of hydrocarbon depletion.

Re: Baltic Dry Index Nosedive

Unread postby Outcast_Searcher » Sun 22 Jan 2012, 01:41:37


What does this have to do with anything except doomers trying to stay in denial mode? The chart looks like a random number generator short term, and has no meaningful correlation to the gradual economic recovery we've been seeing the past two years in the U.S. -- scary debt and euro issues -- bad as they are, are not stopping it.

But no, it's much better to find an obscure negative index and convince yourself you're right, no matter how many historically reliable indicators continue to grind slowly and painfully upward. (Of course, yelling at OF2 for daring to post the many positive reliable indicators is also helpful). :roll:
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Re: Baltic Dry Index Nosedive

Unread postby Cid_Yama » Sun 22 Jan 2012, 04:24:36

On the contrary. This is a positive development for the US worker. Domestic production will increase.

It's only negative news for the labor exploiters and, of course, the shipping industry.

The US will once again have a vibrant domestic economy where things are produced here and will stay here, so they will be forced to pay a living wage again to have consumers.

This whole globalization thing was a big scam that has run it's course. Labor Colonialism.

The Baltic Dry is not an obscure index.
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Re: Baltic Dry Index Nosedive

Unread postby SeaGypsy » Sun 22 Jan 2012, 04:34:36

Cid_Yama wrote:The cheap labor overseas is disappearing.

China province raises minimum wage by 23%
Sichuan province in southwest China has increased the minimum wage sharply to try and attract workers amid a rapidly rising cost of living.

Sichuan raised the minimum monthly wage by 23.4% starting on 1 January, state news agency Xinhua said on Thursday.

That is one of the biggest increases, with most other provinces raising wages in line with government advice of 13%.

Severe labour shortages in Chinese cities have prompted wage rises in many provinces this year and last.

link

A total of 21 regions across China adjusted their minimum wage standards in the first three quarters of the year, with an average overall increase of 21.7 percent year-on-year, the Ministry of Human Resources and Social Security revealed Tuesday.

By the end of September, 21 provincial-level regions, including Beijing, Tianjin and Shanxi had adjusted their minimum wages, Yin Chengji, the ministry's spokesperson, told a press conference Tuesday.

According to him, 25 provinces in total have issued guidelines for this year's wage increase, setting the baseline of wage growth to above 14 percent year-on-year.

link

Globalism wasn't onesided, favoring the employer. It is resulting in higher wages worldwide. Costs are now approaching parity with domestic production.

Those exploitable peasants are getting harder to find.

There have been massive labor protests across China since November.


Hardly an honest post without mentioning the base rate; heading "Cheap Labor Disappears'. 23% of what? From $4 a day to $5 a day (a day in Asia generally is 12 hours).
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Re: Baltic Dry Index Nosedive

Unread postby Cid_Yama » Sun 22 Jan 2012, 04:44:42

China has already seen the writing on the wall and is retooling for domestic production. Your wage slaves are gone.

Wages in China are going up 14% year-on-year and has for a couple years now.

China has been faced with nationwide labor protests so that not only are wages going up but working conditions are improving, hours worked are going down, and there is now a labor shortage.

Which makes it no longer profitable to ship long distances.

Nothing dishonest about it.

Zhang said during the 12th China Development Forum hosted by the Development Research Center of the State Council that China will take the expansion of domestic consumer demand as its strategic focus to boost domestic demand, continue to enable investments to play a key role in expanding domestic demand and fully develop domestic demand potential.

Zhang pointed out that China will further reform the income distribution system, improve the social security system, increase domestic consumers' purchasing power and promote consumption in the fields of culture, tourism and construction in addition to strengthening the construction of the market circulation system and improving the consumption environment. China aims to build one of the largest domestic markets in the world.

link

If the US wishes to be able to compete for world resources, it will also have to focus on creating a strong domestic market. Which means higher wages to boost consumption. No more corporate sucking the strength of the nation dry.

We may need to start jailing the corporate thieves that work against the interests of the nation, like China does. China puts them to death as traitors.
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Re: Baltic Dry Index Nosedive

Unread postby SeaGypsy » Sun 22 Jan 2012, 05:42:41

There is a hell of a divide still and wage parity is still nowhere near on the horizon. Anyone who thinks it is is in fantasy land. There are another billion in surrounding countries, many of whom have been travelling to the M/E for $100 a week jobs but are now going to China for a little less but better conditions and closer to home. Don't get me wrong, parity will happen, but even at this pace it is still at least a decade away, and we still haven't really felt the other side of peak il yet.
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Re: Baltic Dry Index Nosedive

Unread postby Cid_Yama » Sun 22 Jan 2012, 12:21:59

Billion? You're dreaming. There is Viet-Nam and Cambodia, and China is scooping up those workers. The region has become a Chinese economic sphere, and the opportunity for western exploitation is past. Bangladesh just faced a fundamentalist Islamic coup attempt. Africa is too unstable and lacks the infrastructure.

The invisible hand has swept the western world's pieces off of the board.

The US does not have a decade to create a strong domestic market if it wishes to remain a strong competitor for the world's resources. China already has a massive head start.

The US has needed 25% of the world's resources to maintain our position in the world even though we only make up 5% of the population. The US has never been closer to losing the dollar's status as the world's reserve currency, which has been our ace in the hole.

We lose our access to the lion's share of the world's resources and we will never recover.

Corporations have spent the last decade acting as if they do not need the US. They have been working to dismantle us, sell off our resources, and create another cheap labor pool.

Instead they are going to find themselves in an unfriendly world without a home, as the game changes back to competing domestic economies.
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Re: Baltic Dry Index Nosedive

Unread postby eXpat » Thu 02 Feb 2012, 14:55:00

Baltic Dry Index falls below 2008 levels, yes, that´s right below.
http://www.bloomberg.com/quote/BDIY:IND/chart
and
http://investmenttools.com/futures/bdi_baltic_dry_index.htm

Bloomberg reports that commodity shipping costs slumped to the lowest in a quarter century as a glut of new carriers overwhelmed demand at a time of slowing global economic growth.

The Baltic Dry Index (BDIY), a measure of costs across four vessel sizes, retreated 2.6% to 662 points today, according to the London-based Baltic Exchange, which publishes rates across more than 50 maritime routes. The gauge fell 61% this year and is now at its lowest since August 1986. Rates for Capesizes, the largest iron ore and coal carriers, dropped 84% since mid-December.

http://www.finfacts.ie/irishfinancenews/article_1023868.shtml
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Re: Baltic Dry Index Nosedive

Unread postby eXpat » Thu 09 Feb 2012, 14:31:25

http://investmenttools.com/futures/bdi_baltic_dry_index.htm
Why Is Global Shipping Slowing Down So Dramatically?
If the global economy is not heading for a recession, then why is global shipping slowing down so dramatically? Many economists believe that measures of global shipping such as the Baltic Dry Index are leading economic indicators. In other words, they change before the overall economic picture changes. For example, back in early 2008 the Baltic Dry Index began falling dramatically. There were those that warned that such a rapid decline in the Baltic Dry Index meant that a significant recession was coming, and it turned out that they were right. Well, the Baltic Dry Index is falling very rapidly once again. In fact, on February 3rd the Baltic Dry Index reached a low that had not been seen since August 1986. Some economists say that there are unique reasons for this (there are too many ships, etc.), but when you add this to all of the other indicators that Europe is heading into a recession, a very frightening picture emerges. We appear to be staring a global economic slowdown right in the face, and we all need to start getting prepared for that.
...
Wherever you look, global economic activity is slowing down. The UK economy and the German economy both actually shrank a bit in the fourth quarter of 2011. About half of all global trade involves Europe in one form or another. As Europe slows down, it is going to affect the entire planet.

Many thought that the German economy was so strong that it would not be significantly affected by the problems the rest of Europe is having, but that is turning out not to be the case.

In a new article by CBS News entitled "German economic slowdown worse than expected?", we are told that industrial production in Germany is declining even more than anticipated....

German industrial production fell 2.9 percent in December from the month before, according to official data released Tuesday, suggesting the country's economic slowdown could be worse than expected.

So don't believe all the recent hype about an "economic recovery". Europe is heading into a recession, Asia is slowing down and the U.S. will not be immune.

Despite what you hear from the mainstream media, the truth is that the U.S. economy is not improving and incredibly tough times are ahead.

http://world.hawaiinewsdaily.com/2012/02/why-is-global-shipping-slowing-down-so-dramatically-2/
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Re: Baltic Dry Index Nosedive

Unread postby Outcast_Searcher » Thu 09 Feb 2012, 18:22:12

eXpat wrote:http://investmenttools.com/futures/bdi_baltic_dry_index.htm
Why Is Global Shipping Slowing Down So Dramatically?

Why the obvious distortion in the article?

Yes, the BDI is nosediving. And Yes, LOTS of new shipping is coming online. This happens in cycles, with shipbuilding having LONG lead times. There are lots of articles and discussions on this in places like "Seeking Alpha" where making investment decisions based on DATA is a major goal.

The idea that there is NO evidence of economic improvement clearly flies in the face of reality, unless you want to, for example, call the employment improving in the U.S. some kind of conspiracy theory.

Data points are good, when provided in reasonable context. When distorted to further an agenda -- it's just like politics -- generally BAD.
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Re: Baltic Dry Index Nosedive

Unread postby Newfie » Thu 09 Feb 2012, 20:11:20

There may be a simpler explanation, that the folks who buy and build ships don't have a clue as to what they are doing with investments, just as the Wall Street brokers didn't know what they were doing.

Just a bunch of technically smart blue pill types trying to game the system.

Perhaps.
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Re: Baltic Dry Index Nosedive

Unread postby ralfy » Thu 09 Feb 2012, 22:23:42

Cid_Yama wrote:On the contrary. This is a positive development for the US worker. Domestic production will increase.

It's only negative news for the labor exploiters and, of course, the shipping industry.

The US will once again have a vibrant domestic economy where things are produced here and will stay here, so they will be forced to pay a living wage again to have consumers.

This whole globalization thing was a big scam that has run it's course. Labor Colonialism.

The Baltic Dry is not an obscure index.


The problem is the conflict between capitalists' need for profits and wages. That is, manufacturers want to keep wages low so that profits will be high, but for goods to be sold wages have to be high. That's where banks come in: they provide credit to laborers who can now buy goods that would not be able to afford to buy.

In many ways, this probably describes what happened to the U.S. right after WW2, with not only banks but even government providing support so that even a factory worker could afford to buy a house, a car, and other conveniences while allowing the children not only to go to school but even to college. After that, not surprisingly, the kids with college degrees no longer wanted to work in factories. That and other factors inevitably led to outsourcing.

The only way out, then, is to see the destruction of the U.S. middle class and major drops in income, which in turn would lead to the collapse of the economy (if much of it hinges on consumer spending), the dollar, the military, infrastructure, etc.

The result will naturally be a return to a domestic economy, but probably not a "vibrant" one.
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Re: Baltic Dry Index Nosedive

Unread postby ralfy » Thu 09 Feb 2012, 22:26:29

Cid_Yama wrote:China has already seen the writing on the wall and is retooling for domestic production. Your wage slaves are gone.

Wages in China are going up 14% year-on-year and has for a couple years now.

China has been faced with nationwide labor protests so that not only are wages going up but working conditions are improving, hours worked are going down, and there is now a labor shortage.

Which makes it no longer profitable to ship long distances.

Nothing dishonest about it.

Zhang said during the 12th China Development Forum hosted by the Development Research Center of the State Council that China will take the expansion of domestic consumer demand as its strategic focus to boost domestic demand, continue to enable investments to play a key role in expanding domestic demand and fully develop domestic demand potential.

Zhang pointed out that China will further reform the income distribution system, improve the social security system, increase domestic consumers' purchasing power and promote consumption in the fields of culture, tourism and construction in addition to strengthening the construction of the market circulation system and improving the consumption environment. China aims to build one of the largest domestic markets in the world.

link

If the US wishes to be able to compete for world resources, it will also have to focus on creating a strong domestic market. Which means higher wages to boost consumption. No more corporate sucking the strength of the nation dry.

We may need to start jailing the corporate thieves that work against the interests of the nation, like China does. China puts them to death as traitors.


Indeed. We are looking at combinations of ageing, increasing demand for various products, such as cars and appliances, more desire among the young to move to non-factory work where profits are higher, outsourcing of various components to other countries, etc.

In short, it's the same American Dream repeated, with the move from manufacturing to service for more income and profits, leading to consumer spending and casino capitalism.
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Re: Baltic Dry Index Nosedive

Unread postby ralfy » Thu 09 Feb 2012, 22:35:11

Outcast_Searcher wrote:
eXpat wrote:http://investmenttools.com/futures/bdi_baltic_dry_index.htm
Why Is Global Shipping Slowing Down So Dramatically?

Why the obvious distortion in the article?

Yes, the BDI is nosediving. And Yes, LOTS of new shipping is coming online. This happens in cycles, with shipbuilding having LONG lead times. There are lots of articles and discussions on this in places like "Seeking Alpha" where making investment decisions based on DATA is a major goal.

The idea that there is NO evidence of economic improvement clearly flies in the face of reality, unless you want to, for example, call the employment improving in the U.S. some kind of conspiracy theory.

Data points are good, when provided in reasonable context. When distorted to further an agenda -- it's just like politics -- generally BAD.


How long is the lead time for the BDI, i.e., when should we expect a rise in the index?

About the second point, why not look at what ZH, the NYT, and others reveal, e.g., not counting those no longer receiving benefits as unemployed, etc.?
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Re: Baltic Dry Index Nosedive

Unread postby ItalyRules » Sun 12 Feb 2012, 06:05:06

Like most on here, you believe employers hold all the cards. Labor will, in many cases has already, walked away, creating a black market, where labor, money, and barter are traded outside the bogus 'legitimate' economy.

Where the 'legal' economy no longer works to the benefit of the working class, it goes underground.
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Re: Baltic Dry Index Nosedive

Unread postby SeaGypsy » Sun 12 Feb 2012, 06:46:00

Cid_Yama wrote:Billion? You're dreaming. There is Viet-Nam and Cambodia, and China is scooping up those workers.

ok 620,000,000
http://en.wikipedia.org/wiki/Southeast_Asia
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Re: Baltic Dry Index Nosedive

Unread postby babystrangeloop » Sun 12 Feb 2012, 12:06:32

The Irrelevance Of The Baltic Freight Index
By Mark Perry / Daily Markets / February 1, 2012


However, in the past several years, as is the wont of such excellent indicators, its usefulness has waned to the point where we’ve not even paid attention to its plunge. Why? Because the index has fallen for the very simple reason that there were far, far, FAR too many ships brought on line when the BFI rose from its low at or near 2000 back in 2005-06 to its high near 11,500 in 2008.

Of course there were too many ships prior to 2008. That totally makes sense. They should have predicted that China would go into manufacturing contraction for long periods of time in 2011-2012 and not built so many ships since there would be so few goods left for them to transport.
China HSBC Final Manufacturing PMI At 48.8 In January
RTTNews / January 31, 2012


The headline index has now posted below the 50.0 no change mark, signaling contraction, for three months in succession, HSBC said.
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Re: Baltic Dry Index Nosedive

Unread postby Newfie » Tue 14 Feb 2012, 09:18:33

FWIW

OSG suspends dividend payments
Tanker giant Overseas Shipholding Group, Inc. (NYSE: OSG), says that its Board of Directors has suspended the payment of regular quarterly dividends. No dividend will be paid in the first quarter of 2012.

Commenting on the dividend suspension, Morten Arntzen, President and Chief Executive Officer, stated: "The downturn in our international flag markets has been deeper and has lasted longer than we anticipated, as evidenced by a fairly tepid winter market. At the same time, economic uncertainty in the world persists and the banking markets have become more challenging. Therefore, to preserve liquidity and maintain financial flexibility, the Board suspended the quarterly dividend until further notice. The Board will reassess the dividend as our markets improve."

Mr. Arntzen added, "Today's action should be seen as part of the longer term program at OSG to preserve liquidity, control costs and reduce general and administrative expenses throughout the company, an effort that has seen such expenses come down from $144 million in full year 2008 to under $90 million last year. More recent actions include reduction in Director compensation, elimination of cash bonuses for 2011 and salary increases in 2012 for the entire senior management team, and return of vessels under loss making charters-in. Management is committed to further reducing costs in 2012."
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Re: Baltic Dry Index Nosedive

Unread postby pstarr » Tue 14 Feb 2012, 13:15:33

The BDI suggests world manufacturing demand is down compared to reasonable expectations made several years ago. At that time (pre-2008 financial meltdown) the globalist/liberal orthodoxy held true, and increasing democracy, world trade, consumer demand, and better technology should have increased shipping and demand for new ships everywhere on earth. What changed? Hint; it wasn't the US mortgage crisis.
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Re: Baltic Dry Index Nosedive

Unread postby sjn » Tue 14 Feb 2012, 14:38:22

pstarr wrote:The BDI suggests world manufacturing demand is down compared to reasonable expectations made several years ago. At that time (pre-2008 financial meltdown) the globalist/liberal orthodoxy held true, and increasing democracy, world trade, consumer demand, and better technology should have increased shipping and demand for new ships everywhere on earth. What changed? Hint; it wasn't the US mortgage crisis.

Quite. I wish people weren't so unwilling(?) to look at the world through the lens of System Dynamics. To me, any other way of looking at the world is grossly insufficient, there aren't any completely independent uncoupled variables within the global ecosystem, and most certainly not individual aspects of the human global economy.
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Re: Baltic Dry Index Nosedive

Unread postby pstarr » Tue 14 Feb 2012, 15:23:40

Yes, and petroleum connects the dots.

Due to long lead times heavy manufacturing has traditionally acted as a buffer for heated expectations/recessive cycles. Evens out labor economy and holds jobs through recessions. US is more vulnerable to financial/credit shocks, natural disasters, and oil shocks because now the economy depends on retail short JIT business cycles and finances.
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