Peak Oil News and Message Boards

Daniel_Plainview wrote:... 10. There's so much global uncertainty that consumers and investors are cautious and holding back. There's the pervasive background feeling that "the party's over."

... There is mounting evidence that a great deflation, paused since market crisis lows in 2009, will now swamp the global economy. Deflation threatens to turn world markets upside down. Gary Shilling is one of the most articulate expositors of the case for a deflationary outcome. He has presented five different deflations currently at work and plaguing the global economy in his book, "The Age of Deleveraging." Shilling’s fabulous five deflations are, 1) financial asset deflation, 2) tangible asset deflation, 3) commodity deflation, 4) wage deflation, and 5) currency deflation. Shilling makes a compelling case for all five categories of deflation, which threaten to torpedo the global economy into the up and coming bottom of the long wave winter season. Anyone looking for an inflationary resolution to this global mess should ponder the wisdom of Shilling’s reasoning and the many decades of experience and accurate forecasting.

... Bad monetary policy ultimately makes business cycles worse, but business cycles, large and small are natural events, ebbs and flows in inflation and the paradox of deflation. Central banks do not cause booms and busts, they just make them worse. ... Central banks are bad policy enablers, and are then charged with trying to clean up the mess left behind by the political tomfoolery. ... The problem with politicians and central bankers trying to fix the economy and financial markets is unfortunately the misguided foundation to their Keynesian approach. ... Based on Shilling and other articulate deflationists, Chairman Bernanke and his European counterparts are right to be terrified of deflation. The real question is whether they can stop deflation with Keynesian-Newtonian mechanical intervention, or will they simply make matters worse due to the economic calculation problem.

A great example of Keynesian-Newtonian mechanics gone awry is that artificially low rates are reducing if not eliminating the income and therefore spending of savers, reducing real demand and feeding deflation. Lower interest rates for business, while intended to encourage economic growth and job growth, are keeping the production lines of weaker producers running full tilt, feeding overproduction, and increasing global deflationary pressures. Yes, there is solid reason to believe that monetary policy that is seeking to stop deflation will just make it last longer, and may make the deflation worse than it otherwise would be, crushing the little guy, while perpetuating the inefficient world of crony capitalism run amuck.

Central banks are now considering doubling down on their efforts to try to stop deflation. ... The paradox of deflation comes into play for global investors and traders as they begin to recognize that in order to get the rate of returns they require for the risks they take, based on the prospects for corporate profits and cash flows, that financial markets must endure price deflation and fall substantially. This is required so that they can then rise at a clip where the potential reward justifies the risk taken by investors. Global equity and bond markets are now demonstrating the paradox of deflation at work. The great global equity long wave deflation discount is underway, so that investors can realize an acceptable rate of return in the future. ...

Daniel_Plainview wrote:... 10. There's so much global uncertainty that consumers and investors are cautious and holding back. There's the pervasive background feeling that "the party's over."

Some recovery: Household income fell more after the official end of the recession than it did during the recession itself, according to a new report.

Between December 2007 and June 2009, median annual household income slumped 3.2% to $53,518, according to a report from two former Census Bureau officials.

From that point until June this year, incomes fell to $49,909 — a 6.7% decline, according to Gordon Green and John Code of Sentier Research.

So while the economy technically has been growing, the good news has yet to reach average Americans, who have been saddled with three straight months of 9.1% unemployment as well as a volatile stock market and high prices.

The recovery has been difficult for many, according to the report. Jobless household heads saw their income plunge 18.4% to $33,487 annually, compared to a 5.1% slide to $68,454 a year for full-time workers.

Single parents are making 7.3% less — just $36,465, the report found. Married households are pulling in $73,324, a 4.5% drop.

wrote: ... June 2009... until June this year, incomes fell ... 6.7%

“The American Association of Railroads today reported gains in weekly rail traffic, with U.S. railroads originating 312,170 carloads for the week ending Oct. 1, 2011 (week 39), up 4.7% compared with the same week last year. Intermodal volume for the week totaled 250,864 trailers and containers, up 4.4% compared with the same week last year. This week’s U.S. carload volume is highest since Week 45 of 2008, and the intermodal volume is the highest since Week 39 of 2007.”

[...]

A broad-based pickup in bulk railcar shipments pushed freight carloads up 2.2 percent at major North American railroads in the week ending Oct. 1, setting a new 2011 high for commodity and equipment loadings.

The Association of American Railroads said Class I and regional carriers that report traffic to the trade group originated 408,383 carloads last week. That was 8,804 loads more than a week earlier, equal to about 100 more trains hauling materials, automobiles and other non-intermodal cargoes.

It was also 4.5 percent higher than the same week last year, and the strongest year-over-year weekly gain since April 2 after months in which carloads often rose just 1 percent or less from the 2010 pace. For all of September, the AAR said carloads grew just 1.1 percent from a year ago.

The new strength in rail activity comes despite concern that the economy could be stalling, and is in line with some rebound showing up in the factory sector.

Automobile traffic on major railroads across the continent finally ended the slump that set in after the earthquake in Japan roiled the supply chain last spring. Carriers picked up 25,440 carloads of motor vehicles and equipment last week, a 7.2 percent jump from the Sept. 24 week and 4.9 percent above the previous 2011 peak on April 2.

Coal and lumber shipments also reached new 2011 highs for major railroads, as utilities rebuild coal stockpiles after a blistering summer while construction of apartment buildings supports lumber demand.

North American railroads also originated the most chemical shipments and carloads of semi-finished metals in five months. Both point toward more industrial activity, since chemicals are used in a wide array of products and metals are used in everything from railcars to autos to appliances.

OilFinder2 wrote:Apparently vision-master has so little vision he can't conceive the fact that all intermodal train traffic ultimately must go on a truck to get to a store. He also missed this little fact in the AAR link, which I'll emphasize here from another article.
Bulk Rail Traffic Sets New 2011 Highs

A broad-based pickup in bulk railcar shipments pushed freight carloads up 2.2 percent at major North American railroads in the week ending Oct. 1, setting a new 2011 high for commodity and equipment loadings.

The Association of American Railroads said Class I and regional carriers that report traffic to the trade group originated 408,383 carloads last week. That was 8,804 loads more than a week earlier, equal to about 100 more trains hauling materials, automobiles and other non-intermodal cargoes.

It was also 4.5 percent higher than the same week last year, and the strongest year-over-year weekly gain since April 2 after months in which carloads often rose just 1 percent or less from the 2010 pace. For all of September, the AAR said carloads grew just 1.1 percent from a year ago.

The new strength in rail activity comes despite concern that the economy could be stalling, and is in line with some rebound showing up in the factory sector.

Automobile traffic on major railroads across the continent finally ended the slump that set in after the earthquake in Japan roiled the supply chain last spring. Carriers picked up 25,440 carloads of motor vehicles and equipment last week, a 7.2 percent jump from the Sept. 24 week and 4.9 percent above the previous 2011 peak on April 2.

Coal and lumber shipments also reached new 2011 highs for major railroads, as utilities rebuild coal stockpiles after a blistering summer while construction of apartment buildings supports lumber demand.

North American railroads also originated the most chemical shipments and carloads of semi-finished metals in five months. Both point toward more industrial activity, since chemicals are used in a wide array of products and metals are used in everything from railcars to autos to appliances.

careinke wrote:I wonder if the increase is from more coal shipments to China? Business interests are searching for good rail ports in Washington State for coal shipments to China.

The Ceridian-UCLA Pulse of Commerce Index (PCI), issued today by the UCLA Anderson School of Management and Ceridian Corporation fell 1.0 percent in September on a seasonally and workday adjusted basis, following a 1.4 percent decline in August and a 0.2 percent decline in July.

In the last three months, the PCI has declined at an annualized rate of 10 percent per year. This rate of decline has been exceeded only in the deep recession of 2008/09, and equaled only once outside of a recession in March 2000. In other words, since June, trucking activity has been receding at a pace that would be expected to show up in other economic measures soon. Two or three more months like this would confirm an official recession.

We are more optimistic than last month, but are still targeting GDP growth of 3% for the first quarter of 2011

Key parts of the U.S. supply chain have some troubling news: The traditional holiday peak in shipping volumes has disappeared. Both the Port of Los Angeles and the Port of Long Beach, which together account for more than 40% of imports into the U.S., say the rise in shipments that typically begins in July and lasts through early fall didn't happen this year. Instead, Dick Steinke, executive director of the Port of Long Beach, says shipping volumes have posted two consecutive months of declines, and he's anticipating a double-digit drop for September. The last time the port experienced no peak was during the height of the recession in 2009, he says. Before that, the phenomenon was unprecedented.

Rail companies and other shippers are reporting similar news, as retailers head into their most important season with lean inventories and a frugal outlook. When it comes to the holidays, shoppers typically find a way to splurge. But retailers' chastened outlook, and their apparent willingness to forgo sales to avoid getting stuck with unsold goods, offers a sobering read on the state of the U.S. consumer