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Shipping News - and a bit more
I spoke with a fellow who owns vessels and happens to be be Greek. Some of the business and social/economic threads of our conversation:
He discussed (with some obvious anger) a poor investment he had made two years ago. He purchased a ship for $6Mn. This was a 28 year old vessel (that still had some life) that fell into the (aptly named) category of "Handy Sized" vessels. In the good times (2000-2005), this ship might have gotten charters that earned $15,000 a day versus fixed costs of $8-10K. At that rate the cost of the vessel would be returned in about four years (includes down time and deadheading). Not a bad deal.
It didn't work out. Cargoes for this vessel now pay a rate that no longer cover fixed costs. Layup times between cargoes has increased. Insurance companies charge more to cover shipments in older vessels; so this ship is shunned for newer ones. The final straw is that the ship needed repairs. A layup of three months, and another $1mn down a rat hole was necessary.
He cut his loss. The ship went from Singapore to India on its final voyage. There, it was run aground and chipped into pieces for scrap steel. In a month or two the ship will be converted to re-bar.
If you put this ship on a scale (empty) it would weigh 6,500 tonnes. All of this (nearly) is steel. The going rate for scrap steel is $425 a tonne; so he got $2.8Mn back on his original investment.
I bring this up as an example of how excess capacity is being worked off in commercial shipping. The story he told is being repeated daily. His loss on this ship is part of the healing process.
The good news is that freight rates are up a bit, and longer-term contracts are being written for vessels that are under twelve years old.
The bad news is that he doesn't expect the recent improvement to last. There are more and more ships coming to market, and there are not enough cargoes to fill them all up. He reckons another down tick by June of next year.
He discussed China's role in the shipping industry. It is the stated goal of the Chinese government to own 70% of the vessels that carry Chinese imports/exports. Today, that number is closer to 20%. This implies a huge transition in the ownership structure of the global shipping industry. It means that China, at one point, will have tremendous pricing power over global shipping costs.
China has purchased some vessels in the secondary market to achieve its goals, but the country's strategy is to build its own vessels. This will keep the steel mills and shipyards humming. It supports dozens of other industries that provide components. Financing is available from the banks. Insurance is provided by Chinese companies that favors the Chinese vessels. Chinese crews (non-union) are much cheaper than crews from Greece.
He said that this was playing out in slow motion. It will be another decade before the Chinese economic hegemony in shipping is really felt. He also said that the trend toward Chinese dominance was irreversible, and that there would be casualties. Think of a steady stream of rusty old ships headed for the scrap-yards of India. Each one means China gets stronger.
Note: The USA is not a factor in global shipping. US flagged dry cargo ships exist because they primarily carry A.I.D. cargoes of grain. Without this subsidy, the country would have next to no fleet at all.
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We talked about Greece. The country is grinding to a halt. He described the situation in rural areas that have been very hard hit. The social infrastructure is falling apart. The young people are leaving the islands looking for work. The old people are left. There is no money to pay bills.
Greeks with ties to these communities, who now live outside of the country, are aware of the hardships. They have been providing a steady stream of assistance. A family from London will pay the heating bill for the old age home. Another, from NY, will see that the soup kitchens have food to prepare and serve. Someone in Australia will pay to keep the clinic going. Without this uncoordinated support system, people would be cold, sick and hungry.
He reminded me that the Greek people are very proud. They will accept assistance, but they will not beg. Relying on ex-Greek nationals for essentials is not sustainable. But there is no alternative in sight. Not a pretty picture at all.
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Diogenes, after getting some sleep, I realized that you were referring to my article as the example of "valuable knowledge industry".
I refer you to my reply to ebear. Either your IQ is insufficient, or you are ignoring fundamental economic laws that can not be violated.
It is quite illustrative to see the down votes. It means we have a preponderance of economics illiterates here at ZH.
The Chinese won't limit themselves to manual labour once they have gained complete control of manufacturing and shipping. They've already been designing and manufacturing their own CPU designs, and the West needs Chinese manufacturing infrastructure far more than they need our "intellectual property". Our skills base has atrophied, and we will NEVER get high-grade manufacturing (or even manufacturing engineering) back again. Many of the people in the West with these skills are dead or dying.
Sooner or later, they will start shipping products only with their own IP in (and charging us handsomely for the privilege), because we simply won't have a choice. At that point, anyone with shares in IP will find their holdings worthless overnight. Intellectual property is worth nothing if we can't leverage it, because we have stupidly given away all our leverage to another country - and they WILL make us pay for it.
I might remind you that after the fall of the Roman empire, even skills like pottery were lost for centuries: A 4th-Century king had pottery on his table that was crude by the standards of that available to a peasant in Rome when the empire was at its zenith. If that happened to pottery, what do you think your chances of assembling a modern computer are, from scratch?
Oliver Jones, I refer you again to my linked article. The knowledge component value-added for hardware (or any mass produced item) is relatively small, as compared to the software that does a zillion tasks with that hardware.
Chinese test high because their education is memorization and learning how to test high. It is not indicative of their ability to compete in the knowledge age (where nearly all of the value-added is created). It is impossible to have a knowledge industry, when you censor the internet, have a culture+politics of bowing the head to authority, have a culture+politics that discourages freedom of expression, speech, and thought. And a culture+politics that enslaves the consumer in a Yuan peg so as to retard the dispersion of capital in the economy, thus retarding the individual grassroots entrepreneurialism.
Read it from someone with first-hand experience:
http://www.prospectmagazine.co.uk/politics/mark-kitto-youll-never-be-chinese-leaving-china/
The proof that knowledge is where the value-added resides, is that fact that most of China's companies are operating at low or negative profit margins, notwithstanding that Chanos and even the incoming Premier have admitted that all reported sales and profit data in China is fudged. I read recently that China has finally allowed US regulators to audit the books of companies listed on the USA stock exchanges. Eventually the tide is going to go out, and we will see the truth about China. Reading http://mpettis.com can get you up to speed on the economic reality in the China.
The fact that many westerners don't get a good technical education is their individual problem, and will drive their demise in the welfare state morass. Simultaneously the knowledge producers will excel in the USA and other economies that provide for the freedom for them to do so. It is individual choice.
As for the strategic value of foundrys and other manufacturing synergy, as the race to outsource to China proved, this can be moved very quickly as needed. But China is such an economic basket case, that they will need the income from these for forseeable future, and so we need not worry about needing to find some other slaves for us.
I thought you just said the Chinese are making everything, including designing and manufacturing CPUs? Why would your example of Roman pottery have any relevance? If we don't make it and the Chinese do, it didn't go away or stop being made. Are you trying to say we will not have access to Chinese iCrap in the future? I don't get it.
Pretty simple actually and we are seeing it play out before our eyes. People are just not perceptive enough to understand what is happening and how it will play out.
Take HP. Great American company and technology innovator for 60+ years. Developed a huge amount of the technology that drives every part of the world you know today. Especially over the last 10~15 years, it has increasingly been shedding once profittable sectors that are commiditized out from under them by the low cost producers in Asia. Often, much of the technology is copied or a cheap approximation is dumped on the market, forcing the margins down on the original producer. Stockholders demanding a return will force the company (HP) to abandon the once profitable sector and cede it to the low cost producer. Now, they are hunting desperately to find a way to make money and not finding great prospects. Typical capitalism at work.
Now, add to this model the engineer lifecycle. Said engineer starts working in his 20's and retires in his 60's. Oversimplifying but.... The first round of engineers (1940-1980s) that started HP are long gone. The second generation (1970-2010's) were trained by the first and evolved the technology and are quickly leaving. The third generation (2000-2040's) are a shadow of previous groups as company's have abandoned sectors, downsized, outsourced and increasingly companies shipped the design work to Asia. The knowledge will not be carried forward. For a lot of US engineers, the social contract has been broken and they have abandoned the industry. Look at any US Engineering school today and the numbers of students are down significantly and half of the students are from overseas. Most American parents won't allow their kids to go into engineering as they don't see a future in it as most of the work goes abroad or just does't exist anymore.
In Asia, the only thing the Engineers have been trained in is copying and reverse engineering designs coming from the US. The US Multinationals moving the design work there have realized you can do one-offs but innovation is mostly out of the question. The creative spark and inventive drive is not strong enough in a controled, heirarchical society.
So the technology will atrophe. The US will cede its technological lead. And the stupid americans will stand around pointing fingers and wondering how it happened. Who knows if we take a step backwards? I doubt it but we defintiely have a slowdown coming.
Hardware engineering isn't that economically important, relative to software engineering and many other types of knowledge value-added, such as marketing, etc.. See also my reply to Oliver Jones.
I knew the guy who discovered the way to simulate the transistor in software. I remember how he lamented to me that we lost all our engineering to the Japanese. He related to me how the Japanese always brought their cameras on visits to the USA.
Any activity that can be copied that easily, is not a high knowledge, high valued-added activity.
The Asians have been good at copying. Now they have to show they can rise to American creativity and knowledge generation. Samsung copies Apple. Toyota copies American design. Etc..
At this time, East Asia is still predominantly dependent economically on mass production industry, not on knowledge value-added.
Mass production industry is not very profitable.
The Dude, you've admitted it, that the Asians are turning everything into low profit commoditization. How is that a recipe for profit? How can there be economic domination without profit?
Dominating low profit production is a liability, not a strength. Think about it. Demographics will worsen in China. They need to be saving at high valued-added, instead the Yuan peg is throwing it all down the toilet.
Now you can add duplication of the shipping hardware (another very low profit margin industry) to that top-down toilet bowl flush of capital.
You miss the rather obvious (well, I thought it was obvious - I'm an engineer) point that without hardware, you don't run software. The Chinese already control the hardware to a large extent, today, and the situation is getting worse, not better.
Hardware does not last forever - particularly if your machine uses lead-free solder, if you get my meaning... Control of hardware is essential for the medium to long term, and not just for hardware maintenance reasons! If you don't believe me, ask any hacker who has tried to write free software for the Microsoft Xbox 360 or Sony's PS3: Both are ready examples of what happens when you allow one party to control your hardware, and it is a glimpse of the future as far as PCs are concerned.
I didn't miss it. I dismissed it a long time ago as economically false.
I was thinking about that perspective in the early 1990s when Japan took all of major consumer electronics such as TVs. I remember speaking to my father about it (a man with a genuis IQ), who was a general counsel for Exxon and THUMS (the consortium of major oil companies). When he told me that Japan was our slave, I was perplexed. Later it became clear to me, as I learned more about economics and such, as I am trying to explain to you now.
Replaceability is a very important concept in economics. Hardware is damn easy to replace (because it is very low knowledge and mostly mass production, i.e copying). It is a commodity business.
Software and knowledge is not. It can't even be transferred with money (read my article more slowly!).
There is outsourcing from China to Mexico:
http://www.zerohedge.com/contributed/2012-10-18/shipping-news-and-bit-more#comment-2904747
Btw, Android came in very late and from way behind to take 52% USA marketshare to Apple's 32%, because Android is open and Apple is a closed system:
http://www.catb.org/esr/comscore/
And internationally the difference is even greater in Android's favor.
That you state hardware is easily replaceable demonstrates you do not understand what I am talking about.
Hardware requires knowledge and infrastructure. Software requires knowledge and hardware - and trust me, I would know: I've written software for over ten years, from "metal-bashing" assembler (65xx, 680x0, x86 and ARM) - all the way up to Java. I don't really care what you say about your conversations with your father - or whether he had a "genuis" IQ (evidently, the ability to spell "genius" was not passed on to his offspring) - but it is clear as day to me that you understand neither hardware nor software.
Infrastructure is one thing the West no longer has: Try manufacturing something as simple as a hard disk drive without the involvement of at least one South East Asian country (specifically Thailand), if you get my meaning. Surely the "genuis" economist in you recognised the concept of replaceability when floods took out most of the world's hard disk manufacturing capacity last year? Either you did, which neatly disproves your entire point - or you didn't, which simply shows you don't know what you're talking about.
Lastly, there is no need to read your article: I didn't bother even clicking on the link, btw, because your entire premise is flawed - and obviously so - you don't have to be a rocket scientist to see the flaws, either. One doesn't have to read someone's articicle "proving" that 2+2=3, when it's immediately obvious that 2+2=4.
Again you've entirely missed the point of my article that I linked to:
http://www.coolpage.com/commentary/economic/shelby/Demise%20of%20Finance,%20Rise%20of%20Knowledge.html#EconomyofKnowledge
Hardware is something mass produced. The cost of the manufacturing far exceeds the engineering. Thus it is orders-of-magnitude more replaceable than software, wherein the cost of manufacturing (digital copy) is zero.
Fondle that for a while, until that little light bulb turns on.
Also where I wrote "hardware", I was not only thinking of computer hardware, but also all manufactured goods (where there is an even smaller software component of the manufacturing cost).
P.S. you claim my entire premise is flawed, and yet you didn't even get the premise. Sigh. Ignoring information is bliss or so they say.
Your condescending attitude doesn't help your argument, and it really doesn't cut any ice with me. You also cite laws of economics as if the laws of physics, security or mathematics (including the science of cryptography) don't exist - which is just pure ignorance on your part: Rather like turning up to a gunfight with a knife, in fact.
Software has a direct dependency on hardware to run it. This is something most people learn in Computing 101. Yes, you can distribute software (at almost no cost - servers need internet and power, too - but apparently economists like you don't think that's something worth mentioning) - provided you can offer software that will run on the customer's platform. This is currently something many people (you included) take for granted, given the fact that the PC is currently an open platform. This is subject to change at any time.
The point I made (and which consequently sailed straight over your head, while you were masturbating about your father's IQ) is that if you control the hardware - like Sony controls the PS3, and Microsoft controls the Xbox, et cetera - you control the software market for that platform. Do you really think Apple runs an App Store and collects 30% of developer revenues because the developers actually have a choice about whether they pay or not? Of course not: Developers pay because they have to; because Apple controls the hardware (and all access to said hardware) - not the developer.
Go and develop a piece of software for the PS3, and try selling it on the usual market channels without the hardware vendor's cooperation, if you don't believe me: See if your economics of software distribution hold up to the fact that if a hardware maker can (and will, when its commercial interests benefit from such an arrangement) restrict access to a platform based on what it decides will run - or not, you have no say in the matter.
Fact: Without having your code signed by the hardware vendor's private key, a PS3, Xbox or Apple device won't give your software the time of day. It won't run, period. Sony, et al, won't sign your code until you sign an agreement entitling them to a certain portion of the income derived from your software, and they control customer access to your software at all times. If they decide to develop a competing product based on your idea, they can pull your product and your revenue stream is cut off - and you have no recourse, because that nice little contract you signed with them also holds them harmless to any liability, as far as you are concerned. (Apple has already done this, just in case you think this idea can be dismissed as mere fantasy.)
My point is that the days of the PC being an open platform are numbered, and I already stated this quite clearly: When the Chinese decide the time is right, every PC will come with a cryptographic lock, and you will only be able to install software that is signed by the vendor (or, more likely, an association of Chinese vendors) - which is exactly how things work on the PS3 and Xbox, by the way. You will soon learn - when the Chinese start demanding thousands of dollars to sign your software - how stupid you were to let control of the hardware out of your hands.
Even if Microsoft got a key to enable booting Windows, you can bet that the Chinese would have the firepower to lean on Microsoft to implement whatever features or access restrictions they wished: Denial would simply mean the revocation of Microsoft's boot key, and the next time any PC downloaded the latest certificates, it would not boot again. Given the ramifications of customer impact, there is no way Microsoft could afford to refuse: Their customers would be held hostage to any demands the Chinese expected of them.
One could say that the new Secure Boot feature Microsoft has insisted on PC vendors including on all UEFI BIOS firmware is merely the first step, and it has already been implemented on new hardware. Of course, the Chinese were only too willing to oblige Microsoft, but not for the reasons Microsoft probably reasoned. They will, of course, only reveal their hand when they are ready: The Chinese are adept disciples of Sun Tzu - and fortunately for them, they don't pay much attention to idiotic economists who are determined to remain ignorant of technology.
By the way, do you know where BIOS development is done, these days? Yep, you guessed it - China. Most companies turned their nose up and deemed BIOS development as too "crude" and "low-level" to be of interest, so they left that to the Chinese too, in order to focus on their high-end code that runs under an operating system and sold profitably via an app store.
Big mistake...
Handing a hardware manufacturer the control of your market means they can destroy your market, and your revenues.
"He who can destroy a thing controls a thing."
-- Frank Herbert
I'm not going to argue with you further, because you clearly do not understand the field, or you would already have grasped the basic concepts I pointed out. As such, any further discourse on this topic is simply a waste of my time.
Well it is obvious you have not read my article (which you previously admitted). Because I based my economic arguments on the fundamental physics of energy and entropy.
Listen idiot, please STFU if you are not even going to bother to read what I presented. Your hum is pure noise.
Your ignorance of software shows that you are not even worth arguing with. How can I argue with an extreme idiot who refuses to read and learn? Btw, I am commercially accomplished and prominent in the field of software. Do some googling.
But the platform does not control what people choose to buy. Closed platforms (walled gardens) have never won and never will. Apple only has a minority market share. Android is winning more than 50% share. Gaming is a niche market and irrelevant.
Hahaha. Just go on believing that. I will bet my future $million that you eat those words in your poverty for being so blind to basic Coasian physics.
Hey brainless, China can't do shit if we don't write the software, because they will never write software, because they authorize stealing of software:
http://www.mpettis.com/2012/10/27/when-the-growth-model-changes-abandon-the-correlations/#comment-18661
And we will absolutely refuse to write software for any platform China controls.
And we will write software for open systems and the customers of the world will continue to buy mostly open systems. If you don't understand why customers favor open systems, then go read all of Eric Raymond's writings:
http://www.catb.org/esr/writings/
And we do really hope that you continue to think we are fringe, when in fact we wrote the entire infrastructure of the internet, and much of the software in use today, including Android, and the base of Apple's OS:
http://esr.ibiblio.org/?p=4155
We will continue to laugh all the way to the bank every day. You dumbass loser.
I still run Win XP, as do many many people. Microsoft will just cause us to replace them, which is well underway with Android, and then we will have to replace or fork Android, when or if Google starts closing the platform.
You are galaxies away from understanding technology and knowledge production.
That is humorous, unless you were talking to the mirror, in which case it is fact.
The point is ....and obviously you missed it.....is that if your intellectual base is destroyed as they have decided to turn to greener pastures, there is no value added ' next big thing'. You don't have the critical mass to develop it.
We have walking away from the battle and they will be the technology producers at the end. And not very good ones.
FYI...The rush to create Software companies en mass was not our striving for the next technology innovtion. It was the consequence of VCs and companies only wanting to commit limited capital for an investment and trying to turn a quick buck. Even most of that work went to India. In my mind it is the desperate flailings of companies knowing there is nothing big on the horizon. Selling iWidgets and cloud Apps is only going to get you so far.
Oh...and claiming that Marketing is a higher value function shows you are a moron. ;o)
You are wrong about what is going on with software. It is not just a bunch of gimicky stuff. The entire world is run on software, right down to your toaster and your car. There are software applications written for everything under the sun that we do to produce output and survive, even software for farmers.
And this was not driven by VCs. You are apparently outside the industry and don't have a clue. Most of the software written is not funded by VCs.
As far as I know, almost none of the highest quality software is written by Indians, regardless it doesn't matter to my thesis. Some evidence that I am correct on quality of Indian programmers:
http://www.zerohedge.com/news/2012-11-04/age-it-outsourcing-over-now#comment-2947764
And top computer science graduates are getting multiple $200,000 offers with stock options.
Since you've been factually wrong in all your observations, it is not surprising that you also don't understand the value of marketing. Sigh.
I didn't miss it, I dismissed it as economically false a long-time ago.
Hardware engineering is mostly memorization and copying of formulas. We didn't lose anything that valuable. We outsourced the end of the industrial age to them.
We retained our ability to innovate. (although this is under attack by the welfare state, we are still light years ahead of China which can't even allow the internet. I have learned more from the internet than I learned in all my years in school)
Granted that much of the populace in the USA has dumbed down their education, but this has nothing to do with outsourcing mass production industry. They were the assembly line workers (manual labor) before.
My article agreed that the USA has an unbalanced consumption share of GDP in the mirror direction of China's abnormally low share. Thus there is too much emphasis in the USA on liberal arts education. Indeed this was amplified by the Yuan peg, as my article explained. But none of this makes China stronger. It was a lose-lose for both countries.
When that corrupt globalization implodes, the low profit margin stuff will be the first to implode and the last to come back (economic law of the the highest marginal cost is first to lose demand, is equivalent to to the lowest profit margin). The high profit knowledge industry will continue to generate profits and will grow even more as a share of the global economy. And China is way behind in that arena.
I can see you don't have a very good grasp of economics 101-- I got a 99% grade at a major university.
"we are still light years ahead of China"
A light year is a measure of distance, not time.
"Light-years ahead" means for China to catch up they need to alter a structural problem (Yuan peg), i.e. eliminate the distance from the correct structure, and has nothing to do with how much time it might take. Without fixing the structural problem, infinite time won't get them there (which the words light and year convey well, since humans don't travel at the speed of light).
How about addressing the thesis with some viable retort?
Shelby....you are definitely an economist. You can take that whichever way that you like.
I read/skimmed through your little stream of consciousness econ diatribe and the only thing that I can recommend to you is take your head out of your books and please enter the real world. Even your entire thesis is one of promoting an artificial/software/intellectual existance where only knowledge adds value at the end. Those are dangerous thoughts if you consider that they deny humanity and how the world really operates. Reminiscint of many -isms that have done huge amounts of damage over time by negating how the world really works.
As well, your view of the world through your economic prism shows me that you do not have a very good grasp of the World 101. And definitiely not in regard to technology development, where I am sure I can weigh in more heavily. Also, I am sure that my ivy MBA econ background may not be as versed, but I can still go toe-to-toe intellectually. I just tend not to believe in pulling credentials because I see it as petty and the tool of insecure individuals.
If you could, please confirm one thing in my mind by letting me know how you feel about Krugman.
I don't know on what basis you can deny to yourself that the real world has progressed only via knowledge production. Only!
Is the creation of the net in the fish story not simple enough and real world enough for you to comprehend?
(sorry the rhetorical question might be perceived as condescending but how else can I ask you what you don't understand about that simple example of how increased knowledge is responsible for all increases in production...mankind was already maxed out on the production of manual labor back in the hunter and gathering age...only increased knowledge advanced the production per capita beyond that)
It seems to me that you have not wrapped your mind around the thesis and theory in my linked article. As you said, you skimmed it only. Skimming won't get through an engineering degree (I studied engineering with a math minor).
What is your factual rebuttal that shows how I am disconnected with the real world?
I don't follow Krugman (I don't waste my scarce time and pollute my mind watching TV or reading the MSM much). I have seen some comments that he is Keynesian, and if true, then he and I would probably disagree on most everything.
The only reason I am expending my time to rebutt here, is because I have linked to this page from my article, to help readers with similar misconceptions.
=======================
Let me try to guess what is in your mind. Perhaps you think I am painting some fuzzy theory of reality that is not the real world. Perhaps you are thinking that "knowledge" is some abstract that has no bearing or can't be quantified in the real world. You are probably thinking that software is just iPods and facebook, i.e. you may be thinking of useless consumerism or social tweeting.
If so, then you don't understand what I mean by knowledge production. Knowledge production is the process of creating technology, designs, processes, and understanding of reality (e.g. marketing) that increase the leverage of our time, to gain more of what we want and need. This is why knowledge production is the most valuable in the economy, because a small amount of it, has enormous positive effects on the quality of our life.
I changed from BSEE (electrical engineering) to computer science and math 28 years ago, because I realized that software was the encoding of human knowledge and that I could encode knowledge without needing a foundry of capital (i.e. slave to finance) in order to accomplish publish my real world designs to the world (and sell them for $millions). The power of software is orders-of-magnitude greater than hardware.
And since we execute new knowledge in software orders-of-magnitude faster than in hardware, we create value orders-of-magnitude faster. For as long as China stays mired in hardware, they will be orders-of-magnitude behind.
The language of software is not only programming languages. Each knowledge sector has their own memes for encoding what they add in knowledge, e.g. marketing, etc.. Freedom-of-thought, access to the internet, and freedom-of-speech are essential to attaining maximum knowledge in these social engineering domains.
I understand that it is logical to associate the mindless consumerism with a loss of knowledge. And thus marketing for example might be viewed as dumbing down our society. But marketing is fulfilling what those people want. For better or for worse, it is better fitness to the real world reality. As those mindless overconsumers perish (when the debt spigot turns off in a few years), then the reality will morph, and marketing will continue to optimize the production to what the reality demands. So knowledge will continue to earn a profit, but all that excess manufacturing overcapacity in China will be bankrupt.
"The only reason I am expending my time to rebutt here, is because I have linked to this page from my article, to help readers with similar misconceptions."
Yeah, well don't forget to leave ZH a donation for all that bandwidth your readers will be using.
Did you not notice that ZH displays ads. I assume they earn revenue from traffic.
the usa thinks they are the screwer when they are , in fact, the screwee. they don't even feel it for all the lubricant used. soon the friction will have them squealing
iThings, bitchez!
once the chinese own the labour, the manu'f, the resources, AND the shipping lanes what's left........? (.)(.)fucked we are
What is left is everything that is profitable:
http://www.coolpage.com/commentary/economic/shelby/Demise%20of%20Finance...
China's leaders have sold out their country by swallowing the unprofitable sector of the global economy.
Thats exactly what Rome said when they went to a slave/serf run economy, the population of Rome quintupled; and they had real estate bubbles every ten years and local wars with neighbours for three centuries creating a state of total alienation and hatred in Italy.
Then they "outsourced" their legions to the barbarians as their wars were perceived as "non value added" activity that any jerk from Dacia or Thrace or Gaul or Numidia could do for them. And we know where that led to, 'cos in their state of total hubris, the true ROmans were busy doing the real "value added" activities of intellectual quality, like making useless laws to tax people more, to debase money or to fuck their slave women without pissing off their wives; who ended up taking lovers from the lower class that created even more social upheaval. A slave in roman clothing, is a wolf like his master not a sheep anymore.
Decadence always has the same smell all over the world in history, the sweet smell of apparent success with the hard reality lying under the carpet like a jack in the box of Pandora's nemesis.
Sounds very familiar...empires always implode first from within; before being conquered from without. The US is already in a state of virtual conquest from without as it lives on credit; whereas its whole value system of exceptionalism is the market economy based on virtuous capitalism. So in the current spiral it has destroyed its own core model which will demotivate its own people more than what China does...implosion of mind set, the first step; like in ex-USSR.
Due to the Iron Law of Political Economics, big societies always decay. The big morass of populace in both the USA and China which don't do sufficient knowledge production is decaying.
I didn't write that the USA's welfare state morass was a good thing. I wrote (in my linked article) that China became symbiotic with it, and thus sealed their fate as a loser too.
Nevertheless, we knowledge producers still have the freedom to innovate in the USA, and we do not have that freedom in China. See my reply to "The_Dude" where I explained that low profit margin industry is the first to lose demand and the last to come back (after the global debt spigot is turned off).
american exceptionalism is lance armstrong; a mix of hubris, greed, bullying and corporate spin
nothing is as it seems
it used to be Jesse Owens, Mohammed Ali and a lot of others; choose your icons, America has a great sporting tradition; unmatchable in fact.
Joe Biden was overheard saying "once the elections are over the Greeks will be able to go back to one meal a day, until then she should stop rocking the boat for my friend Hussein Obama"
Your Greek fellow is a bottom feeder among shipping tycoons.
He bought a rust bucket bulker, the type of vessels that have killed hundreds of seafarers. I'm happy he lost on his shitty investment.
But bulkers are not tankers, birds are more valuable then seafarers and oil slicks from sunken bulkers are not so bad.
I'm sure he's right about the Chinese, many advantages in that plan, until it becomes one more grand costly state sponsored fiasco, dependence on state subsidy is deadly in long run.
He owns a fair number of vessels. He has Handy Sized, Panamax and Super-Panamax. He owns old ones, and new ones.
He took a flyer on this one, and lost. Don't worry about him one bit.
For the record, he uses Creek crews on all of his vessels. He has an excellent safety record over many decades. The people who pilot his ships are family.
"He owns a fair number of vessels. He has Handy Sized, Panamax and Super-Panamax. He owns old ones, and new ones."
All registered in Liberia, no doubt.
Good to hear what the Greek guy has to say. Hope things go better for him and the people of his country.
I wonder what the Greeks will do when the countries they expatriates fled to are as destitute as Greece?
There was a bit on ZH a while back about what a Chinese stimulus plan would look like. Building the largest merchant marine in human history sounds about right. And, of course, a blue water navy to protect it. Well, keeping a couple billion people happy all the while would be no mean feat, but plausible? Yep.
The glitch! The glitch! The glitch is back!
;)
+1 for EJ Caribou reference
Sorry OT. Looks like the USDJPY is topping here. That could indicate big changes in the UST 10-yr. yield. Nikkei selling off fairly rapidly and may transfer into the European session.
Something tells me that tomorrow, we could see a major event in the US equity market.
Of course, this is analysis for normal times and there's no telling what is up their sleeves, so keep your eyes peeled and your finger on the trigger.
Best of luck trading, everyone!
:D
If the Hang Seng and Shanghai sell off, DXY goes bid to 80 (or just under). Futures remain in the red + the Nasdaq wipe-out last session
= a sell off
Against the bears though is an almost 100% long market and HFTs maintaining supports (an illusion of course), hence the CME bizarreness.
Trigger is the players shifting cash fast, could fire off at anytime.
One day, you must tell me all your secrets...
I won't tell. I promise.
:D
Addo:
Thing is that the markets are as complacent as I have ever seen. No one is in any sort of hurry, no panic mode to speak of. With everything moving in slow-motion, it is more frightening than if every were freaking out.
Calm before the storm. I don't know when the lighting will strike. If I could predict that with regularity i'd be rich? I just take advantage of the storms as quick as I can.
complacent is the word. yeah it does feel weird. hows marketwatch calling the 1987 thing? be careful what you wish for.
goodluck for Friday, could blow south...hard.
That's freakin' weird, too. I noticed that. There's another one in the scroll bar at the top that says "1987 takes investors back to the future." When you click on the link, it takes you to a listing of recent articles talking about a crash.
I have often believed MarketWatch is some sort of signal beacon to the insider-types. I know that sounds supremely paranoid but there are always these weird headlines that tangentially mention things that, if you remember from last night, are happening today.
Bizarre. Yet no one is scrambling, no one seems even bothered. I can't tell if the complacency is a ruse or they will let loose during London or whether they're trying to lure sucker shorts in for the big kill some time later. Something's definitely up, though. It just feels freaky.
Could be, the insider corp sellers would be close to Wall Street ala profit take to crash. The market has become surreal, only because the rapid fire blog/website information was probably chatter back in the day. But MarketWatch is a popularity contest to other 'sites' so maybe they are tapping the expectation. As they are now advising to buy after the coming '1987' style crash.
Europe looks shaky on open and DXY is still bid, that and futures are red. Asia is tight, which looks nervous. So...maybe soon.
The PD's are buying ES, SPY and back filling with individual equities. With the IBM miss, the GOOG miss, and other earning weakness, this market 'should' be moving down significantly .... but, it's not, so the only answer can be someone is buying in the background. I think this pattern will last until Nov. 6 and the FED 'promise' to Obama, will expire and things will get real interesting.
If the markets don't rise from here through the election, then the fall could be spectacular, regardless of who is POTUS, or what they do.
I am voting for Romney (against Obama) but his assertion that he will reduce the debt by 50% in four years is absurd and will bite him badly in 2016. No one will be able to turn this ship around with the momentum that it now has.
Well, if that's true, it must be taking a Greek shipload of money to do it. Maybe like $40B/mo.? If that's the case, then, once the movement does start, there is no floor underneath it for quite a few SPX points.
With the home-gamer getting out of their mutual funds in droves over these past several weeks, then there is really no floor underneath it because the funds have to stay fully invested and, doing the math...carry the zero...this puppy could be in for a hella three months or so; like back to 1280 before it can even take a breath.
I hope they have their hedges in place, for their sake.
:/
No I don't...
I can see no reason for it to stay at the highs of two years ... a rapid decline to 1075 makes most sense to me. I think the FED has established a specific protocol for a plunge (ala The Flash Crash) to save the boys, but this time after the up swing reaction the HFT's will decide to set trading aside for a little bit and then the fall begins ... you can tell, I love speculation.
Bruce,
I always enjoy your articles (even when I disagree).
I am sure that your take on China's desire to dominate shipping of its products is correct. Seems very typical of how they work.
However, might this be just another example of Chinese mal-investment in infrastructure that will come back to haunt them? Perhaps they will have lots of empty ships to match their empty cities.
Just a thought. Not really original. I read Micheal Pettis' blog (China Financial Markets) and he talks a lot about the need for China to stop over (and mal) investing and start consuming.
I think the worldwide recession (depression?) that appears to be gathering steam will challenge the Chinese mercantile model. They, IMHO, need to focus on the one market that they can count on (China) and try to grow internally.
I read somewhere that the Great Depression hit the US much harder than Great Britain because the US was the big exporter of the day and GB not so much. I wonder if the world's current biggest exporter (China) will be hit hardest when the wheels come off the global economy (as they appear to be doing). I note that IBM, Intel, Google, Alcoa results appear to point to a slowing economy.
As to Greece, I pity the poor Greeks but I see no hope for them and wonder if the rest of the world will be too worried about their own problems to care.
This was not my take. I was taking notes.