• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Shipbuilding Orders Evaporate As Baltic Dry Collapses

Tyler Durden's picture




 

The silence is deafening still about the ongoing collapse in the Baltic Dry Index among mainstream media types (as it just might challenge the hope/hype that growth is coming back). At the dismal level of 1002, BDIY is at 8-month lows and has fallen 14 days in a row... but now it is having a real world impact. As Sea News reports, Korean shipping companies are failing to place orders for large vessels and anxiety over the future is forcing some local companies to dispose of their assets despite the relatively low shipbuilding costs as of late.

 

The Baltic Dry is down 14 days in a row at $1002 - its lowest in 8 months (and worst start to a year on record)

 

And As Sea News reports,

Korean shipping companies are failing to place orders for large vessels. Under the circumstances, the domestic shipping industry is expected to get more and more enervated, because major shipbuilding contracts are an effective means for tiding over a slump in the sector. Some of the local companies are even disposing of their assets despite the relatively low shipbuilding costs as of late.

It seems Korea is particularly hard hit since its government won't subsidize the losing proposition like Denmark and China is willing to...

Industry insiders attribute the current situation to the local shipping finance system. An increasing number of governments, such as the Danish and Chinese governments, have provided large-scale funds for the industry in the form of direct loan and payment guarantees since the outbreak of the recent global financial crisis. CMA-CGM, for instance, returned as the world’s third-largest shipping company thanks to US$150 million from the French government.

 

In contrast, the Korean government is providing little shipping finance support. “The establishment of the Shipping Finance Corporation has been foundered and the foundation of the Shipping Guarantee Fund, one of its alternatives, is showing little progress for now,” said Senior Analyst Song Min-joon at the Korea Investors Service.

 

“Our competitors are likely to be steps ahead from late this year, when the vessels will begin to be delivered one after another,” the Korea Shipowners Associations added, continuing, “Then, Korea’s shipping industry will be facing even greater difficulties, unless there are some measures to turn the tables.”

We are sure the fact that the industry has been overbuilt - based on Keynesian-policy-inspired mal-investment and mispriced signals from global markets - will be used as the excuse for the collapsing price of shiiping dry bulk... but that argument s entirely circular and fallacious as it merely reinfoces the unintended consequences of the oh so visible hand in the world's markets and leaves more zombie entities clogging up any potential economic growth that is possible in a world of peak debt.

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Fri, 04/11/2014 - 21:15 | 4649774 LetThemEatRand
LetThemEatRand's picture

Looks like the ship really hit the fan with this one.

Fri, 04/11/2014 - 21:17 | 4649780 Groundhog Day
Groundhog Day's picture

Which ship are they talking about the USA Titanic

Fri, 04/11/2014 - 21:21 | 4649790 Manthong
Manthong's picture

crud.. thought I was unique with the ship hitting the fan, BUT NO... somebody had to beat me to it. :-)

Fri, 04/11/2014 - 21:29 | 4649812 Harbanger
Harbanger's picture

You got beat by the shipbuilder.

Fri, 04/11/2014 - 21:38 | 4649831 Manthong
Manthong's picture

:-) heh.. heh...   tell me about the rivets and the carbon content of the plate steel.

ooh.. maybe a segue into the temp endurance of the internals of a certain skyscraper on 2001.

Fri, 04/11/2014 - 21:39 | 4649849 Harbanger
Harbanger's picture

Shipbuilder is slang term for a fag.  I wuz just messin with my friend.

http://www.urbandictionary.com/define.php?term=Shipbuilder

Fri, 04/11/2014 - 21:43 | 4649860 jbvtme
jbvtme's picture

it's friday nite.  do you know where your eighth ball is?

Fri, 04/11/2014 - 21:54 | 4649898 HardlyZero
HardlyZero's picture

Can't we all just get Amazon Prime and its "poof" gone.  /sarc

This could be a strong indication the world is running down.

http://www.youtube.com/watch?v=fxoV48SzZ_s

 

Fri, 04/11/2014 - 23:03 | 4650078 TahoeBilly2012
TahoeBilly2012's picture

When they start shipping war armaments all over the world for the BIG ONE, things will pick back up.

Fri, 04/11/2014 - 22:12 | 4649940 dirtyfiles
dirtyfiles's picture

or 9/11 engineering testing

Fri, 04/11/2014 - 21:36 | 4649838 LetThemEatRand
LetThemEatRand's picture

Buzz kill.

Fri, 04/11/2014 - 22:56 | 4650059 MontgomeryScott
MontgomeryScott's picture

UM...

'Catch Phrase'?

Is this like 'SLIPPERY SLOPE'? 'MARK-TO-MARKET'? 'PARADIGM SHIFT'? 'BEAM ME UP'?

'BUZZ KILL'

John Belushi died from something like this, I guess. He wanted to get, in the American Drug Culture Slang, 'BUZZED', and he was 'speedballing' (injecting a combination of Heroin and Methamphetamines intravenously'). He 'overdosed', and it KILLED him. I've heard the catch-phrase 'BUZZ KILL' thrown around quite a bit, and the meaning and the REALITY of this final solution (did you see the 'catch phrase' usage here?) seems to be lost on some (if this is what 'buzz kill' is discussing, that is).

TWO WORD COMMENTS are not very well 'fleshed out' (ANOTHER 'catch phrase!), as far as intellectual acumen is concerned. I might have just insulted you, Rand, but surely you must understand my point here.

Perhaps, you are trying to say (in fucking texting shorthand) that the BDI, and the shipbuilding orders that are falling, are due to the fact that the people involved, too addicted to the greed and avarice of the 'free money' aspects of business, have overdone their pleasures, and now have to live with the cold, hard fact that they are going to lose a shitload of fake money that they never owned in the first place (it is all claimed by private banking institutions, and those addicted to the pursuit of it are like John Belushi, who pursued getting high to the point that it took his very life).

Saying 'buzz kill' means absolutely NOTHING to a reader (and ZH readership is quite large, and global, and intellectually starved. People are HUNGRY for REAL information and are now flocking to alternet sites such as this, and most are looking at and reading the COMMENTS, Rand. TRUST me. I'm not a doctor. I'm an ENGINEER.) It might as well be 'Mickey Mouse' or 'Greedy Bastards', or 'Serves them right', or something.

D'ya ken, Laddie?

 

Fri, 04/11/2014 - 23:13 | 4650079 LetThemEatRand
LetThemEatRand's picture

I was just pointing out that Harbanger who responded to my earlier post with the urban dictionary while he was receiving a cleveland steamer and enjoying same is a fucking buzz kill, wet blanket.  But I like your analysis.

Fri, 04/11/2014 - 23:14 | 4650109 Harbanger
Harbanger's picture

HaHa! Wet blanket is why your mommie had to use plastic bed sheets.  Now that you're all grown up you wear adult diapers.

Fri, 04/11/2014 - 23:21 | 4650119 LetThemEatRand
LetThemEatRand's picture

No, I'm not putting the oil on the skin, even if I get the Harbanger again.

Fri, 04/11/2014 - 23:24 | 4650125 Harbanger
Harbanger's picture

Don't you have enough oil on your Norwood V.

Fri, 04/11/2014 - 23:25 | 4650129 LetThemEatRand
LetThemEatRand's picture

I don't know what that means but I'm sure it's funny.  Now go back to the lipstick and the mirror.

Sat, 04/12/2014 - 14:57 | 4651559 WillyGroper
WillyGroper's picture

Then there's "Over Kill" as in epistle & "Anal Retentive". 

FMR, you're full of yourself.

Fri, 04/11/2014 - 21:38 | 4649848 jbvtme
jbvtme's picture

copper is in the shit. bulk shipping is toast. these equity markets are in fantasy land

Fri, 04/11/2014 - 22:32 | 4649965 MontgomeryScott
MontgomeryScott's picture

So is scrap iron, scrap aluminium, and all the scrap crap that IS the biggest export of the good ole' U.S.A. (besides scrap money, that is).

I AM curious, however.

I've seen several back-and-forth arguments over here regarding the BDI (which I have followed for several years now), in regards to the accuracy of it's indications of economic virtues and losses (the old 'ebb and flow' [catch the 'nautical term' here, the TIDES] of the Keynsian Economic Model, if you will).

If the shipbuilding industry (which is ACTUALLY an industry, unlike the 'financial industy') sees and follows the BDI as a leading indicator (which I think they well should), and so on, WHY are there people on ZH who STILL try and poo-poo the BDI as being either 'too slow', 'too unreliable', 'too old-fashioned', or 'too innacurate' regarding these extremely important matters of economic losses and (hopefully, one day) gains? SERIOUSLY?

The 'other models' seem to resemble the USGov's attempt to introduce other methods of accounting that do not seem to reflect reality sometimes. 'Hedonics', the revised 'CPI', the 'core inflation rates' (which work well if you don't eat, drive a car, or use electricity, or buy clothing or buy anything else that you need to stay alive), and, of COURSE, the lie about the 'defecit decreases' over the years (which are all actually decreases in the proposed INCREASES) are some examples.

I would like so see some responses from those here that, in the past, have stated that the BDI was irrelevant, in light of this article, and will also be up to the task of presenting an a well-thought out, verifiable, and logical opposing viewpoint that would convince me to rethink my so-called 'opinion' regarding the BDI (and the way that it truly reflects the REAL WORLD shipping and economic situation as a whole).

I doubt that I'll get any takers. WELL, perhaps some (like the SHIT-COYNE people. 'Fonestar', are you out there?). 'VIRTUAL' models are, well, NOT, how do you say, 'existant in reality'. It's kind of like the NIST simulation model of the collapse of Building 7, on 9/11. It LOOKS cool, but when comparing it to ACTUAL VIDEO FOOTAGE, it has no resemblance AT ALL to what REALLY happened (much like the Discovery Channel's modeling of the collapse of both Twin Towers using the 'pancake theory' fails miserably when watching the videos of the actual collapses).

Oh, yeah...

ZH rocks the world! I thought you should know that I am grateful to have been allowed here for the past 4 or 5 years, just in case. Even YOU, 'Fonestar'... I feel a distubance in the Force, and this internet stuff may not last. NO, NOT ME, but perhaps a larger issue.

 

Fri, 04/11/2014 - 22:34 | 4649995 BlindMonkey
BlindMonkey's picture

Boy...Don't you know 'nuthin'?  The entire economy of the good 'll US of A is all built on services!  Damn son, you don't need to ship things around to get stuff done anymore.  Just bring the rich folk their food when the cook rings the bell and everythin' will be just hunky dory. 

Fri, 04/11/2014 - 23:21 | 4650116 MontgomeryScott
MontgomeryScott's picture

Of course, you're right.

CLITTON told me that this is now a 'service economy' (I'm not sure if it was Billary Rodhome or Hilliam Jetson, but ONE of them did).

I'm just listless, tired, withdrawn, and feel like the whole world's using me... but I caught an ad for a new drug by Phuque-ewe Pharmecuticals called 'Soma'. I think I'll ask my doctor about switching. It's like I feel that the line must be drawn, HERE:

http://www.youtube.com/watch?v=Jln3mi0vfJU

 

If I can't get my cheap Chinese shit delivered, 'just-in-time' (the catchphrase of the pricks in management skools everywhere was the philosophy of streamlining and saving up-front 'Valuable Company Resources' by calling for 'just-in-time-delivery' of critical raw materials that are necessary for production; thus 'cutting costs' of warehousing these things, back in the mid-1990's. DO YOU REMEMBER THIS? This so-called 'economic philosophy' led to parts of this once-mighty economic juggernaught being DECIMATED!), I might have to go get my fellow slaves and raid a Walmart or something.

WHAT'CHU MEAN, they ain't got no flat-screens in the back room? Let's BURN THIS MOTHER DOWN!

http://www.youtube.com/watch?v=zUwEIt9ez7M

SHUT UP, MAN! I got's a job working fo' the man, at Mickey D's!

SHEEEEEEEEEEEEEEEEEEEEEEEEIT... (longest word in the Ebonic language)

Muthufukuh! (shortest word in the Ebonic language)

 

Fri, 04/11/2014 - 23:28 | 4650139 BlindMonkey
BlindMonkey's picture

Now you're back into the fold.  Feels much more comfy don't it?   There there.  Ain't nutin' to fuss with on the collapse of that BDI. 'S idea, that'S just a measure of bulk commodities movin' 'round.  Don't stop 'dem flat screens being shipped in 'dat new fangled intermodal transport...  

 

You'll get them flatscreens just as long as some vendor keeps shippin' it on terms.   HEHEHE

Sat, 04/12/2014 - 00:14 | 4650211 Harbanger
Harbanger's picture

If the smartphones and flatscreens aren't shipping because they become unaffordable, that interrupts the bread and circus.  They may have to use Maduro economics and force electronic stores to lower prices. 

Sat, 04/12/2014 - 00:23 | 4650224 BlindMonkey
BlindMonkey's picture

I beg to differ pardner. The screens both large 'n' small wont ship because of a credit lockup in 'da land o the dragon. No financing, no production, no product, no shipping and, finally, bare shelves.

'Dats how I sees it goin' down anyhow.

Sat, 04/12/2014 - 02:54 | 4650411 StychoKiller
StychoKiller's picture

Check out the Container Ship Index also.

Sat, 04/12/2014 - 07:37 | 4650592 Winston Churchill
Winston Churchill's picture

He's dead Jim.

Fri, 04/11/2014 - 21:27 | 4649803 Manthong
Manthong's picture

..and regarding the USS Titannic..

the bankers will not be celebrating when they realize that fundamentals are finally overcomming their scam sheets. 

Fri, 04/11/2014 - 23:30 | 4650142 MontgomeryScott
MontgomeryScott's picture

The FedRes bankers, um, I mean, Klingons have a saying.

'Revenge is a dish best served cold.'

It is very cold, in the North Atlantic, in April.

You DO know, of course, why the PARTICULAR industrialists on the Titanic were chosen to die, freezing to death or drowning in the 34 degree (well, 0 degree, if you are all 'metric' and shit) water, don't you?

RETRIBUTION... Well, that one is gonna be really fucking HOT. Payback is a BITCH.

 

I like my avatar. It always reminds me of the events that have led to this.

Fri, 04/11/2014 - 22:12 | 4649939 Buck Johnson
Buck Johnson's picture

The USA Titanic and also the EU Titanic also with the rest treading water.

Fri, 04/11/2014 - 22:28 | 4649980 post turtle saver
post turtle saver's picture

no reason to ship things if no one is buying

Fri, 04/11/2014 - 23:10 | 4650098 Stuck on Zero
Stuck on Zero's picture

I believe that we will be seeing many more "shipping sccidents" and sinkings in the next year or so.  It always happens when shipping becomes unprofitable.

 

Fri, 04/11/2014 - 21:32 | 4649821 Mr Pink
Fri, 04/11/2014 - 21:36 | 4649837 ebworthen
ebworthen's picture

Brown heroin.

Sat, 04/12/2014 - 13:28 | 4651340 Bangin7GramRocks
Bangin7GramRocks's picture

Is this "collapsed to the lowest level since October" collapse or collapse collapse? It's sometimes hard to wade through the hyperbole.

Fri, 04/11/2014 - 21:17 | 4649781 HedgeAccordingly
HedgeAccordingly's picture

slightly bullish - http://hedge.ly/1ephbzY ..

 

iron ore prices tho? 

Fri, 04/11/2014 - 21:18 | 4649784 Tinky
Tinky's picture

Gravity's a bitch.

Fri, 04/11/2014 - 21:19 | 4649789 Groundhog Day
Groundhog Day's picture

The greeks (known for their shipping) just priced their bonds at 4.75% or whatever and the baltic shipping prices collapse...the irony

Fri, 04/11/2014 - 21:47 | 4649876 disabledvet
disabledvet's picture

yeah, no shit. "welcome to your supertanker of debt."

how many more islands are on the chopping block this time?

Fri, 04/11/2014 - 21:21 | 4649796 kurt
kurt's picture

I repeat:

It was over 9000

We are now skidding along the bottom, have been, nothing new.

The ship's hull is scraping on he coral. A hulk, a bird roost. These are tidal movements on an abandoned beach.

Signifying nothing

Fri, 04/11/2014 - 23:34 | 4650151 MontgomeryScott
MontgomeryScott's picture

+1 for the reality team.

Fri, 04/11/2014 - 21:23 | 4649798 seek
seek's picture

Totally off topic, but I just stumbled into this story, and all I got to say is seriously, what the fuck: http://www.washingtonpost.com/politics/social-security-treasury-target-h...

Pretty sure that's a constitutional violation of the first order.

Fri, 04/11/2014 - 21:35 | 4649833 kurt
kurt's picture

This could turn somebody crazy.

Fri, 04/11/2014 - 22:23 | 4649962 NoDebt
NoDebt's picture

I posted that link in another thread earlier today as an OT.  Surprised the Tylers haven't latched onto it yet.  My hope is they are taking their time to do a deeper dive.  It's sounded a bit "fluffy" and could have used some more evidence before declaring "emergency".  But, yeah, it's more than a bit troubling when the children are tapped to pay the parents' debts (real or imagined, as determined solely by the IRS, with no recourse).

 

Fri, 04/11/2014 - 22:35 | 4649999 seek
seek's picture

If I'd have spotted your link I'd have upvoted and commented for sure.

Ignoring everything else in the article, just the removal of the time limit on debt collection is more than enough to warrant Tyler reporting on this. And if the going after family members is true, then it's really over the top. Where does it stop? Just your children, or if the parent's debt is unpaid from 1950 and assigned to the kids, and then the kids don't pay the debts, does it get assigned to the grandchildren?

Seriously, once you can assign parental debt to children, they could go back to the revolutionary war and claim the Nth generation owes back taxes from 1795 plus interest and fines -- and that's not hyperbole, all they need is the ability to assign parental debt to children without a statute of limitations on the debt, and the rest comes automatically. They could backdoor their way to seizing virtually anyone's accounts.

Sat, 04/12/2014 - 01:33 | 4650321 OldPhart
OldPhart's picture

Like this is new?

Look at the debt we're passing to our grand, and great-grand, children.

The vermin in government WILL be after their dough long after we're dried up corpses on the side of a desert road.

Sat, 04/12/2014 - 07:46 | 4650606 Winston Churchill
Winston Churchill's picture

A friend of mine inherited his fathers business in the UK.The father packratted all the company

accounts/invoices etc from 1936.My friend got audited by the Inland Revenue, and because

the records were there ,they went all the way back, and bankrupted the company for tax owed

from the 30's and 40's.

Fri, 04/11/2014 - 21:36 | 4649841 infinity8
infinity8's picture

Thanks for that - I have a good friend that got a letter from IRS @ 2 weeks ago that he owes some thousands of dollars from 2004 and he has no idea wtf they're talking about. Doesn't talk about it being an "old" debt. No additional info yet but, I sent him this. He's mostly 1099's and has a foreign-sounding last name that has had income that wasn't his reported but, that got resolved a few years ago. Interesting.

Fri, 04/11/2014 - 21:42 | 4649862 kchrisc
kchrisc's picture

Sorry "seek," but I thought that this was so important that I would highlight it a bit more.

Gene Rayburn: "The DC US is so broke..."

Audience: "How broke are they?"

Gene Rayburn: "Well, they are now raiding the people's refunds and accounts after over 30 years for conjured up debts of their parents. That's how broke they are."

 

Now, Social Security claims it overpaid someone in the Grice family — it’s not sure who — in 1977. After 37 years of silence, four years after Sadie Grice died, the government is coming after her daughter. Why the feds chose to take Mary’s money, rather than her surviving siblings’, is a mystery...

The aggressive effort to collect old debts started three years ago — the result of a single sentence tucked into the farm bill lifting the 10-year statute of limitations on old debts to Uncle Sam.

http://www.washingtonpost.com/politics/social-security-treasury-target-h...

In addition to the other criminality involved, "Ex post facto laws are expressly forbidden by the United States Constitution in Article 1, Section 9, Clause 3."

Do NOT follow this link or you will be banned from the site!