Some observers of the fall in US consumer spending have noted that despite the overall contraction, some merchants, such as Wal-Mart, are reporting solid sales gains. They infer that buyers are still spending, but have downtraded radically so as to reduce their total expenditures. While one needs to take care in generalizing from the US […]
Read more...Readers may know we have been concerned about the dramatic fall in shipments of basic materials, as reflected in the collapse of the Baltic Dry Index. This in turn, as we have also stressed, is in large measure to the difficulty of obtaining trade finance, in particular letters of credit. A very good post at […]
Read more...This front page New York Times story on factory closings in the Pearl River delta covers ground already discussed in some detail on this blog. However, its report gives more detail on the resulting labor unrest. From the New York Times: For decades, the steamy Pearl River Delta area of southern Guangdong Province served as […]
Read more...The latest back-handed insult may be yet another variant of the Bush “we don’t do multilateralism” syndrome. Unfortunately, as various pundits writing at the Financial Times have pointed out, the US’s stranglehold on power is slipping. Even Obama in the campaign repeatedly said that a country cannot maintain military dominance if it is not a […]
Read more...We have been reporting from time to time on the impact of the credit crisis on international trade. The main focus has been on how buyers and sellers of cargos are finding it increasingly difficult and costly to obtain letters of credit. However, a second effect is on shipowners themselves, both directly (via plunging freight […]
Read more...We have gotten so large to throwing large numbers around in the US thanks to the various Fed facilities that the significance of the Chinese move may not be as obvious as it would otherwise be. $586 billion is a massive number for an economy the size of China’s. Recall our first stimulus package here […]
Read more...Reader Chris pointed us to some stories today on the difficult conditions in the shipping industry, the result of a falloff in trade. From Bloomberg: At least 20 percent of the vessels most commonly hired to haul coal and ore are sitting empty as steelmakers cut output and dwindling trade credit halts deliveries, Lorentzen & […]
Read more...The dreary forecast comes from Eric Fishwick, chief economist at CLSA, an Asia-focused private equity firm. His reports in particular contends that the Chinese cannot possibly meet its growth projections for next year. One does not cross the officialdom in China casually. That suggests that either 1) CLSA is quite confident they won’t be making […]
Read more...When it rains, it pours. Amazingly, the list of possible casualties from positions on forward freight agreements includes not only ship owners, traders, and charterers, but also hedge funds. From the Financial Times: Fears are growing in the shipping industry over the potentially big losses that could emerge this week on derivatives triggered by the […]
Read more...We have been writing for a few weeks that the credit crisis had engulfed letters of credit, a crucial instrument in international trade, particularly of commodities (ex oil) and other raw materials. With banks hesitating to extend credit to each other much beyond overnight (finally changing only by virtue of massive liquidity measures and recapitalizations), […]
Read more...Reader Michael appeared to be on a mission on Saturday and sent quite a few links on trade/shipping related matters. They were remarkably consistent in pointing to simply dreadful conditions and no expectation of near-term improvement. Indeed, further deterioration seems entirely possible. From Lloyd’s List: Freight rates in the Asia-Europe trades have crashed to record […]
Read more...We featured reports earlier this year on plant closings in China, and the suffering in manufacturing areas is becoming more acute as the global downturn cuts into Chinese exports. Reader Michael sent us this report on China’s toymakers, but it also stresses that China may be more vulnerable to a global financial shock than advanced […]
Read more...As Senator Everett Dirksen famously said, “A billion here, a billion there, and pretty soon you are talking real money.” Today, the Fed provided Brazil, South Korea, Mexico, and Singapore with dollar swap lines of $30 billion each (hat tip readers Robertm, Dwight). From the Fed’s press release: Today, the Federal Reserve, the Banco Central […]
Read more...Over the last few weeks, and accelerating late last week and early this week, it looked as if a full bore run on emerging markets was in progress. Now with the yen taking its biggest dive in two decades and carry trade unwinds a temporary thing of the past, emerging market and currencies are staging […]
Read more...In a bit of synchronicity, it seems that some mainstream commentators are starting to to take interest in a topic we’ve commented on in recent weeks, namely, how the difficulty in getting letters of credit is playing a significant role in the contraction in international trade (see our related post earlier today). John Dizard in […]
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