If this is the canary in the coal mine then we are in for a rough ride.
Let's begin with the shipping news. If nobody is buying your trucks, you don't need to rent a vessel to carry that shiny new 18-wheeler to its new owner. Hence the Baltic Dry Index, which tracks the cost of shipping goods and commodities, fell below 1,000 this week for the first time in six years.Slow Boats From China
Put another way, it is now almost 90 percent cheaper to ship goods over the oceans than it was at the beginning of the year. And because the huge vessels known as capesize ships can't currently charge much more than their daily operating cost of about $6,000 per day, their captains have slowed down to economize on fuel and save money, to about 8.68 knots from 10.33 knots in July, according to data compiled by Bloomberg.
It isn't just the oceans that are emptying. Air freight traffic dropped 7.7 percent in September, according to the latest figures from the International Air Transport Association. That's the steepest decline since the trade group began compiling the data in January 2003.
not good
Well, I wanted supply chain costs to increase so much, it would be another dampening effect on global labor arbitrage, but this sure doesn't look like it....
BTW: We need a blog post up just in terms of stuff on the front page and I'm wondering about economic indicators, what would be easier and cooler to get a "big picture" snapshot of so many of our quick posts at once. I have no idea but if there was some way to "macro-ize" all of these indicators in one big picture post or page that would be cool.
indicators
you could do like an airplane indicator display and set up the different measures like on a plane or a car speed display.
This should be interesting
if global trade collapses, then export dependent economics are going to be headed into the shitter.
I don't think that internal trade in the European Union is going to be effected, because there integration there is so robust, but I do think that countries like China are in for a hell of a surprise.
Exports are 37.5% of GDP in China.
The comparable number in the United States is under 9%.
If the trade around the Pacific Rim starts to unravel, then China is going to face an economic crisis of biblical proportions. And China depends on rapid economic growth in order to maintain public order.
There's already been a slow down as factories in the Pearl River Delta (Shenzen and greater Guangdong area) have started to shutter. Right now this part of China is at the stage where labor costs are too high to remain competitive in labor intensive industries like clothing assembly (as opposed to the production of cloth which is capital intensive)
Chinese factories have been outsourcing assembly to Vietnam, where wages are much lower, but internal transportation costs have higher.
This is creating large numbers of unemployed.
This could really bite Beijing in the ass in terms of political instability. And if Beijing can't bring home the bacon, then they have to be a lot harsher in the way they treat their public, and are likely to turn to intense nationalism.
Shipping traffic almost non-existent
The credit crunch has gotten so bad that shipping companies are going out of business.
New business opportunity for the poor of America
Buy a foreclosed-upon container ship and anchor it offshore! I wonder what you could rent empty containers for?
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Maximum jobs, not maximum profits.