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The Shipping News Suggests Economic Weakness

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Re: The Shipping News Suggests Economic Weakness

#51

Post by ThomPete »

tosseraccount wrote: post #36
rtuins wrote: post #9

There are other reasons why Baltic Dry Index is falling - new megaships are reducing shipping costs. http://www.forbes.com/sites/timworstall/2015/11/20/dont-aban...

Indeed. You can measure boat and rail traffic, but what about the digital economy? http://www.aei.org/publication/its-official-a-lost-decade-fo... : "One potential explanation that reconciles these observations is that structural changes in the US economy may have resulted in a statistical understatement of real GDP growth. There are several possible areas of concern, but the rapid growth of software and digital cont…

Which is all the more reason to treat technology not as an externality as it's being done now but as an integral part of GDP.

Re: The Shipping News Suggests Economic Weakness

#53

Post by TheCowboy »

VLM wrote: post #16
qaq wrote: post #10

Obviously oil price has 0 correlation with cost of shipping.

A rule of thumb is trucking spends 1/3 on fuel, more efficient rail spends 1/4 on fuel. Shipping is even more efficient, so its likely under 1/4 total costs. (edited to emphasize that if fuel cost magically dropped to zero, costs could not drop more than perhaps 20%. And fuel has dropped, but not to magical zero) Capex and maintenance are expensive.

qaq's assertion that shipping costs have zero correlation with oil prices is not accurate. It's not difficult to demonstrate that some correlation exists, and one can also do an overlay of shipping cost indexes to oil prices.

Shipping is already highly efficient in general, so it might be the opposite that fuel prices are a significant percentage of operating expenses. Low estimates I've seen state that fuel costs are around 40% of operating expenses. Source: https://people.hofstra.edu/geotrans/eng/ch7en/conc7en/bdi.ht...

I'm not arguing they're the only cost, but there has been a lot of hysteria about the Baltic Dry Index this month. So much that Snopes and Marine Traffic responded to it: http://www.snopes.com/cargo-ships-atlantic-map/

Re: The Shipping News Suggests Economic Weakness

#54

Post by vezzy-fnord »

jjoonathan wrote: post #48
brc wrote: post #4

The world economy is dominated by people in governments who believe that printing money, burying it and paying people to dig it up again will increase the amount of trucks built and goods shipped. No amount of failure of this theory will be enough for it to be abandoned, because it has a certain amount of truthiness to it, and it excuses profligate and wasteful behaviour. Both these things are fun and buy votes. The…

I don't buy it. Boom & bust cycles are driven by the fundamental difficulty of quantifying value. Since there is no true value, people base their opinions on those of others (+delay), leading to "inertia," leading to oscillation. The government might exacerbate the oscillations, but the lion's share of responsibility lies with the market. Complaining that the oscillations happen because the market "just isn't free en…

What you're describing might explain fluctuations, but it's inadequate and incomplete for the business cycle.

Virtually no one, not even Keynesian or other left-economists support make-work. It's mostly an idea favorable to laymen, or often done for more nationalistic rather than economic reasons. FDR was inspired by William Trufant Foster's and Waddill Catchings' policy advice for instance, who had Keynesian-esque underconsumptionist views but did not derive these from any economic theory per se.

Even ardent Keynesians will advocate a more sophisticated proposal of what amounts to government-owned employment agencies that combine private contract procurement with state investment projects, with the intention of having the unemployed serve as buffer stocks of labor to meet some form of output target. But not quite brute make-work.

(Actually the "quantifying value" problem makes no sense. It's not as if there is some objective essence called "value" that people seek. Value is largely denominated in units of currency. I suppose what you're getting at is the importance of monetary policy?)

Re: The Shipping News Suggests Economic Weakness

#55

Post by pessimizer »

horsecaptin wrote: post #44
bcg1 wrote: post #41

Earlier quoted context omitted.

Of course you should use more than one indicator... like commodities getting completely crushed across the board: http://finviz.com/futures_charts.ashx?t=ENERGY&p=w1 http://finviz.com/futures_charts.ashx?t=SOFTS&p=w1 http://finviz.com/futures_charts.ashx?t=METALS&p=w1 http://finviz.com/futures_charts.ashx?t=MEATS&p=w1 http://finviz.com/futures_charts.ashx?t=GRAINS&p=w1 Usually plummeting commodity prices are not a si…

A stronger dollar combined with a lack of a middle-class that can actually use the dollar's strength to consume more stuff means trouble.

A stronger dollar is what destroys the middle class by crushing exports: http://www.tradingeconomics.com/united-states/balance-of-tra... (click MAX)

http://www.usatoday.com/story/money/business/2015/05/05/trad...

Re: The Shipping News Suggests Economic Weakness

#56

Post by jessaustin »

meeper16 wrote: post #47

The sky is not falling. This is Bear hype. A group he's connected with is probably short the market. Wait for the Black Swan to trigger just like the Bear Stearns trigger of last downturn. Keep an eye on the yield curve, the most important indicator. It's not bending yet. I see these bears come out of the woods everytime they beat the "the bull run has been too long" drums.

As I understand the term "black swan", it isn't something for which one can wait. If a particular event occasionally happens at a particular point in a business cycle, then we can assign a rough likelihood to that event, and it isn't a black swan.

Re: The Shipping News Suggests Economic Weakness

#57

Post by vezzy-fnord »

calibraxis wrote: post #50
vezzy-fnord wrote: post #35

Earlier quoted context omitted.

Funnily enough Chomsky is implicitly assuming that government spending has a crowding out effect, which is an idea popular with economists who are "hired to develop capitalist theology," as you label them. But, probably not. Even "social spending" opens up lots of procurement opportunities for the corporate manager. There might be some crowding out in real terms (government having political authority to exclude activ…

> "They see corporations as evil entities that spontaneously emerged from the ground to usurp the state" This is the problem in an HN culture where commenters don't support claims with cites. Chomsky frequently explains that corporations are creations of the state, and they share the same interests to a first approximation. You can find it in the book I referenced, or google for sources. This comment seems to paint h…

In an interview, he clearly states that he favors maximization of state power in some narrowly defined "short term," and largely believes that the only alternative to a state is anarcho-syndicalism. He's relying on it withering away. [1]

I know full well he isn't a liberal and never implied that he's one (in the modern Galbraith sense). Nonetheless, most analyses by the revolutionary left are definitely slanted towards a picture of painting the issue as being primarily one of corporate hegemony.

[1] https://www.youtube.com/watch?v=PiqPCRtzOBw

Re: The Shipping News Suggests Economic Weakness

#58

Post by ihsw »

rdlecler1 wrote: post #49
bcg1 wrote: post #41

Earlier quoted context omitted.

Of course you should use more than one indicator... like commodities getting completely crushed across the board: http://finviz.com/futures_charts.ashx?t=ENERGY&p=w1 http://finviz.com/futures_charts.ashx?t=SOFTS&p=w1 http://finviz.com/futures_charts.ashx?t=METALS&p=w1 http://finviz.com/futures_charts.ashx?t=MEATS&p=w1 http://finviz.com/futures_charts.ashx?t=GRAINS&p=w1 Usually plummeting commodity prices are not a si…

China had an outsized affect on comkodity demand, at the same time capacity has been over built for many years. For oil, obviously the US resurgence has been a huge factor, and for food crops they had a couple of very very good years globally (and new land has been brought online).

Several currencies are sliding down against the USD (for a variety of reasons).

Food crops may be good but food prices are the first thing to spike when inflation spikes, and many nations have seen food prices climb ~20% across the board without parallel increases in wages and salaries. This is not good.

Re: The Shipping News Suggests Economic Weakness

#60

Post by ihsw »

rdlecler1 wrote: post #52
qaq wrote: post #10

Obviously oil price has 0 correlation with cost of shipping.

Actually could put upward pressure if they start to store excess capacity in tankers and have the ships run slower.

They don't need to drive slower, they can park themselves outside of ports and refuse to discharge their cargo.

And they are doing just that.

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