I posted a brief comment about this topic in October. But I did not explain much. Deflationary recession or Hyperinflation? http://groups.google.com/group/world-thread/browse_thread/thread/cb4aea8161314fb1/7435a4b3883542dd?hl=en&lnk=gst&q=baltic#7435a4b3883542dd
The whole drop along the year has been more dramatic than 50%. The best way to measure international trade without currency exchange rates "noise" or distortions because their volatility is through the so called Baltic Dry Index (1). The six months I mean are related only to the period between May 2008 and October 2008. When Saudia flooded the market with oil and the Fed stopped US dollars injections simultaneously. As you can see below, the total fall has been dramatic, terrible, ... maybe you can find a better word for a total fall of ... 94% ! Baltic Dry isn't a Latvian deodorant or an Estonian cocktail. Rather, it's a number issued daily by the London-based Baltic Exchange, which traces its roots to the Virginia and Baltick coffeehouse in London's financial district in 1744. (2) The index provides "an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Handymax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain. (3) Every working day, the Baltic canvasses brokers around the world and asks how much it would cost to book various cargoes of raw materials on various routes (e.g. 100,000 tons of iron ore from San Francisco to Hong Kong, or 1,000,000 metric tons of rice from Bangkok to Tokyo). (3) The BDI is termed a leading economic indicator because it predicts future economic activity. (3) On 21 May 2008 the index reached its record high level since its introduction in 1998, reaching 11,793 points. Half a year later, on 5 December 2008, the index had dropped by 94%, to 663 points, the lowest since 1986. These low rates move dangerously close to the combined operating costs of vessels, fuel, and crews. By the end of 2008, shipping times had been already increased by reduced speeds to save fuel consumption, but lack of credit meant the disappearance of letters of credit, historically required to load cargoes for departure at ports. Debt load of future ship construction was also a problem for shipping companies, with several major bankruptcies and implications for shipyards. This, combined with the collapsing price of raw commodities created a perfect storm for the world's marine commerce. Cheaper fuel was no longer able to offset this situation and global letters of credit are beyond the powers of the Federal Reserve. (3) (1) The Baltic Exchange http://www.balticexchange.com/ (2) The Shipping News http://www.slate.com/id/2090303/ (3) Wikipedia. Baltic Dry Index http://en.wikipedia.org/wiki/Baltic_Dry_Index When will it recover to previous levels? Probably, it will take many years. Very probably, this crisis will not be short. Peace and best wishes. Xi On Jan 13, 10:32 pm, CincyBabe <[email protected]> wrote: > 50%! Oh, my. > > It will be interesting to see how long it takes for the world markets > to right themselves again. Thank you for all the information, Xi. > > On Jan 13, 12:34 pm, "[email protected]" <[email protected]> > wrote: > > > > > My comment: It is happenning worldwide. International trade fell > > almost 50% in just 6 months. > > > Peace and best wishes. > > > Xi > > > Drop in U.S. Trade Gap ‘Slim Comfort’ as Exports Keep > > Plunginghttp://www.bloomberg.com/apps/news?pid=20601087&sid=aPF7lI_nwNVA&refe... > > > Jan. 13 (Bloomberg) -- U.S. exports fell in November, capping the > > biggest four-month decline in more than a decade and signaling trade > > will contribute little to economic recovery, even as the recession > > depresses imports. > > > Exports decreased 15.2 percent from August to November, the most since > > at least 1992, according to Commerce Department figures released today > > in Washington. The trade deficit narrowed to $40.4 billion, the > > smallest since November 2003, as imports fell to the lowest level in > > three years. > > > “The key message from this report is bad news,” said Nigel Gault, > > chief U.S. economist at IHS Global Insight in Lexington, > > Massachusetts. “It is slim comfort that the U.S. cut its demand for > > imports more rapidly than the rest of the world cut its demand for > > U.S. exports. That might cushion the U.S. downturn a little, but it is > > not a route to recovery.” > > > American exports and imports are both contracting as the global > > economy faces the first simultaneous recession in the U.S., Japan and > > the euro region in the postwar era. While plummeting demand helps trim > > the nation’s purchases of foreign goods, falling exports of U.S.-made > > products will hobble American factories and jobs. > > > Trade has contributed to growth in the U.S., the world’s largest > > economy, since the first three months of 2007. > > > Americans bought 12 percent fewer goods and services from abroad, > > reducing imports to $183.2 billion as demand for foreign crude oil, > > automobiles, computers and televisions sagged. Exports dropped 5.8 > > percent to $142.8 billion in November, today’s figures showed. Foreign > > purchases of automobiles were the lowest since October 2006. > > > Decline in Trade > > > “The real story is the contraction in important export volumes that > > underscores the decline in world trade,” John Ryding, chief economist > > at RDQ Economics LLC in New York, wrote in a note to clients. “An > > economy cannot grow its way out of a recession by reducing imports, > > especially one the size of the U.S.” > > > Slumping demand for American-made computers and semiconductors > > contributed to the drop in November exports. Intel Corp., the world’s > > largest chipmaker, said this month that fourth-quarter sales dropped > > 23 percent, more than it projected in November, as the global > > recession intensified. > > > Intel Chief Executive Officer Paul Otellini, 58, has said he expects > > the current U.S. recession will be the worst of his lifetime. The > > Santa Clara, California-based company’s chips run about 80 percent of > > the world’s PCs, making it a bellwether for technology spending. > > > On Jan 13, 4:26 pm, CincyBabe <[email protected]> wrote: > > > > This is no doubt a fallout from the banking and credit mess, Xi. When > > > sales fall, and stores cannot get credit, they can't order new stock. > > > With the US reliance on Chinese goods, I'm sure that is a major > > > factor. > > > > On Jan 13, 9:16 am, "Xi Ling" <[email protected]> wrote: > > > > > My comment: Foreign trade has two main indicators to measure. > > > > > One is size of trade. As a consequence of international collapse of > > > > trading > > > > that is close to 50% since July, export and import fell. Its > > > > consequence is > > > > an inmediate fall in the economic activity of that economy, in this case > > > > China´s economy. Everybody predicts that this rate will not rise in the > > > > near > > > > future as Europe and USA demand is declining and nobody can predict > > > > when it > > > > will rise again (if it does). That is why VP Xi and Premier Wen are > > > > urging > > > > all economic areas and all entrepreneurs to expand to new markets. > > > > > The second indicator is surplus (or deficit). As many predicted, this > > > > rate > > > > is flat. Imports fall as much as exports. Therefore, surplus does not > > > > fall > > > > yet. We cannot expect that it remains like that as soon as domestic > > > > demand > > > > starts to grow as much as promoted through the stimulous plan. Probably > > > > we > > > > will see early signs since March or April, and a clear turn of its trend > > > > since June-July. On the one hand it is possitive because it allows to > > > > sum > > > > reserves to be used later, sort of national savings. But on the other > > > > hand > > > > it means that domestic demand is not growing yet, or not enough. > > > > Obviously > > > > it is early and the first perception is possitive: government are > > > > investing > > > > more and more, and consumers have balanced their attitude toward a more > > > > balanced rate savings-consumption, the third leg, corporations, will > > > > join > > > > soon. We should pay attention to this chart around March-July, f we do > > > > not > > > > see signs of a more balanced import-export rate, or rather, if imports > > > > fall > > > > as much as exports, we will have a problem. > > > > > Peace and best wishes. > > > > > Xi > > > > >http://news.xinhuanet.com/english/2009-01/13/content_10650248.htm > > > > > BEIJING, Jan. 13 -- China's exports fell two months in a row for the > > > > first > > > > time in a decade, reflecting the impact of the global financial crisis > > > > on > > > > the "workshop of the world". > > > > > According to Customs figures, to be released Tuesday, exports in > > > > December > > > > dropped 2.8 percent year-on-year, after falling 2.2 percent in November. > > > > > Imports in December dropped, too, to 21.3 percent year-on-year, after > > > > having > > > > fallen 17.9 per cent the previous month. > > > > > But since the drops took place in November and December only, the > > > > country > > > > will still see an impressive 17.2 percent rise in exports and 18.2 > > > > percent > > > > increase in imports for the whole of last year. The previous year's > > > > records > > > > were much more impressive, though, with exports and imports both > > > > recording a > > > > 20-plus percent growth. > > > > > Last month, the exports and imports volumes were 111.2 billion U.S. > > > > dollars and 72.2 billion dollars - and in November, they were 114.9 > > > > billion > > > > dollars and 74.9 billion dollars. > > > > > The falling trend in exports is likely to continue in the first two > > > > quarters of this year, some Beijing-based trade experts said yesterday. > > > > > Su Chang, macroeconomic analyst with China Economic Business Monitor, > > > > said > > > > foreign trade could decline further and would pick up when the U.S. > > > > economy > > > > showed signs of recovery. > > > > > The country is likely to see "almost zero growth" in exports in the > > > > first > > > > quarter of this year, and perhaps "a fall of 6 percent" in the second > > > > quarter, Su said. > > > > > The drop in exports has been attributed to falling demand in the > > > > European > > > > Union (EU) and the U.S., the country's top two trade partners. > > > > > Ma Jun, Deutsche Bank Greater China's chief economist, said that > > > > given the > > > > state of the EU economy, China's exports could grow only 6 percent this > > > > year. > > > > > The trade experts said the other threat to Chinese exports could come > > > > from > > > > Vietnam, India and Pakistan because they are offering lower prices for > > > > goods > > > > being made there. > > > > > The government has announced a 586-billion dollars package to boost > > > > domestic demand. But, Su said, it is too early for those measures to > > > > have > > > > taken effect. > > > > > xin_532010613104643728623.jpg > > > > 50KViewDownload --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
