Chicken Soup for the Economy

In Art. 22 (Surveying the Damage), we cited the latest World Economic Survey which had just been published by the snake oil salesmen of the International Chamber of Commerce and the Institute for Economic Research. With tongue-in-cheek no doubt, The Journal of Commerce reported on the survey with this headline:

“Global Economy on the Mend, Says Survey”

According to the report, 1,120 “economic experts” from 120 countries had confirmed “the now prevailing view that the downs wing will be relatively short and moderate in most countries and not devolve into a recession…

“This view, coupled with the brightening outlook in some other parts of the world, particularly in the U.S., allows us to reasonably hope that the Western European economy will start picking up in the second half of 2012,” one of the “experts”said.

Let’s take a quick look at what those charlatans think isn’t being noticed.

    • From The Journal of Commerce (Feb. 24th, 2012) — “Northeastern Truckload Carrier Shuts Down”—“Northeastern truckload carrier Atkinson FreightLines closed its doors after being battered by rising costs and competition from larger national carriers … The 127-year-old company, founded as a horse-and-wagon trash hauler in 1885, closed the doors on Feb.17. “There’s no freight left in the pipeline,’ Atkinson said.”
    • From American Shipper (Feb. 24″, 2012) — “International Chamber of Shipping chief calls a halt for box ship building” — “The chairman of the International Chamber of Shipping, Spyros Polemis, is pleading for a suspension ofnew containership building. ‘Until the crisis is over we do need a moratorium on new orders for ships that have no economic purpose. Current markets would appear to be demonstrating just how seriously damaging the oversupply of ships has been to shipowners’ revenues, with many now struggling to meet operating costs,’ he said, according to London’s Financial Times… Mr. Polemis also warned that this year is widely expected to be a difficult year for shipping, as ‘much of the industry is still struggling with the serious consequences of a truly massive contraction in economic activity, with global trade estimated to have declined by nearly 10 per cent.’”
    • From Business Times (Feb. 24″, 2012) — “50% of dry-bulk carrier orders could be canned” —‘“(LONDON)As many as 50 per cent of commodity carriers on order at yards worldwide may never be built after 56 per cent of new dry-bulk vessels didn’t enter service in January as scheduled, according to Genco Shipping & Trading Ltd…. Prices of new ships carrying dry-bulk commodities slid to an eight-year low this month, down by 52 per cent from an August 2008 peak, according to Det Norske Veritas. The Oslo-based company monitors compliance with ship designs and structural rules.
    • ”From SchedNet (Feb. 24″, 2012):
      • —“Air China cargo volume slides 28.5pc to 73,300 tonnes in January …
      • —“China East Airlines cargo volume down 19pc to 97,200 tonnes in January …
      • —“Singapore Airlines cuts 20 per cent capacity owing to softening demand.”
    • From SchedNet (Feb. 24″, 2012) — “Singapore’s NOL suffers US $ 478 loss” — “Singapore’s Neptune Orient Lines (NOL), which owns APL, the world’s sixth largest container shipping company, has posted a US $ 478 net loss … The company attributed losses to high fuel costs and overcapacity as well as a weakening global economy … ‘The performance of container shipping is disappointing,’ said NOL chief executive Ng Yat Chung. ‘Overcapacity and higher fuel costs have negatively affected the whole container eS 2° shipping industry’…
    • From The Journal of Commerce (Feb. 27″, 2012) — “Maersk Lost $ 602 Million Last Year, Forecasts 2012 Loss” — “Maersk Line will remain in the red this year after slumping to a $ 602 million loss in 2011, said A.P. Moller- Maersk, parent of the world’s largest ocean carrier … Maersk has activated lay-up plans and will make more extensive use ofsuper slow steaming … Maersk announced earlier this month it will cut Asia-Europe capacity by 9 percent… “There will be overcapacity in the market, especially Asia-Europe. That must be dealt with,’ said Moller-Maersk ChiefFinancial Officer Trond Westlie … The company also said that its ‘outlook for 2012 is subject to considerable uncertainty, not least due to developments in the global economy’…”
    • From Business Times (Feb. 27″, 2012) — “Debt-laden shipowners risk bank seizure of vessels” —“(LONDON) Troubled shipping companies face the threat of seizures of their vessels as banks lose patience with an industry struggling with overcapacity and falling demand, industry players say. Banks have been fairly supportive until now, but lenders are under pressure to cut their exposures to risky and dollar-denominated assets such as ship and trade finance to meet tougher capital rules. ‘With all the other troubles that many European banks have, and the tightening noose of regulatory and capital adequacy rules, they have no choice left other than to face their demons,’ said Nigel Prentis, head of research, consulting and advisory with HSBC Shipping Services, Ltd. ‘An increase of arrests, foreclosures and forced asset sales appears inevitable,’ he said …

” They’re in big trouble, alright, but none of them seem to understand the underlying cause of the whole mess. The only way to reverse the world’s economic downs wing is to deal with the plight of the unemployed in the U.S. One way or another, for better or for worse, the U.S. has been the deciding force behind every event that has influenced the development — or destruction — of European and Asian continents over the past hundred years. The welfare of most of the world still depends upon the economic health of the U.S., and unless some forty or fifty million jobs can be created for idled Americans, the economies throughout the world will continue to nosedive. Fuel costs, slow-steaming, lay-ups, etc., etc., will be about as effective as a band-aid on a broken leg. “When the U.S. sneezes, the world catches pneumonia,” they say. Truer words were never spoken.