Still Missing the Boat?
Without mentioning names – because a number of analysts will be dieting on their words in a little while – here’s the gist of what we’ve been reading:
“As soon as the powers-that-be take steps to stabilize the financial world, U.S. and international economies will begin to recover.” Or words to that effect. The reasons they give for the disastrous conditions existing today all miss the mark. Failing banks, tottering financial institutions and credit markets, high oil prices, a declining housing market and a falling off of car sales, they insist, were the main causes of our grief, and Wall Street’s collapse is what caused the world’s economies to tumble. It has yet to occur to these pros that unemployment is the real cause of the whole mess.
But the recession will end in the latter half of 2009, we’re being told, because depressed nations are planning to inject massive amounts of stimulus money into profit-making ventures like infrastructure, infrastructure, and of course, infrastructure. We’ll just spend our way out of this economic downturn, and the early signs of economic recovery will become evident, they say, when rising imports allow retailers to build up inventories again, when empty containers are being returned to Asia, and when ocean carriers take laid up ships out of mothballs. In fact, the recession, they assure us, will no doubt come to an end during the first half of this year.
They’re dreaming, and this report in today’s Bloomberg News doesn’t support such fantasizing:
“Mexico is postponing the construction of its planned Punta Colonet port on the Pacific Coast, and may scrap the project entirely because bidders have been unable to come up with the financing. The first simultaneous recession in the U.S., Japan and Europe since World War II has led to a 30% drop in port traffic on the U.S. and Canadian Pacific coast, making it difficult for potential bidders to get financing, Communications and Transport Minister Luis Tellez said in Mexico City.”
Israel’s GLOBES [online] brought additional dismal news:
“Sources inform ‘Globes’ that Zim Integrated Shipping Services Ltd. will mothball a substantial part of its fleet as part of its streamlining measures to cope with the severe crisis in the shipping industry … Shipping industry sources believe that Zim will mothball 30 – 40% of ships on its Israeli routes and a similar proportion on its international routes … Zim currently has a fleet of 100 ships. As ‘Globes’ reported, it has taken 20 ships out of service since the start of the crisis as shipping demand plummeted.”
A January 6th report in The JOURNAL of COMMERCE ONLINE stated:
“Idled ocean container capacity has reached 550,000 TEUs, with 210 vessels out of work as carriers continue to cut or suspend services in the face of sharply falling demand on key liner trade routes.”
[“… shipping demand plummeted”?? “… sharply falling demand …”?? Is it possible that some analysts are catching on? Are they finally keying in on the fact that economies thrive only when supplies are demanded by buyers … gainfully employed buyers who have paychecks to squander?]