For many of the borrowers, it has become a question of survival, and the subject of profits hardly comes up at all anymore. Depending on the type of ship, charter rates are up to 80 percent lower than before the crisis, when they were at their highest point. In fact, writes Hamburg shipbroker Harper Petersen & Co., charter rates have arrived at "a painfully low level, and most shipowners are still losing money." For lack of contracts, almost 500 ships are currently at anchor in ports worldwide.
In the boom years, intoxicated with their success, German shipowners ordered $60 billion worth of new ships. Banks were expected to provide 70 percent of the financing, while shipowners planned to drum up the rest of the money from German small investors through so-called "ship funds" set up by brokerage firms like HCI, MPC and Lloyd. But now investors are balking. The supposedly safe ship funds, which had promised high returns subject to minimal tax rates, are suddenly requiring additional investments to cover their losses.
With the first funds already capitulating, shipowners can no longer depend on selling shares in new ship funds to finance their current orders.
Although brokerage firms and shipowners guarantee the equity shortfall for which the banks are now providing interim financing, they are unable to come up with the cash. "In theory, many are bankrupt," says Hamburg industry expert Jürgen Dobert. "But the banks are deferring debt service and are not enforcing their claims because they know that an entire house of cards could collapse if they did."
In the worst case, shipowners would have to sell ships from their fleets. "This would lead to new market distortions that would affect shipowners, shipyards and banks," one banker warns. Fire sales would depress already low ship prices even further, thereby reducing the value of the banks' collateral.
More Here..
This piece of data says it all, unused ships, plus trucks and trains are also down. It is the true indicator of the state of our economy and the world consumption machine. And I quote "Ignore that man behind the curtain, I'am the Great and Powerful Wizard of OZ" LOL
ReplyDeleteIn the worst case, shipowners would have to sell ships from their fleets. "This would lead to new market distortions that would affect shipowners, shipyards and banks," one banker warns. Fire sales would depress already low ship prices even further, thereby reducing the value of the banks' collateral.
ReplyDeleteGreat, now we have the great used ship sale.
Crikey, how long can this game go on.
-Cars
-Trains
-Trucks
-Heavy equipment
-Personal Jets
-Homes
and now Ships
This.
Will.
Not.
End.
Well!
For 95% of the world!
Been keeping an eye on the Baltic Index #s for several years along with food reserves in the US...We used to keep millions of tons of soy/wheat/rice etc etc in warehouses...People the cupboard is bare.
ReplyDeleteWTF?...Yet at the same time here where I'm at people are still overbuying and goofing around...Sometimes though being that I'm known as the "Weird one" I get questions in hush tones about what I think...To those I offer simple advice...Buy shit you need to consume, things to protect yourself, then things that will keep you occupied while things get figured out.
I don't think we're going Mad Max...I think we're going Argentina circa 2000...Either way 80%-90% of polulation TOTALLY unprepared...I for one don't care.
The signs have been there in neon...The information is available everywhere...BUT people choose to believe what they want.
Fine...I fear the first couple of months...Afterwards it'll settle...Prep like an ant for the winter...Don't be the grasshopper!
In capitalism ,production and distribution form a whole economy .
ReplyDeleteCapital in its commodity form is one stage of the movement of capital in its quest to expand its value.
If capital in its commodity form of value does not circulate in distribution , no new value created in production can be realised as cash , at sale and there can be no profits either.
Cash however must also exist in the hands of the buyers to create real effective demand and not just wishes. For production and its twin circulation to continue the bulk of the realised cash must be reinvested in new resourses and labor power for the movement/cycle of capital to continue. If a portion of the profits are also re -invested the economy may grow and the opportunity to make bigger profits results.
The past wishes of the people have been satisfied by extending credit. The limit is the ability of people an the governments treasury to pay interest on the credit to capital.
The movement of capital can be stimulated by printing money and Keynesian spending .
By the government creating debt for future generations. But real value has to be exchanged for real value .And the belief that the dollar paper of the biggest economy of the world represents real value is doubted by the rest of the world and circulation of capital in its commodity form is shrinking as credit is withdrawn.
The less commodities that circulate the less cash profit can be realised and shipping ,rail and trucking statistics show how much commodity -capital is circulating in the real economy and how real is the “recovery” .
We have lots of trains going thru town where I live, no slow down. Coal, grain and many tanker cars along with some car carriers....no trouble here in the Midwest as far as I can tell. Trucks all day and night, lots of commerce. I have noticed the local U-haul place has more one way trucks ending up in town though, many folks towing cars with tags from CA, AZ and FL
ReplyDelete7:57 that's weird...In Cali check out our main ports in LA and Long Beach...Look at the thousands of train cars being mothballed...Thousands of new cars being stored in fields...The Baltic Index doesn't lie...We're not even at 70% of where we were...Less is coming in just we're using the last of what's stored away...It's spooky.
ReplyDelete