My ex-husband worked in international shipping for over 30 years. It is interesting watching it grow to monster size thanks to free trade and now, its collapse. The financial earthquake and tsunami that wrecked this game is continuing to rumble but it has been added to by real, natural earthquakes, tsunamis and volcanoes. Not to mention, floods. On top of all of this is the totally human-generated problems of war. The US and EU insist on one war after another aimed at taking over and controlling seething masses of angry Muslims who happen to live on top of world oil reserves.
All of this is causing a major global economic collapse that no longer can be papered over by ZIRP loans from Japan and the US. There are many people who imagine interest rates are causing our problems and all we need is totally free credit and we are home free. This is totally insane and we see why: Japan is ZIRP for decades and each year, things deteriorate further.
The handing out of ZIRP loans in time of war is a prescription for disaster, big time. The military is quite capable of soaking up infinite money and fighting forever. This is a classic problem. One thing is certain, giving out ZIRP money to everyone at the top leads to inflation and in today’s case, this inflation is mainly in oil and food speculation. This, in turn, is really killing global free trade since it has become economically difficult to get profits from shipping manufactured goods due to the high cost of transportation.
On top of this lies the problem of inflation itself: when you manufacture something, knowing the ability to price above the rate of inflation is highly important. As economic activity falls, the price of various manufactured products fall due to customers spending all their money on food, fuel and medicine. These go up in price while all other things fall. This rift between goods being consumed leads to a downward spiral of the things that create a vibrant society.
We end up in a situation where everyone tries to merely stay alive. The big screen TVs from Asia, for example, sit in stores, price cutting ruthlessly still doesn’t move them out. Time is money and the longer it takes to sell something, the less profit. If you buy x-number TVs and it takes 3 months rather than 3 weeks to sell, the cost of keeping them in stock for 10x longer is very significant. Each day reduces the profit margin and if there is sneaky hyperinflation at work, this doubles the losses which is why moving things out as fast as possible is so vital.
Most people have little clear memory of the last times we had fuel and debt hyperinflation which is called ‘stagflation.’ That is, there is depression in pricing of many things from houses to TVs but the cost of actually staying alive shoots rapidly upwards. This is why the government, instead of honestly dealing with this stagflation problem, cut it in two like Solomon’s baby: the hyperinflation caused by high fuel and food prices was entirely removed from inflation statistics!
This way, when we go into a stagflation mess, the government can lend money at ZIRP rates, claiming there is a depression when there really is hyperinflation. When people cease buying TVs, then they cease being part of the ‘cost of living.’ When people cease buying houses, ditto. When people spent all their money on food and fuel then the price of these are really the ‘cost of living.’ Indeed, very much so! The excuse of ‘volatility’ is stupid, the entire point is to track volatile things and see how these impact on the other sectors. And we have known since 1973 that if fuel prices go up, so does food and this drives down the prices of everything else and it kills the economy.
Free credit can’t fix this, it makes it worse! The more free credit, the more speculators use this to drive up the price of commodities. They aren’t speculating on more TV sales. They are speculating that oil will be further disrupted by wars.
Yesterday, I spent time looking at shipping matters. First, the keystone of world trade/shipping has been Japan for the last 30 years. Japan is now fatally crippled by first, geological events and now, human stupidity. The Fukushima mess continues unabated: Japan’s Crippled Power Plant Faces More Difficulties as ‘a drone aircraft being used to take air samples at Japan’s crippled Fukushima Daiichi nuclear power plant crash landed on the roof of the Unit 2 reactor.’
Far from being able to go about at will and do things, the drones are having many difficulties. They have many limitations and one of these is due directly to the nature of nuclear radiation interfering with electronics. Right now, ‘experts’ are still trying to simply see what the hell is going on and they are barely able to do this. Another major reason to terminate all nuclear power systems. This is very much like finances: since the US and UK created a totally opaque system of derivative deals, we have an ongoing catastrophe that still hasn’t been fixed nor the secrecy fully penetrated.
In Japan, the Death March continues as Pensioners to Aid Nuclear Plant Clean-Up on Worker Shortage. The pathetic response to this catastrophe is finally falling away and finally, the poor people are beginning to show some spine: Survey shows disappointment, anger among Fukushima evacuees. This is the first step on a very long road of future battles where these poor people will have to fight tooth and nail for justice and for their very lives. If they were Chinese, there would have been riots a month ago.
In the West, every time the Chinese resist or fight back, our craven leaders imagine the government there might fall. I say, it shows the Chinese are active, brave and full of life and hope. Whereas, the Japanese, for example, are weak, oppressed and without even a ray of hope. They are on a major death march as a people, a culture and a society and they better wake up and fight this depressing, powerful undertow and swim back to sanity. First off, they have to become political in the real sense and this doesn’t mean voting for one or the other corrupt, barely articulate political leader but to really join into some political debate about what ails Japan and to admit the culture and society is on the road to annihilation.
Just like in the US, despite ZIRP borrowing, taxes have to go up: Japan govt panel proposes tax hikes for reconstruction. Will it be a regressive tax or a tax on the rich? I know the answer, it is the same corruption as the US where the rich evade taxes and the poor die. Here is one of the silly solutions to the nuclear catastrophe: Sunflowers to clean radioactive soil in Japan. Turn the entire country into a van Gogh painting?
Then there is the problem of the Mountains of rubble which remain a headache in Fukushima. Call Tennessee! The GOP there wants your nuclear garbage! Isn’t that a fine exchange: we get Toyotas in exchange for radioactive waste that is dangerous! I can’t wait. This is the bitter end of world free trade, by the way. Americans eating garbage, breathing other nation’s nuclear wastes, living in poverty with no hope of any good manufacturing value-added jobs.
In the US, the mad wars continue as the GOP becomes, as usual, peaceniks when a Democrat is President. So, the House Rebukes Obama on Libya, BUT Stops Short of Funding Cutoff. This is all about being fake. We get the wars while the GOP pretends they don’t want it. Sad, isn’t it? Justin at Antiwar.com is pleased his GOP buddies are now antiwar but he can’t seem to figure out that this is all fake. Sheesh.
Meanwhile, the Libya war is backfiring, killing world trade better than any laws or changes in trade strategies. Make diesel too expensive and voila: no free trade. So, here is the reason why the government announced they were releasing oil from our reserves in order to make diesel cheaper: Diesel Gas Prices Increase Again – Ocean Shipping Blog. The end of free trade is very much attached to the price of oil!
Transportation within states is also very affected by high diesel prices: Weekly On-Highway Retail Diesel Prices
It was down to $2.00 a gallon in early 2009. This coincided with the near total collapse of world trade when oil prices spiked previously. I remember when diesel was twenty cents per gallon, by the way. Shows how old I am! Anyways, after leveling off for around six months, it took off like a rocket again as wars spread and has reached a new peak. Only after it again, killed world trade, has it slightly declined.
So, if we cease world trade, the price of diesel will fall back to below $2 a gallon! I don’t hear anyone at the top announcing this amazing fact! There are so many reasons to stop world trade as far as the US is concerned, I am amazed how this is never brought up. Our trade deficit hasn’t much improved due to us importing too much energy. But this is a start at fixing the trade problem (high diesel prices, that is!).
The price of say, steel is falling again due to high energy prices. Making and moving steel which is barely produced in the US anymore, is a complex problem directly caused by the US deliberately destroying its own industrial base and the issue of free trade. So, Black Sea billet down on weak demand, may fall further while Demand slows down in Italian flat steel market and Rio Tinto cuts iron ore price: sources. So, Major steel producers continue to cut prices because the Chinese stainless steel market remains weak.
The Chinese are killing inflation the harsh way. Also, unbeknown to most Americans, China’s biggest trade partner has been Japan, not just the US. And trade with Japan has collapsed as Japan falls off the cliff. No one wants Japanese exports, not even cars, many of which are being produced where radioactive rain in falling. I like to visit this site to view world shipping and this week, it shows some awful things are going on in Asia: it is SHUTTING DOWN!
First, let’s look at the Northeast US. The purple marks are yachts. Note that they are all over the Cape Cod area and some are in the Long Island sound. But look at DC: a FLOTILLA of yachts! Guess why? Well, the rich sail between the Wall Street summer homes and DC as lobbying continues and what better place to do this than at sea?
Otherwise, we look at NY and see virtually no shipping. The diamonds are anchored ships and there are virtually no container ships. There are several anchored offshore of the NJ/Penn ports and one is at sea, going to NY harbor. That is it! I used to watch shipping from Grave’s End and this is about as quiet as it gets. Quiet as a Davy Jone’s locker after the Titanic sank.
Now on to the West Coast: LA. There are many more container ships still compared to NY. But most of the shipping is oil containers from Alaska. Fewer yachts and most are at anchor. Still, this is far less shipping than I usually see.
When we go to Europe we see very active shipping mainly within the EU. And lots and lots of yachts.
Same with the Mediterranean Sea and the Black Sea. Much of this is oil. Most ships in the Mediterranean Sea are oil ships.
The Persian Gulf is very active with lots of shipping, again, mostly oil. Dubai being the major point of action and note all the yachts.
Here is the Strait of Malacca which is still rather active but with only half of normal traffic.
This is the only exception: Beijing and Tianjin. Nearly all the ships are going in or are at anchor. I bet many of these are Chinese ships, not importing/exporting ships.
Iran condemns IEA decision to release oil stocks: here it is! The Saudis are worried that the West which supports their noxious, anti-female, religious dictatorship, is falling apart so they are OK with cheaper oil but some of the rivals of Saudi Arabia like high oil prices, especially the countries fighting the US and Israel. So Gaddafi joins the Iranians as well as Venezuela, etc in demanding higher, not lower oil prices.
This is driving the US nuts for we need cheaper oil since we consume more imported oil than any nation on earth. China wants cheaper oil, too. But the US wants to destroy China. But needs Chinese imports. This is a HUGE instability relationship point as the US has basically openly declared war on China in the oceans offshore of China! U.S. ready to arm Philippines amid China tension is the latest horrible news from the Pentagon and Hillary’s Valkyrie warmongering.
China opens string of spy schools is very funny. Oh, the Chinese will have a CIA sort of business? HAHAHA. I hope they teach the youth there to be patriotic and not psychotic like our own guys here. No lying! No fake information! That is key: seeing reality is important for any spy. You can’t be delusional. And nothing is more delusional than the US arming everyone in Asia in hopes they will all commit suicide and go to war. Japan is already basically surrendering to China! China and Japan: new economic diplomacy and Asia Times Online :: Japan News – New energy to Japan’s diplomacy are two articles about how this is now turning in China’s favor.
Japan can either end it like a bullet to the brain or can change direction. And soon! Time is running out. The US wants war and war would most definitely turn all of Japan into one big Hiroshima with no survivors. The Chinese don’t want this and I hope the Japanese agree.
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