“Shatters the complacency” that TBTF carriers “are immune to failure”
South Korea’s Hanjin Shipping Co., the world’s seventh largest container carrier and a unit of Hanjin Group, Korea’s 10th-largest conglomerate that also controls Korean Air Lines, has been in financial trouble for a long time. Bankruptcy or rather a government bailout, not only for Hanjin, but also of the second largest Korean carrier, Hyundai Merchant Marine (HMM), has been bandied about for as long.
HMM was restructured, with creditors taking a big hit, including its main creditor, the state-owned Korean Development Bank which in the process became HMM’s largest shareholder, which boils down to a taxpayer bailout. Pending regulatory approval, the restructured HMM will join 2M carriers Maersk Line and MSC in a new alliance next April.
But Hanjin’s debt restructuring and bailout efforts collapsed – to the great surprise of the industry, which, having seen the bailouts and other maneuvers of 2009, figured that the major container carriers were too big to fail due to their role in the global economy and that they’d always get bailed out.
On Wednesday, Hanjin filed for rehabilitation in Seoul (similar to a US chapter 11 bankruptcy) after its creditors – the largest being the Korea Development Bank – which had tried to keep the carrier afloat for years, threw in the towel and cut off a financial lifeline.
The court has given Hanjin until November 25 to submit a rehabilitation plan. In reality, the court is simply granting the company some time for an orderly liquidation. The Korean government has already called on HMM to buy Hanjin’s healthy assets – thus choosing the survivor.
Hanjin’s liquidation would be by far the largest container-carrier failure in history. The two carriers handle the majority of South Korea’s exports, which account for about half of its GDP! So the fact that the Korean government let TBTF Hanjin fail is a sea change.
The filing created instant chaos at ports and for shippers worldwide. Creditors seized Hanjin ships. Ports denied them access. Container terminal operators refused to handle the cargo. Goods got stranded. Supply chains froze up. Crews were said to be leaving ships because they’re not getting paid.
Hanjin has numerous service partners with slots on Hanjin ships, and they’re now tangled up in the chaos, particularly the CKYHE Alliance (Cosco, K Line, Yang Ming and Evergreen). Drewry Maritime Research:
[S]uch is the intertwined nature of the industry whereby carriers swap space freely in order to expand their network offering that many more lines will be affected. Many shippers will be unaware when they book with carrier Y that their container will actually have been moved on a Hanjin-operated vessel.
On Friday, Hanjin filed for Chapter 15 bankruptcy protection in the US. A hearing is scheduled for Tuesday. If recognized by the court, the filing will prevent creditors in the US from seizing Hanjin’s ships or commencing other legal actions for the duration of the Korean bankruptcy proceedings.
On Monday, South Korea’s Financial Supervisory Commission, which is trying to bring some order to this chaos, said that plans are underway to file for court protection in 10 countries this week and in dozens of other countries soon, in order to prevent Hanjin’s ships and other assets from being seized by creditors. By now, the number of stranded ships has risen to 79 (61 container ships and 18 bulk carriers), nearly two-thirds of Hanjin’s 128 operating ships.
The head of the Commission, Yim Jong-yong, admonished the majority owners: “Aside from the government’s efforts, Hanjin Group and its affiliates should be more aggressive in coping with this chaotic situation. The shipping line is their company.”
The Commission has set up a task force to limit the impact of Hanjin’s collapse on Korea’s export-dominated economy. On Monday, it said that bailouts from a supplementary budget are being planned for the many Korean contractors of Hanjin to keep them afloat.
Vice Finance Minister Choi Sang Mok told reporters on Monday, according to Bloomberg, that the government will focus on getting cargo unloaded from Hanjin ships stranded around the globe and have them shipped by sea or land to their destinations in order to ease supply-chain disruptions.
And he emphasized that the government has no plans to use public funds or guarantee Hanjin’s debt to prop up the carrier and bail out its creditors. Since a main creditor is the state-owned Korean Development Bank, Korean taxpayers get to eat much of the losses.
When I wrote about a Hanjin bailout versus bankruptcy back in March, container freight rates had totally collapsed as a result of lackluster demand and dizzying overcapacity of ships. Post-Financial Crisis QE and zero-interest-rate policies by central banks around the globe had bamboozled industry executives into believing that central banks could actually stimulate demand. And they’d commenced a ship building boom that is now meeting reality.
By March already, bailouts of Hanjin and HMM were underway. The Korean government was setting up a $1.2-billion fund to bail out the two carriers. The Korea Development Bank would chip in. The industry believed in it.
“The most important thing is each company’s possibility of revival,” Oceans and Fisheries Minister Kim Young-suk said in an interview on March 20. Both would preferably survive as independent companies, he said. “If the companies get merged, file for court receivership, or are sold to a third party, they will be completely dropped out from their global alliances… it would be a huge loss for the Korean shipping industry if we lose one of them that has maintained its hard-won membership.”
But I wrote at the time:
The risk of carrier bankruptcies – with the awkward side effect of stranded cargo – increases, according to Drewry, “the longer rates remain non-remunerative….”
Today, Drewry Maritime Research came out with a report titled, “Zombie Apocalypse.” And it spelled out the problem:
In 2009 when the container industry posted operating losses of nearly $20 billion and many lines were said to be minutes from bankruptcy, none died. The “zombie” carriers’ survival methods were varied and complex, ranging from off-hiring ships to requesting government support, but ultimately they worked.
Having survived the worst crisis the industry has ever faced, the assumption grew in strength that major carriers could not be killed off. While some smaller players have fallen by the wayside this decade, none were remotely in the same league as Hanjin Shipping….
Hanjin’s move into administration shatters the complacency that major carriers are immune to failure and can stomach prolonged years of low rates and financial losses.
It was this complacency that blinded most to the very real possibility of Hanjin’s demise. It was common knowledge that the company was in financial trouble; from 2010 to the first-half 2016 the company’s operating loss amounted to approximately $580 million with most of the damage emanating from the container division. Since 2013, Drewry Financial Research Services has warned that Hanjin was dangerously leveraged and living on borrowed time.
Drewry concludes:
The impending bankruptcy of Hanjin should serve as a warning that carriers do have breaking points and that they will not always be rescued. Unless shippers make the altruistic decision to pay more to save carriers (unlikely), they will need to pay more attention to the warning signs.
And for shipping companies, it’s still tough out there. Read… World Trade Falls for Second Quarter in a Row
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When the shippers remotely think the recent rates were ” normal “,
iow well below the actual cost price per teu, they will have a rude
awakening.
I feel/have no pitty, they got what they asked for.
Their Holiday goodies stranded all over the world ports.
To actually “get” them at their destination will be very costly.
( if they can get them released at all in time ?)
Our Danish friends at Maersk are rubbing their hands and smiling.
Rates will go up for sure. They are laughing all the way to the bank.
Good for them!
Maersk has very little to gloat about, just like the rest of the European carriers.
Traditionally Maersk had their ships built “in-house”, meaning either at Odense, Denmark, or in other Baltic/North Sea shipyards. With the Triple-E container vessels they started having them built in the Far East, partly because it’s cheaper but chiefly because local shipyards can deliver ships far faster than European ones.
Maersk has so far only ordered ships from Daewoo but MSC and CMA-CGM (among others) had their newest >150,000GT carriers built in China.
As is well known, this means handing the Chinese not merely the blueprints, but the expertise as well and faster than you can say “Tariff” COSCO started fielding mega-carriers every bit as good and efficient as those belonging to their competitors.
As we well know COSCO is fully State-owned and fully backed by the Big Four (the largest Chinese banks). It has zero problems operating at a loss to undercut the competition: it was COSCO which crushed Maersk’s attempt to pretty much double shipping rates to North America and Europe overnight. CFO’s don’t care which flag the container carrier flies as long as they can save money.
I have been pondering about this whole shipping malarky for a couple years now and I have come to believe it will finally boil down to a colossal standoff between Maersk and CMA-CGM on one side and COSCO on the other. The Europeans will try increasing prices at every turn only to have the Chinese pull the rug from under their feet. COSCO is geared to operate at a loss, even a large one if need be. Maersk and CMA-CGM have the EU, which would be great for them, until one considers the rising tide of anti-EU sentiment all across the Continent, which makes big bailouts political hot potatoes now and may make them the kiss of death in a couple years.
It will be interesting to watch unfold.
“It will be interesting to watch unfold”
It ill be interesting to watch.
How much longer china is allowed to continue to wage state sponsored economic warfare, on the rest of the international shipping industry.
This sort of behavior has been know to start shooting wars.
China is not “allowed” to do anything.
China “has” to do what she does.
This is not merely for internal reasons: if China has a cold, the rest of the world catches pneumonia.
To stay on topic, those huge container carriers run on two stroke diesel engines built exclusively by three manufacturers: Wartsila of Finland, MAN of Germany and Mitsubishi of Japan.
If China stops building container carriers, it also stops buying diesel engines from these three manufacturers, which stacked a lot of chips on perpetual growth of the China trade.
We often forget how insanely important China has become as a worldwide economic engine. I’ll give just two examples.
The largest silicon wafer manufacturers in the world by a large margin are two Japanese companies: SUMCO and Shin-Etsu. A single Shin-Etsu factory in Japan manufactures over 20% of the silicon wafer consumed worldwide. Where does the bulk (over 60%) of their production goes? The other side of the Sea of Japan.
And to completely change subject, 40% of BMW Group’s profits come from the Chinese market, a larger share than the much more developed US one.
In short the costs may be astronomically high, but Red Capitalism is too sweet of a deal for far too many persons.
China is.
Building super-container carriers, in state sponsored yards. Which have no work in a state owned/sponsored. Gross over capacity, shipbuilding industry.
Then supplying those super-container carriers, to COSCO, a state sponsored shipper.
Cosco a overcapacity shipping line is supplied these ships for effectively nothing. By the state.
COSCO continues to put on more capacity and undercut all western shippers on the Asian route’s, even when the western shippers are operating at brake even, Cosco can off lower prices, as it is STATE SPONSORED.
Cosco can run at a huge loss, as long as Beijing wants it to.
Beijing will not stop untill they are the only shipper in the far east.
THAT IS ECONOMIC WARFARE.
FESCO were engaged in the same activity, until the USSR collapsed.
I used to ship on both of them.
China has been engaging in economic warfare since the begining with Nixon. The pace is simply ramping up, as they steal more market share.
Maos policy, was always, to destroy the west, without engaging in a shooting war. This is still CCP policy.
Free trade, and fair free trade, are totally different thing’s. china does not engage in fair free trade, it engages in STATE SPONSORED ECONOMIC WARFARE.
You refuse to see this and simply promote more of what is being used to deliberately destroy western manufacturing. So destroying the engines of western defense infrastructure.
American fighter jets now have parts in them, made in china.
Soon the US defense department will not be able to do anything, china does not want, unless there is a system change, as it will not be able to source any hardware, that does not rely on, CHINA.
Western defense, dead, without firing a shot, Mao’s Dream.
And YOU are helping destroy western defense, by defending chinese Economic Warfare.
What? We are going to start a war over the shipping industries? That would be more stupid than why we started wars in Iraq and Afghanistan and Syria and Libya and etc….etc….etc.
Control the ships.
Control the trade.
How many wars have been fought. Prior 1914, effectively over, “Trade”?
Franco Prussian war 1870, 1914, and 1939, were different, in that they were about france, trying to suppress and subjugate the new German nation. In which france failed disastrously.
THREE times.
History will show you all of that.
Yep you got it. Believe me I have seen it in person.
The US HANDED the manufacturing to China. Gave them everything they needed to own us. Now they do. We deserve what we get, Europe included. If the West thinks they can possibly “win” in a war with China, they are insane. The US leadership handed off all the US productivity. Now people still slurp at the trough, when they need to learn to cook their own food, make clothes and garden. Toys for the holidays stranded? Who cares….hardly anyone is buying anything, anyway.
So BMW, making a car far too expensive for most of us, gets 40% of its profit from China.
How much more expensive is it for the average Chinese- income about $7,000?
Fact: about 80 % of China’s health care budget is consumed by about 8.5 million CCP party members and their families.
You will read all kinds of resentment on this site about the US one percent, and what we should do about them.
With China it’s one percent of one percent.
When REAL China expert Ann Stevenson-Yang addressed a think tank in Feb.2015 (enter her name to see you tube masterful presentation) she described a contracting economy in seething chaos.
She estimated growth as flat to negative- so anyone could have made a fortune shorting the Chinese market which crashed a few months later.
She describes the empty cities, but more telling is an aluminum plant that wanted to shut but had to stay open so the State Owned Enterprise (SOE) bank wouldn’t have to report a loss.
The SOE’s are a legacy of communism that have been taken over by
the CCP as personal fiefdoms.
The process resembles the way the former Soviet Union’s state owned industry was taken over by their one percent of one percent- the oligarchs. But because unlike Russia, China never formally dumped communism, they have to remain SOE in name at least.
Any economy emerging from strict Marxism is looking at a whole bunch of low hanging fruit. China has now burnt through that. Unlike Japan it never did achieve a reputation for quality- more the opposite.- its exports to the US are pretty much Walmart stuff.
In budget apparel it is facing competition from former Marxist economies like Vietnam and Cambodia ( the name on my BUM sandals) which have…more low hanging fruit- a labor force that will work for room, board and some walking- around money.
In 2007- 2008 the US and others went through a painful recession.
China didn’t. With a massive expansion of credit it poured more concrete in 8 years than the US did in the 20th century, much of it of dubious value.
It is doubtful or at least an open question whether this most unequal society CAN take a recession- the recession underway, or whether there will be a revolution.
China has to face one overall question- what to do with the CCP, which now resembles the French aristocracy circa. 1788.
It is worth remembering that the other China, Taiwan, has a GDP per capita 300 % that of the mainland. (7K versus 21K- 2014, World Bank)
If the Nationalists had won the civil war instead of soon to be insane Mao, China would have become the world’s largest economy decades ago. And been spared the Cultural Revolution. for which the CCP should apologize to the Chinese people.
What you describe (accurately), describes a “society” that is going to explode.
As long as they explode within the borders of China, it will be pure entertainment for me. A massive Chinese civil war will help clear things up.
The problem is, those who are causing the mess are buying up houses, condos, etc in MY America and YOUR Canada. The idea of letting Non-Citizens purchase property in MY country makes me fume. Only the citizens of the nation, within which they are citizens, should be allowed to own property, especially residential.
So, the corrupt 1% of 1% bid up OUR homes and force OUR citizens to suffer so they can get their looted money out of their corrupt looted “nation”. Great.
Chinese civil wars tend to have nasty side effects.
Like the Black death, and the US anticommunist hot war, fought in Vietnam. Among others.
GDP measured in dollars or any other currency is meaningless. What is important is what kind of lifestyle that figure buys in the country where it is measured. In China, a household (not personal) income of $9600 US buys a decent middle class lifestyle measured by Western standards. In America and Europe it is way below the poverty level.
Your remarks about the CCP are certainly made by somebody who has never spent time in China. Most of the citizens here (I live in China) are supportive of the Party and believe their leaders are making the right decisions. The poor have come the farthest. The middle class is 52% and growing. It is easier to start a company and get rich in China than America.
This is the formula for a stable, contented citizenry. In America, the middle class is now at 1967 levels of disposable income and 95% of the people have been sliding backwards financially for decades. America is a country ripe for revolution, not China.
In the last big Chinese holiday (similar to US Thanksgiving) many millions returned home to villages etc.
A large number of adults returned on Yumo 125 CC motorcycles, a kid’s starter here, with girl friend or wife on back. It was cold and with traffic jams 20 miles long the trip took 2-3 days.
A middle class like the US? Even the Walmart shopper doesn’t get there on a motor bike.
BTW: Ann Stevenson-Yang has lived there for 20 years.
Re: support for CCP- are you allowed to say you don’t want the CPP?
In our wonderful new, supply side, trickle down world we have taken our eye off the global consumer.
How is the global consumer these days?
1) The once wealthy Western consumer has had nearly all their high paying jobs off-shored. As a stop gap solution they were allowed to carry on consuming through debt. They are now maxed out on debt.
2) Japanese consumers have been living in a stagnant economy for decades.
3) Chinese and Eastern consumers were always poorly paid and with nonexistent welfare states are always saving for a rainy day. Western demand slumped in 2008 and the debt fuelled stop gap has now come to an end.
4) The Middle Eastern consumers are now too busy fighting each other to think about consuming anything and are just concerned with saying alive.
5) South American and African consumers are busy struggling with economies that are disintegrating fast.
Oh dear.
Why is global aggregate demand so subdued?
A quick look at the global consumer reveals all.
I agree with the SK government guy who gave the mother outfit sh*t for letting the thing collapse in mid- ocean. An orderly shutdown, with ships returning to SK after unloading, would not in the scheme of the big picture have cost a whole lot more.
And SK is NOT a place where you want to pee off the government.
The ‘savings’ to the parent may prove to be expensive.
Looks like the Christmas season is already off to a bad start. I read Target, Walmart, and Best Buy have cargoes stuck on the Hanjin ships. Considering the Xmas season starts earlier and earlier the shelves will probably be empty. Last year inventory was very lite. Less inventory will mean higher prices and lower sales, just what we needed, more misery. We can all go Xmas shopping now, if we can, or go even more austere later.
This will trickle down to the truckers and the holiday jobs. I was expecting a downturn after the election, but it looks like it’s already here.
Just like in 2008, they waited until after the Olympics were over for the bad news to hit the public airwaves, or for drastic actions in the marketplace to take place. I was suspecting this year would be like 2008, and the real bad news wouldn’t become public knowledge until after the Olympics, again. Now as then, the stock market has been sagging since May or June, in ’08 it didn’t pick up speed until September. Time will tell !
I heard that Hanjin was in comatose for some time headed by Chairwoman who took over when her husband died – typical chaebol ways of working/corporate governance. She ran it to the ground and did a lot of hide the weenie and misled the Korean banks as she knew the Korean government will surely bail out the “national” carrier and 1 of the driver of the export engine. Nail on the coffin was her rather dumb and obvious insider trading few days before excrements hit the fan and the banks finally had enough of her lies and forced it into BK.
That said there may be more dominos to fall in other shippers.
I expect the stock market will rally hard. This one is probably the Korean Lehman, meaning the next few ones will be bailed out for national security reasons.
“I expect the stock market will rally hard.”
You say this everyday. Go spam Zerohedge or someplace else.
Won’t even bother reading anything you write again…’million dollar man’, see your words give your Zero ID away.
One of many fundamentals that have come home to roost.
Many more to come.
European Banking Crisis
Negative rate bonds at record high
Business debt 30% higher than in 2008
Rail car loadings near 2008 lows
CAS Freight Index down for past 25 months
House bubble 2.0 at 2005-06 peak and starting to pop
Business inventory to sales ratio is dismal
Auto sales have peaked now down in 6 month decline
Class 8 truck net new orders have crashed
These are just SOME fundamentals that stink. To say nothing of the increasingly dangerous geopolitical interactions now ongoing.
I see Dow 30K ahead. Remember with every bad news, the value of one dollar of earnings go up by a multiple. You can’t put a price on a unicorn.
Change of “Viewpoint”.
Your DOW value depends on your valuation yardstick.
Have a look at the GOLD/DOW value. You will be shocked.
Mike Maloney put out a video on this exact topic. Stock market value measured against gold is much less impressive.
https://www.youtube.com/watch?v=AwNADpG7NfE
Not so sure about the dollar going up The dollar index is around 95 now down from around 100 last October If they go negative with rates which is very possible you could see a big drop in the dollar
Earnings? Or profit. If they are negative do they go down by a multiple?
Credit is contracting. Twitter, Tesla etc. with no profit, but lots of stock sales may be put to the test sooner because of the Hanjin collapse.
NotSoSure:
The dollar will rise, as there is more and more International chaos, since the dollar is, still, the least ugly chick in the Financial Whore House.
IF you had millions, would you put it in Japan? No. China? No. Korea? No.
The Euro? No. Any South American country? No.
(Notice I don’t even mention ANYTHING regarding Africa……..why invest in a 12th Century continent…..)
When America is the last financial failure to collapse, you will invest in America. As long as we have the 2nd Amendment, we are the best place left on this insane planet.
Yeah sure it will Today it got crushed due to poor data Euro presently at 1.1250 and silver is up almost 4 percent
The dollar strengthened dramatically during the Depression.
How does a strong dollar save companies like Twitter etc, that have no profits in weak dollars or strong dollars.
I didn’t say in my comment that I would not invest in US DOLLARS, just not in internet unicorns with no profit- dot.com 2
We are witnessing a global phenomenon of governmental “investment” into private businesses and when they fail the burden is shifted to the taxpayer. This is theft, plain and simple. Large corporations and their crony executives are bailed out by their governments and when the whole house of cards falls they are whisked away on their golden parachutes while the average Joe is left holding debt incurred by their government. This seems to be the trend all across the globe. Whether by Q.E., the US T.A.R.P. program, negative interest rates, etc., the end game is to shift this burden onto the citizens of the nation. The practice is a disgraceful abuse of authority and portends bad things to come in the form of social unrest and resentment.
I agree, social unrest is already rising and we can already see it with movements like BlackLivesMatter. Political unrest is also here with the rise of alternative candidates like Trump, Sanders, Stein, and Johnson. The failure of alternative solutions to take hold will be the catalyst to the bigger disruptions.
Merkel is already in trouble in Germany. The status quo is dead in America. The Euro Zone is unraveling. Asia is rising. Everywhere you look people are fed up.
And… let’s not speak about Climate Change and the chaos we are going to experience.
Climate change is a Wall St scam. Weather is cyclical and there will always be temperatures rising and falling somewhere.
However, after the recent floods in Baton Rouge, Louisiana there have been findings that apart for water management in a swampy area being non existent, sound barrier walls, and median walls on highways, made everything even worse. Good water management and good construction can go a long way to alleviate some of the natural disasters we all experience.
The burden isn’t going on this taxpayer. I’m making it a point not to make $. Have a good lifestyle, though.
An underlying theme reverberates in the comments today. Every bad headline has in it the manipulating hand of central banks / governments distorting the world economy into a very unpleasant construct: to unwind means chaos and to continue is unthinkable. As for watching it unfold, no one will be a spectator.
Having been in this business for 30 years I have no sympathy. These companies had a license to print money for years via anti trust immunity, conferences/legalized price fixing, and still couldn’t make it work. It was always the sales teams fault. You guys aren’t selling value. Well thats pretty damn hard to do when you negotiate a contract, refuse to meet the target rates of the shipper, wait till the contract is signed with a competitor, then slash the rates to lure the customer back. The management and pricing departments of these companies are all out to lunch. I have notes from meetings where top company officials said “we wont allow the business to become commoditized”, “the pricing departments will not analyze the markets and price accordingly while guiding sales with target verticals and rate levels”, etc. etc. etc.
Its just hilarious and I hope they all have their day of reckoning. Its a business that needs massive overhaul and reform.
ALL businesses need to face reality. Including mine ( a “medical” business that is totally out of touch and absurd)
PETUNIA: “Climate change is a Wall St scam. Weather is cyclical and there will always be temperatures rising and falling somewhere.”
–but wait? were you the one i read on this site early on about moving out of florida because you saw the salt water rings around the palm trees and knew it’d be literally under water soon??? if that wasn’t you, forgive me. it was early on and i’m visual and have a hard time with names/no faces online.
please explain the “scam” part if you have time. i disagree with you, but am interested in everything you say, especially the parts i disagree with.
—-
CHRIS: ‘We are witnessing a global phenomenon of governmental “investment” into private businesses and when they fail the burden is shifted to the taxpayer.’
and
HUMPTY DUMPTY: “An underlying theme reverberates in the comments today. Every bad headline has in it the manipulating hand of central banks / governments distorting the world economy into a very unpleasant construct: to unwind means chaos and to continue is unthinkable. As for watching it unfold, no one will be a spectator.”
…you two: YEAH. that’s the NEW thing i’ve been seeking historical precedent for so that i may better understand how this was never like THIS before. i came to this site by accident, probably because i’m searching for LOGICAL explanations on the nonsensical suicidal housing/stock market bubbles. Wolf says he’s trying to map out the demise of the housing bubble and all this as well, but it’s turned into a cul de sac in this hell where everyone’s mapping out the new spectacularly disastrous effects of this global, “governmentally distorted” economy.
as for unrest? you ain’t kidding. i went on a book tour about five years ago. this time we’d started our own publishing company (yeah, and had our books printed in china! we TRIED america… we TRIED… i get all my own unintended evil, be it street level thuggery or economically…)
..so i was hoofing this tour on ground and seeing people everywhere and the smart phone lives and social media lives and everything dying and old towns i’d loved were destitute and i nearly started a riot on a a broken down bus on the side of the road in new haven just with my sense of entitlement.
and i stopped and saw the rage sparked in everyone’s formerly dead zone faces. and i knew that things were gonna snap and snap hard.
and i also saw how hard it was to do business and how rigged it all is with book returns and “consignment” (book stores don’t have to “buy” their books; they’re on “loan”/consignment for a few months and what doesn’t sell is shipped back often in tatters. and book publishers can handle pallets of books being returned just to be re-ordered later so they don’t have to buy ’em).
the internet gave most of us the sudden status of silent film stars right after talkies.
and you’re right, HUMPTY DUMPTY… i used to think if you were smart, you could pull the rings off the dead. but no one CAN sit this one out. there is no walled community walled off enough from this. that’s what makes it so ABSURD and OBVIOUSLY INSANE.
we are a nation founded upon psychopathery and sociopathery. but scratch most other “sweethearts” out there, and they’re just shootin up jivin’ and hookin’ at 2am while we’re sleeping.
I worked on Wall St. in the early 90’s when they were looking for more ways to create derivative products, which were the big money makers then. The global warming carbon credits idea was one they were doing research on to exploit. They paid a bunch of college professors to write research to support the idea of global warming. This is the research they are always pointing to as proof of global warming. When they got outed as liars because the earth wasn’t warming, they changed the meme to climate change. It is all a way to tax everybody, by forcing companies to buy climate derivatives as a ransom, to do business.
I used to think those Wall St. guys were nuts when I would hear or read their ideas. But they got away with convincing everybody that crap was true. I lived in FL for 14 years and the beach coastline hasn’t moved an inch since I vacationed there in the 70’s.
Petunia: How do you account for Exxon’s scientists discovering global climate change tied to human activity as early as 1968? Were they part of the Wall Street scam?
You write like a troll. No one does multiple responses in one comment.
No surprise here. I buy/sell and ship physical commodity chemicals for a living – which we distribute to U.S. manufacturers. We import high volumes of certain products from China. At this time we can import a full container (20MT of packaged product in a 20′ container) from our manufacturer’s plant in China to the port of L.A. for under $1k. To put that in perspective we wouldn’t be able to ship that same product/weight from L.A. to Bakersfield, CA (110 miles) for less than $1k via van or container drayage. Don’t get me started on the other negative signs I’ve observed throughout the chemical industry since oil started collapsing 2 yrs ago. The terms overcapacity and artificial demand sum my thoughts up perfectly.
Btw, I’ve been visiting this blog for over a year now and appreciate the sharp writing by Wolf and thoughtful commentary. People here get it.
I was in Seoul over the weekend. The Hanjin deal is in all the news there. I did see a lot of smaller Hanjin trucks moving around. I wonder if part of the company is still working, or did the drivers take advantage of the mess to do some moving and trucking on their own.
Wolf, what do you think about the claim on BusinessInsider that shippers are going to raise rates by 50% until the Hanjin mess gets sorted out? Also, any idea of the affect on Just-In-Time manufacturing?
They’ve been trying to raise rates by 100% plus for over a year, and they failed.
The Shanghai Containerized Freight Index (spot rates) for this week just came out, and it barely budged.
Eventually, they will have to raise rates because they’re having trouble surviving at current rates for long, but “eventually” could be some time away. I’ll believe in 50% rate increases when I see them stick.
“I’ll believe in 50% rate increases when I see them stick.”
I’ll believe in 50% rate increases, when I see them stick, for years.
The chinese intend to keep rates unprofitable for their western competitors until several more large shippers in Asia fail.
The west is, and has for sometime been, at Global War with Islamic Fundamentalist Terrorism, it simply wont admit it.
The west is also locked in a trade war with State sponsored chinese industry’s, it wont admit that either.
At the moment it is still waffling about chinese “Overcapacity” ,whilst every day, more non chinese company’s are driven out of existence by chinese “State Sponsored” Economic warfare.
For how much longer can MAERSK Etal compete with the chinese state??
It has been proven Steel manufactures, can not.
Hence the US Tariffs on chinese state products being deliberately dumped to destroy US steel manufacturing completely.
The chinese answer is, in a globalised world, everything should be made in china. It is the middle (So Superior) Kingdom, after all.