The Shipping Glut Is So Bad Globally That Ships Are Now Sailing Slower Than 19th Century Clippers Just To Keep Busy
Vincent Fernando, CFA | Oct. 31, 2010
For those who haven't followed the situation closely, many container ships right now have practiced 'slow steaming' due to a glut of ships being built worldwide.
Essentially, they are sailing at speeds well below their potential in order to reduce the supply of ships in the market, and thus support shipping rates.
The way this works is that the slower a ship sails, the fewer times it can make a round trip per year. Thus purposely sailing slowly reduces the effective supply of ships. It's a response to insufficient shipping demand relative to the size of the global container shipping fleet.
Yet these poor shipping companies have taken this practice to such an extreme that many ships are now sailing at speeds slower than old clipper ships from the 1800's. morePolitical action is still meaningless.
The Impotence of Elections
By PAUL CRAIG ROBERTS
In his historical novel, The Leopard, Giuseppe di Lampedusa writes that things have to change in order to remain the same. That is what happened in the US congressional elections on November 2.
Jobs offshoring, which began on a large scale with the collapse of the Soviet Union, has merged the Democrats and Republicans into one party with two names. The Soviet collapse changed attitudes in socialist India and communist China and opened those countries, with their large excess supplies of labor, to Western capital.
Pushed by Wall Street and Wal-Mart, American manufacturers moved production for US markets offshore to boost profits and shareholder earnings by utilizing cheap labor. The decline of the US manufacturing work force reduced the political power of unions and the ability of unions to finance the Democratic Party. The end result was to make the Democrats dependent on the same sources of financing as Republicans.
Prior to this development, the two parties, despite their similarities, represented different interests and served as a check on one another. The Democrats represented labor and focused on providing a social safety net. Social Security, Medicare, Medicaid, food stamps, unemployment insurance, housing subsidies, education, and civil rights were Democratic issues. Democrats were committed to a full employment policy and would accept some inflation to secure more employment.
The Republicans represented business. The Republicans focused on curtailing big government in all its manifestations from social welfare spending to regulation. The Republicans’ economic policy consisted of opposing federal budget deficits.
These differences resulted in political competition.
Today both parties are dependent for campaign finance on Wall Street, the military/security complex, AIPAC, the oil industry, agri-business, pharmaceuticals, and the insurance industry. Campaigns no longer consist of debates over issues. They are mud-slinging contests. moreWe are still goaded into stupid actions by economists who are utterly clueless.
Mugged by the Moralizers
By PAUL KRUGMAN
Published: October 31, 2010
“How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?” That’s the question CNBC’s Rick Santelli famously asked in 2009, in a rant widely credited with giving birth to the Tea Party movement.
It’s a sentiment that resonates not just in America but in much of the world. The tone differs from place to place — listening to a German official denounce deficits, my wife whispered, “We’ll all be handed whips as we leave, so we can flagellate ourselves.” But the message is the same: debt is evil, debtors must pay for their sins, and from now on we all must live within our means.
And that kind of moralizing is the reason we’re mired in a seemingly endless slump.
The years leading up to the 2008 crisis were indeed marked by unsustainable borrowing, going far beyond the subprime loans many people still believe, wrongly, were at the heart of the problem. Real estate speculation ran wild in Florida and Nevada, but also in Spain, Ireland and Latvia. And all of it was paid for with borrowed money.
This borrowing made the world as a whole neither richer nor poorer: one person’s debt is another person’s asset. But it made the world vulnerable. When lenders suddenly decided that they had lent too much, that debt levels were excessive, debtors were forced to slash spending. This pushed the world into the deepest recession since the 1930s. And recovery, such as it is, has been weak and uncertain — which is exactly what we should have expected, given the overhang of debt.
The key thing to bear in mind is that for the world as a whole, spending equals income. If one group of people — those with excessive debts — is forced to cut spending to pay down its debts, one of two things must happen: either someone else must spend more, or world income will fall. moreAnd of course, those companies that have been doing a quality job of managing their affairs will be threatened by the speculators for their virtue.
Vulnerable to Attack
German Companies Fear Wave of Hostile Takeovers
By Frank Dohmen, Dietmar Hawranek and Janko Tietz
Countries like France and Spain go to great lengths to stop foreign companies buying up their national champions. But Germany's takeover laws make it easy for firms in other countries to launch hostile takeovers of healthy German companies. And the government isn't planning to do anything to change that.
The situation at German construction company Hochtief looks so hopeless that it seems that only a sheik can help. Spanish company ACS wants to take over Hochtief, in which it already holds a 29 percent share. Intervention by a Middle Eastern sovereign wealth fund would allow Hochtief to stave off the Spanish advance.
Chancellor Angela Merkel herself established contact between the two parties, introducing Hochtief CEO Herbert Lütkestratkötter to the economics minister of Qatar at a reception hosted by German President Christian Wulff at his official residence, Bellevue Palace in Berlin.
So far, Qatar has yet to make up its mind. The same applies to the German government, which has been pursuing a strangely back-and-forth course on the Hochtief issue. more