Showing posts with label Trade. Show all posts
Showing posts with label Trade. Show all posts

Just wait a little while

SUBHEAD: You’ll have to earn everything worth having, including self-respect and your next meal.

By James Kunstler on 7 August 2017 for Kunstler.com -
(http://kunstler.com/clusterfuck-nation/just-wait-little/)


Image above: Aarly 20th century Russian painting of "A Peasant Leaving His Landlord on Yuri's Day" by Sergei V. Ivanov. From (https://www.kp.ru/radio/26511/3430500/).

The trouble, of course, is that even after the Deep State (a.k.a. “The Swamp”) succeeds in quicksanding President Trump, America will be left with itself — adrift among the cypress stumps, drained of purpose, spirit, hope, credibility, and, worst of all, a collective grasp on reality, lost in the fog of collapse.

Here’s what you need to know about what’s going on and where we’re headed.

The United States is comprehensively bankrupt. The government is broke and the citizenry is trapped under inescapable debt burdens. We are never again going to generate the kinds and volumes of “growth” associated with techno-industrial expansion.

That growth came out of energy flows, mainly fossil fuels, that paid for themselves and furnished a surplus for doing other useful things. It’s over.

Shale oil, for instance, doesn’t pay for itself and the companies engaged in it will eventually run out of accounting hocus-pocus for pretending that it does, and they will go out of business.

The self-evident absence of growth means the end of borrowing money at all levels. When you can’t pay back old loans, it’s unlikely that you will be able to arrange new loans.

The nation could pretend to be able to borrow more, since it can supposedly “create” money (loan it into existence, print it, add keystrokes to computer records), but eventually those tricks fail, too.

Either the “non-performing” loans (loans not being paid off) cause money to disappear, or the authorities “create” so much new money from thin air (money not associated with real things of value like land, food, manufactured goods) that the “money” loses its mojo as a medium of exchange (for real things), as a store of value (over time), and as a reliable index of pricing — which is to say all the functions of money.

In other words, there are two ways of going broke in this situation: money can become scarce as it disappears so that few people have any; or everybody can have plenty of money that has no value and no credibility.

I mention these monetary matters because the system of finance is the unifying link between all the systems we depend on for modern life, and none of them can run without it.

So that’s where the real trouble is apt to start. That’s why I write about markets and banks on this blog.

The authorities in this nation, including government, business, and academia, routinely lie about our national financial operations for a couple of reasons.

One is that they know the situation is hopeless but the consequences are so awful to contemplate that resorting to accounting fraud and pretense is preferable to facing reality.

Secondarily, they do it to protect their jobs and reputations — which they will lose anyway as collapse proceeds and their record of feckless dishonesty reveals itself naturally.

The underlying issue is the scale of human activity in our time. It has exceeded its limits and we have to tune back a lot of what we do. Anything organized at the giant scale is headed for failure, so it comes down to a choice between outright collapse or severe re-scaling, which you might think of as managed contraction.

That goes for government programs, military adventures, corporate enterprise, education, transportation, health care, agriculture, urban design, basically everything. There is an unfortunate human inclination to not reform, revise, or re-scale familiar activities.

We’ll use every kind of duct tape and baling wire we can find to keep the current systems operating, and we have, but we’re close to the point where that sort of cob-job maintenance won’t work anymore, especially where money is concerned.

Why this is so has been attributed to intrinsic human brain programming that supposedly evolved optimally for short-term planning. But obviously many people and institutions dedicate themselves to long-term thinking.

So there must be a big emotional over-ride represented by the fear of letting go of what used to work that tends to disable long-term thinking. It’s hard to accept that our set-up is about to stop working — especially something as marvelous as techno-industrial society.

But that’s exactly what’s happening. If you want a chance at keeping on keeping on, you’ll have to get with reality’s program. Start by choosing a place to live that has some prospect of remaining civilized. This probably doesn’t include our big cities.

But there are plenty of small cities and small towns out in America that are scaled for the resource realities of the future, waiting to be reinhabited and reactivated.

A lot of these lie along the country’s inland waterways — the Ohio, Mississippi, Missouri river system, the Great Lakes, the Hudson and St. Lawrence corridors — and they also exist in regions of the country were food can be grown.

You’ll have to shift your energies into a trade or vocation that makes you useful to other people. This probably precludes jobs like developing phone apps, day-trading, and teaching gender studies.

Think: carpentry, blacksmithing, basic medicine, mule-breeding, simplified small retail, and especially farming, along with the value-added activities entailed in farm production.

The entire digital economy is going to fade away like a drug-induced hallucination, so beware the current narcissistic blandishments of computer technology.

Keep in mind that being in this world actually entitles you to nothing. One way or another, you’ll have to earn everything worth having, including self-respect and your next meal.

Now, just wait a little while.

.

Abundance Circle • Story Connective

SUBHEAD: A volunteer effort to share the abundance of food between individual growers and gatherers.

By Rebecca Rhapsody on 23 April 2017 for Story Connective -
(https://storyconnective.podbean.com/)


Image above: Avacados and grapefruit offered by Judy and Matt sharing extra produce with to Abundance Circle on Maui through Vicki Levin. Still frame from video below by Story Connection.

Vicki Levin is a champion of locally grown food and community. She gathers up excess food produced by her friends' and neighbors' gardens and distributes it among them all.

It's called the Abundance Circle.

For example, when one member of the Abundance Circle has too many ripe oranges from their tree for their own household, they contribute the extra fruit to the Abundance Circle.

Vicki collects everyone's excess produce and distributes it to the group. In this way, the person contributing the excess oranges will get sunflower sprouts, kale, bananas, & more from the extra produce other Abundance Circle members give... free of charge!

It's not a trade and it's not a barter. Even when a member's garden doesn't have anything to give for a time, they still receive. Everyone just contributes whatever they have excess of to the Circle Abundance, and everyone benefits. Vicki's dream is for everyone to have even a small garden in their backyard.


Video above: Interview with Vicki Levin by Rebecca Rhapsody about the Abundance Circle on Maui. From (https://youtu.be/HD-j7VgKetI).

VIDEO CREDITS:
Interview
Rebecca Rhapsody at StoryConnective.org

Audio and video production
Loxley Clovis at StoryConnective.org

Ukulele score and performance
Rebecca Rhapsody at StoryConnective.org

Story Connective art and logo by
Sarai Stricklin SaraiStricklin.com

SPECIAL THANKS TO:
Vicki Levin and her Abundance Circle members

Artwork ‘Makamaluohonaokalani’
Marilyn Kahalewai at Kumukahi.org

Moku and Ahupuaa map of Maui 'Mokupuni O Maui"
Juan Wilson at IslandBreath.org

SHARING AND SUPPORT: 
If you support Story Connective's 501(c)(3) mission and vision of bringing stories of resilience and possibilities to the world and would like to help our project, there are many ways you can help us.

Share this with video friends, family, coworkers. Like us at Facebook.com/StoryConnective

Subscribe to our YouTube Channel at https://www.youtube.com/channel/UCDb41I_NpEhN-_ciTLOGt7A

Subscribe to our podcast feed: https://storyconnective.podbean.com/ using the Podbean app (for all devices), iTunes (Apple devices), & Google Play Music (Android devices)

Stay tuned to Story Connective on YouTube and the Story Connective podcast for more on this series: Re-envision Maui.

Fiscal Sponsor of Story Connection is ELLSSA – a non profit committed to Empowering individuals to take care of the future. Learn more about at www.ellssa.org

The Story Connective is listener and viewer supported. Support our crowdfunded project at https://www.Patreon.com/Storyconnective or by using the "Be a patron" button on your Podbean podcast app.

FAIR USE:
The purpose of this video is for non-profit education, news and commentary.

CREATIVE COMMONS LICENSE:
Attribution-ShareAlike
2.5 Generic (CC BY-SA 2.5)

.

Buy on the Dip?

SUBHEAD: What might happen to the USA if the SNAP card refills and Social Security checks stopped coming.

By James Kunstler on 17 April 2107 for Kunstler.com -
(http://kunstler.com/clusterfuck-nation/buy-the-dip/)


Image above: Illustration ofa  gold backed Chinese twenty "dollar" bill that could replace the US dollar in international trade. From (http://www.thedailyeconomist.com/2017/03/russia-may-soon-take-new-swift-type.html).

The military frolics of spring have distracted the nation’s attention from the economic and financial dynamics that pose the ultimate mortal threat to business as usual.

Note the distinction between economic and financial.

The first represents real activity in this Land of the Deal: people doing and making.

The second, finance, used to be a minor branch — only about five percent — of all the doing in the days of America’s putative bigliest greatitude.

The task of finance then was limited and straightforward: to manage the allocation of capital for more doing and making. The profit in that enabled bankers to drive Cadillacs instead of Chevrolets, but not much more.

These days, finance is closer to 40 percent of all the doing in America, and it is not about making anything, but getting more than its share of “money” — whatever that is now — and what “money” mostly is is whatever the people engaged in finance say it is, for instance, Fannie Mae bonds representing millions of sketchy loans for houses of vinyl and strand-board built in places with no future… or stock issued by the Tesla corporation… or the sovereign IOUs of the US Treasury.

The list of things that pretend to be “money” these days would be long and shocking and the sheer churn of these instruments among the banks and markets “produces” the fabled “revenue streams” beloved of The Wall Street Journal.

What happens when the world discovers that these instruments (securities and their derivatives) represent falsely? Why, bigly trouble.

And this is the season we’re moving into as the dogwoods blaze: the season of the re-discovery of actual value.

For those of you gloating over last week’s demonstrations of US Big Stick-ism, be warned that our military shenanigans have given China and Russia every reason to discipline this country by undermining the international standing of the dollar.

They’ve been preparing for this very deliberately for years: constructing an alternative to the US-sponsored SWIFT international payment system, stockpiling thousands of tons of gold, building trade partnerships to circumvent US dominated syndicates.

Before the month of April is out, they’ll “pull the trigger” on new voting arrangements in the International Monetary Fund that will reduce the financial power of the US and the Eurozone, especially in the oil trade.

Around the same moment, America will wake up to the awful reality of the debt ceiling. This petard has been ticking the whole time that the political bureaucracy of Washington has wasted its mojo on the quixotic crusade to blame Russia for the 2016 election outcome.

Congress will return from the Easter recess to discover that they have a few mere days to debate and resolve the debt ceiling problem — that is, to raise it so the country can borrow more “money” — or else they’ll be faced with a shut-down of government operations, including their own generous emoluments.

It’s a good thing (for them) that they have plenty of walking-around money from the mysterious perqs of government service, but the rest of America doesn’t have $500 to pay for a new set of tires or the extraction of an abscessed molar.

Some readers may have long wondered what might happen in this country if the SNAP card refills and social security checks stopped coming. Perhaps we’re about to find out. Congress might find itself in a painfully tight spot.

The Democrats would like nothing better than to let this drag on for a while in order to humiliate, and perhaps finish off, their arch-nemesis, the Golden Golem of Greatness.

Many Republicans have a religious-strength ideological aversion to increasing the already appalling US debt load. The prospects are not bright for a quick-and-easy resolution to this quandary.

The IMF voting re-set and the debt ceiling quagmire have the power to disrupt many of the arrangements that allow the banks and markets to continue pretending that their stuff has value.

When that consensus trance snaps, President Trump may find himself in the unhappy position of having to declare a bank holiday.

Unlike the usual holidays in America, there will no Easter Bunny, no Jack-o-lanterns, no Santa Claus.
Just empty supermarket shelves and pissed-off people marshaling in the WalMart parking lots with flaming brands and espontoons.

.

Hanjin shipping bankruptcy

SUBHEAD: Just-in-time is very efficient financially (until it isn't). But just-in-time is not very resilient.

By  Kurt Cobb on 4 September 2016 for Resource Insights -
(http://resourceinsights.blogspot.com/2016/09/hanjin-shipping-bankruptcy-efficient.html)


Image above: Hanjin container ship "Hanjin China" underqway with containers. From (http://www.marinetraffic.com/en/ais/details/ships/shipid:408968/mmsi:352058000/imo:9408865/vessel:HANJIN_CHINA).

We are about to learn once again that lack of resilience is the flip side of efficiency. The world's seventh largest shipping firm, Korean-based Hanjin Shipping Co. Ltd., failed to rally the support of its creditors last week and was forced to file for bankruptcy.

Retailers and manufacturers worldwide are in a bit of a panic as the fate of goods on Hanjin ships shifts into the hands of courts and lawyers for creditors intent on seizing Hanjin assets in order to ensure payment of outstanding bills. Much of Hanjin's fleet is chartered, that is, owned by others, and those owners want to make sure they get paid their charter fees or get their ships back pronto.

The result has been that half of Hanjin's container vessels are currently blocked from the world's ports for fear that the ports will not be paid for their loading and unloading services. Other shippers which include trucking companies which carry containers to their final destination are reluctant to take on Hanjin freight for fear of not getting paid. (You are perhaps seeing the main theme here.)

Meanwhile, the sudden drop in available shipping containers and ships has caused shipping rates to soar as businesses scramble to make other arrangements for items still to be shipped.

U.S. retailers are so panicked that they have asked the U.S. Department of Commerce to step in to help resolve the breakdown which is likely to hurt those retailers during the upcoming Christmas shopping season.

Let's take a step back to understand how this all happened. Clever business owners have learned to run so-called "lean" operations to compete with their equally lean competitors.

One way to be lean is to reduce idle inventories which just sit in expensive warehouses by arranging to have what the business needs delivered practically every day. The approach is often referred to as a warehouse on wheels and also as just-in-time delivery.

With little or no inventory of essential goods and raw materials retailers and manufacturers are subject to disruptions all along their supply chains which reach around the globe. A breakdown at any step can quickly bring activity to a halt on the factory floor or on the sales floor.

Just-in-time is very efficient financially (until, of course, it isn't). Little money is tied up in inventories or the space to warehouse them. But just-in-time is not very resilient. It used to be that businesses stockpiled goods and critical resources to ensure against disruptions.

But the advent of computerized tracking combined with more efficient shipping practices worked to end the stockpiling of inventories.

I wrote about the vulnerabilities of just-in-time delivery systems back in 2006, 2008 and updated the 2006 piece in 2011. My suggestion back in 2006 that just-in-time systems were likely to recede in the wake of repeated shocks has proven to be premature.

But the wisdom of running hospitals, for instance, on just-in-time supply principles seems foolhardy. It seems logical for hospitals as emergency facilities to be prepared for a mass catastrophe (earthquake, hurricane, etc.) with substantial medical supplies.

Along these lines, does a three-day supply of food now available in most metropolises seem like wise planning?

The Hanjin bankruptcy also calls into the question the wisdom of allowing so much freight--7.8 percent of all trans-Pacific U.S. freight--to be handled by one carrier. And yet large size and just-in-time systems create what economists like to call economies of scale. Goods and services are provided more cheaply.

But such systems are not resilient. Resilience often requires redundancy and that spells inefficiency in today's business climate. It is, however, what we see in nature. Humans have two kidneys, but can survive with just one. Some genes are redundant, able to perform the same functions. There are 4,186 known species of diving beetles, lots of redundancy to ensure survival and biodiversity.

Two organizations worldwide practice redundancy on a major scale. Space exploration agencies build multiple redundant systems, especially for manned flight, to ensure the survival of spaceships, probes and people. Space exploration is so hazardous that even these redundancies don't always ensure survival as the loss of two space shuttles has shown.

The world's militaries also practice redundancy to ensure survivability and deterrence. The United States, for example, continues to maintain a trio of nuclear armaments on land, on and under the sea and in the air at all times on the theory that in order to maintain a credible nuclear deterrent, the U.S. military must have nuclear arsenals that are difficult to destroy in a first strike.

If some of those arsenals are deep in the oceans in nuclear submarines or on bombers in flight, some of those will likely survive to strike back--though sane people will ask what of human civilization will be left after such an exchange.

And when it comes to oil, the lifeblood of the world economy, countries across the globe now have what are called strategic petroleum reserves, oil reserves controlled by or mandated by governments to ensure against disruption of oil deliveries.

All of these redundancies would be considered "inefficient" in the business world. But they create much more resilient systems. Tightly networked systems with little redundancy such as the worldwide logistics system we now live under are highly efficient but vulnerable to widespread breakdowns from small hiccups. What seems rational on the surface is deeply irrational underneath.

The Hanjin bankruptcy is unlikely to bring down the world logistics system. At most it will shutter some factories temporarily and result in store shelves that are a little less diverse this fall. But the Hanjin affair will make clear that efficiency does not always come cheap, and that efficient systems are only efficient if they function continuously.

Should the pressures we saw in 2008 return, we may wish that just-in-time systems had been abandoned or least modified so as not to create the large and cascading disruptions that are an inevitable cost of such "efficiency." And should the financial uncertainty experienced at the end of 2008 after the financial crash return, we may find far more Hanjins filing for bankruptcy and far more serious disruptions occurring than we are experiencing today.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

.

The Desert Fridge Project

SUBHEAD: How to build a pot-in-pot "Desert Fridge to cool food by 18ºF for extending storage.

By Bibi Farber on 5 March 2009 in Next World TV -
(http://www.nextworldtv.com/videos/innovations/desert-fridge.html)


Image above: Still frame pouring sand into pot-in-pot "Desert Fridge Project. From video below.

The Pot in Pot method of keeping food cool in hot climates is even becoming popular among people in the West who wish to reduce their dependency on a big energy sucking refrigerator.

The method is very simple: There are two clay pots, one inside the other. In between fill with is sand. Saturate sand with water and Put food to be cooled in inner pot. Cover pots. As the water evaporates it removes heat from the inner system, thereby leaving it cool.

As needed add more water a few times a day to keep the sand wet.

One major benefit is that the pot-in-pot enables Gambian farmers to retain food for future sale, instead of dumping all the produce that doesn't sell during a given day.

If the farmers have a storage system, it changes everything. No electricity needed!


Video above: How to build a pot-in-pot "Desert Fridge. From (https://youtu.be/92fpnUfRt1A).

.

Fedpocalypse Now?

SUBHEAD: Despite insistence that the economic skies are blue, storm clouds scud through every realm and quarter.

By James Kunstler on 14 December 2015 for Kunstler.com -
(http://kunstler.com/clusterfuck-nation/fedpocalypse-now/)


Image above: Photo of Janet Yellenenters a meeting of the Fed’s Board of Governors in Washington in early September. Photo by Jim La Scalzo for EPA/Corbis. From (http://fortune.com/2014/09/17/janet-yellen-vs-the-inflation-zombies/).

“Here’s another fine mess you’ve gotten me into….”
— Oliver Hardy

If ever such a thing was, the stage is set this Monday and Tuesday for a rush to the exits in financial markets as the world prepares for the US central bank to take one baby step out of the corner it’s in. 

Everybody can see Janet Yellen standing naked in that corner — more like a box canyon — and it’s not a pretty sight. 

Despite her well-broadcasted insistence that the economic skies are blue, storm clouds scud through every realm and quarter. 

Equities barfed nearly four percent just last week, credit is crumbling (nobody wants to lend), junk bonds are tanking (as defaults loom), currencies all around the world are crashing, hedge funds can’t give investors their money back, “liquidity” is AWOL (no buyers for janky securities), commodities are in freefall.

Oil is going so deep into the sub-basement of value that the industry may never recover, international trade is evaporating, the president is doing everything possible in Syria to start World War Three, and the monster called globalism is lying in its coffin with a stake pointed over its heart.

Folks who didn’t go to cash a month ago must be hyperventilating today.

But the mundane truth probably is that events have finally caught up with the structural distortions of a financial world running on illusion. To everything there is a season, turn, turn, turn, and economic winter is finally upon us. All the world ‘round, people borrowed too much to buy stuff and now they’re all borrowed out and stuffed up. 

Welcome to the successor to the global economy: the yard sale economy, with all the previously-bought stuff going back into circulation on its way to the dump.

A generous view of the American predicament might suppose that the unfortunate empire of lies constructed over the last several decades was no more than a desperate attempt to preserve our manifold mis-investments and bad choices. 

The odious Trump has made such a splash by pointing to a few of them, for instance, gifting US industrial production to the slave-labor nations, at the expense of American workers not fortunate enough to work in Goldman Sachs’s CDO boiler rooms. Readers know I don’t relish the prospect of Trump in the White House. 

What I don’t hear anyone asking: is he the best we can come up with under the circumstances? Is there not one decent, capable, eligible adult out there in America who can string two coherent thoughts together that comport with reality? Apparently not.

The class of people who formerly trafficked in political ideas have been too busy celebrating the wondrous valor of transgender. 

Well, now the wheels are going to come off the things that actually matter, such as being able to get food and pay the rent, and might perforce shove aside the neurotic preoccupations with race, gender, privilege, and artificial grievance that have bamboozled vast swathes of citizens wasting a generation of political capital on phantoms and figments. 

Contrary to current appearances, the election year is hardly over. There is still time for events to steer history in another direction.

Mrs. Yellen and her cortege of necromancers may just lose their nerve and twiddle their thumbs come Wednesday. 

If they actually make the bold leap to raise the fed funds rate one measly quarter of a percent, they might finally succeed in blowing up a banking system that deserves all the carnage that comes its way. There is something in the air like a gigantic static charge, longing for release.

.

International trade is collapsing

SUBHEAD: Denmark (home of biggest container shipper Maersk) says trade in primary commodities is down 25%.

By Michael Snyder on 9 November 2015 for Economic Collapse -
(http://theeconomiccollapseblog.com/archives/we-have-never-seen-global-trade-collapse-this-dramatically-outside-of-a-major-recession)


Image above: The Danish company Maersk debuts the Tripple-E, the largest ship in the world in 2013. Maersk  has been the top container ship operator in the world since 1996. From (http://www.industrytap.com/worlds-largest-container-ship-debuts-in-copenhagen/13932).

If you have been watching for the next major global economic downturn, you can now stop waiting, because it has officially arrived.  Never before in history has global trade collapsed this dramatically outside of a major worldwide recession.

And this makes perfect sense – when global economic activity is increasing there is more demand for goods and services around the world, and when global economic activity is decreasing there is less demand for goods and services around the world.

So far this year, global trade is down about 8.4 percent, and over the past 30 days the Baltic Dry Index has been absolutely plummeting.

A month ago it was sitting at a reading of 809, but now it has fallen all the way to 628.  However, it is when you look at the trade numbers for specific countries that the numbers become particularly startling.

Just within the last few days, new trade numbers have come out of China.  China accounts for approximately one-fifth of all global factory exports, and for many years Chinese export growth has helped fuel the overall global economy.

But now Chinese exports are falling.  In October, Chinese exports were down 6.9 percent compared to a year ago.  That follows a decline of 3.7 percent in September.

The numbers for Chinese imports are even worse.  Chinese imports in October were down 18.8 percent compared to a year ago after falling 20.4 percent in September.  China’s growing middle class was supposed to help lead a global economic recovery, but that simply is not happening.

The following chart from Zero Hedge shows just how dramatic these latest numbers are compared to what we are accustomed to witnessing.  As you can see, the only time Chinese trade numbers have been this bad for this long was during the major global recession of 2008 and 2009…

Chinese Imports Chinese Exports

Other numbers confirm the magnitude of the economic slowdown in China.  I have mentioned the ongoing plunge of the China Containerized Freight Index previously, but now it has just hit a brand new record low
The weakness in China’s economy and its exports to the rest of the world are showing up in the weekly China Containerized Freight Index (CCFI): On Friday, it dropped to the worst level ever.

The index, operated by the Shanghai Shipping Exchange, tracks how much it costs, based on contractual and spot-market rates, to ship containers from China to 14 major destinations around the world. Unlike a lot of official data from China, the index is an unvarnished reflection of a relentless reality.

It has been cascading lower since February and has since dropped 31%. At 742 currently, it’s down 26% from its inception in 1998 when it was set at 1,000.
Here are some more deeply disturbing global trade numbers that come from my previous article entitled “18 Numbers That Scream That A Crippling Global Recession Has Arrived“…
  • Demand for Chinese steel is down 8.9 percent compared to a year ago.
  • China’s rail freight volume is down 10.1 percent compared to last year.
  • In October, South Korean exports were down 15.8 percent from a year ago.
  • According to the Dutch government index, a year ago global trade in primary commodities was sitting at a reading of 150 but now it has fallen all the way down to 114.  
What this means is that less commodities are being traded around the world, and that is a very clear sign that global economic activity is really slowing down.

Additionally, German export orders were down about 18 percent in September, and U.S. exports are down about 10 percent for the year so far.

Clearly something very big is happening, and it is affecting the entire planet.  The CEO of the largest shipping company in the world believes that the explanation for what is taking place is fairly simple
In fact, according to Maersk CEO, Nils Smedegaard Andersen, the reason why companies that are reliant on global trade, such as his, are flailing is simple: global growth is substantially worse than the official numbers and forecasts. To wit: “The world’s economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting.

Quoted by Bloomberg, Andersen says that “we believe that global growth is slowing down,” he said in a phone interview. “Trade is currently significantly weaker than it normally would be under the growth forecasts we see.
Global financial markets can run, but they can’t hide from these horrifying trade numbers forever.

One of the big things that is contributing to this new global economic slowdown is the unwinding of the U.S. dollar carry trade.  A recent piece from Phoenix Capital Research explained the U.S. dollar carry trade pretty well…
When the Fed cut interest rates to zero in 2008, it flooded the system with US Dollars. The US Dollar is the reserve currency of the world. NO matter what country you’re in (with few exceptions) you can borrow in US Dollars.

And if you can borrow in US Dollars at 0.25%… and put that money into anything yielding more… you could make a killing.

A hedge fund in Hong Kong could borrow $100 million, pay just $250,000 in interest and plow that money into Brazilian Reals which yielded 11%… locking in a $9.75 million return.

This was the strictly financial side of things. On the economics side, Governments both sovereign and local borrowed in US Dollars around the globe to fund various infrastructure and municipal projects.

Simply put, the US Government was practically giving money away and the world took notice, borrowing Dollars at a record pace. Today, the global carry trade (meaning money borrowed in US Dollars and invested in other assets) stands at over $9 TRILLION (larger than the economy of France and Brazil combined).
But now the U.S. dollar carry trade is starting to unwind because the U.S. dollar has been doing very well lately.  As the U.S. dollar has surged against other global currencies in 2015, this has put a tremendous amount of stress on emerging markets around the world.

All of a sudden oil, other commodities and stock markets in nations such as Brazil began to crash.

Meanwhile, those that had taken out loans denominated in U.S. dollars were finding that it was taking far more of their own local currencies to service and repay those loans.  This financial crunch in emerging markets is going to take years to fully play out, and it is going to take a tremendous toll on global markets.

Of course we have seen this happen before.  A surging dollar helped cause the Latin American debt crisis of the 1980s, the Asian financial crisis of the 1990s and the major global recession of 2008 and 2009.

If you thought that the financial shaking that happened in late August was bad, the truth is that it was nothing compared to what is now heading our way.

So buckle your seat belts boys and girls, because we are definitely in for a bumpy ride.

.

Guide to Hawaiian secession

SUBHEAD: Independence would allow Hawaiian to take full advantage of their unique features and location.

By Ryan McMaken on 4 November 2015 for Mises Institute -
(https://mises.org/blog/practical-guide-hawaiian-secession)


Image above: Painting by Herb Kane of King Kamehameha turning power over to his son in front of his home at the Ahuena Heiau on the Big Island. From (http://www.explorationhawaii.com/2013/03/27/ahuena-heiau-the-personal-home-of-king-kamehemeha-the-great-and-his-place-of-death/).

The BBC reports this week that a secession movement in Hawaii continues to simmer under the surface:
An upcoming election has highlighted the deep disagreement between native Hawaiians over what the future should look like. For some, it's formal recognition of their community and a changed relationship within the US. Others want to leave the US entirely - or more accurately, want the US to leave Hawaii.
Much of the antipathy to Washington DC stems from the grievances of the indigenous population which is quite familiar of how wealthy white ranchers in the late 19th century overthrew the legitimate government of Hawaii and formed  a pro-US puppet government in its stead. Eventually, annexation followed.

Nevertheless, the fact that some Hawaiians want independence does not mean that most do. While it's true that whites are only 25 percent of the Hawaiian population, it's also true that indigenous Hawaiians and other pacific islander groups only comprise ten percent of Hawaii's population.

The largest demographic group in Hawaii is Asian-Americans, who make up 38 percent of the population (not including people of mixed parentage.)

If the secessionists are ever to sell secession to the overall population, they would have to offer something more practical than solidarity with the indigenous population or appeals to local patriotism.

Potentially, the costs of secession could be high if the US decided to regard the Hawaiian government as a hostile regime (thus bringing economic sanctions), and of course, spending by the US government in Hawaii — funded by mainland taxpayers — is extensive.

Practically speaking, however, there is a lot of real estate between the current status quo for Hawaii and full-blown independence. It is unlikely that Hawaii would fully remove the US from the islands any time soon, no matter how unpopular the regime in DC became.

It is likely that Washington would resort to military action before it would be willing to give up its military installations in and around Pearl Harbor. Look, for example, at how the US has held onto Guantanamo Bay, even when Cuba became aligned militarily with the Soviet Union.

However, there is no reason that that Hawaii could not reach a compromise with the US in which Hawaii obtains domestic autonomy while remaining a military ally and resource for the US. The world is full of such arrangement, and many countries have relationships with regions (many of which are islands and overseas territories) that use their own currency and have their own systems of government while remaining part of a larger political body.

It does not follow logically, of course, that Hawaii, even if it were to allow a US military presence, would have to use US currency or submit to US regulations of trade.

In fact, freedom from federally imposed restrictions on trade would be among the greatest benefits for Hawaiians in the case of independence. As Gary Galles noted here in Mises Daily, Hawaii, as part of the US's domestic market, is heavily restricted by the Jones Act. The Jones Act restricts the nature and extent of shipping that can take place in and out of American ports. Galles writes:
Jones Act costs are made clearest in Hawaii, Puerto Rico, and Alaska, where it most severely limits supply lines.

In 2014, shipping a forty-foot container from Los Angeles to Honolulu reportedly cost more than ten times shipping it to Singapore. Dependent on Jones Act shipped petroleum for three-quarters of its electricity generation, Hawaii’s electricity prices are almost double the next most expensive state.

A 2012 report found that sending a container of household goods from the east coast to Puerto Rico cost more than double that to nearby Santo Domingo. A GAO study found that some Puerto Rico companies had shifted sourcing from America to Canada, due to cost savings from escaping Jones Act restrictions.

Alaska is restricted from shipping oil by tanker to the lower forty-eight states or to Hawaii, due to Jones Act restrictions. The costs are so extensive that the state’s governor is mandated to use “all appropriate means to persuade the United States Congress to repeal those provisions of the Jones Act.”
International trade is restricted by the Jones Act as well, although not in the same way as domestic shipping.

Thanks in part to trade restrictions such as these, the cost of living in Hawaii is notoriously high. For example, in nominal terms, Hawaii has a rather high median income at $59,000.  (The US median is $58,000.) But when adjusted for cost of living, the median income in Hawaii plummets to $50,900.  This disparity is the nation's largest, although, New Jersey comes in just slightly behind Hawaii in this measure.

We can't blame all of this on federal law, of course, as Hawaii is a long way from other major shipping ports, but the fact remains that the Jones Act severely limits what can be shipped from the US mainland, and by whom, while international trade further is controlled by a Congress where only four people out of 535 are from Hawaii.

Thus, economic freedom for Hawaii would allow Hawaiians greater power to control tariffs and trade in a manner that benefited Hawaii rather than special interests far away on the mainland. (Naturally, I prefer unilateral free trade in this regard.) This isn't to say that some Hawaiians never benefit from US trade restrictions. International trade restrictions on sugar are a famous example. But for every pro-Hawaii government regulation, there are countless others that benefit far away interests much more.

The US cannot be faulted for all of Hawaii's inability to take advantage of its geographical advantages. As just one example, we might note that a majority of Hawaiians have long refused to allow gambling on the islands, even though such a move could turn the islands, or a subregion of them, into a Monaco of the Pacific where wealthy Asians and Americans would leave behind thousands of dollars in gambling losses with every trip.

The biggest obstacle to successful secession for the time being, however, is not ideological. As long as the federal money keeps coming in the form of social security checks, welfare checks, and military spending, its unlikely many will want to kill that golden goose. If those checks ever start bouncing, however, and if the feds start to scale back the fiat-money and taxpayer funded largesse, things will start to look very different.

See also:
Ea O Ka Aina: Hawaiian Sovereignty on the line 10/27/15
Ea O Ka Aina: State of Hawaiian sovereignty 9/11/14
Ea O Ka Aina: Hawaiian Sovereignty Issues 9/17/11 
Ea O Ka Aina: Feds Threaten Hawaiian Sovereignty 2/2/11
Ea O Ka Aina: Case for Hawaiian Sovereignty 12/20/10
Ea O Ka Aina: Hawaiian Sovereignty Panel 9/26/09
Island Breath: Hawaiian Nation Part 1 4/25/08
Island Breath: Hawaiian Nation Part 2 5/4/08
Island Breath: Trail against Henry Noa 7/28/07
Island Breath: One Step at a Time with Bumpy 9/3/05
Island Breath: Francis Boyle on Hawaiian Sovereignty 12/28/04


.

Is this Black Monday?

SUBHEAD: Today's opening may be just a warning sign, and it may take a while longer before the deluge, but it will come.

By Raul Ilargi Meijer on 24 August 2015 for the Automatic Earth -
(http://www.theautomaticearth.com/2015/08/is-this-black-monday-crash-the-big-one-it-doesnt-matter/)


Image above: Concerned trader on the floor of the New York Stock Exchange as the Dow Jones Industrial Average tumbled 1,000 points at thr opening on 24 August 2015. From (http://www.upi.com/Top_News/US/2015/08/24/Dow-drops-over-1000-points-at-Monday-opening/5841440426010/).

After losing 11% last week, Shanghai this morning was down almost -9% at one point, after lunch went back up to -6.5%, and ended its day at -8.49%. A Black Monday for sure, but is this the BIG ONE?

It really doesn’t matter one bit. Unless perhaps you persist in calling your self an investor, in which case we pity you, but not for losing your shirt.

Because God knows we’ve said enough times now that there are no functioning markets anymore, and therefore no-one who can rightfully lay claim to the title ‘investor’.

Plenty amongst you will be talking about economic cycles, and opportunities, and debate how to ‘play’ the crash, but all this is useless if and when a market doesn’t function. And just about all markets in the richer part of the world stopped functioning when central banks started buying assets.

That’s when you stopped being investors. And when market strategies stopped making sense.
Central banks will come up with more, much more, ‘stimulus’, but what China teaches us today is that we’re woefully close to the moment when central banks will lose the faith and trust of everyone.

After injecting tens of billions of dollars in markets, which thereby ceased to function, the global economy is in a bigger mess then it was prior to QE. The whole thing is one big bubble now, and we know what invariably happens to those.

More QE is not an answer. And there is no other answer left either. Those tens of trillions will need to vanish from the global economy before any market can be returned to a functioning one, and by that time of course asset prices will be fraction of what they are now. It may not happen today, but that doesn’t matter: what’s important to know is that it WILL happen.

And if you keep being out there trying to outsmart a non-functioning market, you’ll get burned as badly as the millions of Chinese grandmas who already lost 20%+ so far just this month. And that’s just on their share holdings; Chinese property ‘markets’ will be at least as badly burned.

China’s leaders, and its people, have walked eyes wide open into an ugly albeit nigh perfect trap. They’ve all started to believe that borrowing more could make them richer. Outstanding credit across the entire society has reached idiotic proportions. We can get somewhat of a glance at what levels debt have reached in Steve Keen’s Is This The Great Crash Of China?, in which he argues that a crash is inevitable, simply given those levels.

But we can at the same time be sure that this doesn’t tell the whole story. Much of what has gone on in the shadow banking sector remains unknown and carefully hidden. Thousands of local governments have plunged themselves into the deep end borrowing from trusts and other often shady instruments, at interest levels much higher than the ‘official’ ones. Even these shadow trusts last week have begun asking for bailouts, a development that can only make one think of a Godfather episode of one’s choice.

China’s first big mistake is that Xi and Li and their ilk think they can control housing and stock markets. Which basically means they think they can stop people from selling property and assets when they feel these might go down in ‘value’.

China’s second big mistake is that so many people believe that Xi and Li actually have any such control. Which means the people don’t sell nearly soon enough, and will be saddled with the losses.

 From an economic perspective, it’s an exercise in stupid futility, or, if you prefer, futile stupidity.

Add to this that the credit that allowed the Chinese to purchase all these alleged assets came from nowhere, and will therefore of necessity have to go back to nowhere, and you have a recipe for deflationary debt deleveraging the likes of which the world may never have seen before in history, unless perhaps you count the tulip- or South Sea bubbles, but they are just small scale anecdotes compared to today.

This deleveraging will be global. We pity the many millions of poor souls who think that countries like the US and Britain will be spared the worst because their economies are doing ‘so well’. Doing well in a global Ponzi is not a recommendation.

China’s fall is being exacerbated by the fact that it has two -heavily intertwined- parties who believe in their own omnipotence, the government (Politburo) and the central bank. Both are being found out at the same moment. And both will resist this discovery. As will all central banks in the west, where at least any idea of omnipotence of governments has long been eradicated.

But the entire west has become so addicted to China’s debt, and the illusion of prosperity and economic recovery it has brought, that all prices everywhere must come down, as noted above, until the tens of trillions of dollars in stimulus measures have vanished into the thin air they were fabricated in. Until value becomes real value again, not this virtual zombie Ponzi pricing.

Today may be just a warning sign, and it may take a while longer before the deluge, but it will come. And since China has nothing left to fall back on but even higher private and public debt levels, make that sooner rather than later.

The main advice we’ve always given with regards to debt deleveraging stands: get out of debt.

Meanwhile, the western financial press, which has been reporting on non-functioning markets for years as if they actually were still functioning, is worrying about a potential Fed rate hike, telling its readers and listeners that the US central bank ‘looks set to make a dangerous mistake’.

But the real ‘mistake’ was made a long time ago.

.

Container Freight Rates Crash 60%

SUBHEAD: Container shipping rates between Asia and Europe fall 60% in three weeks signalling global trade in free fall.

By Tyler Durden on 23 August 2015 for Zero Hedge -
(http://www.zerohedge.com/news/2015-08-23/global-trade-freefall-container-freight-rates-asia-europe-crash-60-three-weeks)


Image above: The Rena, a container ship, founders off New Zealand in October 2011. From (http://www.emergency.co.nz/archive/rena.html).

Three weeks ago, when we last looked at the collapse in trade along what may be the most trafficked route involving China, i.e., from Asia to Northern Europe, we noted that while that particular shipping freight rate Europe had crashed some 23% on just one week, there was some good news: at least the Baltic Dry index was still inexplicably rising, and at last check it was hovering just above 1,100.

That is no longer the case, and just as with everything else in recent months, the Baltic Dry dead cat bounce is now over, with the BDIY topping out just above 1200 on August 4, and now back in triple digit territory, rapidly sliding back to the reality of recent record lows which a few months ago we suggested hinted that much more is wrong with global trade, and the global economy, than artificially manipulated stock markets would admit.

More importantly, a major source of confusion appears to have been resolved. Recall that as we noted on August 3, "many were wondering how it was possible that with accelerating deterioration across all Chinese asset classes, not to mention the bursting of various asset bubbles, could global shippers demand increasingly higher freight rates, an indication of either a tight transportation market or a jump in commodity demand, neither of which seemed credible. We may have the answer."
We did. To wit:
"Should the dead cat bounce in shipping rates indeed be over, and if the accelerate slide continues at the current pace, not only will shippers mothball key transit lanes, but the biggest concern for global economy, the unprecedented slowdown in world trade volumes, which we flagged a week ago, will be not only confirmed but is likely to unleash yet another global recession."
As expected, on Friday, we got confirmation that the BDIY has indeed become a lagging indicator to actual demand, when Reuters reported in its latest weekly update using data from the Shanghai Containerized Freight Index, that key shipping freight rates for transporting containers from ports in Asia to Northern Europe fell by 26.7 percent to $469 per 20-foot container (TEU) in the week ended on Friday. 

The collapse in rates is nothing short of a bloodbath: "it was the third consecutive week of falling freight rates on the world’s busiest route and rates are now nearly 60 percent lower than three weeks ago.

Freight rates on the world’s busiest shipping route have tanked this year due to overcapacity in available vessels and sluggish demand in goods to be transported. Rates generally deemed profitable for shipping companies on the route are at about $800-$1,000 per TEU.

Other Europe-focused freight rates did even worse, with container freight rates from Asia to ports in the Mediterranean plunging 32.1%, while those to the US West and East coast slid by 7.9% and 9.9%, respectively.
This should not come as a surprise: it was back in March when we first reported that "Global Trade Volume Tumbles Most Since 2011; Biggest Value Plunge Since Lehman."

It took the no longer discounting "market" about 6 months to figure this out. As for the culprit, no question who is at fault.

What happens next?

Well, some, such as the world’s largest container shipping company, Maersk Line, will desperately try to no longer lose money on every transit, with a plan to raise spot freight rates by $1,000 from ports in Asia to ports in northern Europe, with effect from Sep 1. Other major container shipping companies have similar plans.

The virtually guaranteed outcome of this "strategy", as there is simply not enough demand as the world careens off the global recession cliff to offset a surge in freight costs, will be an even greater collapse in trade volumes. 

The alternative, is just as bad: as we sarcastically hinted first in March:
... none of the above should alarm anyone: remember - central banks can just print trade with just the flick of a CTRL-P switch.
And then again three weeks ago when we said no need to worry because it is just a matter of time before "central planners learn how to print trade."

For now, however, printing money no longer equates to boosting global trade. In fact, easy monetary policy now appears to be backfiring, as even the "market" has figured out.

So, sarcasm aside, what really happens next, to both shipping, trade, the global economy and markets? Sadly, unless central planning finally works after 7 years of failing ever upward... this.

xxx

The Dow Jones Industrial Average fell over 1,000 points as trading opened Monday, following steep dives in markets around the world.

The benchmark index fell 1,089 before it quickly righted itself to a loss of 603 points, or 3.7 percent, to 15,858. The drop followed declines Thursday and Friday caused by uncertainty over China's markets after a devaluation of the Chinese currency.

NYSE Group Inc., operator of the New York Stock Exchange, invoked "Rule 48" on Monday, a rarely used action which relaxes some trading rules on especially volatile pre-start trading to ensure a smooth opening to the trading day. A number of stocks triggered rules, which act as circuit breakers, when a price drop of 10 percent in a five-minute period is noted.

Between last week and Monday, the Dow Jones Industrial Average suffered its worst decline in four years; the average was down 370 points, to 16,088 at 10:15 a.m.


.