Global economics and finances - impacts

[JimD]

Another domino falls.

Australia, you have officially run out of luck.

While leveraged property investors in Sydney and Melbourne are desperately hunting for a senseless “net-yield” that makes the yield on a German 2-year bund look rewarding, the Australian mining sector is screaming towards what may be one of the greatest and colossal economic breakdowns in modern Western history.

As iron ore illustrates, this is not a downturn; this is a spectacular crash in the spot price of a commodity. And the sad news is, there is no new demand scenarios (unless China builds more apartments than its population) to suggest that more supply is needed to fulfil the demand of the global economy.

Australia made two bets.

The first bet was that China would willingly consume every ounce of iron ore Australian miners could dig from the ground and pay a premium.

Unfortunately, Australia has built an (incredibly sophisticated and streamlined) iron ore production operation so big that the world may never be able to consume all that it can supply.....

The second bet this nation made was to leverage Australian households through the roof and create an economic model that shares the same risk profile as a Ponzi scheme in order to assure that house prices only rise creating never-ending capital gain to those who took the most abnormal sums of risk to invest in a zero-sum game.

House prices have already ‘crashed’…yes ‘crashed’, across a plethora of our mining towns. These real estate markets were ‘property bubbles’, yes ‘property bubbles’ that have already ‘burst....

 it’s by all mathematical accounts, downhill from here.

I stand by my prediction that I made in my book ‘Australia: Boom to Bust’that the spot price of iron ore will touch $20 with three of the five largest iron ore producers in Australia going bust; that property prices across Australia will fall back to their long-term median house price to income ratios; and that at least one of the big four banks will either go bust, be bailed out, or nationalized before the end of 2017. ....

http://www.nakedcapitalism.com/2015/04/wolf-richter-australia-runs-luck-now-needs-miracle.html

[JimD]

More robot info.

According to the International Federation of Robotics, an association of academic and business robotics organizations, China bought approximately 56,000 of the 227,000 industrial robots purchased worldwide in 2014 — a 54 percent increase on 2013. And in all likelihood, China is just getting started. Late last month, the government of Guangdong Province, the heart of China’s manufacturing behemoth, announced a three-year program to subsidize the purchase of robots at nearly 2,000 of the province’s — and thus, the world’s — largest manufacturers. Guangzhou, the provincial capital, aims to have 80 percent of its factories automated by 2020......

http://globaleconomicanalysis.blogspot.com/2015/04/productivity-robots-china-growth.html

[Laurent]

How to divest your bank account of fossil fuels
http://www.theguardian.com/environment/2015/may/16/how-to-divest-your-bank-account-of-fossil-fuels

[Laurent]

Well, there is a little problem :
http://www.theguardian.com/business/2015/jul/08/china-stock-markets-continue-nosedive-as-regulator-warns-of-panic

If the Arctic is really going down this year, I am pretty sure the sentiment of many stakes holders won't be that bright...

[JimD]

A few relevant items.

http://www.telegraph.co.uk/finance/economics/11782965/Greece-needs-100bn-debt-relief-as-perpetual-depression-looms.html

http://globaleconomicanalysis.blogspot.com/2015/08/capital-controls-destroy-greek-small.html

Greece needs a debt write-down of almost €100bn (£70bn) if the country is to stand a chance of clawing its way out of a “prolonged and severe depression”, according to a leading think-tank.
In a stark analysis, the National Institute of Economic and Social Research (NIESR) laid bare the impact of VAT hikes and strict budget targets that it said could become “self-defeating”.
......
By the end of 2016, the economy is forecast to be 30pc smaller than at its peak in 2007 and 7pc smaller than before it joined the euro in 2001.
“We don’t see Greece getting back to the level it was when it joined the euro in 2001, let alone anywhere near where it was before this crisis struck, so this is a prolonged and severe depression for Greece,” said Jack Meaning, research fellow at NIESR.

If there is not a big rise in anti-European terrorism in Greece over the next couple of years I will be shocked. 

http://www.nakedcapitalism.com/2015/08/chinas-stock-market-collapse.html

http://davidstockmanscontracorner.com/why-commodity-prices-are-cliff-diving-the-iron-ore-collapse-reflects-the-end-of-the-monetary-super-cycle/

The plunge in commodities is going to hammer a few of the developed economies and a bunch of the developing countries.

[JimD]

China - Yikes!  gives a good picture of how much things are slowing.

http://www.businessinsider.com/visualization-china-shrinking-economy-2015-8

[JimD]

Brazils economy is falling fast.  HSBC thinks the recession will be worse than 2009.

....For shareholders, betting on Brazil was risky as lenders grapple with tax hikes, weak credit demand, rising defaults, and the impact of what looks likely to be the country’s worst recession in over two decades....

http://wolfstreet.com/2015/08/06/getting-worse-and-worse-in-brazil-service-sector-manufacturing-financial-crisis-hsbc-bradesco/

[JimD]

More storm clouds.  Note where Ukraine falls on the charts.

China's surprise move to weaken the yuan will have repercussions far beyond last week's market turmoil. For one: Governments and companies in emerging markets will have a harder time paying the dollar-denominated debt they have amassed.

The yuan's depreciation -- by almost 3 percent against the U.S. dollar -- triggered instability and exchange-rate declines across emerging markets. As of Friday evening in Asia, the Malaysian ringgit was down 3.8 percent from a week earlier. The Turkish lira, Mexican peso and Russian ruble also fell sharply........

http://www.bloombergview.com/articles/2015-08-16/china-makes-emerging-market-debt-heavier

[JimD]

Awesome picture in link btw.

World shipping has fallen into a deep slump over the late summer, dashing hopes of a quick recovery from the global trade recession earlier this year and heightening fears that the six-year economic expansion may be on its last legs.
Freight rates for container shipping from Asia to Europe fell by over 20pc in the second week of August, even though trade volumes should be picking up at this time of the year. The Shanghai Containerized Freight Index (SCFI) for routes to north European ports crashed by 23pc in five trading days....

...“During the first six months of the years the euro was on average 19 percent lower than the yuan, making purchase of Chinese goods costlier for European importers,” he said.

If so, this is grist to the mill of those arguing that China timed its switch to a market-driven exchange rate in order to disguise what is really “currency warfare”, or a beggar-thy-neighbour strategy as it used to be known. The Chinese central bank has dismissed such claims as “nonsense”. It has intervened to stabilize the yuan over the last three days.

The port of Hamburg said trade with Russia collapsed by 36pc, the latest evidence that the rouble crash and deepening recession has forced Russian consumers to cut back drastically on purchases of imported cars and heavy goods.....

http://www.telegraph.co.uk/finance/economics/11808488/World-shipping-slump-deepens-as-China-retreats.html

[JimD]

More China stuff and commodities.  WTI at $42.41 right now.

There is a familiar feeling about today, as economic woes have clobbered the Chinese stock market overnight (hark, down 6.2%). Heavy selling ensued into the close, as a seeming lack of government intervention to support the market (?!) stoked concerns, and ergo, voracious selling. Nearly three-fifths of stocks finished limit down (-10%).

There appears to be three consistent themes in global financial markets at the moment: China worries, currency routs, and commodity sell-offs. We can tick all three of these boxes today, as WTI continues to retest 6-year lows, while copper and aluminum join its pity party....

http://oilprice.com/Energy/Energy-General/More-Rotten-News-For-The-Commodities-Markets.html

[Nick_Naylor]

Here's a helpful analysis of the action/inaction decision by Citigroup.

https://ir.citi.com/5%2BD3LAj%2Ba5yhsTAE9%2FJU0FQGOiQPJvnrPrLhR%2BdUSVMRjVsSyhROJBwV0st2%2F1TE

It's a comprehensive report. The punchline is that failure to act would cost the world economy up to $72 Trillion by 2060, while the cost of action would be "marginal".

Useful stuff when confronting republican nonsense about "devastating the economy".

[crandles]

Here's a helpful analysis of the action/inaction decision by Citigroup.

Useful stuff when confronting republican nonsense about "devastating the economy".

I would be incline to make that quote a little longer:

The sums of money at stake in terms of investment in the energy sector are
staggering — we estimate at $190.2 and $192.0 trillion between 2015 and 2040 for
Citi’s ‘Action’ and ‘Inaction’ scenarios, respectively. The difference is marginal
between the two scenarios; mainly due to the fact that although we spend more on
renewable resources and energy efficiency in the ‘Action’ scenario, this is offset by
savings in fossil fuels through lower usage and the lack of fuels used by wind and
solar. However, going down the route of ‘Inaction’ would lead to a reduction in global
GDP which could reach $72 trillion by 2060 depending on temperature increase,
scenario and discount rate used.

The difference between $190.2 trillion and $192 trillion is trivial. Even if there is only a small chance of a $72 trillion hit to GDP it would be worth playing safe.

(and the chance isn't small when you have such overwhelming agreement that all national and international groups of scientists agree there is a problem.)

[Nick_Naylor]

Excellent quote.

Earning a $72 Trillion return on an investment of $1.8 Trillion seems like a very good deal - as long as you can tolerate the idea of the richest folks in this generation sacrificing a pittance for the future benefit of others.

[TerryM]

WTI is $41.34 at the moment.


One of the more interesting numbers is that Western Canadian Crude, the stuff Canada wants to power the continent with, is selling at a $20,00 discount on delivery to Cushing Oklahoma. Getting it there costs ~$9.00/bl, when pipeline space can be found - otherwise rail transport is more expensive.
Could it be that economics will solve a problem that has baffled ecologists?


Terry

[JimD]

WTI is $41.34 at the moment.


One of the more interesting numbers is that Western Canadian Crude, the stuff Canada wants to power the continent with, is selling at a $20,00 discount on delivery to Cushing Oklahoma. Getting it there costs ~$9.00/bl, when pipeline space can be found - otherwise rail transport is more expensive.
Could it be that economics will solve a problem that has baffled ecologists?


Terry

There are similar loses being taken on a large percentage of the fracked oil.  Many might wonder why there is so much oil being produced by the high cost producers (like the tars sands and frackers) and then being sold at a loss.  This occurs because they are desperate for cash flow of any kind.  Yes they are losing money but the only way they can service their loans is to generate cash.  So they must sell even at a loss.

Obviously this cannot continue forever as long as things stay the same.  If Saudi does not blink (and they certainly will not until after the next loan restructuring period in the Oct timeframe), then many of these high cost producers are going to get their reserves revalued to market rates circa Oct and this will dramatically change their ability to borrow.  That will drive a significant number of them into bankruptcy, but not all.  The longer market dynamics keep the crude prices very low the more casualties there will be. 

It will be very interesting to see the market effects should the WTI price break below $40.00.

[JimD]

Latin America

Lots of recessions coming fast.

...China’s phenomenal growth over the past two decades led to boom times for other countries as well. China is a voracious consumer of all sorts of commodities – oil, gas, coal, copper, iron ore, agricultural products, and more. For countries exporting these goods, the run up in commodity prices since the middle of the last decade has been extraordinary.

Nowhere is that more true than in Latin America. Countries like Brazil, Argentina, Chile, Peru, and Colombia have enjoyed strong economic growth rates because of China’s rapid expansion.

But the boom times are over. Latin America is getting hit with a double whammy: the collapse in commodity prices and the sudden economic turmoil in China.....

Three whammy's really as the rise in the dollar kills them too.

http://oilprice.com/Energy/Energy-General/Low-Oil-Prices-And-China-Pull-The-Rug-From-Under-Latin-America.html

[JimD]

It may as well be called.   The currency war is underway.

All that debt (mostly denominated in US$) is getting really expensive.  Lots of defaults coming.

...And Kazakhstan freaked out and devalued the tenge by 4.5% today, to 197.3 per dollar, the biggest drop since that infamous day in February 2014 when the central bank let the tenge plunge 20%. So today’s move is likely just a foretaste of what is still to come.

The Turkish lira dropped 1.3% today to a new record low of 2.93 per dollar, now down 4% since the yuan devaluation, and 8% for the past month. Political turmoil in Turkey and its proximity to a war zone are adding totally unneeded spice to the already difficult fundamentals in its economy and in the broader emerging market.

Vietnam lowered the reference rate by 1% today and widened the reference band to 3% on either side. In response, the dong fell 1.2%. After similar devaluations in January and May, the dong is down 4.4% against the dollar for the year.

Then there’s Japan. Shinzo Abe had announced in late 2012, just before he came to power, that his official policy would be to crush the yen, and that he would get the Bank of Japan to do it for him. He succeeded wonderfully. Since then, the yen has lost 36% against the dollar, annihilating over a third of the yen-denominated wealth of the Japanese.

The shenanigans of the Bank of Japan have driven the Koreans nuts. The two countries compete directly with each other in numerous areas. And last year, Korea lost its patience and retaliated. Now China has added fuel to the fire. The Korean won is down 2.9% against the dollar in 30 days and 15% over the past 12 months.

The Indian rupee which had swooned badly during the Taper Tantrum in 2013, but then recovered, has been re-swooning starting a year ago and is now back to the Taper Tantrum levels of 65.2 rupees to the dollar, having lost another 1.5% since the yuan devaluation.

The Taiwanese dollar dropped 1.2% since the yuan devaluation; the Malaysian ringgit 2.7%, now down 6.4% for the month and 15% for the year. The Indonesian rupiah lost 1.4% since the yuan devaluation and is down 11% so far this year. Other Asian countries, such as Azerbaijan and Georgia, have already devalued their currencies over the past year...

http://www.nakedcapitalism.com/2015/08/wolf-richter-it-starts-broad-retaliation-against-china-in-currency-war.html

[TerryM]

The Canadian Loonie is now below 76c US as WTI has dropped below $40 / bl.


30 years ago Reagan & friends asked their Saudi compatriots to pump oil until the Soviet Union was ruined. They complied, oil dropped to $10 / bl, & the Soviet Union was relegated to history books. Obama & friends may have whispered in the ear of their Saudi compatriots & it's just possible that they won't stop pumping until Mr. Putin becomes a forgotten footnote in tomorrow's history books.
Canada, Mexico, numerous Latin American countries will also feel the pinch, even it they weren't the primary target. Victoria Nuland was being far to specific when she mentioned the US's feelings relating to Europe.


Terry 

[Laurent]

Huge development projects could doom Africa’s environment
http://news.sciencemag.org/africa/2015/11/huge-development-projects-could-doom-africa-s-environment

[AbruptSLR]

The linked article & images shows the projected Global GDP revised to 2.9% in 2016 (which is still higher than in 2014 & 2015, so emissions should continue increasing):

http://www.bloomberg.com/news/articles/2016-01-06/world-bank-sees-global-growth-sputtering-along-amid-china-slump-ij392sat

Extract: "The Washington-based development bank lowered its forecast for 2016 growth to 2.9 percent, from a 3.3 percent projection in June, according to its bi-annual Global Economic Prospects report released Wednesday. The world economy advanced 2.4 percent last year, less than a forecast of 2.8 percent in June and slower than the 2.6 percent expansion in 2014, the bank said."

[silkman]

The result of "underwhelming" 2.9% per annum growth is a doubling of the global economy in 24 years - by 2040, the same timeframe that COP 21 sees as critical to the achievement of their almost certainly underpowered 2C target.

This old and sometimes politically incorrect video of Albert Bartlett's explanation of the exponential function has been posted on this site before:



It's long and there are shorter versions to be found on YouTube but if you haven't watched it it's worth finding the time.

It illustrates brilliantly exactly why economists' views of "sustainable" growth are undefendable in the context of a finite planet.

The simple message is that if "business as usual" can only be achieved through exponential growth it will lead to failure. The only variable is how long it will take.

[JimD]

Serious turmoil in China this week.  The Chinese economy is really struggling and a recession is not out of the question.  Regardless there will be huge ripple effects from this.  Be happy you do not live in a commodity driven economy.

A pretty knowledgeable take on China:

http://www.nakedcapitalism.com/2016/01/identifying-vectors-influencing-chinas-and-international-markets.html

[TerryM]

  Be happy you do not live in a commodity driven economy.

Correction:

 Be happy IF you do not live in a commodity driven economy.

Terry - From Canada where Tar Sand Crude sells for <$20.00 and an American dollar buys $1.40 Canadian dollars.

Over the last year the Loonie has been falling as fast as the Ruble, but Canada relies on imports while Russia works towards self sufficiency.

Ontario borrowed heavily in less expensive US denominated loans that now need to be serviced using Canadian tax dollars. A loan that may have required a 5% interest payment, now needs ~ 47% Canadian just to keep it afloat. The 1/2% saved by borrowing American funds has proven a very expensive mistake.

I can't help but wonder how many other governments and large industries have fallen into the trap of borrowing cheap American loans only to find themselves paying exorbitant interest as their currency falls against the American. Few will be able to service loans at such usurious rates.

[plinius]

We have by far more agricultural production than what we can eat even with our meat consumption. Or why do you think are we planting energy crops?
Cut away 20% of world's supply and we start seeing trouble. Before that it's just luxury problems. And certainly not an issue with Ukraine...

[JimD]

Nothing in the Pairs agreement is legally binding.  But if the TTIP is signed it is legally binding.  Same with the TPP.  Fight these things.

Climate change governance should inform global governance more broadly, including international trade and investment policy. One of the most important trade and investment agreements is the Trans-Atlantic Trade and Investment Partnership (TTIP)—currently under negotiation between the European Union and United States—given the role the agreement will likely play in establishing rules for the global economy in the 21st century.
The current model that the TTIP is based on will increase carbon dioxide emissions and jeopardize the ability of Europe and the United States to put in place effective policies for mitigating climate change.....

Regulatory Risks of the TTIP
The TTIP could jeopardize the ability of the European Union and the United States to put in place the proper regulations to meet climate targets. The legal effects of the TTIP could take a variety of forms, including broad restrictions on regulatory authority under investor-state dispute settlement (ISDS) provisions, limits on carbon intensity standards, modifications of the U.S. fossil fuel export regime and restrictions on renewable energy programs.....

http://triplecrisis.com/ttip-and-climate-change-low-economic-benefits-real-climate-risks/

[plinius]

About TTIP I find even worse that it seeks to undermine the jurisdiction branches in both countries. The plan to replace proper courts with company lawyers in some office tower is sickening.

[JimD]

A interesting article by Tverberg.

It is long so I won't excerpt it.  Worth reading.

http://www.nakedcapitalism.com/2016/01/2016-oil-limits-and-the-end-of-the-debt-supercycle.html

[magnamentis]

A interesting article by Tverberg.

It is long so I won't excerpt it.  Worth reading.

http://www.nakedcapitalism.com/2016/01/2016-oil-limits-and-the-end-of-the-debt-supercycle.html

one of the best reads on this topic since long, nice find. generally the world of ever more "expertise" in narrow fields causes great voids in understanding (and seeing) the bigger picture which is what this excerpt is doing in a perfect manner, trying to showcase how major forces are directly related

[AbruptSLR]

The linked article is entitled: "What binds the U.S. and Chinese economies? Moral hazard" and argues that both the US and the Chinese governments are so vested in keeping the current economic system afloat that special interest can take unreasonable risks because they know that their governments will make them whole in case the risks are realized.  While this article is focused on financial risks, I suspect that most fossil fuel special interests believe that they will be bailed-out from climate consequences (think NYC after Superstorm Sandy); however, I doubt that this will be true by 2050:

http://www.sfchronicle.com/business/article/What-binds-the-U-S-and-Chinese-economies-Moral-6744063.php?google_editors_picks=true

Extract: "But moral hazard is hardly a unique concept to the United States. The idea is simply a natural consequence of any national attempt to keep afloat an economy that purports to be market based.

By that definition, China is one gigantic moral hazard. Much of China’s economy belongs to state-owned enterprises — a kind of hybrid between a private and a publicly owned business that can count on government support should the economy implode. The country has also pumped enormous amounts of cheap capital into banks to finance questionable real estate and infrastructure projects like bridges, highways and apartment buildings."

[werther]

The Baltic Dry Index shows the lowest level in many years. It indicates that international trade and shipping of goods are declining. It illustrates Tverberg’s latest blogpost. 2016 may become a very bad year for money.On the other hand, it may provide a wonderful opportunity to hone personal skills, develop compassion and letting go material attachment.

[LRC1962]

Not to minimize trade agreement implications, but there is a bigger issue at stake. 13C average local temperature.
Climate Change Could Wreck the Global Economy based on this study, Global non-linear effect of temperature
on economic production

The anticipated spike in temperatures will not affect the world evenly, according to the study. Productivity peaks when temperatures in a given region average 55ºF (13ºC), meaning warming may actually increase productivity in cold northern countries while devastating the tropics. That means climate change could also worsen global inequality—northern countries are in general already better off than tropical ones.

The one thing that is missing is that you will be having more extreme variations in temperatures and undependable sources of water as the origin of water source will be getting a more uneven extreme level of supply.
Oil and banking may be the centre of most of money, but food and water are what determines how healthy an economy it will be.

[JimD]

A frail global economy caught in China’s tumble

......
So how did Chinese events translate into the worst US stock market losses to start the year? The explanation is a lack of confidence among western investors. Part of this is mistrust of China, born of opacity and lack of information. The second-biggest topic of conversation in Wall Street and the City this week has been the open letter written by Martin Taylor, founder of an emerging markets hedge fund called Nevsky Capital, explaining why he was closing the fund.

His complaint, with which many agree, was that he could not trust the information he most needed to make good investment decisions, particularly from China. “An ever growing share of the most important data they produce is simply not credible,” Mr Taylor said.
FT View

The resilience of the global economy is once again being tested
Distrust of official Chinese data is so great that there is a thriving industry in assembling alternative estimates from the available hard data, such as electricity consumption. For example, London’s Fathom Consulting this week estimated GDP growth at 2.4 per cent. The official number is 7.1 per cent....

China’s actions also played into the greatest prevailing fear in the west: deflation. Central banks are desperately trying to escape this so anything that threatens to intensify the problem is very serious....

Just like we found recently with Chinese coal consumption being much higher for years than official figures, the figures on Chinese GDP are certainly far from the official numbers.  If, as the article states, the number is really as low as 2.4% we are in critical territory.

http://www.ft.com/intl/cms/s/0/86f524ca-b539-11e5-8358-9a82b43f6b2f.html#axzz3wm5kD4S3

[JimD]

This is a pretty drastic piece of open advise for this industry.  Many would consider it like yelling 'fire" in a theater.

RBS cries 'sell everything' as deflationary crisis nears
Clients told to seek safety of Bunds and Treasuries. 'This is about return of capital, not return on capital. In a crowded hall, exit doors are small'
      
RBS warned clients of trouble just before the 2008 crisis. It has done so again.

RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel.

The bank’s credit team said markets are flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008. “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note.

http://www.telegraph.co.uk/finance/economics/12093807/RBS-cries-sell-everything-as-deflationary-crisis-nears.html

[johnm33]

"    Commerce between Europe and North America has literally come to a halt. For the first time in known history, not one cargo ship is in-transit in the North Atlantic between Europe and North America. All of them (hundreds) are either anchored offshore or in-port. NOTHING is moving.

    This has never happened before. It is a horrific economic sign; proof that commerce is literally stopped."
https://www.dollarvigilante.com/blog/2016/01/11/shipping-said-to-have-ceased-is-the-worldwide-economy-grinding-to-a-halt.html
https://www.superstation95.com/index.php/world/750
s--t!

[solartim27]

"    Commerce between Europe and North America has literally come to a halt. For the first time in known history, not one cargo ship is in-transit in the North Atlantic between Europe and North America. All of them (hundreds) are either anchored offshore or in-port. NOTHING is moving.

    This has never happened before. It is a horrific economic sign; proof that commerce is literally stopped."
https://www.dollarvigilante.com/blog/2016/01/11/shipping-said-to-have-ceased-is-the-worldwide-economy-grinding-to-a-halt.html
https://www.superstation95.com/index.php/world/750
s--t!

This is absolute garbage written by either scaremongers with an agenda, or people who don't know how to zoom in on the map.  Many of the comments referred to this site so if you want, you can take a look for yourself (Please note the ship ID system only works when the ship is in range of shore based radar). 
http://www.marinetraffic.com/

Using the filters, with the map zoomed in to the Atlantic Basin area i get a total of 8536 Cargo and Tanker ships, with 3196 underway.

[bligh8]

 "(Please note the ship ID system only works when the ship is in range of shore based radar)."

Your Absolutely correct, if international shipping had stopped or even slowed the entire world would know about it.  Below is some interesting information about ship tracking systems and how it's used.

Ship tracking has become a little more sophisticated than AIS.  Now it’s mandatory that builders install into the hull of all ships over 300gt an SAIS a Satellite based ship ID system, this way the ID system cannot be turned off.  What was happening was fishing vessels would be skirting a area of illegal to fish in waters and mysteriously their tracking system would go off and three days later would come back on and the ship would be just outside of the illegal zone.  What the US government does is track every ship on the high sea’s and if one is suspected of catching illegal fish the government will notify the ship’s next port of call that their suspected of catching or holding illegal fish. It’s up to the port of call country to respond legally.  Some do and some don’t depending on the resources and policies of that government. It’s financially a positive thing because illegally caught fish can be seized. Depending on the seriousness of the situation, meaning some ships may have a shanghaied crew, in which case the captain & crew may be jailed and the ship may be seized. If the country has the resources it may try to track down the owners or corporation that owns the vessel and prosecute them, which is not easy as corrupt corporations in cahoots with less than cooperative governments will make every effort to disguise ownership through a sophisticated paper trail that leads nowhere.
The linked Wiki article mentions SAIS as a side note but the information supplied is incomplete and/or outdated. https://en.wikipedia.org/wiki/Automatic_Identification_System   


 

[johnm33]

"    Commerce between Europe and North America has literally come to a halt. For the first time in known history, not one cargo ship is in-transit in the North Atlantic between Europe and North America. All of them (hundreds) are either anchored offshore or in-port. NOTHING is moving.

    This has never happened before. It is a horrific economic sign; proof that commerce is literally stopped."
https://www.dollarvigilante.com/blog/2016/01/11/shipping-said-to-have-ceased-is-the-worldwide-economy-grinding-to-a-halt.html
https://www.superstation95.com/index.php/world/750
s--t!

This is absolute garbage written by either scaremongers with an agenda, or people who don't know how to zoom in on the map.  Many of the comments referred to this site so if you want, you can take a look for yourself (Please note the ship ID system only works when the ship is in range of shore based radar). 
http://www.marinetraffic.com/

Using the filters, with the map zoomed in to the Atlantic Basin area i get a total of 8536 Cargo and Tanker ships, with 3196 underway.

Thanks for the reality check, since all the boats around here have sat nav I assumed the ships were tracked that way. Can't say I'd fancy being out in the North Atlantic

[JimD]

I make no secret that it is my opinion that the global Capitalist economic system we have in place is totally unsuitable for a successful human future.  Below is a great post from another blog on this system we have sold our souls to.  Think about how this system functions at a fundamental level and then try to imagine a way that we could ever dig ourselves out of this mess we are in while still adhering to its mechanics.

http://www.nakedcapitalism.com/2016/01/capitalism-versus-social-commons.html

[JimD]

An item which demonstrates why I am always saying that we just do not have the resources in wealth to afford all of the BAU approaches to solving the carrying capacity/climate change problem.

...The value of water
Flint, some experts say, is illustrative of a larger problem. Poor asset management, shrinking federal and state budgets, and a lack of political will to address the issue over decades has left the US with deteriorating water and wastewater systems – some dating back to the Civil War era – in urgent need of repair and replacement.

With more than one million miles of water mains across the country, the cost of restoring and expanding them to serve a growing population could cost up to $1 trillion over the next 25 years, the American Water Works Association (AWWA) estimates. The EPA’s forecasts are more conservative – an investment of just over $330 billion over 20 years – but even those remain well above the $1.38 billion state and local governments are spending annually on drinking water and wastewater infrastructure, the American Society of Civil Engineers reports.....

http://www.csmonitor.com/Environment/2016/0113/Flint-crisis-a-cautionary-tale-about-America-s-water-supply-video

Anyone can tell you that we do not have the wealth to do this.  One could write a similar article about the deteriorating road and bridge infrastructure (got to have something for all those damn cars) and our ability to maintain and grow them.  Or one could write a similar story about the dire need to rebuild and redesign the national grid.  Or the need to rebuild the housing stock (around 100 million units in the US) to energy efficient standards, or the millions of commercial buildings?

Thus we see the inevitability of decline.  We cannot afford to maintain our current infrastructure nor build the necessary replacements. 

[AbruptSLR]

The linked article on the World Bank Group website is by Dimitris Tsitsiragos is Vice President of Global Client Services at IFC, a member of the World Bank Group.  The article is intended to encourage the private sector to take action and is a follow-on to the Paris Agreement and  I believe that the cited climate consequences represent a lower bound of what may come.

http://www.worldbank.org/en/news/opinion/2016/01/13/climate-change-is-a-threat---and-an-opportunity---for-the-private-sector


Extract: "No matter what kind of agreement follows after Paris, the fight against climate change will not be cheap. Developing countries will need about $100 billion of new investments per year over the next 40 years to build resilience to the effects of climate change. Mitigation costs are expected to be in the range of $140–$175 billion per year by 2030. This enormous burden cannot be carried out by national governments, many of which are already struggling to make ends meet: they will need the buy-in and participation of the private sector.
But why should businesses, whose main responsibility is to their shareholders, care about climate change?
The answer is simple. A growing number of studies are showing that it could be disastrous for the bottom lines of companies around the world. If global temperatures jump four degrees by 2100 – the path we're on now – they could spark droughts, flooding and ferocious storms, sowing financial chaos and upending small shops and international conglomerates alike.
A study by CitiGroup found that rampant warming could shave up to $72 trillion off the world's gross domestic product, while another report in the journal Nature found it could reduce average global incomes by nearly a quarter. A four-degree Celsius jump would also batter sectors like agriculture, real estate, timber, and emerging market equities. All told, that would make for a toxic environment for businesses large and small.
Investors wouldn't be immune either. A report by Cambridge University suggests equity portfolios could tumble by up to 45 percent as climate-related fears ripple across global markets."

[Sigmetnow]

They are blaming oil prices for today's stock market plunge.  Mostly.

Oil Prices Drive Stocks Rout: Dow Briefly Dives More Than 500 Points
http://www.nbcnews.com/business/markets/u-s-stock-market-dow-plunges-oil-prices-spiral-lower-n497276

[werther]

It is a tantalizing passtime to muse on what will happen economically and financially this year. And I realize it is a bit useless too, because I'm not going to influence a single euro or dollar in the outcome.
Nevertheless, the drop in indicators, like crude oil prices, makes for a great story to follow. And what to think about the BDI (Baltic Dry Index), reflecting the cost of shipping bulk commodities around the globe? From an already low state through the last months, the reel down last week is impressive. Whereas it has been on almost 12000 before the '08 crisis, it is now on 373. I haven't found the link to the BDI history before '08, but I think it may never have been lower.

It is not only the fossil fuel industry and the whole sector of their supply chain, but also worldwide shipping, that's suffering.
Whereas it cost between 200 and 300 thousand dollar a day to hire a large bulk carrier once, prices are between 4 and 12 thousand now (couple of weeks ago). And falling... The cost to keep these ships afloat are now three times higher than the revenue.

Is it a matter of time to start witnessing large scale defaults and bankruptcies? Makes you wonder how much slack BAU capitalism has.

[bosbas]

When the BDI hit an all time low in Jan last year (it is lower now), this was explained here: http://www.economist.com/blogs/economist-explains/2015/03/economist-explains-7
I quote: "The current malaise is much more a result of the overall supply of ships than a harbinger of doom for the world economy. In the run up to the financial crisis, as the world economy boomed and rates hit new heights, shipowners ordered a huge tonnage of bulk carriers. These hit the waves during the post-crisis slump that was already weighing heavily on demand for ships, which pushed charter rates lower still. Just as scrapping and a slimming of the order book was eroding the oversupply of ships, an uptick in Chinese coal imports in 2013 prompted another rash of orders. Ship owners reckoned that China’s appetite for coal would keep growing. But the country’s policy of weaning itself off dirty energy has contributed to a rapid decline in imports, leaving another glut of new vessels and rock-bottom rates for their owners."

[werther]

Bosbas, hi,
Working through the web, I saw that sort of explanations, too. I think they are right on a detailed level while looking back. However, in my opinion such explanations lack a more holistic approach. Since I started reading FI Tverberg's blog, I'm not very reaffirmed by these sectoral explanations, often provided by governments and main stream media.
Anyway, as it seems impossible to me to figure out the outcome in very complex systems (the only format being an analysis of risk/chance), I try to take it in as an exciting quest on general providence. As long as it doesn't make me feel to miserable on a more personal level.
I realise that that last feeling might become reality though...

[Shared Humanity]

For those of you who are regulars, you have likely stumbled across posts of mine on this website with an underlying theme/perspective. For others, perhaps not. I often repeat myself (my adult children and friends are generally amused, sometimes exasperated by this fact).

As context, I have an economics degree and MBA from the University of Chicago.

From my economic perspective, I have consistently argued that this growth system (capitalism) which is constrained by a finite resource (earth) with feedback loops that have significant lags (AGW for example) under "Business as Usual" behavior is destined to collapse. I have often referenced or suggested the books of a researcher for whom I have a great deal of respect. Among  many other books, Donella Meadows authored "Limits to Growth" which was published in 1972 and "Thinking in Systems" which was posthumously published in 2008. I would encourage  everyone to read these. They are fascinating, accessible and entertaining. Donella was a research fellow at MIT when she published "Limits to Growth" and taught at Dartmouth College for 29 years, beginning in 1972 until her untimely death in 2001 at the age of 60.

If you want to get an understanding of the challenge humanity is facing, these two books are essential reading. Systems thinking allows a person to see the interconnectedness of trends and  events that seem totally unrelated.

Researchers at the University of Melbourne have recently completed research that set out to  evaluate the predictions that "Limits to Growth" made in 1972. The research is complete and "Limits to Growth", which predicts an overshoot and collapse before 2070, is remarkably accurate.  Current population, economic and environmental trends are frighteningly in line with the forecasts set out in the book.

http://www.theguardian.com/commentisfree/2014/sep/02/limits-to-growth-was-right-new-research-shows-were-nearing-collapse

[AbruptSLR]

The division between the rich and poor cited by the linked article is helping to fuel "populists"/"nationalists" like Tump who is part of the problem

http://www.reuters.com/article/davos-meeting-divisions-idUSL8N151092

Extract: "Just 62 people, 53 of them men, own as much wealth as the poorest half of the entire world population and the richest 1 percent own more than the other 99 percent put together, anti-poverty charity Oxfam said on Monday.

Significantly, the wealth gap is widening faster than anyone anticipated, with the 1 percent overtaking the rest one year earlier than Oxfam had predicted only a year ago.

Rising inequality and a widening trust gap between people and their political leaders are big challenges for the global elite as they converge on Davos for the annual World Economic Forum, which runs from Jan. 20 to 23."

[Laurent]

That does sound huge to me... (we don't have wallmart in France, may be under an other name...)
Wal-Mart To Close 269 Stores, Including 154 In U.S.
http://www.npr.org/sections/thetwo-way/2016/01/15/463217478/walmart-to-close-269-stores-including-154-in-u-s?sc=tw

Wal-Mart will shut down 269 stores to focus on other aspects of the business, including online sales, the company announced Friday. Among the shuttered stores will be 154 in the U.S.

Wal-Mart, however, is not shrinking. In the same announcement, the company said it is planning to open 300 more stores globally next year. Because of this, NPR's Chris Arnold described Wal-Mart's move as more of a "repositioning" rather than scaling back. He said the company will also be more heavily focused on its e-commerce business, as online marketplaces like Amazon continue to flourish.

Of the 154 U.S. Wal-Mart locations being closed, 102 of them are Wal-Mart Express stores, the company's smallest-format stores that had been in the pilot stage since 2011. The Wal-Mart Express stores are almost exclusively located in Southern states, as shown on this map by Quartz.

Instead, Wal-Mart said in a statement, it will focus on "strengthening Supercenters, optimizing Neighborhood Markets, growing the e-commerce business and expanding Pickup services for customers."

The move to close the stores will eliminate about 16,000 jobs — 10,000 of them in the U.S. The company acknowledged the difficulty in closing stores, saying it will take steps to help employees.

"More than 95 percent of the closed stores in the U.S. are within 10 miles on average of another Walmart, and the hope is that these associates will be placed in nearby locations," Wal-Mart President and CEO Doug McMillon said in the statement.

"Domestically, Walmart intends to open 50 to 60 Supercenters and 85 to 95 Neighborhood Markets in Fiscal 2017, which begins Feb. 1," the statement said.

Wal-Mart, which boasts nearly 11,600 stores around the world, said the stores on the chopping block "represent less than 1 percent of both global square footage and revenue."

The full list of stores to be closed can be found at the end of the company statement.

[JimD]

This gives a good snapshot of what the big decline in China is doing and is going to do to the commodity producers.  It is ugly.  These effects will last for years and dramatically undermine the capabilities of these countries to make any kind of dent in the behaviors which exacerbate climate change and carrying capacity issues.

http://www.forbes.com/sites/kenrapoza/2016/01/21/china-to-the-world-this-is-going-to-hurt-you-more-than-it-hurts-us/#25a40eb571db

[JimD]

Former BIS Chief Economist Warns of Massive Debt Defaults, Need for Debt Jubilee; Fingers Europe as First in Line

http://www.nakedcapitalism.com/2016/01/former-bis-chief-economist-warns-of-massive-debt-defaults-need-for-debt-jubilee-fingers-europe-as-first-in-line.html

[JimD]

An excellent little video which pulls some of the curtains back on how well China is doing.  The figures show that about 10% of Chinese exports right now are actually a form of capital flight vice real economic trade.  This of course means that China's recently reported economic growth is lower than stated  -  as most close observers have been saying for a long time.

http://www.bloomberg.com/news/videos/2016-01-27/doing-the-math-why-china-s-exports-don-t-add-up