Economics – Trade, Exports, Shipping & Freight (13 Dec 08)

• The past 8 weeks have seen the rapid dis-integration of the world economy. Earlier on many people were of the opinion that Asia is decoupled from the financial blowout that is happening in the West. This is utter nonsense. Asia will in no way escape the full force of the economic meltdown.

              Asian trade in ‘free fall’ as exports to West dry up

• “Intra-Asian trade is in free-fall. Taiwan’s exports to mainland China in November were down a whopping 42pc.”
   
• Japanes export in Oct fell 7.7pc . Exports from Korea & Taiwan both collapse by over 20%. Expectations are that China exports will show a decline. Can we expect a recession in China for 2009? I won’t bet against it. Despite the many forecast of 7.5% growth for China for 2009, this will increasingly be revised downwards in the coming weeks. China no longer can export herself out of trouble.
   
• The WSJ is reporting that : Freight Haulers Slam on the Brakes , trade is collapsing as seen in the Baltic Dry Index which is still more than 90% down compared to their highs. Trucking companies are mothballing trucks, cancelling orders for new truck replacements. Shipping companies are in dire straits, many will not survive into 2nd half of 2009. Rail cars production has plummeted and order cancellation for new ships are mounting.
   
• If we compare the current crisis with the Great Depression of 1929-1939, we see that there is more downside to international trade. The Great Depression saw international trade collapsed more than 66%.
   
• Bailouts, Retrenchments & Bankruptcies are on the rise. Will we see 1 in 4 unemployed like in 1929 GD. My feeling is :Yes and it could get even worse than the 1929 GD.
   
• We will see a repeat of the 1929 GD progression: Economic crisis–>rising unemploment–>social dis-integration..riots–>famine and finally War. Could we see another great war as in WW3? We are heading that way IMO.

 

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