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mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Fri Oct 10, 2008 5:54 am Post subject: Grain piles up in ports |
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This is very serious:
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The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.
Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said.
"There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy."
So far the problem is mostly being felt in U. S. and South American ports, but observers say it is only a matter of time before it hits Canada.
"We've got a nightmare in front of us and a lot of people are concerned it's going to get a lot worse," said Anthony Temple, a grain marketing expert based in Vancouver.
The port troubles occur as financial institutions worldwide experience an unprecedented level of failures; even the strongest global banks are taking shelter in government bailouts. Yesterday, the U. K was expected to invest as much as �45-billion ($87.01-billion) in three of the country's biggest banks, while the U. S. government rushed to put in place its US$700-billion rescue package for beleaguered financial market players. Ottawa has so far resisted pleas for direct financial aid for exporters.
Access to credit is key to the survival of maritime trade and insiders now say the supply is being severely restricted. More than 90% of the world's trade by volume goes by ship.
The Baltic Dry Goods Index, the main measure of shipping rates, is down 74% from its high back in May when trade with China was still strong.
"The credit crisis has made banks nervous and the last thing on their minds is making fresh loans," Omar Nokta, an analyst at investment bank Dahlman Rose, said in an interview with Reuters.
While shipping has always been a cyclical industry whose fortunes rise and fall with the global economy, analysts said the current crisis over the drying up of credit is something they have never seen before.
Jason Myers, head of the Canadian Manufacturers and Exporters, said exporters across Canada are getting caught up in the turmoil as customers delay payments, forcing them to shoulder the cost.
"What some companies are saying is we can't pay you until our customer pays us, so it becomes a question of who bares the financial risk and the cost," Mr. Myers said. "We're hearing about it more and more." |
http://www.financialpost.com/story.html?id=866522
http://www.nakedcapitalism.com/2008/10/international-trade-seizing-up-due-to.html |
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sojourner1
Joined: 17 Apr 2007
Location: Where meggi swim and 2 wheeled tractors go sput put chug alugg pug pug
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| Posted: Fri Oct 10, 2008 9:17 am Post subject: |
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So it will begin to rot while many go hungry.
Tell me if that's not capitalism failing the world? Capitalism the way were doing it is seriously flawed. In theory, it's a beautiful system that works for everyone willing to work and consume, but it's breaking down and failing us. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Oct 10, 2008 9:22 am Post subject: |
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| Well, remember that there isn't a capitalism but many capitalisms. Our financial system is clearly defective. The actual agricultural economy works very well, but the financial economy is failing us. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Fri Oct 10, 2008 9:33 am Post subject: |
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| mises wrote: |
| Well, remember that there isn't a capitalism but many capitalisms. Our financial system is clearly defective. The actual agricultural economy works very well, but the financial economy is failing us. |
The financial markets have been killed by the Socialist Federal Reserve's fiat money.
Free market money is always backed by gold or some other hard asset. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Fri Oct 10, 2008 1:49 pm Post subject: |
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| Yes, this is quite serious. Korea imports a lot of food. If the ships don't move, the food doesn't come. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Oct 15, 2008 1:55 pm Post subject: |
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http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahkq91XcsKnY
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Shipping Lines Say Tight Credit Cutting World Trade
Oct. 15 (Bloomberg) -- Pacific Basin Shipping Ltd., Hong Kong's biggest dry-bulk carrier, and Precious Shipping Pcl. said demand for moving coal, iron ore and other commodities will fall because banks are guaranteeing fewer loads.
``Letters of credit and the credit lines for trade currently are frozen,'' Khalid Hashim, managing director of Precious Shipping, Thailand's second-largest shipping company, said in Singapore yesterday. ``Nothing is moving because the trader doesn't want to take the risk of putting cargo on the boat and finding that nobody can pay.''
The lack of letters of credit, in which banks guarantee payment for merchandise, could become a ``big issue'' for world trade, according to Klaus Nyborg, Deputy Chief Executive Officer at Pacific Basin. Tighter credit has contributed to this year's 80 percent drop in the Baltic Dry Index, a measure of commodity-shipping costs. About 90 percent of world trade moves by sea.
``This can have a significant effect on demand because you won't see the same volume of cargo moved,'' Harold L. Malone III, senior vice president at Jefferies & Co., said at a Marine Money conference in Singapore. ``You have to figure out other ways to get trade done.''
The Baltic Dry Index dropped 8.5 percent to 1,809 points yesterday, the lowest since August 2005. Pacific Basin dropped 6.5 percent to HK$4.75 in Hong Kong and Precious Shipping declined 5.5 percent to 12.1 baht in Bangkok.
Vessel Owners
Banks worldwide have curbed lending because of increased concerns about getting their money back. Shipowners are already struggling to obtain funding for new vessels. Precious Shipping took as long as 15 months to secure financing for 18 vessels it has on order, Hashim said.
The maritime sector needs about $300 billion over the next three to four years to fund construction of vessels that are already on order, according to Nordea Bank Finland Plc. At least a quarter of container ships, dry-bulk vessels and oil tankers on order are not financed, according to Seaspan Corp., the Hong Kong-based ship lessor.
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It is getting ugly. |
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VanIslander
Joined: 18 Aug 2003
Location: Geoje, Hadong, Tongyeong,... now in a small coastal island town outside Gyeongsangnamdo!
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| Posted: Wed Oct 15, 2008 2:56 pm Post subject: |
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| must be time to also nationalize trading companies |
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