Tuesday, April 2, 2013

A telling sign of the state of the world economy

Irrespective of the numbers bandied about by politicians, administrators and bureaucrats, one can always get a good idea of the state of a nation's economy - or a region's, or a continent's, or the world's, for that matter - by examining actual trade figures.  Who's buying, and what?  Who's selling?  Do actual corporate purchases and sales match the numbers that the liars politicians are spouting?

When it comes to oil, they don't.  Bloomberg reports:

Earnings for very large crude carriers, the industry’s biggest ships, plunged 75 percent from a year earlier to $11,624 a day, according to figures from Clarkson Plc (CKN), the world’s largest shipbroker. A surplus of the supertankers seeking charters in the Persian Gulf averaged 21 percent during the first quarter, the largest glut since 2009, according to market surveys by Bloomberg.

“Crude rates remain in the doldrums,” RS Platou Markets AS, an Oslo-based investment bank, said by e-mail today. VLCCs earned $17,000 a day on average in the first quarter, down 32 percent from a year earlier, it said.

. . .

The number of VLCCs seeking Persian Gulf cargoes exceeds likely shipments over the next 30 days by 22 percent, according to a Bloomberg survey of five shipbrokers and owners today.

There's more at the link, with added commentary at Zero Hedge, which has some very interesting graphic depictions of the collapse in oil shipments.

This can mean only one thing.  The world's transport systems are largely petroleum-based.  Goods and services don't move without gasoline, diesel and lubricating oil, whether it be by road, by rail, by air or by water.  Similarly, most plastics and derivative products are produced using oil as the feedstock.  Without oil, none of those economic activities can happen.  Therefore, if less and less oil is being transported internationally, it means that less and less is in demand by international commerce and industry.  Sure, some is being replaced by increased domestic production in a few countries (such as the USA, courtesy of 'fracking'), but other countries don't have that good fortune.  That, in turn, can only mean that overall, worldwide economic activity is slowing drastically.

Don't believe the 'official' numbers telling you our economy is doing well.  Instead, look at the reality, and at evidence such as this, and prepare accordingly.  I'm anything but a wealthy man, but I went to the bank yesterday and doubled the amount of cash I'm keeping in a safe at home.  I no longer trust its security in a savings account where it earns a negligible amount of interest - and is subject to all the risks highlighted by recent events in Cyprus.  I'm taking additional steps, as discussed earlier.

I fear time is growing short.


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