The Guardian he reported that:
Goldenport, one of the last shipping companies left on the London Stock Exchange, has delisted from the market and sold off six of its remaining eight vessels for $1 (69p) each.
The giveaway reflects the most dismal shipping conditions in decades, caused by economic slowdown in China combined with an oversupply of vessels due to a building spree during a previous boom.
Three thoughts.
First, this is market failure: the world shipping tonnage increased massively between 2010 and 2013.
Second, this what recession looks like.
Third, this may be because the world is beginning to buy less 'stuff'.
One of those is good news in the long term.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
I think this echos the title of James Galbraith’s book ‘The End of Normal’. The ECB has been trying ti increase consumption by the failed method of QE asset purchases and core inflation in the Eurozone is still less than 1% and has been negative for short periods.
We are in new territory surely? Yet acting as if it were the old. This cries out for new economic models.
Agree with all that
Recession, indeed: and domestic demand in China isn’t picking up the slack.
As for buying less stuff, large parts of the world are becoming more affluent and buying more; this is masked by rich countries in austerity recessions buying less – but still more than they did twenty years ago, as cheap manufacturing makes everything affordably disposable.
‘Affordably’, except for the environmental cost.
The significant exception is cars: younger Westerners are buying fewer of them – car ownership is going down in the G8 outside North America – and cars today last far longer.
But even the clothing boom seems to be over
I agree re cars
Not sure about cars. “Record year for new car market as registrations hit 2.6 million in 2015” and “UK new car market starts 2016 on a high with best January in 11 years”. (http://www.smmt.co.uk/2016/02/uk-new-car-market-starts-2016-on-a-high-with-best-january-in-11-years). The quoted figures may be a bit exaggerated due to pre-registrations but there doesn’t seem to be much evidence that the UK auto market is currently in a state of decline. So what’s going on? PS: Hope the move has been a success.
That is low finance costs at play for now
Recession, indeed: and domestic demand in China isn’t picking up the slack.
This has consequences: the stability of China is built on a social compact that tolerates bad government because of increasing material prosperity for all.
As for buying less stuff, large parts of the world are becoming more affluent and buying *more*; this is masked by rich countries in austerity recessions buying less -temporarily, and still more than they did twenty years ago, as cheap manufacturing makes everything affordably disposable.
‘Affordably’, except for the environmental cost.
The significant exception is cars: younger Westerners are buying far fewer of them – car ownership is going down in the G8 outside North America – and cars today last far longer, consume fewer parts, and are largely recyclable.
I don’t have good data for increasing car ownership in developing countries. I know it’s happening, but the pattern of urban development isn’t reproducing our car-dependent suburbanisation.
So: you’re mostly right, and it mostly balances out, and the recession could be a long one.
In my view this is an over supply of tonnage in the shipping world. Shipping companies went on a massive building programme just before the last recession in 2008 and this is the result. Simplistically, shipping has always been cyclical, and more tonnage drives down freight rates. Shipowners will lay their ships up for a while to try and ride out the downturns. Older ships get scrapped. It will come back but I don’t see that people are buying less than before. Oil levels are pretty much maintained and consumer products from the Far East continue unabated.
If tonnages are down so is consumption
Although I’m sure the volume of ‘stuff’ the world buys is down, this particular news is not a good indicator. The ships that have been sold by Goldenport are dry bulk carriers (iron ore, coal etc.) and reflect the huge down turn in demand for bulk commodities. I suspect this better represents the huge decrease in demand for steel and cement much of which has gone into Chinese building/infrastructure.
But that feeds through to stuff
Could it be that the people are finding they can’t afford to buy so much stuff. With wealth being concentrated upwards a drop in demand is inevitable.
If you have an ageing population they may well buy less. If you have a young generation forced into longer and longer term education and debt, they may well buy less. If you have the ones in the middle, needed to prop up the old and subsidise the young, they will buy less. If all of us spend more time on the net and less time out or shopping less will be bought in any case.
In an environmentally friendly world where producing and transporting less “stuff” around the world that produces harmful externalities to people and the planet, must be therefore the top priority.
And so a significant drop in tonnage and consumption is a very good thing for most of us, if it was not for an economic system that will see most of us punished for this failure of capitalism to adapt to changing circumstances.
I for one am celebrating just a little, but would like to see the new “MUCH LESS STUFF” economic model developed quickly, so that it enables “LESS GROWTH” in “BAD THINGS” to happen and society to prosper “MUCH MORE EQUALLY”.
We are now hitting the real limitations of financial capitalism to deal with anything but self-interest at any cost.
Could it be both? A cyclical downturn in the buying of the affluent classes in middle-income countries, who Branko Milanovic of the World Bank identifies as relative “winners” from globalisation, due to the economic downturn/end of the commodity boom, and at the same time a longer-term tailing off of certain kinds of consumption in the richer countries?
Two offerings of pure anecdote: the astonishingly high proportion of brand-new or nearly-new cars I saw last summer on the roads in Jakarta (a city I’ve known on and off since the 80s) and the fact that everyone I know in London now has so much cheap stuff that they can barely fit any more into their absurdly overpriced properties, nor afford to buy bigger ones to put more stuff in. When at any point in history until now would “decluttering consultant” have been a viable occupation?
There are probably an awful lot of people in developing countries who would like to acquire more prestige goods if they can come by the money (I’m writing this after spending the day wandering round central Lusaka). But I guess that’s not necessarily grounds for pessimism on the environmental front if there’s a longer-term trend starting in the West towards using less stuff. The thing I’d be tempted to worry about, long term, is not just stuff but how to sustainably generate all the power to store and use the data that will replace a lot of stuff in the longer term.
Don’t forget that, for the moment at least, one person’s “stuff” is another person’s job.
Beware the Paradox of Thrift.
The future is in services
“The future is in services”
…..not if you work for BHS…….
Where the legacy of Sir Philip Green is apparent
Under this government’s economic and financial system, there are some obvious “growth sectors” in services which will be attracting the new breed of “entrepreneurs”, for example:
1. Debt collection
2. Anxiety & depression therapy
3. Gangmasters
4. Drug dealers
5. Funeral directors
6. Food banks
7. Homelessness charities
What a horrendously divided country we are becoming (yet again!)
insecure housing is probably a great disincentive to amass stuff,
the inability of youngsters to form new households destroys a big household stuff market,
using credit to buy expensive stuff requires a confidence in job security,
will that new sofa fit if I have to move?
each time you move you clear out superfluous stuff, the more often you have to move the less inclined you are to handicap yourself with a stuff mountain,
why do home improvements if you’re renting?
why buy plants and shrubs and tend a rented garden?
a world governed on short term principles is inhabited by people with a short term outlook,
many people are becoming economic migrants in their own countries, refugee’s of recession and austerity, you live out of a suitcase when you can’t put down roots,
the only possession we can own and store for free is money!
Housing has been a bubble for 40 years and Government after Government ignored it and M.P’s increased the size of their housing portfolios. This is a scandal and outrage that never seems to create the anger and protest it deserves. I suspect the young are not going to take this crap forever on top of other forms of debt peonage. For many young people without inherited wealth there is very little sense of a worthwhile future knowing that you are to be a wage slave for a syphoning rentier leech.
I’m even wondering whether there is any point in my own son going to University and am looking into other forms of training open to him so at least one area of peonage is mitigated.