Boeing employees have been on strike, if you haven't noticed, the shares have taken quite a hit. How many overseas customers will be ready to buy 787s when this credit contraction cycle has finished up, or when the price of oil rebounds once deleveraging has concluded? Those two factors alone will put a hell of a crimp in discretionary air travel.
The magnitude of the financial crisis still eludes most. Estimates of the scope of the derivatives outstanding range from $450 trillion to...Quadrillion In Derivatives Waiting To Explode
$this->bbcode_second_pass_quote('', 'T')he heart of the current crisis is the quadrillion plus derivative market. Roughly half of these derivatives are listed on exchanges, but the other half are on the totally unregulated, totally opaque, poorly documented and mostly naked (no reserves or collateral given to secure performance) OTC derivatives market. The subprime and Alt-A mortgage debacles, and the soon to be recognized prime mortgage debacle, are little more than a side show with what will become their one to two trillion in losses which the Phony-Fraudie nationalization and the Paulson Ponzi Plunder Plan are meant to address, albeit futilely. However, the real estate derivative problems created by these debacles have been important catalysts leading to the loss of confidence that is preventing banks from lending to one another, because these problems, like a Zippo lighter on high flame, metaphorically speaking, have lit the fuse leading to the quadrillion dollar powder keg waiting to blow any day now, and Hanky Panky and Helicopter Ben are running around like raving, corporatist, fascist lunatics trying to stomp out the lit fuse before the whole world financial system goes up in a blaze of glory.
PeakOil is You
Baltic Dry Index Crashes (Shipping Costs)
Re: Global shipping crash is here. Are shortages coming?
by TheDude » Sat 01 Nov 2008, 13:44:38
If $5 trillion of this funny money has been taken care of we've barely even started. Banks were leveraged 10:1 in the GD; FannyMac were at 100:1 when they imploded. Central banks have much less authority than they are credited with for addressing these problems, too. Greenspan himself once remarked that the perceived notion of their being infallible was "puzzling."
Cogito, ergo non satis bibivi
And let me tell you something: I dig your work.
And let me tell you something: I dig your work.
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TheDude - Expert
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Re: Global shipping crash is here. Are shortages coming?
by shortonoil » Sat 01 Nov 2008, 19:03:35
TheDude said:
$this->bbcode_second_pass_quote('', 'I')f $5 trillion of this funny money has been taken care of we've barely even started. Banks were leveraged 10:1 in the GD; FannyMac were at 100:1 when they imploded. Central banks have much less authority than they are credited with for addressing these problems, too. Greenspan himself once remarked that the perceived notion of their being infallible was "puzzling."
$this->bbcode_second_pass_quote('', 'I')f $5 trillion of this funny money has been taken care of we've barely even started. Banks were leveraged 10:1 in the GD; FannyMac were at 100:1 when they imploded. Central banks have much less authority than they are credited with for addressing these problems, too. Greenspan himself once remarked that the perceived notion of their being infallible was "puzzling."
As DP and myself have commented on many times, a debt based fiat currency can not be sustained in a post Peak world. The failure of banks to let Letters of Credit is only one of many recent developments in the financial system.
We have seen the collapse of MBS, ARB, CP and even F&F are having problems moving explicitly government backed paper. The largest banks in the world would now be failing if it were not for direct government intervention. This latest event, in shipping, is merely a continuation of an unravelling in the world's monetary systems.
Once shortages become wide spread even cash will become inconsequential. Ironically, as Central Banks pump more liquidity into the market the faster asset values decline and the faster the system comes apart.
As massive amounts of currency are pumped into the system (M1 is now growing by 19% per year) the money (value, wealth) to back that growth must be coming from somewhere?
As fossil fuels' energy contribution for the production of NEGS (non energy goods and services) declines so too does the wealth to back the currency that represents it. The wealth to back this explosive growth in currency formation is appearing from a reduction in the value of asset classes.
We are now seeing almost every asset class decline in value. Stocks, bonds, housing, commodities, autos, and now ships. The last class to fall into the abyss will be cash itself.
At that point we will witness the end of our present technological petroleum based society. Central governments will collapse, technological innovation will cease (if it hasn't already) and we will begin to construction a new civilization based on (hopefully) more sustainable principals.
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shortonoil - False ETP Prophet
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Re: Global shipping crash is here. Are shortages coming?
by copious.abundance » Sat 01 Nov 2008, 20:23:49
$this->bbcode_second_pass_quote('TheDude', 'B')oeing employees have been on strike, if you haven't noticed, the shares have taken quite a hit. How many overseas customers will be ready to buy 787s when this credit contraction cycle has finished up, or when the price of oil rebounds once deleveraging has concluded? Those two factors alone will put a hell of a crimp in discretionary air travel.
As far as delivering the airplanes themselves, if I'm not mistaken Boeing offers a credit/lending program for its customers. If an airline has trouble getting a loan from a bank, Boeing has its own lending program. Sort-of like a GMAC for airplanes.
Of course that doesn't resolve the issue of whether there will be passengers for all those new airplanes, but most airlines that are ordering lots of planes from Boeing are probably thinking beyond the current credit crisis. After all it takes at least a few years for these planes to be delivered anyway.
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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copious.abundance - Fission
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Re: Global shipping crash is here. Are shortages coming?
by copious.abundance » Sat 01 Nov 2008, 20:32:23
$this->bbcode_second_pass_quote('oswald622', '')$this->bbcode_second_pass_quote('oilfinder2', '3')) According to this article here, written just yesterday, shipping volume on the Asia-US route to fall about 8% this year:
$this->bbcode_second_pass_quote('', 'C')ontainer shipping lines have said they expect cargo demand on the US-Asia route to fall by as much as eight percent in 2008.
...So at worse you might see a few minor shortages of things here and there for a bit, but that, too, shall pass.$this->bbcode_second_pass_quote('', 'C')ontainer shipping lines have said they expect cargo demand on the US-Asia route to fall by as much as eight percent in 2008.
I agree with your sunny disposition, which implies that economic dislocation isn't the end of the world; but I think you're underestimating the potential of these developments to wreak havoc on the current world system.
1. Above, you say that shipping volume will fall by 8%. But that's not what the article says - it says that demand will fall by 8%. Though related, the two are not the same. For instance, volume may initially hold steady even while demand drops, since current volume reflects orders put in months ahead of time. On the flip side, volume may fall even if demand holds somewhat steady - the missing factor is credit.[...]
You could be right, but from reading the rest of the article I got the impression that the word "demand" was just being used interchangeably with the word "volume." The rest of the article talks about volumes of ships declining by 9.9% in Shanghai in the 1st half of 2008, growth in Hong Kong dropping from an increase of 6.7% in August to just 1.2% in September, and so on.
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
Nice. Sorry to spoil your fun. 
