The Report That Will Blow Up The Eurozone + Chart of the Day: The Baltic Dry Index Plummets

[stockholmer]

http://www.businessinsider.com/the-report-that-will-blow-up-the-eurozone-2012-1


No, I’m not talking about the fact that Germany and Holland want to take over as the de facto government in Greece, as Noah Barkin writes for Reuters (that they want to do it through Brussels is a mere technicality).

Germany wants Greece to give up budget control http://www.reuters.com/article/2012/01/27/us-eurozone-greece-germany-idUSTRE80Q1ZF20120127

Germany is pushing for Greece to relinquish control over its budget policy to European institutions as part of discussions over a second rescue package, a European source told Reuters on Friday. "There are internal discussions within the Euro group and proposals, one of which comes from Germany, on how to constructively treat country aid programs that are continuously off track, whether this can simply be ignored or whether we say that's enough," the source said. The source added that under the proposals European institutions already operating in Greece should be given "certain decision-making powers" over fiscal policy. "This could be carried out even more stringently through external expertise," the source said.

snip


The report I refer to in the title requires a little background info:

In Holland, where I'll be for a few more days, there's a "rogue" right-wing party named PVV (Party for Freedom). It has no cabinet ministers, but the minority moderate right-wing government needs its support to stay in the saddle. The PVV, like other European right-wingers, is, among many other things, against much of what the European Union stands for. It's certainly against the Euro, and the bailouts with Dutch taxpayer money of countries like Greece and Portugal.

A few months ago, the PVV announced they had commissioned a report from British financial consultancy firm Lombard Street Research on the economic consequences of staying in the Eurozone versus returning to the guilder. That report is about to be published "within days". It will prove to be highly explosive material. And the PVV will do all it possibly can to make sure it receives a lot of media attention. It may tear down the incumbent government, which is a heavy advocate of all things Europe, and which will have to quit once the PVV support dies, but for that party that's not the no. 1 concern. And if and when Holland has a large scale discussion on the report and the issues it raises, Germany won't be able to ignore it and stay behind. And then, neither will France.

snip

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Chart of the Day: The Baltic Dry Index

http://www.efinancialnews.com/story/2012-01-25/chart-of-day-baltic-dry-shipping-rates-fall?mod=mostread-PE




The index – often used as a proxy for the health of the global economy as it reflects the prices charged for shipping commodities such as metals, coal or grain around the world – has fallen by 61% since October. The index was at 842 at yesterday’s close – down from its 12-month high of 2173 last October.

Nick Bullman, managing partner at risk consultant Check Risks, said the index is a good way of looking at the risks to the global economy, “as it tends to be where they hit first”. According to Bullman, its initial collapse in October was driven primarily by a fall-off in demand from China, where declining housing prices pushed purchasing managers to cut back on orders for the raw materials whose transport the Baltic Dry Index reflects.

He said: “This collapse looks similar to the falls we saw in the Baltic Dry ahead of the recessions of the late 1970s and early 1990s – but this drop is actually steeper.” Bullman added that it was also a more direct indicator of global economic health than government-produced statistics. “Personally, I’m not interested in employment data and GDP figures because they’re manipulated,” he said.

snip

[cthulu2016]

1. Baltic Dry

Why didn't we all hear about this the many times in the last few years it has spiked up just as dramatically? Shouldn't that have meant that all other economic statistics were crap and the economy was actually going through the roof?

"Bullman added that it was also a more direct indicator of global economic health than government-produced statistics. “Personally, I’m not interested in employment data and GDP figures because they’re manipulated,” he said."

I do thik the Eurozone has a strong chance of breaking up, and I do expect serious problems in Europe either way. I am merely leerly of this measure as being reliable, let alone as a thing to focus on with relative disregard of other stats.

From the same site as the chart of the day:

http://www.businessinsider.com/the-truth-about-the-massive-plunge-in-the-baltic-dry-index-2012-1

[True Earthling]

3. from your link...

Again, these kinds of big swings are par for the course with the Baltic Dry.
But to really understand what's going on, you need to understand that the Baltic Dry Index is not merely a reflection of shipping demand, but also ship supply.


Read more: http://www.businessinsider.com/the-truth-about-the-massive-plunge-in-the-baltic-dry-index-2012-1?utm_source=alerts&nr_email_referer=1#ixzz1ku5LuDNA

[cthulu2016]

4. Precisely

I am a major economic pessimist but no fan of single statistic anything.

[golfguru]

2. World awaits crash of Chinese property bubble

That crash will make US property bubble crash look like like Sunday picnic.

Note that China has been importing gargantuan quantities of cement, coal, oil, chemicals etc.
WHen that trade crashes, watch out for objects falling from sky.

[Zalatix]

5. I hope the point of this video wasn't to generate sympathy for China's people

My sympathy is tied up in America, thankyouverymuch.

[golfguru]

7. My only objective is to portray the magnitude of Chinese property bubble

It illustrates universal failure of central planning by governments.

[Amonester]

6. So it's time for Europe to decriminalize cannabis...

and tax it.

Holland...

umm...