There is Too Much Supply in the World

[Luke]

All of these indicators point to a global economy with far too much supply and too little demand from cash-strapped consumers. These are conditions completely consistent with a report out this week from Oxfam (http://www.oxfam.org/en/research/wealth-having-it-all-and-wanting-more), which found the following:

“In 2014, the richest 1% of people in the world owned 48% of global wealth, leaving just 52% to be shared between the other 99% of adults on the planet. Almost all of that 52% is owned by those included in the richest 20%, leaving just 5.5% for the remaining 80% of people in the world. If this trend continues of an increasing wealth share to the richest, the top 1% will have more wealth than the remaining 99% of people in just two years.”

[servant77]

WOE to the rich, for they have been satisfied.

Blesses are you poor, for you shall receive comfort.

[Choir Loft]

All of these indicators point to a global economy with far too much supply and too little demand from cash-strapped consumers. These are conditions completely consistent with a [link removed]which found the following:

“In 2014, the richest 1% of people in the world owned 48% of global wealth, leaving just 52% to be shared between the other 99% of adults on the planet. Almost all of that 52% is owned by those included in the richest 20%, leaving just 5.5% for the remaining 80% of people in the world. If this trend continues of an increasing wealth share to the richest, the top 1% will have more wealth than the remaining 99% of people in just two years.”

Trans-oceanic shipping has decreased approximately 40% since 2014. The rise and fall of shipping can be accurately tracked by means of the BDIY index or Baltic dry index. This is a figure representative of dry bulk trans-oceanic shipping. In other words, non oil product.

Shipping companies such as Maersk must gain a fractional amount of profit from trans-oceanic shipping in order to stay in business. If shipping contracts fall below a certain level, shipping companies divest themselves of their inventory, their ships, so as to remain competitive with their rates and profits. Unlike the US government that used to be able to berth unused ships until needed, commercial interests cannot afford to 'park' unused ships. Instead they sell them for scrap.

The reader may be aware of the booming business in ship scrapping especially in India. This is conducted in nations that don't have restrictions on treatment of toxic materials contained in commercial ships. Workers die like flies and nobody cares. The money is good and there is no lack of workers anyway.

Once a shipping company divests itself of ships it takes two to three years to build a replacement. Hence the BDIY index moves much more slowly than other economic indicators. Shipping owners consider their decisions to scrap or build ships very carefully. The BDIY index is also a very good indicator of long range global economic conditions. If the index goes down it generally means that less goods are being shipping trans-ocean. That is the case since 2014.

Since 2014 the index has dropped by nearly half. Less trade is therefore well documented in the BDIY index rather than the daily roller coaster of stock trade averages.

and that's me, hollering from the choir loft...

[Luke]

The Baltic dry index collapsed because of coal. It is not an good indicator of oversupply anymore. Dr. Copper is the best indicator of oversupply. And yes China is still in oversupply with dozens of empty ghost cities.