Baltic Dry Index Falls Sharply

The News:

Baltic Dry Index slumps 35% from year's high

The Baltic Dry Index (BDI), a measure of shipping costs for dry bulk commodities, slumped around 35% on August 14 from this year's high of 4291 on June 3. This is the sharpest fall registered by the index since June 3. The BDI went below 3000 to close at 2685 on Friday, after being through a troublesome week.

According to experts, one reason leading to such drop in BDI is the slowdown of Chinese demand for shipments of coal and iron ore. Moreover, as delivery of new ships has started to happen, it is impacting the freight rates.

"Slowdown in Chinese demand is a concern. Moreover, the delivery of new ships has started, due to which freight rates are going down impacting the BDI. The new ships are leading to a gap between demand and supply, as the demand situation is yet to gain pace," commented S Kulkarni, secretary, Indian National Ship owners' Association.

China's coal and iron ore imports in the first half helped the index to advance as much as five fold this year, reversing some of the record 92% collapse in October 2008. So far this year, China has imported nearly 355 million tonnes of iron ore, compared with 440 million tonnes for the whole of 2008. Hence, the worry for the shipping industry is that Chinese buying will slow further as its mills struggle to work through that enormous inventory.

My Views:

While Central Banks around the world have been pushing hard to create another bubble with their loose monetary policies but its The Chinese who have become successful! They are competing directly with the US on who is bigger fool and seem to have won the bet for now...

Brtish MPs in Trouble

The News:

British PM Brown apologises for politicians' perks

Britain's Prime Minister Gordon Brown apologised on Monday for politicians' expenses to try to staunch a damaging parliamentary scandal but a newspaper published new revelations about lawmakers' extravagant claims.

The disclosures in the Daily Telegraph newspaper were the latest in a string of embarrassing headlines about expense claims by ruling Labour legislators -- including Brown and his cabinet colleagues -- and opposition figures.

The reports have prompted widespread public anger and calls for an election, not legally required until mid-2010, to be held immediately.

"I want to apologise on behalf of politicians ... of all parties for what has happened," Brown said in a speech.

The Daily Telegraph said on its website late on Monday that opposition Conservative politicians had received tens of thousands of pounds to maintain manor houses and stately homes.

One claimed 2,000 pounds ($3,000) for clearing the moat around his manor house. Another claimed for cleaning his swimming pool but told the Telegraph he would repay the money. A third claimed 380 pounds for horse manure for his garden.

The reports of how legislators have used allowances on top of an annual salary of almost 65,000 pounds -- more than double the national average -- are particularly damaging at a time when Britain is suffering its worst recession since World War Two.

My Views:

This is not a surprise at all. Politicians do not run for office to serve people, they have ambitions which do include monetary gains and in this case there was nothing "illegal" as per the laws. If people think politicians are there to "serve" them then they are in delusion.

Coming to people, they are angry on the lavish expenses by elected politicians. This anger is not what it looks like - "aware public response". Most of the people should expect it anyway. The real reason behind this outcry is ongoing Depression which makes people "cry foul". In times like these, emotion of envy is bigger than anything else and so the entire drama.

A New Trend? Or Trend Reversal?

The News:

Worldwide recession may reverse the direction of modern societies

Washington, May 10 (ANI): A psychologist has developed a new theory of social change which suggests that the current worldwide financial crisis may reverse, at least temporarily, the direction of modern societies.

The theory was developed by UCLA (University of California Los Angeles) distinguished professor of psychology Patricia Greenfield.

"In the United States and in other parts of the world, we are now moving in the other direction," Greenfield said. "I see signs of people becoming more community-minded as people are getting poorer," she added.

For example, former executives who are out of work are doing much more volunteering for nonprofit organizations, moving toward a focus on the common good.

My View:

I agree with the theory and good psycho analysis by Patricia Greenfield of societies turning styles. This is what happens when there are drastic changes as we are facing today and not in times of mild recessions. This also suggests that today's crisis is not a mere recession but a Depression, which requires fundamental changes before any real recovery.

US: Something cooking for FED?

The News:

Obama aide Volcker: Economy recovery a "long slog"

Sat, Apr 18 08:57 PM

Paul Volcker, senior economic adviser to President Barack Obama, said on Saturday that the U.S. economic recovery will be a "long slog" but that the rate of decline "is going to slow."

Volcker said a review the Federal Reserve's role, something traditionally regarded as taboo, now seems inevitable given the fallout from the long-running financial crisis.

"For better or worse, we are at a point where the Federal Reserve Act is going to be reviewed," said Volcker.

The wide range of proposals, from giving the Fed much more supervisory authority to stripping it of part of its current authorities, "are just an indication of how wide open that question is going to be."

My View:

This is something that had to happen given the circumstances. Whatever the mainstream media says, the actual root cause of this entire problem is loose policies of Fed (the recent one was Greenspan's irresponsible "too low too long" interest rate policies).

There can be many interpretations of Volcker's statement and its actually more confusing than the uncertainty of economy. I have two assumptions:

1. They are contemplating INCREASING the powers of Fed to the level where the Fed have extreme power. I think this will be the last thing required and if its true then the so called freedom in US of A will become a history chapter. It will be like a kingdom ruined by a monster giving it the state powers with honor and praying that the monster having more powers will save the kingdom!
2. They may be thinking of stripping the Fed's powers in the effort to make it less powerful. This may sound like a good idea but what if the motive behind this is to create a more powerful and bigger govt?

So, in my opinion, either way this is going to be tough - tough for "the Free Citizens".

US: Irony of living in the richest country

The News:

FEATURE - Hidden homeless emerge as U.S. economy worsens

---

Fri, Mar 27 09:03 AM

Emergency shelters brimming with homeless people in California's capital are quietly turning away more than 200 women and children a night in a sign of the deteriorating U.S. economy.

The displaced individuals on waiting lists at St. John's Shelter and other facilities often turn instead to relatives or friends for temporary living quarters, perhaps moving into a spare room, garage or trailer. The less fortunate might sleep in their cars or a vacant storage unit.

They are the hidden homeless. And their ranks appear to be growing as rising joblessness and mortgage foreclosures take their toll in Sacramento and other U.S. cities, experts say.

U.S. President Barack Obama recognized the trend in his televised news conference this week, saying, "the homeless problem was bad even when the economy was good," and he vowed to bring greater government resources to bear to deal with it.

"It is not acceptable for children and families to be without a roof over their heads in a country as wealthy as ours," he said.

A "tent city" of up to 200 homeless in Sacramento was thrust into the media spotlight last month as a symbol of the battered U.S. economy. California authorities said this week they would shut down the illegal settlement and find other shelter for its residents, most of them chronically homeless.

My Views:

This is what happens when manipulated fiat money lifts prices of assets way beyond their actual value. What Greenspan did in the earlier part of this decade resulted in such stories. His reckless act of lowering interest rates to near zero for too long created this and now imagine what Bernake's acts can do.

The poors will remain poor forever if fiat money is to be trusted and those who earned money with hard work will be robbed by this artificial money.

Russia announces rearmament plan

The News: (Source: http://news.bbc.co.uk/2/hi/europe/7947824.stm)

Russian President Dmitry Medvedev has said Moscow will begin a comprehensive military rearmament from 2011.

Mr Medvedev said the primary task would be to "increase the combat readiness of [Russia's] forces, first of all our strategic nuclear forces".

Explaining the move, he cited concerns over Nato expansion near Russia's borders and regional conflicts.

My Views:

This announcement by Medvedev is not surprising given how Russia has re-emerged as a force since Putin took charge. Russians want their influence intact and the plans by NATO to expand into Russian influence territory has not gone well into their throats. Recent Georgia event was an open announcement by Russia that they will not tolerate NATO moving inwards towards nations under its influence.

The Americans definitely are not happy with it but they are helpless at best. They can not directly counter Russia for several reasons ranging from strategical to economic hurdles. American forces are engaged in Iraq and Afghanistan and are short on resources to meaningfully counter Russia. To add to the problem is non-cooperation by European members of NATO given their dependence on Russian energy supplies as well as their geographic location which would make those countries suffer more consequences as they don't enjoy being on the right side of the Atlantic ocean as does US of A.

The situation is complex but what I see here is more rhetorics by both camps than any real danger of re-emergence of cold war. I know this news may become hot topic for few days in global media but most of these things are worthless to even consider. The only threat is if the economic conditions weaken so bad that govts need to enter into conflicts (inspired by WWII).

Buffet becoms Victim of his Misadventures

The News:

Berkshire net sinks; Buffett says economy in shambles

Sat, Feb 28 10:52 PM

Berkshire Hathaway Inc, Warren Buffett's insurance and investment company, barely broke even in the fourth quarter because of losses on derivatives contracts tied to the stock market.

Profit fell 96 percent, the fifth straight quarterly decline, and Berkshire's net worth tumbled $10.9 billion in the year's final three months. Net worth per share fell 9.6 percent in 2008, only the second decline since Buffett began running Berkshire in 1965. It fell 6.2 percent in 2001.

My View:

The Oracle of Omaha once famously said "Derivatives are financial weapons of mass destruction". A person who is ideal of so many people around the world (not only US) did not practice what he preached! Derivatives if could be personified would have answered like this - "see, you called us financial weapons of mass destruction, now you will be the sure victim, AND we will target your reputation more that your wealth".

My respected Buffet has been faltering for quite some time and I once wrote my reaction in my indexviews blog about why Buffett could be advising wrong things. You can find that here.

Yet another Scam

The News:

U.S. charges Stanford with massive Ponzi scheme

U.S. securities regulators on Friday accused Texas billionaire Allen Stanford, his college roommate and three of their companies of carrying out a "massive Ponzi scheme" over at least a decade and misappropriating at least $1.6 billion of investors' money.

My View:
As I've once already expressed my explanation on why these SCAMS are getting exposed one after the other, its simple - its a result of bad economic times. The fact is in times of perpetual fake prosperity there were these brilliant brains working overtime to figure out new and newer ideas with which they could cheat people. Now when time is not that good (remember, the real bad time is still to come) these scams are getting exposed one by one.

The biggest ponzi scheme will be exposed not now. It will be a surprise to masses but not for sane people (I don't mean masses are insane, they are credulous though). This scam is under progress and its being done on war scale !!! Yes dear readers, this scam is govt sponsored crisis postponement plan.