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World trade has fallen for the second quarter in a row. The decade of
stagnation of industrial production in the United States, Japan, and European
Union can be blamed on financial engineering, housing bubbles, war, and
recently on destructive monetary policy in QE bond purchase program. It is
not stimulus, but rather a destroyer of capital. The West contains several
nations with heavy industrial emphasis, hardly advanced economies anymore.
They risk a fall into the Third World from a generation of outsourcing, asset
bubbles, and financial fraud, as soon as the new currency regime is installed
as part of the financial RESET.
The CPB Netherlands Bureau for Economic Policy Analysis, a division of the
Ministry of Economic Affairs, just released its preliminary data of its
Merchandise World Trade Monitor. Trade volumes rose 0.7% in June
sequentially, after falling 0.5% in May. Trade was flat year-over-year, but
below the volumes of December 2014. On a quarterly basis, world trade fell
0.8%, contracting for the second quarter in a row. Without a doubt the global
economy is stuck in a powerful recession. No positive constructive remedies
or proper reform policy have been put in place since the Lehman failure.
Exactly none. To be sure, none have even been attempted.
Worse, the CPB recently adjusted its world trade data downward, going back
several years. The newly updated data depicts a post-Financial Crisis
recovery of global trade which is considerably weaker than their original
data had indicated. These downward adjustments of 2% to 3% came in a climate
of stalled economic growth, according to the IMF. Much of the Western
national data is rubbish, forced positive by the common NeoCon fascist
dictum. The chart of the CPB�s World Trade Monitor index shows the old data
released as of July 2015 (blue line) and the newly adjusted data released
(red line). Observe the horrendous 4.4% downard adjustment from the peak
in global trade volumes in the original data for December 2014 and in the
current data for June 2016. They confirm a broadbased global recession of
about 1.0%, in full contradiction of the nonsensical constant Orwellian
propaganda of sluggish recovery, spouted routinely in the drumbeat of
mainstream news.
World trade is a direct reflection of only the goods producing economy.
Services are not shipped around the world. An airline flight of a group of
consultants is not considered world trade, any more than tourism. Finished
products, raw materials, and intermediate goods (like car parts for assembly)
are shipped regularly. So industrial production, excluding construction, is
key. The trend is terrible for advanced economies. Global industrial
production, excluding construction, rose 0.6% in June, after a 0.3% decline
in May. The index for industrial production in advanced economies rose to
102.5, below where it had been in January at 103.4, a level reached after the
Financial Crisis in December 2012. The industrial output remains below from
the glory days before the Financial Crisis when the index peaked at 107.8 in
February 2008. The global economic recession is as painfully evident as
it is denied.
The current level for the index has returned almost exactly to where it
was in April 2006, right before the Lehman failure and ensuing crisis. The
world has endured a full decade of stagnation, without any remote attempt at
remedy or reform, while the bank syndicate remains in power. Remove rose
colored glasses. Combine the abandoned austerity budget initiative for the
USGovt with the ongoing big bank welfare (known as QE), the preserved
insolvent big banks (in dire need of liquidation), the expanding welfare
state, then sprinkle on Arab human garbage, and stir with the maintained constant
war. Thus no economic recovery, just talk of such.
To varying degrees, the gripping recession has occurred in the United
States, Japan, and the EuroZone. A few other so-called industrialized
(advanced) economies have exceeded their pre-Financial Crisis levels. Industrial
production has shifted to emerging economies, capitalizing on their cheap
labor for many years, such as China. Decades ago the vast array of
companies in the US, and eventually in Europe and Japan, began outsourcing
production to emerging economies in foreign lands. Hence, industrial
production in emerging economies has surged over this period. This was
particularly the case after the Financial Crisis when companies in the US,
Europe, and Japan redoubled their efforts to get production relocated
offshore, using easy money from the USFed which moved the cost of money to
near 0%, where it has remained for seven years. However, an extreme point of
caution. The Emerging Market USD-based debt stands at over $5 to $9
trillion, depending on the definition of such nations. Some estimates are
higher. The debt is on the verge of default, due to their currency declines
and reduced commodity income, including from crude oil. Thanks to Wolf
Street for the contribution.
HANJIN SHIPPING CRISIS
The Hanjin crisis brings new headache to US-based importers. Trailers
stack up, adding to client costs while trailer shortage looms. The idle
containers are clogging the entire system. Confusion abounds, as emergency
measures are being sought. A drop-off point system for the empties is being
considered. Soon the used containers will become a newly created market for
cargo owners. The bankruptcy of South Korea's Hanjin Shipping Co Ltd is
causing ripple effects for importers bringing goods from Asian factories to
the US marketplace. Port facilities are being jammed, while a shortage of
trailers is created to move ocean shipping containers on US roads and
railways. The world's seventh largest container carrier owns and transports
more than half a million containers. They are in many cases clogging up ports
and truck yards, tying up trailers that cannot be used to handle other cargo.
The growing chaos is beginning to worry freight handlers at US ports on the
West Coast. Witness the first sign of follow-on effects from the failure of
Hanjin. The problem stems from Hanjin's shortage of cash, which has stranded
$14 billion of cargo owned by companies such as HP Inc, Home Shopping
Network, and Samsung Electronics. Much of the cargo have been stuck on over
100 ships at sea because cargo handlers, tug operators, and ports are
refusing to work with Hanjin unless they are paid upfront. They all are aware
of the risk of not receiving payment.
In recent weeks, terminal operators in the California ports of Long
Beach and Oakland are not taking back empty containers. Many in the industry
doubt Hanjin will pay storage costs, which has led to a growing backlog of
empty containers and the trailers they sit on. The containers are
stranded. Thousands of Hanjin containers are on trailers kept out of
circulation. The uncertainty surrounding Hanjin appears to be pushing
truckers to lock in trailers from the local organization pool. Maybe the vast
pile-up of containers can be fashioned into sleek condominiums like in
Detorit, like lego communities.
Simply stated, if a container reads the Hanjin label, there is no place
for it to go. One intermediate solution put forth is the creation of a
Drop-Off Point for containers after their cargo is discharged. In Southern
California, shipping industry executives are discussing a staging area where
truckers could drop off empty containers to free up trailers. Another
mid-term solution has been proposed. The cargo owners could resort to buying
the containers they hold, which would clear up any legal uncertainty around
them, thereby enabling the return of chassis. A new niche market is emerging.
Global supply chains are paralyzed after world's seventh largest container
shipper filed for bankruptcy, with its assets frozen within the system.
Eastern (Asian) mega-corporations are not too big to fail, not coddled and
bailed out (like in the West). Hyundai Merchant Marine might purchase some of
Hanjin's diverse assets. Shipping rates have been reduced amidst the glut, as
the global economy is due for a large slam.
August 31st will be marked on the calendars. On that day, the largest
casualty finally slammed global trade ports when South Korea's Hanjin
Shipping filed for court receivership after losing its bank support (credit
lines), which left its assets frozen. Ports from China to Spain denied access
to its vessels. Hanjin Shipping is SKorea's largest shipping firm and the
world's seventh biggest container carrier. It is a truly huge player. It
operates some 70 liner and tramper services around the globe, transporting over
100 million tons of cargo annually. Its fleet consists of some 150
containerships and bulk carriers. It commands four regional headquarters in
the US, Europe, Asia, and South East & West Asia, with nearly 5000 people
on global staffs. They run numerous major ports for their world class
logistics network. Other shipping firms will go bust soon. Even leader
Moller-Maersk is in deep trouble, now considering a restructure.
HIDDEN PROBLEM IN USDOLLAR AS PAYMENT
The shipping stalemate from Hanjin has suspicious elements and overtones.
Perhaps the Asians generally are conspiring to throw a wrench into the
Western Economy. The strong hint of a USDollar rejection at the ports is a
major component in the financial angle, possibly the initial salvo in the
global financial RESET. Dire challenges exist to shipping with respect to
finance, threatening the Global Economy.
Be sure to know that what follows is speculation, but informed and backed
by the last few years of events. The stage is set, during a trade war and
a global visceral response to the QE monetary hyper inflation that undermines
the USDollar. The East led by China want the RESET to be done, but the West
delays interminably. The Western bankers and their controlled governments
are printing money to cover their failed bonds and to finance their huge
debt. THIS CANNOT STAND. Global finance has been turned on its ear. Numerous
national banking systems are insolvent. The expected pull of the plug has
been looming for many months. Consider some thoughts by EuroRaj, a brilliant
analyst on the Jackass team. He wonders if the Asian producers have finally
found a lever to pull with shipping and its related payments, to interrupt
global trade with the West. It has been not only lopsided, but the payments
have been in low quality printed paper and impaired debt. Refer to
USTreasury Bills, which seem to be a problem, perhaps being rejected at ports
as payment. Consider the theory by my brilliant colleague with 20 years
of bank analyst experience, a savvy fellow who has contributed much to the
Hat Trick Letter since 2013.
The Hanjin story sounds very shady for a number of reasons. The total
debt involved is only at $5.6 billion. Nobody stops operations in a
bankruptcy, since the situation worsens quickly and the creditor damage grows
deeper. The banks or specialist funding companies step in quickly with an
urgently needed service, to provide debtor in possession financing
(DIP) funding. Imagine some potential motives at work here. First,
perhaps Team Asia wishes to throw a monkey wrench for trade between China and
Europe. Note how China and Spain are mentioned in the articles concerning the
Hanjin debacle. Second, perhaps a plan is afoot to bring global trade and
manufacturing to a halt, so that USFed can justify QE to Infinity in full
bloom soon while the Western Economies are severely distracted.
The question has come to center stage. As a result of the bankruptcy
process, the global supply chain stands at risk to endure an unexpected
failure. The South Korean oceans ministry had been in negotiations for
Hyundai Merchant Marine to take over some routes. The global implications
from the bankruptcy are unknown, since without precedent due to enormous
scale. The potential impact on global supply chains remains devastating, with
a cascading waterfall effect, whose impact on global economies could be
severe as a result of the worldwide logistics chaos. Both economists and
corporations around the globe, the affected firms suffering deep impacted and
others, will have yet another excuse on which to blame the radical slowdown
in profits and economic growth in the third quarter. An official admission of
a global recession, along with numerous individual national recessions, might
come. Do not expect the USFed to hike interest rates with the shipping
disaster in the background. They are all talk!
PRETEXT FOR USTBILL REJECTION
Here is the central point, perhaps a seminal event in progress with
respect to the Global Financial RESET, an action done by angry Asian
producers. We might be witnessing a pretext in action, to cover for the
rejection of the USDollar, the refusal to accept USTreasury Bills at ports in
return for cargo delivery. At risk is the stoppage of all goods shipped
from Asia to the United States. The stakes have risen. The Asians are out of
patience. The damage multiplies each month. They might be fed up with toilet
paper spewn by the USGovt and USFed, a money laundering duo. We might be
seeing a trade war salvo of high order, this round led by Asia, directed at
the USEconomy, forcing the RESET that Washington and Wall Street refuse to
permit, refuse to initiate. The American retailers and other clients who
order the Asian ships loaded with cargo typically pay with USTreasury Bills.
The Asians might be finally calling an end to payment in USD terms, rendered
African toilet paper by QE and the massive hemorrhage of $1 trillion USGovt
debt. Hyper monetary inflation has stern nasty consequences. The US trade
deficit is a whopping $500 billion per year, which is financed by debt during
a time of suspected debt default and full debt monetization.
The red flag could be telling us to that RESET is here. The urgent call
would be to stock up on essential supplies and to buy physical gold &
silver (then to hold it). Without any hesitation or equivocation, the
hangup at ports implies something particularly foreboding about the state of
global finance. The DIP Financing step has been short-circuited. It
smells like a coordinated operation is being carried out by Team Asia, with
Hanjin a sacrificial lamb, albeit a very big lamb.
Futhermore, more stench with signals. The goods carried as cargo have
nothing to do with the troubles of the transportation company. They are
separate. The suspicion is that the producers who load the ships with
cargo from actual work are interested in higher quality payments, no longer
finding the USTBill acceptable as payment. The USGovt officials would put
a news blackout on the USD rejection. The real physical goods are there. Look
beyond the stated news. It is the payment in USD terms which is the
problem. The DIP Financing should be an easy issue to overcome. Such
financing is standard operating system, and has been for 50 years. With each
passing month that QE wrecks the financial platforms and undermines capital
structures, the payment in USD terms is more assuredly to be refused. We
might soon hear about payment in kind for the cargo, as in the form of any
commodity or finished good being requested. Perhaps demands for barter on
hard assets such as commodity swaps will be part of trade payments, a concept
cited by The Voice on countless occasions in the last year or two. This
could be accomplished with copper plates, iron ore, cement, oil & gas,
even credits toward commercial building purchase, port facility purchase,
bridge and toll road purchase, even more.
GOLD TRADE NOTE INTRODUCTION
The Gold Trade Notes for trade payment might be coming into view,
initially with commodity transfers, later swap contracts, and finally
gold-backed short-term notes which supplant the USTBill. One might think
of used newspapers on the floor, or of the dodo bird. The trade might be made
in exchange for either goods delivered or USTBills held. Detect a growing
connection to finished goods being withheld from delivery. This is probably
another sign of refusal of USTBills as payment. As footnote, be sure to know
that the preliminary steps to the Global Currency RESET will not be laid
out in full disclosure for public benefit. It represents a tremendous
investment opportunity for the elite, which they never tend to share. In
fact, the RESET might be well along before it is even recognized. End to
EuroRaj main thoughts and open analysis, for which much gratitude is given.
The Jackass believes a few critical elements to the RESET are in place. More
details on DIP Financing feature is included in the September Hat Trick
Letter report.
***A major hitch obstacle can be inferred. Payment in USD terms might
be the clot in the artery. Demands might be for hard asset swaps, and the
contract security from large scale commitment of commodities, facilities, and
property. The swap trade is coming into view, a presage of the Gold Trade
Note.***
The Jackass concludes the USD rejection could be lifting its head within a
gathering storm, without clear identification. It is indeed difficult to
identify all the elements when hidden deals at the highest level are
underway, and friction is omnipresent. The Bobcat
Corp rejection of USTBills at Pacific ports is a clear story. For every one
story recounted, there are 10 to 20 not yet heard. My firm belief is that in
Asian banking systems, they do not want the USTBills anymore. The banks in
Asia are trying to dump them in heavy volume, not accumulate more worthless
toilet paper. Finally the sharp blowback from printing QE money has hit. The
USFed monetary policy saves the big insolvent banks, but kills capital. The
result has finally seen manifested in USD global rejection, or at least hints
toward the same. Asian banks still hold vast sums of USTBonds. They are not going
to announce the rejection, but instead fight behind the walls for better
terms of payment, even as they pursue the Gold Trade Note for payment at
ports. It is coming, like daybreak follows the long night.
NEW SCHEISS DOLLAR & GOLD TRADE STANDARD
In time, expect an eventual refusal by Eastern producing nations to accept
USTreasury Bills in payment for trade. The IMF reversal decision assures this
USTBill blockade in time, and might accelerate the timetable. The United
States Govt cannot continue on five glaring fronts of gross negligence and
major violations. These violations have prompted the BRICS & Alliance
nations to hasten their development of diverse non-USD platforms toward the
goal of displacing the USDollar while at the same time take steps toward the
return of the Gold Standard.
The New Scheiss Dollar will arrive in order to assure continued import
supply to the USEconomy. It will be given a 30% devaluation out of the gate,
then many more devaluations of similar variety. The New Dollar will fail all
foreign and Eastern scrutiny. The USGovt will be forced to react to USTBill
rejection at the ports. The US must accommodate with the New Scheiss
Dollar in order to assure import supply, and to alleviate the many stalemates
to come. The United States finds itself on the slippery slope that leads to
the Third World, a Jackass forecast that has been presented since Lehman fell
(better described as killed by JPM and GSax). The only apparent alternative
is for the United States Govt to lease a large amount of gold bullion (like
10,000 tons) from China in order to properly launch a gold-backed currency.
Doing so would open the gates for a generation of commercial colonization,
but actual progress in returning capitalism to the United States. The cost would
be supply shortages to the USEconomy, a result of enormous export increases
to China.
The colonization has already begun, with secret deals galore. It is very
unclear what deals are being struck in order to arrange for the USGovt to
have a proper gold reserve hoard, for backing a new legitimate USDollar.
Meetings at very high level are in progress, with little if any popular
representation, only elite members present. Failure to produce a
legitimate bonafide gold-backed currency would mean the United States must
proceed with the New Scheiss Dollar, an illegitimate fake phony farce of a
currency. It would be subjected to a series of devaluations. The result
would be heavy powerful painful price inflation from the import front. The
effect would be to reverse a generation of exported inflation by the United
States. The entire USEconomy would go into a downward spiral with higher
prices, supply shortages, and social disorder. However, the rising prices
would come from the currency crisis, and not so much from the hyper monetary
inflation. That flood of $trillions has been effectively firewalled off.
HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.
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