Maybe it is time to catch our breath and reflect on what is staring us in the face. The major leading indicators are pointing downward. The US generated sub-prime financial crash amounts to around $1.2tr, half of which is securitised outside of the country, primarily in Europe but no one knows where for sure. Banks remain solvent but there is a growing liquidity crisis that is resulting in a sharp reduction in lending exposure. The biggest impact is on housing with a direct link to consumption as the assumed wealth evaporates with dropping house prices and lack of sales. In Europe, the UK, Spain and France are most vulnerable.

The immediate impact has been a severe tightening of credit which is beginning to hurt ship and port financing. It is not that banks do not have the money, they are just reluctant to lend and industry is beginning to reduce inventories as consumers begin to waiver.

With fuel costs making up at least 40% of vessel operating costs, how can the ship operators keep their costs under control, particularly as the European Union Commission is hammering away at the industry surcharges. So with the slowdown in the US, loss of equity value and loss of borrowing flexibility combined with rising costs how is it that the typical ship operator is convinced that 2008 will bring better results. I hope that they have some back up plans just in case reality becomes reality.