Printer Friendly
Email a Friend
The alphabet recession and irrational exuberance
27 Aug 2008
It used to be that recessions were linked to parachuting. Soft landings, hard landings, crash landings... The world is changing. Today there is not a day that passes without some new letter of the alphabet creeping into the economic recession language trying to explain the type, depth and length of the recession.
We are well versed with the "U" recession, steep in, slightly longer than expected, but a sharp recovery; the "V" recession – deep but short; the "W" recession – not so deep but hard to get out of yet still bouncing back relatively vigorously. Now, in an alphabetic reversal, the "L" recession has jumped into the verbiage. This latest definition is scary. A sharp drop, followed by an indeterminate amount of time, conjectured to be until 2010 or later by some, in the depth of the recession with no clear idea what happens at the end of it.
Oil prices rise, markets tumble, oil prices drop, markets tumble. Problem today is that there is no perceivable bubble out there to help drag us out of the recession. We are globalised, technologised, energised and mortgaged to the hilt.
What does this mean for the ports? Well, no congestion for a start in an environment where the US import trade collapsed from double digit growth to negative growth in 2007 and more to come in 2008. The booming Asia- Europe market that saved the liner companies last year is collapsing from 17% growth in 2007 to probably no more than 5% this year, if we are lucky.
Are we in danger of seeing one further bubble, the port investment bonanza, bursting or is the industry being given a chance to catch up with globalisation and sorting out its waterside and landside infrastructure shortcomings? Time to hold one's breath.
