Financial roulette: the new game in town
Securing cash in Europe has become a bit of a gamble. Credit: Conor Ogle
It seems to me, as an interested observer, that the western hemisphere is in a gambling mood. There is a lot of hedging and slight of hand going on in the supposed rescue of the European banking system and Greece.
Money that was pledged back in July to rescue the Greek economy from its financial misdeeds has yet to fully appear and we are already witnessing new pledges in various parliaments for a third tranche of money.
Meanwhile, the banking system has become destablilised and Greece is slipping into anarchy. Finance ministers are finding it difficult to reach a European-wide solution. Perhaps it is best to let Greece return to the Drachma and let it sort itself out rather than taking the EU, or at least the Euro Zone, down with it.
The impact on trade is beginning to be felt with import volume from Asia - here growth has virtually stalled since April with little movement. Exports are equally flat to Asia but have shown some resilience in total terms. Looking forward to the next four months does not raise cause for optimism.
The European taxpayer ultimately has to fund the cost of the financial rescue, whether it succeeds or not. Retail sales are slipping, industrial production is declining, not only in Europe but also in Asia where we buy our goods. We can expect a season of falling demand with the prospect of slipping into a second recession so soon after having come out of the last one. Austerity has chocked off growth; that is clear. Whether that was necessary or not is another matter.
And the outlook for our industry does not look good. There is too much capacity chasing too little demand and the euphoria of 2010 has disappeared into the oceans along with freight rates and charter hire rates.
The volatility has been nothing short of astounding, and it is hard to blame the ending of liner antitrust immunity this time around. Ports will soon begin to share the pain as carriers with big losses come asking for discounts. The coming 12 months will not be kind to the industry.
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