No Trade = No Commerce = No Economy

Reading time: 674 words, 3 pages, 2 to 3 minutes.
Update: Tues. Jan. 12, 2016

An observant reader (H/t: Ken J.) sent me a link to an article titled, Historic First: North Atlantic EMPTY of Cargo Ships in-transit – ALL anchored along coasts; none moving

It takes a lot to make me snort coffee through my nose!

You see, I’m a life-long Logistics specialist. Given that and a background in finance, etc., I understand the critical importance that commerce and trade play in national and global economies. Any economy, whether it’s local, national or global, relies on trade and commerce the way bodies rely on various circulations of food, material and waste for the sustenance of life. It’s a rough analogy, but you get the point.

Coincidentally, I happen to be preparing a couple of articles for future publication that look at the connections and correlations between the northern European tribes stopping Roman expansion and the eventual collapse of Rome, not by barbarians, but by Muslim pirates who turned the Mediterranean Sea, the world’s largest trade and commercial system into a battleground which destroyed Rome’s economy and plunged Europe into the Dark Ages. No trade = no commerce = no economy.

Immersed in this eye-opening research, Ken J.’s link to that news article arrived with an explosion! There has never NOT been trade in the North Atlantic.

I had to verify this before sounding an alert. I found several other articles all citing the one above. The clinch was these two vessel-finder sites. Even on Sunday, January 10, 2016, the only vessels in the North Atlantic were at anchor including at the Azores mid-Atlantic. Click on the sites below.

www.vesselfinder.com/

www.marinetraffic.com/

The article goes on to say, “This has never happened before. It is a horrific economic sign; proof that commerce is literally stopped.

“The reason commerce has stopped is simple: People are not buying things. When people do not buy things, retailers do not sell things, so they do not order more goods for stock.

“When retailers do not order goods, manufacturers don’t make anything because there are no orders to fill. When manufacturers do not make goods, they don’t order raw materials for manufacturing.

“When there are no orders for raw materials, commodities sellers do not sell raw materials. When no raw materials are sold, there is no shipping by large cargo ships, (or railroads or tractor trailers) to move anything.

“Put simply, the global economy is LITERALLY stopping. Right now. Today.

“How things go from this point forward is simple: Without sales, retailers are not even “turning dollars” so they will have to layoff employees and close stores. Without orders, manufacturers will have to layoff employees and shut down. When manufacturing shuts down, suppliers of commodities will have to layoff employees and cease operations. As all of this economic activity comes to a halt, then the disaster REALLY takes off:

“When businesses are not even “turning dollars” they cannot pay back their loans. Retailers, manufacturers and commodities suppliers will begin defaulting on bank loans within 30 days. When enough of them default, it begins taking-out banks. As banks begin to fail, others will run to their banks to withdraw money for fear THEIR bank will fail too; and therein starts “bank runs.”

“We are literally standing at the edge of an abyss. It appears we are about to go over that cliff . . .”

This slow-down in trade and commerce is no surprise because Friday it was reported that the Baltic Dry Index of shipping rates (a leading economic indicator) had plunged “20% lower than the previous record low in 1986.”

BDI

Chart: Zero Hedge

Dry-bulk carriers’ bankruptcies will continue as we circle closer to the drain of economic collapse. Stay tuned: 2016 will be an eye-opening year.

Update: Tues. Jan. 12, 2016
(H/t to reader Dan) Mish Shedlock wrote there is freighter traffic albeit very little volume. He says, “Contrary to popular myth, shipping has not ground to a halt. However, shipping volumes and shipping rates have both plunged. 2015 was a disaster by any measure.

“There’s no need to exaggerate. Reality is bad enough.”

*

Remember the mantra:

We cannot borrow our way out of debt.

We cannot spend our way to prosperity.

We cannot pretend our way out of trouble.

Gerold
January 10, 2016

Your comments are welcome!

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About gerold

I have a bit of financial experience having invested in stocks in the 1960s & 70s, commodities in the 80s & commercial real estate in the 90s (I sold in 2005.) I am appalled at our rapidly deteriorating global condition so I've written articles for family, friends & colleagues since 2007; warning them and doing my best to explain what's happening, what we can expect in the future and what you can do to prepare and mitigate the worst of the economic, social, political and nuclear fallout. As a public service in 2010 I decided to create a blog accessible to a larger number of people because I believe that knowledge not shared is wasted.
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22 Responses to No Trade = No Commerce = No Economy

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  7. GBV says:

    Gerold,

    Glad to see you’re still writing. And it looks like your blog is getting more traffic these days, which it truly does deserve.

    Sorry I haven’t been able to drop comments as often as I used to – kind of going through my own (quite serious) personal collapse/apocalypse at the moment. Glad I was saving up for the “world wide” collapse/apocalypse, though unfortunately my own personal collapse/apocalypse may end up cleaning me out in terms of financial & social capital before the real fireworks start😦

    Cheers,
    GBV

    • gerold says:

      Good to hear from you again, GBV.

      I’m sorry to hear about your own situation. I know it’s small comfort, but I’m hearing more of this from many different people. Hang in there, GBV.

      – Gerold

  8. Paul says:

    I think that the Roman Empire fell due to psychological factors, more so than economic ones. Same is true today with the US. As Gustave Le Bon points out, a nation declines essentially when no one believes in its principles anymore. Without belief, which can come in religions forms, there is nothing linking the state with the people and no reason to defend it. Plus, the land will descend into anarchy as this common belief is uprooted, dividing people into various camps without anything in common. And when does this begin? When people are allowed to question the belief.

    The Romans fell due to their discarding of their old gods for the Christian one, as well as acceptance of the barbarian culture. When cultures intermingle, it inevitably erodes the dominant belief until their is no commonly held belief. The barbarians did this to Rome and when the barbarians finally began knocking on Rome’s gate, it was easy for them, as the rot withered away all the strength of the Empire, including the pirates. Sound familiar? Change the barbarians to Latin America.

    Socialism and bureaucracy also have the same effects, as people spend all their will trying to navigate a complex law structure and procedures, which are created by design to limit will, initiative, and independence. Yet, these are the very qualities needed to grow strong and compete.

    Also, velocity is more important than mass in trade. Goods have to be moved about rapidly for their effects to be felt. If nothing moves, no velocity, it does not matter how big the mass itself is.

    • gerold says:

      Excellent points, Paul! I can’t disagree with any of it based on what I’ve been taught.

      However, I’m still researching for my article(s) on Rome, the barbarians and Islam. Based on what I’ve found so far, it will add a new dimension on that ‘distant mirror’. Stay tuned.

      Gerold

    • GBV says:

      Paul,

      Suggest you look into articles/blog posts/writings about how the Roman Empire collapsed as a result of energy depletion, excessive debt, and complexity. Joseph Tainter is a great place to start, and The Automatic Earth touches on those subjects from time to time. Any podcasts/writings by Ugo Bardi and his Seneca Cliff theory also tend to cover empire collapse as well.

      Cheers,
      GBV

  9. Dan_Kurt says:

    Suggest you read this article, link below, re: “No Trade = No Commerce = No Economy” Gerold

    http://globaleconomicanalysis%5BDOT%5DblogspotDOT%5Dcom/2016/01/investigating-claims-north-atlantic%5BDOT%5Dhtml

    http://globaleconomicanalysis.blogspot.com/2016/01/investigating-claims-north-atlantic.html
    Dan Kurt
    p.s. Except for your writing on the Japanese Nuclear Disaster, I enjoy reading your essays. My wish is for you as a Canadian to analyze the future of your country under the air head Justin Trudeau.

    • gerold says:

      Thanks, Dan. FINALLY! You nailed it with the link to Mish’s article showing some cargo traffic albeit a small amount. I’ll update by blog post shortly.

      I’d love to do an analysis on Justin Trudeau, but it’s still early days. What a politician says and what they do … well you know the rest. I’m going to base my analysis on action, not rhetoric so I shall bide my time a while.

      – Gerold

    • GBV says:

      Dang,

      Looks like Dan_Kurt beat me to posting that MIsh article.
      But glad it got posted.

      Mish’s final words kind of sum it up in my mind…

      “Contrary to popular myth, shipping has not ground to a halt. However, shipping volumes and shipping rates have both plunged. 2015 was a disaster by any measure.
      There’s no need to exaggerate. Reality is bad enough.”

      Reality is pretty freakin’ bad these days. Sigh.

      Cheers,
      GBV

  10. Roy says:

    I reposted this article on http://www.theburningplatform.com/2016/01/11/no-trade-no-commerce-no-economy/ . So far I have 15 comments. TBP is more of a Facebook/Dear Abby type blog than a serious economic blog that is infested with “selfies”.

    I am working up a post on Fukushima starting with the works of Alice Stewart MD then using your material.

    • gerold says:

      I’m obliged to help. TBP has been a mainstay of mine for years.

      FYI – I found out after I published it that the article “SURPRISE! You’re Eating Fukushima Radiation; Bloody Cancerous Tumors in Fish & Seafood” is of questionable origin so I would not reference it for your work on Fukushima.

      – Gerold

      • Rocco D'amico says:

        Gerold, how does one prepare for the demise of economies?

        • gerold says:

          Good question, Rocco! I wish I had the answers. Notice I said answer(s) because different areas will fare differently, from one extreme to the other. Even the best prepared can be tragically surprised. There was the Frenchman who, before WW II broke out, moved his family to a tranquil South Sea island. It was called Guadalcanal.

          What we’re seeing is the winding-down of the failed globalization experiment and the painful transition to an increasingly multi-polar world in which the U.S. will refuse to relinquish control. We’re seeing it already. Russia, China and others are transacting trade and commerce in non-U.S. dollars. This threatens the Amerikan Petro-dollar so the rest of the world tries to manage the transition as painlessly as they can with lots of hic-cups and scares along the way.

          The victim is us. I mean you and me and everybody not in the 0.01%. Our lifestyle is going back to the pioneer days and in some areas it already has or worse (Detroit).

          The whole global financial system is being revealed as a Ponzi scheme and it’s slowly (for now) unraveling. When it’s finished, we’ll all be poorer having been looted by the 0.01% for more than a century (central banks). We’ll find it’s easier to read about our standard of living falling by half than it is to actually adjusting to it.

          We’ll deal more locally and get used to things (as per James Howard Kunstler http://kunstler.com/ ) “made by hand.” The survivors, that is …

          I cannot say I’m looking forward to it. I still have my health, but who knows how long that can last. On the other hand, every day is a blessing.

          – Gerold

          • gerold says:

            Don’t get me wrong. I don’t expect the whole world to go Mad Max. Some already is, but I don’t expect all of it will be.

            Blabber-mouth that I am, I skirted the question – what can one do? Individually, what one can do is the basics. Get out of debt. Become as self-reliant as you can. Stockpile water, food and essentials including tools and gardening supplies.

            Treat family and friends well. Be nice to the neighbors. You may need each other. That’s just a start, but it’s not rocket science.

            I cover lots more in “Survival & Emergency Preparedness” https://geroldblog.com/category/survival-emergency-preparedness/

            – Gerold

  11. Pingback: No Trade = No Commerce = No Economy | The Falling Darkness

  12. Digmen1 says:

    Great article Gerold ! and a bit scary.
    I have always said that I get annoyed with economists fixation on gdp or the exchange rate. To me what matters is are new factories being built, are new companies starting and doing well. To me a country cannot survive on its retail and service sectors. You have to have something to service.
    I was very intrigued by your comments on the fall of the Roman Empire, but remember that Mohammed was not around till 700 AD, well after the collapse the western Roman Empire in 476 AD. So it may have been Arab pirates not muslim ones?

    • gerold says:

      Good comments, Digmen1.

      The problem with economists is that the only ones that know what they’re talking about are the Austrian School (Mises, Rothbard, etc.) and the government refuses to hire them because they won’t tell the politicos what they want to hear (lies).

      I used to believe that Rome fell after it was ‘looted’ in 476 AD. Notice the word ‘looted’ does not mean destroyed. Yes, the Barbarians stole, but they did NOT destroy Rome. They installed their own king and the Western Empire grew for two more centuries until the ‘Barbary pirates’ destroyed the Mediterranean as a trade route.

      That’s a hint of what’s to come. Stay tuned after the next several economic updates for articles further fleshing this out. I guarantee it will be an eye-opener and not what Islamophiles want to hear.

      – Gerold

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