Professor Elam

Maersk is cutting costs by slowing down, even adding a couple of weeks to shipping times by avoiding the $600K cost of using the Suez Canal. In a world focused on Enterprise Resource Planning supply chain solutions this is surely high irony. the above chart of the Baltic Dry Index explains why.  The Baltic Index is the price of renting ships to ferry freight. It has in a word collapsed. Even the dead cat bounce to 2,000 has lost steam, no pun intended. The hyper link will take you to the article in the WSJ. 

This certainly has ramifications for vaunted globalization. Consider

Shipping has slowed so that conserving fuel cost is more important than Just in Time JIT Delivery, another new theory dies a hard death. 

Shipping has slowed since demand has slowed which has idled factories in Eastern Europe, and everywhere else but

And so Western European loans to Eastern Europe have soured

As Eastern European currencies have tanked which

Yes has led to less confidence in the Euro which

has further boosted even the US Dollar with all our mortgage problems, think Iceland freezes up…

Deflation Rules

but, now a Maersk ship has been taken by pirates, the cost of shipping is going up.

Our Secretary of State has announced that the US intends to resole the issue without the loss of life, no doubt this is reassuring to Pirates everywhere, this is not, students, the way Thomas Jefferson handled essentially the same situation.