[9/8/16] South Korea’s Hanjin Shipping was the world’s seventh-largest container shipping company, moving (until last week) 100 million tons of cargo on its 200 cargo ships from manufacturers to retailers across the globe. Last week, following years of losses as the global economy has slowed, Hanjin declared bankruptcy. That move stranded 90 of those ships as off-loading companies refused to unload them over concerns that they wouldn’t be paid.
Even an offer of $90 million from what’s left of Hanjin (including $36 million from the personal assets of its chairman) fell far short of the necessary $543 million estimated to unload all of its ships that are now circling ports around the world.
Concerns are mounting that the delay in offloading (retailers are scurrying to make other arrangements to get access to their goods in time for the holiday season) will impact Black Friday shopping and well into the Christmas season. Samsung, for example, has an estimated $40 million worth of refrigerators and other appliances, along with Galaxy smartphones and other “visual” products, waiting to be unloaded.
The offloading is being complicated by creditors seizing some of those ships as collateral for loans they’ve made to Hanjin over the years.
What’s surprising is that Hanjin’s bankruptcy has caught the national media by surprise. The Wall Street Journal published a major article on Hanjin’s difficulties on Wednesday, managing to say nothing about Hanjin being the first example of what is likely to be a series of similar bankruptcies occurring all across the international supply chain.
As Adam Hayes, a chartered financial analyst, noted back in January, there were a whole host of factors leading to a global recession, including:
The “European Situation” consisting of the bailing out of the PIIGS nations (Portugal, Ireland, Italy, Greece and Spain) repeatedly by the European Central Bank and the IMF;
The “Chinese Bubble” now imploding thanks to overbuilding of ghost cities, over capacity in basic industries like steel and cement, resulting in a dramatic “official” slowing of China’s economy from double digits to 7% or more likely, much lower;
The “Student Loan Problem” in the United States where $1.2 trillion of those loans are hampering young people from otherwise engaging in economic activities like marrying and buying homes and cars;
The “Central Banks’ problem” consisting of their inability to reduce interest rates further in the nonsensical Keynesian attempt to stimulate moribund economies around the world, when interest rates are already at, or below, zero; and
The “Economic Data problem” showing patterns unnervingly similar to those that appeared just before the start of the Great Recession: retail sales dropping, factory orders declining, GDP growth barely positive, export growth slowing and corporate profits declining…CONTINUE READING