Aug 14, 2012
The city of Compton, California is in line to become the fourth city in that state to file for bankruptcy in September.
Meanwhile, one of the oldest shipping companies went bankrupt in Britain, due to the collapse of world trade since 2008.
Established in 1730, Stephenson Clarke had tried to sell its ships and cut costs in the face of crashing rates for dry bulk shipping on which it relied - transporting cargoes such as coal, grain and iron ore.
But liquidator Tait Walker was appointed on August 3, the company and liquidator said in a statement.
"While previous economic downturns have been weathered, the current market is one of the worst experienced for many years with no upturn forecast for at least 12 to 18 months," a spokesman for the company said.
Dry bulk shipping companies ordered large numbers of new vessels between 2007 and 2009, when freight rates hit record highs. But the extra shipping capacity arrived just as economies were turning down, sending rates tumbling.
Known affectionately as Stevie Clarke, the company sold the last of its six ships in July, Reuters reported....
Other dry bulk shippers are also struggling with the slump.
In July, lawyers for Deiulemar Shipping, a major Italian dry freight group, said they were seeking to wind up the company to pre-empt formal bankruptcy after prosecutors seized more than half of its fleet.
The Baltic Dry Index measures trade by keeping track of ocean shipping. I commented on the collapse of shipping some years ago after the banking crisis of September 2008, when the BDI dropped about 90%. I related this to Rev. 18:11-17, which speaks of the lament of the merchants of the earth over the fall of Babylon.
Here is the 5-year BDI chart showing how trade has never recovered from that drop. The stimulus packages helped temporarily just a bit, but as you can see, but we are now in a post-stimulus political environment. This has left the shipping companies sinking in their own debt, and that is why bankruptcies are happening, with more to come.
(Go to the above link and click on the 5Y black button on the upper right side to see the 5-year chart.)
Dr. Stephen Jones