Lowest Ever: The Baltic Dry Index Plunges To 394 As Global Trade Grinds To A Standstill

Container Ship - Public Domain

For the first time ever, the Baltic Dry Index has fallen under 400.  As I write this article, it is sitting at 394.  To be honest, I never even imagined that it could go this low.  Back in early August, the Baltic Dry Index was sitting at 1,222, and since then it has been on a steady decline.  Of course the Baltic Dry Index crashed hard just before the great stock market crash of 2008 too, but at this point it is already lower than it was during that entire crisis.  This is just more evidence that global trade is grinding to a halt and that 2016 is going to be a “cataclysmic year” for the global economy.

If you are not familiar with the Baltic Dry Index, here is a helpful definition from Wikipedia

The Baltic Dry Index (BDI) is an economic indicator issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides “an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a time charter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coaliron ore and grain.”

The BDI is one of the key indicators that experts look at when they are trying to determine where the global economy is heading.  And right now, it is telling us that we are heading into a major worldwide economic downturn.

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LT
LT
9 years ago

This is perhaps the greatest understatement of all time -- “right now, it is telling us that we are heading into a major worldwide economic downturn.”

What we are heading into, is the effective end of world trade on anything like the level which we have been acustomed to over the last 50 years. By the end of 2017, I expect that global international trade levels will have dropped below those of the mid 1700s, and perhaps might descend to levels unseen since before the founding of the British East-India Company.

If you find this to be an outlandish and preposterous idea, then you aren’t paying attention —
War reduces trade. Economic instability reduces trade. Lack of viable currencies reduces trade. Lack of production reduces trade. Mass disease and death reduce production, thereby reducing trade. An EMP will create mass death and disease, thereby reducing trade.

What we have witnessed these last hundred years, has been an anomaly of grand proportions. It’s ending shall be just as grand -- a grand tragedy to close out the books.

When the world reverts to the mean for population and production (above subsistence), this century of lavish excesses will fast become an unbelieveable fairy tale -- as distant from real life as we find Homer’s Odyssey or Shakespear’s Twelveth Night to be…

WE HAVE BEEN WANRED

Rusty
Rusty
9 years ago

Well said LT… It is difficult for us to actually see the toilet bowl effect, while our heads are directly in the swirl of it.