Home > Uncategorized > International trade coming unraveled?

International trade coming unraveled?

An index commonly used to track global manufacturing has fallen 20 percent in two days.

From Naked Capitalism:

The Baltic Dry Index, which some use as a proxy for the outlook for global manufacturing, has been falling since late June, not long before the commodities bubble burst in July, and has been in retreat since then. What is particularly worrisome is its steep dive in the last two days, despite Herculean efforts to get the banking system operational.

The Guardian article suggests that the culprit may be a rapid deterioration in the Chinese economy, but we are concerned that another factor may be at work that the financing of trade is seriously impaired. in our post “International Trade Seizing Up Due to Credit Crisis,” we cited reports that banks are refusing to honor letters of credit from other banks. If this persists, international trade will break down.

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