Saturday

Huge losses and negative sentiment again yesterday. There are plans to produce a 'Son of Bretton Woods' agreement which will re-define how the world's monetary system will work. Meanwhile, the US Dollar continues to be undeservedly stong with the Euro (and British Pound) plunging to new recent lows. None of this helps anyone - business needs stability, not volatility.

There is a lot of talk about the crisis moving into the 'real economy'. The chart below is of the Baltic Dry Index; this shows the volume of goods being shipped around the world at any time. I think that the chart speaks for itself. If all those goods are no longer being transported, chances are they are no longer being made! That means that the firms that made them will close (or contract), the workers laid off and - very significantly - all the raw materials needed to make them will be left with the producers. Commodities have fallen not because investors have stopped investing in them but because there is a reduced demand for them.