Letter of Credit Forum

The markets switched from irrational exuberance to irrational pessimism as amply evidenced by the decline of the major stock indices. We have reported on banks not granting credits despite the applicant demonstrationg sufficient collateral. This blog reports on the Baltic index, a measure of commodities-shipping costs, plunging 82 % in the last year and, as a consequence, a Swedish shipping line filing for bankruptcy.

I wonder and hope for comment in this regard, whether these events are anecdotal or wide-spread. In a way the indices we are carefully watching are derivatives of reality, a handy number supposedly summarizing real world developments. However, the traders are removed from the actual business and their fears and hopes unduly influence our perception, even though we can see ourselves how things are going.

I have reported on individual cases of bad news that affect international trade finance, but I see that the same cases are repeated over and over again. Hence my question whether there is a trend or merely  the perception of a trend.