Hi Mr. Drn,
What you say may be true. There are so many variables, some trending better for operators, and some worse. The name of the game is pricing power. Do the tanker operators have it or don't they?
The best barometer, "is" the spot rates. This tells us today how that pricing power is for the sector. When spot rates are high, there is some extra profit to be made. When it is low, below break even, those in the sector will be squeezing quarters trying to maintain a positive cash flow.
I've been watching this stock and this sector since 2004. And what I have found, is that the spot rates trump all other factors. If some variable is really going to make a difference, it will show up in the spot rates. There are many variables which are quite transparent. But, then there are so many that are opaque. We don't even know what they are.
Then there is the question of why the spot rates are falling, or rising, or staying the same. We will seldom actually know what caused the balance of pricing power to tip one way or another. Fortunately, all we need to do is watch the trends within the spot rates to tell what is going to happen to the profitability of companies like Frontline.
If we find that spot rates are high relative to break even, and have been stable there for awhile, it probably means that the variables are all running pretty stable. Then, when we see a variable shift, we can predict a change in the trend of the spot rates that may be caused. Sometimes it does, and sometimes it doesn't follow what one would expect. But, the spot rates are the spot rates.
Just my take.
Best of luck,
Hendrickson also had something to say about the post WWII economy in the same article:
Stiglitz and I agree that standards of living improved after the end of World War II. He, though, implies that this prosperity was due to the more egalitarian progressive tax code of the era, with its top marginal rate of 91 percent. I know of no accepted economic theory that high taxes create prosperity. The real explanation for the post-war boom was that after years of suppressed consumer spending enforced by wartime rationing and the diversion of resources to the war effort, peacetime released a flood of pent-up demand as Americans made up for lost time. The huge decline in federal spending after the war (from 48 percent of GDP during the war down to 15 percent in the late ‘40s) released billions of dollars to the private sector turbo-boosted a strong economic recovery.
The middle class was an historical fluke, made possible by the fact that the United States was the only country to emerge from WW 2 with its industrial capacity intact. The American dream, noting more than an interlude between the Gilded Ages. For the majority of human history there have been only two classes: aristocracy and peasantry. It’s an order in which the many toil for subsistence wages to provide luxuries for the few.
In counterpoint to the Stiglitz book, Mr. Mark Hendrickson wrote the following:
Joseph Stiglitz’s diagnosis is flat-out wrong when he argues that the middle class is declining because the rich are getting richer. That zero-sum view is atavistic mercantilist nonsense. In a free market, transactions are positive sum, so individuals become wealthy in return for economically benefiting others. It is in the political marketplace where transactions are zero-sum—where wealth that benefits some comes at the expense of others. Indeed, we have a lot of that today in the form of bailouts, subsidies, boondoggles, and other forms of cronyism. If Mr. Stiglitz would oppose those growth-sapping cancers, I’d gladly make common cause with him, but for him to blame the rich instead of government for today’s problems reflects a partisan and ideological bias rather than objective economic analysis.
Because Stiglitz’s diagnosis is wrong, his prescription also is wrong. Raising taxes on the rich won’t improve the economic prospects of the non-rich. Shrinking the burden of government will.
I tend to agree with Mr. Hendrickson.
Disease,murders,disasters are not enough for this blood thirsty bast---d. Every now and then he needs to murder thousands all at once.last night he and his son JC, and the spook who are all the same person decided they were bored and caused a great earthquake.Today the are laughing their as-es off.
As they are never happy they are now planning even more human suffering.
Tomorrow,sunday,they know millions will go to church to pray[beg]them to give they things and all they get is the almighty finger.
SCS HOUSTON,people only get unemployment benefits if they have worked.
No social programs if you don't work.If there are no job the Government should employ people at any job that need to be done,like picking up trash along hyways.All job should pay a living wage.
lakeed, let's talk specifically about the "People who are able to work but choose not to should be made to work or get zero benefits" that you refer to. How would you propose that policy would be enforced? What time period could they get unemployment benefits and other social programs before those benefits would expire, in your opinion?
I would add that given the increased SA output, high worldwide storage levels, you may see some of the extra tankers used for storage as well, which will reduce availability to some degree....This will take some time to materialize, but it certainly will have an effect as it does come into play.....after all, we've been there before! GLTY
No SCS HOUSTON,If you raise the min.wage only the worker would get it.Non working people don't get then min. wage.Sorry to confuse you.
The people who are unable to work should .of course .in a just system . be cared for.
People who are able to work but choose not to should be made to work or get zero benefits,
lakeed said "By doing this millions would get off welfare."
You are assuming that those who are on welfare are willing or able to work, and that there are employers who seek the kind of "help" that current welfare recipients have to offer. The reality is...why would they work as long as they have "free" welfare to live on instead?
Semp,the 30s are long gone .
Let's change the programs and make the minimum wage a living wage and SS a living pension.
By doing this millions would get off welfare.
People would have more money to spend so business would do even better.
This is a win win.
"While it is true that most of a CEO's salary and benefits would be lost in a BK ... in a Chpt 11 reorg. BK will let the top guys continue to pull down lots of money while the stockholder eat the losses."
Or for heaven's sake... You talk as though these guys get off light in a BK. To the extent that the "top guys" were major stockholders, they too would eat **significant** losses.
Yes, they may keep their jobs and their salaries. But so too would the lower level employees that continue to work in the reorg'ed company.
"The spread between the guys at the top and even mid level decision makers is just too great. I am not talking about rig workers or hourly folks but salaried decision makers suffer too"
Many of the firms you cherry-pick as examples were started by "the guys at the top". Their comp is hugely oriented toward equity. They get wickedly rich when the **market** bids up the price of the company stock (which in this bubble market has been fueled by cheap, fake, QE funds). That is NOT money out of the pockets of hourly folks or others. And, if the company is publicly traded, at any point the hourly folks or others could have used their cash comp to purchase shares in their company if they felt strongly about the firm's future and prospects.
And a lot of those "guys at the top" were, themselves, mid level decision makers at some other firm before going out on their own. They took risk. They're entitled to their piles.
If one of their employees feels "cheated" by the arrangement they can negotiate for higher comp... or walk... and set up THEIR own firm.
You're being a bit like the whining workers in Matt 20. The employees agreed to work for specified comp package. They're NOT being cheated.
Hi Mr. Maslee,
Thanks for the invitation to share my thoughts on the issue of day rates.
From your post: "Intertanko reports day rates have been dropping ... but why?"
To me, the more pertinent question is "how" are the day rates moving about?
1. Have day rates fallen to below Frontline's published break even rates? NO
2. Is there now a trend in place indicating that the spot rates are falling and will soon tread below Frontline's published break even rates? NO
3. Have the spot rates stopped their upward trend into the stratosphere? YES. Perhaps so.
4. Are the spot rates congesting at a high level well above FRO's published break even rates? YES
I have no problem with the rates peaking and pulling back a bit. The real issue is that the rates are still at a very high level relative to break even. So, the company is generating a lot of cash which it can use to pay down debt or maybe even pay a dividend.
Relative to real consumption demand, the sector is still glutted with too many tankers. And, if/when Iran starts shipping, 15 or so more VLCCs will hit the market.
So, enjoy it while it's here.
Should be a great 1st quarter. Hopefully, not too much of the cash will be sucked by by the associated party agreements.
Just my take.
Best of luck,
Your lies ,in an attempt to slander me won't work.SCS HOUSTON.Exposed soon.
I am against most of what Karl Marx wrote with Engle[spelling?]in the Communist manifesto.
You ,on the other hand hate people who are poor.You would allow them and their children to starve to death.
You would allow them to die for lack of medical care.
You can call me anything you want.I can't stop your stupidity,but what you are is right wing scum.
lakeed, apparently you are confused about what I wrote. Let me clarify my position. I think people who don't earn money are entitled to receive money from those who DID earn it, provided that those who DID earn the money are not being forced or coerced (or taxed) to give their hard earned money to those who did not work for it.
As for Marxism, here are the "10 Planks" listed in the Communist Manifesto (note plank #3)
1. Abolition of private property in land and application of all rents of land to public purpose.
2. A heavy progressive or graduated income tax.
3. Abolition of all rights of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.
6. Centralization of the means of communication and transportation in the hands of the state.
7. Extension of factories and instruments of production owned by the state; the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal obligation of all to work. Establishment of Industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country by a more equable distribution of the population over the country.
10. Free education for all children in government schools. Abolition of children's factory labor in its present form. Combination of education with industrial production, etc. etc.
Yes lakeed, I believe you are a very much a Marxist based on what you have said you believe in. You may not like the label, but you clearly subscribe to those beliefs.
When introduced in the early 30s Min Wage was 25 cents an hour.
If it were adjusted for cost-of-living using CPI, to be equivalent to the pay rate when it was introduced in the 1930s, min wage today would be **less** than $5.00 an hour... $4.90 or so.
Which is to say that at the current rates of $7.25, min wage is almost 1.5x what it should be.
The point being...
Minimum wage was **never** meant to be a "living wage".
Just as Social Security was **never** meant to provide a livable pension.
SCS HOUSTON,Karl Marx never said that so you are lying or just ignorant.
So you think people who don't earn money are entitled to it?Sound like welfare to me.Are you a closet Communist ?
keem,I guess you haven't read my posts or you are just trying to spread hate of people who don't think like you..
I am very much in favor of man interfering with the natural process of evolution and have stated that many times.You implied I care nothing about my fellow man.and you know that's a lie.I guess being a liar is ok with your god.
I take the rest of your post as an insult to my people and me.