Despite a successful Posidonia
this year, our shipping cluster is facing many challenges. Our competitors in Scandinavia (Norway,
Denmark) and Far East (Singapore, Hong Kong) are not in the deep shackles of
Eurozone creditors and their debtor in possession bailouts nor the scorched
earth of a bankrupt local banking system from years of depression, double digit
unemployment/ emigrating youth.
These countries have their own
issues, but no crushing legacy debt burden and also more promising growth
prospects than the EU, whose share in world trade has been steadily shrinking
over the years and suffers from serious structural problems with a political
class in self-denial and complacency and dangerously disconnected from an
increasingly desperate electorate on which they have been consistently
exploiting by monetizing enormous financial losses from years of constant
policy failures.
These points have become even
more salient by the recent BREXIT vote in the UK, which is both a challenge and
opportunity. If the EU choses to punish the United Kingdom by
repressive actions for the anti-EU popular vote, this will not only disrupt
existing trade relations and cause a general recession in Europe but also
further inflame voter antipathy to the
EU elite and more exit-type referendums. If the EU opens a dialogue to correct its
existing dysfunctionalities and gives more devolution to its members, this may
actually lead to better growth and more harmonious trade relations.
The Scottish issue is a microcosm
of Greece. The Scots live above their
means with perks like a generous pension system, subsidized by British
taxpayers. The EU could encourage the
Scots to seek direct EU membership to spite and pressure the withdrawing UK,
but such actions would be detrimental to both the Scottish people and the EU
with another weak new member needy of EU transfer funds and who cannot support
a heavy currency like the Euro (more of the same EU failure pattern). In a short time, Scottish unemployment would
rise, more Scottish youth will emigrate and Scotland will be become a debt
slave of Brussels. An ‘emancipation’
that risks degenerating to Brussels colonialization and an additional EU vassal
state that the Brussels would be ill supported to carry.
The better outcome would be that
the UK is given an exit agreement similar to the present EU trade status of
Norway. This arrangement could become a
benchmark for other suffering EU members, who want more sovereignty and
breathing space from Brussels bureaucracy and escape the stranglehold of German
debt deflation economics for better growth rates. It might even facilitate a future GREXIT
along with generous debt forgiveness to allow a new start to Greece as another
Norway-like associate membership. That
would be more suitable for Greece as a sea power and on the EU Periphery.
A customs zone for the EU
Periphery would be the best outcome, where the core might still remain in the
Eurozone and could support more integration in a controlled and workable context that is unworkable for the periphery countries.
Finally our maritime cluster has
excessive exposure in dry bulk, where there are few entry barriers, low
earnings margins, no control over pricing and tremendous over supply of
ships.
The Greek vessel provider business
model is very heavy in relatively low yielding assets and weak on commercial,
trading platform. This setup works
extremely well coupled with low cost bank leverage in times of high inflation,
but it’s not effective in times of deflation, where the bank debt and interest
expense burn up liquidity and eventually lead to negative equity and bankruptcy
or zombification from pretend and extend lending practices of which the Germans
are probably the world champions.
Our maritime cluster needs to
take more elements from Norway and Denmark, moving to a wider marine service
economy with a bigger cargo operator element over the current vessel provider
business model. We also need to lighten up
and consolidate on dry cargo exposure as well as continue expansion into more
diverse marine sectors like industrial shipping where there is better pricing
power, more of a trading element and less asset speculation.
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