A visit from our terminally depressed pal*, Ambrose Evans-Pritchard.
From The Telegraph:
The price of key industrial metals has fallen further over the last four months than occurred during the worst years of Great Depression between 1929 and 1933, according to research by Barclays Capital.
Kevin Norrish, the bank's commodities strategist, said the average fall in the price of copper, lead, and zinc has been roughly 60pc since the peak in July this year. All three metals were traded on the London Metal Exchange in the inter-war years so it is possible to make a comparison.
Prices for the three metals fell 40pc from their highs in 1929 before touching bottom in 1933, with the bulk of the fall in 1930 as the slump spread worldwide. "Lead and zinc have already lost more than they did in the 1930s," he said.
Copper was hit hardest during the Depression, despite the electrification drive in the US and the Soviet Union, falling 70pc at one stage before creeping back in the mid-1930s. The reason was an 85pc fall in US construction, then the biggest user of the metal.
Barclays Capital said the broader equity markets are already discounting the sorts of "savage declines" in corporate profits that were last seen in the Slump. It said (trailing) price to earnings ratios are actually lower now than they were the early 1930s, with moves in credit spreads that suggest investors are anticipating depression-era levels of economic contraction....MORE
Environmental Capital has a post on the interconnectedness of everything:
Coal Pits: Recession Sends Coal Prices Plunging
Need another reason to believe that the economic slowdown is bad news for the environment? The collapsing auto and construction sectors have sideswiped steel makers around the world (leading to massive layoffs and production cuts at U.S. Steel and ArcelorMittal). With demand from steel makers in free-fall, prices for premium coal are also plummeting. And that threatens to send the price for run-of-the-mill coal used to fire power plants even lower, after already plunging 60% from its summertime highs (just like oil).
After a year of meteoric price rises for coal, that makes coal more attractive for power companies, environmental concerns notwithstanding. Even for utilities that have restrictions on their emissions—such as those in the European cap-and-trade scheme—it’s often cheaper to burn coal and buy permits to cover the pollution. More so, now that both coal and the permits are getting cheaper.That’s also bad news for renewable energy...MORE
*Some prior A.E-P. articles (sometimes our headlines, sometimes his):
Oct. 28, '08
Phase III (or is it IV?): Europe on the brink of currency crisis meltdown
July 16, '08
U.S. Faces Global Funding Crisis: Merrill Lynch
July 7, '08
Oil Price Shock Means China at Risk of Blowing Up
June 27, '08
Barclays warns of a financial storm as Federal Reserve's credibility crumbles
June 18, '08
Royal Bank of Scotland: Global Stock and Credit Crash Alert