Greenpa posted an illustration of what's happening between buyers and sellers. "Here, from The Financial Post, is a nice clear story about why this stuff matters; immediately.
The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said."There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy."
This whole "letter of credit" thing is a little obtuse if you're not a financial freak; but basically both ends of the shipping business are now refusing to trust each
other - as they always have- that the money for the ship, and the money for the cargo, is actually there."
The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said."There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy."
This whole "letter of credit" thing is a little obtuse if you're not a financial freak; but basically both ends of the shipping business are now refusing to trust each
other - as they always have- that the money for the ship, and the money for the cargo, is actually there."Even if you have never read The Revelation, you have probably heard about the symbolic beast who "causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark". Is our current global financial storm setting a stage for such a concept?
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