Ship Breakers Ask for a Bailout

How international-trendy do we try to be? A lot. How stupid are we? Again quite a lot apparently. Ship breakers have asked the penniless Bangladesh government to 'intervene' in a bubble. This is a tactic taken out of the international rule book of asking for bailouts. In addition, they have sent a written request to Bangladesh Bank for an interest freeze on all their loans and even more fresh subsidized loans. I am trying to imagine the Governor of Bangladesh Bank in his WTF Kodak moment when he reads the request. And believe me he has had more than his share of WTF moments that I fear for his health.

As you may recall, earlier this year, we experienced the sky high prices of many construction materials including steel rods and concrete. This basically put off construction to a standstill and many contractors put off projects in hopes of better times. What did ship breakers do during the era of inflated prices? They went around aggressively buying more ships than they could accommodate. Refused to break down existing inventory in hopes of even more exaggerated prices. If Bangladesh doesn't buy overpriced rods, surely China and US will.

Do you remember oil traders who bought oil at $100 waited for it to reach $140, then $200 but all of a sudden its now worth $64. Do you have any remorse for these people who have caused so much havoc in the last year? Are they asking for a government intervention? Where was this government intervention when prices of rods/oil reached unimaginable prices? What makes speculation worth saving?

Even though local ship breakers have let their imagination run wild, their situation is extremely realistic and critical. Now construction materials are more affordable. This doesn't suit the ship breakers on the speculative and opportunistic empire that they built while dismantling the rational and conservative nature it once had. According to Financial Express, the industry raked up loans near Tk 5500 crore (close to $1 billion) to establish their companies and buy the now-useless junk at the price of gold. But many other newspapers pin the figure at around Tk. 15,000 crore (close to $3 billion) in loans and close to 10,000 crore in danger of going bad. And most of this, was debt financed involving a few select handful of local banks.

Which banks are these? As a reassurance not all banks are involved in this. The ones involved are those that you don't hear about, recognize, see, or even realize that they were banks until they report amazing profits in the neighborhood of Tk 200 crore to Tk 300 crore. And people always wondered how do these banks make money? The answer will now be publicized better. They finance these importers and ship breakers. Because of this opportunistic and speculative sector, these particular banks are going to have one hell of a write-off next year. This is after having yet another year of mind blowing paranormal profits in 2008. But the banks are certain to make it through with flying colors (they haven't asked for any assistance), but the steel breaking industry is in for a rapid change in status quo.

Update: Some of the articles that are published on this site are purposely delayed to give some 'face time' to other articles and to evenly spread them out evenly. This is fine because this is more of an analysis site rather than a news site. But time to time the analysis may come too late or be mistimed. Even though this article pointed some issues out on October 30 (and published November 3/4). The Daily Star is now reporting the same insights on November 5th. Although it is not plagiarism, it is wishful thinking that we may have some big-box media readers.

Beyond Melamine...the Milky Chaos

Mr. Mofijuddin Milky, 36, private service holder, father of two sees more to this recent chaos regarding powder milk, which is one of the major items as baby food. The elated yet confused Mr. Milky wishes to thank the following with regard to this developing story.

He would like to thank God almighty first of all for bringing down this divine punishment to the sector which produces and markets powder milk in Bangladesh. He thanks Him for punishing these over greedy profit-mongers who happen to adjust (read increase mindlessly) prices for their powder milk almost every month. He thinks 'what goes round comes round', since those companies have taken the general consumers hostage for a long time, now its God's will that they get a taste of their own medicine.

Mr. Milky would also like to thank the media for singing in unison against the companies and
their brand who are 'caring enough' to feed melamine...perhaps as a replacement to calcium,
iron etc. to our babies. Media plays a big role in making or breaking or shaping up an industry. Journalists have babies too...they had been held hostage to this price crime by powder milk producing companies...and Mr. Milky thinks that its good that the journalists have joined this Jihad against this indiscriminant price tyrants. So this is not the time to pick and choose, its time to brush fire and the whole industry needs to bear the backlash fuelled by leading media in the country.

Mr. Milky also hails the media as those suspected companies are using that very media platform to publish their announcements of innocence and claiming that their product is free from melamine. So media is surely in the dominant role in these trying times. However he suspects that some of those rogue companies might be trying their best to convince some media and their mouthpieces to stop bullshitting and save their falling brand images and the consequential loss of consumer faith.

Mr. Milky thanks the lab of the Chemistry Department at Dhaka University, the Plasma lab,
the BSTI and all others for making the water muddier. He underscores that all kind of
revolution and protest against the odds and evils have always generated from the Dhaka University and this time as well, is no exception. So he thinks that this movement will be a success.

Mr. Milky would like to have a good laugh at the Government for making yet another committee and trying to find out what to do and what to advise to general citizens. He whips that starting from Tata's investment proposal to moon sighting during Eid, what they always do best is forming committees and then getting confused and remain without a decision until the general mass and media lose all interest to follow the topic any further and the issue goes into oblivion.

However, Mr. Milky is still worried about what to feed his children, one 2 years and one 5 year old. He has decided to cut down on his occasional habit of eating himself the infant food and he would advise his wife to do the same, given the scarcity of baby food. He is hopeful that this crisis would bring down the price of a vital product such as baby food down to tolerable limits and within the buying limit of the middle class. He would still keep on thinking about food items for his children...he plans to contact Pizza Hut and World Food Programme (WFP) if children in Bangladesh can be fed delicious pizzas from their very early years to alleviate hunger once and for all from the face of Bangladesh.