Charting the good, the bad, and the broke

First, let’s take a look at some good news concerning the global economy. Since bottoming out in the fourth quarter of 2008, the Baltic Dry Index (BDI) is beginning to rebound. BDI is a measure of how expensive it is to move dry-bulk cargo. A higher value on the index would indicate higher prices due to a tighter supply of ships and, therefore, a higher level of commerce. Since dry-bulk shippers mostly move commodities, the index is an excellent forward-leaning indicator for the global economy at large. The BDI is something like the global economy’s coalmine canary, and right now, it is experiencing some modest improvement.

Now, for the bad: the implications of another index, the Case-Shiller Home Price Index (CSHPI). CSHPI measures home values in the United States, and as the chart below demonstrates, prices have far, far to fall before reaching their historical mean. Further declines in home prices will continue to weigh upon banks and the federal government’s balance sheet.

The broke? The US Government released bankruptcy statistics for 2008. The numbers aren’t good. Bankruptcies involving business debt spiked 54% in 2008. All bankruptcies – business and personal, all chapters – rose 31% last year.