Did You Hear The One . . .

January 26th, 2022

Did you hear the one about the cruise ship that can’t pay for fuel?

In my post on January 24th, “Craving Capital”, I highlighted that many market participants are likely over extended, just as the Federal Reserve is starting to pull capital back out of the system. And then the news broke of Crystal Symphony failing to pay for fuel and an order for it’s seizure (arrest) being granted by a judge in the USA.

Passengers were taken to Port Everglades on Sunday, but the ship was redirected to the Bahamas to avoid seizure. To put that in perspective, a ship like this is likely valued at about $50 million, and reports suggest that the fuel bill is $1.2 million.

It is unlikely that the ship will be going on anymore cruises (i.e. not generating revenue) until they can pay for their fuel and other services. This is akin to the cars you see parked on the side of the road with a flat tire and a t-shirt in the window to let police know it is disabled. Why would someone leave a car on the side of the road, in need of a $200 tire? Because they are broke.

The post about Craving Capital suggested that there simply won’t be enough capital to keep things the way they are, and this is a great example of what is to come for Governments, businesses and individuals as the unusual support provided over the last 15 years is scaled back or removed.

Of course many profitable companies will likely remain profitable, but profits could be seriously reduced as consumption at all levels ‘normalizes’.

[Note that Crystal Cruises is owned by Genting Hong Kong, and the company’s shares are nearly worthless on the OTC market. The company filed to be wound up (terminate their business) and the CEO resigned on January 21st.]

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