Tuesday, August 16, 2005

Oil

From Stephen Roach, Chief Economist, Morgan Stanley:

Courtesy of a full-blown energy shock, the venting of global imbalances can
no longer be deferred indefinitely.

http://www.morganstanley.com/GEFdata/digests/20050815-mon.html#anchor0

I haven't commented much on oil, and as for Peak Oil, I really have no idea if we are there or not. However, as to whether an oil price shock would be a likely precursor to the sort of economic correction that Steve Roach predicts, yes I think this is quite likely.

As for whether we are at Peak Oil? I don't even like to think about it. That is too bearish even for me! If we are at Peak Oil now, before the asset bubbles and debt binges correct themselves then the outcome will be nothing short of catastrophic.

So, if you tell me this is Peak Oil I will put my fingers in my ears and sing lalalala loudly to myself and think about investing in Californian real estate or Internet stocks.

3 Comments:

Blogger Peter said...

http://biz.yahoo.com/ap/050816/china_fuel_shortages.html?.v=1

Fuel shortages in China.

9:55 am  
Blogger Peter said...

http://news.ft.com/cms/s/2badb480-0ff7-11da-bd5c-00000e2511c8.html

There seems mounting evidence that oil will be the kindling on the asset bubble fire (sort of a metaphor there) as it was in 1973/74.

You might want to do your own research on "Oil priced in Euros" and reach your own conclusions on a number of issues. In particular, consider the timing of the quotes and articles you find.

10:03 am  
Blogger Peter said...

http://www.atimes.com/atimes/Global_Economy/GH26Dj01.html

This is a significant article. If commodities are priced in your currency, ie US Dollars and you are continuously running a trade and budgetary deficit you actually aren't paying for them!

The US can get away with that because of the dollar's reserve currency status.

Repricing oil in Euros would have a significant impact of the US ability to fund its deficits.

3:14 pm  

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