Economics matter
So oil prices are hurtling towards the US$100 "psychological" barrier. Big deal. Environmentalists should celebrate. A higher absolute cost of oil will translate to a lower relative cost for renewable energy resources as well as the opening up of new forms of oil deposits which were previously dearer to mine. Oil or tar sands in Canada and Venezuela which were harder to extract because of technology and high cost is now less costly because technology has progressed and sweet crude is just too pricey now.
That the rapid rise in crude oil prices almost match the fall in the weakening of US dollars is not a coincidence. Although many would be quick to link a uni-directional causality but this is not the only reason "oil-crises". In fact, looking at the balance of trade can better explain the weakening US dollar. Historical evidence don't seem to say support the causality as well. (see here) One would have to consider too the northern-hemisphere's hunger for energy in the coming winter months. Global-warming can mean warmer than usual winters but it can also have the reverse effect. USD priced commodities like crude oil may be snapped up at this time not because of impending supply-side pressure but more so it is a demand-derived upward drive.
The engines of growth in China are not commercial or financial services. So the sub-prime woes in US may affect financial centres like Hong Kong and Singapore, perhaps Korea and Japan, but manufacturing is going to continue in China. Being the workshop for the world (like Britain was in the post-industrial years), energy is important. Airlines around the world would also want to hedge their fuel prices. Basically when faced with a volatile market, investors hold onto commodities. Especially with storable values. So not talking about corn, soybean and rice. It's the precious metals, minerals and ores - gold, coal and crude oil.
The call for the re-valuation of the Chinese renminbi is so ridiculous. If coupled with a declining US consumer confidence rating, as is the case now, a more expensive Mattel toy, lead-laden or not, will mean a less merry Christmas for the little Johns and Marys in the western world. Jobs are not going to flow back to US because the Yuan is more expensive now. It'll only mean a worsening of terms of trade immediately. Re-value, sure. But it must not be seen as the panacea to all the woes in western world.
Actually, it's just the US. Heck, Europe is doing well. Germany is registering expansion (rare) and unemployment figures are halved at 6%. Britain is humming along well. France has her own unique set of problems on the provision of social service.
I should start thinking if and when I wish to get my own car, should I consider a Honda Civic Hybrid or a City. Will the price differential be small enough so that over X number of years, the savings from petrol can be recouped.
That the rapid rise in crude oil prices almost match the fall in the weakening of US dollars is not a coincidence. Although many would be quick to link a uni-directional causality but this is not the only reason "oil-crises". In fact, looking at the balance of trade can better explain the weakening US dollar. Historical evidence don't seem to say support the causality as well. (see here) One would have to consider too the northern-hemisphere's hunger for energy in the coming winter months. Global-warming can mean warmer than usual winters but it can also have the reverse effect. USD priced commodities like crude oil may be snapped up at this time not because of impending supply-side pressure but more so it is a demand-derived upward drive.
The engines of growth in China are not commercial or financial services. So the sub-prime woes in US may affect financial centres like Hong Kong and Singapore, perhaps Korea and Japan, but manufacturing is going to continue in China. Being the workshop for the world (like Britain was in the post-industrial years), energy is important. Airlines around the world would also want to hedge their fuel prices. Basically when faced with a volatile market, investors hold onto commodities. Especially with storable values. So not talking about corn, soybean and rice. It's the precious metals, minerals and ores - gold, coal and crude oil.
The call for the re-valuation of the Chinese renminbi is so ridiculous. If coupled with a declining US consumer confidence rating, as is the case now, a more expensive Mattel toy, lead-laden or not, will mean a less merry Christmas for the little Johns and Marys in the western world. Jobs are not going to flow back to US because the Yuan is more expensive now. It'll only mean a worsening of terms of trade immediately. Re-value, sure. But it must not be seen as the panacea to all the woes in western world.
Actually, it's just the US. Heck, Europe is doing well. Germany is registering expansion (rare) and unemployment figures are halved at 6%. Britain is humming along well. France has her own unique set of problems on the provision of social service.
I should start thinking if and when I wish to get my own car, should I consider a Honda Civic Hybrid or a City. Will the price differential be small enough so that over X number of years, the savings from petrol can be recouped.
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