Current economics
A thought I had today.
We currently have a crap economic situation. Everyone is aware of the credit crunch and the commodities boom, but it does occur to me that the current pullback in the oil price has been brought about by the fact that nobody can afford oil any more rather than because the resource is over valued. And that in turn suggests that when the credit crisis bit finishes then the oil (and other commodities) price will leap back ahead and we will end up with a nasty little cycle of inflation every time we have an economy that looks like it might be able to grow.
So what? Well, for one point, I reckon buy oil and mining shares in about a year when the worst of the bank problems are shaken out. For a second, kiss goodbye to low inflation pretty much permanently. The only way to keep low inflation will be to keep an almost permanent recession on the go and no government is going to do that.
This is not all terrible. People will still have jobs, but they'll have to get used to buying what they can afford rather than what they would like and in a weird kind of way it could do a whole lot of good. Think, if consumption suddenly becomes expensive and painful, maybe we will do less of it. We can still have as much fun but just with older toys and less fuel. As ever, if you want something to happen on a macro scale, apply an economic lever to it.
I might, of course, be talking cobblers. But we shall see :)
We currently have a crap economic situation. Everyone is aware of the credit crunch and the commodities boom, but it does occur to me that the current pullback in the oil price has been brought about by the fact that nobody can afford oil any more rather than because the resource is over valued. And that in turn suggests that when the credit crisis bit finishes then the oil (and other commodities) price will leap back ahead and we will end up with a nasty little cycle of inflation every time we have an economy that looks like it might be able to grow.
So what? Well, for one point, I reckon buy oil and mining shares in about a year when the worst of the bank problems are shaken out. For a second, kiss goodbye to low inflation pretty much permanently. The only way to keep low inflation will be to keep an almost permanent recession on the go and no government is going to do that.
This is not all terrible. People will still have jobs, but they'll have to get used to buying what they can afford rather than what they would like and in a weird kind of way it could do a whole lot of good. Think, if consumption suddenly becomes expensive and painful, maybe we will do less of it. We can still have as much fun but just with older toys and less fuel. As ever, if you want something to happen on a macro scale, apply an economic lever to it.
I might, of course, be talking cobblers. But we shall see :)