reply to post by MischeviousElf
Commodities are actually a very good indication to the health of the economy..
For instance, from 1991-2001 the price of oil did not fluctuate much.. neither did the price of food. And if you look at inflation, unemployment and
so forth through the 90's, we where doing alright.
In the past 8 years however.. it's been a roller coaster.
First, the Recession of 2001 brought with it ever increasing oil prices.. only now a news headline with the words "middle east" and "terror"
somewhere meant that oil could move up $2-3 .. something never thought of in the 90's.
Remember everyone panicking "at what point by inflation is the price worse then the 1970's???"
It's $89 a barrel.. we hit $150
Partly due to a failing Dollar..
Now however the Dollar is making it's stellar come back, and with it the realization that we hit our economic peak and collapsed since then ..
Oil falling is a sign of a recession .. for areas in the M/E it could mean a depression.. several States moved to funds the rise of industries and
even tourism (Saudi, UAE, Kuwait) .. but now over there it puts what we are going through to shame.
Oil peaking at $150 should have been a sign that .. something wasn't right.. it was not natural.. the way oil and wheat and rice inflated, supplies
fluctuating wildly.. Something should have screamed out to us 'brace your selves" ..
Anyways, from reading your post I would honestly say that oil will keep falling, falling, falling. Food and other crops could rise for a different
reason. Many farmers, especially in the "3rd world" rely on Bank Loans to buy all the material for the harvest, such as seeds, machinery needed,
land renting etc.. if the credit freezes world wide and effects this, crops prices could soar.
Oil however will have nothing propping it up .. the reason OPEC is cutting back it's production is due to over production.. supplies are sitting in
containers and storage on docks because demand has dropped.
House prices will plummet yet even further.. the housing correction has only seen on average 5-10% reduction in value.. when the price of houses could
(and should imo) drop considerably more.. especially on the West Coast.
What we are looking for is a "return to real value" .. oil should have kept it's same growth rate that it had, because the World economy never
accelerated.. we went from a recession to a massive equity bubble built on fabricated wealth. Same with home prices, obviously they stretch income to
far, we need a return of actual real value..
PS. With the Dollar making it's comeback, it brings about some good like lower gas prices.. but all these companies posting above expected profits?
.. Expect those profits to be erased with the new exchange rate.