Is 'Oil Bubble" About to Pop?

American Thinker ^ | March 07, 2008 | Rick Moran

[SlapHappyPappy]

Lenders are very gun shy. I was recently laid off because our commercial lending office was closed. It wasn’t closed for bad loans (there weren’t any). It wasn’t closed because of specific market weakness (our target market is almost universally felt to be the strongest in the US with least risk for the foreseeable future). It wasn’t closed to save money (the people laid off were almost all on 100% commissions). It was closed because the credit department was scared to make loans, plain and simple. And the credit losses in mortgage lending (which we didn’t do) had given the credit departments a lot of power, and tilted the very difficult balance between sales and credit much to far in the credit direction.

To all those questioning Bernake’s wisdom in increasing liquidity (which is reasonable) you need to remember that the mechanisms the Fed uses to stimulate the economy depend on the extra liquidity actually entering the economy and not just sitting on ban balance sheets. That simply isn’t happening the way it’s intended.

[DugwayDuke]

Just trying to share a positive message of hope and change with you.

[Man50D]

The truth of the matter is that there is no way to measure supply at any given point in time, because any measurement of supply requires knowledge of the sellers’ willingness to sell at various prices, which is virtually impossible to know.

I suppose the most accurate method would be to know a comparison of how much gas stations are ordering now versus some point in the past.

[gogogodzilla]

Speculators drive up the price of oil as a hedge against the falling dollar.

Hmm.

That would mean that as long as our government pursues a policy that reduces the value of the dollar, more and more people will invest in oil - thus driving the price higher and higher.

So, to pop the oil bubble, all we need is an administration that actively works to INCREASE the value of the dollar.

(In other words, the oil bubble will pop as soon as we get a new president.)

[mysterio]

Is 'Oil Bubble" About to Pop?

No. It will go to $120 a barrel before it goes to $70.

[gogogodzilla]

I agree. Everything is pointing to stagflation.

Weak dollar + high commodity costs = hidden inflation

Hidden inflation = less money for the consumer to spend = recession

Recession + weak dollar + high commodity costs = 1970’s redux.

The only thing missing is the high interest rates. But that’ll come, for it’s the only thing left in our arsenal to boost the value of the dollar.

And if we boost the value of the dollar, then the commodity prices come down, paving the way for consumers to spend more, as they now can buy goods at a ‘cheaper’ price.

That is, if they have a job...

[grey_whiskers]

insomniac with bad cold ping for later...woke up with coughing fit at 3:30 AM.

Yuk.

No cheers, unfortunately.

[grey_whiskers]

To all those questioning Bernake’s wisdom in increasing liquidity (which is reasonable) you need to remember that the mechanisms the Fed uses to stimulate the economy depend on the extra liquidity actually entering the economy and not just sitting on ban balance sheets. That simply isn’t happening the way it’s intended.

The folks at www.minyanville.com refer to this as "pushing on a string."

It's also why long-term US Treasuries have lower interest rates, but 30-year and 15-year fixed mortgage rates are going UP.

*ssholes.

No cheers, unfortunately.