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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: arun gera who wrote (94318)5/16/2008 9:27:15 AM
From: sea_biscuit  Read Replies (1) of 110194
 
So there is a short term inflation and maybe a crash in prices as buyers substitute products or lower demand and suppliers overproduce.

What substitute is there for rice in Asia? Or for wheat/corn in the West? There is a reason why they are called "staples", you know. And show me any proof that there is going to be a massive glut of rice or wheat or corn anytime in our future.

Faced with higher oil prices, the world over people will cut usage. Let us say the usage declines by 5 percent over the world, you suddenly have 4 million barrels per day extra capacity, more than the daily consumption of the whole of India.

If that happens. And they have to keep cutting usage every year because even the supply is dwindling due to depletion in the large oil wells. Can the world keep cutting its consumption by a few percent every year for the foreseeable future? The chances of that happening are somewhere between negligible and non-existent, and closer to the latter than the former.
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