chuz, thanks your kindness and usual courtesy....re:inflation/oil...
a conundrum????
let's look at your query from a different vantage point..."...what kind of oil prices would we have if asian economies were as they were in 96-97....why did oil prices drop so rapidly"...
the young tigers of the asean nations honed their claws on the very thing that eventually declawed them......oil!
other than japan,korea and the prc...the majority of the tigers:malaysia,sarawak,sabah,brunei,indonesia had drastic changes in their economies beginning in the mid eighties from the untold oil riches in the shallow south china sea...the nationalized oil exploration and production launched them into the twenty first century, with infrastucture and economic explosion...the direct benefit of the boom was to japan,and korea...whose heavy industries and plant constructors were backlogged with oil related projects...this was saudi arabia part deux...as the infrastucture was established, the young tigers became net exporters of oil...to a market already soft...the lack of cash flow hurt the korean and japanese economies...it was history repeating itself, much like the bust of the mid eighties in the arabian/persian(depending how you view it)gulf...initial dollars to infrastructure, beyond that the net exporter becomes part of the problem...malaysia at 2/3 production capacity...compelled to slow down as vision 2000, to be the pearl of the asean slipped away...built the tallest building in the world with petro dollars...but what to do now for an encore...
we live on a planet that all life forms are carbon based, allowing a replenishment of fuel such as oil,gas,coal,lignite,timber,peat,...as long as there is time new fuels will be produced...
technology caused the rapid drop of oil prices..it became too easy to produce...deep well drilling(+1500ft), steam injection,, opened up previously unreachable fields, and made dry wells wet with crude.....
discount periods of political unrest and oil prices have trended downwards...during the embargo of the seventies it was a cartel of arab nations and venezuela...there was no north slope of alaska,south china sea,russia, on and on and on....we have abundant energy for at least several hundred years...are the bond traders looking out that far?
oil/energy is a convenient political tool to create inflation...
my question to you chuz...was there ever inflation in a time when there was not an over riding political event...e.g vietnam war,russian wheat deal,arab oil embargo,etc...i'm a firm believer that government produces inflation with is decisions and regulations...
it is a new world, due to a tangible technology,which increases an unmeasurable productivity...the government still scratching its head over the impact on economic figures..
but still it's the perception of the future that moves markets...and long term i've found all econometric models seriously lacking...mr greenspan in his 98 humphrey hawkins predictions was 20-40% off...can't survive with crystal balls...just brass ones! ed a. |
