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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Greg Jung who wrote (68003)	9/22/1999 11:14:00 AM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Greg, The USA uses about 60% of the world's oil, so higher rates should cut demand. Agreed that 1/4% won't do much. Another 1% will and 2% will cause a depression. I think the disastrous trade balance and weak dollar will hit growth, which is already greatly exaggerated by the phoniness of the govt. numbers. Oil is not a great dollar hedge, unless higher oil prices are a major cause of the dollar's decline, which they aren't this time. They were in the 1970s. Yes, a weaker dollar means that, all things being equal, oil should rise against the currency. But all things are not equal and we already see the airline industry starting to feel the strain. It is just a matter of time. Oil is not the worst place to be during an economic crash that takes the dollar lower, but it isn't the greatest hedge, either.