Tags: Oil.

Oil has now moved dramatically higher. Without any disruption, the events of particularly the last couple of days are starting to look like result of speculation (hedge funds betting on a decline after Bernanke's Wednesday comments on inflation and forced to cover on Thursday and Friday). But regardless of the reasons, it is very scary and has dramatic implications for the US and the broader world economy. The most scary thing is that nobody has a sense of how to handle this - the G-8, as seen here, has issued a worthless statement about the need to invest in renewable energy. Since this entire commodity craze is now tied to a declining dollar, my bet is that we will see a concerted action by the Federal Reserve, the ECB and other major central banks to buy dollars over the next several days. If they could quickly drive the dollar up about 5%, the could remove some of the fluff from commodities. An intermediate Federal Reserve rate hike also cannot be put off of the table.

 

Submitted: Jun 8, 2008    Views: 122    Comments: 0    Likes: 1   


View Article: http://biz.yahoo.com/ap/080608/oil_meeting.html


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