Oil, commodites - higher inflation?

[grantx]

Business Financial News, Business News Online & Personal Finance News at WSJ.com - WSJ.com

In the Video Centre on the right, halfway down, see "Oil breaks new ground".

This has got to have serious inflation implications.

Grant.

 

[TWI]

All commodities are roofing and they still try to b*llsh*t us saying inflation is under control..what a load of b*ll*cks. I is about keeping the masses dumb and gradually turning them into docile cattle so they can be lined up and lead through the slaughterhouse of hyperinflationary robbery. It is the only logical outcome from the current situation we find the World economy in.
Advice: Build a bunker, buy farmland remember that currency is just a promise and stock up on real stuff.

 

[grantx]

TWI,

It could become self-fulfilling - higher commodity prices, higher input/output/factory gate prices, finished goods inflation, lack of demand, weakening economies, China acknowledging the true extent of its debt, mega recessions all round. Buy bonds - how low can yields go?

Grant.

 

[TWI]

Problem with a lot of commodities is that their supply/demand is very price inelastic and the demand side of the equation for a lot of them is exploding. Think about how many millions of 1500pound cars will be selling across Asia and how that translates to oil demand and how all the urbanisation that is occuring in the newly industrialised World and how that translates to demand in fundamental foostuffs. Great thing about commodities business is that people still have to eat and get around no matter how recessionary we are. I agree with you that the equation slows somewhat if Asia goes into a deep recession but the demand growth there is already out of control so a little moderation will give a little relief to the overstretch supply side and at least allow some infrastructure development, however when the recovery arrives..then we are really in trouble.
I guess western currencies will be the initial sacrifice so yields can no doubt continue to tank...

 

[grantx]

Then the US invades Iran, Iraq invades Turkey, it kicks off again in the Balkans and the EU will be drawn in and opposed by Russia, and there will be massive oil and gas supply disruptions across Europe. Apart from that, have you had a pleasant weekend?

Grant.

 

[0007]

Leave it to the politicos ?

I agree with all foregoing posts.

The thing that amazes me is that the politicians (Flash Gordon in particular) would have us believe that they have control over economic events (well, at least when things look rosy. At other times it's due to "world events" and without our politicians we'd all be in the guano.)

No one has yet explained economic cycles any more than they can explain share prices. God help us when the Chinese want proper prices for their goods - I'll have to stop my weekly buying of DVD players and all the other Chinese electronic goods that go into the inflation index. Personally, I'm not worried about house prices or mortgage costs (which aren't in the index) because obviously they don't affect inflation.

 

[grantx]

0007,

"because obviously they don't affect inflation".

Where would interest rates be now if they were? 8% easily.

Grant.

 

[0007]

0007,

"because obviously they don't affect inflation".

Where would interest rates be now if they were? 8% easily.

Grant.

Grant,

I'd love to know what Alistair's real figures are (presumably Gordon's boys do this for him). I keep meaning to visit the UK Office of National Statistics site, where you can calculate your personal inflation rate.

The only anti-inflation weapon seems to be reduction of interest rates - I seem to remember that 0% rates caused the Japanese some problems during the 1990s. What do you do when you get down to near zero?

High oil prices caused us problems in the 1970s. There are predictions that oil production is just about topping out now - so that ain't gonna help its price or inflation. (mind you, the doom-mongers 30 years ago reckoned oil would have run out by now).

I await with interest Gordo's explanation when it all goes tits-up.

 

[grantx]

0007,

Re Japanese 0% rates, I think they were technically negative which can only happen if inflation is falling (I stand corrected on that point) which, with zero growth is stagflation(?). Remember 15% in the UK in the 1990's? If we'd only bought long-term gilts and held them.

The real inflation rate for UK consumers includes, amongst things, mortgage repayments, council tax and a broader basket of goods/groceries. The actual figure is not a secret - I've seen/heard it referenced a number of times - but, surprise, surprise, it is not from a government department.
The last I heard it was over 5%. I'm sure someone can throw light on this.

No, Darling will be the fall-guy in this but ultimately Brown will suffer when he loses the next election. Market will rally a 1000 points the following day (from around the 1000 level on the FTSE).

Oil at $150? Any advance? $175. Anymore? $200. Come on, gentleman, I think we can do better? $225 with a 1-year option on $250. Sold (I should have pushed for more).

Grant.