1. planning4acrash said...

I think that the risk here is that, if this becomes common knowledge, that oil becomes the next bubble, maybe it already is. We already learned that highly leveraged bets have been made on rising oil prices, which are unwinding now in the face of a liquidity crisis. OPEC are saying that current oil prices bear no relation to reality and are the result of speculation. This I believe, is a half truth. In reality, investors are amplifying a true crunch in supply and demand. What this means, is that the oil bull market could have a long way to go over the next 5-10yrs minimum and could keep more of an upward push on inflation than central banks had banked upon. But there will be fluctuations downwards when credit is in short supply. So Oil becomes a high value safe haven, like Gold, used for its monetary value as a currency because it is a good hedge against inflation, thereby inflating its value to car drivers and manufacturers. And, fluctuations like we have seen make bankers impotent because their planning window is two years hence, and oil is going up and down by 20%+ in the space of a few months at the moment. This is significant because we are so over stretched as a country that even a 0.25% rise in interest rates generates howles of pain from the press and homeowners. It also creates a greater risk of, not only interest rates being too low, but them being too high, with impact upon the economic stability that we have become accustomed too.