Tuesday, February 10, 2009
FT – Credit crunch will exacerbate the commodity super-cycle
The world natural resources were grossly under resourced even before the credit crunch as so much money was squandered in real estate investment instead of extracting resources. Thats why we had the commodity boom before the credit crunch. Now because of deleveraging, commodity prices have temporarity collapsed making new investments in extracting resources uneconomic. Also thanks to the credit crunch, no spare money is available to invest in new resource developments. Anyway when we come out of the credit crunch (2010 and 2011 presumably) commodity prices should spike like crazy.