Sunday, March 20, 2005

more from the master

Stepen Roach comments "In real terms, $56 oil represents more than a quadrupling from the lows of late 1998 -- putting this price spike very much on a par with those devastating blows of the 1970s. The apologists will tell you not to worry -- that the real price of oil is still below record levels hit in the late 1970s. That is poor macro, to say the least. Impacts to economic growth are not about levels -- but about changes. The sharp run-up of oil prices in these past few years is the functional equivalent of a tax on household purchasing power that only puts further pressure on an already over-extended American consumer. The fact that consumers haven’t caved yet doesn’t mean the Holy Grail of a new immunity to rising oil prices has been discovered. It could mean that something else has temporarily deferred the endgame." more

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