Sunday, September 07, 2008
speculation drives commodity prices? never!
The oil price shock that has hit global growth could have been exaggerated by financial speculation, Jean-Claude Trichet, European Central Bank president, suggested for the first time yesterday.
well of course. i didn't understand how it was deniable when it was happening.
efficient market economics called for the visibility of storage, and many adherents refused to acknowledge a speculative bubble without seeing it. that misses the point, however, that the storage cannot be obvious for the bubble to be ongoing -- that it would only become obvious in hindsight. now the CFTC is investigating traders for lying about inventory levels. what a shock.
while i profited initially, i've lately taken a sizeable hit on oil prices underperforming as speculative positions have unwound and driven the oil price to $105. i do however expect a temporary rebound of the kind seen in all collapsing bubbles after the initial break. oil is off nearly 40% from its high.