insideoil

Look to the Markets to Assess Inflation

Simply add the thought that oil at $100/bbl today is the same value arguably as oil at $60/bbl, based on old exchange rates US$/Euro. The conclusion then is that it will be US equities that have a problem, not the rest of the world- as it is only the US (and US peg countries) really seeing the inflation.
Maybe you could do the same analysis, but from the perspective of the Euro ? I for one would be most intrigued to the outcome.
Perhaps also add to this the inflationary impact all those extra petrodollars will have - unless GCC/Opec players switch to Euro's or a basket of currencies.
So many options - so little time !!!

Big Ben Panics and Gold Responds

Leo - I was afraid that someone would answer just as you have. Everything one (ethically) stands for tells one not to be so cynical, but reality laid out as it has been this last week, stripped naked of its misleading perceptions or false hopes makes it difficult to come up with any other conclusion.
Under this understanding - what happens to asset inflation and living cost inflation ? Are you saying that living cost inflation has to kick in to cover the cost of the "free" money being dispensed so liberally, or that the gap will be covered by having to produce more to be paid the same or less than before i.e that higher productivity is the way that living cost inflation will be kept under control? With interest rates not changing much, is the assumption then that asset pricing will have a soft landing - i.e a gentle deflation, or a stage managed slow increase that the investor is still willing to stay in the market. I guess as you say - it is business as usual - but you know you are paying the price while being productive and working for a living. It seems to me that the flexibility to manage such a tightrope have been significantly reduced - so we should expect volatile times - no-brainer for that one.

Big Ben Panics and Gold Responds

Tell me the Fed loans have to be repaid in the short term, and cannot just be rolled over indefinitely - please ! Does this also apply to the ECB - are these short term loans or liquidity injections for free ?
Why does American sub-prime get all the blame - surely each and every entity with a positive cash flow has been pumped up as investors compete and chase up the asset price leveraged by cheap credit (hedge funds ?)- perhaps with the knowledge of a Greenspan "put", that has now become Benanke free cash from helicopters. If risk and the real cost of money has been underpriced and hidden by skillful (and plain deceitfull) packaging of unpayable debt in "mark to model" scams, then we have a general asset bubble - not just housing in sub-prime in America. I hope we are talking jail time here - not just "oops" we made a very profitable - thank you- mistake !!