The world is vulnerable to additional crisis. Institutions are hedging the weakness of the dollar by buying oil. When the oil price bubble bursts, there will be additional strains on the financial system as traders scramble to unwind positions or cover losses. Lawmakers and regulators should impose additional equity requirements on the commodity markets immediately.
The Price of Oil (This New York Times article published in 2005 is even more timely now.)
Oil Price History and Analysis (WTRG Economics)
“When speculation has done its worst, two and two still make four.”
Quotation from Samuel Johnson
“Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher asset prices.”
Quotation from Alan Greenspan
“I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.”
Quotation from Alan Greenspan