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Post by redwolf on Jan 15, 2008 20:09:17 GMT -6
Chinese and U.S. Demand Drives Commodities SurgeBy CLIFFORD KRAUSS "The price of copper has tripled in five years. Zinc has doubled. Wheat and soybeans rose 70 percent in 2007. Futures prices of crude oil, gold, silver, lead, uranium, cattle, cocoa and corn are all at or near records.
A global boom in the cost of commodities, the staple ingredients of a modern economy, is entering its sixth year with no end in sight. Commodities have always been subject to boom-and-bust cycles, but many economists see a fundamental shift driving the markets these days."www.nytimes.com/2008/01/15/business/worldbusiness/15commodities.html?th&emc=th
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Post by unlawflcombatnt on Jan 16, 2008 4:38:25 GMT -6
I think the author of the article makes good points about the rise in commodity prices. However, like most supply-sider/right-wing analysts, he continues with the fairy tale that commodity demand is not tied to the U.S. or to Europe.
He is wrong on that contention. Chinese, Indian, and Asian demand for commodities is greatly dependent on American and European consumer demand for finished products from those areas. If the U.S. and Europe slide into recession, the demand for commodities is going to fall as well. Most Chinese, Indian, and Asian demand for commodities is from export production demand. As such, that production demand is more dependent on the U.S. and Europe, than it is on Asia. Remove the production demand from the U.S. and Europe, and it removes much of Asia's demand for commodities.
Food demand would be less affected by a U.S.-European recession than non-food production. Even with food, however, the fuel-related component of food costs will decline with declining industrial production demand—since fuel demand declines with declining industrial demand.
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