Aug 11 2007
The Fed shifts its ground
The tough stance of the Fed to banks that have made foolish loans was altered somewhat yesterday when like the European central Bank they supplied cash to the market to allow banks and others to settle their debts.
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John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
So going back to this theme of listening to what clever people are saying in the financial press, there is a guy who works in commodities called Jeffrey Currie “said that $95 crude was quite likely this year unless OPEC unexpectedly increased production and that declining inventories were raising the chances for $100 oil.” Well according to the International Herald and Tribune.
The article in question, which can be read in full here: http://www.iht.com/articles/2007/07/23/business/oil.php also quotes another clever guy, a man who works at Goldman Sachs, who in relation to oil prices stated “Ultimately, the key to the outlook going forward is when will Saudi Arabia ramp up production.”
Surely further oil price spikes are an inflationary risk, the recent rise to over $75 will surely kick in in the near future and could lead to more inflation. Whilst I agree with free markets and stuff it’s worth remembering that OPEC is effectively a price-fixing cartel. Flush with money Arab dictatorships are now trying to buy up our supermarkets. This, and the Chinese looking for somewhere to stash their cash reserves, might keep our share prices up, however it does cause legitimate concerns for our economic security. Most Brits see the Arab and Chinese states as crackpot dictatorships. How much influence have the actions these people got over our central banks? How much actually depends on how much oil the Saudi’s decide to put on the market?
Talking of crackpot regimes, over here in Brown’s Britian, the government do actually have a pefectly reasonable way of reducing the effect of oil spikes - temporary cuts on fuel duty. I’m sure that to policy wonks such as Miliband that would be unthinkable, sending out the wrong message on ‘climate change’.
I too see the economic logic in going ‘green’, however I have no time for what I consider to be madcap carbon reduction schemes - namely ‘tradable personal carbon allowances’ and ‘offsetting’ confidence tricks where they try to make you think they are actually planting a new tree for your tenner.
Surely with fuel duty the polluter already pays. Those that get off lightly are folk like me with old cheap cars.