Wednesday, May 14, 2008
Logic Breakdown
My apologies for the post below in which I wrote that a 8% erosion of the world's GDP will necessarily put any country growing slower than 8% into a recession. 8% of world GDP is simply a fraction of total growth, and not necessarily a direct effect. That said, it will be interesting to calculate at what level they [oil prices] will make growth impossible. That level will no doubt have a critical impact on Stock Exchanges, Banks, Economies and the whole chain gang further down the line.
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2 comments:
Interesting thing about oil prices is that the higher the price goes, the more there is available (because if the price is higher, one can spend more in getting it out of the ground).
I think you'll find that supply and demand still affect the price. If the price is higher than the demand (assuming a competitive market), someone will lower their price so they can sell...
It's all about Macroeconomics.
Now, if there is a monopoly, politics might have a greater influence on either supply or price. But that in turn drives competitive energy sources.
I think we may end up being uncomfortable; but any non-growth will be caused by political forces acting against the normal market dynamics--and against the greater good...
...and that will mean another war... :-(
"Interesting thing about oil prices is that the higher the price goes, the more there is available" - errr...I think you are having a logic breakdown JTB. If you want to be realistic you have to compare the growth in demand to growth in discovery (growing supply). And discovery of new oil is little bread crumbs and demand is rampant. You seem to know a little about a little.
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