Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
The oil price increase was not a bubble - Goldman Sachs certainly rode the price increases profitably, but oil prices did not just increase because of speculators, which, for long period in that bull phase were betting on a price fall. No, fundamentally oil prices rose really high because we moved from a supply-driven price to a demand-driven price, and prices had to go up high enough to force people to use less in the few places that were actually subject to full price variations, mainly the US and, to a lesser extent, Europe (because high taxes and the euro softened the variations in gas prices). When demand crashed (whether because of oil prices or because the financial crisis had turned into an economic one, or both), prices went back to supply-driven basis, ie much lower.

And carbon trading is not a bubble: the system is not bad per se, it's just been distorted by too-high allocations to industry (not to Goldmans), a problem of traditional corporate lobbying rather than evil capture of government by Goldmans.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Jul 9th, 2009 at 11:58:46 AM EST

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