div align=”justify”emCapt. Kirk: What would you say the odds are on our getting out of here? /em/divdiv align=”justify”emMr. Spock: It is difficult to be precise, Captain. I should say approximately 7824.7 to one. /em/divbr /div align=”justify”/divdiv align=”justify”Maybe we need the Star Trek crew in the US Treasury (certainly some of the recent hires look and talk like alien life forms). I’ve never been in the deflation/depression camp, and have consistently argued that the scale of monetary and fiscal stimulus, particularly in the US and UK, allied to the windfall real income gains from falling prices, would generate an economic rebound in 2010. In particular, I considered the speculative spike in energy costs last Summer as the critical tipping point that pushed a teetering US economy firmly into recession; at the time most economists recognized neither the nature of the mania in the oil market nor its destructive economic consequences. /divdiv …

“Global Demand for Oil to Plummet,” screams a recent Financial Times headline.   Huh?  No it won’t.  Who are they trying to kid?

Global oil demand is not going to “plummet.”  And for the FT to say so is just plain silly, if not irresponsible.  OK, I know.  There’s an old saying that they teach in journalism schools.  “You have to sell newspapers.”  But this declaration by the FT highlights the perils of letting a headline-writer do your thinking for you.  It’s what I call “arguing a screaming conclusion.”  And a wrong conclusion at that.

Oil Demand – Down, Then Up

But let’s move past the headlines.  The Financial Times article explains that the World Bank has just issued a new study.  The World Bank believes that the world is entering into the toughest economic times “since the Great Depression.”  Thus overall world oil demand may fall by about half a million barrels per

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From the Asia Times Online: Without question, the landscape of diplomatic battles has been impacted deeply by the rise of petro-states in the context of ballooning oil prices. The question now arises whether this is just another bubble that will be pricked by the sharp recent fall in petroleum prices. Already, Western media outlets are gloating that the heydays of Russia, Iran and Venezuela are over as oil prices have plummet in response to decreased world demand. There are doomsday predictions that the healthy foreign exchange reserves built up by the petro-states are dwindling and that the next logical step would be a reversal of their policies of confrontation with the US. (...) However, announcing the "fall" of Russia, Iran and Venezuela as a result of the about-turn in oil prices would be naive. A state's power in world politics is not absolute, but relative to the power of other states. ...

CAN you feel it? That cold empty void where  Macro Man's dissection of last week's flight of the buck should have been. Of course, this only goes to show that our good MM's initial hunch was right in the sense that when he sets off on holiday fireworks spark from the sky in market land. Last week consequently marked the biggest USD rally (against the Euro) since the conception of the single currency. Actually, last week had the buck written all over it as Uncle Sam's currency rose against almost anything that moved to erase everything but a small part of the loss it had sustained so far in H01 2008. It seems that the exercise of leafing through those Benjamin Franklins is not as pityful an endeavor as it used to be, only a few months ago. Of course, the past week's performance of ...