NYT: Surging Prices for Commodities Reflect Global Growth

[DeepModem Mom]

Surging Prices for Commodities Reflect Global Growth
By JONATHAN FUERBRINGER

Published: March 9, 2005


Commodity prices are nearing record highs - but there may be less to worry about than investors think.

While higher commodity prices have often been a worrisome portent of inflation, those concerns have been overshadowed by the other significance of the rise - that economic growth is picking up in areas around the world.

Some analysts also say that the impact of these higher commodity prices on inflation will be muted.

The rise "reflects booming activity in the Asian developing world and on balance, that means the global economy is doing better than we thought," said Robert J. Barbera, chief economist at ITG/Hoenig.

Yet after a closely watched index of commodities rose to a 24-year high yesterday, doubts about this upbeat interpretation emerged in the markets. As the prices of crude oil, home heating oil and copper, all components of the commodity index, neared their record highs, the stock market slumped and Treasury prices fell, sending yields higher....


http://www.nytimes.com/2005/03/09/business/09place.html

[David__77]

1. But that Chinese development needn't help US economy.

What we're really almost exclusively talking about is increased Chinese demand for oil. It will grow still larger in the coming decade. Since China has capital controls and other mechanisms to stabilize its economy and insulate it, I don't see how this growth is necessarily a good thing for the US, except for stimulating some high-tech industries here for whose products Chinese demand has grown.

[SoCalDem]

2. Yeppers.. The "Old China" was better for us

A China that was closed off and backwards might have taken a long time to emerge, but our corporations jump-started them (from sheer greed), and now there is no stopping them.. They hit the ground running, and are eating OUR lunch :(

[Blue to the bone]

4. So true. We should have given that sleeping giant, Sominex. n/t

[David__77]

10. They're not benefitting at our expense.

They are benefitting from their own efforts. Western capital is still turning a profit in China. I wish them the best of luck. An economically vital China which can stand on its own feet is good for world peace.

[sandnsea]

11. Thank you

Global trade is starting to work the way Clinton envisioned it would, which is a good thing like you say. Unfortunately, Republicans aren't following through the way a Democrat would.

The problem is that Bush won't invest in the technologies of the future to help create better paying US jobs. And he won't address the global environmental or labor problems which would help bring the standard of living up for developing countries and equalize the playing field a bit, AND create a demand for those technologies (that he won't invest in anyway). And finally, he won't do anything about health care which is another reason we're having a hard time competing.

Another case where demanding the right solutions would allow the Democratic Party to have a strong voice, but too many in our own party don't get it.

[Tempest]

8. Not just China

India's demand for oil is growing as much as China's.

[leveymg]

3. doubts about this upbeat interpretation emerged in the markets.

Gee, the positive spin didn't even last past the fifth paragraph. The NYT must be trying to tell us something important here.

[DeepModem Mom]

5. The headline missed that part of the story! nt

[Athame]

6. Riiiiiiight, and it has nothing to do with rise in OIL prices...

What a crock!

"Some analysts also say that the impact of these higher commodity prices on inflation will be muted." Somebody correct me if I'm wrong, but isn't a rise in commodity prices the definition of inflation, or at least part of it?

[adigal]

7. How can more competition for oil

possibly be good for us since we are completely married to the stuff??

[Tempest]

9. Especially considering America's weak position

What has Bush done in the last 5 years to solidify the U.S.' position in the oil producing countries?

Not a damned thing.

And in the meantime, India, Russia and China are going around the world and signing oil and gas contracts with countries everywhere. Especially in countries the U.S. is hostile with and have large oil reserves. Cuba, Iran and Venezuela, for example.

China has even signed oil contracts with Bush's best friends the Saudis.

[sandnsea]

12. Investing in alternative energy

Which is what any Democrat would have done. That was supposed to be where the job growth would be, except the Bushies are just too wrapped up in oil to get it.