Car News Articles

I gather that a lot of what’s behind the $104 price of a barrel of oil is down to the chronically weak dollar. That’s okay, then, it’s just a currency effect - no, it’s not really okay as a trip to fill the old petrol tank confirms.

And there are worries starting to emerge in China about price inflation. The surging Chinese economy has an avaricious appetite for energy and raw materials. As it grows, it consumes more. And that helps send the prices of commodities and raw materials up - globally.

Cost-push price inflation is now emerging in the Chinese economy, a kind of feedback loop. Price inflation there has just spiked.

Food prices are going up, too (for one thing, richer people eat more - especially dairy and meat, more land intensive than cereals/veggies, squeezing them). The Chinese authorities will be very concerned. They are sensitive about inflation in staple commodities because that causes popular unrest. The last time it happened in the late 1980s, it helped underpin the protests that resulted in the Tiananmen Square protests that were then brutally crushed. 

Credit in China may well be squeezed to slow the economy. If they put the brakes on they may well be applied heavily (there’s a history of stop-go macroeconomic management in China and maybe we will be back to that, having seemingly broken out of that to 10% pa economic growth indefinitely).

Problem: China’s economic growth is needed more than ever to pick up the slack globally as the US economy teeters on the edge of recession this year. China’s economy will also be squeezed by slower exports as America’s consumers go on a crash diet.

Maybe things can be successfully managed to keep China’s economy on track, but talk of the world economic slowdown occurring alongside high/rising energy and commodity prices is definite cause for concern. Even in UK the possibility of reduced interest rates due to plummeting consumer confidence/spending is being put off by continuing concerns over inflation and energy prices in particular.  

The stuff in the below link caused my jaw to drop a bit…

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