Diamonds and Dogs
Slippery Oil, Slippery PoliticiansSlippery Oil, Slippery Politicians
As the days wind down to the end of QE2, or the governments' desperate attempt to stabilize the economy by keeping rates low, a new easing tactic may have been born. Last week the US and other developed nations agreed to release 60 million barrels from the Strategic Oil Reserves around the world, with the US contributing 30 million barrels. With no ammo left to keep rates low, the powers to be feel that bringing oil prices lower by adding to the supply, will ignite the economy and also keep inflation low. Here is the burn though, in less than a week, oil prices are higher than when the announcement was made. The idea that 60 million barrels of crude, or less than one days' world usage, would keep prices low is symbolic at best. The threat of further government intervention into the capitalist markets might keep prices muted, but ultimately supply and demand rules the day. History shows that politicians do more harm to economies than good.