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Does nobody remember when OPEC was saying they would defend a $100/bbl price floor?

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Sun Nov 30th, 2008 at 05:12:16 AM EST
[ Parent ]
And they meant it when they said it.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Sun Nov 30th, 2008 at 06:10:06 AM EST
[ Parent ]
Presumably global demand has not fallen sufficiently to directly cause the low price, but introduced enough slack into the market to make the defence of a higher price too expensive (?) for producers.

Theatre and concert ticket scalpers can elevate prices where there is a widespread perception of a sell-out performance in the future. But if there are a few empty seats on the day, and tickets are still available from the box office, the scalpers will have to dump their prices.

You can't be me, I'm taken

by Sven Triloqvist on Sun Nov 30th, 2008 at 06:34:35 AM EST
[ Parent ]
Well, clearly OPEC was threatening to cut production if necessary - OPEC had a window of opportunity when the price of oil dropped to $90 from $145 earlier this year, but they failed to establish their credibility and now they make noises about a constant price (in the $50-60 range, presumably) over 2009. There is no bite behind that bark, it seems.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Sun Nov 30th, 2008 at 06:39:44 AM EST
[ Parent ]
Looked at more generally, has anyone floated a coherent explanation for the wild oscillations of commodities prices and the US$ we've seen this year?

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Sun Nov 30th, 2008 at 09:57:23 AM EST
[ Parent ]
Confused Perceptions ;-)

You can't be me, I'm taken
by Sven Triloqvist on Sun Nov 30th, 2008 at 10:30:50 AM EST
[ Parent ]
I think I have. Just read the most recent Countdown to $200 oil texts.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Nov 30th, 2008 at 11:19:45 AM EST
[ Parent ]
Found it, I think (from August). Thanks.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt ät gmail dotcom) on Sun Nov 30th, 2008 at 01:49:00 PM EST
[ Parent ]

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