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I think we need to redefine the term "bubble" relative to commodities, in particular energy commodities, and further note that spot oil is up 65% in euro terms since the beginning of 2006, as opposed to 125% in USD terms, which is a currency issue more than a commodity price issue.

When we price commodities in Euros, I agree with Roubini we see a "bubble" of maybe 10-20% (who the hell knows - but demand decline expectations will almost necessarily prompt a decline in futures prices) in euro terms, down to maybe EUR70/barrel, which itself represents still 35% unit price growth in a relatively short period of time, indicative of rising fears of peak oil filtering into market expectations. And that will, in the long run, continue to rise as peak oil expectations are increasingly priced by markets. But, I am still pretty convinced that this is more an underly USD issue than a commodities price issue, and since we see everything priced in USD, we get these constant "holy shit" moments when in fact all that's happening is the US economy is starting to be valued, like the average Argentine eventually, at what it's  worth rather than what it thinks it is worth.

So, we may get some oil price relief in the short and even perhaps medium run, but not the Americans. The continuing dollar decline due to inflationary fed policies to bail out the wealthy shareholders of US financial institutions will ensure that the dollar continues to go nowhere but down.

100% with you on decoupling. Some economies have made great strides to integrate, at their peril, into the US economy, in the name of globalisation, headlined by the 51st state outre-manche and their junior "no voting" partners to their geographic left. But not all. There will be demand strains of course, but considering these have already been priced into EUR-denominated exports via a tanking dollar over the past 2-3 years, it's hard to imagine those strains getting worse, especially if you consider the dual economy in the US, that high SES americans act differently than low SES americans, that they exhibit, generally speaking, demand inelasticity for the types of consumer products they tend to buy, and that we are in no risk that the us will figure out how to change its income distribution to an extent where that inelasticity is impact anytime soon. The upper-middles may stop buying Louis Vuitton in increasing measure though as the second and third income deciles in the US get hit by the coming long )I'm thinking Japan-style) recession. Still, markets for those same goods are growing rapidly, in Russia, in the PRC and now, given commodities prices, even sub-saharan Africa.

Imho, we are not going towards a global economic recession so much as we are entering a global economic pivot. How we position ourselves relative to the shift in economic power, away from North America and towards the developing world (Brazil, Argentina, PRC, India, Viet nam, Sub-saharan Africa) and the commodity producers in the middle east will determine our future economic prosperity.

Personally speaking, as far as France goes, as well as most (but not all, noting Spain, Portugal and Ireland in particular as being at risk) the EA-15 economies, I am not exactly confident, but definitely cautiously optimistic.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Wed Jul 16th, 2008 at 12:38:45 PM EST
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Along with the Economic Pivot we are facing Peak Oil, Peak Water, Peak Food, and Global Warming.  Together these are the necessary conditions for the collapse of 'Normal' into a new Fitness Landscape with its own Emergent Properties and Attributes.

Think Easter Island or Chaco Canyon writ large.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Wed Jul 16th, 2008 at 01:48:36 PM EST
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could up and leave. Perhaps they did.  

But what happens when there is no where to go?  That's the Easter Island scenerio, the one that we are--incredibly, for whatever reason, consciously or unconsciously--striving with all our effort to bring about.  

It is now the most likely--though far from sure!  

The Fates are kind.

by Gaianne on Fri Jul 18th, 2008 at 01:25:13 AM EST
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Both areas depopulated when the carrying capacity of the land collapsed.  Easter Island seems to have depopulated through starvation and war; there may have been some people who got off in the last canoes -- nobody knows.  Chaco Canyon depopulated by internal warfare, as there are instances of Chaco-like structures on easily defended buttes and mesas, but it seems most of the people scattered over thousands of square miles.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Fri Jul 18th, 2008 at 03:03:47 PM EST
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The Easter Islanders seem to have been isolated from other human societies, but did range hundreds of miles to the nearest (uninhabited) atoll.  

there may have been some people who got off in the last canoes  

THERE is the makings of a story.  They would have been adventuring into the (for them) unknown.  Say, a team of dolphin hunters out on the ocean thinks about what they are going back to, and what is bound to happen, how their catch is really not going to make any difference . . . and decide not to return . . . Brings to mind Kim Stanley Robinson's "Icehenge."  

The Fates are kind.

by Gaianne on Sun Jul 20th, 2008 at 10:25:11 PM EST
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