It seems that commodity prices are more a reflection of speculators trading futures, than real demand. Copper went up 100% in a few days this year, because hedge funds were covering their shorts. I read that on the Big Picture. Another example of how you can get short squeezed.
The moral problem is that the manufacturers who need copper to be productive, to actually build something, are having their costs raised by speculators who do nothing but play market games in raising prices. It’s such a shame what these hedge funds are doing. Same with oil. It’s the speculators trading futures who are causing these prices to go sky high. Without all that, the prices would be a little bit lower.
I believe that the US recession will bring on a global slowdown. When that happens, there is no way that commodities will keep rising at the current rate. As the rate of demand slows, so will the price of commodities.
Any thoughts on that? My brother thinks that commodities will keep rising, and China’s economy will keep getting stronger. As their exports decrease, they will just consumer their own products. They’ll use the dollars they already have to buy up natural resources worldwide, and enrich themselves, without another look at the US consumer.
I still think trade tariffs would have prevented the liquidity bubble and stunted wage growth in the US. I disagree with Rich. If we would slap tariffs on all those cheap Asian imports, we could have maintained our US manufacturing base. The downside is that inflation would be MUCH higher, as wages would have gone up faster.
The only reason that wages are not going up much is that we are competing with people working for $4/day.
This is the most important point that zk and others like him must realize when they think that higher wages, rather than falling median home price, may contribute to a rebalancing of the per capita income/median home price ratio.
As long as we have a willing intelligent educated workforce at $4/day, our wages are staying flat.
