It is often said that appearing on the cover of Sports Illustrated is the kiss of death for a team’s or an athlete’s future prospects. One can only wish that this item — featuring the scary $200 a barrel number — in the WSJ might have the same effect in the financial world:

Oil’s historic ascent from $100 to nearly $150 a barrel in just six months is lending weight to a far grimmer prediction: Crude could reach $200 a barrel by the end of the year.

We know we’re a broken record on this subject, but this is a bubble of epic proportions for which a correction is long overdue. There is a pretty significant probability that the restrictive monetary policies that are necessary (particularly in places like China and India) to tame inflation will in their turn create a deflationary global environment, once the commodity bubbles burst. We’ve already seen bubbles like Shanghai 6000 popped and now a distant memory, even though only a few months have passed since the peak. So it may be with oil. But of course it never feels that way while you’re inside the bubble, does it?

This entry was posted on Monday, July 7th, 2008 at 6:55 pm and is filed under China, General, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.