"Oil is Oil..." , Buy!!!

Falling oil prices is no mystery… because we have three major economies – the US, Europe and Japan – reeling under recession… several rounds… And, the two major emerging economies – INDIA and China – are also facing overheating… The monetary cycle in the emerging world is trying to cool down inflation – the down cycle, means less demand… But, low oil-prices will make the oil more attractive from the view of investment… A lot of investment should flow to the companies in terms of share-prices, but this is true as long as investors especially in the stock market view that the prices has hit the bottom, because it is profitable to invest low and sell high... Oil is a cartel-market – oligopoly – where firms can manipulate supply to control prices and profits… Oil prices are an indicator of demand for oil…  Oil demand is (ceteris-paribus) price-inelastic, means movements in prices affect demand little, but if the prices were low, people will consume more… Its utility is high, therefore its price is high, low prices will increase demand, but oil companies are restricting the supply conditions which is likely push prices up in the next-period… This happens everywhere… Major sectors are mainly oligopoly-markets, according to the latest Nobel winner in Economics… Oil is still in demand for reserves… But, investors should be cautious low prices are not a signal of low demand ahead for too long because “oil is oil” after-all… It is an opportunity for investment… 

Update... late...

Article;

Finance Ministers from the Worlds Largest Economies Determined to Sustain Recovery.

Comment;

Inflation-targeting aims at increasing inflation and prices… i’m little surprised, probably late, at the Central-banks that they are trying to correct a demand problem with supply-side measures, money-supply and production… But, when the economy is in liquidity-trap, means when you are increasing money-supply and it is not increasing inflation… good supply conditions or likely, over-supply in the past are not letting demand exceed supply, which is a necessary condition for increase in prices. They rise when demand exceed supply or when supply undershoots the demand level… But, increasing prices does not lone could solve the real economy problems (unemployment)… Increasing prices is not a problem… The central-banks can increase interest rates to increase the borrowing cost; prices will go up, next-day… Banks can try… But, our real problem is low employment, low-real-wages and low demand… And, it could not be solved by supply side measure… In any multiplier supply and demand interacts with each-other on various levels… Therefore, it does not matter who triggers who, it’s a chain reaction… either demand follows supply or supply follows demand… Not, much a policy problem… But, we need to choose between the multiplier and accelerator. When monetary-policy works it is the former, and fiscal, the latter. But, we must have money… QE is increasing inflation… Means less demand… But, our problem is low demand… I think it is an update for Keynesians… Many say that QE has no drawback…