dow up 157 , page-12

Aflatoon,

Of course the planet is awash with money born of the massive increase in demand from the 2.5 billion people of China and India.

Their material dreams have been released from the poverty of "no choice" for the first time in recorded history by their increasing participation in the global economy, but this has resulted in resource prices being stretched as tight as a drum.

So besides the vulture and private equity games there are the strategms of those paying high prices for resources who need a sharp fall back in prices.

Take just nickel, for instance, from $15,000 to $50,000 a tonne with hardly a pause for breath.

The goals of these two (the funds and vultures on one hand and the high importers of resources on the other) are not mutually excusive.

Sharp falls in the price of resources (eg: Nickel 5% this week) are welcomed by resource buyers as well as the funds who feast at the tables of panicked investors as they have the virtually unlimited liquidity to do this with. Especially money borrowed cheaply from Japan at bu**er all interest and the money sloshing in from baby boomers approaching retirement.

If the falls are temporary it gives the resource buyers a breathing space to lock in lower prices while the funds, vultures etc., have a huge return as the stocks rebound. And the upward trend will resume interspersed with such welcome "corrections".

But the second law of thermodynamics forbids that anything lasts forever. Even liquidity.

(Sir) Lunchalot
Scoffer Extraordinaire