Saturday, September 29, 2012

The commodities super-cycle?

Amidst the gloom surrounding the Great Recession, one of the less discussed stories surrounds the boom in commodity prices in the aftermath of the sub-prime mortgage meltdown. There is a very strong view that the latest spurt in this "commodity super cycle", which has been on the ascendancy for more than a decade now, was triggered off and is being sustained by the ultra-accommodative monetary policy regime followed by the Federal Reserve in the US.
















The excellent graphic from Quartz puts the commodity super-cycle theory in perspective. Ruchir Sharma had a very persuasive article in the FT recently. And he argues that the biggest threat to deflating this bubble will come from China's weakening growth prospects. 

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