Oil Prices & Ramifications(4)

f) USA May React:


USA being USA will be facing untold problems if oil prices stay at US$100 for a prolonged period (say a few years).

Politicians will work feverishly to control the consequences of living with US$100 oil.

Push comes to shove, USA may fight certain wars for the oil - if you know what I mean.


g) Petrodollars Balance Sheet:


Used to be 100% in US Treasuries - this way the US can continue to consume as the petrodollars were recycled back to lend to the US via Treasuries.

Over the last 2 years,many countries with hefty trade surpluses have started huge sovereign funds to invests in foreign companies.

These companies are a mask to move funds away from buying Treasuries.

I don't see this trend reversing, hence I see further downside for USD.




By Salvatore_Dali