Friday, October 19, 2007

Financial Journalist Thinking in Action

Mark Hulbert of Marketwatch shows just how clueless he and all too many other financial journalists are about sound economics when he asks "Why hasn't high-priced oil, now nearly $90 a barrel, killed the stock bull market?" without really being able to answer that question.

But in fact, this question is extremely easy to answer. While one external factor, the threat of a Turkish invasion of oil-rich Iraqi Kurdistan have also contributed to the recent oil price rally, the main reason for higher oil prices isn't related to supply. Instead the stock market rally and the higher oil price is caused by a common factor: extremely loose monetary conditions in the U.S., with MZM being up at an annual rate of 25%.


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