Thursday, January 25, 2007

EXTREME VOLITILITY IN COMMODITIES...

The extreme volitility in commodities is not healthy...

When commodities are bouncing around like ping-pong balls you know that the markets are having speculative buying and selling which is bound to be a warning sign of worse to come...

The hyper-liquidity that the FED has been supplying to the financial sector for some many years is starting to loose it's desireable effects...

It's sort of like a pilot flying a plane at near its "stall speed"...the "controls" become sloppy; and there is a real danger that all lift will disappear...

The difference between a healthy liquidity...and sloppy hyper-liquidity is hard to notice at first... Until the inevitable downward spiral starts...