Monday, May 15, 2006

The Investment Cycle

This chart suggesting the various phases of the Investment Cycle was published in 2000. If you think about the run up in the commodities and oil markets over the past 18 months it begs the question; are we approaching the 'growth expectations peak' ?

2 comments:

Gearoid said...

Id recommend reading this paper on the causes of the Wall Street Crash of 1929. All it took was a change in sentiment rather than any significant events.

http://eh.net/encyclopedia/article/Bierman.Crash

The bubble in the markets has already burst for some (Saudi Arabia's market down by 50% since March) and is on the way for others (Iceland in trouble).

The pegging of the Chinese currency to the dollar is making chinese goods cheaper and cheaper in Europe as the dollar falls further. Eventually the EU has to wake up to that reality and then what - tarriffs?

Duplex said...

Thanks for the link Gearoid.

I've read a little about the Icelandic episode and their debt induced bubble bust. Its also intresting that the volatility in the Saudi and UAE markets has escaped the headlines in the west. Rumor has it that the Yuan (spelling) may float against other global currencies in as little as three years from now, that might be interesting.