Re: Petrodollars: Good for the Greenback ?
Nobidicus wrote:
Stephen Roach’s Global Economic Forum note of 28 November commented at some length on the investment behaviour of [oil] exporting nations:
http://www.morganstanley.com/GEFdata/digests/20051128-mon.html
“As disruptive as they have been, the oil shocks of the past have all had a silver lining: A significant portion of the revenue windfall accruing to oil producers — especially those in the Middle East — has been recycled back into dollar-denominated assets. In earlier oil shocks, the flows associated with these “petro-dollars” have been sizable enough to have contained the damage to US interest rates and to the interest-rate-sensitive components of the US economy. The energy shock of 2005 is different.
Maybe. But he’s been wrong so far, and the worst of the energy shock of 2005 seems to be over, at least for now.
Doug