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Oil Prices Don’t Control the Recession

Posted August 11, 2008

"Can the collapse in oil prices save the economy from recession? Sadly not. The rising oil price was a symptom, not a cause, of the unchecked global boom that lead us here. And the fact that it’s falling now is merely a sign that we’re already in the grip of a huge downturn." — John Stepek

Blogger’s note: Oil prices are down from their peaks, and the Dow made a beautiful recovery on Friday. But this doesn’t mean the worst is over. John Stepek of the UK’s Money Morning has some bad news: We’re far from the bottom. And the recession won’t be stopped by easing oil prices. In fact, those falling prices are a bad sign. Don’t believe me? Read on below.

by John Stepek

Baltimore — (TFN):  It’s like something out of a cheesy disaster movie.

Just when we thought all was lost, and the Western world was going to be consumed by recession, the mighty US market drags itself back to its feet. The Dow Jones jumped by more than 300 points on Friday.

*** Hedge funds are now gambling serious money on falling oil prices. Find out what stocks they’re buying right now… and how you can profit from what they know! ***

The rebound was driven by a slump in crude oil prices (partly down to a leap in the dollar), which has pundits on both sides of the Atlantic getting excited. Lower oil prices, means lower inflation, which means lower interest rates, they argue. And it also reduces one of the pressures on consumer spending.

So can the collapse in oil prices save the economy from recession? Sadly not. The rising oil price was a symptom, not a cause, of the unchecked global boom that lead us here. And the fact that it’s falling now is merely a sign that we’re already in the grip of a huge downturn… Read on to learn more.

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Posted by John Stepek · Filed Under Oil and Energy 

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