Forget quantitative easing and low base rates, the REAL great global stimulus—tumbling prices in commodities and, most importantly, oil— continues and it's hard to see what's going to change any time soon.
This huge transfer of wealth from commodity producers to consumers has shown little sign of abating despite a brief spring rally off the lows, which are once again being challenged in products from copper to iron.
In oil, the signs of the glut in supply are everywhere. Even in deepest, darkest Sussex prices are tumbling. I can now fill up the car with diesel at below £1.10 ($1.70) a liter and all the talk from the supermarkets is of a battle down to a pound. In addition, us poor souls who live on heating oil rather than gas are at last having a field day. Latest prices are down to just 30 pence a liter. My most expensive purchase of the last four years has been north of 70 pence a liter. Happy Days!
But surely the old adage that low prices are the cure for low prices will soon come to the fore and float prices aggressively in the not too distant future?
Well in the normal course of events that would be the case, with billions of dollars of production coming off the table in response to low prices. And to a certain extent that is happening in North America and elsewhere. Yet this time, the great global game of chicken means there is a huge reluctance to be the one to cut production and lose market share.