3/15/2006

Mid east's economic boom

In a blog on the Chicago Boyz site there is reference of a WSJ article about the OPEC oil cartel, the inelastic demand for their energy sources, and the resulting economic boom in the area. In the article it states that their stock markets have out-paced our own by at lest twice as much in the last decade, their cash rich banks are investing at record levels, and all seems to be exploding economically. Could this be the luck of having a natural resource that the world can't live without or is their business structure just that much better? I think it's both the luck and business structure to use a natural resource to finance an economic boom that is going to last as long as the oils inelastic demand.

2 comments:

Seth said...

As I read it, the article is about the follies of their market structure: they are in a speculative bubble, they don’t have the same access to information investors in other exchanges have, and they’re inexperienced. I would like to see them succeed but they’re going to have the inevitable correction in the market that always follows a bubble.

Dr. Tufte said...

-2 on Frank's post for multiple errors.

There's elements of truth in both the post and the comments. Some of them are sitting pretty with inelastic demand right now. But, there is also a boom going on with some bubble-like signs.

For those with strong opinions either way on Iraq, perhaps you should ask yourself if the boom in the region close to Iraq is an unintended consequence of the war.