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Why Commodity Prices will Collapse By 2015

Michael Pettis at China Financial Markets believes commodity prices will collapse by as much as 50% over the next few years. His rationale is solid.

Here are a few snips from a recent Michael Pettis email in which he outlines the case.

By 2015 Hard Commodity Prices Will Collapse

There are four reasons why I expect prices to drop a lot more.

First, during the last decade commodity producers were caught by surprise by the surge in demand. Their belated response was to ramp up production dramatically, but since there is a long lead-time between intention and supply, for the next several years we will continue to experience rapid growth in supply.

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  • Hans Nieder on September 06 2012 said:
    I read, Mr Pettis, article yesterday...

    I am quite sure that the "boom" in Red China is over..

    They will continue to expand their economy but not at previous rates...The days of double digits are over...

    You knew that there was trouble ahead, when the economic output is 50% state...

    Sorry, but command and controlled economies simply do not work in the long run...

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