WHILE THERE'S NO REASON THE FED SHOULD ACT SMARTER THAN ANY OTHER HUMAN INSTITUTION...:

OPEC left to its own devices: Hedge fund redemptions lay bare the role in oil speculation (MarketWatch, 10/17/08)

Gone is the steady drone of peak-oil forecasts. Gone is the fear that we are in the pockets of "folks that don't like us very much." Prices are down at the pump, and talk radio has moved on, feasting now on banks, bailouts and rampant greed and corruption on Wall Street.

As the industrial world withdraws into a recessionary shell, it takes oil demand with it. China and India's insatiable thirst for oil looks meager now as factory output slows to a trickle.

But there's also been a rush of roving capital out of the market. According to the latest data from Hedge Fund Research, third-quarter hedge fund redemptions hit a record-high $210 billion, spearheading an exodus wealth that burst one of the biggest commodities bubbles of all time.

It's no coincidence that oil prices plunged in tandem with these record withdrawals, exposing for all to see just how much of the summer's oil-price spike was driven by speculators.

...cranking rates to fight non-existent inflation for the third time in a quarter century was particularly dumb.

Posted by Orrin Judd at October 19, 2008 9:35 AM