...But They Won't Slow A Third World Gush Of Commodities

The lesson from the current disarray in global oil markets, says economist Tony Riley of A. Gary Shilling & Co., is that many commodity prices are likely to stay depressed for a long time. "The economic axiom that falling prices lead to curtailed supply," he says, "just doesn't work in a world in which major commodity producers are debt-laden developing nations dependent on export revenues." In such a situation, falling prices often spur producers to boost output to maintain earnings, a strategy that causes prices to fall still further.

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