Quantitative Easing Will Drive a Commodity Bubble: Analyst
Commodities are becoming a bubble says Marco Annunziata, chief economist at UniCredit Group. He was interviewed by Bloomberg on Tuesday.
Like all bubbles, Annunziata says that the story underpinning growing commodity prices looks compelling—growth in China and emerging markets, but recent events, namely discussion about more quantitative easing to stimulate a flagging American economy, are pushing commodities beyond the fundamentals and turning the price rise into a bubble.
Annuniziata is critical of any proposed quantitative easing. He says that it will result in liquidity will be sucked out of the U.S. and fuel bubbles in commodity and emerging markets.
"The fed is flirting with recklessness considering QE2. It is not going to work," he says.