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Commodities say forget Greece

I last featured industrial commodity prices a month ago, and I note that they have since risen some 3-5%. Both of these charts reflect prices of a variety of industrial commodities, many of which do not have futures contracts associated with them and are therefore at least somewhat immune from speculative forces.

Commodities across the board are marching onward and upward, apparently oblivious to Greek indebtedness, concerns about which have been plaguing markets for months. In the end, global growth—as is strongly reflected in the commodities markets—is one sure-fire way of dealing with whatever fallout there may be from what will either be a bailout of Greece or a restructuring of its debt. To put things in context, Greek GDP is about $340 billion, which is about what the U.S. government is borrowing every three months. Fears of a default on Greek debt, which is somewhat larger than its GDP, have erased more than $1 trillion of global equity market capitalization, but Greece's total indebtedness, even when combined with other PIGS, is a small fraction of the global bond market. Keep your eye on the big things, like strong global growth and accommodative monetary policies, since those are likely to overwhelm the Greek debt situation.

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