Paul Krugman: Iron resolution
Iron resolution: Chinese steelmakers have agreed to a 96 percent increase in the price they pay for Australian iron ore. One interesting point about this case is that, as I understand it, iron ore isn’t traded on an international exchange; trade takes place through bilateral deals between producers and consumers. In other words, there isn’t any easy way to speculate on future iron ore prices. Yet ore prices are surging like oil prices. A bit more evidence against the speculative frenzy hypothesis.
