In some ways, a quick look at the Reuters/Jeffries CRB commodities index (see Graph) says it all. Even a cursory examination immediately makes a number of important aspects of the recent boom-bust cycle very clear. Firstly, we can see how, after languishing idly around a long-term average, a secular rise in commodity prices started up around 2002 and lasted for around four years, with the line eventually flattening out between 2006 to mid-2007, before we got a second strong surge forward in the form of a sharp upward spike. Of course, after the rise always comes the fall, and this sudden and dizzying spike was in its turn followed by a pronounced downward crash, under the weight of which we are still laboring at the time of writing. In fact, the index hit an all-time series high of 473.5 on July 2, 2008 and was still stuck down in the low 200s as 2008 drew to a close.

Now, depending on how you see things, you will put one interpretation or another on all this. What follows is simply my own interpretation, and doubtless others will have theirs to offer. But what I personally find most interesting, indeed intriguing I would say, is just how that initial flattening-out of the trend coincides (more or less) with the arrival of the housing slowdown in the US (and thus arguably with the beginning of the end for this most recent business cycle), while the subsequent 2007 spike would seem to be a clear a knock-on consequence of the start of the August subprime `troubles' in the summer of 2007, reflecting the sharp capital outflows into the growth thirsty emerging markets that this first world financial shock precipitated. Well, all of this should give us plenty of food for thought, as should the rout in commodity prices which followed the arrival of the July 2008 peak, a peak which anticipated by almost two months the dénouement of the financial crisis with Lehman Brothers bankruptcy in September.

So, amidst all that coupling, recoupling, decoupling, uncoupling rhetoric, might it not be interesting at this point to ask ourselves just what has been happening here? For my part, the first point I would like to make is that the chart does seem to offer us some evidence in support of the idea that there was some form of long-term structural break occurred in the growth path of some of the key emerging economies following the aftermath of the Asian crisis of 1998. As can be seen from the long-term trend in commodity prices, something was finally starting to move in the world of emerging economies, and the big question is why it was.

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