Oil, gold and Strauss-Kahn

Our list of factors affecting oil and gas prices already includes war, kidnapping, supply and demand, hurricanes, pipeline explosions and threats to tyrants. Add sexual assault.

Dominique Strauss-Kahn’s arrest for allegedly assaulting a maid at the Sofitel in Manhattan is causing havoc not just in oil markets — gold, currencies, and Asian stocks are all in a kerfuffle. Oil dropped below $98 a barrel; gold fell by $3 an ounce, and silver declined, too; the Euro plunged to a seven-week low against the dollar.

The stated reason is that the 62-year-old chief of the International Monetary Fund was supposed to swoop into Brussels today and tomorrow and help figure out how debt-laden European countries might get bailed out before seriously injuring the economies of the European Union. But why should that be the case since Strauss-Kahn’s superlatively able deputy, John Lipsky — who also has been named as the IMF’s interim chief after the arrest — has stepped in to the breach?

Is this a normal reaction? Out of curiosity, I Googled "sex scandal shakes market." There were 1,220,000 hits, including accusations against lifeguards in Florida ("Sex Scandal Shakes Volusia Beach Patrol"); a 1976 scandal involving then-Rep. Wayne Hays and a long-forgotten clerk named Elizabeth Ray ("Sex Scandal Shakes up Washington"); a sex tape that rattled Turkish politics ("Sex Scandal Shake-Up Reinvigorates Turkish Opposition Party"); and a two-decade-long controversy involving an Indian dessert shop ("Ice Cream Parlour Sex Scandal Returns To Shake Kerala Govt").

This unscientific survey turned up no immediately noticeable direct link between sexual assault and the markets. I was certain that the Monica Lewinsky case must have rattled markets in the mid-1990s — and readers may recall better than I — but had no luck with that specific search, either.

Curiosity aside, the Strauss-Kahn case is a wake-up call for those who do not yet realize that we are in a highly jittery moment, and perhaps on the edge of a new global economic dip. Read this piece by John Authers at the Financial Times.