LONDON, England – There is real concern now about the impact that escalating oil prices will have on the global economy. London has been swamped by truckers and Barcelona by fisherman — all complaining about the rising cost of fuel. American car owners are demonstrating by cutting down on journeys to save gas. Politicians fear high oil prices will spark higher inflation in economies that are already slowing down.

But rising oil prices do not matter a jot to the global economy , at least in theory. Any changes in the price of oil have a neutral effect. The cost to those countries buying it is offset by the money made by those selling it. Overall the effect of a rise, or indeed a fall, in oil prices is nil. The cash is simply being shifted around the globe. It’s swings and roundabouts, as they say.

But if the U.S. economy goes down, surely it will take the rest of the world with it? Not according to Paul Donovan, Senior Economist at UBS. He points out that countries in the Middle East are consuming far more than they were 10 to 15 years ago, as evidenced by the huge building projects in Dubai.

“You are rebalancing power in the world economy, there is no doubt about that,” says Donovan. “It’s very disruptive but the net effect is simply to redistribute wealth from countries like the U.S. and UK to the Middle East or countries like Russia.”

In other words, Europe and America may be suffering but other continents are gaining, so no need to fear a global recession. The Middle East and Russia are strong enough to prop up the whole system. Do you agree?

LONDON, England – The car industry is to manufacturing what Madonna is to music. It is constantly having to reinvent itself to stay relevant, and has been pretty successful.

Chairman Ratan Tata poses next to the Tata Nano.

One of Madonna’s more memorable phases for me was when she was constantly stripping (well I was a teenager) and that seems to be the phase the car industry is going through now. All the big car makers seem to be coming up with stripped down versions of vehicles with none of the mod cons.

Italy’s Fiat is developing a new low-cost car. Its follows in the tracks of Renault with its Logan and Tata with its Nano. They are all betting on the fact that the no frills segment will grow significantly over the next few years.

The market for cars in the developed world is saturated so car makers are hoping to sell cars to those that haven’t got one yet in places like India, China and Brazil.

It’s a risk though. How easy will be it to get the price down far enough to tempt people to upgrade from their mopeds, rickshaws and tuks? The margins will inevitably be thin so sales will have to be large enough to bring in decent profits. Are larger vehicles the best solutions in those markets? And can you use the same model in several different markets — will the Nano work outside South Asia?

One interesting thought is there may also be demand in developed markets for low-cost cars as people tighten their belts and want to spend less on the initial outlay and running costs.

Do you think the car makers are right to bet on low-cost cars?

LONDON, England – “Mumbai, Shanghai, Dubai or … bye bye” — this is the rather dark joke that’s been doing the rounds in London’s financial community recently.

The gist is that unless you work in emerging markets, prepare to lose your job.

Europe’s biggest bank, HSBC, illustrated the trend this week when it revealed huge losses in America, but big profits in Asia.

There just isn’t the money to be made in Western markets that there once was, so the banks are cutting back dramaticially on their headcount.

Bankers rarely get sympathy when there are job cuts because they are generally paid very well for what many see as straightforward gambling. But this time round they are getting even less sympathy.

In fact, they are being blamed for being the architects of their own downfall and for dragging the rest of us down with them. Critics say the industry should be taught a lesson.

What that lesson should be will be considered today by a group of European finance ministers called Eurogroup.

According to El Pais, the meeting will consider whether the Anglo-Saxon market model is a danger to global financial stability and whether firms chased immediate profits at the cost of massive sackings.

Has the short-term pay structure of modern capitalism become deformed, causing firms to take on excessive risk without regard to stakeholders or society?

In other words, should bankers be punished for causing the credit crisis by having their performance bonuses slashed — by law?

Britain’s Daily Telegraph has its view: “Bankers’ pay may be excessive and geared too much toward risk-taking but it is not the job of government to regulate it, it is the job of shareholders who have lost billions in the credit crisis to insist on new rules if they want them.”

What do you think? Post a response here on this blog.