People I met in China (the final country on my Asian tour) earlier this week are optimistic about growth. Chinese stores are bustling and general economic activity appears to be quite healthy. The Chinese have turned bearish on the US dollar and have slowed their purchasing of dollar assets such as US Government Treasury and Agency debt, as well as US equities and corporate debt. This is bullish for oil in dollar terms and a reason for recent strength in oil prices (in addition to the global physical oil market beginning to tighten and a recovery in equity markets).
The chart above shows the fall in the purchasing power of the US dollar since the 1920s. A chart of most other paper currencies would show a similar if not greater declines. As Anatole Kaletsky says in an interesting article in today's Times:
Oil is a currency itself, a hard currency floating stronger against these more ugly paper currencies.
"The currency game is not a beauty contest but an ugly contest, in which investors must choose the currency that is least ugly."