“It is always good for our economy when oil prices are lowered.”
It’s good for the “real” economy.
However, the “real” economy is dwarfed by the “leveraged” economy - which is not real.
The lower price of oil is going to very possibly precipitate the collapse of leveraged assets (including ultimately stocks) because credit to marginal or high-cost energy producers will be destroyed - and the lenders will have to recognize this loss (and the consequences of such a loss).
If we had stuck with a “real” economy for the past 7 years or so, we’d be expecting an uptick economically from lower oil prices. Instead, the “fake” growth and GDP over the past years will revert to a significantly lower level.
Of course the Fed could bail everyone out......and protect those who made irresponsible loans to marginal energy producers by buying all their bonds (just like they’ve done in the housing market). Expect that to happen. Otherwise we must capitulate to all the growth during the Obama administration was mere illusion created by Fed manipulation.
No threat to the Obama economic illusion will be acceptable, that’s why I see marginal oil loans ending up on the Feds balance sheet, along with all the other garbage.
...the Fed could bail everyone out......and protect those who made irresponsible loans to marginal energy producers by buying all their bonds
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Re the matter of bonds, this article discusses the possibility of a spiral of distressed sales of bonds and loans, and not just in the oil sector. A potentially frightening contageon should it happen.
http://www.zerohedge.com/news/2014-12-13/how-tell-if-next-financial-crisis-upon-us
Interestingly, some heretofore steady bank loan funds are already showing signs of weakening prices.