Posted on 03/22/2015 7:28:54 AM PDT by thackney
Energy-sector deals have been a bright spot at a time when once-lucrative businesses, such as fixed-income trading and consumer lending, are flagging thanks to tighter rules, low interest rates and uneven economic growth, analysts said.
Investment banks helped fuel the oil-and-gas exploration boom of the past decade by making loans valued at about $1 trillion to companies in the energy industry, most of which they sold to investors.
The banks sold much of the debt to loan mutual funds, which grew rapidly from 2011 to 2013, but that demand dwindled as individual investors yanked $35 billion from the funds over the last 12 months, according to S&P Capital IQ LCD.
The two forces that united
First, the banks’ search for profits. As many articles have explained, abnormally low interest rates, combined with stiffer reserve regulations, have made banks’ search for profits and growth more difficult. Even traditional lending to small businesses and consumers is less desirable, pushing banks to look elsewhere.
Second, the low interest rate effect on investors. With traditionally safe investments paying next to nothing, investors need to search for alternative investments to find income. Hence, the growth of specialty funds offering higher income with the appearance of acceptable risk.
These two forces produced ready money for the U.S. oil companies’ exploration, development and production needs. Banks could make nearly unlimited loans, earning attractive fees, then pass on the loans to the funds that were scrambling to find income investments for their large inflows.
Why is the Fed to blame?
For the answer to that question, we need first to discuss how capitalism gets it right: Through market-determined price setting. Nowhere is this price setting process more important than in the capital markets because it determines the allocation of capital throughout the financial system and the economy...
(Excerpt) Read more at forbes.com ...
We’ll find out..the strike was settled on Mar 12.
http://fuelfix.com/blog/2015/03/12/steelworkers-shell-strike-deal-to-end-refinery-strikes/
The refinery strike contributed certainly. The union has negotiated a new contract now. Most local unions appear to be accepting the contract.
The strike began as refineries were preparing to switch over to summer blends which are also more expensive since they cannot use as much butane and the like.
Union says tentative deal reached to end U.S. refinery strike
http://www.freerepublic.com/focus/f-news/3267450/posts
MARCH 13, 2015
Fitch: Prolonged refinery strike could affect gasoline supplies
http://www.freerepublic.com/focus/f-news/3266585/posts
March 10, 2015
Shell and USW 2015 Oil Bargaining - Just The Facts: Update
http://www.freerepublic.com/focus/f-news/3262251/posts 02/26/2015
U.S. refinery strike spreads to one-fifth of national capacity
http://www.freerepublic.com/focus/f-news/3260310/posts
Feb 22, 2015
Union strikes at 9 US refineries in bid for new contract
http://www.freerepublic.com/focus/f-news/3252998/posts
Feb 1, 2015
Local unions are still voting to approve the new contract. It is likely settled but many are not yet back to work at the refineries.
the day of reckoning when rates climb will be severe to almost all.
Cash will be king.
More evidence that we need cultivate more “Right to work” states, and sh!+can the EPA.
Virtually every state has a DEP, we don’t need 51 layers of bureaucRATic oppression.
Lose money = malinvestment.
Low interest rates are what are preserving us from a full blow disaster of national debt though I wonder if it would really be a disaster? Who is going to foreclose?
I was looking back on my investment plan from almost 20 years ago. GICs, Guaranteed Investment Contracts from Fidelity were paying 8% and the Windsor Fund was making a pretty consistent 12%... Anybody with half a brain could save enough for retirement and just about anything else back then. It was a no brainer. Even the investment advisors were figuring on 8% for most retirees with “conservative” investments.
Funny though, the economy was not over heated but it was not bad either. The housing boom had not yet hit and we built a house in ‘95 for what was then a reasonable amount and with a 6.5% or so loan. Now the property taxes have exceeded the mortgage. When we bought they were just incedental.
The economy is struggling because of taxes, over regulation and too much government... that’s my take.
With the top three thieves 1. wall street 2. the federal reserve 3. congress involved and simply lining their own pockets ...and I say this because all of the 3 outfits I listed know well in advance of the actions that will be taken. The banks have been getting money at near zero interest for years and with The Glass/steagul act still null and void the banks can get better monies with quick stock purchases and sell offs...why invest in America when your institution can garner sufficient profits while passing any losses off to pensions and mutual funds?..All the money handlers still get their cut .... win or lose...I have NEVER ventured into the markets at all and made it a point to never have to borrow...it can be done. Rent until you can purchase outright or do a buy owner financing ( lots of cash can be hidden in the sellers favor ) the inflated prices of ALL goods are the direct result of the thieves taking their cut and passing off the losses to “we the people”...go back to the savings and loan bail outs of the 80’s...then the mortgage debacle and the stimulus (which only paid current state employees with next to nothing making its way down to the persons who actually pay for these thefts....what I’m trying to say is quite simply learn how to be able to provide and ‘MAINTAIN” the essentials we enjoy I.E. house/car/truck/basic plumbing/electrical ....rather than chasing a dollar to pay for inflated items on which you need to HIRE someone to fix...you will find life more enjoyable and less stressful. Sorry to ramble but I find the article and most drivel about this topic to all boil down to the same thing.
Mark my words: Oil will go to $100 per barrel right AFTER the 2016 election for president
Obama conspired with his Muslim allies in the Middle East to lower the price of oil(GASOLINE) UNTIL the 2016 election for president in the USA. This is all to elect a democrat in 2016 so that the fundamental transformation of the USA into a socialist state will be completed . They know Scott Walker could restore America so they lower gasoline prices for now to keep the peasants happy and so that they will vote same party as Obama. Muslims and Obama want a democrat in 2016: this is irrefutable logic.
Sure you all will argue and say but U.S. production is up . yes but it has been for many years . look at the timing why now? And also remember that they (Muslims) shot up oil price to $144 per barrel during the year that Obama got elected. look it up
The economy is struggling because of taxes, over regulation and too much government... that’s my take.
that’s true
Bookmarked.
I am far, far more suspicious that the worldwide “oil price drop/oil over-production spike” the last 18 months was a “perfect storm” of several often-competing interests by the Obola administration.
Over-production/low oil prices destroy the Texas/North Dakota oil patch regions - which Oboma hates and fears.
Low oil prices spur the rest of the country’s economies in all of the other states, thus helping Obola get “an expanding” economy for his ABCNNBCBS press corpse to write about.
Low oil prices hurt Putin - which Obola doesn’t like, but he can afford to hurt somewhat since that reduces some pressure on Ukraine, which Obola at least needs to pretend to oppose.
Over-production by Iran (which lowers oil prices in general) hurts Putin also - so Iran doesn’t mind the poor Russian economy, since he threatens Iran. Again.
Over-production BY ISIS/ISIL-dominated areas in Syria and Iraq is the only way for them to fund their future fighting - but low oil prices reduce the money they get, so Iran doesn’t mind mind hurting their opponents in the region.
Low oil prices kill the Nigerian and Venezuelan economies, which Obola doesn’t like, but he can consider them expendable if Iran and Washington benefit.
Perhaps they could find something on shore, that has a nice return and uses American labor?
Natural gas liquefaction plant? Or five or six!
Cross country pipeline, bigger and longer are better.
Looks like the Canadians are going to show us how it is done.
A brand new greenfield oil refinery!
No government funds needed!
look at the timing why now?
Because supply grew faster than demand for more than a year.
There is no conspiracy. There is no magic control by a mysterious party.
Over-production BY ISIS/ISIL-dominated areas in Syria and Iraq
Production in those areas controlled by ISIS went down by more than half.
Iran production is down as well.
oil skyrockets during election year when Bush (R) is the president
oil free falls during election when Obama (D) is president
“Over-production/low oil prices destroy the Texas/North Dakota oil patch regions - which Oboma hates and fears.
Low oil prices spur the rest of the country’s economies in all of the other states, thus helping Obola get “an expanding” economy for his ABCNNBCBS press corpse to write about.”
Bingo!And also see my other posts on this thread . This is to get an expanding economy for the 2016 election to elect a democrat next year. the price of oil will rise after the 2016 presidential election.
I see problems with the theory that any one group is somehow controlling oil prices....especially in this country.
For starters, the middle east is playing a diminishing role in our energy supply. Also, growth in middle east supply has not outpaced demand growth...domestic production has.
I always see a strong linkage between the economy and oil prices. In 2008, when oil peaked, we had a very strong economy (turned out to be a bubble built on bad lending...but before the crash, it was a strong economy).
So what about now? Could be bad economic news around the corner.
When hyperinflation hits you will need a wheelbarrow to carry your cash around.
Not necessarily; there's some times where 'investing' in liquidity pays off. (e.g. taking a couple hundred bucks just in case
when you go looking at thrift shops and antique stores.)
Also, some people would equate savings w/ loose money
, and I would argue that savings are not malinvestment
.
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