It’s still going to hit the oil patch really hard, starting with the service industry. Probably a year to 18 months before it shows up at the banks.
It is already hitting the service industry. My brother drives truck for a heat treating plant. He told me a week ago that the incoming items to be treated have dropped way off.
It may not take that long.
The next financial collapse, already on our radar screen, will not come from hedge funds or home mortgages. It will come from junk bonds, especially energy-related and emerging-market corporate debt. The Financial Times recently estimated that the total amount of energy-related corporate debt issued from 2009-2014 for exploration and development is over $5 trillion. Meanwhile, the Bank for International Settlements recently estimated that the total amount of emerging-market dollar-denominated corporate debt is over $9 trillion.