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Boom Goes The Dynamite: Oil's Price Crash Is Going To Rip The Global Economy To Shreds
Seeking Alpha ^ | 13 Jan 15 | Michael T. Snyder

Posted on 01/14/2015 5:41:59 PM PST by SkyPilot

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To: SkyPilot

Universities are no more than cash cows forgovernment money laundering.


221 posted on 01/16/2015 6:23:26 AM PST by caww
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To: SkyPilot
Erratum:
I wrote that "Lehman and Morgan Stanley" were Fed collaborators in the 2009 levitation act. That was incorrect, since Lehman Brothers was no longer around. I meant Goldman Sachs and its CEO, Lloyd Blankfein. Goldman is the Little Guy Harvesting Machine that enjoys "near-perfect knowledge" because of its numerous (and illicit) connections to the Federal Reserve leadership and bureaucracy. You could almost call them a "co-Fed", except that the relationship is largely parasitic.
222 posted on 01/16/2015 10:20:21 AM PST by lentulusgracchus ("If America was a house, the Left would root for the termites." - Greg Gutfeld)
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To: SkyPilot
"This is extremely violent and totally unexpected, the central bank didn't prepare the market for it," said Alexandre Baradez, chief market analyst at IG in France. "It's sparking panic across all asset classes. It suddenly revives the risk of central bank policy mistakes, right when central bank action is what's keeping equity markets going."...

Good quote, nice catch.

But the risk from central-bank involvement and sudden moves by motivated central bankers has been there ever since James Baker arrived at Treasury in 1987. Six months later he had a spat with the German bankers, and the market crashed.

Wall Street insiders, as you pointed out, have been playing the "Greenspan put" ever since.

223 posted on 01/16/2015 10:37:56 AM PST by lentulusgracchus ("If America was a house, the Left would root for the termites." - Greg Gutfeld)
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To: SkyPilot

We’re all gonna die. Film at 11.


224 posted on 01/16/2015 10:54:00 AM PST by gogeo (If you are Tea Party, the eGOP does not want you.)
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To: Diana in Wisconsin
No more so than 2008 was!

I've been following the financial markets for the past 35 years.

I can't remember a time when someone wasn't preaching the world would end tomorrow.

225 posted on 01/16/2015 10:56:20 AM PST by gogeo (If you are Tea Party, the eGOP does not want you.)
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To: SkyPilot

All of this is political, not economic. If you are Saudi Arabia, and you had Russia and Iran gearing up to destroy you, and you had this weapon at your disposal, would you use it?

The Saudis are doing this on purpose, and its political.


226 posted on 01/16/2015 10:59:35 AM PST by RinaseaofDs
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To: Diana in Wisconsin

ROFL!!!


227 posted on 01/16/2015 11:10:31 AM PST by gogeo (If you are Tea Party, the eGOP does not want you.)
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To: thackney
There will be some offsetting gains. But I think history shows the total economy has never jumped before in this situation. The reality is there is more going on than just gasoline prices. The drop in price is partially driven by slowing economies that have job impacts at the same time. Copper is also at a 5 year low. Lumber prices are down. It isn’t just oil.

I don't know if there's ever been a credible economic study that filtered out all other factors. You also have to ask, compared to what?

There's no doubt that $140 oil was a drag on the economy, especially considering how much of that oil was imported. The domestic production boom has been doubly stimulative in that it has decreased the world price of oil and kept more $$$ at home. Win-win.

Some estimates put the effect on the economy at 2% additional GDP growth from jobs alone. As far as the favorable effect of lower costs and lower balance of payments, who knows?

One of the shortcomings of the "Science of Economics" is that it just speaks to that which can be reasonably measured. If economics can't (or, in some cases, won't) measure activity, we're left to our theoretical knowledge to make our best judgment. The quality of our theoretical framework will determine the quality of the judgment.

The effects upon the industry are comparatively easier to measure. Layoffs can be tracked. Payments to vendors and other components can be measured.

It's harder to measure the effect lower prices has on small business not directly affected. Lower business at restaurants across from facilities is probably offset by higher business at other restaurants.

Manufacturing has become much more competitive. Small businesses such as mine are making buying decisions for the next year based upon projected fuel costs.

Negative effects can be easily measured because they are localized. Positive effects are much more diffused and harder to recognize and measure.

It doesn't mean they don't exist, or that they are not substantial. There's no doubt it's incredibly disruptive.

228 posted on 01/16/2015 11:43:31 AM PST by gogeo (If you are Tea Party, the eGOP does not want you.)
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To: gogeo
I don't know if there's ever been a credible economic study that filtered out all other factors.

The point is, all other factors are part of the equation.

Oil doesn't move without other factors. And slowing global demand for oil is a symptom of those factors.

My point, very significant drops in oil prices and the associated gasoline prices, have resulted in a booming economy in the past. I don't see it happening today. It is because gasoline prices are not the only thing going on.

Also at this time, the oil industry has become a larger percentage, of our domestic economy. Combine a lower percentage of the population actually earning paychecks, and a oil industry that has been hiring like crazy for a few years, the impact is likely to be greater than before. Lots of associated businesses have been doing well due to selling, pumps, pipe, switchgear, cables, housing, heavy equipment, etc that are going to see a large drop in sales.

229 posted on 01/17/2015 6:56:22 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney
I agree with your post.

I believe lower fuel prices are a net plus for the economy.

230 posted on 01/17/2015 7:25:29 PM PST by gogeo (If you are Tea Party, the eGOP does not want you.)
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To: gogeo

Do you think they are buying that in Switzerland?


231 posted on 01/17/2015 7:33:51 PM PST by Vermont Lt (Ebola: Death is a lagging indicator.)
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To: Mark17

If you are seriously asking that question, it is clear you do not understand how this whole thing works.


232 posted on 01/17/2015 7:35:44 PM PST by Vermont Lt (Ebola: Death is a lagging indicator.)
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To: raybbr

The entire economy is based on constant increases in prices. When those prices decline, the revenues to pay the debts (leverages at 100:1) fail to come in.

Consider that you’ve had a steady stream of income, and you rolled that into mortgages on big apartment complexes. All you need to do is fill all of the apartments and keep the rent coming in.

But all of a sudden, you have a vacancy problem. And the revenues are not coming in.

You default on your mortgage.

The bank, counting on hour revenues increasing every month, rolled their investments up at 100:1. Now they cannot pay their mortgage....

Do you understand how this goes from the oil companies losing money to the bank on the corner going broke?


233 posted on 01/17/2015 7:39:44 PM PST by Vermont Lt (Ebola: Death is a lagging indicator.)
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To: SkyPilot

Snyder is pulling your leg!

Low oil prices are the best thing that could ever happen.

Money going to oil producers destabilizes the world.


234 posted on 01/17/2015 7:39:54 PM PST by editor-surveyor (Freepers: Not as smart as I'd hoped they'd be)
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To: Paladin2

But there are trillions of dollars in derivatives that are going to go belly up.

Just ask the guys who were shorting the Swiss Franc last week. They got wiped out in ten minutes. TEN minutes. Billion dollar operations were wiped out. Do you think that might leave a mark somewhere?


235 posted on 01/17/2015 7:41:25 PM PST by Vermont Lt (Ebola: Death is a lagging indicator.)
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To: Pelham

The “majority” of the world does not have to own high yield bonds for the world to turn upside down. It doesn’t take much to get the ball rolling.

The drop in oil will cause the Russians to pull some junk in Europe with gas.

Its the folks who took their margins to the limits to invest in oil, thats who is going to get hurt. They will dump their assets to cover their debt. That will cause more deflation. And it starts a horrible spin out of control.

Too many people took out too much risk. For the average Joe on the street....they will not know what hit them when their jobs disappear and their 401ks are cut by 80%.

And yes, it could get that bad, that fast.

I am not saying it will, but consider if we have another Lehman situation...what will the Fed do? All of their ammo has been shot without great results. Are they going to drop their rates under zero? Or are they going to print more money?


236 posted on 01/17/2015 7:47:12 PM PST by Vermont Lt (Ebola: Death is a lagging indicator.)
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To: RaceBannon

Its to hurt the US, but mostly Russia, Iraq, and Iran. They want to hurt the OPEC and non OPEC companies who were not playing by the rules. Saudis can take us and the rest of the world to the mats.

I dont think they really want to do that, but we also do not know what goes on behind closed doors in the Kingdom.


237 posted on 01/17/2015 7:49:17 PM PST by Vermont Lt (Ebola: Death is a lagging indicator.)
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To: Star Traveler

Fill up your spare tanks. Now.


238 posted on 01/17/2015 7:50:30 PM PST by Vermont Lt (Ebola: Death is a lagging indicator.)
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To: SkyPilot

Yes, life is just a dream...from paradise up above


239 posted on 01/17/2015 7:52:23 PM PST by RedHeeler
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To: Vermont Lt

What do you mean?


240 posted on 01/17/2015 7:54:13 PM PST by gogeo (If you are Tea Party, the eGOP does not want you.)
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