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The Crude Crash Comes To Wall Street: Counterparty Risks Rear Their Ugly Heads Again
In late 2006, default rates on lower-rate subprime private MBS began to rise considerably. Though not a very transparent market to the mainstream media-watching world, bankers knew trouble was brewing as this had not happened before in such a benign house price decline. Banks, knowing what they had on their books, what they had sold to others, and what that meant for risk, began quietly buying protection on other banks as counterparty risk became a daily worry for desks across Wall Street.
The stocks of US financials continued to rise amid "contained" and "no problem" comments from the status quo but credit spreads for the major US banks kept leaking wider even as stocks rallied... then reality dawned on stocks and the rest is history.
Today, US financial credit spreads (wider) have decoupled once again from stocks (higher) and that divergence began as oil prices started to slump.
Are banks hedging counterparty risk once more 'knowing' what loans and exposures they have to the massively levered US oil industry? Or is it different this time?
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LOL!!!
Why god created exchanges...,
so you don't have to worry about who is on the other side of the trade.
Yoohoo! Darling! I'm trying to reach Mr Madoff! Mr Blankfiend sent me over to collect on that bet I made! Mr Madoff? What do you mean he's not available. Will you have him call me back? What do you mean he can't? He's where? Well, that's one hell of a note to find out that Goldman sold the protection I bought to Mr Madoff! I'm going to call the SEC and my lawyer, damn it! You haven't heard the last from me!
Don't Corzine me, Dude!
If TPTB want to avoid a credit crunch it's really very simple this time.
There is an oil glut of 2 million barrels a day.
At $60 that's just $120 million a day. Or $3.6 billion per month.
The US can simply start adding to the strategic petroleum reserve at a rate of 2 million barrels a day. This would bring stability back to the world oil markets by soaking up demand and it costs a tiny fraction of what they were spending on QE.
We can call it QEOil.
Imagine how much oil $85bn a month would buy!
And, yet, they haven't even announced a plan to do so.
the truth is not in the commercial media because the truth is a dagger pointed at its heart, which is its pocketbook
http://www.philiacband.com/propaganda.html
<<<This would bring stability back to the world oil markets>>>
When markets are orderly and stabilized, the banks are only making boring money.
Volatility, velocity and panic gives them the opportunity to fleece the widows and orphans, the 401k crowd and canibalize hedge funds and banks not part of TPTB.
If you are not in this club, get the hell out of the casino.
Things are way different this time. This time there is like zero recoverable assets. Last time at least their were houses.
Gas..................Burp
The Fed, the gubmint and the TBTF banks will manipulate this as long as they can...I'd love to listen to their tactical and stragegic sessions. They will take this thingas far as it can go and do everything (stoopid) in their power to keep the system going using Obummers mantra 'do no harm'. In the end they don't really give a shit about the rest of us, they are just protecting themselves...they could have prevented this by acting responsibly, but then acting responsibly does not get you elected when you have created an entitlement society...Who knows when the black swan will be spotted; it may be many years, but the longer it takes the worse its going to be when it all hits the fan.
the crisis is part of the plan. the people actually controlling everything never wanted to prevent any of it, and if you look at it from the perspective of what they want to achieve they are acting very logically, sociopaths arent known for their responsibility. nor are they protecting themselves per se, they are enriching themselves and consolidating power. this is why the system exists as it does and this is why they will precipitate the next crisis only after they have ensured they will steal the maximum amount of power and money when it hits.
i forget which commentor brought up the shemitah year a few days ago but when i looked into i was quite surprised. had never heard of it before. perhaps the end will be in september 2015. i might be inclined to buy a few way out of the money puts as an experiment next year. maybe some 3x bear etf
Counterparty risk may be bad but the ripple effects of crashing oil are far reaching and very serious to millions of Middle Class people, or at least what's left of them.
Yet, some Gruberized Dolt was on the radio (NPR no less) boasting how “It’s too bad for the Big Oil Companies” she opined … giong on to cheerfully chirp, ”the benefits to the people far outweigh the money losses to Big Oil.”
Tell that to the engineers in Houston, drillers, equipment suppliers, and a few more million people down the line.
Oh yeah, I heard thru the grapevine the housing market in Houston has completely stalled with plunging construction and all the related service O&G providers and suppliers as well as sharp decrease in mortgage apps in them thar parts.
Good thing that budget passed.
Oh, wait...
Free crap for everyone....you don't even have to be a citizen.
The people have spoken......screw'em.
Dumb Dolt doesn't understand that Big Oil has planned all this so they can break the weaker and buy their underground shit for nothing. As soon as the black gold stops it's water slide curve to somewhere close to the bottom, I'm gonna run out and buy me some more of them big oil stocks with my fiat, plus some more yeller gold. I may even demonstrate utter stupidity and swap some Benjamins for some of that fiat shit that has stars in the circle. Just a short term brain fart to jump on the Merkel Money while it's at $1.24. Not long ago it was 1.38, and yep, it can go a lot lower, but as long as the fools are arguing and not tapping on the electronic printer, it may recover. No arguing in the good ole USSA, tapping like an M-60 machine gun.
If the shooting starts for real somewhere around Eastern Ukraine, I'm Farqued Up.... again. Fools will pile into the $ with both sacks. BFD. Yep I'll BTFDs.
"A fool and his money quickly part ways." Hellllllll Yeahhh!! Say Uh Huh!!
End of times Shemitah.....4 blood moons is a turning of ages event
http://m.youtube.com/watch?v=40C5sfDzAMg
When the Black Swan Hits the Fan....
It's got legs!
The only plan those fat ass bastards are thinking about now is raising taxes on gasoline.
Yes, but that may be just to distract us while they loot our pensions.
If the folks in charge actually thought this through they would eliminate gas taxes entirely and immediately. This is one off the causes of the bubble...a Government incentive for the higher price.
This leads to an unintended but EASILY PREDICTABLE consequence...namely "too much product" chasing "an excess of alternatives" (also funded by the Government!).
Since the only thing the Government creates through Bailout Nation is debt...
Our governer Nixon is talking about a highway toll on 70. It's infurating! What do all the gas taxes get spent on? I'd be for it on the condition they repeal the gas tax but that's not gonna happen.
OM,
And Mr. Putin and Mr. Maduro would be very grateful.
just exactly how much room do you suppose is left in the spr? 2 mb/d would double the spr within a year. think before you post.
SPR has been at capacity since early 2009. We taxpayers filled it up at the FATH in 2008
So lets pump it out of the ground in North Dakota, haul it to the gulf coast and drop it in some salt caverns. Kinda sounds like paying one guy to dig a hole and another guy to fill it in.
Is that like when the u.k. sold its gold in 2000?
There is only about 17 million barrells of spare capacity in the SPR. Eight and a half days surplus off the market isn't going to do much to restore supply/demand equilibrium.
Around 1-2% capacity left but I don't think it has ever been at 100% as the oil is cycled in and out. Anyway, it's effectivly full and has been for 5 years.
what if the Fed is longer totally in charge because it has a new, not a majorit,y but major share holder who can push the rest of the share holders around?
So...if they wont do that tell us about their intentions for merika?
They dont want a secure border
They dont want us to drill offshore
They dont want our citizens armed
They dont want us to have vast stockpiles of useful supplies like oil...
So What do they want?
They want us weak, divided, devalued, demoralized, and disarmed.
Verdict: amerika is about to face a foreign enemy on u.s. soil.
Once conquered, so that they get the benefits of resource extraction...then they will drill baby drill...
Here's what they expect
https://www.youtube.com/watch?v=U1TmeBd9338
QEOil goes against the plan to squash russia.
But then:
The big oil fish couldn't swallow the little oil fish.
Russia would stabalize.
China wouldn't save as much while filling their strategic reserve.
Big banks couldn't get a taxpayer funded bailout the implodes the entire contry and western economic system.
That would work for about 1.5yrs until the SPR was overflowing (if the govt hasn't added any oil to it in 2014. The least estimate I saw was 695m bbls with a capicity of 727m bbls).
Mayby a better govt idea would be to simply buy that oil and burn it in huge fires? The bureaucrats could claim victory in saving us from cheap energy prices while simulatneously working to save us from that pesky global warming crisis caused by plant food.
We Corzined some folks!
Never gets old.
I like this version of the story better because it was much easier to have the poor home owner at the root of the black swan event then big bad oil. It won't be nearly as easy to bail out oil companies as it was to bail out mortgages. Granted the owners of the debt are the same, banks and whomever was foolish to buy the debt from banks. Just like the last time around. I'm still looking forward to how this one plays out. Might hit a little close to home since I'm in the deepwater drilling world, still interesting from an academic view.
Isn't the Fed ultimately the counterparty to virtually ALL debt from TBTF banks? I'm not sure how counterparty will play out as a negative until such time as the US can't print at will, which will be at the end of dollar hegomony. Until then, and as we've seen since Lehman, even the most insolvent of zombies isn't allowed to go bankrupt.
The ultimate counterparty is the man you shaved this morning.
The bankrupt zombies will be us.
I see the *Poof* factor starting to creep up. Faster, and faster...
And so the 4 horsemen ride towards Wall Street.
Remember, horsemen, no prisoners.
Make sure they have the whole thing on video too so we can show it to the next round of scumbags who want to try the same thing...and to show to the congressional criminals in DC.
it's no different. it's in the air and its on the news. when even the local news has nothing good and they are chanting what do we want DEAD COPS when do we want it NOW. how long before the shit hits the fan is the question. I have a 18 yr old that honestly believes he is owed a living and I am showing him that no one owes him shit. hey al ZH readers be ready we are here enjoy the day because tomorrow dosnt look so good and the next well we will see won't we. I have been watching this unfold for 5 years and hoping this day was a nightmare but it's not and if your reading this you know what I do. good luck yall and I pray for us all!!!
Why did they leave out WTI Crude in the first chart? That would have been interesting.
hey, buddy, can you spare a trillion?
I've got some lose tarp money around here somewhere....you can have it.
The secretary will comp your parking on the way out.
Derivatives. The one who invented those things and those that approved and legalized the concept should be burnt at the stake at a public bonfire. The screams , the sizzling and the smell of burnt flesh will have a wholesome envigorating effect on the onlookers.
Put me down for a prime viewing place at the front of the crowd.
In a normal world a decrease in energy price with 50% would be a boon for (almost) everyone. Since the energy sector and it´s dependents are dwarfed by all the rest it should also have a beneficial effect as a whole. In a normal world...but then you we live in the magic kingdom with all these insane "instruments".
I used to laugh and guffaw at the worst conspiracy nuts like Fritz Springmeyer when he seriously wrote that black magic was practised to great effect by certain "elites" - or that insane character David Icke and his "alternative " theories on origin of life and aliens.
Now I am not just so sure anymore. I say - give any bankster you can find the water test and if the float pick them up and burn them. Go Salem on their asses. Minimum would be to burn a pentagram into the forehead with a red hot iron on all those that have even remotely been associated with any and all of their front organizations.
Kilgore: Smell that? You smell that?
Lance: What?
Kilgore: Burned banksters, son. Nothing else in the world smells like that.
Kilgore [kneeling]: I love the smell of burning banksters in the morning. You know, one time we had The Fed bombed, for 12 hours. When it was all over, I walked up. We didn't find one of 'em, not one stinkin' bankster body. The smell, you know that burned bankster smell, the whole hill. Smelled like...
Kilgore [sniffing, pondering, continues with certainty]: ...victory. Someday this war's gonna end.
h/t (and apologies): Francis Ford Coppola
Let them have their derivatives, as long as taxpayers arent ont he hook for bailing out their losses.
Please, try to keep up...
http://www.zerohedge.com/news/2014-12-12/presenting-303-trillion-derivat...
Put some oil on that FED balance sheet. It stuck on the way up.
And make them take delivery. I'm sure they could store at least a few hundred barrels in their empty gold vaults.
They cannot justify QE now, to inflate away the debt. Lehman was an 'argument', shale is another. Or is it just me?
Since when did the Fed have to justify QE?
Want to see Dimon, Blankfein et al swinging from a lamp post
Be my guest but do you mind if I use them as pinatas first?
Shorting Canadian banks, there'll be no FED to save them and tiny economies like Canada can't print off a few trillion to cover the problem.
Crony banking means the Fed might save anybody they feel like saving as long as the printing backed by nothing still works.
and most of Capitol Hill on down to the Half-White House..
Energy market, is the MOTHER of all markets.
Oil companies are just fine. Banks who lent money to them are in trouble. Others will take over with pennies on a dollar.
Extraction will continue with new funding coming from restructured debt, hence lower cost.
Move along. Nothing unusual.
Bank Lobby is losing and is losing big.
yeah, they might but pentagon lost big too with Hagel ... dont you agree?
Actually, Hagel timed his departure to cause maximum harm.
Obama begged him to delay it by 1 month or more. He flatly refused.
ekm.... Seriously. Hagel's departure was a negative? I thought that his appointment was a negative. I can't think of a single person appointed within the last 6 years that's been a big positive, nor anybody left that anybody else but inside the Beltway gives a rats ass about simply because the replacement ain't likely to be an improvement......
@knuckles @arius
Hagel quit. He was not fired.
Reason: Susan Rice.
He told Obama to choose between him or Rice. Obama refused to make a choice. He quit.
Now Susan Rice is the target of the media.
he was fired in not so many words, and i have a pretty good guess ... middle east, he has always been kind of pro arab kind of guy ..
OR
He was fired because he is a total idiot and has fucked up the entire middle east.
He's a total idiot, true, but the Middle East was fucked up before he came on board and remains fucked up. If he fucked it up worse, that's almost an accomplishment, given how stupendously and monumentally it was already fucked up.
"Bank Lobby is losing and is losing big."
I LOL'd. Bank lobby has nothing to worry about when CONgress has its back. Tarp 2.0, 3.0, 4.0? I wouldn't feel sorry for the banks. They won't be the losers in the end. They might appear to be, so they don't end up on the wrong end of the gun, but they are certainly NOT going to be losing big.
Hagel quit. He was not fired.
Seems to be a trend. Susan Rice huh?
They just got us on the hook for their gambling losses. They're not losing.
sorry, but that sounds like spin to me .... stay one more month is a joke when he was pushed out, and who knows why?
I think he was kicked out by the Rices and Nulands of the world for being a pacifist compared to the noe-cons Barry has himself surrounded by.
I mean, seems to me spending time on ESPN eta al, is a blatant gesture of essentially not giving a fuck anymore because the game is being played way above his head, around him and he thinks he's essentially helpless to change the world (reality sets in) because nobody listens to his empty platitudes anymore.
Right on the money, knukles. Nailed it. Game is being played way the fuck above his head and always has been. Amateur hour. I doubt he ever successfully organized anything in any community in any way. Are we even sure the first letter in his name is an 0 and not a zero?
Not to worry, all losses are now covered by the US government.
Its a good thing they all hopped aboard the Cromnibus.
Now, you're either on the Cromnibus or off the Cromnibus. If you're on the Cromnibus, and you get left behind, then you'll find it again. If you're off the bus in the first place — then it won't make a damn.
From the New and Improved Ken Kesey
If you like your Cromnibus, you can keep your Cromnibus.
Not to worry, all losses are now covered by the tax payer.
The US cannot even mathematically pay the debt it admits to.
So now the American taxpayer will cover $303 trillion in derivatives? Does anyone actually believe they'll get that amount of "value" out of US taxpayers? It's insane.
What other collateral could there possibly be? If .gov used federal lands as collateral, things will get interesting.
As for the taxpayers covering this, I say "you want cash or a check?"
the thing with loans is, that the money, or currency to be precise, is not of any interest for the bankers. it would be as nonsensical to pay shoemaker in shoes, though at least the shoes have intrinsic value.
it's good enough if you, and your children, hypothecate your future labor in exchange for the funny money. also the suitable currencies for the repayments include decline in living-standard, loss of liberties, erosion of purchasing power etc.
I see what you did there: '......not of any interest....'. (snarky snikker)
You must have misread:
Nobody ever mentioned value nor was it implied.
I mentioned value. If I'm holding an American bond, I would expect to be paid in constant dollars.
Do you think people buy these bonds expecting a 90% haircut?
I think people buying these bonds are not thinking.
Mention and expectations will not matter when it comes to haircuts. As you have no legal standing you can acquiescence or attempt to enforce something all on your own.
"Not to worry, all losses are now covered by the US government."
Sounds catchy and plausible. Till you realize that the US.gov is owned by the same people who own the Fed.
'Losses' will be eaten by the weakest and least popular bankster kids.
Wells Fargo Junk Bond book
The Wells Fargo stagecoach is about to be held up!
WFC with the largest energy lending portfolio coupled with a large HY book. Could be interesting.
the timing of the cromnibus was no accident
Post o'theday
Exactly. Who knows what kind of losses some of these banks are sitting on due to energy derivatives. Citi was making sure that when the shit hits the fan, which looks sooner rather than later, the US government has the legal recourse to bail them out again.
neither was the name...
that might be most astute observation here in long time
get ready
Definitely different this time. It is called Nirvana. Nothing to worry about here. We have changed all the rules and except for 3 or 4 days we always go up. So it is said, so it is written and so it is done. Gotta believe in the FREE capitalist system.
Until the Reaper and the Pied Piper want their due.
Sure as shit, years from now when the next AIG is bailed out because of this, Jamie and Lloyd will be testifying in congress how they had "no exposure" and would've been fine if the US taxpayers let said bank fail.
I can't wait.
The New Bolshies are now determined to crash the world economy in an attempt to destroy Russia and need the cover of the Cronybus to ensure the US taxpayer is stuck with their losses. Epic.
What I don't understand is why they didn't dismember Russia back in the 1990's.
It would have been easy meat back then. Now I highly doubt they can.A remote possibility
only, at best. Taking them on now is pure desperation.The roles are completly reverved with
the US corrupted, bankrupt and militarily spent.The MIC looks good on paper, but so did the Soviets,
and we know how that ended.
Hubris.
simple -they essentially agreed to dismember their empire -we reneged on our part of the deal -it certainly would not have been easy to dismember the remainder of the Russian Federation -they still had 20,000 nukes and their goodwill would only go so far. And why dismember Russia? Until Putin came in, we were damned close to making Russia a vassal state of the International Banksters -just like the U.S. and Europe.
Churchill should have been hung for his war crimes.
It was stated that even at their low point, when Russians were bartering goods and taking their work home as payment just to survive, the Russian military was still at 80% of cold war capacity. The military never loses its funding until all else fails. It is the last man off the sinking ship
Ah what a theater! And you and I are in the front row!
There was a lot of betting on the shale boom.
And most likely a whole lot of fraud which soon will come to light as deals come undone and paper becomes toxic and worthless, taking a lot of players down.
Nothing has been fixed. The economy is more dysfunctional.
Just like Japan, we'll have to raise the stakes after this disaster and gamble even harder tomorrow
All this shit crashed. In the 80's too. There is no way this is a surprise to anyone.
Hmmmm, EOG perhaps?
Nahhh
As it goes, the PTB become drunk with their power to subvert ....and finally go too far. We KNOW there will be a failure of the oil derivatives....we KNOW because the PTB have saddled the people with their failures....but , and only maybe, they may have gone too far this time....rather than just sucking the lifeblood out of the economy, this may kill the golden goose ....and we will finally all agree their time is over.
You mean Moral Hazard is a ghost we can't print to infinity away?
Bear Stearns showed credit was zero back then. Same thing will happen now when a counterparty blows up.
Trying to cram that derivative language in good and hard in the omnibus over the weekend. JP Dimon himself making phone calls. You know the shit is getting ready to hit the fan and the banks are getting ready to unload the losses on the taxpayer.
Well this is interesting ND production was already declining in October and rigs have further dropped off.
State officials said Friday that oil production in October declined by about 4,000 barrels per day to 1.18 million daily barrels compared with September, the first decline in eight months. Drilling for new wells also declined and is expected to decline even more in 2015.
North Dakota officials’ outlook was more gloomy than the U.S. Energy Information Administration’s. The agency on Friday issued a report reiterating that it expects U.S. crude oil production to increase 700,000 barrels per day in 2015 compared with this year. That estimate is down from an earlier projection, however.
New North Dakota regulations to reduce flaring, or wasteful burning, of natural gas at wellheads contributed to the decline in output, Helms said. After drilling wells, operators increasingly are deciding not to immediately complete them.
http://www.startribune.com/business/285687401.html
They drill the wells to satisfy their requirements under and then lock in the leases, then cap them till the market price makes it profitable to produce. Same was done in the shale gas leases in PA.
"Now our best is in the past. Thanks Putin for the best... About truthful reality perception."
http://investazy.com/blog/303.php#comments
Way back in Feb 2008, when the sub prime crisis first exploded this guy Eric Janszen wrote a superb article explaining the bubble economy, predicting the next bubble would be the renewable energy market that would burst in 2014.
He was not far wrong. The real 2014 bubble came from non conventional Oil production not from renewables.
Here is what he wrote then. Its interesting reading :
http://harpers.org/archive/2008/02/the-next-bubble/
Its worth reading this essay in totality its very clear and prescient.
www.itulip.com one of the better economic sites out there.
Thanks Falak; Janszen understands.
Anyway, the next bubble will be 'Global Warming' and the next global reserve currency will be the SDR.
Once the next bubble faces limited oil/peak minerals, and the next global reserve currency becomes overwhelmed by so little left to steal/take the desperation will lead to gold as we will be facing political collapse.
Can’t say we didn’t get proper warning!
Gail Tverberg
The drop in oil prices is simply part of a world situation where debt-growth is slowing as income growth is slowing. Citizens (including governments and businesses) are becoming less able to afford goods made with commodities of all types.
http://ourfiniteworld.com/2014/12/07/ten-reasons-why-a-severe-drop-in-oil-prices-is-a-problem/#comment-49364
You just Stolpered it, thanks!
SDR's are 60% US dollars.
But that too will change. It should be around 5%. But, let’s say 20%. So if a barrel of oil trades at SDR$50, it will cost $250.00 US dollars.
Anyway, SDR is Bank-Money (private-money) run by “The Power Elites” (political, economic, and military that were indoctrinated by prominent schools/universities) as well.
Get this over your head, America Empire is over. Once the dollar can no longer extract overseas minerals, resources, labor, and finished goods America becomes like everybody else, a 3rd world nation.
SDR buys the “The Power Elites” some time. That’s about it.
The dollar will collapse as soon as we run out of zeros.
If TPTB want to avoid a credit crunch it's really very simple this time.
There is an oil glut of 2 million barrels a day.
At $60 that's just $120 million a day. Or $3.6 billion per month.
The US can simply start adding to the strategic petroleum reserve at a rate of 2 million barrels a day. This would bring stability back to the world oil markets by soaking up demand and it costs a tiny fraction of what they were spending on QE.
We can call it QEOil.
Imagine how much oil $85bn a month would buy!
It's a trap - more you buy, price go up, less they sell, you need to buy even more,...->>> you are fucked
US gov is a preferred customer, price will stay right as long as US keeps droppin' bombs.
Why Oil Prices are Falling: The Secret Deal Between the U.S. and Saudi Arabia
What if....they're lying again and as usual and it's not 2 million barrels but 15 million barrels? Or more?
Think oil has crashed in half and still falling because of a measly 2 million extra barrels?
Gotta stop believing them.
Synchronicity, just scrolling by thinking that...Carpenter1.
Wondering if this sobering article is based on cooked happy stats.
http://www.prudentbear.com/2014/12/the-collapsing-periphery.html
It will take the Amazing Kreskin to rebalance this heavy ship.
"Even now, I know what you're thinking"
http://www.amazingkreskin.com/
Excellent suggestion if intent is to increase price of oil to stabilize markets and rescue marginal producers in US and Canada. However, if intent is to bring Russia to it's knees and offer US consumer some year end relief, then it is a stupid idea.
Watch what happens after Holidays to get your answer.
You would have to issue Fuel Stamps for the poor (like food stamps, only for fuel). You can't store that much oil for very long time.
I think there is no conspiracy behind oil prices. In October of 2012, there was a post on economic-undertow.com, titled "The mother of all free lunches". In it, it was clearly said "point of impact, two years of less". I can't say I wasn't warned, I just don't know how is this all going to play out, where it is gonna start cracking, and when and where it is going to end. So I sit and watch, chewing popcorn in between.
Where do you put the oil. With the contango in the market the last few months all places to store will fill or have which will make the overhang greater. Lower production and/or more consumption is the way it changes. Demand ain't comin back quick and I think production will remain for longer than you think cause people need the cash flow.
It can go back into the ground.
All you need is a hole and some horsepower.
Cannot view US in isolation. You would have the US, ME, Russia, etc. ramping up production thanks to the increased artificial demand--this means the US gov would have to keep increasing the amount of money to buy GLOBAL oil production as the price rises and supply glut gets larger. The cost would likely grow exponentially. It would also be another version of QE infinity as the more the gov buys the larger and less stable the bubble becomes.
NIRP will save us "-10%" and all fixed /sacr
This whole thing is gonna collapse. They can't keep up with all the moving pieces, and they're gonna fumble...if it isn't oil, it will be something else that is weakened by oil and starts to falter, and so one and so on. You KNOW it's coming...
It's maddening to watch. Like the smoker who doesn't flick their ash, and the thing just keeps getting longer, defying all the laws of physics and staying firmly attached, and you think, "C'MOOOOON you bastard! FALL already!"
Any SECOND now, because it simply can NOT go on any longer.....then they wave their arms around, and the ash STILL REMAINS ATTACHED, and you realize you will never understand these markets.
The narrative will be that, "it is all priced in" and, "it is just a hiccup" central bank intervention medicine can fix simply by taking some honey.
"Its contained!"
You're too focused man !!!
That was good!
You must be really trying hard to quit smoking. Like the analogy better than the last snowflake on the mountain before the avalanche.
Markets can remain irrational longer than you can remain solvent
you should hammer that in your head. the system is NOT ALLOWED to collapse,
As USD fades, oil could see a bounce next week
http://bullandbearmash.com/chart/wti-oil-weekly-tanks-forecast-58-suppor...
longer term, oil will head much lower, but for now, we could be back into 60s and perhaps 70s over the next few months.
So let's point out the obvious: bull market in stocks, bull market in bonds, bull market in the dollar.
Oil only makes up a one component of speculative capital and banks have been exiting the commodity space for some time now. (John Corzine effect.) So far no recession that I can see but that could change. Natural gas is well off the panic lows. I think the amount of debt "created" from Bailout Nation is a big problem relative to the recovery but hey, this is still a capitalist country.
Oil prices are notorious for monumental price corrections.
"Free" sounds about the right price to me....especially if the best that can be done with the natty is burn it up on the wire.
EMPHATICALLY YES. All TBTJ do is abuse asymmetric access to leverage and knowledge of positions to cram the other side down. And we can end it forever by liquidating the trillions of essentially fraudulently priced financial assets and SQUEEZING gold very hard. To the point if delivery failures. There's much less float in gold than float scams. As they try to crunch others, just convert stocks AND bonds to gold. They will be unable to avoid a default and their "power" will be gone.
The silly thing is, every time I take a calculator to the figures provided by the EIA or even BP, I keep coming up that there is no oil glut.
Maybe my calculator is defective, or my common core math skills are off.
BP oil production and consumption up to 2013 (Report published June 2014)
http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review...
EIA Production World production total:
http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=5&pid=53&aid=1
EIA World Oil Consumption total:
http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=50&pid=54&aid=2
And, these numbers appear a bit interesting:
http://peakoilbarrel.com/opec-november-crude-production-numbers/
China produces four million barrels of oil a day. Over one billion metric tons of coal a year too. Soon they'll be producing infinity natural as well I imagine.
Yes they consume a lot of energy...but they produce a lot too. Since these are state energy companies their "incentive" is to over produce "to pay for everything.". So no...there is no peak oil and yes their is a price collapse that will cause even more product to come to market.
So far " war with Russia" has been an uber bear for energy and materials.
It ought to be pretty clear to all by now that the oil price crash is nothing to do with a plot to bring Russia down. The figures show Saudi output has been constant over the last 2-3 years. The demand has vaporised. That's all it is. Makes a mockery of the recovery propaganda.
This IS deflation.
And once again, the Fed never saw it coming.
The Shadow Banking system is now filled with Slimmy Black Oil derivatives
Time for fullretard bullard
Go Putin.
If someone says " No problem, we are hedged". That means a counter party must pay up if the required circumstances are realized. If the Hedge market participant can't sqeeze the money out of his counter party, then HOW hedged is he really?
We have seen that with AIG and many other cases during 2008. The counter partys didn't have ability to make good their bets. We KNOW that today, the same type of Hedges are just as unable to make good if they are called on to do so.
That is where the Taxpayer comes in. He must make it all good, or must make it good through dolar devaluation of his wages.
We have let, traders, bankers, big trading houses, wall-street and everybody trade with the explicit guarantee of Tax Payer backing for all the Hedges that can't make good.
Yet we call this Freedom, Freemarket Capitalism, Personal Responsibility, were browbeat minimum wage workers for being so greedy and unthinking as to suggest their labors might be worthy of some compensation increase, after all, they are not wards of the state, they work for wages. So we call them names and attack them for being anti capitalist, yet the same people throwing stones at them, are deathly silent about everything I just commented on above. The elite 1% can trade with governmetn guarantee of profits, and insurance in the form of government covering of failed counter party hedges.
Makes you sick to see how people can piss down on some people, and let those with the most get by with theft and communism.
The jokes on them if they think dumping the massive losses on tax payers is worth something.
It's like driving a truck across a bridge with imaginary support.
Saying it has backing, don't make it so.
They are only risking enraging the beast