Posted on 01/01/2015 6:27:40 AM PST by HomerBohn
The American people are feeling really good right about now. For example, Gallup’s economic confidence index has hit the highest level that we have seen since the last recession. In addition, nearly half of all Americans believe that 2015 will be a better year than 2014 was, and only about 10 percent believe that it will be a worse year. And a lot of people are generally feeling quite good about the people that have been leading our nation. According to Gallup, once again this year Hillary Clinton is the most admired woman in America and Barack Obama is the most admired man in America. I don’t know what that says about our nation, but it can’t be good. Unfortunately, when things seem to be going well common sense tends to go out the window. A couple days ago, the Guardian ran an article entitled “Goodbye to one of the best years in history“, and a whole lot of people out there are feeling really optimistic these days. But should they be?
Sadly, what we are experiencing right now is so similar to what we witnessed in 2007 and early 2008. The stock market had been on a great run, people were flipping houses like crazy and most people were convinced that the party would never end.
But then it did end – very painfully.
The signs of trouble were there, but most people chose to ignore them.
Sadly, the exact same thing is happening again.
On Monday, the price of oil hit a brand new five year low. As I write this, U.S. oil is sitting at a price of $53.76 a barrel, which is nearly a 50 percent decline from the peak earlier this year.
There is only one other time in history when the price of oil has declined by more than 50 dollars a barrel in such a short time frame. That was back in the middle of 2008, shortly before the worst stock market crash since the Great Depression.
Unless the price of oil starts really bouncing back, the U.S. economy is going to be hit really hard.
Since 2009, oil industry employment has risen by 50 percent. And jobs in the oil industry pay quite well. One figure that I saw put the average weekly wage at about 1700 dollars.
But now we aren’t going to be gaining those types of jobs. Instead, we are going to rapidly start losing them.
Already, the oil rig count has dropped for three weeks in a row and is now at an 8 month low. And as the oil industry suffers, all of the industries that it supports are also going to start feeling the pain. In fact, Business Insider is reporting that Texas business executives are “freaked out” about what is happening…
Business executives in Texas are worried about the drop in oil prices.
On Monday, the Dallas Fed’s latest manufacturing survey showed that activity in Texas was slowing down.
The latest composite index came in at 4.1, widely missing expectations and down big from November’s reading. Expectations were for the index to come in at 9, down from 10.5 last month.
So while most Americans are feeling really good about the coming year, many of those with an inside view are becoming quite alarmed. One Texas business executive went so far as to say that the stunning decline in oil prices was “going to make things ugly … quickly.“
Meanwhile, the 9 trillion dollar U.S. dollar carry trade is starting to unwind.
The following is an excerpt from a recent Zero Hedge article…
Oil’s collapse is predicated by one major event: the explosion of the US Dollar carry trade. Worldwide, there is over $9 TRILLION in borrowed US Dollars that has been ploughed into risk assets.
Energy projects, particularly Oil Shale in the US, are one of the prime spots for this. But it is not the only one. Economies that are closely aligned with commodities (all of which are priced in US Dollars) are getting demolished too.
Just about everything will be hit as well. Most of the “recovery” of the last five years has been fueled by cheap borrowed Dollars. Now that the US Dollar has broken out of a multi-year range, you’re going to see more and more “risk assets” (read: projects or investments fueled by borrowed Dollars) blow up. Oil is just the beginning, not a standalone story.
If things really pick up steam, there’s over $9 TRILLION worth of potential explosions waiting in the wings. Imagine if the entire economies of both Germany and Japan exploded and you’ve got a decent idea of the size of the potential impact on the financial system.
And that’s assuming NO increased leverage from derivative usage.
Ouch.
And yes, as that last excerpt mentioned, derivatives could soon become a massive problem. The big banks are holding trillions in commodity derivatives that could blow up if the price of oil does not rebound. Overall, there are five U.S. banks that each have more than 40 trillion dollars of exposure to derivatives of all types, and the total global derivatives bubble is at least 700 trillion dollars at this point.
At the same time, many are becoming concerned that the unprecedented bond bubble that we are witnessing could soon implode and trillions of dollars of “wealth” could disappear into thin air.
In fact, Bloomberg says that we should “get ready for a disastrous year” for bonds…
Get ready for a disastrous year for U.S. government bonds. That’s the message forecasters on Wall Street are sending.
With Federal Reserve Chair Janet Yellen poised to raise interest rates in 2015 for the first time in almost a decade, prognosticators are convinced Treasury yields have nowhere to go except up. Their calls for higher yields next year are the most aggressive since 2009, when U.S. debt securities suffered record losses, according to data compiled by Bloomberg.
That certainly does not sound very optimistic, does it?
Anyone with even a minimal amount of intelligence should be able to see the massive financial bubbles that the central banks of the world have created, and anyone with even a minimal amount of intelligence should be able to see that we are heading for a massive financial implosion which will be extraordinarily painful.
Unfortunately, as I wrote about yesterday, the American people have become “zombiefied“. Instead of thinking for themselves, they let “the matrix” do their thinking for them. And right now “the matrix” is telling them that everything is going to be just fine in 2015.
If you do not think that there is a propaganda machine that tells us what to think, I want you to watch the video posted below very carefully. This video makes it so obvious that even a small child can understand it…
Analysts often underestimate the ability of American optimism to overcome investment fundamentals. This poll tells me 2015 will be an up year in spite of all the structural rot - Obama is not on the verge of election or re-election, and the lower energy prices are quickly thawing out consumer spending habits.
Thanks to the utter fools running and putting the finishing touches on ruining California the price of eggs now soars in all of America even as I type this.
Their feckless edict demanding that effective today California poultry and egg producers must increase the apartments assigned to each chicken by 67%.
Meanwhile, in the rest of the nation, medium eggs have already soared past $2.69/ Doz. and large eggs are over $3.00. But then, all food items have risen extravagantly and needlessly!
Eliminate the regulators, but don’t throw eggs at them.
According to Faux News the majority of Americans love what Obama is doing.
Fox News Poll: Voters say 2014 was a good year
By Victoria Balara
·Published December 30, 2014
·FoxNews.com
For the second year in a row, more than half of voters feel the past twelve months have been good for them and their family. Fifty-seven percent feel that way, up from 51 percent last December. Only 34 percent felt good at the end of 2009, the first time the question was asked on a Fox News poll.
The problem with this is that the sheiks pay all arab families a large stipend paid out of their massive oil revenue. Further, they construct huge edifices to display their wealthy status as nations. This revenue is diminishing drastically and soon they will be in almost as dire economic condition as our pitiful nation.
Then there is the issue of reserves.
and wait till the debt bubble collapses.
consumers have more money from lower gas prices .but US consumers are spending money on electronics made in China while the only USA industry the oil producing industry is collapsing.i’d say a recession is coming . at least people will get madder at Obama and that's good
We live in the sticks.
Got neighbors with chickens. They sell em, cheap. (eggs, not chickens)
GOOOOD EGGS!
If I was a Saudi royal, I’d keep my head low about now. Ruskies and Persians be hatin’....
Let's make a resolution to log in again on January 1, 2015 and then let's talk again about doom.
We may be scrambling for copies of Matt Bracken's trilogy to see what might happen next.
RE: Unless the price of oil starts really bouncing back, the U.S. economy is going to be hit really hard.
I could fill gas for my car for less than $1.50/gallon in the mid to late 1990’s, why wasn’t the economy of the USA ( and even Texas, which was already an oil producing state ) hit hard then?
In fact the mid to late 1990’s were considered the great years for the economy.
I have only one word...Shemitah...Google it.
https://www.youtube.com/watch?v=W8B14NSIWc8
>> The stock market had been on a great run, people were flipping houses like crazy and most people were convinced that the party would never end.
I know a lot of gold bugs (some of ‘em right here!) who were convinced that gold was going to $3000, too.
That’s not much of a resolution.
Low oil prices hurt retirement funds
Dan Boyce
Inside Energy
December 28, 2014
While consumers continue to feel relief at the gas pump due to falling oil prices, the story is more complicated for another piece of their financial picture. Nearly all U.S. retirement accounts are solidly invested in oil and gas companies, many of which have seen their stock prices slide alongside crude oil.
Oil was at $55 to $60 a barrel just before Christmas, down from a high of more than $100 per barrel this summer.
Ultimately, oil and gas is not a critical part of our retirement funds. But, make no mistake, our retirement funds are absolutely critical for the oil and gas industry. The American Petroleum Institute says about 70 percent of U.S. oil company worth is owned by tens of millions of U.S. households through our IRAs, our pensions and our mutual funds.
“The Sky Is Falling, Part 257”
Welcome to Free Republic.
Sometimes a post can become somewhat confusing and loose a lot of meaning if the indentations in the original article are lost. Same applies to links.
not breaking.
US economy’s been on a decline since the 1990’s. 1990’s horrible for the USA ,industry declined, debt increased ,illegals increased all thanks to clinton.
economy just fueled by massive debt.
China makes everything. the only thing in the USA was the oil fracking industry .now Obama and saudi conspiring to bring that down.
USA is doing so good? look at the debt. what’s our major industry , fast food joints.
Thanks, learned new word...
Investing in the ObamaFund; Treasury rolls out a new savings plan without a Congressional vote.
EXCERPT—--the WH wants you to consider a retirement plan that will invest in nothing but US government debt. Any financial professional who advised this—would be sued for malpractice. But asset allocation is merely one of the problems with the new “myRA” fund rolling out this month.
A form of Roth IRA that allows people to save after-tax dollars and watch them grow tax-free until retirement, the new myRA offers a single investment option. It’s a private version of the G Fund that is available to federal workers and has lately been delivering annual returns of about 2% on its portfolio of Treasury securities.
Readers will recall Obama’s announcement in January’s SOTU address.....said he would direct the Treasury to create this new retirement plan, which was puzzling because such plans are normally created by law, not Presidential order. Treasury is now offering the accounts and has hired Texas-based Comerica to manage them with a partner -----Fidelity National Information Services. But the executive branch received no new authority from Congress to launch the program. (SOURCE. wsj.com)
I assume you mean 2016. Anyway, if things are “that bad” I doubt I’ll be reading books about crappy times.
Having contingency plans is a good idea, being chicken little is a form of cowardice. Strap on a pair and face the world. Historically speaking, we live in an excellent time.
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