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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

If you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer. As I write this, the price of U.S. oil is sitting at $45.76 a barrel. It has fallen by more than 60 dollars a barrel since June. There is only one other time in history when we have seen anything like this happen before. That was in 2008, just prior to the worst financial crisis since the Great Depression. But following the financial crisis of 2008, the price of oil rebounded fairly rapidly. As you will see below, there are very strong reasons to believe that it will not happen this time. And the longer the price of oil stays this low, the worse our problems are going to get. At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before. So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead. Because if not, the price of oil is going to absolutely rip the global economy to shreds.


(Excerpt) Read more at seekingalpha.com ...


TOPICS: Business/Economy; Editorial; Government; News/Current Events
KEYWORDS: dollar; economy; oil; stockmarket
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To: SkyPilot

The energy companies owes banks Billions,

And so does EVERYONE else, when the Banks finish stripping the assets from the people as a result of this, the price will go back up. Then we will do it all over again,and again,again...


21 posted on 01/14/2015 6:06:18 PM PST by eyeamok
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To: SkyPilot

For years economists have been telling us low oil prices stimulated the economy. What changed?


22 posted on 01/14/2015 6:07:53 PM PST by raybbr (Obamacare needs a death panel.)
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To: SkyPilot

So I guess if gas was $5.00/gal the “Global Economy” would be booming!

Yeah, whatever. The only thing booming would be oil profits. Everyone else would be paying 1/4 to 1/3 of their earnings for gas for their cars.

Any crash on the stock market will be the result of printing money like it was going out of style and dumping it in the market. Another government created disaster.


23 posted on 01/14/2015 6:09:54 PM PST by CapnJack
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To: SkyPilot

Derivatives need to die.


24 posted on 01/14/2015 6:11:38 PM PST by Paladin2
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To: raybbr
I think most economists know it is great for the average consumer and the middle class. They will have more money to spend in other parts of the economy, money for college payments, money to save or pay off other debt, etc.

But.....

The banks will demand they get their loans back, and will put the brakes on further credit. That makes the Fed very, very nervous.

Falling oil prices hitting economic growth: Fed (7 hours ago)

25 posted on 01/14/2015 6:13:37 PM PST by SkyPilot ("I am the way and the truth and the life. No one comes to the Father except through me." John 14:6)
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To: Star Traveler

I never thought I’d see the day people would be complaining about low gas prices...


26 posted on 01/14/2015 6:14:06 PM PST by 38special (For real, y'all.)
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To: SkyPilot
That was in 2008, just prior to the worst financial crisis since the Great Depression.

Obama said that in every one of his speeches in the 2008 campaign. Then, when he failed to do anything about it except pass Porkulus, he said it was even worse than they'd thought, which, I suppose, means that it was the worst economy since the Black Plague.

27 posted on 01/14/2015 6:14:46 PM PST by Future Snake Eater (CrossFit.com)
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To: Jim Noble
The men in this picture are going to be swinging from ropes before this is all over.

Maybe not swinging from ropes but very broke!!! They pumped crude future prices just a tad too high! The chickens are coming home to roost.....

28 posted on 01/14/2015 6:14:54 PM PST by eeriegeno (<p>)
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To: Mark17
How did the "global economy" survive, when oil prices were low enough, that gasoline was 30 cents a gallon?

Because cost of leases, equipment, drilling and labor were also ridiculously low by today's standards. The cost of doing business was low by today's standards, thus were retail prices.

29 posted on 01/14/2015 6:14:59 PM PST by Bloody Sam Roberts (Life and death are but temporary states. But Freedom endures forever.)
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To: Paladin2
Derivatives need to die.

That's a lot of dying.

The $12 Trillion Ticking Time Bomb

30 posted on 01/14/2015 6:15:04 PM PST by SkyPilot ("I am the way and the truth and the life. No one comes to the Father except through me." John 14:6)
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To: SkyPilot; All
Will somebody please refresh my memory? I thought that the financial mortgage crisis associated with 2008 was cause by homeowners who chose to try to fill their vehicle’s tanks on $4 / gallon gas instead of paying their mortgages.
31 posted on 01/14/2015 6:15:50 PM PST by Amendment10
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To: 38special
I never thought I’d see the day people would be complaining about low gas prices...

I never thought I'd see the day a guy from Kenya named Hussein would be re-elected POTUS with $4/gal gas, 8% unemployment (13% actual), surging food prices, and trillion dollar deficits.

Sadly America has changed profoundly....

32 posted on 01/14/2015 6:16:16 PM PST by nascarnation (....)
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To: Eric in the Ozarks

It keeps moving down around here ... Tulsa at about $1.65 and Oklahoma City at about $1.55.


33 posted on 01/14/2015 6:16:20 PM PST by Star Traveler (Remember to keep the Messiah of Israel in the One-World Government that we look forward to coming)
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To: Mark17
How did the "global economy" survive, when oil prices were low enough, that gasoline was 30 cents a gallon?

I believe there's been a tad bit of inflation since then. A scintilla, really.

34 posted on 01/14/2015 6:16:48 PM PST by Future Snake Eater (CrossFit.com)
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To: The_Media_never_lie

...and the chilluns.


35 posted on 01/14/2015 6:18:19 PM PST by moovova
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To: SkyPilot
The banks will demand they get their loans back, and will put the brakes on further credit. That makes the Fed very, very nervous.

Do you think we can survive without the FED?

36 posted on 01/14/2015 6:18:52 PM PST by Karl Spooner
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To: CapnJack
So I guess if gas was $5.00/gal the “Global Economy” would be booming!

Gas prices went ballistic in the first 5 years that Obama was in office (from something like $1.85 to almost $4.00 for a time).

The banks and those who loaned money to energy companies loved it. Russia loved it. Iran loved it. Venezuela loved it. Energy stocks loved it.

If you or your spouse lost your job, or your wages were flat - you were largely screwed over, and then Obama's Bureau of Labor and Statistics told you that energy and food prices don't count towards inflation estimates - so there was no inflation! Life is grand!

Any crash on the stock market will be the result of printing money like it was going out of style and dumping it in the market. Another government created disaster.

Exactly.

37 posted on 01/14/2015 6:19:31 PM PST by SkyPilot ("I am the way and the truth and the life. No one comes to the Father except through me." John 14:6)
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To: Future Snake Eater

I believe there’s been a tad bit of inflation since then. A scintilla, really.

_________________

thank you for that. Perhaps we need to teach a Freeper Econ course?


38 posted on 01/14/2015 6:20:15 PM PST by Chickensoup (Leftist totalitarian fascism is on the move.)
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To: SkyPilot

This looks like a lot of fear mongering about nothing. Some high yield bonds issued by some oil patch companies will default. Junk bonds are risky, that’s why they have a high yield in the first place.

I fail to see how that is going to bring down the world economy. The majority of the world doesn’t own high risk, high yield junk bonds but they do benefit from lower energy costs.

This is hardly comparable to the housing bubble when trillions of dollars of high risk paper was misleadingly rated AAA. Investors who bought the high yield energy sector junk bonds knew that they were taking a risk, this wasn’t the case during the housing bubble.


39 posted on 01/14/2015 6:20:48 PM PST by Pelham (WWIII. Islam vs the West)
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To: Jim Noble
Your post #5 asks questions seldom thought about by anyone.

I liked it a lot.

40 posted on 01/14/2015 6:21:09 PM PST by VideoDoctor
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