How The Deflationary Collapse Of Oil Will Pop The Bond Bubble...

Yes, so you get my drift.

It was an interesting thing for you to write that they could phase this in without too much overt attention, as I sort of had different images in my head regarding that. I think also that North & Central America will have different scenarios to Australia, as will Africa & Europe. We don't really have as many ghettos here (yet!!).

Keep up the good work mate, if it wasn't for you, we'd have to rely on nutcase conspiracy theorists for our alternate points of view! Tin foil hats anyone? lol

Dear Saddletramp:

Might be a "liquidity crisis" in our future.

[link to www.marketwatch.com]

pdog

If the collapse in Junk Bonds triggers a cascade of CDS and CDO's in the derivative markets we will most definitely see some form of liquidity crunch, the price of oil will automatically effect the credit status of many small and mid-size producers...

EU said to be ‘noncompliant’ with Basel III rules on capital


""The EU legislation is not compliant, certainly not on the definition of capital," Nicolas Veron, a fellow at research group Breugel, said on Monday. "What happens next depends crucially on the attitude" of the European Central Bank. "As a supervisor, there are a lot of things the ECB could do to bring the eurozone closer to Basel III compliance," he said.

The EU was found to be "materially noncompliant" with parts of Basel capital rules in a preliminary probe two years ago, including by weakening the treatment of banks with insurance units set out in the latest international standard known as Basel III.

The 2012 report, based on a draft version of the relevant EU legislation, also challenged the bloc’s practice of allowing banks that measure capital requirements using internal models to benefit from rules allowing a zero-risk weighting for holdings of sovereign debt.

Basel III more than triples the minimum amount of core capital that internationally active banks must have to at least 7% of their risk-weighted assets. It also seeks to tackle other weaknesses exposed by the 2008 financial crisis."

[link to www.bdlive.co.za]

US was found materially noncompliant in one area — the report singled out provisions in the Dodd-Frank legislation banning the use of external credit ratings in bank capital requirements.

how about...dropping the price of oil will keep the precious metal people at bay- garner more investment in oil futures because you know sweet crude is worth significantly more than $65...

If you play the game - you keep $US and investment preoccupied in the dollars for oil trade
If you own huge $us dollar treasuries and also a lot of oil resources- you are not interested in watch one or the other drop off a precipice..current the run up in the USDX offsets the drop in oil prices

liken it to the Japanese swap

Edit: deleted due to repeated info. Sorry ST

This 2008 all over again except they rearranged the deck chairs... this time real pain is coming

"The oil industry is now in a frenzy about how much further oil prices could fall with the Chicago Mercantile Exchange reporting that it has a surge of investors betting US crude – now $65 per barrel – could fall eventually as low as $40."

[link to www.theguardian.com]

I don't mean to say I told you so, but I told you so...

Keep shorting until March...

if it keeps falling like this till March, wont the entire system unwind by then?

Bank of America sees $50 oil as Opec dies

"Our biggest worry is the end of the liquidity cycle. The Fed is done. The reach for yield that we have seen since 2009 is going into reverse”, said Bank of America.

The Opec oil cartel no longer exists in any meaningful sense and crude prices will slump to $50 a barrel over the coming months as market forces shake out the weakest producers, Bank of America has warned.

Francisco Blanch, the bank’s commodity chief, said Opec is “effectively dissolved” after it failed to stabilize prices at its last meeting. “The consequences are profound and long-lasting,“ he said.

The free market will now set the global cost of oil, leading to a new era of wild price swings and disorderly trading that benefits only the Mid-East petro-states with deepest pockets such as Saudi Arabia.

The bank said in its year-end report that at least 15pc of US shale producers are losing money at current prices, and more than half will be under water if US crude falls below $55. The high-cost producers in the Permian basin will be the first to “feel the pain” and may soon have to cut back on production.

current slump will choke off shale projects in Argentina and Mexico, and will force retrenchment in Canadian oil sands and some of Russia’s remote fields.

It will take six months or so to whittle away the 1m barrels a day of excess oil on the market – with US crude falling to $50 - given that supply and demand are both “inelastic” in the short-run. That will create the beginnings of the next shortage. “We expect a pretty sharp rebound to the high $80s or even $90 in the second half of next year,” said Sabine Schels, the bank’s energy expert.

[link to www.telegraph.co.uk]

What a ride with WTI today... 59.60 !!! Wow !!!

Can it go lower?



Edit 12/12: Yup, it can...

ing






So saddletramp, with oil being as low as it is now, what can we expect to happen to our economy in the coming months?