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Teh Economic Situashun
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mattyb
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Dec 18, 2014, 08:51 AM
 
     
The Final Dakar
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Dec 18, 2014, 09:50 AM
 
It might be bad for oil companies, but its better for the US economy overall.
     
mattyb  (op)
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Dec 18, 2014, 11:09 AM
 
I wasn't focusing on the US economy.

Strange though how the DOW goes up when oil goes up : Stocks surge amid data, oil gains; Dow up 250 pts and Summers: Perceived oil-stock drop link surprising

Notice he says "on balance" in the second article.

Also : Winners and losers of oil price plunge - FT.com where they talk about the emerging economies will benefit more.
     
The Final Dakar
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Dec 18, 2014, 11:17 AM
 
Originally Posted by mattyb View Post
I wasn't focusing on the US economy.
It's what I probably understand best though.
     
osiris
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Dec 18, 2014, 11:27 AM
 
well, if it's good for the American people, Wall street tanks - and vice versa.
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mattyb  (op)
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Dec 18, 2014, 04:13 PM
 
A while ago there was an article about if oil went above or below a certain level that it wasn't good, due to Middle-Easterners investing in US stocks. There was a sweet spot that people were happy with.

That FT article that I linked to above is pretty good with a break-down for oil producers and the larger economies.

I do nearly 40 miles per day with my car*, so the price drop has really been appreciated. I paid 1.08€ per litre at the last fill-up. Thats about $5 per gallon I think.

*Yes, I realise that this isn't much for the North Americans.
     
turtle777
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Dec 18, 2014, 05:44 PM
 
My prediction: full economic crash ahead in the next 12-15 months.

Low oil price is a margin call on $3Tr. debt accumulated in the oil and gas industry.
This will not only take down explorers and producers, but also banks and financial institutions, just like the subprime debt crisis did in 2007/2008.

In the process, multiple countries will have a full fledged currency crisis with bond defaults. This will further fuel the crash.

-t
( Last edited by turtle777; Dec 19, 2014 at 02:56 PM. )
     
mattyb  (op)
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Dec 18, 2014, 06:43 PM
 
So, NOT good, for any economy?
     
Cap'n Tightpants
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Dec 18, 2014, 06:59 PM
 
It's good for the Saudi economy, even at less money /brl.
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Mike Wuerthele
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Dec 18, 2014, 07:47 PM
 
Not to mention, helps to quell any need for oil independence or alternative fuels.
     
turtle777
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Dec 18, 2014, 10:32 PM
 
Originally Posted by Cap'n Tightpants View Post
It's good for the Saudi economy, even at less money /brl.
Not really.



In general, the middle eastern oil countries have maneuvered themselves into a big predicament.
Their life style and the approval of the (dumb) masses was purchased by handouts financed by oil.

If oil remains low, they will have a crisis a la Egypt on their hands.
The only reason why they are not curbing oil production is because they can't afford it. They are addicted to oil income.

-t
     
Doc HM
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Dec 19, 2014, 09:33 AM
 
Originally Posted by turtle777 View Post
My prediction: full economic crash ahead in the next 12-15 months.

Low oil price is a margin call on $3B debt accumulated in the oil and gas industry.

-t
Isn't 3B$ rather a small amount? spread across a hugely profitable industry?
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ShortcutToMoncton
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Dec 19, 2014, 09:36 AM
 
Yeah I think we discussed this a while back. Middle East technically has the "cheap oil", but they have essentially modernized public welfare services based on having massive oil revenues. Once oil goes below $80-90 they're running brutal deficits.
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SpaceMonkey
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Dec 19, 2014, 12:49 PM
 
Too many unknowns. It's unclear how willing Saudi Arabia is to shoulder even more the burden of lowering production (their break-even point is less than the aggregate shown on Turtle's graph, and they have large cash reserves), how price-responsive U.S. shale oil production currently is, and how price-responsive Chinese demand currently is.

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The Final Dakar
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Dec 19, 2014, 01:04 PM
 
Call me when turtle predicts something good for a change. He's been doom and gloom forever, so eventually he'll be right.
     
turtle777
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Dec 19, 2014, 02:57 PM
 
Originally Posted by Doc HM View Post
Isn't 3B$ rather a small amount? spread across a hugely profitable industry?
Indeed. But it's a typo. Estimates range from $800B up to $3Trillion.

Corrected. above post.

As a comparison: Subprime debt was estimated up to $1.5T. So half of it.

-t
     
   
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