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Old 12-09-2014, 04:25 AM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,887
oil boom and bust,, whodunit

During the construction days of the Alaska pipeline, Pastor Lindsey Williams volunteered his services to the oil barons at pipeline headquarters. They had him sit in on their meetings so he would know where things were going. He was the chaplain to the roughnecks working on the pipeline. They fed him quite a bit of information and really opened his eyes. He wrote and published a book, "The oil non-crisis". If you consider that the original GOV lease at Prudhoe was a 10 Mile by 10 mile area, you get the idea that GOV didn't want to discover too much oil. The petroleum reserves in the arctic are ENORMOUS.
Many years ago they drilled "Gull Island" and found a huge bonanza. It was capped. Williams reported this and just recently, it was uncapped.

Pastor Williams regularly carried messages that his elite friends wanted aired out. A few years ago, they told him that they were going to drive oil down to $ 25 a barrel. Against the advice of his colleagues, he reported this. It came to pass. Many firms that had contracts locked in had to declare bankruptcy.
Both GOV and the speculators make more off a barrel of oil that the oil companies do. The oil companies are losing a lot of money and are probably unhappy about that.
GOV controls the leases and the taxes. The banks have financialized energy,, inflated the price and are making a killing. Only the oil companies produce oil. They can manipulate the output. Much of the Alaskan oil has sand in it and is abrading the pipeline. The oil majors were going to put in a new pipeline and use the existing pipeline to transport natural gas. They never did it.

The oil majors crashed the price already one time. Once again, the speculators have driven up the price. An old figure that I had is that; the speculators add $ 26 per barrel. Once again, the price has been crashed down. Once again, it is trashing the speculators. This time is different. The highly leveraged and (can't lose) bets are pushed into other areas with oil profits as the base of finance. Since $ 100 oil was a sure bet, everybody took their sure-to-appear profits and invested in everything else.

A couple more headlines; "Oil drops $2 to five-year low on oversupply"
Oil drops $2 to five-year low on oversupply

"Energy companies sold $50 billion in junk bonds through October, 14% of all junk bonds issued! But junk-rated energy companies trying to raise new money to service old debt or to fund costly fracking or off-shore drilling operations are suddenly hitting resistance.

And the erstwhile booming leveraged loans, the ugly sisters of junk bonds, are causing the Fed to have conniptions"
I suspect that the buyers of these junk bonds have very little protection. So, energy companies sold junk bonds to banks.
This is how those loans are performing;
Oil and Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next | Wolf Street

From The Automatic Earth; "This is what makes the falling oil prices so dangerous. As I must have said a million times in just the past few weeks, itís not about the energy, itís about the money."
"Oil, Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next "
"Smaller drillers are in trouble. All of them had horrific single-day plunges, some over 30%, on ďBlack FridayĒ after OPECís Thanksgiving decision [..] Traders who tried to catch these stocks have gotten their fingers sliced off since then:

Goodrich Petroleum -88% since June. Energy XXI -86% since June. Sanchez Energy -78% since June. Oasis Petroleum -75% since July. "
"even the 43 largest, most diversified players in the energy sector that are part of the S&P 500 are grappling with the new reality: analysts chopped earnings estimates by 20.5% since September 30, according to FactSet. "
More Than A Quantum Of Fragility - The Automatic Earth
These elite friends have e-mailed Lindsey to tell him that they are going to crash the economy in October.

The Bank of international Settlements seems to be getting quite worried; " The highly abnormal is becoming uncomfortably normal. Central banks and markets have been pushing benchmark sovereign yields to extraordinary lows - unimaginable just a few years back. Three-year government bond yields are well below zero in Germany, around zero in Japan and below 1 per cent in the United States. Moreover, estimates of term premia are pointing south again, with some evolving firmly in negative territory. And as all this is happening, global growth - in inflation-adjusted terms - is close to historical averages. There is something vaguely troubling when the unthinkable becomes routine."

If you remember the plot line from Atlas Shrugged, Francisco d'Anconia had his own ships sunk to deprive the GOV of copper ore. At one point, the elites told Lindsey Williams that they would crash the economy when obamacare was fully implemented.
The big slowdown in China hit about the same time that fracking boomed. It boomed big enough to draw in all the hot money. The next problem is that all this volatility will keep most investors from coming back.
Armstrong says that October, 2015 is when the major riots start in America.
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