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Old 12-26-2018, 04:04 PM
Danny B Danny B is online now
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,894
Oil,,, the dept poison is back and, spreading

In a general sense, the economy goes down when the cost of energy goes up. In a general sense, the financial sector goes down when the cost of oil goes down. Oil is going down.
The Kuwaitis say that they can extend the production cuts until it finally causes a rise in price. The price of oil now is 1$ a gallon,,, $42 a barrel.
The IMF says that Saudi Arabia could be bankrupt by 2020. That would definitely cause financial markets to puke up.

"When asked why stock prices are falling, the talking heads on television and the internet point to the Fed’s continuing interest rate hikes and the ongoing trade war with China. Those factors are important, but there’s another component that gets less attention: soaring levels of debt. Much of that debt is of highly dubious quality. "
"financial wizards on Wall Street turned sub-prime mortgages into mortgaged-back securities called collateralized debt obligations"
"However, with the help of global credit rating agencies, the purveyors of mortgage-backed securities were able to do something roughly akin to converting lead into gold."

Since the banks were rated AAA, the ratings agencies rated the sub-prime loans AAA.
"Millions of borrowers defaulted on their mortgages, and the value of collateralized debt obligations collapsed. Then the banks and insurance companies backing those securities started to collapse, along with stock markets worldwide.

Now it’s happening again. Credit rating agencies are once again using questionable assumptions to give trillions of dollars in dodgy debt much higher ratings than is deserved."
"he volume of debt rated BBB- has ballooned from $700 billion in 2008 to $3 trillion today.

Drilling down into these numbers, there are some alarming statistics. In 2007, companies rated BBB- had an average net debt of 2.1 times earnings. Today, that ratio is 3.2. And more than a third of companies with a BBB- rating have a debt-to-earnings ratio larger than five."
"I won’t be surprised if a large chunk of supposedly investment-grade debt is effectively junk and written off if the correction we’re now experiencing in the stock market turns into a recession. And that could trigger a financial crisis that dwarfs the one that we experienced a decade ago."

"in the early 2000s, the Fed’s easy-money bias spawned a monstrous credit bubble, which subsidized the leveraged monetization of housing-market froth.

And so it went, from bubble to bubble. The more the real economy became dependent on the asset economy, the tougher it became for the Fed to break the daisy chain."
The economy SHOULD have been commensurate with our wages. It took serial bubbles to save the finance sector from a crash with reality. At the same time, the welfare-warfare State had to be constantly financed and the State was not about to reel in the FED.

12/26 House Democrats line up behind huge expansion of gov’t – Daily Caller Just what we need.
12/25 Trump ‘plunging us into chaos’, Democrats say, as markets tank – Guardian
Yep, put the dems in charge and , everything will be great.
California is starting to enter it's own special hell.
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