Up to now there's been an almost celebratory mood in markets about the once weakening but apparently now tanking energy sector.
It was going to be good for everyone, cheaper gas pump prices, more greenbacks in consumer pockets and all the other perks the media talking heads sounded off about. But a note of caution might be in store here as low becomes too low and we get the unexpected and unintended.
The collapse of the housing bubble sent the world
spiraling into recession. The collapse of the energy and commodity
bubble threatens to be just as damaging. That few are willing to even
use the term "bubble" with regard to the boom and bust in the price of oil, copper, iron ore, and other materials tells how early we still are in the painful unwind phase.
As with housing, there was a fundamental reason for these prices to soar. China has been on a historic commodities binge as it doubled the size of its economy in recent years to become one of the world's largest. Even so, those fundamentals begat—as they have so often throughout human history—a feeding frenzy.
That frenzy of financing, mining, fracking and
dealmaking exacerbated the boom and now, the bust as China's growth and
appetite for such raw materials has slowed dramatically. The collapse of this apparatus is already proving deeply painful for the world economy.use the term "bubble" with regard to the boom and bust in the price of oil, copper, iron ore, and other materials tells how early we still are in the painful unwind phase.
As with housing, there was a fundamental reason for these prices to soar. China has been on a historic commodities binge as it doubled the size of its economy in recent years to become one of the world's largest. Even so, those fundamentals begat—as they have so often throughout human history—a feeding frenzy.
Be careful. What you wish or hope for might be getting ready to intrude.
cnbc.com/2015/12/08/the-real-danger-of-the-oil-collapse.
No comments:
Post a Comment