Before you throw yourselves into lit fireplaces, I want you to consider one thing: the entire country might, very well, go bankrupt one day. Aside from the mountains of national debt, $19 trillion and counting, our burgeoning oil and gas sector has about $250 billion, most of which is now low quality paper, thanks to the collapse in crude.
Just like when home prices collapsed, causing the underlying debt of those who financed that sort of shit to vanish, one could make a similar argument that the shale oil boom laid the seeds for the complete and utter annihilation of these United Steaks of America.
Let me explain.
The credit crisis of 2008, actually started in 2007. Things got dicey and were quickly swept under the rug. As home prices continued to decline, the credit quality of that paper got downgraded, causing banks to take action, raise capital, in order to offset the write downs they were taking on illiquid, seldom traded, debt instruments. I suspect a similar scenario, albeit smaller, might be taking place now.
As that price of crude dives lower, the knife inside of CHK turns rapidly. Their guts are being mangled, strewn out across the ground. It’s only a matter of time before it bleeds out. If CHK were to go bankrupt, who is affected by it? I am not merely picking on CHK. This is a question that needs answers. Who owns all of that oil and gas debt?
How much does CFR, a Texas bank, own?
Within time, all of these questions will be answered. Since the drop in crude is somewhat fresh, I’m guessing the financial ramifications won’t be realized until Q1 of 2016.
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Reminds me of the song “Serial Killer” on Snoop’s First album.
no shit sherlock — isn’t the reference obvious to all?
My guess would be, “fuck no it isn’t.”
That’s Sloop, not Snoop. But thank you anyway.
Was thinking the same thing, countries that depend on crude for part of all of there GDP ,are dangling over a fire. The natives are getting restless . Dennis hopper has no more cigarettes or spam to throw to the masses. Everybody will stop rowing and turn on there leaders.
So that may be why you were tweeting old school 2008 links to classic IBC blogs. Enjoyed reading them last night.
I am writing a book, compiling my live blogging from 2007-2009. It should be archived. I will compile them in a manageable way and self publish it.
What would your pen name be?
.
Seymour Butz ???
😉
.
brilliant !
autographed copy please,
You have to consider adding some of the pictures / art if you can get away with it Fly. That poof Merlin is one I remember well from your 2007-2009 era
I will
Let’s start with BEN and OAK. How much might be in BX?
+1
Excellent comment never thought of this, but wondering if this is the reason why pe firms are getting beat down lately
Look at MET and LNC
Looking forward to the book
And GS, MS, C, JPM have loan exposure. Not to mention emerging market energy cos. Ironically, an interest rate increase by the Fed had it occurred (seen as a positive because it would increase interest rate spreads for the banks) might actually damage them by setting off a panic and defaults in the subprime energy debt market. OK, now I’m sounding too zerohedge-y.
On the other hand lower oil goes more they can add taxes on it with nobody crying much
Alright, one more thing. The Fed warned the money center banks to curtail energy lending back in 2013. You can see how persuasive it was.
When that false preacher(maybe) got beat to death with a wooden bowling pin. That is exactly what will happen to orphans and widows United Steaks wide that were sold the garbage from the shale fraud. Possibly granny starts buying crude? Gods work should demand it.
I love how you use CHK as an example. That company, and it’s filthy founder, Aubrey McClendan, was instrumental in one of the largest scams on the American people. They inflated the cost of Nat Gas to ridiculous heights back in the mid 2000’s. I was quite happy to see Aubrey get whisked away with his tail between his legs a few years ago. Now that the entire company is headed under, I can only smile and laugh.
Aubrey should be in prison together with Ken Lay and friends.
Chk is a zero
No, it won’t , Icahn and new CEO has huge skin in it.
Icahn once rode blockbuster all the way to zero
Your true calling may be as an author. Looking forward to the book.
I choose to live. Dabbling in kol. Thousand cuts style.
I spent a time over the last year and change obsessed with shorting the hell out of Canadian Banks under similar logic. I turned into one of those asholes obsessed with a short idea that could have catastrophic downside so i could feel smarter than everyone else. I blame Michael Lewis. Now i just check on them when i think the broader market has potential for intermediate downside and oil doesn’t look poised to rip. Like a rational person. I will throw some of our US brethren into the mix, which would be something of a paradox given that conventional wisdom dictates that regional banks will thrive in a rising rate environment.
Everyone wants to be exceptional, nail the big trade, become a gazillionaire. It’s gambling that way
Shade advice.