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Non-Tech : Kirk's Market Thoughts -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (2406)	12/11/2014 5:33:43 PM
From: Jerome	1 Recommendation Recommended By Gottfried Read Replies (2) \| Respond to of 26880

Hi Kirk,.....The hangover from cheap oil is just starting to take shape. The American consumer and the American economy will do fine but hidden damage is just starting to surface. My expectation would be that the Saudi's keep driving oil prices lower to the point that oil shale from N. Dakota becomes becomes too expensive for many oil companies to produce. We are almost there now. From Bloomberg...today....http://finance.yahoo.com/news/fed-helped-cause-550-billion-143354747.html junk Fervor Cools as Oil Rout Upends Energy Debt: Credit Markets Junk Backing Shale Boom Faces $11.6 Billion Loss The Houston-based company's $750 million of 9.25 percent notes, issued in December 2010, have tumbled to 64 cents on the dollar from 106.3 cents in September So who gets hurt the most. A number of regional l banks and some majors that helped fuel the speculation. Probably the same banks that thought sub prime mortgages were the place to be. Also in the hurt would be banks in N.Dakota that financed all those expensive homes around Dickenson N. Dakota. I lived in Colorado at the time of the shale collapse on the western slope of Colorado. A fourplex apartment that sold for $160,000 new could be purchased for $30 to $40 thousand dollars. (Grand Junction Colorado). But all the renters left for jobs in other areas. A worthwhile read about the low price of oil is the Moscow Times (English edition) themoscowtimes.com As of today the Moscow bank is paying 10.5% interest to help stem the outflow of money. And the banks in S. Dakota are demanding about 10% interest on financing oil shale production . That shows you how risky oil shale money can be If the Russian economy collapses who else gets hurt besides the locals that are looking at 10%inflation in the past six months. The Moscow paper is reasonably honest about the financial distress about the failing economy and they smart enough to not to blame Putin for the problem. I expect that there are a few Russian ETF's that are getting clobbered, as well as some companies that worked mighty hard to get around the sanctions the west imposed on Russia. Their debt from Russia could be all but worthless. The fall in crude prices has by itself killed the TransCanada pipeline. Alaska's state budget goes in the hole by about three billion dollars. The railroads that that ordered all those extra tank cars will have huge bill to pay.I believe that the reduction in oil royalties impact a number of western states (Texas and Oklahoma) . And as usual the lawyers that sift through the rubble of this financial collapse will do OK.