The Obama Administration and their Saudi friends have done it. They were finally able to collapse the oil price in order to stop the Russian bear in its tracks. And the best part is, it has worked. At least thus far.
-
Russia entering ‘full-fledged economic crisis’, says ex-minister Kudri
-
Who Will Get Caught When The Oil Debt Bubble Pops?
Yet, as any Econ 101 student can tell you, it is next to impossible to concentrate financial terrorism without unintentional consequences popping up elsewhere. In this case, the destruction of the US shale industry and the upcoming junk debt collapse associated with it.
This scenario and its ultimate outcome is rather simple. You can even claim that it has already started and cannot be stopped. First, the oil prices are not likely to recover anytime soon. I have discussed this on Friday. Second, the US shale industry has been and will continue to be decimated. It is estimated that hundred of billions in junk loans (primary source of finance in that industry) are about to go belly up as most projects fail.
Finally, as the junk market collapses, the economic pain associated with the oil market will spread throughout most sectors of the US Economy and the stock market. The only remaining questions is……Is your portfolio positioned for all of the above?
