Oil prices might be a prelude to a new Lehman Brother’s moment, leading to another bail out (in) for financial institutions and some kind of “beneficial” central bank action. Only that this time the focus would be on long oil speculation and shale oil debt (instead of subprime). It could masquerade as a quasi-natural pattern, a re-enactment of 2008 that can be recognized even by laymen.
Derivative expert Rob Kirby thinks, that crashing oil prices are going to lead to another meltdown, “tied to the junk debt that has been issued to finance the shale oil plays in North America. It is reported to be in the area of half a trillion dollars worth of junk debt that is held largely on the books of large financial institutions in the western world.(…) I do believe that will be the signal for the Fed to come riding to the rescue with QE4.” (my emphasis)
A crash like this would go a long way to retroactively explain, how crude oil prices had behaved three months ago: “The markets saw it coming”, the experts would say.
It could serve as an excuse to have the sky high overvalued US stock markets corrected. It would be the long needed prick in a room full of bubbles.
Hat tips to A. N. for making me aware of the Kirby interview.