Friday, December 12, 2014

Will Palin Address Falling Oil Prices And Global Financial Collapse Implications?

Is the reverse oil price shock the "Black Swan" financial moment that will doom Hillary 2016 and usher in Palin versus Warren?

"I am expecting that we will soon see Sarah Palin begin educating America on the next emerging crisis that is going to hit like a financial/geopolitical global tsunami in probably the next 6 months.
That crisis is going to emerge to a large degree in a subject area that she knows more about than any politician alive: Oil.
What is happening in oil at the present moment is quite complex with long lasting impacts that 99% of Americans find difficult to comprehend or see coming.
We are witnessing an historic drop in the price of oil. Most of us see it as a welcome relief at the gas pump. But there are more fundamental consequences to the global financial system and to the geopolitical balance of power in the world. And therefore to the U.S. economy and to U.S. national security.
These interconnections of oil and energy to the stability of the world economy and political stability and to our own economy, political stability and national security will shape the 2016 election cycle political discourse.
Linked here is a superb primer on the risks to us and to the world from falling oil prices. The 27 minute video lays out those risks in a way that most people can understand.
A key threat is the loss of income to oil exporting states. Those countries like Saudi Arabia, Russia, Venezuela, Iran, the UK, Norway and others rely on oil income to subsidize daily life in their domestic economies and more importantly from our perspective to invest in financial assets. Falling oil prices drains liquidity out of the global financial markets.
Another threat stems from the Financialization of Oil. Oil and more specifically the income stream anticipated to flow from oil production undergirds a mighty superstructure of DEBT used to facilitate production. Oil is the collateral of a highly leveraged speculative pyramid. That collateral is now impaired. It's worth less in the ground and in the pipelines and in the storage tanks. It is worth less in the future.
Impaired collateral should send shivers down your back. Think 2008 and the Sub-Prime debacle. The oil business is reprising the real estate business. Everybody thought real estate could go only one way--up. Similarly, everybody BET that oil was going only one way--up.
The consequences of a break in the RE market in 2007/2008 were monumental because the collateral of the trade got severely impaired in value setting up a cascade of adverse consequences in the derivative markets which led to Lehman Brothers and massive government intervention into the financial markets which continues to this day.
We have not yet begun to see the consequences of the impairment of the collateral that supports trillions of dollars of leveraged investments related to the production and distribution of oil. But those consequences are going to be GIGANTIC perhaps surpassing the Sub Prime crisis in order of magnitude.
It's about those credit derivatives based on $100 oil. With oil at $68 and some saying on its way to $50 the debt is de-collateralized and imperiled. Somebody is going to get burned here. Guess who?
What was it that Nancy Pelosi was raving about in her opposition to the Obama/Boehner CRonybus Act of 2014 yesterday afternoon? Oh yeah, the provision allowing the 4 Big Banks to walk away from their $300 Trillion Credit Derivative insurance business liabilities by shifting those liabilities to FDIC insured affiliated entities that firewall their "good" earning assets behind legal barriers that will withstand the claims of the holders of that insurance. And by the way creating an existential crisis for the FDIC and the rest of the banking system as a form of "collateral damage" (no pun intended). But no matter the 4 Too Big To Fail multinational gambling casinos will be out of harms way from the cascading effects on the world economy.
I believe Sarah Palin will begin shortly to walk us through these complexities and the implications for our country (especially the security aspects in a rapidly destablizing international political environment) brought upon us by this EVIL alliance between Big Business and Big Government.
We throw these terms Crony Capitalism and Permanent Political Class around a lot. But the impact of this relationship is about to hit the average American like an unstoppable tsunami.
I'm pretty sure Sarah Palin is fully aware of the economics and the geopolitical consequences for us. I expect a series of presentations in some format that will outline it all for us together with her proposals to mitigate the damage from it.
This discussion will drive the 2016 political dialogue of that I am in no doubt whatsoever. The LEADER who can lay these complex interrelated issues all out for the average American in simple to understand no BS language together with a path forward that makes sense will be the next POTUS of the United States.
This is right in Sarah Palin's wheelhouse."

The above commentary appeared anonymously at Conservatives4Palin and is reproduced with permission. At the same time the following commentary appeared at Yahoo Finance as the share market reacted violently to the oil price drop;

"Stocks Just Had Their Worst Week in Years

U.S. stocks sank, with the Dow Jones Industrial Average capping its biggest weekly drop in three years, as oil continued to slide and Chinese industrial data raised concern over a global economic slowdown