President Trump: The NEW one and only politics thread

It's a debt issue. People have no idea how much overleverage there is out there on the back of the central bank stupidity of the past 10 years. Shale oil is one of the most prominent areas. You are looking at hundreds of billions of dollars of junk debt in that sector alone, and those companies need oil at $45, $50 a barrel just to stay on the treadmill they are on. They can not produce profitably for less than that. At $30 a barrel they drown in their debt. The Saudis? No problem at that level. They can produce profitably at less than $10 a barrel. And worse for us, they just went public with Aramco, so they are sitting on a mound of money that will allow them to weather things for a good chunk of time.

The high-yield debt market has buckled during the recent turmoil, but credit spreads have not blown out yet. If they do, the fantasy is over. There will be a spillover effect that hits the entire junk market, and that is when we will find out what kinds of derivatives are out there and who owns them. Essentially, it will be the tide going out and everyone finding out who is swimming naked, kind of like in 2008 except in different areas this time.

Just bringing it to this thread. ... The stock market bubble was built on that same overleverage. When you fix the price of money way too cheap for so long in such unprecendented ways, you create a lot of imbalances that permeate a lot of areas, and they need to get back into balance at some point. A forced deleveraging. Donald Trump tied himself to that bubble -- idiot that he is. If it pops completely before November, he will be mustering an epic amount of bullshit from his orange pie hole, but people won't be buying it, even if they don't really understand what happened or the fact that he had little to do with it, even though he was taking credit while it was going parabolic.