Remember the giant housing bubble created by loose federal loan policies by Freddie and Fannie? Remember the carnage when that bubble burst? Could we be headed for another federal bubble about to burst?
In this Fed-designed world of zero interest rate policies, when risks no longer mattered, drillers were able to borrow new money from banks and bondholders and drill that money into the ground, and production soared, and more money poured into the industry based on Wall Street hoopla about this soaring production, and this money too has disappeared.......
But now the spigot is being turned off. And much of the industry is heading toward default and bankruptcy.......
........Chesapeake, which gets 72% of its production from natural gas and 11% from natural gas liquids, has already written off $15.4 billion over the past three quarters! It’s currently trying to “restructure” its debt. Nearly $12 billion of it is junk bonds. Of them, $9.3 billion are unsecured.......
This carnage among investors in natural gas, oil, and other commodities is a consequence of the Fed’s strategy to flood the world with free money. It corrupted the way financial decisions are being made. And now, much of these investments have been shuffled off to folks who hold them in their mutual funds, retirement funds, pension funds, and the like, and they’re taking a licking, even worse than savers have had to endure for over seven years.
But now contagion is spreading to the broader goods-based economy.
Thank you President zer0
In this Fed-designed world of zero interest rate policies, when risks no longer mattered, drillers were able to borrow new money from banks and bondholders and drill that money into the ground, and production soared, and more money poured into the industry based on Wall Street hoopla about this soaring production, and this money too has disappeared.......
But now the spigot is being turned off. And much of the industry is heading toward default and bankruptcy.......
........Chesapeake, which gets 72% of its production from natural gas and 11% from natural gas liquids, has already written off $15.4 billion over the past three quarters! It’s currently trying to “restructure” its debt. Nearly $12 billion of it is junk bonds. Of them, $9.3 billion are unsecured.......
This carnage among investors in natural gas, oil, and other commodities is a consequence of the Fed’s strategy to flood the world with free money. It corrupted the way financial decisions are being made. And now, much of these investments have been shuffled off to folks who hold them in their mutual funds, retirement funds, pension funds, and the like, and they’re taking a licking, even worse than savers have had to endure for over seven years.
But now contagion is spreading to the broader goods-based economy.
Thank you President zer0
