The echo effect – amplified

We ran this six months ago, but it’s worth another look.

Oil prices are low. That’s a good thing.

Here’s what’s not a good thing…

Hundreds of billions of dollars were loaned to drilling companies with the expectation that oil prices would stay high.

How is that money going to be paid back?

But wait, it gets worse.

Many of those “bonds” were leveraged to borrow more money and derivatives were created from them. No one knows how big the mess is.

It’s not quite “sub prime” big, but it’s not small.