First Pain then....................
Every global recession since 1970 has followed a sharp increase in oil prices, not a decline. And economic analysis supports the same conclusion, since a US$60 fall in oil prices redistributes US$2trn of income annually from producers to consumers and also guarantees extremely dovish central banks………………………………
To put it another way, the sharp fall in oil prices this year has certainly been disruptive, but a low price level, once it stabilizes, should be good for economic growth.
Anatole Kaletsky
This is a very smart guy and I pay attention to what he says. However I see a bit of disruption and loss of money everywhere. A lot of oil companies will be bankrupt, wind and solar will be comparatively very expensive. If real estate market fell 50% in one day what would happen? It would be very good for the people who want to buy a house but everybody that has one house on credit would be bankrupt in one day. What I want to say is that this big moves are very painfull in the short term and a lot of wealth is destroyed.
Another headwind are the oil companies that had their below the ground reserves valued at 100 and now are valued at 30! That is a big big fall. Someone is loosing a lot of money. In conclusion I see pain before blue skies. He are already in Bear Market territory in most of the markets.
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