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Permalink Reply by Jim Litwinowicz on December 28, 2014 at 2:22pm

Here's a link...requires free membership to read.

http://www.fool.com/investing/general/2014/12/28/2-ways-plunging-oi...

Excerpt;

While the losses of junk bond investors might not seem particularly important in the grand scheme of the U.S. economy, it's important to realize that over the last few years energy has come to represent 22% of the junk bond market, up from 9% in 2009, according to Goldman Sachs and JPMorgan Chase.

Deutsche Bank said the spike in yield indicates the market is predicting a 30% default rate from smaller oil and gas producers, with JPMorgan estimating that, if oil stays at $65 for the next three years, default rates could reach 25%-40%. While JPMorgan believes that scenario is "unrealistically draconian," if it were to occur it could have broad implications for banks, asset managers, and pension funds. That's because, in an era of near-zero interest rates, these institutions have eagerly bought up these high-yielding securities.

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Permalink Reply by RICHARD BASILE on December 28, 2014 at 3:06pm

jess, @ present the Utica is not a prime " oil play ", it is a " combo "--- that may start to change in this coming yr, ( if they drill ? ) ---see CHK, -Parker, EQT--ncd, & EVep- nettle well, & new off/set of Parker well,---the Butane/ mineral frac may hold a key to the "CODE "---sure hope so

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Permalink Reply by RICHARD BASILE on December 28, 2014 at 2:39pm

thks, picked this Up on yahoo feed/news, member of Motley, but all you have to do is go to web site & do search (Adam Galas ), you will get full article + comments--- Galas  response is quite illuminating---re oil co profits----

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Permalink Reply by searcherone on December 28, 2014 at 6:50pm

Great info to be found in Adam Galas responses to comments;  he puts it right out there about all the geopolitical implications of falling oil prices;  some very tough world problems are lessened by cheap oil;  the Saudis stand to regain strength in their region;  power of ISIS is squashed, Iran and Russia are brought up short and yes, just why now after many years are Cuba and the US talking.

Think about who is Saudi Arabia's longtime friend, yes the United States.  The Saudis and the US work together even when the nightly news says they are not getting along.

So in my thoughts there are several nations working to right the current geopolitical situation.  Common sense says weakening a country's or radical movement's money flow renders it ineffective.

I do disagree with Galas on his point that there is no "petrodollar".  While there is no physical "petrodollar" the world runs on who has control and access to oil and that is a "petro economy".

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Permalink Reply by Joseph-Ohio on December 29, 2014 at 12:02am

The picture I see painted most plainly is one of economic self blood-letting by the OPEC (including the Saudis of course) in an effort to sanction the radical bad guys.

In this instance, I'm pessimistic about how successful it will prove to be. I'll go as far to write that I don't think it will work over the long term considering how radical the radicals actually are.

Economic self blood-letting also does harm to those who apply it to themselves and their allies / partners.

Also, I think it has great potential to lead to more and actual / literal blood shed in expanding war.

Only my take / read and only IMHO.

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Permalink Reply by Joseph-Ohio on December 29, 2014 at 1:25am

Maybe expanding the real wars (by baiting the radicals into the field) is the true objective of it all ?

Hard to say from my perspective / vantage point and especially considering the fog.

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