Oil falls to 12-year lows, dragging stocks down with it

[darksumomo]

Below was originally posted at Crazy Eddie's Motie News on January 14, 2016.

Comments

[cieldumort]

The recession naysayers are blaming the collapsing price of oil on 'oversupply' -- blaming often that on negligent OPEC members and fracking -- which blindly overlooks a not-so-subtle message one can see in the graph you shared above: oil has been relatively high our times in the past few decades, with the prior three instances leading into recessions, and ending in a collapse of price. The issues is not simply oversupply, it is *softening demand* -- and now, like 2008, it is contributing to global debt-deflationary pressures.

[ext_3487446]

This issue has me torn. I am not sure of why the decrees in prices of gas has happened. Rather it's because of supply or demand. But I love on a consumer point of view that the gas is dropping. It has been a while since I could file my tank up with $25...I recall filling up my car with $10 back in 1999. So I love low gas prices but hate that it messes with the stock market. It's one of those give and take situations.

[cieldumort]

Yeah, Starla that is a very good point. It's got its pluses and minuses, but imho, I think overall in the face of preexisting disinflation/deflation, the net effect is negative if it goes on for too long. It needs to find a floor and quit falling. Rapid volatility in either direction is not a good thing for those businesses and households trying to manage budgets.

[robbied90]

I'm the same. While we are reaping the benefits now, further down the line it could contribute to another difficult period in terms of a global recession.

[ext_3488948]

Awful! I do think, though, that it has to get worse before it will get better and that it will eventually improve. Especially in light of the new president we can look forward to in this upcoming November. I like to be optimistic, I guess.

[cieldumort]

👍