The Oil And Gas Credit Collapse Is Going To Be Catastropic

We’re headed toward another big credit explosion and I think what’s happened in the oil market is will trigger that.  The perfect poster-child of what’s going to happen to the stock market is what’s happened to Kinder Morgan stock.  – interview with

It speaks volumes about the corrupted nature of our financial markets that this news report does not cause a huge downward price adjustment in the entire stock market:  Big Banks Brace For Oil Loans To Implode.  This is, minimally, t $500 billion issue and that number does not incorporate at all the size of the derivatives exposure to oil sector debt. Move along, nothing to worry about here…it’s reminiscent of circa 2007, when Bernanke stated that the problems developing in the mortgage market were “contained.”

And speaking of Kinder Morgan, I listened to the Kinder Morgan conference call because I’m working on stock report on KMI. I forgot what a Broadway play production these investor calls are. Richard Kinder is a grade-A snake-oil salesman. Everyone seems to have forgotten that he was the COO of Enron when Enron’s Ponzi scheme was being constructed. He was college buddies with Ken Lay. But he left in 1997, buying out an Enron pipeline subsidiary with William Morgan.  Everyone thinks Richard Kinder is squeaky clean and they don’t associate him with Ken Lay. It’s emblematic of the ignorance, denial and fraud embedded in our system. KMI has been issuing debt to make its dividend payments and the only reason they cut their dividend is because their bankers told them they would have trouble issuing more debt this year. Kinder kept referencing the possibility of stock buybacks on the call. Are you kidding me?  You can visualize the sycophantic big bank analysts writing everything down word for word in order to regurgitate them robotically in farcical equity reports designed to suck more idiots into the stock.

More on Kinder Morgan soon. As for the manipulation of the gold market, I’ve mostly managed to separate my emotions from the attacks on gold.  When you think about it, they have no choice.  The ONLY way they can support their lies about the relative health of the economy and financial system is by attacking gold and making sure the price doesn’t take off.  Just like they can print an unlimited amount of dollars using Bernanke’s infamous “electronic printing press” to defer the collapse of the banking system, they can print an unlimited amount of paper gold certificates in order to use the paper trading apparatus of the Comex to keep the price contained. Like all paper schemes, this one will fail spectacularly.  The only unresolved issue is timing.  That’s impossible to predict. and I discussed these topics in depth and others, including China and the U.S. economy:

4 thoughts on “The Oil And Gas Credit Collapse Is Going To Be Catastropic

  1. As for holding gold, the only thing I didn’t realize a few years back when I started buying, was that it’s mostly an insurance policy against catastrophic loss. I didn’t realize they could control the price this much. I considered it partly as an investment and that I could cash it in for fiat as it slowly went up.

    When it does eventually rocket up, this will signal the acute phase of the crack up, and will not happen a minute before. Well….maybe physical will run out and this will be the trigger, but mostly I think the shit will hit the fan everywhere and at every level and owning gold won’t be the panacea I imagined, at least for awhile until the system resets. Still, I am hoping that the April opening of the Shanghai gold exchange will start an arbitrage situation with the West and this will speed up the game.

  2. Hi Dave

    I haven’t seen this talked about in any media. If you google Saudi oil production and world oil prices from 1999 to today, a funny thing jumps out. From 1999 to 2013 world oil prices have had five major declines. Each and every time the Saudis have then cut their production by an average of 1.5 million barrels A day right after the price drop.

    In 2013 as prices started falling the Saudis started cutting production, then all of a sudden, instead of dropping production some more as they have done five times in the past, they did a 180 and increased production to as much as they can pump.

  3. It seems like this ipath OIL etn that Zerohedge has been talking about is exactly the same of the gold situation except gold is in the opposite direction and over a much longer period of time.

  4. Didn’t zerohedge have an article that the fed had suspended some of the normal mark to market rules for banks regarding oil patch debt?

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