Dow Chart 1000 Points Drop February-16-27

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The US liquidity monetary policies have created a dangerous paradox

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Ben Bernanke, former Federal Reserve chief, prompted the ‘taper tantrum’ when he hinted at reducing bond purchases // A paradox has emerged in the financial markets of the advanced economies since the 2008 global financial crisis. Unconventional monetary policies have created a massive overhang of liquidity. But a series of recent shocks suggests that macro liquidity has become linked with severe market illiquidity . Policy interest rates are near zero (and sometimes below it) in most advanced economies, and the monetary base (money created by central banks in the form of cash and liquid commercial-bank reserves) has soared – doubling, tripling, and, in the US, quadrupling relative to the pre-crisis period. This has kept short- and long-term interest rates low (and even negative in some cases, such as Europe and Japan), reduced the volatility of bond markets, and lifted many asset prices (including equities, real estate, and fixed-income private- and public-sector bonds). And...
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The Collapse of Oil Prices 2016

So, what has caused oil to fall this severely in the first place? The excessive supply of oil has likely been the main reason for the big drop in its price. The glut first started to build in the US because of the shale revolution there. Companies sold their oil cheaper, causing the Organization of Petroleum Exporting Countries (OPEC) to lose market share. Traditionally, the OPEC had acted as a swing producer; it would cut its oil supply if prices fell sharply and increase production if prices rose meaningfully, as it attempted to keep oil relatively stable at a comfortable level. This strategy had served the oil cartel well in the past – especially its largest member, Saudi Arabia. However, with shale oil booming, the OPEC could no longer control the market like before. If the cartel cut its oil output, the US and other shale producers would simply fill the void and increase their market share by selling oil cheaper. Therefore, in November 2014, Saudi Arabia resisted calls from poor...
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World Oil Production and Average Price

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Figure 1. World oil (crude and condensate) average daily production and refiners average acquisition cost in 2009 $, both based on EIA data. 2010 is partial year through September 30. ///     /// /// . Figure 2. Graph of Persian Gulf oil (crude and condensate) based on EIA data. /// . Figure 3. Persian Gulf oil production and average price, based on EIA data. /// . Figure 4. OPEC reserves based on BP Statistical Report data. Graph by Rune Likvern of The Oil Drum. /// : Figure 5. Oil production from the Former Soviet Union, based on EIA data (crude and condensate). /// The USA: Figure 6. US (crude and condensate) oil production, based on EIA data. /// : Figure 8. Oil production (crude and condensate) for the rest of the world based on EIA data. /// International   International energy data and analysis /// International Energy Outlook 2014 /// World markets for petroleum and other liquid fuels have entered a p...
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