The 2020 Financial Crash

posted by O-Trap

Umm ... were you not around for 2008?  A huge chunk of the problem there was the credit approval given to borrowers who had no business borrowing.

Lord.  We are not talking about throwing money at new borrowers who are not credit-worthy.  We are talking about guaranteeing existing credit lines of businesses so they have the liquidity to weather the storm; otherwise many will become insolvent immediately and then the shit will hit the fan.  This is a completely different situation than ’09.

posted by QuakerOats

 

Lord.  We are not talking about throwing money at new borrowers who are not credit-worthy.  We are talking about guaranteeing existing credit lines of businesses so they have the liquidity to weather the storm; otherwise many will become insolvent immediately and then the shit will hit the fan.  This is a completely different situation than ’09.

There's certainly some nuanced differences, which I've already alluded to.  However, it's more similar that you're trying to make it seem.

So, if I had cash to throw into the market now to try to catch the rally, how would I do that?  Where would you all invest it? 

Depends on if you want long term growth or you are looking for a quick money grab.

posted by FatHobbit

So, if I had cash to throw into the market now to try to catch the rally, how would I do that?  Where would you all invest it? 

Should've thrown some cash in last week. 

Crude oil down over FIFTY percent today. It’s under $9 a barrel. Crazy, crazy crash of the oil industry. 
...And I just bought a ton of oil drilling stocks. Buy low

posted by SportsAndLady

Crude oil down over FIFTY percent today. It’s under $9 a barrel. Crazy, crazy crash of the oil industry. 
...And I just bought a ton of oil drilling stocks. Buy low

Good lord.  I remember the days back in 2014 when it was topping out over $100.  This is crazy.

posted by SportsAndLady

Crude oil down over FIFTY percent today. It’s under $9 a barrel. Crazy, crazy crash of the oil industry. 
...And I just bought a ton of oil drilling stocks. Buy low

Which ones?

posted by like_that

Which ones?

DO and HP

Bought OXY, too

Almost below a dollar. Holy shit

What does this mean long term? I'm completely ignorant on this kinda thing.

posted by justincredible

What does this mean long term? I'm completely ignorant on this kinda thing.

S&L probably knows more, but this is just for the May futures. June is still above $20.

posted by justincredible

What does this mean long term? I'm completely ignorant on this kinda thing.

It means we're about to see how much of each gallon is determined by fixed rates of taxation as opposed to barrel prices.

This thread gives some explanation. 

https://twitter.com/gilbeaq/status/1252293724215762950?s=21

posted by justincredible

What does this mean long term? I'm completely ignorant on this kinda thing.

I don’t know how much of a long-term effect this shows, as these prices are only short term (May) futures contracts. In the short term, it means drillers aren’t drilling, and will need to find other ways to make money. These companies better have a lot of cash on hand or else you’ll see bankruptcies. 
It also means Russia, Saudi Arabia, and countries that rely on oil exporting are completely fucked. Particularly Russia who really doesn’t export anything else. 
China is a clear winner here. They don’t drill any oil, so they’re only importing their oil and right now are getting it at an incredible rate. 
 

Also, and this could be wrong as there are a lot of abnormalities in the market right now, but I doubt this effects your cost of gas price at the local gas station. Gas stations aren’t going to drop their cost to .50 cents a gallon because they’re getting it for practically nothing. They’re hurting too, and aren’t going to just give it away to those who are still buying right now.  
 

The sudden crash in demand has led to a major storage problem; there is nowhere to physically put the oil right now, so the prompt month (May) has cratered. I look for June to also drop from $22, probably into the mid-teens, until supply gets cut more and some demand comes back from air traffic and beyond.

Got it. Thanks. 

posted by O-Trap

It means we're about to see how much of each gallon is determined by fixed rates of taxation as opposed to barrel prices.

posted by SportsAndLady

I don’t know how much of a long-term effect this shows, as these prices are only short term (May) futures contracts. In the short term, it means drillers aren’t drilling, and will need to find other ways to make money. These companies better have a lot of cash on hand or else you’ll see bankruptcies. 
It also means Russia, Saudi Arabia, and countries that rely on oil exporting are completely fucked. Particularly Russia who really doesn’t export anything else. 
China is a clear winner here. They don’t drill any oil, so they’re only importing their oil and right now are getting it at an incredible rate. 
 

Also, and this could be wrong as there are a lot of abnormalities in the market right now, but I doubt this effects your cost of gas price at the local gas station. Gas stations aren’t going to drop their cost to .50 cents a gallon because they’re getting it for practically nothing. They’re hurting too, and aren’t going to just give it away to those who are still buying right now.  
 

Yeah, at least for the short term, it looks like now the price of gas will be the federal gas tax plus whatever is your state and local gas tax. 

On a related note, nearly every state funds their transportation projects through gas tax and toll revenue. The lack of gas being sold and the lack of people on the road way is killing transportation projects now. 

I know Ohio, PA, Virginia, and North Carolina have pretty much scaled back all of their transportation projects. North Carolina went so far as to cancel most of all the projects that were going to be awarded this year. 

Sure companies are enjoying less traffic to get the current roadway projects done, but the pipeline of work is drying up now. 

The long touted infrastructure bill from Trump would be great right now....