Trump or Clinton? No. America’s Future Will Be Decided By the “Financial Industry”(Source globalresearch.ca)
For several years now the US has attempted to become a global market leader in the oil business and gain independence from oil and gas imports by furthering its shale industry. In the beginning stages, the method of fracking was hardly competitive with classical techniques of oil extraction. However, as technical progress made this mode of production more and more profitable, several hundred large investors developed interest in the business and provided loans of hundreds of billions of dollars to the shale industry.
By now it is clear that most of this investment was based on a massive miscalculation. The oil price has fallen by more than 50 % over the past two years. Although production costs in fracking have been significantly reduced, the price, which has been floating around $ 45.00 for months now, is not nearly enough to generate the profits needed for the shale industry’s survival. Between January 2015 and July 2016, 90 oil and gas producers have already gone bankrupt and left behind more than $ 66 billion in debt. Since these loans were most certainly reinsured through credit default swaps, they must have left considerable holes in the balance sheets of major US banks.
When the rest of the loans come due at the end of this fall, creditors will be facing enormous problems, as the world economy remains stagnant with no improvement in sight. Above that, the present price of oil is itself the product of massive manipulation: Producers have hired fleets of tankers that are filled to breaking point and storages are almost bursting at the seams. Contrary to media reports there is no chance that production will be significantly cut in the near future, due to the fierce competition between the producing states, some of whom are themselves on the verge of bankruptcy. By the end of the year the US financial system could thus be threatened by a crisis approximately the size of the Dotcom bubble. However, sixteen years later and eight years after being artificially propped up after the fall of Lehman Brothers, the financial system is more instable than ever. The Fed has pumped trillions of dollars into the system and its interest rate is close to zero. Risk exposure in the derivative markets is at record levels, and excessive speculation has led to huge bubbles in the bond, stock and real estate markets. In an environment like this the problems of the shale industry could very well become the spark threatening to blow up the financial system. Thus Wall Street finds itself in a position in which an increase of the price of oil is more urgent than ever. However, being unable to jack it up by furthering demand, reducing production or stepping up manipulation, there is only one option left and that is the escalation of the war in Syria and the destruction of a large number of oil wells in the Middle East.