Wednesday, February 11, 2015

The BIS Paper on Borrowing and Leverage in OIl

The Bank for International Settlements, the international banking consortium, has done a study of instability in the oil price regime. They find that the drop in prices is not solely related to changes in production and consumption; but rather due to leveraged hedging by producers and the middlemen. Sound familiar? The same tactics that infected the housing market last decade are now at work devaluing oil assets.

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