A blog focusing on the intersection of economics, politics and public policy.
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.