The commodities bubble is so diverse and globalized that consequences are hard to predict beyond severe bankruptcies in extractive industries, widespread and large bank losses, and wide spread economic contraction.
These arguments are developed in my new book, Dispossession: Liberalism's Crisis that I've been posting excerpted ideas and passages from for feedback and discussion.
Throughout this book I gradually weave in the implications of the commodities bubble. I discuss environmental, political, and individual effects from financial speculation by extractive industries, including banking.
I warn that the commodities bubble appears to have been erupting for at least a year now and the bankruptcies are probably just beginning for many debt-burdened energy producers.
The derivatives based on commodity markets are prey to the same financial fraud as found endemic in the derivatives producing the housing crisis. Fraud allows for more leverage and more risk, inflating the bubble even more.
An article from The New York Times illustrates what I mean by an imploding global commodities bubble:
Nelson, D. Schwartz and Julie Creswell, “A Global Chill in Commodity Demand Hits America’s Heartland,” October 23, 2015 http://www.nytimes.com/2015/10/25/business/energy-environment/americas-heartland-feels-a-chill-from-collapsing-commodity-prices.html?emc=edit_th_20151024&nl=todaysheadlines&nlid=32962000China's economy is slowing down and the slow-down is going to worsen as global demand contracts, especially for extracted commodites, including and especially oil and natural gas:
In China and other emerging markets, growth is waning and demand
for the raw materials that drive the global economy has dried up.
GRANITE CITY, Ill. — A thousand miles south of this gritty steel town on the Mississippi River, West Texas oil rigs have shuddered to a halt. Seven hundred miles north, mines in the Iron Range of Minnesota have been stilled. The drilling rigs, with their deep underground pipes, once consumed much of the steel that Granite City’s blast furnaces could produce, while the mines supplied the raw material. So now, more than 2,000 workers at the mammoth United States Steel plant not far from St. Louis are waiting to see if they will be next. This month, the company warned them it might be forced to idle the plant. Layoffs could begin around Christmas.
The International Energy Agency, an energy watchdog, forecasts global oil demand growth falling from 1.8 million barrels a day this year to 1.2 million next year.http://majiasblog.blogspot.com/2015/10/sounds-like-economic-depression-to-me.html
Oil price deflation and stagnation are going to cause widespread acquisitions and bankruptcies.
The Federal Reserve and European technocrats have failed utterly to prevent another global crisis.
The reason is there is too much extractive greed throughout every level of our interdependent global social system constituted primarily by large and powerful institutions, both private and state owned, with neither capable of authentic stewarship.
Dispossession: Liberalism's Crisis Part I http://majiasblog.blogspot.com/2015/10/dispossession-liberalisms-crisis.html
Liberalism's Crisis Part II http://majiasblog.blogspot.com/2015/10/dispossession-liberalisms-crisis-part-ii.html
Trafigura: Purveyor of Toxic Waste Also Threatens Global Commodities Markets
Catastrophic Risks in US Energy Infrastructures http://majiasblog.blogspot.com/2015/09/catastrophic-riks-in-us-energy.html
New Cold War Update http://majiasblog.blogspot.com/2015/09/new-cold-war-2015-update.html
Erased Exposure Data Being Used to Shutdown Discussion Concerning Causes of Fukushima Children's Thyroid Cancer http://majiasblog.blogspot.com/2015/10/erased-exposure-data-being-used-to.html