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01/13/2015

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Brian

It will be interesting to see. It sounds like shale production is primarily being driven by a large number of "small" firms (compared to your large oil companies), right? Hard to see government elites bailing out smaller businesses directly. More likely, they would do something like guaranteeing loans on shale energy extraction.

This would seem to have the benefit of a) appearing to do something against big, bad OPEC (who actually has nothing to do with this problem created by the shale energy guys themselves), 2) ensuring that the banks are protected from losses without actually appearing to bail out the banks, 3) allowing the banks to continue to increase their lending, at zero risk, 4) allowing the shale energy guys to continue pushing towards "energy independece", by 5) blowing their bubble by building up ridiculous debt, which 6) will surely lead to eventual debt destruction and consolidation, creating the opportunity for Wall St to earn a whole boatload of M&A money.

What's not to love here? Politicians look like they're doing something to "protect" American business. The Money (Wall St) is fully protected. Small producers are encouraged to take on dangerous risk, leading to consolidation, which benefits both Big Oil & Gas (buying assets on the cheap) and Wall St (brokering M&A deals). Win. Win. Win.

It's almost too easy. How could they NOT go this route?

It's the God-damned American Dream!

More or less. ;-)

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