It's the (oil) economy stupid - What I am reading 12/2/2014

Washington Post - How the US Economy Got It's Mojo Back -

Seven years after the credit bubble burst, just two of the 12 countries that went through systemic financial meltdowns in 2007 and 2008 have reclaimed enough ground to reach their previous peaks in per-capita GDP: the United States and Germany. And Germany isn’t looking so hot these days, given that it’s teetering on the edge of deflation.

The TL/DR:  Bernanke was a Friedman disciple and so when the crash occurred, having read Monetary History  he had a guide on how to deal with it.  Fortunately it didn't involve listening to Ron Paul or  that douchebag Monty over at Ace of Spades.  The solution wasn't perfect and even the non-perfect solution wasn't perfectly executed, so we could be much further along, but we are still much better off than most.  I do rhink the author of this article does underestimate the effects of the shale oil boom however.

As oil prices plunge, wide-ranging effects for consumers and the global economy -

While it has taken awhile to see some truly significant cost reductions at the pump (Gas here is $2.83/gal the lowest I can recall in at least 3 years) the increase in shale oil output combined with reduced demand has help keep oil from pushing up to the $200/bbl mark, which many predicted it would have crossed by now.  That has freed up cash for both consumer spending and investment.  It would have been better if prices had come down sooner and much better if they had never gone up to the levels they did back in 2008,since as you know I contend it wasn't an overheated housing market that caused the bubble to burst.  It was the jump in oil prices.  I still maintain that if oil had gone up to such ridiculous levels the housing bubble could have been deflated much more gracefully.

Now we just have to make sure we don't enter an oil bubble:

Quartz -Is the US energy sector flirting with a mini-bust that could take down the bond market with it? -

Here’s the catch: The drop in prices will make it tougher for energy companies to pay off their newly minted junk bonds. The FT reported last week that a third of energy debt bonds are classified as distressed, meaning there is a high likelihood that will have to be restructured. Some investors in the riskiest forms of energy-related junk have seen their returns hammered to roughly zero (paywall).

As a result, some analysts say the markets could imminently shut off lending to shale oil drillers. Others say the junk bond market might collapse, in an echo of the real estate bubble of the mid-2000s.

Don't panic, we probably aren't going to crash immediately, but it is something that needs to be watched.