Keep an eye on oil...Ukraine might be the victim. Updated.

UPDATE:  Check this out from Business Insider...

Russia has lost its ranking as the world’s eighth biggest economy, shrinking in just nine months from a $2.1 trillion petro-giant to a mid-size player comparable with Korea or Spain.

Countries have been under less stress and gone to war.  The US State Dept, Pentagon and EU remain quiet.  This is bad.  Real bad. 

 

The decline in oil prices has been to the benefit of the average consumer but its fall points to serious trouble ahead.  Check out these articles.

*  Banks including Barclays and Wells Fargoare facing potentially heavy losses on an $850m loan made to two oil and gas companies

*  The rouble suffered its biggest one-day decline since 1998 as oil prices continued to fall on Monday

*   Nigeria’s currency tumbled to a record low on Tuesday, hammered by falling oil prices that have weighed on Africa’s top economy

Be aware.

Falling oil prices are great for us but possibly bad for the world...as its currently constructed.  Low oil has increased the value of the US dollar which means that our exports are high priced...including the F-35.  Additionally we're on the verge of a worldwide recession as long as this continues because not only is Russia taking a beating but so is Nigeria and other oil exporting countries.

That points to the possibility of even more instability worldwide.

Closer to home we have two banks that have admitted that they're vulnerable.  Some analyst are saying that oil prices will increase in short order but if they don't then these oil companies will have more than a short term cash flow problem.  They'll be in serious trouble.  Additionally we don't know how exposed small banks in the upper Midwest are.  Wildcat oil companies might go under and that could have a ripple effect.    What no one wants to talk about is the fact that we're seeing another bubble pop.  Did you ever wonder how the world could suffer the greatest economic contraction since the Great Depression yet gas prices move higher?  Its simple.  The market defied common sense dynamics, you had a rush of investor money into oil and oil related business and the price was pushed up artificially.

Now all that is unwinding.

My biggest fear?  Russia is getting hammered by economic sanctions from the West, and will look to punish those that are causing the pain. Ukraine is going to be nastier than anyone can ever imagine.