The drop in oil prices on the surface for the average citizen seems like a good thing. We have a little more change in our pockets to spend on other things. It could be the good thing that ends up biting us in the ass.
Why, you scream. Well it's pretty simple ,really, there is 440 TRlILION dollars worth of INTEREST RATE DERIVATIVES are sitting out there on the long side of interest rates. Cheap oil is causing many firms (like fracking firms) who have to borrow large amount of money to stay in business. Those companies among others have large borrowing requirements which already are driving interest rates up.
Predictions that oil prices will remain low for a good while almost guarantees that those interest rate derivatives will cause a economic bust bigger than anything any of us has ever seen.
This same investment tool is behind the down grading of pension funds since they use derivatives to try and keep their returns on targets.
If interest triggers this event it will be unstoppable.
HERE'S THE STORY BEHIND THIS PIECE