With oil tanking last night and headed for $40, the mining GFC has returned with a vengeance as mining credit spreads surge, equity is crushed and, increasingly, the mess delivers nasty damage to wider equity as well.
Regular readers will recall that the MB base case for markets over the next year or two is to see the great mining bear market intensify into a credit event around commodity producers both private and sovereign in the form of emerging market economies.
This thesis is based upon the basic point that global commodity markets remains so oversupplied that only a balance sheet event of global magnitude will be enough to shake them out. It is driven by:
