Originally Posted by
xafalcon
Yes, some oil companies will fail. That is the fundamental basis of capitalism - the best performers survive, the worst performers don't
Zero interest rates can't work in isolation. The banks must lend the money to productive enterprises, trade practices (esp subsidies/tariffs) must be reformed, and labour laws freed up.
The US and NZ are good examples of what is possible with low interest rates if the other elements are supportive - heck NZ's still has very high interest rates by world standards, and look how well we are doing with diversification and new industries flourishing to take advantage of new opportunities. Yes the US does currently have the "speed wobbles" but seems to be heading in the right general direction
The EU nations (by and large) are good examples of the ineffectiveness of low interest rates if the other elements aren't supportive. Banks aren't keen to lend, labour unions aren't keen to allow greater flexibility in employment, employers aren't keen to take on more workers due to inflexible labour laws, governments aren't keen to forgo their import tariffs, and EU producers aren't keen to surrender subsidies. This breeds inefficiencies which are now entrenched in many EU countries
Economic effects of low oil price and zero interest rates are simply not comparable with regards to raising growth
I would put my money into heathcare, retirement and tourism sectors. The boomers are now retiring, generally have sound financial backing and will be strong supporters of all 3, with tourism getting a boost from working age people as well
But yes, there could be some pain to come. I'm not saying there won't be. What I am saying is that there will be a huge boost to world growth as a result of low oil price, and the benefit will out-weigh the detriment