Investor: “Terrifying” Consequences if Oil Drops to $40

Posted By Paul Joseph Watson On January 5, 2015 @ 11:40 am In Featured Stories,Tile 

As the price of oil drops below $50 for the first time since 2009, noted investor Jeffrey Gundlach warns that a fall to $40 dollars a barrel could spark “terrifying” geopolitical consequences.

The February contract for West Texas Intermediate briefly fell to a session low of $49.95 earlier today, while Brent crude also hit a 5-½-year low.

However, according to influential investor Gundlach, founder of Doubleline Capital, a fall to $40 could set in motion devastating global developments.

“Oil is incredibly important right now,” Gundlach said in a recent interview with FuW. “If oil falls to around $40 a barrel then I think the yield on ten year treasury note is going to 1%. I hope it does not go to $40 because then something is very, very wrong with the world, not just the economy. The geopolitical consequences could be – to put it bluntly – terrifying.”

As Zero Hedge points out, Gundlach is right to draw a correlation between unstable price fluctuations in crude oil and geopolitical turmoil.

“Large and rapid rises and falls in the price of crude oil have correlated oddly strongly with major geopolitical and economic crisis across the globe. Whether driven by problems for oil exporters or oil importers, the ‘difference this time’ is that, thanks to central bank largesse, money flows faster than ever and everything is more tightly coupled with that flow.”

The last time we saw anything like this activity in terms of oil price, it turned out to be a precursor to the global financial collapse of 2008.

“A junk bond implosion is usually a signal that a major stock market crash is on the way. So if you are looking for a “canary in the coal mine”, keep your eye on the performance of energy junk bonds. If they begin to collapse, that is a sign that all hell is about to break loose on Wall Street,” writes Michael Snyder.

As we have previously documented, the sudden drop in the price of oil has much to do with an engineered attack on the Russian economy and the Ruble which is being led by Saudi Arabia and the Obama White House. The ultimate goal is to destabilize the Russian government and foment a color revolution.

This agenda was summed up by Paul Stevens, a fellow for the secretive Royal Institute of International Affairs based at Chatham House in London.

“If the governments aren’t able to spend to keep the kids off the streets they will go back to the streets, and we could start to see political disruption and upheaval,” wrote Stevens.

The US and the Saudis have resolved to crash the price of oil and with it Russia’s financial system despite the fact that this will also cripple the European economy. Russia has even proposed that the EU dump the TTIP free trade agreement with the United States and instead join the newly established Eurasian Economic Union.

“The U.S. and European sanctions against Russia will become more severe and crippling in the face of drastically falling oil prices – prices which are falling drastically because of the unprecedented boom of shale gas fracking both domestically in the U.S. and abroad in Ukraine and other locales,” writes Mac Slavo. “The oil & gas giants like Chevron and Exxon Mobil have created revolutionary conditions with now direct consequences on U.S. foreign policy and global war for dominance.”

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Paul Joseph Watson is the editor at large of Infowars.com and Prison Planet.com.

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