Boom and bust in oil patch and what it means

http://www.zerohedge.com/news/2015-01-19/next-time-around-feds-are-going-have-confiscate-stuff
Bad medicine, kemosabe.

Update:

This post was made with my smart phone while I was out there working yesterday, and I had a short break.

It is rather difficult to make posts with that thing, so just pointing to it was about all I could do.  Now that I'm home, and I've had some time to think this over, I can offer a few thoughts on it.

What the article is saying is that the fracking activity is being financed by really shady means, and these shady means could blow up the entire economy.  ( my interpretation, by the way ).  It will do this because of our over leveraged system and an inadequate regulatory system.  When you have a lot of leverage on ANYTHING, even if it is relatively small, it can have OUTSIZED effects.  Just like 2008 had outsized effects.   I remember vividly that OFFICIALS were saying that the sub prime loans represented only a small portion of the loan portfolio.  This is criminal malfeasance, because due to highly leveraged banking, it can only result in disaster even if only 1 slight mistake is made.  If only 1 thing blows up, it can blow it all up.

An example is in trading of currencies.  You may be able to still do this, by the way.  I'm not sure.  Back in 2003, I was able to open an account which allowed me to trade currencies.  This account allowed leveraging on the scale of 1 to 100.  That is, 1 dollar controlled 100 dollars.  Therefore, 1000 dollars controlled 100 thousand dollars.  There's good news and bad news.  The good news is that you can make a lot of money fast this way.  The bad news is that you can lose money fast this way.  Let's say you make a bet that a currency will fall and you make one of these trades.  If you are wrong, and the CURRENCY MAKES EVEN A SMALL ADVERSE MOVE, you will be forced either to exit the trade, or meet a margin call.  This could become ruinous in a very short time.  As a matter of fact, I did lose a lot of money a bad trade this way once, and I quit trading currencies because of it.  Nothing like learning the hard way to correct bad behavior, kemosabe.

People in responsible positions should not allow such things because of the danger they represent to the entire financial system.

What the article is saying is that this may be such a threat.