2009 Facts for USA

Energy sector contributes about 7.7% of GDP of USA, i.e. about USD1.0 trillion (create about 9 million jobs).

2014 Facts by Gary Shilling

Energy sector, average debts over market value is about 1.2 times.  For weaker energy companies, the gearing is 4times its market value.

Many billions of junk bonds (USD200b) were issued from the energy sector over past few years, and banks is also exposed to leveraged oil and gas sector about USD300b.

Effect on drop of crude oil to USA economy

The financial risks from the dropping of crude oil price far outweigh the benefits to its consumers.  Although energy sector is capital intensive, its contribution to employment is also significant to USA.

If Worldwide going into recession

Stocks (USA) will be dragged along.  The environment will switch from RISK ON to RISK OFF.  Investor will dump STOCKS and run for safety in US Treasurys AND dollar.

UPDATED 25 December 2014

Debt margin directly related to NYSE, have grown from USD150 billion in 2009 to USD450 billion by end of 2013.  The debt margin was around USD300 billion prior to the crash in 2009.

Similarly hedge funds doubled from USD1.4trillion to about USD2.7 trillion in the same period.  Demand and supply of oil or other commodities aside, a lot of  QE liquidity AND carry trade have went into the "financial markets"

The growth of GDP say about USD250b to USD350b over the last few years, have anyone ask how much debt was created over the same period AND how much of the GDP is contributed by the Stimilus from the Government.  "GDP is just figures used in deceit to get support from the people who doesn't think too much and use the figures religiously to guide their biz direction"

My View (on equities, energy and end game)

Oil will continue to drop to as low as USD30 per barrel.  US of A will panic later in first half of 2015, realising the financial risk from the drop of crude oil price outweigh the gain for the consumers. (too much hot money in commodities over last many years)

Stocks in USA will go into a tailspin. And world will goes into recession.  It is not a prediction, it is just a GUESS based on the current event. (Equities will be the last to fall after JUNK bonds)

WHAT IF I AM A MALAYSIAN?

SCARE DIE ME

Put some into USA dollar or USA Treasurys (10 or 30 years).

Accumulate DEFENSIVE STOCKS in Malaysia slowly i.e. 20% 30% 50% in 2015, 2016, 2017.

DEFENSIVE STOCKS is recession free, high dividend (>4%), double digit growth in revenue and earnings, low PE (below industry average PE for last 5 years)