It’s the same story that will continue to play out in coming months. Highly risky and irresponsible decisions made by companies are coming back to bite.
The recent failure of SemGroup as described by the WSJ comes to mind. This little known, privately held company had apparently gotten carried away with it’s futures contracts by making speculative trades (instead of hedging like it should do). It lost over $2.4 Billion on energy contracts (yes, that’s a “B” not an M).
The company just didn’t have the liquidity to cover the losses so it folded and is now run by it’s creditors.
When I read this, a few ideas came to mind that may be worth exploring further: Maybe the talking heads on TV are right about oil prices — that the reason they are so high is because of all the traders/speculators, and not global supply and demand imbalances; and we, as individuals, can’t do anything about macroeconomic issues or control Wall Street, but we can curb the impact of high gas prices or a job loss by stockpiling cash in a “rainy day” fund and maintaining a suitable budget.
Posted by moneynuggets 