How does the $2 trillion in outstanding oil debt compare to the outstanding housing debt in 2007-9? Even if the haircut for the banks is similar, I don't think that the average homeowner will feel the pinch quite as bad as the last credit crisis. There was a lack f available credit, but there wasn't as dramatic a lack as they made it seem. Getting a loan was more onerous than it should have been, because the pendulum swung too far in the risk-averse direction. Goldman, Citi, BoA were all sitting on mountains of cash for a few years that they refused to give to anyone. Anyway, a little attrition in the oil business might be a good thing in the medium to long term. High oil prices are the best stimulus for cleaner technology.
It seems the numbers were no larger: But this might be the bigger issue: CDO's might have assumed a few businesses to have issues making due, but not the whole sector.
Even more importantly, most oil-price hedges, price swaps/derivatives, also have cross-default provisions. Thus, counterparty credit risk begins to escalate as those parties are forced to disgorge cash payments on those instruments.
If there's a positive here, it's that maybe another derivative crisis would give us the chance at the reset that we opted not to pursue under the TARP. We need a radically differ et approach to financial regulation, but it won't happen without motive, means, and opportunity. A crisis Malay precipitate that.