Who else thinks the High Energy Prices last year was the true cause of the downturn?
I have thought this from day one!! The gasoline and record high natural gas prices and oil prices I think is what really drove the world wide economy over the edge. Money had to spent on energy and not other things!
March 22nd, 2010 at 3:19 pm
Agreed that it severely damaged the economy, if not drove it over the edge.
What I find the most interesting is that gas prices didn’t really rise until Bush signed the last stimulus bill and the treasury sent the rebate checks out.
Once those checks hit mailboxes, gas went up $1/gallon within 2 weeks and didn’t stop growing in price until the stimulus money was spent.
After the bottom fell out on the gas prices in mid-August, the investment banks took a major hit because they had been speculating on the price staying high and ended up losing their shorts, thus had to be bailed out by mid-September by Paulson.
March 22nd, 2010 at 3:19 pm
I think that is the straw that broke the camel’s back.
March 22nd, 2010 at 3:19 pm
How did that bankrupt the investment banks and insurance companies?
March 22nd, 2010 at 3:19 pm
Energy costs are a much smaller portion of the economy than they were in the early 70’s.
It was the housing bust and excessive leverage that killed us.
March 22nd, 2010 at 3:19 pm
that was one part the other were those people who were flipping houses at a huge profit, they ran out of people to sell houses to.
March 22nd, 2010 at 3:19 pm
No.
You’ll have to do a lot more studying if you want to come close to the truth.
But coincidentally, last year because of the high cost of gasoline I took a crash course in economics. With the help of my local library.
It’s very interesting what I found. Some of it is even unbelievable.
Please study up on the subject, it’s well worth the time.
March 22nd, 2010 at 3:19 pm
I don’t see how it connects to the Freddie and Fannie busts. Connect it up, it’s your idea.
What I observed is that when the gas prices went through the roof, the cost of everything else went with it. When the gas prices came back down, the cost of everything else did not come back down with it.
March 22nd, 2010 at 3:19 pm
Then why didn’t everything go back to normal when energy prices came down?
The principal cause for the crisis was loan defaults, coupled with the way mortgages were being repackaged by the "stealth" banking industry.
March 22nd, 2010 at 3:19 pm
well.. it helped… just squeezing more money out of the middle class…
who already had purchased homes that were more than they could afford, using Variable rate loans…and when the Fed increased interest rates, everyone’s loan went up….
that paired with higher energy prices was a huge 1-2 punch that most bank accounts couldn’t handle…
March 22nd, 2010 at 3:19 pm
When Obama was elected, companies realized there would be more governmental control and loss of some tax benefits. This caused an immediate downturn in investment and stock prices. Dropping the market through the floor.
Combine with that banks overextending themselves with failing foreign investments and failed ARM mortgages, and you have the onset of the current depression. What … When Obama promised more governmental control and cuts in tax breaks for big business you thought it would not stifle the economy, as republicans had promised?
We are reaping the whirlwind of America’s bad choices. Electing Obama to get back at GWB. Gas price are an effect ….NOT a cause.