Quote:
Originally Posted by Willravel
To a certain extent, everything is interconnected. Still, oil itself did not cause the mortgage bubble or subsequent collapse. The mortgage bubble's main cause would be deregulation in the 1980s and the subsequent moves by financial institutions to turn homes into risky investments; things to be toyed around with en masse via the market. That, more than anything else, set us on our course which always was going to end with a burst bubble with or without the oil price spike in July of 2008.
|
I think the mortgage bubble is a huge factor, but I also am increasingly believing that it was burst by the fact that the CPI spiked when oil prices did. I remember when rice prices hit the headlines and it was causing turmoil. I remember near-daily news articles of people griping about how oil/gas prices where making it difficult for them financially. Couple that with a mortgage that you can barely afford to begin with, and it won't take much to get into a tight spot. What were interest rates like at the peak? I can't remember, but a boost in rates coupled with peak oil prices would be a recipe for disaster for many already stretched too thinly.
Quote:
|
Remember, oil prices were rising more steadily until mid 2007 when they started to skyrocket. While this could be an indication that Hubbart's Peak is upon us, it's connection to the financial collapse would seem to be chronologically off.
|
Yeah, the combination of peak oil and peak globalization puts overall economic growth at risk. I'm interested to see what happens when the global economy gets back on track and demand for oil increases again. Let's see what the summer months bring.