Not for no reason. Housing defaults are coming mostly from those with adjustable mortgages. What happened was, the Fed raised the Funds rate to 5.75%. This ended the easy money needed to keep growing the housing bubble. At the same time, adjustable mortgages were beginning to reset and the value they were resetting to were tied to the Fed Funds rate. In the meantime, the speculators saw the housing bubble petering out and moved from housing to commodities to try to catch the next bubble. You saw this move from a housing bubble to a commodities bubble and you are mis-diagnosing the effect -- higher energy prices -- for the cause, which is the collapse of the housing bubble. So while you think high energy costs were a cause of economic crisis, they were in fact an effect of the economic crisis.
Your theory is very interesting though. If you think high energy prices caused the collapse of housing, then what caused the high energy prices? The housing bubble was caused by a flood of easy money, both low interest rates and loose lending standards. Those structural changes created the housing bubble? In your mind, the energy bubble caused the collapse of house prices, banking and the economy. If that is your thinking, then what structural change occured to suddenly cause the energy bubble and higher oil prices? OPEC didn't cut back on production. Demand didn't suddenly outpace supply. I have identified structural changes that caused the housing bubble. Now your turn. What structural changes do you think caused the oil bubble? Bubbles don't "JUST" happen. Usually they follow some loosening of government policy that steers capital into a given direction, speculators jump in and then Suzi Soccer Mom and Joe Six Pack jump in to run it up to the moon. This happened with housing when the government slashed the Fed Funds rate and demanded that lenders give loans to everybody with a heartbeat, which they salivated at to get fees. How did this happen with oil? I'm dying to hear your explanation.
I would say the prospect of China and India (and elsewhere) growing its economy and energy consumption at a monstrous clip of 12-20% per year had something to do with the oil spike, dontcha think?
>Whether realistic or not, analysts BELIEVED China would increase its power consumption 40% over the next three years, with an exponential INCREASE in growth after that.
China could be consuming more oil and energy than America by 2016. India also.
Is it any wonder oil producers kept upping their prices, even as China and India were buying up every freaking oil company and other company in sight.
China tried to buy Seagate Tech, and it bought IBM's computer division.
It tried to buy Unocal, ?? Exxon, and several other major American energy companies with its POCKET change.
It currently has about 40 million vehicles (compared to America's 160 million) and is (was) expected to quadruple that in several years.
China already has 200 cities bigger than Dallas, TX .. with a billion people thriving to use more oil.
Add India into the mix, and it's easy to see why oil contracts were being snapped up at higher and higher prices ... going out 10-15 years.
I've lost track of the Fortune 500 companies China either bought, or tried to buy.
When oil spiked so high, companies and countries suddenly stopped expanding due to both real and PERCEIVED increases to its short term outlays.