Posted on 10/17/2012 12:32:23 PM PDT by Sub-Driver
Obama's Brutal Gaffe: Low Gas Prices Cratered Our Economy
by Ben Shapiro 17 Oct 2012, 11:48 AM PDT
Last night, President Barack Obama dropped the biggest campaign gaffe of the season – only the media wasn’t watching. It happened during his testy exchange with Mitt Romney over gas prices. First, Obama denied that he’d done anything about denying licenses on oil and gas; he backed off of that shortly. Then he denied that production on federal land was down; he was lying. Finally, Romney hit him with this devastating line:
The proof of whether a strategy is working or not is what the price is that you're paying at the pump. If you're paying less than you paid a year or two ago, why, then, the strategy is working. But you're paying more. When the president took office, the price of gasoline here in Nassau County was about $1.86 a gallon. Now, it's $4.00 a gallon.
Obama’s response was horrendous:
Well, think about what the governor -- think about what the governor just said. He said when I took office, the price of gasoline was $1.80, $1.86. Why is that? Because the economy was on the verge of collapse, because we were about to go through the worst recession since the Great Depression, as a consequence of some of the same policies that Governor Romney's now promoting. So, it's conceivable that Governor Romney could bring down gas prices because with his policies, we might be back in that same mess.
In other words, bringing down gas prices by drilling creates economic recession. That was Obama’s argument.
Does anyone think this president understands basic economics?
(Excerpt) Read more at breitbart.com ...
However, it was actually an oil price shock that set off our economic crisis. That’s what caused the dry up of disposable income, the rise in unemployment, the mortgage defaults and the bank liquidity crisis, in that order.
So actually an excessive rise in oil prices is a leading indicator and causative agent of an economic recession.
-PJ
I thought the mortgage issue was banks loaning money to people who couldn't afford it. Once they bought homes at the high real estate bubble, the bubble burst and the home values declined, leaving the mortgages upside down (mortgages worth more than homes). So, people walked away from their mortgages.
That wasn't a case of high consumer prices using up money that would go to mortgages. People didn't have the incomes to pay for the mortgages onces the ARMs adjusted. They wouldn't have, no matter what the gas prices were.
-PJ
“The corollary of this theory is that paying $4.00 means that the economy is roaring. Imagine how we will be doing when we are paying $10.00.”
With that we’d probably “improve” to near-EU levels.
No y'all are misunderstanding what Obama said. Obama didn't say the low prices caused the bad economy. He said the low prices were the result of the bad economy.
And Obama said Romney could cause more low oil prices by crashing the economy with his policies. Not that Romney policies would lower oil prices and cause a crash, but that his policies would crash the economy, and oil prices would fall as a result of the bad economy. Thus Romney would successfully bring oil prices back down by crashing the economy.
I don't remember exactly what Romney said about prices, other than that they had increased due to Obama's policies.
I too was scratching my head, and yes, I shouted
“WTFFFFFFFFFFFFFFFFFF!”
So according to Obama, a recession will drive down gas prices and a strong economy = high gas prices?
Ummmm. Don’t think so.
Notice CC decided to remain “a fly on the wall” for that one though.
NONE of those guys said that or else they’d be part of the 99% right now.
He would be correct. Strong economy equals more demand for fuel equals higher prices. When demand fell like it did in 2008 prices fell. Why did demand fall?
but the enigma here is that clearly our economy is NOT currently strong, but gas prices are through the roof.
My take on oil prices is somewhat different. No one here is addressing the Fed’s impact on oil prices. Oil is traded in US dollars. The Fed has been printing money for the past 4 years, big-time. So the real value of a dollar has been diminished, by how much I couldn’t say. So the sheiks want more of these cheaper dollars for their barrel of oil.
That was the most asinine comment I’ve ever heard. I’m thinking we should be wishing for $10 gallon gasoline so we can have a good economy.
Our economy is stronger than it was in 2008-2009, but that isn’t the whole picture. Crude oil is traded on the world market and rises and falls on worldwide demand, not just how we are doing here. China and India are becoming huge consumers of oil.
the sad thing is that what he said, makes sense to about 30-40% of the population.
What is causing the outrageous gasoline prices with crude hovering at 92 bucks?
even your pets had to laugh! yah, then why is it 4.00 a gallon now?
Gas prices in Jan-05, the start of W’s second term were about $1.85. The week prior to the Lehman collapse in Sep-08 they were about $3.80. 4Q08 GDP declined by 8.9% and Jan-09 payrolls fell by 818,000. I have to believe that such a hit to the economy goes along way to explaining the gas price in Jan-09. Also, if 1.80 gas is so great, why was Newt only wiliing to promise $2.50?
The price of gas in Jan-05, the start of W’s second term was about $1.85. The week prior to the Lehman collapse in Sep-08 it was 3.80. That was followed by 4Q08 GDP of -8.9% and Jan-09 payroll declines of 818,000. I have to believe those circumstances were a key component to the gas price levels seen in Jan-09. Also, if $1.80 gas is so great, why was Newt only willing to commit to $2.50?
Positive. Look at a chart of oil prices for the 2000's. Then look at a chart of unemployment. There was a spike in 2002 that we never fully recovered from. The economy was reflecting a weak economy then, outsourcing had already begun to take it's toll. Then you see unemployment start rising much faster almost a year before the banking crisis hit the fan.
Most people who got mortgages, had jobs and could afford the mortgage when issued. But once oil went up, they started having trouble. Once it went up enough, they started losing their jobs and the defaults grew.
Mortgages take it on the chin in every recession and in hindsight it looks like a real estate bubble. It's usually not. Sometimes there are speculative bubbles but those tend to be regional. Mortgages are a symptom of the general health of the economy. When people lose their jobs they default.
The defaults grew until a money market fund broke the dollar for the first time in history. Money market funds are limited to investing in short term investments. That's one of the things that drove the market in mortgage derivative products. Derivative companies would split the mortgage payments into a series of cashflows. Payments due in the near future would be bundled into a security sold to the money markets. Payments occurring later in the life of the mortgage would be bundled into a security sold to the life insurance companies.
When that money market fund broke the dollar it scared the banks and liquidity dried up almost instantly.
Meanwhile, the bipartisan repeal of Glass Steagall in the late 90's had allowed banks to invest in riskier stuff. They mollified the FDIC by claiming they had hedged their risk with offsetting credit default swaps. The FDIC accepted this despite that they had failed to regulate them and didn't know if the company that had issued them could really stand behind them.
On top of that the Federal Reserve had exempted different types of bank accounts and various funds until the effective reserve ratio was about 1%. So that when the credit crisis hit, followed almost immediately by a liquidity crisis, the FED had no reserve to fall back on. Thus President Bush was forced to go to Congress and issue an emergency appeal for loans to stop the liquidity crisis. This public appeal killed any remaining consumer psychology that was left.
It was a comedy of errors, but the mortgages were not the cause, a weakened economy due to unwise trade policies, high gas prices and unemployment is what caused the defaults. There was some mortgage fraud but it wasn't that much.
You can say that the loosening of mortgage standards and subsequent tightening made the situation worse. But we would have had problems anyway.
Gas prices are driven by world wide demand and supply and to some extent speculation.
Any politician actually predicting a price is sharing a hope and a prayer. There are some things that they can do to help drive the price down, but to guarantee a price, or even that the price will go down, no.
Gas prices are driven by world wide demand and supply and to some extent speculation.
Any politician actually predicting a price is sharing a hope and a prayer. There are some things that they can do to help drive the price down, but to guarantee a price, or even that the price will go down, no.
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