[DannyTN]

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.

[Political Junkie Too]

So either way you look at it, Obama was wrong? It wasn't the low prices by themselves, but the excessive rise in prices, as Romney alluded to?

-PJ

[Political Junkie Too]

Are you sure the mortgage defaults weren't the trigger? I don't see the link between mortgages and gas prices.

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