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.
-PJ