[Doly]

I've been reading a lot about the events in the stock markets in the last couple of weeks, and I can't make up my mind on the burning question: Is this IT? Is this the crash brought on by high oil prices we were all expecting?
I know oil prices haven't been mentioned as a cause for it, but we all know one of the big reasons people are defaulting on mortgages is because their gas costs, heating costs and food costs (that have been going up with oil prices) have kept creeping up while their income hasn't.
What do you think?

[seahorse2]

Yes, the recent "crash" of the housing market and now the financial markets are related to a plateau in oil production since 2005. If oil in fact peaked in 2005 (certainly has been flat), the role of high energy and the fact that there is no more energy to sustain a rising bull market, things have to slow down or stop (if there is no oil to make stuff, things slow or stop). Thus, I don't see how one can not say they are related.

[RonMN]

Yup, This is the beginning of it...It'll play out over the next 2 years, but it's getting bad already. Even tax free municipals just took a hit.

[Roccland]

This is by design...
ARMS had a 3 to 5 year fuse put on them - 3-5 years ago...precisely the time oil peaks.
Was going to happen independent of the ARMs...now it happens on "their" terms.

[evilgenius]

$this->bbcode_second_pass_quote('Roccland', 'T')his is by design...
ARMS had a 3 to 5 year fuse put on them - 3-5 years ago...precisely the time oil peaks.
Was going to happen independent of the ARMs...now it happens on "their" terms.

[eastbay]

No. Short answer.

Well, it depends on what time frame one means by 'beginning'. A major catastrophic downturn can still be delayed this time with relatively still-plentiful energy and by creating more money. So I believe 'the big one' is still a few years away. Next time we have a major crisis unfold, the energy may not be as readily available so infusing cash will not have nearly as much positive effect.

On the other hand, in my opinion, the 'beginning' of the present economic crisis occurred in July of '05. Everyone here at po.com knows what happened then. Since nothing like oil depletion has ever happened to humans on such a colossal scale, the details and timing of the coming economic, social, and political horrors will only become known in the rear-view mirror.

[TommyJefferson]

$this->bbcode_second_pass_quote('Doly', 'I')s this IT? Is this the crash brought on by high oil prices we were all expecting?

[DarthBruder]

TommyJefferson is 100% correct.

[Alcassin]

$this->bbcode_second_pass_quote('TommyJefferson', '
')Enjoy watching the Doom masturbators pleasure themselves, but don't make life decisions based upon their ejaculations.

[hiperhiper]

$this->bbcode_second_pass_quote('TommyJefferson', '')$this->bbcode_second_pass_quote('Doly', 'I')s this IT? Is this the crash brought on by high oil prices we were all expecting?

[RonMN]

IMHO I think the long slide can only go on for so long before panic sets in & it all hits the fan.

I just don't see a long slow 20+ year slide...people aren't that patient...especially where their wealth is concerned.

[Pops]

Naw, there is a heck of a lot of money floating around out there looking for a home,
It was in Dot.Coms
Then in real estate,
Now commodities.

In some areas like my old neighborhood, gas prices might be a partial cause of the housing slump. I think though, the bigger cause is, as always, the lure of easy money resulting in a saturated market.
Easy money is the sure lure for both shark and minnow.
Looks like this time it will be catch and release.

[seahorse2]

The problem with trying to say this is a financial crisis unrelated to an oil plateau denies that high energy prices, or resource constraints, have any effect on credit expansion. Resource constraints ultimately act as a buffer against easy credit expansion. This big run up in credit/easy money expansion ultimately imminates from a capitalist belief that resources are unlimited, which they are not. Capitalism ultimately assumes that if that the only restraint to expansion is in access to resources (i.e. the Cera argument that there are plenty of resources, just not enough access). Now that an oil plateau has set in, easy credit/capitalism is bumping into the glass ceiling of limited world resources. The bubble of capitalism has thus been contained. It can't expand past its resource constraints. The resource contraints, i.e. high fuel prices, high copper prices, high everything, start compounding and translating into higher everything, steel, lumber, gas, etc.

So, this recent market correction is reflective, I think, of limited world resources to fuel unlimited cheap growth and credit. Credit will become more expensive, which will in turn, limit growth, things will stay in balance with the amount of resources ultimately available.

[Pops]

Seahorse, I am way over my head whenever I type anything here so be gentle with your explanation.
But gasoline prices are pretty low today, steel (high tensile fence wire anyway) has come down to where it was 2 years ago, corn is down on anticipation of a good harvest.

Cashing in on RE value escalation has been driving the economy for some time, it doesn’t seem strange to me that the stagnation and reversal in that trend would cause some concern.

[keehah]

$this->bbcode_second_pass_quote('', 'P')lan for slow deterioration, painful reconfiguration, and thinning of the herd.

[seahorse2]

Pops,
Gas prices today versus 2000?
Steel prices today versus 2000?
Although building prices are now crashing, compare 2005 (year of PO) prices of concrete, brick, lumber, etc to 2000 prices for the same materials?

Everything went way up from 2000 to 2005, now, the prices are either stagnating or coming down, I say, bc of resource constraints. It doesn't matter how much money they print, there's a limited number of resources to buy. When they print more and more money with the mistaken belief that resources will be forthcoming, it causes inflation in the money supply. So, they can now either keep pumping up the inflation, or allow things to deflate, but the number of goods available will be the same regardless.

[Plantagenet]

No.
The U.S. economy has been expanding for almost 6 years now (2002-2007).
That is longer then the typical economic expansion.
The economy is overdue for a recession.

The stock market typically leads the economy by about 6 months.
The current bear market suggests that perhaps next summer we will see economic contraction, rising unemployment, and the signs that the long post 9/11 economic expansion has ended and the economy is going into recession.

[TheDude]

Howzabout creating a new industry out of destroying houses for their raw material, and using same raw material to build...more houses...

We could drop the raw material out of helicopters while we're at it, or bury it in mines for people to dig up.

[wisconsin_cur]

Once there was this guy in a corner of a room. It was my job to go in and restrain him b/c he was threatening to kill himself. He was without clothes and in his right hand, ready to throw was a handful of his own excrement.

The lesson of the story? If you have to ask, it has not hit the fan.