Blame oil, not banks, for recession

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The connection between oil price spikes and recessions was first advanced in 1983 by economist James Hamilton of the University of California at San Diego. He showed that almost all U.S. recessions have been preceded by spikes in the price of crude.

Using the Hamilton template, Mr. Reynolds notes that 10 spikes occurred between 1947 and 2007, each followed by recession. On this basis, Mr. Reynolds predicted that, writing in the Financial Times on Jan. 3, 2008,