Oil, House Prices, Credit: Three parts of the same story

The long forgotten ‘oil crisis’ of just a few months ago has been replaced by a full blown ‘credit crisis’ – related events that represent the unravelling of half a century of unsustainable trends in oil consumption and debt. These two ingredients have been used in a special ‘compound growth formula’ to finance the construction of suburbia and fuel the (un)happy residents on their long journey to work and home again via the shopping mall, so they could spend more than their earnings on stuff to put beside the TV and inside the microwave oven.


…So consumers started driving less because global oil supply simply could not meet everyone’s expectations. Next the value of their house fell. Finally they found the bank wouldn’t (couldn’t) lend them anymore money, so they stopped shopping as well. That was the last straw, as there is nothing that strikes fear into the heart of an economist more than the sight of a consumer who has stopped shopping.

The Oil Drum