i wonder how often Economists are right, and never tried to measure it.
Economists say that high gas prices triggered the housing crisis in 2007 (2012)
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Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#22Now we have high oil prices (not yet at the high) also with general (corporate induced) inflation, combined with an even greater separation of wealth. All things that point to a a recession again. But war is the variable here.
we are not seeing 'corporate induced inflation' we are seeing government policy induced inflation - very big difference.
This is from BUSINESS INSIDER:
https://www.businessinsider.com/corporations-using-inflation...
"Corporations are using the excuse of inflation to raise prices and make fatter profits," he said.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#23Now we have high oil prices (not yet at the high) also with general (corporate induced) inflation, combined with an even greater separation of wealth. All things that point to a a recession again. But war is the variable here.
we are not seeing 'corporate induced inflation' we are seeing government policy induced inflation - very big difference.
I’d claim inflation responsibility is on both sides. I forget the number off the top of my head, but a rather large proportion of the price increased were collected as profits. Given that a number of industries are dominated by a handful of large conglomerates, the incentive to price products competitively seems rather low.
However, this is also correlated and reinforced with the actions of the federal reserve for a number of reasons.....
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#24The more EVs penetrate the market the less vulnerable we are to oil price spikes. Oil has been the rate limiting reagent of our civilization. That is ending.
yea, all those poor people who can't afford to fill their cars should just run out and buy Teslas instead.
the idea is that the EV market will continue to slide towards entry price. the used EVs market should follow suit, so, those poor people would also have the choice to replace their fossil fuel vehicle with an EV to avoid being at the mercy of oil prices.
not that I think the theoretical reasoning will work, but it is at least plausible, and not only for consumer vehicles.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#25> "The key word is, 'triggered,'" said JunJie Wu, an OSU economist and one of the authors of the paper. "This theory recognizes the role of subprime mortgages and lax lending practices as inflating the housing bubble, but high gasoline prices provided the trigger that burst the bubble." Are we in another bubble? And if so what is the theory for why? I assume subprime and lax lending wouldn't be the cause after the le…
Not a bubble because for the most part people are buying homes that they can pay the mortgage on. High energy prices are also going to spike inflation which eventually means rates rise. If that happens owners with their 2.75% mortgages aren't going to be inclined to sell. Coupled with higher new construction costs the housing market probably continues to rise.
> owners with their 2.75% mortgages aren't going to be inclined to sell.
Or able to sell.
This is the other side of historically low rates pushing home prices up by allowing people to pay higher prices while keeping their mortgage payment affordable. If (when?) rates go back up, that may cause prices to fall. This could also put people underwater on their homes, and even trigger another (hopefully smaller?) wave of foreclosures if they suddenly can't make payments anymore and also can't sell the house at a price that will cover the remaining balance of their home loan.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#26The more EVs penetrate the market the less vulnerable we are to oil price spikes. Oil has been the rate limiting reagent of our civilization. That is ending.
yea, all those poor people who can't afford to fill their cars should just run out and buy Teslas instead.
Well depending on the need a imported https://insideevs.com/features/459206/citroen-ami-review-dri... could serve many niches in suburbia and the city.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#27> "The key word is, 'triggered,'" said JunJie Wu, an OSU economist and one of the authors of the paper. "This theory recognizes the role of subprime mortgages and lax lending practices as inflating the housing bubble, but high gasoline prices provided the trigger that burst the bubble." Are we in another bubble? And if so what is the theory for why? I assume subprime and lax lending wouldn't be the cause after the le…
Not a bubble because for the most part people are buying homes that they can pay the mortgage on. High energy prices are also going to spike inflation which eventually means rates rise. If that happens owners with their 2.75% mortgages aren't going to be inclined to sell. Coupled with higher new construction costs the housing market probably continues to rise.
> for the most part people are buying homes that they can pay the mortgage on
The question is can they still pay the mortgage if cost of living goes up significantly (like it appears to be)
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#28Earlier quoted context omitted.
makes me wonder if student loan default en masse could follow this time.
How would that work? I thought most US based student loan can't be defaulted on.
Defaulting just means you have not made required payments for a certain period of time (270 days for student loans), so anyone can default.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#29Earlier quoted context omitted.
> (corporate induced) inflation Why did the corporations wait for the government to print tons of money to decide collectively to raise prices?
Did you notice there was a multi-year pandemic that destroyed supply chains and greatly increased labor costs? The causality is not as simple as “governments printing money -> inflation”.
Yes, this time it's a stuff shortage, not an oversupply of money. But the central bank still wants to raise rates, which is silly. The current prices and shortages are a result of longstanding policy, just not monetary policy.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#30Earlier quoted context omitted.
Canada’s housing bubble didn’t pop a decade ago, and continued to inflate.
Housing in the Toronto area has been even more insane than usual the last few months. Houses an hour away from downtown that were selling for ~850k in November 2021 were selling for $1.05M in January and February.
All of Southern Ontario really; prices in Midland, Owen Sound, etc. etc. are all much higher.