I sort of agree with the basic thesis, that the-elephant-in-the-room-whose-name-shall-not-be-spoken is the high cost of energy. No, however, the high cost of energy did not directly cause the housing market to collapse. Instead, it imposed an extremely high burden on virtually all sectors of the economy. Eventually, this burden increased to the point that a critical sector (in this case real-estate) reached failure. The rest followed.
Would the real estate market have still failed without the unreasonably high cost of energy? Probably yes, since there were no serious efforts to fix the subprime loan business. But it would have taken a while longer before that happened. Would another sector of the economy have failed if the real-estate and credit business had cleaned house a few years back? Well, probably yes… We were beginning to see the beginnings of huge inflationary price increases, especially in sectors that have traditionally relied on low transportation costs (how much has the price changed for that cheap little pack of ramen noodles? Where I shop, it’s about doubled!).
Just my $.02
DaveK
