Tuesday, February 28, 2012

What? It wasn't the CRA?

Rick Santorum trotted out a new Republican explanation for the financial collapse in 2008--higher gas prices.
During a campaign appearance in Michigan, Santorum said the housing bubble burst in 2008 because people could no longer afford to pay their mortgages because of high gas prices.

"We went into a recession in 2008 because of gasoline prices," Santorum said in Michigan according to Buzzfeed. "The bubble burst in housing because people couldn’t pay their mortgages because of $4 a gallon gasoline."
If you're wondering why you haven't heard this explanation before, it's because no one else would be dumb enough to espouse it.

The price on gasoline was $4 a gallon or higher in June and July of 2008. The Great Recession began more than half a year before this in December 2007, and the housing bubble burst even earlier in the spring of 2006.

Either homeowners were incredibly far-sighted and started cutting back on mortgage payments more than two years in advance of the run-up in gas prices, or Santorum is a boob.