A Question

With regarding the current financial crises has the following connection been made anywhere?

• Many American’s operate close to the edge of their liquidity, spending money on “things” at about the same rate it comes in.
• Gas prices doubled in a short period of time, coming to a maximum shortly before the crises.
• Our economy is called rightly petroleum based.
• Our behavior didn’t markedly change quickly when prices doubled.
• Then the credit markets collapsed.

It is hard to adjust habits, spending and activities rapidly to match rapidly fluctuating commodity prices. When that commodity is oil, which is so fundemental to every one of our activities. That could spell trouble.

Is it too simplistic to account for the current market problems to the inability of that same market to adjust quickly to fluctuations in cost of its fundamental commodity? If not, why isn’t this being noted? Or more to the point, what’s wrong with my logic above? And if it isn’t wrong, who else is suggesting it.

Filed under: Economics & Taxes • Energy • Mark O.

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