THE CREDIT CRISIS: AN ECONOMIC ROLLERCOASTER RIDE RICK TOBIN
With less demand for U.S. dollars worldwide in
recent years and the combination of rising
inflation partly due to the introduction of trillions of
dollars by way of “Quantitative Easing” and other
government and Central Bank “bailouts”, the price
of
gasoline
has
skyrocketed
due
to
the
weakening value of the U.S. dollar.
The availability of capital is
typically the number one
driving force behind a “boom” or
“bust” time period as it
relates to real estate cycles
I may venture to guess that demand for gasoline
here in the USA in recent years has dropped due
to the sluggish economy and $4 to $5+ gasoline
Bank Bailouts as opposed to People Bailouts
costs per gallon. If true, then the weaker U.S.
dollar may be the primary reason for the much
Since the financial implosion began back in the
higher gasoline costs rather than a lack of supply
Summer of 2007 after the near collapse of the
of oil for American consumers.
world’s derivatives markets (i.e., Credit Default
Swaps, Interest Rate Options, etc.), then many of
As I once learned in past Economics courses
the financial bailouts offered by Central Banks and
back in college, when supply exceeds demand for
governments worldwide have focused more on
a product, then prices tend to drop. However,
saving many of the largest banks, investment
when oil is traded for weaker U.S. dollars, then
banks, and insurance companies as opposed to
gasoline prices tend to skyrocket, sadly.
directly helping individuals or small to mid-sized
business owners. Why haven’t more of the U.S.
citizens or “Mom and Pop” businesses been bailed
out as well? Why can’t people also be “too big to
fail” as alleged with some of the larger U.S. banks
and Wall Street firms?
There have been upwards of millions of homes
foreclosed in the USA since 2007, and countless
personal and business bankruptcies. Couldn’t the
USA take a few trillion dollars of allocated “bailout”
money for the big banks, and redirect it towards
helping U.S. consumers reduce their credit card
debt, student loans, mortgage loans, business
loans, and possibly to provide them with some
“seed
capital”
expansions?
for
business
and
investment