In our case these underlying problems have been built up over the years. The root cause of the crisis, of course, is America’s enormous debt, which it cannot repay and has no intention of ever repaying. The catalysts for the crisis were, without a doubt, the events of 9/11 and the war in Iraq. On the one hand we have the enormous expenses associated with these events and on the other hand – increasing global instability and rising hydrocarbons prices. Until recently, at least, the US economy was the cornerstone of the global financial system and oil is the cornerstone of the US economy, which consumes a quarter of global production.

Look at the growth of oil prices and consumer gasoline prices over the past few years: http://www.venik4.com/?p=63 And the look at the Oil Price vs Consumer Gasoline Price index. This unusual trend was bound to end in disaster. America’s economic troubles started in September of 2001. They never really recovered. As I mentioned, the first signs of trouble were airline bankruptcies and Boeing laying off some 30,000 employees in 2001-2002. This was a direct result of events of 9/11, and these problems were compounded by all the White House stupidity that followed. In physics this is called sympathetic resonance.

But the problem is not even with subprime mortgages. This is just where the first signs of trouble appeared, because subprime mortgage lenders are so sensitive to subtle changes in financial status of the borrowers. High oil prices preceded the subprime crisis, and so did growing unemployment, ballooning national debt, enormous expenses on the war in Iraq, and Afghanistan, as well as huge amounts spent on “security” in the year following 9/11 and the resulting first wave of bankruptcies among airline companies, which were followed by layoffs in the aerospace industry. All these negative trends were building up over the years and the economy eventually developed a tear at its weakest point – you guessed it, subprime lending.