Once again my bro Joe Weisenthal at Business Insider gets it wrong and inspires me to create a post explaining what caused the 2008 financial crisis.
When gasoline prices spiked above $3 a gallon, the cost of filling up the tank became too much for families to handle. A decision had to be made: pay $100 each week to fill up the tank on the gas guzzler in order to drive the daily commute to work and keep the paychecks coming or make the mortgage payments in full and not leave the house. Families realized protecting their income stream took precedence over their obligation to their lender so they blew off the mortgage payments and continued going to the office. Because these mortgages had been bundled and sold all over the world as Residential Mortgage Backed Securities the collective decision by American households to stop making mortgage payments had global repercussions. To this day RMBS's are so toxic the Fed recently announced its plan to create $40 billion out of thin air each month to take the shit off the TBTF banks' balance sheets.
As people began to realize the banks were broke Corporate America rightly freaked out and started laying off workers by the tens of thousands. Now there was no job at the end of the commute, and no income to pay the mortgage or fill up the tank. It's a vicious cycle. And it is by no means over.
FRED tells the story in a way words cannot...