Did high gas prices cause the mortgage mess?

[okmic1]

Originally Posted by robinsre

Gas prices likely exacerbated the issue. Realistically what "caused" the crisis was simply irresponsible borrowing and lending.

This.

I've had mortgage payments for 12 years. I made sure I had a loan I could afford. Gas prices didn't change that.

[KingWulfgar]

Originally Posted by Ride the Lightning

I respectfully disagree. What would you be saying if the added expense wasn't due to fuel costs, but was instead because their car insurance or rent went up by that amount? If gas is such a huge percentage of someone's monthly expenses, they need reevaluate their combination of home cost and location, lifestyle, vehicle choice, etc. I spend about $400/month on gas right now and the increase really doesn't make much difference in the grand scheme of things. Yes, I wish I had that $150-200/month back to do other things with. If you are living that close to the edge you need to adapt your lifestyle to suit your new needs. I meet a lot of people that say gas prices are ruining them, when in reality it's going out to eat every night, going through a case of beer a week, smoking 3 packs/day or something similar that is causing their true financial burden. When people have no frivolous expenses to speak of and the price of gas is still killing them, I'll have some sympathy. Until then, gas prices aren't hurting the economy, poor spending habits are hurting the economy.

Read Captain Jack's post right above you. He already explained how the cost of goods and services has risen along with gas prices. Have you not noticed how much a gallon of milk costs now as opposed to three years ago? How about other food items, ammo, clothing? Basically, anything that needs shipped. It's a big snowball that, yes, has affected the economy.

I never said gas prices were ruining me, but to say it hasn't affected spending in other areas (or money freed up to invest/save) is naive.

[trik396]

[quote=Ride the Lightning;1344746]Gas prices had nothing to do with 90% of the mortgage problems. The problem is that people are too busy keeping up with the Joneses to act in a fiscally responsible manner. Yes, there were people who owned or rented a modest place, drove old cars, and added fuel cost was all it took to drive them over the edge. Those were the minority. Most people have a home, cars, toys, etc. that are beyond their means in the first place and gas prices did nothing but make their interest accumulate faster than they could pay it off. For those people I have no sympathy at all.[/quote

I agree 100%. To the OP, if $200 extra expense every month were to cause a family to not pay their mortgage, then they bit off more than they can chew. It is that simple.

What ever happened to not being able to get a loan if the monthly payment was more than 32% of your net monthly income?

GREED is what happened.

If the purse strings were tightened by banks and people used common sense, we wouldn't be in this freakin' situation right now.

Common sense is lacking in the country from top to bottom.

[robinsre]

Originally Posted by Ride the Lightning

I respectfully disagree. What would you be saying if the added expense wasn't due to fuel costs, but was instead because their car insurance or rent went up by that amount? If gas is such a huge percentage of someone's monthly expenses, they need reevaluate their combination of home cost and location, lifestyle, vehicle choice, etc. I spend about $400/month on gas right now and the increase really doesn't make much difference in the grand scheme of things. Yes, I wish I had that $150-200/month back to do other things with. If you are living that close to the edge you need to adapt your lifestyle to suit your new needs. I meet a lot of people that say gas prices are ruining them, when in reality it's going out to eat every night, going through a case of beer a week, smoking 3 packs/day or something similar that is causing their true financial burden. When people have no frivolous expenses to speak of and the price of gas is still killing them, I'll have some sympathy. Until then, gas prices aren't hurting the economy, poor spending habits are hurting the economy.

The fuel cost was not a primary factor in the "I need to buy fuel sense" but rather in the "I need to buy everything else that's shipped" sense. I've seen the price on almost EVERYTHING increase with the increased price in fuel.

When gas goes up, EVERYTHING goes up.

[Ride the Lightning]

Originally Posted by KingWulfgar

Read Captain Jack's post right above you. He already explained how the cost of goods and services has risen along with gas prices. Have you not noticed how much a gallon of milk costs now as opposed to three years ago? How about other food items, ammo, clothing? Basically, anything that needs shipped. It's a big snowball that, yes, has affected the economy.

I understand that, but the added expense should not be that devastating if you are living within your means to begin with. The prices of commodities are also not exactly in line with the increase in fuel costs. Many things have increased almost linearly with the cost of fuel when fuel is only a small percentage of the cost of producing the item. Here are two examples:

#1. One of our parts suppliers began charging us $1.03 fuel surcharge when gas went up. When gas hit its peak of $3.89/gallon they said they spent around $50 to fill up each delivery truck every day and each delivery truck made around 80 deliveries. They were charging almost double their total cost of fuel to offset an increase of only about 80%. That's a 4 to 1 return on the fuel surcharge.

#2. My neighbor pays to have his lawn mowed and the cost has doubled the last two years and he has received several notices that the increase is due to fuel cost. Daily fuel use for a truck, mower, trimmer, and blower (based on what my truck, mower, trimmer, and blower use) is probably 10 gallons/day, or roughly $40. The cost of the two employees at $8/hr would be $128. I'm sure there are also numerous other expenses that are significant like insurance, loan payments, maintenance, etc, so it's probably safe to say that fuel cost is only about 10-20% of their daily expenses, yet it was used as an excuse to double the cost of a service.

The point is that fuel is no longer considered an expense, it is considered a profit center. The majority of the cost increase we see on many commodities and services is based on greed, not added expense.

Milk, meat, and other agriculture items should go up significantly with fuel because you can't even think about them without burning fuel. For everything else I am highly skeptical of large price increases due to fuel cost increases.

[Brickboy240]

Indirectly, yes, high fuel prices (which pretty much ramped up the price of many other things) was probably a cause of many of the defaults. Most people in this country live right up to or beyond their means. They leverage themselves and extend themselves so damned far, that any glitch or uptick in the price of anything throws them into a total panic.

Most Americans save literally nothing as well. Last figure I saw, had US citizens almost dead last in a poll of which countries save the most.

Didn't we see tons of people pawning their belongings, selling blood and some were dumping their big SUVs because gas went up 50 cents to a dollar? I believe we did.

We have a VERY warped sense of personal economic management in this country. This is partially fueled by the big media, that loves to dangle all sorts of expensive goodies in front of a willing public. The message is "gotta have it now" and "you're nobody if you don't have _____"

The banking and credit card industry is also partially at fault, because over the decades, they have loosened up requirements and aggressively marketed younger and lower income people with teaser rates on cards they have no business owning.

At the root, I really blame our public education institutions, which do not require economics classes in middle and high schools. There is literally NO teaching of responsible personal finance or teaching that consumers need to live within their means. No...we can teach that Heather has two mommies and how to put a Trojan on a banana...but how to fight the temptations of the advertisers, benefits of saving and the dangers of debt go largely unmentioned.

Knowing this...now....who is REALLY responsible for all this mess?

With the proper morals and education about responsible economics, people CAN be taught to resist the temptations of the free market, but without any teachings and a very aggressive free market, offering up everything at one's fingertips, we have a very dangerous cocktail in our society.

- brickboy240

[KingWulfgar]

Originally Posted by Ride the Lightning

I understand that, but the added expense should not be that devastating if you are living within your means to begin with. The prices of commodities are also not exactly in line with the increase in fuel costs. Many things have increased almost linearly with the cost of fuel when fuel is only a small percentage of the cost of producing the item. Here are two examples:

#1. One of our parts suppliers began charging us $1.03 fuel surcharge when gas went up. When gas hit its peak of $3.89/gallon they said they spent around $50 to fill up each delivery truck every day and each delivery truck made around 80 deliveries. They were charging almost double their total cost of fuel to offset an increase of only about 80%. That's a 4 to 1 return on the fuel surcharge.

#2. My neighbor pays to have his lawn mowed and the cost has doubled the last two years and he has received several notices that the increase is due to fuel cost. Daily fuel use for a truck, mower, trimmer, and blower (based on what my truck, mower, trimmer, and blower use) is probably 10 gallons/day, or roughly $40. The cost of the two employees at $8/hr would be $128. I'm sure there are also numerous other expenses that are significant like insurance, loan payments, maintenance, etc, so it's probably safe to say that fuel cost is only about 10-20% of their daily expenses, yet it was used as an excuse to double the cost of a service.

The point is that fuel is no longer considered an expense, it is considered a profit center. The majority of the cost increase we see on many commodities and services is based on greed, not added expense.

Milk, meat, and other agriculture items should go up significantly with fuel because you can't even think about them without burning fuel. For everything else I am highly skeptical of large price increases due to fuel cost increases.

I think you are missing my point. I never said the fuel cost increases were affecting my ability to pay my mortgage. I didn't bite off more than we can chew (even though I was approved to by the gracious banks). I said that it was affecting the overall economy and I believe my position is infinitely defendable.

It's a snowball effect. In your example for lawn work, you're not considering the increased wages to compensate for the increase in prices of everything else. My pay raise last winter barely covered the inflation of the past year (and that was for doing a great job).

Sure, some companies may be using it as a profit boost (I would certainly be suspicious of your neighbor's lawn company--mine only raised our prices about 8% on the chemical treatments due to fuel in the last 2 years). However, I guarantee everyone is dealing with more increased costs than JUST the fuel. Everything costs more, employees cost more, insurance costs more. Inflation is scary stuff, isn't it?

[einheit 13]

Gas prices caused nothing...Low interest rates to fund a war caused the land/housing sector to start a price hike on property there by really offsetting the low rates. It also caused folks to get a false sense of security that this would be the 'happy time' to buy the house of their dreams...guess what, people that couldn't qualify for a home suddenly could and now look what we have. All the major lending institutions that thought they were 'god' found out how 'mortal' they really are over the past year. major construction firms going under by bankruptcy or buy outs, banks going out of business, state governments doing audits on all projects and allocated monies...then the fuel prices are going up, not the demand-hasn't gone up in 10yrs-just the price that the hoarders are willing to pay. The big oil companies will always make their profit, we foot the bill and this compounds the effect, along with lay offs. i know that the government must bail out the mortgage industry to keep us out of a depression, projected to be worse than the one in the 20's. I do have a problem with paying the bill so that jo shmoe the idiot will keep his home by the sweat off my brow and the pain in my back. Let them go destitute, let them go homeless. Stop foreign aide, start offshore drilling, stop taking money from the schools (thats the first place that takes a hit when the economy is turning, great indicater too), start firing and dissolving government agencies....get rid of 'life in prison' and restart forced labour camps for those states that will not execute the worthless miscreants. You've got 6 months of 'welfare' to get on your feet, after that-you're on your own and are at the will of Natural Selection. And give all these homes that we are gonna be footing the bill on to disabled vets and their families, it would be the very least we could do....

[Ride the Lightning]

Originally Posted by KingWulfgar

I think you are missing my point.

No, I'm not. I get your point perfectly clearly, I just don't entirely agree with it. I think you are missing my point which is that greed is at the bottom of all of this. If it wasn't for greed we wouldn't have to worry about this, and as an added benefit the gas prices wouldn't have gone up to start with. Our unquenchable thirst for material possessions and the energy to operate them is the basis for this problem.

I never said the fuel cost increases were affecting my ability to pay my mortgage.

Neither did I, but you've mentioned your personal finances twice implying that I have. ???

In your example for lawn work, you're not considering the increased wages to compensate for the increase in prices of everything else.

I didn't consider it because it isn't happening. Companies aren't tossing out raises to offset everything else. If they were we wouldn't be having this conversation because the raise everyone got would have been more than enough to cover the added expenses.

Sure, some companies may be using it as a profit boost (I would certainly be suspicious of your neighbor's lawn company--mine only raised our prices about 8% on the chemical treatments due to fuel in the last 2 years).

I mow my own grass, but pay for the chemical treatments. Our treatments are still $43/month like they've been for the last 5 years.

However, I guarantee everyone is dealing with more increased costs than JUST the fuel. Everything costs more, employees cost more, insurance costs more. Inflation is scary stuff, isn't it?

Inflation is bad enough, but when it goes out of control because people can never get enough, we get what we have now. Gas prices are not the motivator in inflation, greed is the motivator in inflation. I am not opposed to bettering your standard of living, I'm certainly better off now than I was a decade ago, but doing so on credit is freakin' stupid as hell and that's where our nation's money problems are rooted.

[jim331656]

I know gas prices didn't affect things too much... Around here the shore is about 60 miles from philly. People on the news were complaining that high gas prices would keep them from going to the shore... But on friday afternoon, the highway was still all jammed up from people going down the shore. Still amazes me that someone would stand there and say an extra $10 in gas would keep them from going