I had never seen anything like it. It seemed like everyone was mad. "It was gouging, it was greed, it was corruption, gasoline is a necessity, it's a utility, we can't do without it". Even Republicans who supposedly are against government control sounded like they wanted the government to step in and throw the gas station owners in jail. Problem is, except for some statewide anti-gouging laws that triggered by state emergencies(which have drawbacks), it was not against the law to raise gasoline prices based on what the customers are willing to pay. But the proof of gouging was claimed to be :"I saw the gas station owners raise their prices. There is no way that their prices could have gone up so fast." So the angry customer didn't need to know how the gasoline gets from oil ,halfway around the world, into the pump in his gas station. He didn't need to know that his country was running down the dollar and the futures traders were betting on it continuing. The angry customer knew he didn't like the price and it was unfair and must be dishonest.
Gasoline was not the only product to go up, food prices, gold, oil, most commodities. So was the stock market. Gasoline production and transportation is a complicated process that involves many steps and many parties. There were a number of factors in the increase in gasoline prices, high world demand, devaluation of the dollar, war threats by Iran, new ethanol mandates, local shortages due to weather, refining capacity and speculators driving up the price betting it will go higher. And it was sellers market, world demand was at an all time high. At the same time all commodities were rising, including house prices.
Raw materials prices were rising, as was money supply and it was low interest rates (related to money supply) that drove the housing boom insane. Homeowners were getting multiple buy offers in a day. House prices were rising 20% per year, property taxes were at an all time high. Ordinary investors were buying rental property as they watched others get rich, others cashed out the increased paper equity in their homes that they never earned to buy new cars and TV sets. The savings interest rates were nothing, close to zero, driving savers and investors into everything else, debt, speculation. But that's what we wanted, economic activity, lots of new jobs like stock brokers, real estate agents, mortgage agents, we even had to import labor from Mexico, illegally, to support the building boom. We even had to import foreign immigrants to buy and live in the houses and the loans were sold overseas to fund more home loans.
So we have the story of two booms, a good one housing, and a bad one gasoline. In the second case we saw politicians (especially democrats) in front of the TV cameras, and holding congressional hearings grilling oil executives,about the suffering. All while the government devalued the dollar, increased government consumption and increased environmental regulations. So the homeowner who was ecstatic he could get such a big return on his home, cursed the oil companies and gas station owners,
But what about the young person that couldn't afford a home, unlike those that got in before the housing boom? The government that inflated gasoline and house prices had a solution for that(Democrats in Maryland). Tax payers would pay to build a small number of housing for lower income people, and they would pay half the price. This was called affordable housing, and polls showed support for affordable housing.Everybody wanted their house prices to go up and wanted housing more affordable. Where would this money come from to build the houses? Property taxes! But this made our houses less affordable. Better yet, those that owned the affordable houses did not pay property taxes on the houses.
How about high gas prices? Democrats had a solution for that too. Take the profits away from the oil company. They were pressed on how this would lower gas prices. When pressed they admitted the prices were not the real problem but it was the profits. All that money the oil companies were making could be used to fund our beloved social programs. You see democrats really wanted higher gasoline prices. Few people, especially Obama worshipping democrats, saw this pre-election video in the peak of democrats blaming republicans for gas prices, where Obama admitted he preferred high gas prices.
Pre-election Video: Obama Supports High Gas Prices If They're Gradually Hiked
Like all speculation bubbles, the US housing bubble economy burst this one leaving a sea of bad debt behind. There is an oversupply of houses and an undersupply of demand. And what is the response of the federal government? To try to paper over the losses caused by the crash, to get the loans started again and get the market to take off again; also to keep people in their houses. So in effect they are trying to prop up the housing markets at levels above demand, hoping to recreate the demand. Back two years ago they were concerned with available affordable housing. What about gas prices? The consumer is happy to have them low again. He has forgot his anger at the oil companies and newly elected democrats are planning multiple energy taxes.
So we had two price booms, housing and gasoline. One moral , the other not. We had politicians in Washington lining up to defend us from the gas prices, to stroke our outrage for gas station owners charging what we would pay. All the while we rejoiced over multiple buyers bidding up the prices of our homes. That was capitalism. So we elected Obama and democrats 2008, to protect us. Their top objectives? And saving the housing industry by keeping prices from falling. Energy taxes to pay for it! One boom good, the other bad.