“We went into a recession in 2008. People forget why,” Rick Santorum told an audience recently. “They thought it was a housing bubble. The housing bubble was caused because of a dramatic spike in energy prices that caused the housing bubble to burst … People had to pay so much money to air condition and heat their homes or pay for gasoline that they couldn’t pay their mortgage.”
This sounds stupid to some writers. (Most of these writers were more likely to find Santorum stupid before he made that comment.) But it’s not very stupid, at all.
In 2009, economist James Hamilton published a paper that retroactively forecast what an oil shock, like the one we experienced in 2007-08, would do to GDP. And guess what? His model accurately predicated much of the collapse in GDP that resulted from the Great Recession — as if there had been no housing bubble or financial crisis! The oil spike was that bad.
Via Instapundit.