Most of us pretty much agree that the bursting of the housing bubble contributed.
Most of us pretty much agree that policies permitting and even promoting the sub-prime lending were part of the cause.
I'm not sure whether most of us would agree that the oil price spike of 2008 contributed to the recession, though Jim Hamilton makes a strong case for this, and I argued to a friend in e-mail that it would be a contributing factor back when it was happening.
And Ironman, at Political Calculations, makes a case that the raising of the minimum wage in the US in 2007 also was a contributory factor leading to this recession:
It may well be that the minimum wage hike of 2007, with its corresponding job losses and employer cutbacks in hours worked, was sufficient to cause the level of payroll employment to erode enough so that the start date of recession was pushed up to November-December 2007, some four to five months sooner than it might have done otherwise as the outcome of the oil shock.
And should that be the case, the increase of the federal minimum wage in 2007 would join with the bursting of the housing bubble and the fallout from the oil shock as the third leg forming the current recession.
The global economy is too much centered around the US economy. This is not a good thing. In the last few days, we all noticed that export earnings of China, Korea and India fell in December 2008. The major export market for all these 3 countries is USA. I think this is another reason for the recent economic crisis.
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Posted by: Razib Ahmed | February 02, 2009 at 03:23 PM