Jared Bernstein and Dean Baker and the Great Recession

They claim that the grey bars, the Great Recession, in 2008 to late 2009 was caused by the housing crash in 2006.

The blue line, with those peaks at the start and the end of the recession are the producer price index, mainly oil prices from imported oil.  The two economists have never explained how a housing boom,bust from 2003 to 2006 could have caused those two oil spikes, one up and one down.  I will explain it for them the best I can.

The Jared and Dean network multiplier

Taking their position, the best I can come up with is that OPEC invested in house mortgages.  So, these OPEC bankers were watching their housing investments which looked like they were in serious trouble in 2006.  You can see the drop in the green line, consumer inflation, which must be the housing crash.

Then as the default scare began to be realized, the OPEC investors must have gotten pissed and deliberately spiked the price of oil until Bernanke made good on the house defaults. Then when Bernanke made good, the OPEC oil cartel then gave Ben a gift of very cheap oil, thus marking the beginning and end of the Great Recession.

Is this story plausible? Well, actually, Saudi oil exports to the USA nose dived in 2009, and the amount was restored by non-OPEC members. They are the only oil producer who did this. Says Wiki:

On March 5, 2008, OPEC accused the United States of economic "mismanagement" that was pushing oil prices to record highs, rebuffing calls to boost output and laying blame at the George W. Bush administration.^[26]

Philly:

"Crude-oil prices are being strongly influenced by the weakness in the U.S. dollar, rising inflation, and significant flow of funds into the commodities market."

Wiki Again:

In May 2008, NPR explained in their Peabody Award winning program "The Giant Pool of Money" that a vast inflow of savings from developing nations flowed into the mortgage market, driving the U.S. housing bubble. This pool of fixed income savings increased from around $35 trillion in 2000 to about $70 trillion by 2008. NPR explained this money came from various sources, "[b]ut the main headline is that all sorts of poor countries became kind of rich, making things like TVs and selling us oil. China, India, Abu Dhabi, Saudi Arabia made a lot of money and banked it."[

So, does this make sense?

No. The timing is off. At the peak the Saudis were still exporting, and increasing exports to the USA, until July 2008.  After the peak, after the oil price collapse is when they slowed down. I see no other story here, that is the best.  I do not think Jared and Dean have it right.