Housing peaked at the end of 2007. THAT's when things started to fall apart. The housing bubble was created by years of artificially cheap money and lax lending regulations. The housing bubble was greatly enabled by the huge derivatives market; banks no longer needed to carefully husband the quality of their mortgage loan portfolios when the mortgages were owned by everyone else.

But smart money could read the writing on the wall and began to exit at-risk investments, seeking safety in commodities, including crude oil, which in turn created an energy bubble.

If it were just supply/demand determining crude prices, prices would have remained fairly steady in a range of, probably, $50 - $80.

But why did people make junk investments? There weren't decent alternatives. In the start of the 20th century you could make money by investing in industry since it was always expanding. Near the end we pumped up investments in the Internet and it became overvalued then the money had to go somewhere else and we picked real estate (sort of a backlash) and then that became overvalued. Next is probably T-bills.
Industry ceased to be a viable investment as the US was on the downward slope of national peak oil and real estate on the downward slope of global peak oil. There are so many foreign investments in US real estate.

So....crude price starting to come down in the summer of 2008 caused people to do stupid things with their money in 2004 and 2005 related to how much money they borrowed for houses?

Thats...interesting.....?

People did stupid things with their money because of a dearth of sensible things to do as the rate of growth slowed as the production rate of goods made from natural resources used for capital slowed.

Richard Heinberg interview:

"Blackout: Coal, Climate and the Last Energy Crisis"

http://www.financialsense.com/Experts/2 ... nberg.html