Hey, everyone can make a mistake or a bad call. I've made plenty of doozies. But then again, I'm not the Chief Economist for a "respected" auditing and research firm. One who you would have figured had studied past manias and bubbles in his econ 101 class, and would have seen the now-popped housing bubble as the single most obvious financial bubble in recorded human history.
Well, unfortunately for Deloitte's customers, their Chief Economist Carl Steidtmann made the mother of all bad calls in July 2005, with a paper entitled "The Housing Bubble Myth". Perfect timing - Carl perhaps hit the very tippy top of the housing bubble. Bravo Carl!
Hey, I'll cut him some slack. Those CDO's and SIV's were just toooooo confusing for a professional economist to dig into. "Liar's Loans" must have made perfect sense. An unregulated REIC had to have been acting in good faith. The lines of sheeple outside new condo developments were just signs of the "robust market" Carl talked about.
Carl also followed up in April 2007 after the bubble burst, trying to defend his bad call and save what shred of credibility might have been left, while calling the folks at iTulip "bubble heads" and "idiots" and stating "Why the housing market is not a bubble" again. Nice, Carl, very nice.
Note to Carl - when you find yourself in a massive gaping and obvious hole, stop digging. And don't make fun of the people who simply pointed out that you were in a hole. We got it right, you got it wrong, and it's time to give us "bubble heads" and "idiots" our props. And you might want to look for a new line of work, as you're now known as "a joke" as an economist
Here's his 2005 paper. Enjoy!
Economist's Corner: The Housing Bubble Myth
Issue: July 2005
By Carl Steidtmann, chief economist and director, Consumer Business, Deloitte Research
Everywhere you turn these days the buzz is about soaring real estate prices. If you are lucky enough to be a homeowner in one of the hot markets like South Florida or New York City, owning real estate is almost as good as winning the lottery.
The increase in household wealth is seen by many analysts, who can’t stand the thought that someone somewhere might be doing well in this economy, as a sign of some future catastrophe to come.
When you strip away all of the white noise around a housing bubble, what you find is a robust market for housing that is undergoing several profound changes all of which manifest themselves in higher home price indexes, none of which adds up to a housing price bubble.
Eventually mortgage rates will rise and the housing market will cool. But don’t expect the calamity that many of the housing bubble heads are hoping for.