Why were so many 'smart' people so dumb?
Seriously?
I understand corrupt people (like realtors) denying the bubble. But economists and self-appointed think-tank gurus who didn't see it, well, they simply should be put out to pasture. Never to be listened to again.
Alan Reynolds, we await your mea-culpa. Make it a good one, OK?
(thanks Stephen for the link)
No Housing Bubble Trouble, by Alan Reynolds
Alan Reynolds is a senior fellow with the Cato Institute and a nationally syndicated columnist.
January 9, 2005
The start of each year is prime time for economic pessimists, who try to persuade us terrible things are about to happen. A perennial favorite is the "housing bubble" about to burst, with a supposedly devastating impact on household wealth. This has been repeatedly recycled since June 2002 by bearish economic forecasters like Ed Leamer of University of California-Los Angeles and Stephen Roach of Morgan Stanley.
House prices did not just "bubble" for no reason. The discounted present value of housing rose because 30-year mortgage rates fell from 9.2 percent in December 1994 to 5.8 percent in December 2004 (no, not because of a budget surplus). The drop in world interest rates raised home prices even more in foreign cities like London, Dublin and Sydney.
"Housing bubble" worrywarts have long been hopelessly confused. It would have been financially foolhardy to listen to them in 2002. It still is.
August 28, 2008
HousingPANIC would like to know if Cato Institute Housing Bubble denier Alan Reynolds has any more words of wisdom for the world
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12 comments:
That's why they pay him the big bucks.
>"Housing bubble" worrywarts have long been hopelessly confused.
Very Classy, very astute. Good thing you held your ground Keith and didn't change the site to HousingWorrywarts. No, you'd have to be dumb as this genius do that. And he probably still considers himself above regular folks. After all, he works at a think tank. Out of my way peasants.
Casey Serin for NAR President!
"HousingPANIC would like to know if Cato Institute Housing Bubble denier Alan Reynolds has any more words of wisdom for the world?"
Uh Keith.....the Cato Institute is just another Right Wing propaganda organ. Very similar to CNN or Fox News, except the Cato Institute is cloaked in the mystique of being a "think tank".
Goebbels would be envious of America's MSM.
"...Since 1985, the OFHEO price index never failed to increase longer than a single quarter at the national level..."
Technically true, until you consider inflation.
3Q03 OFHEO's Housing Price Report.
Yet another lesson that... you can not know the unknowable. Woe to he who listens to anyone who pretends to know the future with certainty.
Gawd, I'm full of sh*t.
http://tinyurl.com/5adkyt
Welcome to Phoenix
Cato Institute "think tank" people are just Free Market Hookers for Ayn Rand policies. Hey, I liked Ayn Rand when I was 16-- Being a hero for being a complete azzhole is about as cool as it gets when you are 16!
Some of us developed critical thinking, accepted thermodynamics, and refused to live with superstition based economic models.
She could write a damm good novel though!
"Why were so many 'smart' people so dumb?"
Its because they quite literally lost touch with reality altogether.
They have tunnel vision where they can't view anything outside of a particular perspective or think with another kind of thought process. Basically, some people wind up reducing themselves to a utility like a calculator instead of an individual.
Thats my guess anyway.
"Some of us developed critical thinking, accepted thermodynamics, "
You are what Rand correctly labeled, "Concrete bound".
You are unable to think in principles.
Just sayin...
Marcus Cato is rolling in his grave.
That was January 2005!-- nearly four years ago. The people I was criticizing were predicting a recession in 2005 and said it would be caused by housing alone, not by pricey oil, the Fed, etc. The same folks predicted recession again in 2006, and again in 2007.
Housing starts have been falling ever since early 2006 (a year after my column appeared), but that's never yet been enough to sink the whole economy.
Even in 2008, the US has not had even one quarterly drop in real GDP, but Europe and Japan have. To blame their problems on housing speculation in Vegas and Naples would be silly. Surges in oil prices have always been followed by recession, as I explained in the Financial Times Jan. 3.
Nothing I said in January 2005 had anything with "denying" a housing bubble. Indeed, one of the quotes explicitly says there was housing bubble (rising prices) in the US and many other countries, and explains why it happened.
In 1997 Congress let couples collect $500,000 of tax-free capital gains from flipping homes. That invited trouble, and should be tightened-up.
By the way, I'm a successful investor (unlike those who believed those recession forecasts in 2005)and I donate almost as much to Cato as they pay me. I write about economic issues because it's fun. Nobody ever tried to influence what I write.
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