Why were so many 'smart' people so dumb?
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
Posted by blogger at 8/28/2008