Check out this video of Paul Krugman (professor of economics at Princeton University) speaking about the housing bubble. In his words, "this is scary". The cool thing about Krugman is that as an academic he is not beholden to anyone... not the Bush Administration, not the media, not politics, not special interests, etc... and so he can call it the way he sees it.
Hat tips go out to the Vancouver Housing Market blog and Calculated Risk for this find.
You might also be interested in this book by Krugman. It's an eye-opener. If you don't want to buy it, then consider just reading the introduction; I bet you will want to pick up a copy for yourself after reading it.
10 comments:
My favorite quote is we won't be "as bad as Argentina". Didn't they have a massive banking collapse reminiscent of the Great Depression?!
When she asked what credit bush gets for the economy, and when she defended that certain economic indexes are looking okay, he kinda hemmed and hawed.
I'm wonder why he didn't say something like "of course the economy should be looking good when you consider how much the government and consumers have been borrowing over the past few years. It's easy to look wealthy if you borrow it all... it's when you gotta pay it back you have problems..."
The cool thing about Krugman is that as an academic he is not beholden to anyone... not the Bush Administration, not the media, not politics, not special interests, etc... and so he can call it the way he sees it.
Well, as a former academic I can say that academic credentials stand for very, very little! ;-) The problem with academic analyses is that they are idealized and probabilistic.
Most everyone thought SF Bay Area housing was radically overpriced in 2001-2002 due to the dotcom runup, and the academics said so by looking at the long term trends. They turned out to be dead wrong over the short term, and anyone who sold in '02 missed a bundle of appreciation.
The same thing goes for the Peak Oil, metals, and predictable economic cycle crowd--miss the so-called 'guaranteed outcomes' by just a few years and die poor.
-John
p.s. I used to know a college teacher who stayed awake at night worrying when buying a $400K house in '02...that would now be an $800K listing...
what credit bush gets for the economy
When the Iraq bill hits home, we'll all know the answer to that one.
TAKO JOHN:
Academic types usually do not forcast for near future situations...their accuracy is based on historical trends and long term projections...so it's no wonder they may have been wrong in the near term.
Economically this country is fked...the only way it's going to come out of this one is by miraculously the debt disappearing and people's salaries increase 2 fold in the next few years...
Does anyone see that happening anytime soon?
fred, how inane.
Those who can't do, teach.
Actually, doing well at teaching is hard, really, really hard!
Many academics want to conduct research at heart so they put teaching on the back burner (they suck). There are few jobs harder to get and hold than college research positions.
Many hostile or neurotic personalities try to teach when they are just not comfortable doing so. A good teacher has to be sociable, well trained, a quick thinker, and sympathetic to unprepared and lazy students.
Those who can teach often end up in non-technical management, entertainment, or sales jobs. Those who can understand technical topics often get forced into teaching.
Marin heat index at 0.48 ....Will we see frost below 32?
The only thing I am wondering about openly is how many people truly are effected by the debt crises.
I fully understand a crises - but remain unconvinced at an economic crash. There will be a portion of the population who will suffer from their exuberant credit practices - however I again am not convinced at a meltdown.
He did not bring any real stats to the table to prove - so there was a lot of exuberance and some political soapboxing from him unfortunetly.
I will say that the RE stoppage and retail stagnation from credit issues will certainly slug our economy. We may be in for a long run of stagnation...
On the otherside since 2001, many corporations have been sticking to conservative practices and are cash heavy. I can't quote stats - but in a couple reviews I have read corporations due to their bearness have are more cash wealthy then ever before - of course at the cost of not expanding their positions much.
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