2005 Quote of the Day: Excessive Pessimism in Housing
As someone who is frequently wrong on a great many subjects (just ask Missus Big Picture), one of the things I like to watch is seeing what other people get right and wrong. And since we seem to be focusing on Economists today, let's find a fun example.
Its one thing to be wrong about the future -- thats merely a low probability best guess; What I always find interesting is when economists get the present "wrong."
The danger of erroneous evaluations of the present is that it often is extrapolated to incorrect conclusions about the future. My own tendency is to get the immediate present right, but the future wrong.
But the present is important. Misunderstand the present, and your future forecasts will have no utility. Like a rocket launch off half an inch, out in space it misses its target by millions of miles.
See if you can guess the source of this comment:
>
"These nattering nabobs expect a housing collapse to take down the U.S. economy. But excessive pessimism is unwarranted: Fears of a housing bubble are overblown...
The good news is that demographic, tax and economic factors explain most, if not all, of the greater-than-expected activity in housing."
-May 31, 2005
>
Hint: Its off of a page where PCP is regularly added to the office water cooler . . .
Once you are done guessing, you can highlight below.
>
Source:
Mr. Greenspan's Cappuccino
BRIAN S. WESBURY
May 31, 2005
http://online.wsj.com/article/SB111749811222546623.html
Thursday, February 07, 2008 | 02:30 PM | Permalink
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Comments
Wow -- Kool graphics trick, too, Barry. You're hitting quite a few out of the park lately. It must be the Calvinist in you.
Posted by: Doug Watts | Feb 7, 2008 2:37:14 PM
WOO HOO! I knew it!!!
Posted by: Whammer | Feb 7, 2008 2:37:28 PM
I would have said that $3Bill Kudlow
Posted by: rubberbandman | Feb 7, 2008 2:41:42 PM
had to be from the WSJ.....just had to be.
Ciao
MS
Posted by: michael schumacher | Feb 7, 2008 2:48:46 PM
I love how they've gone from, "there's no bubble," to, "the housing market is really an insignificant portion of the overall economy, so its collapse doesn't matter."
I guess the next line will be the recession isn't that bad because the cardboard box sector has skyrocketed as people use them for housing.
Posted by: GMF | Feb 7, 2008 2:55:44 PM
I have a degree in Economics and I can tell you without any reservation, that ANY economist that predicts the future to any degree and to any extent, is WRONG.
Posted by: Tracy Coyle | Feb 7, 2008 2:56:33 PM
We all remember what happened to the reputation of the last person who used the phrase;
Nattering Nabobs
Don't we?
btw the relevant definition of nabob?
nabob - a wealthy man (especially one who made his fortune in the Orient)
man of means, rich man, wealthy man - a man who is wealthy
and
An important, influential person: character, dignitary, eminence, leader, lion, notability, notable, personage. Informal big-timer, heavyweight, somebody, someone, VIP. Slang big shot, big wheel, bigwig, muckamuck.
I rest Barry's case.
Posted by: Thom H. | Feb 7, 2008 3:10:00 PM
I thought it was Kudlow or one of his groupies that frequent his shows. It turned out it was Wesbury so I was about right. Actually in the WSJ survey of economists, Wesbury finished #20, Kudlow was #44.
Posted by: Kuds | Feb 7, 2008 3:15:18 PM
cinefoz is Brian Westbury's handle?
Posted by: Mr. Obvious | Feb 7, 2008 3:17:51 PM
My guess is David Lereah. It sounds like a beat on NAR day today. ;-)
Posted by: Joe Klein's conscience | Feb 7, 2008 3:31:33 PM
Just read this on Calculated Risk:
Horton: More Bad News
A few headlines from D.R. Horton (largest U.S. homebuilder):
Cancellation rate 44%.
Housing environment is "Challenging"
Average ordered home price fell 17%.
Inventory of homes is "too high".
Cancellations high in California, Arizona, Florida, Las Vegas.
California housing market won't recover in next 12 months.
Pricing weaker than expected.
Posted by: bluestatedon | Feb 7, 2008 3:31:59 PM
Have you read what's being said at the Chicago Auto Show today??? Please hold your laughter...
The top executive at Navistar International Corp (NAVZ.PK: Quote, Profile, Research) said on Thursday the North American truck market has "absolutely" bottomed, and that the industry will experience growth in 2008.
"What we're assuming is that the economy doesn't get any worse, and that it starts to get better as the year goes on," he said.
http://www.reuters.com/article/marketsNews/idUKN0740293420080207?rpc=44
Posted by: karen | Feb 7, 2008 3:37:53 PM
spiro agnew!!!
Posted by: rob | Feb 7, 2008 3:38:53 PM
thought it was NAR
Posted by: Michael Donnelly | Feb 7, 2008 3:44:04 PM
The Navistar guy was misquoted. What he actually said was:
"What we're assuming is that if we stick our fingers in our ears, cover our eyes, and fervently pray, the economy doesn't get any worse and that it starts to get better as the year goes on," he said.
Posted by: bluestatedon | Feb 7, 2008 3:48:15 PM
I got dibs on Cramer, I got Cramer.
Posted by: Street Creds | Feb 7, 2008 3:53:04 PM
What's scary is that he was right for the two years after the quote, where he should have been wrong, but yet the market kept going up, up and up! Reversion back to the mean is going to be awfully mean!
Posted by: Justin | Feb 7, 2008 3:53:48 PM
Hey, give Cramer a break. His track record of predicting what happened yesterday is an astounding 100%.
Posted by: Peter Davis | Feb 7, 2008 4:01:21 PM
Karen, you have to excuse the Navistar exec. It seems that someone dumped PCP into Lake Michigan this morning out here in the Windy City. I guess it's not an isolated incident, according to Barry.
Posted by: Boom2Bust.com | Feb 7, 2008 4:06:54 PM
Back in 2005 with all of the negativity in housing Kudlow on the old Kudlow and Cramer show did a study to figure out if there was a housing bubble. He interviewed 8 people from various cities around the country. Every one predicted that housing was fine and prices were going higher. Kudlow then came to the conclusion that there was no housing bubble.
By the way it should be noted that all of the people he interviewed were real estate agents.
Posted by: GerryL | Feb 7, 2008 4:13:46 PM
It's Brian Wesbury from "Mr. Greenspan's Cappuccino," a WSJ article.
Posted by: Camille | Feb 7, 2008 4:24:25 PM
My client's have said over and over the last few months "the things you have been preparing us for are coming true". (To which I owe this blog all credit.)
The problem I'm having is when they ask "what needs to happen to correct all of the problems?"
Anyone?
Posted by: saltwater | Feb 7, 2008 4:29:47 PM
At what point does the WSJ Editorial Page get 86'd from this blog, as has been done to Ben Stein? I read the WSJ on a regular basis, but am always overwhelmed by shame and embarrassment when I get to the editorials.
Posted by: Brian Fox | Feb 7, 2008 4:55:35 PM
"Once you are done guessing, you can highlight below."
Nice HTML trick Mr. Big Picture ... do you code your own HTML or did you get an assist from an employee?
Posted by: STS | Feb 7, 2008 4:58:50 PM
I think that's the question a lot of us are trying to answer. It's made difficult by all the meddling. Straightfoward, IMO we have to have a reversion to the mean in our standard of living as Justin mentions.
The scary part IMO, is you have the chance for a perfect storm causing real hard times. People blast Benny but I feel he has done okay so far.
C'mon, Cheesefuzz is just Barry fucking with us on a drug high!
Posted by: ken h | Feb 7, 2008 5:05:06 PM
