Shiller: "Historic Housing Bust"
Shiller warns about the extent of the Housing collapse:
Tuesday, February 05, 2008 | 04:00 AM | Permalink
| Comments (42)
| TrackBack (0)
add to de.li.cious | 
digg this! | 
add to technorati | 
email this post
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00e550134a2a8833
Listed below are links to weblogs that reference Shiller: "Historic Housing Bust":
Comments
Schiller, right on the spot on housing, but still a Keynsian when it comes to consumer spending as a driver of the economy. Yes people will stop spending -- the more the marrier. Less consumption means more savings and investment which, if any can cuchin the comming collaps of the american economy.
Posted by: Daniel Halvarsson | Feb 5, 2008 5:27:00 AM
As an engineer, I find the common solution that these clowns promote as laughable at best (spend more) ... However, given what's at stake, I can't laugh..... I really can't... In fact, I am having trouble sleeping. In fact, I can't focus on my discipline.
Confidence a'? Yeah, have confidence everything is alright when you assess your financial situation and realize you will be a slave to your debt for the rest of your life... Go out their and spend and have confidence everything will be alright. Have confidence when inflation and taxation effectively take away 50% of your income and it used to line some private company's pockets and the barrel of a gun with hot lead thousands of miles away.... Be confident everything will be o.k? Are you ____ kidding me?
This is one video that made me say "WTF" and I have been saying a whole lot of WTFs since I graduated and hit the 'real' world...
As a 23 year old newly out of college w/ a Masters in ECE, I have had to take focus off of what I spent many years pursuing with passion (something which I dreamed about as a child) in order to figure out how to survive this coming wave of bullshit that is about to be dumped on my lap (America's economic future)....
Friends said to get off the political belt and invest... F' everyone else. So, I did.. I made some nice change taking market positions in a little short/long her on ABK, MBI.. Some SKF to cheer in the new year. A little shorts on retailers... The gambit...
But when I woke in the morning @ 4/5 a.m (PST) in order to make some change ahead of the workday to offset the ridiculous state taxes, federal taxes, sales taxes, gasoline tax, inflation........You name it... When I stayed up all night on Sunday marking out stock picks... Looking into 0% APR BT credit card offers to shore up $25k so I can trade like a free human being.... When I laid exhausted and covered my finances after having brought in ~120k from my start date... I couldn't help but ask, So this is the American dream? So this is Middle Class?
A paid off civic, ~$16k in my 401k, living frugal, sleeping on a mattress pad... Living modes... So this is the American dream? ~47% of my income stripped off by taxes alone?
Paying a social security and medicaid bill that I will never benefit from? Living amongst a nation of folks who applaud being slaves to debt and dependents on the government for handouts?
And I had epiphany... This is not the most efficient means to solve my financial woes nor is it the efficient means for anyone....
As an engineer, I wouldn't accept the solution to a leaky gasoline tank as putting more gas in the tank.. So, why am I sitting by as an empowered educated citizen watching my money go to doing that? Just WTF is wrong w/ me?
I have officially decided today 2/5/2008 that I am going to make my voice heard and the voices of those heard so that we wont have to sit by helpless as we let a flawed govt. and economic system bleed our continuing efforts to better ourselves dry...
To the government, I say :
I don't want your fucking handouts or bailouts... Give me back my freedom and my ability to be empowered and you can take your worthless paper and beat it !!!!
So, I ask this group.... Am I off base? Am I justified in feeling this way? Am I justified in taking a stand?
Posted by: jombi | Feb 5, 2008 5:44:47 AM
Jombi, we live in a country of people who sell out. When you find yourself standing alone it is then when you must make your second choice, to sit or be shit on. Good Luck Grasshopper.
Posted by: bobd | Feb 5, 2008 6:07:18 AM
If we consider how much more tame BR's comments are on TV compared to his blog views, one may imagine what Mr. Shiller would say on his blog.
Reassuring he is not. Mr Shiller is not only mentioning the "R" word, he is talking "D" word.
Looks like we may want to take a closer look at those 1987, 1929 charts.
Posted by: Steelduck | Feb 5, 2008 6:09:29 AM
jombi, "Except those things I cannot change and the wisdom to know the difference." The system isn't broken just getting terribly bent. Now if the dam Keynesians would just get out of the way and let the Mercantilist stop buying our bonds to correct this thing the way it is suppose to be corrected - by servival of the fittest. Obviously, America needs a real wake-up call; AGAIN.
Posted by: Justin | Feb 5, 2008 6:52:24 AM
"If people remember, at the start of the great depression, there was a huge drop in confidence". I don't think we are going into a depression. Luckily we have Ben Bernanke, an expert on the great depression, leading us.
Housing bust of historic proportions... worse than the bust of the great depression...will go down in history as the sub-prime housing bust.... $2Trillion in losses allready ..... we can expect it to go on for at least another year.
Thankfully Dr. Shiller pulled his punches.
Posted by: blam | Feb 5, 2008 7:05:28 AM
Although Mr. Shiller says we have an equality problem which we should be thinking about all the time, he seems to spend no further time on it in this interview. Is he really endorsing the bailout in its current form?
Posted by: Aunt Deb | Feb 5, 2008 7:30:22 AM
Instant replay:
One the one hand Dr Shiller goes: "Luckily we have Mr Bernanke at the helm", and on the other hand he says "Cutting rates does not... heeeu... this misalignment is not going to be stopped by the Fed".
Way to go Dr. Shiller. You get a B+ for saying what you mean without actually saying it.
Posted by: Steelduck | Feb 5, 2008 7:45:30 AM
That is a very sobering interview. I've seen Shiller speak many times on TV. This is the first time I've heard him say things like "I fear we may be facing a severe recession." He mentioned the Depression too many times.....
That was a scary interview.
Posted by: Andy Tabbo | Feb 5, 2008 7:55:44 AM
Ah, Jombi. You sound so much like me, 30 years ago. The high tax bite, the high cost of gas, all of it.
Take some advice: things do not often turn out the way you think they will. The Social Security and Medicare you pay today will likely be there for you, and you may be glad it is. 30 years ago, I was convinced that SS and Medicare would be belly-up by now, that I would have wasted all of that money, that I could invest it better and retire rich and take care of myself.
Guess what? I've made some mistakes, some bad investments (who would have thought?), and I'm still working with not anywhere as much to retire on as I thought. The SS doom sayers have been around forever. That will be taken care of, if some idiot doesn't screw it up because it's a 'crisis' (hi, Obama, how ya doin'?).
Medicare seems tougher, but that will also get worked out. Probably because the entire medical system will be overhauled, a bit at a time. It's broken badly, the costs are out of control, it just can't sustain itself much longer.
You have the anger and frustration that befits your age. The hard part is keeping your mind open enough to understand your future may be dependent on some of the things you curse today.
Posted by: dark1p | Feb 5, 2008 7:59:02 AM
I just listened to the interview and I am glad I didn't read the recent crap he wrote about housing. This is a man with a political agenda, someone who wants to use a perpetual housing scare scenario to further it.
I never heard him give a direct answer to a direct question. Not once. When asked if the big price run up, followed by the recent downturn was only a correction to normality, he blathered on about it not being like the Depression, but the Depression must be used for comparison. What a phony shitstorm.
He is playing on the need for people to think experts exist who really know it all. And if bad things happened, you can surely extrapolate and continue the trend line in the same direction for all time.
He also only used 10 or 20 markets as basis for his graphs. Had he used my community, he would have only seen a longer time on the market with only slight price changes. Not the end of the world he IMPLIED constantly.
"Today is Bad and tomorrow will be the same or worse. DEPRESSION, DEPRESSION, DEPRESSION, BOO BOO BOO, but not really" said Shiller who then repeated himself several times without providing a direct answer to even one question that contradicted his agenda.
I proudly repeat my belief that housing will turn upwards later this year, probably in late spring or summer. To the idiots who can't read simple English, I do not mean that housing prices will be off to the races again. Rather, I think this will mark the inflection point to normalcy again.
If you went stupid and paid 50% or 100% too much for a California or similar house at the top of the mania, too bad. You lose and what I said doesn't apply to you. Fortunately most people are not involved with subprime or insanely overpriced homes. Every successful economy has winners and losers. People who buy at the top of manias are generally losers.
Posted by: cinefoz | Feb 5, 2008 8:47:51 AM
"I proudly repeat my belief that housing will turn upwards later this year, probably in late spring or summer."
You mean that housing will become affordable again, and that the credit tightening unfolding right now will be stopped in its tracks?
Somehow, I find this hard to believe. Unless you're thinking about spring or summer 2010...at the earliest.
Posted by: Francois | Feb 5, 2008 8:59:43 AM
Francois,
Please refer to the paragraph that refers to idiots who can't read simple English.
Posted by: cinefoz | Feb 5, 2008 9:05:12 AM
jombi,
I personally feel that you are definitely justified. While my situation is a little different, I'm 28, working for three years-I'm currently working on a Masters in ECE, married with a kid on the way, living in one of highest cost of living places in the US. I do feel a lot of your same sentiments. I think having an engineering background gives me a different perspective on things.
I think what gives younger folks-more accurately those just starting to work (not trying to start age warfare here) a different perspective is not being institutionalized in the system. After so many years of being in the system, people become complacent at being screwed over all the time. It's very similar to what I found as an undergrad and TAs (who were sometimes the worst at giving good grades) . . . it was as if they were saying, "well we've been screwed over, so now it's your turn to get screwed over". So instead of doing what is morally right, they force morality on everyone else.
For example, when on God's green earth did it become morally right to forcibly take one man's earnings and give it to another (from each according to his abilities to each according to his needs-Marx). And before any rails against me for being uncharitable, I give at least 12% of my income to charity.
I try to be very principled, life in my opinion isn't about getting ahead, it's about doing what's right no matter the consequences.
It's very enlightening the same platitudes that politicians espouse today are the same ones we've had for 30+ years. Look at some YouTube campaign ads from the 70-80s. It is the same stuff you hear today, change this, change that, cut gov. debt, save SS, blah blah blah. So far very little has changed course . . . (i.e. from a free society to a socialized/fascist one). So while politicians espouse change, and washington is broken, etc, etc. I'm of the opinion very little will actually change-except for more government regulation, more socialized programs, more debt, and less personal responsibility.
Say what you will, but in the times when the opportunity for real change comes (not trying to get too political), like Perot or Paul, the masses really don't want it-they're institutionalized in the system. So we get the same old solutions to the same old problems, and nothing fundamentally changes. There are ebbs (Reagan) and flows (FDR, and Johnson), but the trajectory doesn't change it either speeds up or slows down.
As far as investing in stocks, I personally like commodities more, but I really don't do a whole lot of investing in it. I save my money and try and put it in the highest yield savings account, I know I lose some on inflation, but I accept it. I know I could prob. do better in the markets, but I have learned a couple of things from my father (who for years worked commodities, and actually became quite good at it, he actually holds a seat on the COMEX).
1) Don't play with money your not willing to lose (this includes "investing" in stocks)-it clouds your judgement
2) You need a decent amount of cash in order to play the game right (at least 25k)
3) It takes a lot of time to do it right-one hour a day just doesn't cut it
4) Nobody cares more about your money then you.
5) But at the same time you have to learn to completely control your emotions.
Sure I could give my money to a money market or mutual funds . . . I'm just protective of my money, and I like to make the decisions in where it goes, it's just my personal choice.
Since, I don't have 25k I'm willing to lose at this point (baby, working on buying a house, etc). I mostly stay out of the game.
dark1p . . . 30 years ago that would have put us in the midst of the 70s . . . yes things would have been horrible if things didn't start to correct somewhat.
I personally believe the biggest difference now that will change the world is information. With the click of a button, a high school kid can research on his own and find out how much BS he is learning in school-that is very powerful.
Posted by: Shane | Feb 5, 2008 9:09:22 AM
Jombi,
A paid off Civic and $16k seems good to me for 23. Heck, I am 37 and have a paid off Corrolla and $20k. Ron Paul's politics need serious consideration as remedies for your grievances.
Posted by: Lew Dunbar | Feb 5, 2008 9:12:05 AM
Incidentally, most people ignore the fact there are two sides to every trade.
If some idiot paid 100% too much for a house, that means the lucky stiff who sold the home received a bonanza. Screaming finance babies may have been left holding the bag due to extreme incompetence in their profession, but the money didn't evaporate. Some people are sitting pretty for selling their homes to idiots who believed there was no limit to up. Crooks who sold homes with phony appraisals have cash flowing within the economy somewhere.
Posted by: cinefoz | Feb 5, 2008 9:14:53 AM
cinefoz....I used to find some merit in your posts...but no longer. If you are so right, then why so angry?
Posted by: Mr. Obvious | Feb 5, 2008 9:28:17 AM
Cinefoz,
Could you please define "inflection point to normalcy"?
Posted by: bonghiteric | Feb 5, 2008 9:29:11 AM
Some people are sitting pretty for selling their homes to idiots who believed there was no limit to up.
Are you sure? I don't see how this works. If the house is foreclosed, the payments stop. If the house cannot be re-sold for its original sale value, that value is illusory. It no longer exists. The wealth disappears as quickly as it first appeared.
Posted by: Doug Watts | Feb 5, 2008 9:30:27 AM
Yes Please in your infinite wisdom cinedouche, please explain that made up phrase. While your at you still have several points to clear up with interest rates (the fact that you can't understand them) and how that is supposed to save the housing market.
Good luck getting ANYTHING coherent or he'll just call you a name and feel good about it.
Ciao
MS
Posted by: michael schumacher | Feb 5, 2008 9:35:01 AM
Yeah sure- some idiot's left holding the bag on a far too expensive house, but they were enabled by the RE agents who convinced them that the value was there. The role of the RE intermediaries in inflating prices and adding to the hysteria cannot be overlooked. There was a recent NYTimes article on the owner suing her agent for just this reason:
http://www.nytimes.com/2008/01/22/business/22agent.html?sq=real%20estate%20agent%20sued&st=nyt&scp=1&pagewanted=all
Posted by: Paul in NYC | Feb 5, 2008 9:36:48 AM
I sold my house in October of 2005
for more money than I thought i could ever get for it. I can re-buy that house right now if I wanted to for about the same amount I paid for it in 1993. That is what he means.
Posted by: Maggy | Feb 5, 2008 9:37:29 AM
Encouraged by who? Remember this phrase? "I wanna make this the ownership presidency"
Posted by: Bob A | Feb 5, 2008 9:40:25 AM
Maggy, agreed. However, there are few too few of you out there in the market to keep the bubble from imploding and getting goo all over everyone else.
Posted by: Doug Watts | Feb 5, 2008 9:55:47 AM
So, I ask this group.... Am I off base? Am I justified in feeling this way? Am I justified in taking a stand?
Posted by: jombi | Feb 5, 2008 5:44:47 AM
One of the hardest things to accept is how linked you are to your fellow man, in particular your fellow US citizen. You rise together or die together. It is very hard to isolate yourself from others, especially when you share a country.
So I recommend two possible things for you.
a) leave the US and work in Singapore or HK.
b) accept the burden and chose politics that encourages good and aims to lift all boats.
A lot of terrible choices have been made in the US since 2001. Those bills will have to be paid before you can even think of seeing a better political arrangement. If you really don't want to pay them, leave the USA for the next 8 to 12 years.
Posted by: Northern Observer | Feb 5, 2008 10:05:10 AM
