Herd About the Housing Bubble?
Yesterday econ/real estate guru Robert Schiller penned an article for the Times examining why Greenspan, market experts and individual investors didn’t see warning signs of the disastrous housing bubble: The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United…
Yesterday econ/real estate guru Robert Schiller penned an article for the Times examining why Greenspan, market experts and individual investors didn’t see warning signs of the disastrous housing bubble:
The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks. Were all these people stupid? It can’t be. We have to consider the possibility that perfectly rational people can get caught up in a bubble.
Schiller concludes that the lack of foresight about the bubble has to do with “herd behavior” and “information cascade,” whereby rational investors’ individual decisions add up based on incomplete info. The phenomenon helps explain why an entire nation would be under the thrall of the notion that housing=a great investment. A cascade is possible when a whole country buys into the same belief despite individual analysis that refutes prevailing wisdom. The result? Rising prices and a big bad bubble. So what’s next? “It is now possible that a downward cascade will develop — in which rational individuals become excessively pessimistic as they see others bidding down home prices to abnormally low levels,” writes Schiller.
How a Bubble Stayed Under the Radar [NY Times]
Collage by Amy Jaz.
Ok Biff Im sad now you continue to miss the point… are you smoking dope during your lunch break? you’re memory is bad.
Im sorry for calling you a retard earlier. You’re not retarded you’re a special person.
btw (by the way) I’m a straight man please dont call me “dear” or “sweetie pie”.
2:21, while yep is fine, “definitly” and “Im” are not. Keep trying, sweetie pie. You’ll get it right one day…
Broolyn is not the suburbs. It lies somewhere between a city and a suburbs. Why do I say that? Because I grew up in the burbs. You cannot live without a car there. You can in Brooklyn. You don’t have major cultural institutions like BAM, Brooklyn Museum, etc. etc. Brooklyn is more densely populated and more interesting.
Biff I almost cried Im so proud of you son. You can definitly stay and learn more. See you’re learning already it’s totally ok to use words like “yep” here.
You gotta love today’s youth.
zzzzzzzzzzzzzzz
1:56, thanks but no thanks. I would like to stay here and enjoy your witticsms, if I may. “Doodle head”. Yep, that’s genius. And please remember that it is “grammar”, not “grammer”, my dear.
1:46 Your answer bores me.
The people that live in ‘Greater London’/the ‘banlieue’ of Paris/or the outskirts of Madrid would openly admit to living in the suburbs-because they do.
Why can’t a lot of people who write on Brownstoner who live in Brooklyn admit the same.
By the way-there is no downtown in any of the 3 cities I mentioned.
Biff i understand the point you were making… but guess what son? you’re at the wrong blog. If you need direction to Scholastic’s web site you can simply google it. Doodle head.
I believe you still have time to register to the annual spelling bee and over there you can find a lot of bright children like yourself.
this blog is about the green stuff that’s in your mommy/daddy’s purse or wallet. and most of us here understand what a “comment” is, and there really is no need for a snot nosed brat to correct grammer.
Hurry run along and play now… bub bye.
I’m so proud of today’s youth they’re so internet savvy.
“OR, you could bet on complete meltdown or our economy and way of life and anticipate 50% decreases in RE.”
You’re beginning to see the light.