Robert Shiller on housing crisis
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Robert James “Bob” Shiller (born 1946) is an Am… (more)
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Robert James “Bob” Shiller (born 1946) is an American economist, academic, and best-selling author. He has been a research associate of the National Bureau of Economic Research since 1980, was Vice President of the American Economic Association in 2005, and President of the Eastern Economic Association for 2006-2007. Shiller serves as the Stanley B. Resor Professor of Economics at Yale University and is a Fellow at the Yale International Center for Finance, Yale School of Management. His book Irrational Exuberance (2000) was a New York Times bestseller, and warned that the stock market of the late 1990s had become a bubble that could lead to a sharp decline.
Shiller received his B.A. from the University of Michigan in 1967 and his Ph.D. from MIT in 1972. He has taught at Yale since 1982 and previously held faculty positions at the Wharton School of the University of Pennsylvania and the University of Minnesota. He has written on economic topics that range from behavioral finance to real estate to risk management, and has been co-organizer of NBER workshops on behavioral finance with Richard Thaler since 1991. His book Macro Markets won the first annual Paul A. Samuelson Award of TIAA-CREF. He currently publishes a syndicated column.
In 1981 Shiller published an article in the American Economic Review, titled “Do stock prices move too much to be justified by subsequent changes in dividends?” He challenged the efficient markets model, which at that time was the dominant view in the economics profession. Shiller argued that in a rational stock market, investors would base stock prices on the expected receipt of future dividends, discounted to a present value. He examined the performance of the U.S. stock market since the 1920s, and considered the kinds of expectations of future dividends and discount rates that could justify the wide range of variation experienced in the stock market. Shiller concluded that the volatility of the stock market was greater than could plausibly be explained by any rational view of the future.
The behavioral finance school gained new credibility following the October 1987 stock market crash. Shiller’s work included survey research that asked investors and stock traders what motivated them to make trades; the results further bolstered his hypothesis that these decisions are often driven by emotion instead of rational calculation. Much of this survey data has been gathered continuously since 1989, and is available at Yale’s Investor Behavior Project.
Shiller’s most recent book is The New Financial Order: Risk in the 21st Century (2003).
9/1/2007
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You continue to blather away incoherently.
Taxing land value is simple: at the federal level, it’s a direct tax and unconstitutional unless apportioned among the states by population. The federal govt. uses indirect taxation instead.
The states direct tax land.
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OK keep the monetary system just as it is. However, your silence on taxing/socializing land value is deafening. Only the elites want to keep the unearned increment from community created land values. Where do you stand if you are not part of the elite landed aristocracy that never disappeared despite the fact that we are supposed to be in the age of capital and are told by our professors that land is no longer important? And this despite the recent popping of the land speculation/housing bubble.
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Don’t make unsubstantiated editorials about the monetary system.
You have yet to say anything intelligent.
If you want to argue about ‘a monetary system backed by positive value’ then make substantive arguments not elitist blather.
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Yes direct taxation of wealth is unconstitutional. A constitutional tax would be to assess a proportional tax on states based on population with the requirement that it come from a state imposed land value tax. The point being that tax on land values is the only just, fair and appropriate tax since land values are created 100% by the community of all people and by public services all of which increase land value.
I am afraid you are sadly misinformed about the reality of the monetary system.
Kansieo.com
You are talking about federal taxation of wealth, a direct tax, which is unconstitutional without apportionment among the states.
Your notion that the monetary system is one of debt is conspiracy theory drivel. It’s not as the Federal Reserve rebates all of it’s net income back to the Treasury.
That’s why you see a miniscule percentage of public debt attributed to the Federal Reserve.
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Suggestions for what we should do: embrace the idea of land value taxation with reduction of taxation on labor and capital and return to an honest monetary system backed by positive value and not debt.
finance
You mean you did not notice that since 1999 is when Realestate was having mass promotion and 31 different RE seminars in your learning Annex? How about home prices nearly double in 2002?
Create a video blog
We’re going to see massice foreclosures. It’s just beginning.
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The housing crisis is at its fundamental core a crisis of land speculation that finally crested. I know you guys think this is nuts because folks at the American Economic Association and other so-called institutions of higher learning worked diligently for over 100 years to establish the dogma that land is really not land at all but capital in total reversal of what all classical economists had been saying from the beginning. Once the distinction was lost there was no understanding.
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20 Year boom, and how long did everyone think it was going to keep rising, the prices did not make sense 10 years ago let alone now with some properties rising 50% per annum, who has the money to buy at todays prices?
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Because he’s trying to save his banker buddies. He’s the head of the Fed, a private banking conglomerate.
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A true genius
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Shiller is very very sharp. I have read numerous of his papers going back to the 70s and it really inspiring material. A very independent and thorough thinker.
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If you buy now, you will find a house like the one you bought for $100K or more less than what you paid. You effectively will be catching a falling knife and become instantly underwater on your mortgage! Imagine going to the bank and asking, “I’d like to open an account for minus (-)$100K”. After years of deposits adding up to $100K you will have $0 in the account. Silly isn’t it? Well that is exactly what you will be doing if you bought a house right now.
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Shiller is sharp. Krugman is an idiot.
Kansieo.com
There’s a podcast called “Words from the Wise” where Shiller discusses several economic with Bobby Ilich. It’s worth a listen.
Shiller is very sharp. As is Paul Krugman. People should listen to these guys.
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If they lower the rates, the prices tend to surge, maybe even spike up. That affects mostly the poor and middle class, which will see their purchasing power significantly reduce.
So you’d rather protect people with property than people who have nothing?
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cflying you have obviously not followed Shiller’s explanations. Cutting rates will help kill the recession… Unfortunately it’ll take time.
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free energy/utility bills!!!!!!!!! and control on individual taxes !!!!!!!!!
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Of course they should be lowering the rates! Bernanke/Paulson do not care about you, me, the dollar or the US economy, they only care about their Wall Street buddies.
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We are supposed to be raising rates. Why did Bernake just lower them? Because next year is an election year.