I'll tell you how I knew that disaster loomed. In the autumn of 2004 we studied a London estate agent's windows - one advertising properties for rent, one for purchase. Comparison showed that we were already in the world of the Greater Fool. I knew that equities were grossly overvalued, courtesy of Andrew Smithers who wrote lots for the layman, explaining Tobin's q and Shiller's version of Price-to-Earnings ratio. I knew about the madness of debt levels from the writings of Warburton (I think it was) and others, and I learnt about the risks of derivatives mainly from the one-liner of Warren Buffet. I'd read Galbraith's "Great Crash" long enough ago to have a feeling for what was coming. It was all, I have to say, pretty bloody obvious. That economists on the whole were dead against "Disaster lies round the corner" tells me only that they tend to lack brains or balls. Prognosis was the easy bit: I had every confidence that I was right and The Economics Profession was wrong. Whether the action that I took was wise is much harder to say; there I may have been wrong. We'll see.
The full 1 hour lecture is available here:(voice only)http://www.zocalopublicsquare.org/archives.php?event_id=133
I'll admit I didn't watch the clip because I can't stand Krugman. He's a shrill, politics-obsessed idiot. If he had his way, we'd spend moeny until we looked like Zimbabwe.
I agree K T. This guy is a complete moron. He thinks Obama will magically make everything different, and has no concept of inflation. Any economist who doesn't understand that printing money leads to inflation is a fool.
Wrote to my MP in feb 04 about banks offering 100% morts. then we went to 110 and 125% then it went bang...MP wrote back telling me what a brilliant chancellor Crash Gordon was.Its simple, when you put down a deposit, you self insure the loan. The banks invented ways of us not putting down the deposit (secularization ect)This was done with the nod from Central Government, good politics putting cash in peoples pockets and giving loans to poorer people (a whole new market) and of course the banks were paying the Govts loads of tax revenue so everyone was happy.Krugman is a very dangerous man, what is bad now can be made worse believe you me.
A real estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodically in local or global real estate markets. It is characterized by rapid increases in valuations of real property such as housing until they reach unsustainable levels relative to incomes and other economic elements.=============================SamMLS