Posted on 01/14/2009 9:37:28 PM PST by Steelfish
The One Who Saw It Coming Robert Shiller forecast the credit crisis for the right reasons, and has a novel idea for how to fix it. By Zachary Karabell | NEWSWEEK From the magazine issue dated Jan 19, 2009 Robert Shiller is one of a handful of economists who have been feted for foreseeing the credit crisis, but he is the only one who predicted it for the right reasons.
New York University's Nouriel Roubini, now known as "Dr. Doom," warned as early as 2006 of an imminent housing crash that would stop America's consumer-spending spree and lead to severe recession. Another über-bear, Morgan Stanley's Stephen Roach, had warned for years that the weakening dollar and the U.S. trade deficit with China were signs of a dangerously imbalanced global economy, doomed to fall. While both deserve credit for highlighting weaknesses that others ignored, neither had much to say about the real reasons for the current state of affairs, namely the vast amount of speculation that took place in the financial world linked to home mortgages. Shiller did.
(Excerpt) Read more at newsweek.com ...
Not a word about Fannie Mae, Frank is quoted as supporting the idea of enforcing less risky loans (after refusing to fix the problem when directly confronted over the last 8 years), etc.
That is, Newsweek didn’t disappoint me; they once again, as always, are extremely biased towards the Dems. And this guy that is being feted made no extraordinairy prediction -he just parroted what Pubbies said in open testimony and in interviews.
At first, I thought this was a bad idea, but I am having second thoughts.
The credit crisis. This is another screw job by big government. The creditors banks and bigwigs get paid off by taxpayer money and the poor saps who got the loans get left in the cold and on the street. The so called “progressive” system in the USA is in reality a totally regressive scheme run by a bunch of pirates and crooks. Take down those Stars and Stripes over Washington and run up their true colors..The Jolly Roger. At least the Somali pirates are honest about it.
uh oh
WASHINGTON (AP) — More than 2.3 million American homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007, with the worst yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices.
Nationwide, more than 860,000 properties were actually repossessed by lenders, more than double the 2007 level, according to RealtyTrac, a foreclosure listing firm based in Irvine, Calif., which compiled the figures.
Moody’s Economy.com, a research firm, predicts the number of homes lost to foreclosure is likely to rise by another 18 percent this year before tapering off slightly through 2011.
Still, foreclosures — which keep breaking records going back 30 years, according to the Mortgage Bankers Association — are likely to remain well above normal levels for years to come, and that will continue to keep home prices from rebounding.
“Hitting bottom is a lot different than coming off the bottom,” said Christopher Thornberg, a principal with Beacon Economics in Los Angeles.
snip.
The four states with the highest foreclosure rates last year were Nevada, Florida, Arizona and California.
More than 1.1 million properties in those four states received a foreclosure notice, almost half the national total. And more than one in five of those households were in California, which is coping with massive job losses in the housing and mortgage industries as well as a rapid decline in home prices.
Among metro areas, Stockton, Calif., was first, with 9.5 percent of all housing units receiving a foreclosure filing last year. It was followed by Las Vegas, Riverside and Bakersfield, Calif., and Phoenix.
In December, more than 303,000 properties nationwide received at least one foreclosure notice, up more than 40 percent from a year earlier and up 17 percent from November, according to RealtyTrac.
Nearly 79,000 properties were repossessed by lenders in December, a 61 percent increase over a year ago.
New state laws, particularly in California, Massachusetts and Maryland, that required giving homeowners advance notice of foreclosure proceedings, reduced filings in several states. But the effect of those laws has worn off, and lenders appear to be going ahead with foreclosure, rather than trying to modify loans.
“If all you’re doing is basically giving a stay of execution, then the inevitable will follow,” said Rick Sharga, RealtyTrac’s vice president for marketing.
Foreclosures would have been about 10 percent higher in California last year, Sharga said, if it were not for a law requiring lenders to give borrowers a 30-day warning before starting the foreclosure process.
snip.
In a speech at the University of Delaware, Charles Plosser also said that the unemployment rate probably won’t drop anytime soon, but that he doesn’t expect it to rise to double digits, as it did during the recession of the early 1980s.
snip
--CHINA NOW NUMBER THREE ECONOMY (just surpassed Germany, now follows only USA and Japan
--NORTEL (of Canada) going BANKRUPT
--BANK OF AMERICA in deep sh*t along with Citibank
There is no end to it.
Yes, there’s an end to it. Just not a particularly pretty end.
global shobal....Nafta crafta.....we should have been looking out for our workers instead of the rich looking out for themselves....
Yes, NAFTA and Liberal Free Trade Globalism is proving to be an utter failure. Only the most brain-dead extremist thinks that Liberal Free Trade Globalism is still effective.
The trillions that the USA has wealth-redistributed overseas through free trade is beginning to show its ugly effects.
Even scarier is that the two biggest benefactors of this redistributed wealth....Communist China and Mexico...are having major problems themselves
One four letter word completely explains the mess that the world finds itself in, D-E-B-T. We stopped producing products in America and started producing debt. To paper over this imbalance and failing economic model, the fed printed money which found its way into higher real estate prices, a bubble. In addition, it found its way into higher stock prices. Economists like Shiller, love to proclaim the efficient market theory bogus, because then they can substitute the authority of the government. This crisis was not a failure of the free market, but rather a failure of socialism and printing press democracy. As a leading modern theologian and close adviser to future presidents once said, “America’s chickens are coming home to roooooost.”
Nearly 100 years of bad policy choices have brought us here. From the formation of the Fed (1913) to FDR’s New Deal and dropping of the gold standard (1934) to the “Great Society” 1964 to dropping of the international gold standard (1971) to the socialization of the mortgage markets (1997) to the socialization of the financial markets 2008-2009 to hyperinflation of the currency 2009-2010?, the mess we find ourselves in is one wholely and uneccessarily brought on by an ever more tyrannical government.
China as the number three economy shouldn't scare anyone. China will be the world's biggest economy, certainly before 2075 and perhaps sooner. And that, shouldn't scare anyone. China is over three times the size of the US. To think that we would remain the largest economy is folly and pure hubris. But, the economic pie is not static. Just because China's piece is growing, doesn't mean our slice of pie won't grow as well.
Knee jerk protectionism is dangerous. We, as Americans should enjoy trade with any and all takers. We should relish the competition and realize that it's the competition that will make us better, more efficient and ultimately much, much stronger.
For those of you not old enough to remember what protectionism brought us, look up Ford Pinto, Dodge Pacer and AMC Gremlin - protectionism in practical application. Enjoy.
Well said. And the new doctor is gonna continue the same old failed prescriptions as the old one, so the patient won't be getting well any time soon.
I've often wondered what it was like to have lived in the 30's. Why do I get the feeling I'm gonna find out, first hand?
Ahhh, Peter Schiff predicted this as early as 2002. He also says its game over with all of the spending. We are in for a ‘lost decade’, just like Japan. This is going to put an end to the middle class.
China will be the largest economy by 2013.
I'm old enough to remember the AMC Pacer. ;)
I know it's the title, but...The One was the lawyer who sued American banks, which further magnified the disaster.
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