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The problem is that economists aren't interested in predicting anything useful about the real world. They're too busy speculating about how beliefs and desires inform preferences and choices, and then...
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In the comment I define your disagreement with post reporter Zachary A. Goldfarb as a disagreement about whether reduced but still positive home equity causes a reduction of consumption on the order of...
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Aren't a good majority of these mortgages owned by the Fed or some other government organization at this point? So why do we really care about their losses? Have the government reimburse any writedowns...
View ArticleThe Housing Wealth Effect Estimate Are Based Almost Exclusively on Homes with...
Robert, I gave a link to the google scholar pages for "housing wealth effect." There are many dozen articles that give estimates of the size of the housing wealth effect. Almost all of these estimates...
View ArticleIt's not about the balance sheet
It's about the income statement. Underwater homeowners have difficulty refinancing, and therefore are often still paying mortgage rates from the mid-2000s. Include taxes and insurance, and quite often...
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The Google search that Dean refers to actually seems to have about as many papers which discount the housing-wealth effect as affirm it. The influences on savings and spending rates is a complex and...
View ArticleWhat about the income effect?
The housing equity effect on consumption is the usual conservative propaganda to boost the political strength of the rentiers. Just ask yourself: what is the effect on spending of earned INCOME? not...
View ArticleHousing data
Prof. Baker While i agree with your core argument, i am afraid that i must disagree with some of your statistics. The MEAN household income is less then 70k, the MEDIAN is around 50k, with a 3/5 mean...
View Articleasset bubbles, credit bubble, the LBO of America etc.
«Dean is right to call attention to asset bubbles, but they don't explain everything.» Sure, there is also energy prices and demographics, but when there have many so many so enormous asset price...
View Articleshifting losses to suckers has worked!
«a good majority of these mortgages owned by the Fed or some other government organization at this point? So why do we really care about their losses?» That was exactly the point, to transfer the...
View ArticleCredit Card debt peaked at 10 percent of disposable income
Skeptonomist, Credit card peaked at around 10 percent of disposable income in the late 90s http://www.federalreserve.gov/releases/g19/current/default.htm. It was stable or falling as the saving rate...
View ArticleGood criticism
Good criticism. However, your post has too many interconnected ideas, and I don't think the message comes through. I see the takehome as follows: During the bubble, both increased building and...
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