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I lived in Phoenix during the early-mid 2000's. I certainly didn't need a simulation to tell that housing was an out-of-control financial scheme that was about
by jqm 12y ago
I lived in Phoenix during the early-mid 2000's.
I certainly didn't need a simulation to tell that housing was an out-of-control financial scheme that was about to crack and bring the economy to its knees. You simply can't keep doubling property values every year without wages or some other method of servicing the dept rising accordingly. The only thing I wonder is why more people didn't see this.
- hibikir 12y agoSeeing that a trend can't go on forever is not difficult: Almost no trend, ever, can go on forever. The trick is knowing what will happen to disrupt the trend, and when it happens. It's easy to say that there will be a recession in the future of the US and be correct. It's almost as easy to be correct if we say we'll see one before 2025. But when, exactly? How big? If it was actually easy to predict those things in detail, they'd be priced into market prices already. Just look at property all over the country. In some cases, the bubble deflated, and prices are still pretty low. In others, there was no real popping of a bubble: A minor dip due to global economic conditions, but prices are higher than they were 7 years ago. The difficulty comes from predicting which ones will recover and which ones will not. If anyone could do this, we'd see them get insanely rich in the financial markets, but when we compare mutual fund behavior over time, the number of people that beat the market in any period is no different than random chance. We ignore the efficient market hypothesis at our own peril.
- matheweis 12y ago> If anyone could do this, we'd see them get insanely rich in the financial markets Can you expound on this? I fail to see a scenario where anyone gets rich off the student loan bubble letting off its air.