Comments on: Loss aversion and finding a bottom http://www.creditwritedowns.com/2008/08/loss-aversion-and-finding-bottom.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: Edward Harrison http://www.creditwritedowns.com/2008/08/loss-aversion-and-finding-bottom.html#comment-138 Edward Harrison Sat, 09 Aug 2008 02:13:00 +0000 http://www.creditwritedowns.com/2008/08/loss-aversion-and-finding-a-bottom.html#comment-138 It seems to be a remarkable case of hubris on the part of US policy makers in thinking the US was somehow vastly different from the Japanese. People are the same everywhere and markets are largely dominated by social and psychological factors common to us all at key turning points.<br/><br/>What the US needs is a good way to consolidate the financial services sector while clearing the market of the overhang of properties for sale at too high a price. <br/><br/>The longer this crisis continues, the greater the likelihood that the US will seek solutions destined to prolong the crisis by not allowing the markets to clear. It seems to be a remarkable case of hubris on the part of US policy makers in thinking the US was somehow vastly different from the Japanese. People are the same everywhere and markets are largely dominated by social and psychological factors common to us all at key turning points.

What the US needs is a good way to consolidate the financial services sector while clearing the market of the overhang of properties for sale at too high a price.

The longer this crisis continues, the greater the likelihood that the US will seek solutions destined to prolong the crisis by not allowing the markets to clear.

]]> By: Anonymous http://www.creditwritedowns.com/2008/08/loss-aversion-and-finding-bottom.html#comment-135 Anonymous Fri, 08 Aug 2008 17:49:00 +0000 http://www.creditwritedowns.com/2008/08/loss-aversion-and-finding-a-bottom.html#comment-135 Very good. There seems to have been the idea that Japan is a far off country, and because they "no speaky Engrish good", our problems can't possibly pan out like theirs did.<br/><br/>And yet here we are in an identical predicament after a credit-driven housing boom, and we refused to learn from their experience because our clever economists in central government thought they were too smart by half.<br/><br/>I could never quite pinpoint why no-one will actually give in and cut their losses, but your point excellently illustrates why those sections of the media in denial about the housing crash right now are doing far more harm than good to those interests they are trying to protect. Very good. There seems to have been the idea that Japan is a far off country, and because they “no speaky Engrish good”, our problems can’t possibly pan out like theirs did.

And yet here we are in an identical predicament after a credit-driven housing boom, and we refused to learn from their experience because our clever economists in central government thought they were too smart by half.

I could never quite pinpoint why no-one will actually give in and cut their losses, but your point excellently illustrates why those sections of the media in denial about the housing crash right now are doing far more harm than good to those interests they are trying to protect.

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