Comments on: Peer pressure and bubbles http://www.creditwritedowns.com/2008/08/peer-pressure-and-bubbles.html Finance, Economics and Markets Thu, 09 Feb 2012 23:29:37 +0000 hourly 1 By: Edward Harrison http://www.creditwritedowns.com/2008/08/peer-pressure-and-bubbles.html#comment-182 Edward Harrison Thu, 21 Aug 2008 00:09:00 +0000 http://www.creditwritedowns.com/2008/08/peer-pressure-and-bubbles.html#comment-182 Mark,<br/><br/>Long-term th stock market is a good value barometer. But that long-term can be 20 years! The markets just aren't that efficient over the short and medium-term.<br/><br/>As for real estate, I agree 100% that real estate is an especially pernicious animal when it's a bubble. I still struggle as to whether bubbles are endemic to the markets because of human psychology.<br/><br/>Annitah,<br/><br/>Yes, my reductionist view of science is rather narrow. I do have to admit to having two PhD Biochemist parents so I have full respect for science. You seem to get the point I was making being about Economics not being science. I'm glad the Milgram experiment provokes some thought.<br/><br/>Thanks for the comments.<br/><br/>Edward Mark,

Long-term th stock market is a good value barometer. But that long-term can be 20 years! The markets just aren’t that efficient over the short and medium-term.

As for real estate, I agree 100% that real estate is an especially pernicious animal when it’s a bubble. I still struggle as to whether bubbles are endemic to the markets because of human psychology.

Annitah,

Yes, my reductionist view of science is rather narrow. I do have to admit to having two PhD Biochemist parents so I have full respect for science. You seem to get the point I was making being about Economics not being science. I’m glad the Milgram experiment provokes some thought.

Thanks for the comments.

Edward

]]> By: Anittah Patrick http://www.creditwritedowns.com/2008/08/peer-pressure-and-bubbles.html#comment-181 Anittah Patrick Wed, 20 Aug 2008 23:00:00 +0000 http://www.creditwritedowns.com/2008/08/peer-pressure-and-bubbles.html#comment-181 I find your definition of science a mite reductive but will allow it given that your post, overall, is thought-provoking. I hadn't considered the housing situation through the lens of the Milgram studies; thank you for that. I find your definition of science a mite reductive but will allow it given that your post, overall, is thought-provoking. I hadn’t considered the housing situation through the lens of the Milgram studies; thank you for that.

]]> By: Mark Wadsworth http://www.creditwritedowns.com/2008/08/peer-pressure-and-bubbles.html#comment-174 Mark Wadsworth Mon, 18 Aug 2008 21:38:00 +0000 http://www.creditwritedowns.com/2008/08/peer-pressure-and-bubbles.html#comment-174 Skipping the middle bit and returning to the EMH, it depends whether you look long or short term. Long term, prices (whether of real estate or commodities) are fairly stable, it's only in the short term that they have these wild swings. <br/><br/>In the case of oil, the bubbles can come and go within a year or two. In the case of real estate, the cycles seem to be about 18 years long. So let's not worry about oil, that sorts itself out, it's the real estate bubble/credit bubble that you want to worry about, and that's easily fixed via 1) sensible banking supervision, 2) land value tax and 3) liberalising planning laws. Skipping the middle bit and returning to the EMH, it depends whether you look long or short term. Long term, prices (whether of real estate or commodities) are fairly stable, it’s only in the short term that they have these wild swings.

In the case of oil, the bubbles can come and go within a year or two. In the case of real estate, the cycles seem to be about 18 years long. So let’s not worry about oil, that sorts itself out, it’s the real estate bubble/credit bubble that you want to worry about, and that’s easily fixed via 1) sensible banking supervision, 2) land value tax and 3) liberalising planning laws.

]]>