Or how to avoid a house price crash (next time)

http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/

I must say that I was sceptical at the start, but became convinced by the 
end

tim

"tim....." wrote
> Or how to avoid a house price crash (next time)
>
> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>
> I must say that I was sceptical at the start,
> but became convinced by the end

Hmmm.  The article says that bears didn't have any way
to influence the market, but of course they *did* -- they
could pull-out of the market, decreasing demand, which....

tim.....  wrote:
> Or how to avoid a house price crash (next time)

> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/

> I must say that I was sceptical at the start, but became convinced by the 
> end

I've been reading Schiller for about ten years. The guy really does know
his onions. He's probably one of the few who were railing about the
credit bubble even before I was.

FoFP

Tim  wrote:
> "tim....." wrote
>> Or how to avoid a house price crash (next time)
>>
>> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>>
>> I must say that I was sceptical at the start,
>> but became convinced by the end

> Hmmm.  The article says that bears didn't have any way
> to influence the market, but of course they *did* -- they
> could pull-out of the market, decreasing demand, which....

What about us bears who weren't in the market in the first place?

FoFP


-- 
"They say there are no atheists in a foxhole. Well, there
are no libertarians in a financial crisis, either."

                                 --Harvard economist Jeffrey Frankel

>> "tim....." wrote
>>> Or how to avoid a house price crash (next time)
>>>
>>> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>>>
>>> I must say that I was sceptical at the start,
>>> but became convinced by the end
>
> "Tim" wrote:
>> Hmmm.  The article says that bears didn't have any way
>> to influence the market, but of course they *did* -- they
>> could pull-out of the market, decreasing demand, which....
>
"M Holmes" wrote
> What about us bears who weren't in the market in the first place?

Easy - you just don't buy.
That would be one less buyer than there could have been...

"Tim"  wrote in message 
news:KradnfJ8cfFxcSHVnZ2dnUVZ8vqdnZ2d@bt.com...
> "tim....." wrote
>> Or how to avoid a house price crash (next time)
>>
>> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>>
>> I must say that I was sceptical at the start,
>> but became convinced by the end
>
> Hmmm.  The article says that bears didn't have any way
> to influence the market, but of course they *did* -- they
> could pull-out of the market, decreasing demand, which....

I think he explains that.

These people are invisible, they have no effect on what the lender does.

By actively "betting" against the market they can be seen, and thus have an 
effect (perhaps)

tim



>
>

>> "tim....." wrote
>>> Or how to avoid a house price crash (next time)
>>>
>>> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>>>
>>> I must say that I was sceptical at the start,
>>> but became convinced by the end
>>
> "Tim" wrote
>> Hmmm.  The article says that bears didn't have any way
>> to influence the market, but of course they *did* -- they
>> could pull-out of the market, decreasing demand, which....
>
"tim....." wrote
> I think he explains that.
>
> These people are invisible, they have no effect on what the lender does.
>
> By actively "betting" against the market they
> can be seen, and thus have an effect (perhaps)

But as I said before, they *would* have an effect anyway,
simply by their actions (or inactions) *reducing* demand.
They wouldn't be invisible at all!

tim.....  wrote:

>> Hmmm.  The article says that bears didn't have any way
>> to influence the market, but of course they *did* -- they
>> could pull-out of the market, decreasing demand, which....

> I think he explains that.

> These people are invisible, they have no effect on what the lender does.

> By actively "betting" against the market they can be seen, and thus have an 
> effect (perhaps)

Of course this all presupposes free markets. What happened when shares
in banks and Fannie and Freddie piled down? They banned short selling.

It seems to me that a big part of the problem is that there's an inbuilt
systemic bias towards rising markets. During the Dotcom bubble, an
analyst was actually forced out of his job for marking Enron a "sell".

Ditto during the main credit bubble. Folks trying to point out it was a
credit bubble or even just a housing bubble were denied media type and
cast as Cassandras.

Sure, short-selling housing helps. One company made 4 billion
short-selling subprime mortgage-backs at the start of this and had "I'm
Short Your House!" t-shirts made, but if it were commonplace and got in
the way of a bubble, the politicians, backed by the public, would find a
way to shut it down.

Back in the South Seas Bubble, they had some folks slung into jail for
naysaying it. When folks have Dollars in their eyes, they just won't be
stopped. About the only real hope would be controlling access to debt.
That's not only tricky, but might well strangle innovation and thus
throw the baby out with the bathwater.

FoFP

"M Holmes"  wrote in message 
news:g9lt2u$p4v$2@scotsman.ed.ac.uk...
> tim.....  wrote:
>
>>> Hmmm.  The article says that bears didn't have any way
>>> to influence the market, but of course they *did* -- they
>>> could pull-out of the market, decreasing demand, which....
>
>> I think he explains that.
>
>> These people are invisible, they have no effect on what the lender does.
>
>> By actively "betting" against the market they can be seen, and thus have 
>> an
>> effect (perhaps)
>
> Of course this all presupposes free markets. What happened when shares
> in banks and Fannie and Freddie piled down? They banned short selling.
>
> It seems to me that a big part of the problem is that there's an inbuilt
> systemic bias towards rising markets. During the Dotcom bubble, an
> analyst was actually forced out of his job for marking Enron a "sell".
>
> Ditto during the main credit bubble. Folks trying to point out it was a
> credit bubble or even just a housing bubble were denied media type and
> cast as Cassandras.
>
> Sure, short-selling housing helps. One company made 4 billion
> short-selling subprime mortgage-backs at the start of this and had "I'm
> Short Your House!" t-shirts made, but if it were commonplace and got in
> the way of a bubble, the politicians, backed by the public, would find a
> way to shut it down.
>
> Back in the South Seas Bubble, they had some folks slung into jail for
> naysaying it. When folks have Dollars in their eyes, they just won't be
> stopped. About the only real hope would be controlling access to debt.
> That's not only tricky, but might well strangle innovation and thus
> throw the baby out with the bathwater.

Hm,

you appear to be saying:

"it might not works, so we shouldn't try!"

tim

"Tim"  wrote in message 
news:p-udnca-Y-BGGCDVnZ2dnUVZ8j6dnZ2d@bt.com...
>>> "tim....." wrote
>>>> Or how to avoid a house price crash (next time)
>>>>
>>>> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>>>>
>>>> I must say that I was sceptical at the start,
>>>> but became convinced by the end
>>>
>> "Tim" wrote
>>> Hmmm.  The article says that bears didn't have any way
>>> to influence the market, but of course they *did* -- they
>>> could pull-out of the market, decreasing demand, which....
>>
> "tim....." wrote
>> I think he explains that.
>>
>> These people are invisible, they have no effect on what the lender does.
>>
>> By actively "betting" against the market they
>> can be seen, and thus have an effect (perhaps)
>
> But as I said before, they *would* have an effect anyway,
> simply by their actions (or inactions) *reducing* demand.
> They wouldn't be invisible at all!

I still don't agree.

Companies don't, in the main, react to the opinions of their "non" 
customers.

If they are doing OK, they ignore them, doesn't matter whether the product 
is loans or beefburgers.

tim

tim.....  wrote:

> "M Holmes"  wrote in message 

[short-selling houses...]

>> Of course this all presupposes free markets.  What happened when
>> shares in banks and Fannie and Freddie piled down? They banned short
>> selling. 

>> It seems to me that a big part of the problem is that there's an
>> inbuilt systemic bias towards rising markets.  During the Dotcom
>> bubble, an analyst was actually forced out of his job for marking
>> Enron a "sell". 

>> Ditto during the main credit bubble.  Folks trying to point out it
>> was a credit bubble or even just a housing bubble were denied media
>> type and cast as Cassandras. 

>> Sure, short-selling housing helps.  One company made 4 billion
>> short-selling subprime mortgage-backs at the start of this and had
>> "I'm Short Your House!" t-shirts made, but if it were commonplace and
>> got in the way of a bubble, the politicians, backed by the public,
>> would find a way to shut it down. 

>> Back in the South Seas Bubble, they had some folks slung into jail
>> for naysaying it.  When folks have Dollars in their eyes, they just
>> won't be stopped.  About the only real hope would be controlling
>> access to debt.  That's not only tricky, but might well strangle
>> innovation and thus throw the baby out with the bathwater. 

> Hm,

> you appear to be saying:

> "it might not works, so we shouldn't try!"

I'm saying that it's a good enough idea but that it's anyway closing the
barn door after the horse has bolted. If the housing bubble were to
repeat (and thank Eris that the Magic Token at least changes each time)
then the masses would not let anyone or anything stand between them and
the riches they know lie at the end of the speculative rainbow.

At best, the short sellers would learn the meaning of the maxim "The
markets can stay irrational a lot longer than you can stay solvent".

At worst they'd be strung from lampposts.

FoFP

>>>> "tim....." wrote
>>>>> Or how to avoid a house price crash (next time)
>>>>>
>>>>> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>>>>>
>>>>> I must say that I was sceptical at the start,
>>>>> but became convinced by the end
>>>>
>>> "Tim" wrote
>>>> Hmmm.  The article says that bears didn't have any way
>>>> to influence the market, but of course they *did* -- they
>>>> could pull-out of the market, decreasing demand, which....
>>>
>> "tim....." wrote
>>> I think he explains that.
>>>
>>> These people are invisible, they have no effect on what the lender does.
>>>
>>> By actively "betting" against the market they
>>> can be seen, and thus have an effect (perhaps)
>>
> "Tim" wrote
>> But as I said before, they *would* have an effect anyway,
>> simply by their actions (or inactions) *reducing* demand.
>> They wouldn't be invisible at all!
>
"tim....." wrote
> I still don't agree.
>
> Companies don't, in the main, react to the opinions of their "non" 
> customers.

But *companies* don't make the market in residential
houses;  owner-occupiers, BTLers & developers do :
they are the buyers & sellers, creating supply & demand.

The bears will either sell (if they already own) or not buy
(if they don't own), thus increasing supply & reducing
demand.  That *does* have an effect on the market.

"Tim"  wrote in message 
news:5oydnWwPE6k7RCPVnZ2dnUVZ8rKdnZ2d@bt.com...
>>>>> "tim....." wrote
>>>>>> Or how to avoid a house price crash (next time)
>>>>>>
>>>>>> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>>>>>>
>>>>>> I must say that I was sceptical at the start,
>>>>>> but became convinced by the end
>>>>>
>>>> "Tim" wrote
>>>>> Hmmm.  The article says that bears didn't have any way
>>>>> to influence the market, but of course they *did* -- they
>>>>> could pull-out of the market, decreasing demand, which....
>>>>
>>> "tim....." wrote
>>>> I think he explains that.
>>>>
>>>> These people are invisible, they have no effect on what the lender 
>>>> does.
>>>>
>>>> By actively "betting" against the market they
>>>> can be seen, and thus have an effect (perhaps)
>>>
>> "Tim" wrote
>>> But as I said before, they *would* have an effect anyway,
>>> simply by their actions (or inactions) *reducing* demand.
>>> They wouldn't be invisible at all!
>>
> "tim....." wrote
>> I still don't agree.
>>
>> Companies don't, in the main, react to the opinions of their "non" 
>> customers.
>
> But *companies* don't make the market in residential
> houses;  owner-occupiers, BTLers & developers do :
> they are the buyers & sellers, creating supply & demand.

Few of these can enter the market if they don't borrow money

> The bears will either sell (if they already own) or not buy
> (if they don't own), thus increasing supply & reducing
> demand.  That *does* have an effect on the market.

Only by a very small amount.  I need somewhere to live.  Someone owns the 
house that I live in.  How does my renting it (by choice) tell the market 
that I don't want to buy at the moment?

By being able to invest in housing, other than by buying, I can have a 
greater influence.

tim

"M Holmes"  wrote in message 
news:g9mhu1$pne$1@scotsman.ed.ac.uk...
> tim.....  wrote:
>
>> "M Holmes"  wrote in message
>
> [short-selling houses...]
>
>>> Of course this all presupposes free markets.  What happened when
>>> shares in banks and Fannie and Freddie piled down? They banned short
>>> selling.
>
>>> It seems to me that a big part of the problem is that there's an
>>> inbuilt systemic bias towards rising markets.  During the Dotcom
>>> bubble, an analyst was actually forced out of his job for marking
>>> Enron a "sell".
>
>>> Ditto during the main credit bubble.  Folks trying to point out it
>>> was a credit bubble or even just a housing bubble were denied media
>>> type and cast as Cassandras.
>
>>> Sure, short-selling housing helps.  One company made 4 billion
>>> short-selling subprime mortgage-backs at the start of this and had
>>> "I'm Short Your House!" t-shirts made, but if it were commonplace and
>>> got in the way of a bubble, the politicians, backed by the public,
>>> would find a way to shut it down.
>
>>> Back in the South Seas Bubble, they had some folks slung into jail
>>> for naysaying it.  When folks have Dollars in their eyes, they just
>>> won't be stopped.  About the only real hope would be controlling
>>> access to debt.  That's not only tricky, but might well strangle
>>> innovation and thus throw the baby out with the bathwater.
>
>> Hm,
>
>> you appear to be saying:
>
>> "it might not works, so we shouldn't try!"
>
> I'm saying that it's a good enough idea but that it's anyway closing the
> barn door after the horse has bolted.

You obviously missed the bit that said this idea was "for the next time". 
And there will be a next time!

tim

On 1 Sep, 20:56, "tim....."  wrote:
> Or how to avoid a house price crash (next time)
>
> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>
> I must say that I was sceptical at the start, but became convinced by the
> end

Schiller has been floating some intelligent arguments for years. I've
found his analysis of long term stock market returns fascinating.
However, in the UK, Cantor, IG Index and Goldman Sachs have been
offering spreadbetting and covered warrents on house prices for years.

--
Daytona

tim.....  wrote:

>>> you appear to be saying:
>>
>>> "it might not works, so we shouldn't try!"
>>
>> I'm saying that it's a good enough idea but that it's anyway closing the
>> barn door after the horse has bolted.

> You obviously missed the bit that said this idea was "for the next time". 
> And there will be a next time!

There will in a couple of generations, but the Magic Token won't be
housing. Personally I think we should give Daffodil bulbs a go...

FoFP

On Thu, 4 Sep 2008 13:19:04 +0000 (UTC), M Holmes
 wrote:

>tim.....  wrote:
>
>>>> you appear to be saying:
>>>
>>>> "it might not works, so we shouldn't try!"
>>>
>>> I'm saying that it's a good enough idea but that it's anyway closing the
>>> barn door after the horse has bolted.
>
>> You obviously missed the bit that said this idea was "for the next time". 
>> And there will be a next time!
>
>There will in a couple of generations, but the Magic Token won't be
>housing. Personally I think we should give Daffodil bulbs a go...

That would be perfect -- something I don't want/need :-)

-- 
(\__/)  M.
(='.'=) Owing to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking most articles
posted from there.  If you wish your postings to be seen by
everyone you will need use a different method of posting.
See http://improve-usenet.org

"tim....."  wrote in message 
news:6i2vntFojhbaU1@mid.individual.net...
> Or how to avoid a house price crash (next time)
>
> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>
> I must say that I was sceptical at the start, but became convinced by the 
> end


As his books has fallen in price by 32% it would not be unreasonable to 
conclude
that he is a bit of a w8nker.


>
> tim
>
>

"Daytona"  wrote in message 
news:c81d6889-db29-4a9f-8116-6119cfec2a49@v16g2000prc.googlegroups.com...
> On 1 Sep, 20:56, "tim....."  wrote:
>> Or how to avoid a house price crash (next time)
>>
>> http://www.theregister.co.uk/2008/09/01/schiller_subprime_review/
>>
>> I must say that I was sceptical at the start, but became convinced by the
>> end
>
> Schiller has been floating some intelligent arguments for years. I've
> found his analysis of long term stock market returns fascinating.
> However, in the UK, Cantor, IG Index and Goldman Sachs have been
> offering spreadbetting and covered warrents on house prices for years.

Indeed, since the start of the current bubble I believe ;O)


>
> --
> Daytona