"What a great site! I'm impressed by the great stuff you've pulled together. It merely confirms my long-held belief that economics CAN be interesting....
All the best"-
Charlie Wheelan,
aka The Naked Economist
This will help you understand the reason that the economy is the way it is today: herd behavior. From one of my favorite economists, Robert Shiller at Yale, perhaps the premier behavioral economist in the field.
6 comments:
Anonymous
said...
I think that some people didn't want to realize the housing market was going bad because they didn't want too. They didn't see the risk because they want a big house to help them feel rich.
This whole bubble basically came about from everyone trying to cheat the system. This tactic only works if a limited amount of people do it. It is like selling candy in school for money. Right now, I have a monopoly on the candy business. If only one or two people do it, then they will make a lot of money. But if half the school starts to sell the same candy, then only a couple people, if any, will be making money while the rest of them would just be losing money. People should stop trying to get around the system and just be happy to be a part of it.
It seems unbelievable that of all the great minds we have working in economics that they aren't able to recognize a potential housing bubble and it seems impossible to think that Greenspan didn't the potential problem in the housing market. It seems that when things are going good for a while people seem to have this false sense of "nothing can happen" and then then the problem hits.
this article explained the "housing market bubble" concept to me. it's unfortunate that so many people were left haging when the bubble burst, but that is the risk you take with you make an investment. i can see how people thought it fool proof seeing as so many people were doing it succesfully. i wonder if this wil affect america's willing to invest in all other markets.
The problem begins with people trying to make money and feel rich by buying a home, and the "herd" mentality, where even rational people rely on others to make decisions, and agencies doing their job by convincing them, that is a good investment. But not even the experts could see what was coming. Now, the great investment is making people lose the money they thought they were making. -Tania
It is sad that the housing bubble was not detected early on. It is true we are rational individuals but we should not have wasted time proving so. The economy is the way it is today because too many primarily ignored the real problem. We have tried to provide evidence for certain decisions (failure to recognize housing bubble) but instead we come to realize a disappointing new conclusion...herd behavior. And now, because of such behavior, sadly, we are growing even more pessimistic with the economy's future.
6 comments:
I think that some people didn't want to realize the housing market was going bad because they didn't want too. They didn't see the risk because they want a big house to help them feel rich.
This whole bubble basically came about from everyone trying to cheat the system. This tactic only works if a limited amount of people do it. It is like selling candy in school for money. Right now, I have a monopoly on the candy business. If only one or two people do it, then they will make a lot of money. But if half the school starts to sell the same candy, then only a couple people, if any, will be making money while the rest of them would just be losing money. People should stop trying to get around the system and just be happy to be a part of it.
It seems unbelievable that of all the great minds we have working in economics that they aren't able to recognize a potential housing bubble and it seems impossible to think that Greenspan didn't the potential problem in the housing market. It seems that when things are going good for a while people seem to have this false sense of "nothing can happen" and then then the problem hits.
this article explained the "housing market bubble" concept to me. it's unfortunate that so many people were left haging when the bubble burst, but that is the risk you take with you make an investment. i can see how people thought it fool proof seeing as so many people were doing it succesfully. i wonder if this wil affect america's willing to invest in all other markets.
-Shannon
The problem begins with people trying to make money and feel rich by buying a home, and the "herd" mentality, where even rational people rely on others to make decisions, and agencies doing their job by convincing them, that is a good investment. But not even the experts could see what was coming. Now, the great investment is making people lose the money they thought they were making.
-Tania
It is sad that the housing bubble was not detected early on. It is true we are rational individuals but we should not have wasted time proving so. The economy is the way it is today because too many primarily ignored the real problem. We have tried to provide evidence for certain decisions (failure to recognize housing bubble) but instead we come to realize a disappointing new conclusion...herd behavior. And now, because of such behavior, sadly, we are growing even more pessimistic with the economy's future.
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