That Hissing Sound

NYT ^ | 8/8/05 | Paul Krugman

[Tumbleweed_Connection]

This is the way the bubble ends: not with a pop, but with a hiss.

Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom goes bust.

So the news that the U.S. housing bubble is over won't come in the form of plunging prices; it will come in the form of falling sales and rising inventory, as sellers try to get prices that buyers are no longer willing to pay. And the process may already have started.

Of course, some people still deny that there's a housing bubble. Let me explain how we know that they're wrong.

One piece of evidence is the sense of frenzy about real estate, which irresistibly brings to mind the stock frenzy of 1999. Even some of the players are the same. The authors of the 1999 best seller "Dow 36,000" are now among the most vocal proponents of the view that there is no housing bubble.

Then there are the numbers. Many bubble deniers point to average prices for the country as a whole, which look worrisome but not totally crazy. When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone.

In Flatland, which occupies the middle of the country, it's easy to build houses. When the demand for houses rises, Flatland metropolitan areas, which don't really have traditional downtowns, just sprawl some more. As a result, housing prices are basically determined by the cost of construction. In Flatland, a housing bubble can't even get started...

[Darkwolf377]

This guy always delivers on the laffs.

[Darkwolf377]

That Hissing Sound

Ted Kennedy after lunch?

[Extremely Extreme Extremist]

Krugman - automatic barf alert and posting of the "Not this feces again" guy.

[martin_fierro]

Paul Krugman

Hisssssss!

[Darkwolf377]

I am thinking of looking around for more of his articles from, say, a year or more ago, to see how he is as a prognosticator.

Then again, how many of these op-ed writers EVER get it right?

[Atchafalaya]

LOL!

[Tumbleweed_Connection]

Old Methane

[Congressman Billybob]

The "hissing sound" is Paul Krugman; he's a snake in the grass. He clearly doesn't like the people who live in the "Flatlands" (who happen to be the key to the election of George Bush, twice). They DO have zoning in such benighted places as Cleveland, you snotty b*stard. (Oops, sorry. That was addressed to Paul the Professor.)

Congressman Billybob

Latest column: "The Washington Post Doesn't Have a Clue about Government Under a Written Constitution"

[PGalt]

(Excerpt) Read more at nytimes.com ...

No thanks. You can't even pay me to read more from this idiot.

[Boundless]

Nothing else is breaking their way on the bad news front,
and since they buy their own BS, they think they see a
bubble.

So they are using this pinhead to try and pop it.

Won't work in a rising economy. Real estate isn't like
stocks. People don't need stocks, but they do need a
place to live. Local and regional corrections may occur,
but prices can't drop very far before wannabee buyers
come out of hiding.

Now if Greenspan raises the Prime to 20% ...

[Darkwolf377]

Old Methane

Let's leave Byrd and his endless orations out of it, huh? ;)

[Atchafalaya]

LOL! Shifty-eyed,weaseltunnelliberalvision Krugman as a source; why is this airhog still around??

[Oldhunk]

First Krugman column I've ever been able to read to the end.

[Darkwolf377]

why is this airhog still around??

Waiting for Ken Lay to call?

[Atchafalaya]

LOL again, a twofer!

[who_would_fardels_bear]

People don't need stocks, but they do need a place to live

Real estate speculators don't need 2,3, etc. homes in which to live.

When they start dumping their excess inventory ...

Krugman may be an idiot, but even idiots are right by accident every once and a while.

[Darkwolf377]

http://www.nationalreview.com/nrof_luskin/luskin200506011007.asp

Check this out from June 05:

1. Shaping, Slicing, and Selectively Citing Numbers. An old favorite is the notorious “divide by ten” incident. In an April 22, 2003, column, Krugman claimed that the Bush tax cuts, designed in part to increase employment, would cost $500,000 for each $40,000 job created. He neglected to mention that the $500,000 would be spread over ten years, and thus can’t be fairly compared to a $40,000 annual salary. Krugman was so humiliated when I pointed this out that he wrote no fewer than eleven increasingly loony and desperate rationalizations — ten spread over eight postings on his personal site (one, two, three, four, five, six, seven and eight) and the eleventh in a special column in the Times.

2. Biggest Howler (Political). It’s going to be hard to beat this one from his January 29, 2002, column:

I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society.

3. Biggest Howler (Economics). There are so many. Here’s a recent one, from his Times column last Friday. Keynesians will be shocked to hear their most prominent acolyte reduce the theory of the business cycle to this:

. . . the Fed’s ability to manage the economy mainly comes from its ability to create booms and busts in the housing market.

4. Worst Prediction. Market tops? Krugman’s a bull. Bottoms? Always a bear. But I like his prediction of an “inflation time bomb” back in 1982 when he was working for the Reagan administration, just when inflation had peaked and was destined to head lower for more than two decades.

5. Funniest Inadvertent Confession. How about the time Krugman debated Bill O’Reilly on Tim Russert’s show, and got so flustered that he said,

Compare me … compare me, uh, with anyone else, and I think you’ll see that my forecasting record is not great.

6. N. Gregory Mankiw Award for Excellence in “Just Making Stuff Up.” My favorite is when Krugman claimed in his August 10, 2004, column that

When Friday’s dismal job report was released, traders in the Chicago [bond trading] pit began chanting, “Kerry, Kerry.”

A tape of CNBC’s coverage of trading that morning — which Krugman cited as his source — revealed that no such chanting took place. Krugman just made it up. Dan Okrent acquired a copy of the tape at my suggestion to see for himself, but back then — when there was still an election for John Kerry to win, perhaps? — Okrent decided not to pursue it.

MORE at the url above

[spyone]

The real estate market will be down 10-30% in a year.

[quantim]

In Flatland,

Is that racist?  I'm a 'Flatlander' I guess.  I'm offended.  We grow people here that fart a lot and have a certain skin color.  I can't handle people calling me names like that.  Where's the ACLU to protect me?  Is calling someone from the land of 'Flatland' as in 'flatulence" suggesting I'm a dumb fart?

I just came here from Mexico (one night through the desert wearing my mullah headdress) and my feeling are hurt.  I thought I was going to be protected in America, and all I get are insults from working people.