In case you missed it in our last post, it’s worth breaking out this chart of U.S. home prices since 1970, provided by the blog Bubble Meter.

When you look at it now, it’s hard not to think “Of course there was a bubble!” (Just like when you look at my favorite long-term chart: The S&P 500 since 1950.)

But I guess that is in the very nature of bubbles — you don’t know that you’re in one until it’s popped (unless you’re one of these people).

Since the country, in the form of the Financial Crisis Inquiry Commission, is now officially delving into the causes of the financial collapse, it might be instructive to take a look back at who among the analysts and punditocracy thought the housing bubble — a precursor to the systemic implosion — wasn’t really a bubble at all.

A 2008 post from the blog Economics of Contempt does just that.

(For context, here’s a chart from the site Bubble Meter that shows the bubble starting to inflate around 1999 and reaching its apex in 2006.)

The Unofficial List of Pundits/Experts Who Were Wrong on the Housing Bubble

The housing bubble has precipitated a severe, and possibly catastrophic, economic crisis, so I thought it would be useful to put together a list of pundits and experts who were dead-wrong on the housing bubble. They were the enablers, and deserve to be held accountable. People also need to know (or be reminded of) which pundits/experts should never be listened to again.

(NOTE: The post includes links to each pundit’s comments.)

• Alan Reynolds, Cato Insitute (2005-06) – “Housing bubble’ worrywarts have long been hopelessly confused. It would have been financially foolhardy to listen to them in 2002. It still is.”
• Kevin Hassett, American Enterprise Institute (2004) – “Mr. Hassett says there is an ideological component to the belief in bubbles. Liberals, who tend to believe that government must step in to protect people from market imperfections, will likely see more of them. Conservatives, who like their markets unfettered, will see less.”
• James K. Glassman, American Enterprise Institute (2005) – “Even in places where prices are soaring, worries of a bubble could be overblown because higher prices appear grounded in good old fundamentals.”
• Jude Wanniski, journalist and advisor to Ronald Reagan – (2005) “unless Greenspan & Company drive interest rates up in order to induce a housing recession, there really is nothing to worry about.”
• Jerry Bowyer, author of “The Bush Boom” (2006) – “Hate to burst your housing bubble, but there isn’t one”
• Nicolas P. Restinas, director, Harvard Joint Center for Housing Studies (2004) – “More Than a Bubble Keeps Housing Prices Sky-High”
• Jim Cramer, host of CNBC’s “Mad Money” (2003) – “Housing bubble? What housing bubble? The signs are in place for a further run-up in real estate. Breathe easy, mortgage holders. There’s still no place like home.”
• Christopher Flanagan, head of ABS research, J.P. Morgan (2005) – “[B]ased on what we know and see in terms of employment and interest rates, it is extremely difficult to see how five years from now we could be looking back and observing a historical 5-year growth rate of, say, less than 5%. That should be more than adequate to support the continued good credit performance of sub-prime mortgage pools.”
• Noel Sheppard, economist, Business & Media Institute

(2005) – “The increase in real estate values the past five years has not resembled the rapid rise typically seen in a bubble.”

• Neil Barsky, Alson Capital Partners, LLC (2005) – “There is no housing bubble in this country. Our strong housing market is a function of myriad factors with real economic underpinnings: low interest rates, local job growth, the emotional attachment one has for one’s home, one’s view of one’s future earning- power, and parental contributions, all have done their part to contribute to rising home prices.
• Chris Mayer, professor of real estate, Columbia Business School, and Todd Sinai, professor of real estate, Wharton School (2005) – “For the past several years, Chicken Littles have squawked that the sky — or the ceiling — is about to fall on the housing market. And it’s tempting to believe them…”Yet basic economic logic suggests that this apparent evidence of a bubble is anything but. Even in the highest-price cities, housing is, at most, slightly more expensive than average.”
• Jonathan McCarthy, senior economist, New York Fed, and Richard W. Peach, vice president, New York Fed (2004) – “Home prices have been rising strongly since the mid-1990s, prompting concerns that a bubble exists in this asset class and that home prices are vulnerable to a collapse that could harm the U.S. economy…A close analysis of the U.S. housing market in recent years, however, finds little basis for such concerns. The marked upturn in home prices is largely attributable to strong market fundamentals: Home prices have essentially moved in line with increases in family income and declines in nominal mortgage interest rates.”
• Brian S. Wesbury, chief investment strategist, Claymore Advisors (2005) – “These nattering nabobs expect a housing collapse to take down the U.S. economy. But excessive pessimism is unwarranted: Fears of a housing bubble are overblown.”
• Samuel Lieber, president, Alpine Woods Capital Investors (2006) – “We don’t see a bubble. Historically, home prices just don’t go down nationwide unless we are in a significant recession. The last time home prices fell nationwide was in 1990. It’s employment that really counts. The underlying fundamentals of real estate are still very positive. Job creation and household formation drive housing.”
• Mark Vitner, senior economist, Wachovia (2006) – “‘Everybody is looking for evidence of a housing bubble,’ [Vitner] said. ‘There is not a housing bubble. The supply had not kept up with demand.’”
• George Karvel, professor of real estate, St. Thomas University (2005) – “‘There’s no housing bubble,’ said George Karvel, a professor of real estate at the University of St. Thomas. “This is a media-induced frenzy. If I wanted to say there is a housing bubble, I’d have Time and Money magazine camped on my door. They’ve called, and I’ve told them there’s no bubble. Panic sells.”
• Margaret Hwang Smith, professor of economics, Pomona College, and Gary Smith, professor of economics, Pomona College (2006) – “Our evidence indicates that, even though prices have risen rapidly and some buyers have unrealistic expectations of continuing price increases, the bubble is not, in fact, a bubble in most of these areas in that, under a variety of plausible assumptions, buying a house at current market prices still appears to be an attractive long-term investment.”

• Kathryn Jean Lopez, editor, National Review Online (2005) – “[T]he so-called housing bubble has yet to pop, and likely won’t as long as home ownership remains a tax-advantaged event. Even the New York Times — no parrot of White House talking points — has had to admit that the economy is ‘booming.’”
• James F. Smith, director, Center for Business Forecasting (2005) – “There is no evidence of a housing ‘bubble’ in the United States and housing demand should stay strong for years to come.”
• Jim Jubak, investing columnist, MSN Money (2005) – “Housing bubble? What housing bubble? With the 10-year U.S. Treasury bond yielding below 4% and 30-year mortgages available at 5.1%, there isn’t a housing bubble.”
• John K. McIlwain, senior resident fellow for housing, Urban Land Institute (2005) – “[T]he housing markets will cool as interest rates rise and as affordability declines, but they won’t crash. Most markets will flatten for a while or increase at lower, more historical, rates. A few may decline for a year or two. But we won’t have a crash.”

• Carl Steidtmann, chief economist, Deloitte Research (2005) – When you strip away all of the white noise around a housing bubble, what you find is a robust market for housing that is undergoing several profound changes all of which manifest themselves in higher home price indexes, none of which adds up to a housing price bubble.”

In December, the Detroit News reported that the unemployment rate of the city, officially at 27%, was really closer to 45%. Here’s a nicely observed blog post from Detroit native M. Hannington about some of the people on the lowest rungs of the city’s economic ladder.

Their names are Pinky (she likes to dye her hair pink) and Pointy (his winter hat is so tall I wonder if the hair underneath matches).

I see them around all the time, but we have never really interacted. So I have given them names.

Closer to home, there is Chris, who is bi-polar and can’t always get his meds. White and blonde, he says the others sometimes tease him as he waits in a parking lot for day jobs. There is Brother Michael, not quite right, but functional and he comes and goes, but sometimes does yard work for me.

They are all the victims of another recession at another time when many of the state’s mental institutions were closed. They survive on the odd job, return money from bottles found and the handout…

From 1987 until the mid-90’s I had a regular bottle man. He would come and collect my returns once a week. An alcoholic, he lived with family and in and out of shelters for most of his adult life. I’ll never forget the paper-like feel of his hands and the scars that he said came from sleeping outside.

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Today marked the first meeting of the Financial Crisis Inquiry Commission. The Christian Science Monitor reports:

A lot of people are hoping the panel will prove to the be the equivalent of the Pecora Commission, which in 1932 investigated the causes of the 1929 Wall Street crash and led to New Deal regulatory legislation like the Glass-Steagall Banking Act (since repealed) and the creation of the SEC.

A motley assortment of introductory links for those interested:

• Financial Crisis Inquiry Commission – home page includes statements and testimony
• Financial Crisis Inquiry Commission – A User’s Guide – overview by Mike Konczal, a former financial engineer, at the NewDeal 2.0 web site
• 20 questions for the FCIC (KeithHennessey.com) (Hennessey is also a panel member)

• Two questions for Bank CEOs (Rortybomb)
• Follow on Twitter here and here
• Liveblogging the Bankers (Dealbreaker)
• Watch it on CSPAN

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From Ribbonfarm.com, a blog about business and innovation, comes two posts on the NBC sit-com “The Office” — “The Office According to ‘The Office‘” and “Posturetalk, Powertalk, Babytalk and Gametalk.” The posts, written by Venkatesh Rao, who works at the Xerox Innovation Group, analyze the show as “an interpretation of management science.”

“The Office” is not a random series of cynical gags aimed at momentarily alleviating the existential despair of low-level grunts. It is a fully-realized theory of management that falsifies 83.8% of the business section of the bookstore…

Hugh MacLeod’s cartoon is a pitch-perfect symbol of an unorthodox school of management based on the axiom that organizations don’t suffer pathologies; they are intrinsically pathological constructs.

Idealized organizations are not perfect. They are perfectly pathological. So while most management literature is about striving relentlessly towards an ideal by executing organization theories completely, this school…would recommend that you do the bare minimum organizing to prevent chaos, and then stop…

The (“Office” co-creator Ricky) Gervais Principle is this:

Sociopaths, in their own best interests, knowingly promote over-performing losers into middle-management, groom under-performing losers into sociopaths, and leave the average bare-minimum-effort losers to fend for themselves.

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This post on Joe Sent Me , a blog for business travellers, is nine months old, but I like it anyway. Using an anonymous interview with an airline executive as a launching point, blogger Joe Brancatelli argues that the airlines that imposed baggage and other fees the quickest are the ones that are losing the most customers. Quotes from the executive:

“The overall numbers don’t lie,” writes Brancatelli. “The faster airlines add fees for basic services like checked bags, the faster their total revenue declines. And as my airline-executive friend ranted a few weeks ago, it’s the forest that matters, not the trees or the fees.”

The dot-com collapse, Enron, September 11th, Iraq, Hurricane Katrina, the tsunami, and an historic real estate bust, financial panic, and recession. The good times just never seemed to end in the 2000s, which Time called The Decade from Hell.

Now the Magazine Publishers of America and the American Society of Magazine Editors have created this video telling the tale of the 2000s completely in magazine covers.

It’s a nice testament to the power of the print media, but there’s also some truth to this reader comment left on The Awl, which speaks to the irony of publicizing the feature on the Web:

These guys just can’t win for losing nowadays.

Over at EconomyStory.org yesterday, one user posted this comment:

It’s time for my micro indicator to broaden its horizons. For 20 years, I’ve interpreted cars with a burned out headlight as an indicator of economic decline. If I see three in the 25 minutes it takes me to get home, it’s still a recession. I’ve only tested this within a 50 mile radius of D.C.’s Beltway. Would love observations from other parts of the country.

So we wondered if anyone else has observed this. A Google search found these mentions of the phenomenon:

baselle’s Financial Diary

Two more recession observations – the grocery store clerks seem to be so much nicer than they have been for months. Disguising their Valentine’s Day hard sell perhaps, but it’s better than being surly. Tonight I noticed more cars driving on the road with one headlight.

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The job search portal CareerCast.com published its 10 best and 10 worst jobs for 2010.

Methodology:

The lists:

Here are the results for all 200 jobs rated. FYI for our media friends, photojournalist comes in 11th from the bottom, reporter 16th. But don’t feel too bad; “web writer” wasn’t even on the list.

One step forward, two steps back
Unemployment has become a waltz
A vicious circle
A movement
A way of life

The Unemployment Waltz from Anthony Ferraro on Vimeo.

Also see Anthony Ferraro’s A Funny Thing Happened the Day After I Got Laid Off.