And then I'll stop by the gun store and shoot myself in the head.

You'll probably have to wait seven days for this one.

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I want to stay here and watch the boy grow up. I don't think anything has been as awesome as his hugs in the past ten years or so. I mean, there's nothing awesomer than a big, HI AUNTIE! and a hug. Seriously. Who could leave that?

It is amazing. It's certainly what is getting me back down to San Diego in a couple of days. Of course the rest of my family is what sent me back here between visits...

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Any market trend enshrined in a TV show is on the cusp of its own demise, don't you think?

Heh. Yep.

Another way that the drop in housing prices is bad for the economy is that a lot of people saw their house values climbing, so they borrowed money against the increased value and spent the money, which is good for the economy. So now we have less consumer spending which might lead to a recession.

Except you could argue that houses had become overvalued, and the drop in housing prices is just forcing people to confront reality. All this wealth was created on paper and people borrowed against it. And now a lot of this wealth is gong away. So there really wasn't as much "real" wealth there in the first place....

At this point, I really want to read some good books on economics, as I don't fully understand all this stuff....

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In all honesty I do not believe that professional economists fully understand the economy.

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In all honesty I do not believe that professional economists fully understand the economy.

There's a great article in Harper's this month about this same subject. I'm with Galbraith (a pro economist), who thought that economists were collectively out-to-lunch. After expressing this opinion in my first micro-econ class in grad school, the professor (who is one of your colleagues, I think, flea, so I won't mention his name) went out of his way to heap scorn and derision on me.

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All the talk of the housing bubble bursting has me kind of terrified, actually, since I'm buying a co-op RIGHT NOW.

I just keep telling myself that we're planning to live there for 7-10 years, and it's in a transitional neighborhood in NYC's hottest borough. Even if the bubble bursts everywhere else, nice apartments in Brooklyn near the park will still be valuable. (Also, interest rates are just ridonkulously low right now, and we have to move in March when our lease is up whether we buy a place or not. So there.)

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In all honesty I do not believe that professional economists fully understand the economy.

The old joke is that if you put three economists in a room, you'll get four theories.

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From town politics I get the impression that contractors would like to build more low and middle end housing because they move quickly. However, the town wants mostly high end housing because it raises property values and tax revenue. At least that's how it works around here. Also, if you get city council people in a private conversation you can uncover racial reasons for limiting lower end housing.

I think you are right on both issues. A lot of zoning and other regulation limits the building of apartments and reasonably sized housing. And not doubt racism plays a large role. Similarly our tax code helps: it would make sense to replace the mortgage deduction with a tax credit that is neutral between rental and owner occupied housing. Going further back, the old VA loans biased the process towards new homes, because for a long time those loans would pay for buying or building a home, but not rehabbing one. (That changed, but way too late.) Other things was the whole process of "redevelopment". Another was the fact that a lot of homes knocked down for freeways, highways, roads and so on were never replaced. Another is that pre-Reagan we had 65 billion a year (in Reagan era dollars) that went into building low income housing. That was reduced, then eliminated, and never restored. So we have really screwed up housing in the U.S. in a lot ways.

And flea nails it:

In all honesty I do not believe that professional economists fully understand the economy.

Oh and Tommyrot, I think the short answer to your confusion is that homes are overvalued, but given that people borrowed a lot on this, a drop in values will hurt the economy. The fact that a drop is harmful AND probably inevitable is one of the reasons housing being overvalued is a problem.

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All the talk of the housing bubble bursting has me kind of terrified, actually, since I'm buying a co-op RIGHT NOW.

I think the "burst" will be a lot less in places like NYC and SF, since there is high demand for limited space.

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The 2006 Year-End Google Zeitgeist is out.

Damn, I don't even know what the number one search word ('bebo') is... I am so un-zeitgeisty.

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