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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Mary Cluney who wrote (189055)	5/12/2012 2:16:16 PM
From: koan	Read Replies (1) \| Respond to of 541986

That is such a good post and really gets to the heart of the matter. People generally do not understand reality which has complexity as its major ingredient. Exactly what Nassim Talb was getting at in his book The Black Swan - guarding against something you not only can't see, but cannot even predict. The human talent is our aiblity to handle complexity, but it does not come natural to us. Krugman prefaced his last book on the 08 crash with a simple economics example that showed how complicated economics is at even the simplist level. He believes we really are just still learning economics because it is so complicated. Statistics, economics and even philosophy at the highest theoretical levels can unvail amazing probabilities/realities. Few have any understanding of these realities. Most people take any complexity, even stuff as simple as the writings of Ayn Rand, and gestalt it into something simple (but not real) they are comfortable with. People should not try and make stuff simple, but try and see the full complexity of things. And not worry if they cannot see it all. I can't see the highest levels of theoretical statistics, but I know they are real and respect them. E.g. the death penalty is stupid because everyone who commits heinous crimes does so becaseue of events beyond their control. Liberals sort of know this, conservatives have no idea. So yes, society has to separate them, but not kill them. <<Housing is ony one component of a very complicated economic system. Krugman is an economist and by almost any non kookoo standard he is pretty good at it. Housing does not stand alone in a neighborhood, city, region, or a country. It is part of an increasingly complex global juggernaught with massive amounts of incomlete real time inputs challenging the most sophisticated super computer algorithms. There are all kinds of people trying to game a system that is almost impossible to understand. Even the super brains at JP Morgran's risk management unit in London with their Monte Carol super computers simulations find understanding humbling. Anyone speaking with any certainty on this subject can not possibly have an inkling of understanding the the situation.

To: Mary Cluney who wrote (189055)	5/12/2012 7:55:49 PM
From: Steve Lokness	Respond to of 541986

<<<<<<Krugman is an economist and by almost any non kookoo standard he is pretty good at it. Housing does not stand alone in a neighborhood, city, region, or a country. It is part of an increasingly complex global juggernaught with massive amounts of incomlete real time inputs challenging the most sophisticated super computer algorithms. >>>>>> Krugman would agree with your conclusion - and I believe that is wrong. People have no sense as to the importance of housing in the economy - because it is such a huge market and basket of only slightly related products it is hard to grapple with the size. In any case as I have been trying to explain, if housing drops from 1.5 million units - to 1/2 a million units, the trickle down effect is huge. It really is. ...........In the past (pre Greenspan), when recessions hit, interest rates fell and housing picked up and drug the economy along with it to return to a robust economy. Greenspan who thought he had found a way to prevent downturns in the economy (a fact he now admits he was wrong about) kept interest rates low that in turn led to the housing bubble. So THIS TIME, we don't get an increase in housing because we already have too many. Soooo, housing can't boom and can't drag the economy into better times. Sooooo, we stagnate. Sooooo Mary, think of every item to go into a house; take lumber for instance. If housing number drops by 2/3's, what will the lumber mills do? The inefficient will close and others will downsize and lay off workers. If the mills close, what does the logging company do? they too have to downsize and shed workers. If the ogging company lays off workers, what does the chain saw shop do? It is a cascading event. .......If there is too many houses already - how do you bring that demand back? Simple - you DON'T and no matter how much pontificating that Krugman does he can't change that fact. Now multiply that story with every single product in a new home and you can understand the point that housing is unique and it is huge!