29 Burst results for "Schiller P E"
Los Angeles-area home prices are still headed higher
"Points. We are seeing home prices in the Los Angeles area taking higher again, according to the latest CORELOGIC as some P Case Shiller home price index out this morning. Showing home prices at 1.1% months a month in a 5.3% over the fast year in Los Angeles area in the Bay Area prices of 0.9% monks a month or 2.5% over the past year and in San Diego prices of 1.1% months a month in 5.5% over the
S&P CoreLogic Case-Shiller: US home prices rise 3.9% in July
"Home prices were up in July U. S. home prices rose at a faster pace in July is the housing market continued to show strength in the midst of the corona virus outbreak help by extremely low interest rates home prices continue to be pushed higher by a shortage of available properties the S. and P. CoreLogic case Shiller twenty city home price index was up three point nine percent in July compared to last year and that was even better than the three and a half percent gain in June home prices in Phoenix rose the highest at nine percent while the smallest increases were in Chicago I'm showing up where
U.S. home prices up 4.3% in June
"Those numbers around today. 4.3% growth in June. Which matched the growth rate in the month of May. And if you look year over year, so if you compare this June toe last June, prices in the 20 cities that case Shiller kind of takes a look at Up about 3.5%. But we know of course, that's very localized in there is There is a negative price effect in places like San Francisco and New York City and more positive in less dense areas, even in places like Lake Tahoe. Incline village, their number of places that are doing much better than that. So as usual, it's very localized in terms of real estate in terms of office
Seattle-area home prices unscathed by coronavirus pandemic
"Slowing or stopping local economies, But one aspect continues to grow. That's home prices in Seattle, they grew faster than nearly every major city in the country in April, except Phoenix, according to the Case Shiller home Price Index. The Times reports. The combination of historically low mortgage rates low home inventory and by our demand helped push the prices up.
US home prices increase 4% in April
"Proof that Colbert nineteen has not been impacting real estate values the prices of homes in the U. S. xcelerated in April at a rate not seen in sixteen months according to the S. and P. CoreLogic case Shiller twenty city home price index prices increased by four percent in April their biggest gain since December twenty eighteen home sales have declined sharply for three straight months to their lowest annual pace in nearly a decade but the supply of available homes for sale also has declined compared to a year ago forcing buyers to bid up prices Phoenix posted the biggest price gains with an increase of just under nine percent my camp in Washington
U.S. new-home sales edge upward in April
"New home sales bounced back in April after falling sharply in March the number of contracts signed by buyers to purchase a single family home rose almost one percent home prices around Washington a rising a little faster than some other big cities the March S. and P. case Shiller home price indexes prices in the DC area were up three point nine percent from a year ago the average among the ten biggest cities three point four
US home prices rose before viral outbreak shut economy
"Overall U. S. home prices rose at a steady pace in February before the viral outbreak shuttered much of the economy and caused a big drop in home sales the brand new S. and P. case Shiller home price index nationally rose three and a half percent from a year ago Seattle housing prices rose about six percent over the year looks like we'll see a higher open on Wall Street when the bell rings in nine minutes sent Dow futures up now four hundred twenty three at twenty four thousand four twenty two S. and P. futures up forty two Investec up eighty
"shiller p e" Discussed on Newsradio 700 WLW
"And P. CoreLogic case Shiller home price index rose more than three percent in January dowry Alden or ABC news for more the corona virus go to the I heart radio app and tap the podcast app for the latest news and information your next update at four thirty rob carpenter news radio seven hundred WLW in good to hallmark is donating two million cards to encourage people to send to friends family and others who right now really need to feel loved and supported just got a hallmark dot com slash care enough and sign up to receive a free three card pack while supplies last petsmart knows that animal shelters are feeling the impact of this crisis so petsmart charities the leading funder of animal welfare has committed up to one million dollars to support pets pet owners and shelters affected by covert nineteen smile direct club has opened its three D. manufacturing capabilities to help produce critical personal protective equipment and medical supplies for workers on the front lines smile direct club is able to print seventy five hundred medical grade facial today and has already shipped the first order of one thousand to Saint Luke's in Boise Idaho nice to have something to smile about we'll let you know about others as we hear about that yes Mister motor coach the elected tanker from the daily ride to the tractor or more firearms to change old you are constantly trying to make them work better last longer and fuller code loves tinkering it's Riley's Marmon Ardsley four PM most truck stops call eight eight eight seven seven one fifty six fifty six click on motor K. O. T. E. dot com going this week but don't forget the garage door in the fishing boat you and your co are gonna.
"shiller p e" Discussed on EconTalk
"That storytelling isn't just about go to the movies or reading fiction. It's it permeates a lot of what of how we see ourselves in an of course that affects our behavior We'd had Yuval Harari on the program talking about his book Sapiens. The things I would like about that book either but it is correct that obviously that books about the myths we tell ourselves that we share and again we can debate about how how important those missile and actual behavior versus what we just believe in. Thank but it's a big part of life for sure. Yeah ah central to our feeling of self worth our achievements or me. What is the meaning of life you know for sure? So this book's been out a few months The part I like about the book is besides this idea that I do think there's are important in life. The other part of like about the book is the understanding that economics is not so precise Other economists probably dislike all of that What kind of reaction you been getting From from your fellow from your peers and colleagues but this was started out. This book started out three years ago. at the two thousand seventeen annual meetings of the American Economic Association. It was my presidential address so I presented it I to the assembled a big audience of economists only and I was a little apprehensive but nobody booed not one and I got applause afterwards maybe ovation but it was applause. So yeah but I you know I think that academia is like that people who say something interesting well always be controversial take Milton Friedman for example he has he brings in strong feelings and he might have been right about some things wrong about uh others but he was came up with interesting thoughts. And that's the best I can hope for not to be see that great. Maybe but to be provocative and that's an interesting narrative. Of course we could tell about ourselves about our career and what we think we we ought to be doing Let's let's close with Policy you do you close with that as well in the book You know one reaction to this kind of approach that you're you're suggesting is that well maybe narratives do matter but we're not really good at understanding. What narratives rise to the top of the viral scope and become viral in which which ones don't and although it might be nice to have some narratives rather than others we don't know how to create narrative certainly the communists it's not our specialty? We don't have any comparative advantage in that What are the implications if any for public policy and how we ought to think about What economists are other should be doing if narratives important as you suggest my book is in some sense a research proposal but not for me we It's outlining what I think will be happening. Over the next thirty years it'll be advances. In neuroscience science coupled with advances in digital text searches and semantic search will have a better idea of the human mind as it relates it to human activity. So I asked for policy makers I I think that a lot of economic policy that is effective already uses narrative economics but they just haven't quite Understood it as well as they could so for example with the great recession government central banks all over the world where stimulative but on top of that they tried to prevent a catastrophe narratives from blossoming so bailing out companies this was a controversial or banks or supporting them in various ways was and remains controversial but they felt they they had to do it when northern rock collapsed in two thousand seven the UK government rushed to rescue the depositors because they thought we don't want another rebirth of bank runs stories. I think people know that who have some knowledge of history knows that you ought to attack. Jack bought her bank run at the very beginning. Because even solid banks can succumb if the public panics too much so they did that but I think they I did it with It took some intellectual courage for them to do things like that this unconventional policies they were basing it substantially on how to reassure the country how to keep morale up instinctive things but I think that they could be more secure in their knowledge of what they're doing if we as a profession made more part of our curriculum the effective narratives and how to understand my guest. Today has been Robert Schiller. His book is Narrative Economics. Bob Thanks.
"shiller p e" Discussed on EconTalk
"I know you know this. Because you're a teacher One of the most shocking things as a teacher is that students will not be able to answer a question that you've talked talked about more than once and you say well well. Why did you get that right? I never heard it before you think. Oh yes you did. I told you three times but it never went into. It just didn't go in. It's it's like. Yeah it's like some people listening right now. They've heard the name of your book mentioned at least once maybe twice. It's called narrative economics. I WANNA thank by the way Plan Tron for providing Robert Schuller's a headset today. And some listeners have wondered is Econ- talk now taking money from plant Onyx onyx which would be Kinda Nice or not but we are accepting their headsets which we are then shipping out to to Guess when we're not doing a face to face interview and this is being done via skype and I'm just I'm grateful for that instead of having to spend the money on the headsets. We can use that money to spend on other things so so For those who've been wondering about that That's what what that is about in the third edition to his principles of Political Economy in the eighteen thirties. David Ricardo who is one of the dominant economists at that time in his preface to the book to the Third Edition said I am now adding a new chapter chapter on machines and he said I've been thinking about since Luddite. This is like twenty years after the lights. I've been thinking about. Ah I used to think that economic progress for all really was for all that there was a reason to believe that. But he said I'm thinking and it might not benefit everyone equally and I think modern economics has to agree that it might not. Oh there could be income inequality replacing say the most simple forms of labor. And or it. Just it's a concern even though we don't know whether it will happen that's a perfect example because What I was GonNa say before is that even though I've mentioned the name of your book a couple of times There are thousands of people listening right now who not only have forgotten the name of it but they've forgotten who the name who my guest is. They might get your first name wrong. They might get your last name. Robin Roberts Szilard his book Narrative Economics but we understand in marketing. They know this very very well that people forget stuff they don't see stuff in the Ricardo examples. Fantastic example Bob. Because he's one of the least read people in human history who's important intellectually. He's not a great writer We have all of his books available. I think we have is collected works available online in some fashion in at a website for Liberty Fund. Either in the online library of liberty or library. Economics that liberty. But it's He's not a great writer. He hasn't read much. I've never heard of that chapter. I'm looking forward to trying to dig into it now but my point which is a little bit roundabout sorry. It took so long long. Is that even. If stuff showed up in the thirties in his papers about technological unemployment and and fear replace being replaced by automation. How many people really noticed? I mean howdy. That's another problem with your theory. Unfortunately which is you know what's published and what goes in what is absorbed by people in their. It's a whole other question. I actually raised that question in my book. I talk about a news New York Times writer. Tillett surprise winning later. Arthur Arthur Crook who said in one thousand nine hundred thirty two. This is the worst time of the depression. I like to go off on a tour of the United States and just just talk about the depression and that people talk back to me. What what do they say? I WANNA hear America. And so he came back and he wrote for The Times a story about what he heard and one thing that he said. Hardly anyone told me about a book they were or anything solid and it was all just off hand remarks so for example. The taxi driver volunteered to him. He said you should go out in the in the alley behind those restaurants over there late at night and you'll find unemployed people eating garbage hotels throw that the restaurants throw away end and of story. That's the way it goes it it. It's not People in eighteen thirties generally didn't read David Ricardo. Either it's off filtered through by little stories like that one that the track maybe the academic scribblers to quote canes have influence but it's not direct influence. It goes I from the the book to a scholar and then it goes to some imagery and a and a story. That illustrates straights. It and then it has its influence. And I'm thinking about the fact that I think a lot of Americans who pay attention to this think that it's a small all group still but that FDR listen to the general theory of canes and then decided to increase government spending. And the fact is he didn't in particular he met canes wants I think didn't particularly at least he said he didn't wasn't much taken by him He didn't spend that much more. It was enormous enormous response But that's a narrative that we tell that that's the canes help the US get out of recession Because his book taught at Ah Politicians about what to do you talk about the laffer curve in your book. And I thought it didn't mention the Keynesian multiplier but both of those the laffer curve and the Keynesian the multiplier or stories that economists tell and the politicians love because they both suggest that a free lunch is possible. Supply siders believe limited evidence for this but they believe right we cut taxes will stimulate the economy and get in. Fact won't even lose money we'll have more revenue and then on the other side we have Keynesians who believe and again. I think the Eminence for this is limited but they believe is a narrative that if we spend and more it'll get back in the form of higher taxes because the economy will grow and won't be deficit won't be a big won't grow the deficit it'll take care of itself itself and so on and so forth and both those narratives are extremely dubious in my view. It certainly in any magnitude. That's precise and yet economists treat them Mike Their facts. Yeah those are by the way in both cases they aren't entirely original. Okay Canes multiplier it has and so does laffer curve. They had People going back in fact laugher says this. He refers pursue an Arab scholar like close two thousand years ago. Who pointed out that taxes will reduce economic activity? It's not it's not that but they were story well too. So why is Cain so famous well first of all. He wasn't good writer but beyond that he had a sense of marketing so he entitled his famous Nineteen Thirty six book. The general theory of Employment Employment Interest and money first of all that to say the general theory. That sounds pretentious. Doesn't it. Yeah on top of that. The general general theory generally refers to Einstein who was at that point at his peak popularity everybody adored Einstein and so he he he created and then he married a ballerina. Beautiful Bell Arena was a star and hobnobbed with the Bloomsbury group so so he kind of had an idea how to promote himself. Most economists. Don't do that. Why don't they do it? They have to read. DONALD TRUMP LEARNS PETR lessons about self promotion marketing matters and I've often an enormous fan of Adam Smith. He's another example. Where a lot of his ideas we're not original They ran other people who who wrote before Him who've been forgotton or literally ignored but he was a great writer and He still readable today. Wasn't just a great writer of his time his his peers. Many them wrote in ways that that were not accessible to us today. The styles vary Alien to US and He was also a great storyteller which is consistent with your ear theme that the pin factory which is his narrative about specialization. The divisional labor it turns out. I think it's true that it's not particularly accurate. He he didn't spend time collecting data on pins. But it's an enduring story because a capture something that's important and it appeals star brains and it has visual the images. I can picture of people making a pin in seventeen seventy six cutting the wire. Let's let's turn into a different aspect which you don't spend much time on the book which actually find I confess giving my skepticism. You know understand but I I have. This is maybe a little more appealing than the application economic fluctuations which personal fluctuations personal choices. We make these sort of the micro acre economics of micro super micro. How I see myself how I decide what to do with my life How to choose a career paths path and so on and I I wrote a story a while back called the story of my life and I think a lot of us tend to see ourselves as the star of a of a great great film That weird we are the some sense the script writer. We concede that there's some other people involved in the script but they all take an ancillary missile every role to our stardom. And I think that's a very powerful human experience that most of us have. I might be wrong about that. Alarms my wife sometimes when I confess this publicly because it might be just peculiar but I think it's somewhat true and that that particular focus of singer sells the storm may not always be so helpful. that it might be better. Sometimes I suggested necessay ourselves as part of an ensemble that we're not always the star Dr But then our natural impulse is put ourselves first and that we would profit in the world would be better perhaps if we start selves as part of a larger cast What do you think about that idea of of thinking of the narrative issue in our personal lives? Well I haven't actually pursued advising people not got to do it. I think that it's built into the the human brain that somehow I I wonder about animals. dogs do they have narrative in their mind Maybe they do. They don't know that they're going to die. They don't know about basic the basic reproduction. They don't know why they're attracted to a female dog if they're male but maybe they do have narratives. So it's it's such an in ancient ancient thing I read about Jane Goodall and her chimps now. They don't seem to have language but they do seem to have a search arrive arrive and they they they probably think something as well. I think it has to ingrained in built in Somehow Society diety is built around people who think they're the center of the universe each of them thinks that some way or other and it creates a sense of some kind of morale wral at that drives A successful human race. Push back on the ideas and your book. I do think that the narrators are extremely important They are how we think of ourselves our density our role in our families our role in our country our role on the world our role in history. There are central So I don't WanNa love about your book. Is it forces you to to to think about that and I think think I think it's undeniably true..
"shiller p e" Discussed on EconTalk
"About W- How your family will react Whether their children it'll be proud of their parents. I don't know but the neighbors will think I can't deny that and so I was arguing about the Great Great Depression in the Great Depression from one thousand nine hundred eighty nine to nineteen thirty two for car. Sales dropped over his about eight eighty six percent. I think it cost ninety percent. Drop now. You might say that's just a multiplier effect considerable so you can avoid it but look what people were saying and it seems like there was a change in attitude brought on by the Great Depression. People love to talk about that change in attitudes sent and they'd say you walking down the street. You can get a different vibes. They didn't say vibes. Something like That women's skirt links went went down. This is the famous star. It sounds crazy but The roaring twenty s were short skirts and women drinking and Frolic Alecky and the thirties. They they started going back to church. That was their story about their time. We've we're more sober. The time and some people said you know people are just nicer now part of the reason. You don't buy a new car in the Great Depression is the family. Nexstar store are the breadwinner is unemployed. That children come home. Come over to your house asking for food. You're you're not going to buy a glamorous new car at that time it just doesn't feel right so I can't prove it but economists do so so many things that can't be proven already. I think this goes into the mix I like that and I. I also very much like the idea that that we're very sensitive to how we're perceived and our reputation what our neighbors think of us and I do think that's been neglected. It's it's all in the theory of moral sentiments by Adam Smith by the way is my listeners. All too well it's a great book yes it is and so I have no I certainly agree with that. And I certainly think we've neglected those phenomenon our social connections and are I would say also just the stories we tell ourselves about our identity. I think the bigger challenge for the stronger claims in the book is that. It's not obvious how we would distinguish you know these explanations for more traditional ones in what what's causal versus reacting. You're aware that obviously I'm not. I'm not suggesting it's not. It's not in the book. Obviously you understand that we were pushing this as a way to get us to explore this a lot of what's in the book. I should like readers now is is trading reading narratives as as epidemics of of belief shared beliefs that we can track via In modern times if you google we can see how frequently were show up at least in books certainly in on the Web and that tells us something important about at least how we see ourselves. That's where I am certainly in agreement with you well okay so Nowhere to go from here. That's okay I I. I think I think that profession- swing over a decade. There was a a mathematical economics. A more than one decade where general equilibrium theory was the hot stuff. And then you know it. It's itself an epidemic within the academic community and then it has started to fade And I think another thing that is happening and it's coming back reflected reflected by the Nobel Prize this year To the flow Banerjee and creamer is experimentally. The economics That's that they could have done that. one hundred years ago but I I can't think of a single example from more than thirty years ago. Isn't that right now. Vernon doing Vernon Smith was doing. Some I think in the fifties but not certainly not not in the first half of the twentieth century that again is I know of but what Vernice bet there's trying to is little bit different than what The Nobel laureates are doing in terms of development upman economics trying to understand what might be effective Smith and others were trying to figure out where the fundamentals of human behavior. which is you know? It's unclear whether whether we can generalize. I think there's an underlying narrative That we're not talking about. which is that economists? Think they're scientists In that precision that you point when I was off and missing is makes most economists very uncomfortable and so They like they have a narrative about themselves that that they're doing something akin to quote real science so I tell my students to take risks at not necessarily in the direction of behavioral economics. But there's a lot of prejudices prejudice. I did this is in academia. And you don't want to be the mild mannered guy who doesn't disagree with anything. That's not a route to your success. I mean I mean. This book is whichever Nobel Prize. You can certainly take a few risks without various many costs so this is risky book. Certainly in that sense talk about one of the narratives in the book that You spend some time on that. I think about a lot which is automation and its effect on jobs. You point out that this is a A very old narrative of fear that automation robots technology will eliminate a human unemployment and lead to therefore social crisis and disruption explained a little bit about the evolution of that narrative over time time. And where do you think it stands down and and again why it's important for the narrative goes back over two thousand years to aristotle. It's only alien one paragraph in all of this works but he does say that He doesn't actually do use the word automation that goes back to I'm sorry I'm being discursive here. It was homer in his Iliad uses the word Automatic Matt Tomato I guess in Greek to describe some devices called the tripods of this little. They were a little bit like robots. It's there in that book this amazing but then Aristotle also talked about a mechanical loom if I was a future future and I don't think it was. It was a dominant worry a week. Narrative in the ancient world Starting with the turning point came in early UK where again it was loom. Some people who Luddites they were called who STAGED A protest against mechanization. Then Eh then went onto the title of neighbor neighbor reducing machines are devices and then it got changed to technological unemployment and then it got changed to automation and then it got a different words describing the same thing now. The term that is most viral is is artificial intelligence or machine learning. But they're all referring back to the same fear that people have about being replaced or you might say fear of not being able to find some other work That is even puts them in an even better place so all on people would point out that when you lose your job to a machine. WHO's to so you won't find something even better and more rich country so that that's been a competing narrative all along but it's not as powerful as is interesting not as contagious so we tend to get thrown off by the more contagious version of the Frankenstein? Narrative is a variation on that right. It's that that human creations human interference with nature will lead to destructive unintended consequences. That we won't be able to control that will spiral out of control and so this narrative the one you're talking about with automation. Did you say it's a very old narrative it's at least least you could argue its thousands years old but certainly at the front of many many people's minds it's it's hundreds of years old and I believe it's a false narrative okay. I might be wrong but I think generally until now at least it's been a false narrative it has not been the case that automation has reduced the number of opportunities opportunities available human beings. Certainly it's reduced the opportunities to some types of skill at any point in time but it's a false narrative. So here's here's my question I don't think it's a narrow that has much significance except as an entertainment the equivalent of say a horror movie people go to harbor. We'd like to be scared like to A. B.. Imagine the worst got quite sure why. That's troops are this good books written on that but I don't know them but I don't think it's affected had much impact on economic policy. See I don't see outcomes right. The human impulse to create is unabated continues to go forward. Technology continues is to advance and even though people were scared about driverless cars which I think are unlikely in the way that people used imagine them even five years ago but people people are worried about him because a will do to cab drivers and others not stopping and going forward. You just keep going so does that narrative matter other than as an entertainment mint is a way to to. I scare ourselves the equivalent to reading. Say Frankenstein by Mary Shelley. Well Franken. I WanNa talk about Frankenstein. which seems more the idea that I might be replaced by a machine? Gene is not parental not always prominent. And I don't think it's particularly prominent now despite all the talk about artificial intelligence but it does at times seem to affect people's judgments about whether to spend or invest notably the Great Depression that was a period when there was a lot of fear of robots replacing jobs and as I show him Ibook lots of people thought that was a real thing obviously was not. But if you if you look at newspapers of the day that was dominant story story and then then let's get back to thinking about decisions If you interpret the high unemployment of the Great Depression as possibly due to technological unemployment. Isn't that going to A. Why wouldn't that affect your decisions? Whether to. Let's take a big vacation right right now and Or buy buy cars instead of one. You would want to save as more because you you think you have a bigger cushion. That's rational response to such a narrative. So we know that the narrative was prominent and we we know what a rational response would be the narrative so why are we doubting that. It was important at that time and I think now the artificial intelligence narrative it may become more ominous if we hit another recession then there will be people saying it's due to machines and then there won't okay any way to prove they're wrong. Well I guess I guess one way to look at it as you're suggesting is that might not affect public policy because that's more complicated but will affect people's attitudes attitudes towards their future and that'll in turn affect their decisions to investors or save and. I suppose that's true. I guess the other thing.
"shiller p e" Discussed on EconTalk
"Have to say that I have no idea if that's true You could make a claim I've heard people make this claim. Smart People Actually Ah should add that yes. He deserves credit because he's deregulated some parts of the economy that didn't shouldn't have been regulated as much and that's stimulated investment. Some people would credit credit is tax cuts but other people point out. Well Gee the biggest thing he's done is he's put tariffs on that. Usually we would suggest slow down economic activity and and yet Ghani's bubbling along. So that I think the question for you WanNa try to pin you down a little bit here. The question is if you wanted to understand why the economy's growing doing so well many many months into what is a very long expansion. Now is that you think due to beliefs that people hold or is it due to actual will policy and changes in economic incentives. Well the answer you might expect from me is it's both. I knew you'd say that but go ahead keep going. Why not a simple world that we live in? But I think that we don't want it -SSUME that trump's effects are mainly through taxes taxes and tariffs the like that's an economist Six ation to dominate that. I think that also is just a general sense of life that he gives. He's a success story that obviously people will want to emulate relate is the most famous ban and it one thing that he stands for is Austin tasteless living he. He boasts about About his glamour. Hotels and clubs and the like He writes writes books that are Motivational inspirational books. He tells you. Don't be afraid of boasting because you you know realistically people won't hear about your success as she don't boast about them so go ahead and do it that the northern sort of not exactly quoting him But it's something that it might annoy them to hear your boasting but it will be a good thing. Do it what he says. And maybe he's right. Millions of US are probably reconsidering. Have I've been too modest. And why have I tried to live a modest life. The success story is to go for the Glamour and I think that sort of thing might be more important than the tax cuts in effecting the stock market. So I'll come back to that in a minute but I'll just ask the simple question. How would you now well some? AH PEOPLE ASK US for our opinions. Okay as economists and opinions are part of the human a AH well-considered opinions about the economy or politics are difficult to pin down. Nobody can prove what's going to happen. But why are people are people who have studied a number of different elements of drivers is in history. And who who are not fixated on one model that is thought to be. Glamorous and the model itself is a narrative one among many. So yeah. It's you know. Economics is not not an exact science. That's what Alfred Marshall said over one hundred years ago the smart man his textbook principles of economics economic. It's pretty good. I was thinking designing now. That was eighteen ninety when he wrote that. It's a good book a lot of insight in there for sure it's on our website you can. I'm pretty sure it is we link up to it. You can read it today for without charge on the web but I guess the question I'm asking is that here's my my skepticism. I am I am comfortable with the idea that that a president like trump could encourage people say to be less modest and more boastful. You're making a boulder claim. You're saying it's not just that he affects the culture and of course there could be a bunch of people are going to start living in huts because In shacks and Thatch Roofs. Because they really don't like president trump. They're GONNA go the other way but I understand that. His cultural attitudes could affect our culture. You're suggesting it. If it affects our economic behavior a defects are decisions about whether to spend invest and that in turn affects business fluctuations. Correct right so how do you decide whether to buy a new car and on top of that you have to decide whether to buy glamour car or a cheap cheap car right. Yep what goes through your mind..
"shiller p e" Discussed on EconTalk
"It's just yeah it's growing along if you do it on a log scale. That's growing along like a straight line with little waddles around it that that is forgotton. Newspaper writers have to keep generating news okay. So they don't like to point out that this is kind of not that big a deal but if you look at the whole plot you do see GDP made some major swings right at the beginning winning with the Great Depression. Sure and then the hugest expansion of all was the Great Depression returning into the World War. Two this reminds me why it isn't a particularly good idea to take GDP as a sign of prosper of of Human Welfare because World War Two. We wouldn't want to go through again but it was. It was was a very high time for GDP so that was a story. What why did we have World War Two when a stupid thing to do right it then do anything good it was? Because of Mr Hitler's stories. You Know He. He was totally dishonest and angry. I angry man is entertainment value. It's it's fun to look at some of his speeches. I think that's why people don't recommend that you do that. Because they're afraid you might like like it but I think you can see how it was amusing. The guy was a showman and he. He kept performing his art in rallies. So World War Two was the biggest expansion of all that from the Great Depression and World War Two was was dominated by story stories. The stories of the Great Depression and the stories of live liver die In in this horrible war. We're we're great depressions at interesting example sample Point on the program that you know the cause of the Great Depression and the cost of its end their bunch of narratives about it They're all interesting. They all have babies something to say about them. was it was a cause was where we're was. The Great Depression caused by a run up in the stock. The crash of the stock market was caused by the bank runs was caused by the forfeiture of of mortgages and and farms and its impact that spread outward was was it caused by smoot Hawley. Tariff was caused by a contract to the money supply was caused by the failure of the Fed to respond to that so on and so on and so on and then you have similar. Or why did it end. Well for longtime people thought well it ended because of the new deal then conduct closer. That's narrative didn't hold up so well so then it was. Oh it ended because of the war and I view that narrative is not so convincing as you point out. It's not a wasn't prickly prosperous time. Forget the death that that that's obviously a bad side of it but just you know. It's a huge measurement problem after the war. Excuse me during the war is the work came to an end. Columnists like Paul Samuelson and others said we're going to have a major Contraction of depression in Grand. US spending government spending could collapse which it did but the depression didn't happen we to narrative but there was pent up demand for for vacations. or You talk about there was pent up demand for you know Appliances is. This is just again it's to me. It's just storytelling. I don't think we have a good idea what actually caused or ended the Great Depression. Okay so My take on that. It's true there will be many stories. They're all part of it. We you have to do an accounting so this sounds like an academic thing but we want to do it because we're scholars right so it seems to me that those those narratives each had contribution some going the other way And you have to. You have to under trying and you understand. The phenomenon of the Great Depression is the important phenomenon to try to understand the war which might have been generated by in response to it. In fact you know when Hitler took over in Germany it was a time of high very high unemployment and dissatisfaction and anger in Germany about the employment. That situation so my thought is that we have to understand the real living in a jungle of narratives. There's just so many of them. Some of the more prominent than others and some of them having different economic consequences but we have to start classifying them and chronicling them and understanding that evolutionary dynamics epidemics going viral matters and it will always be a little difficult to do the summation into explain how much various stories affected the economy. But that's the only way to really approach and understanding of economic fluctuations. You have to look at all the things this is macro economic. Is this some of everything so let me take a broader narrative. That's increasingly common that the current state of the US economy on me. I just interviewed In you mean Applebaum about his book. The economists our in in that book that has come out yet but it will by the time this one airs that we're having in that book. He argues number of people who recently That somehow free market economists became dominate. Take public policy. And that explains the slow growth rates in the United States. In the last fifty years the slowing growth rate it explains the rise. In inequality explains the death of unions explains the mediocrity of of standard of living for the large group of Americans. And I listen to this narrative about four FISA. Visit rings false to me. Factually but okay it. How would we know whether that narrative? which is you know comment on on many in in many media sources whether that narrative is first of all whether it's true and secondly does it does it matter? Is it going to make it more or less likely that Say a different kind of policy is try to the United States versus it is it just. Entertainment is just something we tell ourselves and like to to talk about drama. Well I'm arguing that it's not just dry. It's revealing human patterns of thought and economists have to pay attention to this realistic save. People are maximizing expected utility taking account the time series these properties of interest rates at Cetera. It starts to sound like storytelling also in people are not not forecasting interest rates with any care or diligence. They never read the paper They'd never read the interest rate. They don't know even know what it is now now so to say that those stories are dominant over stories. That people actually talk about seems to me a mistake and that we can correct it but it will it will involve the macro economy is sufficiently complex that we won't have certainty as to this accounting of story we'll have we'll have Better insights into what drives things. But Wha- WHA- it's a it's a tough problem to understand economic fluctuations because it's it's millions or billions of people involved it's is more worldwide now and to me it's really just so striking how narratives spread so I'm thinking of The Donald Trump narratives is the most famous man in the world and it happened suddenly and it has economic consequences Where did he come from? So he around for fifty years before that and we weren't paying any attention to him or how about Greta a tune. Berg she's sixteen years old and suddenly she's exploded to one of the most famous. Maybe she is the most famous woman woman in the world now famous sixteen year old woman. I'm sure of that. And and she has an economic message which is to cut back on spending so and return to an earlier time to say that that is not relevant and that the idea that people are optimizing their consumption in respect of interest rates. Ivette more on Antoon Berg interest. I don't mean to diminish it interest rates matter especially for home purchases. They look at the monthly payment and and then that affects how much they think they can own so it definitely matters. I'm not but that's all. I'm just trying to bring what we haven't understood so far so the let's try to hone in on this a little more Precisely it it's It's December six today. It's a Friday. It's the first Friday of December said so the employment numbers came out a couple of hours ago and to the surprise of some economists forecasters who make a living or try to make a living. Doing this It was it was employment was unusually unexpectedly robust increased by two hundred sixty six thousand. The unemployment rate fell to three point five percent. And I haven't seen it but I'm sure President Trump's going to trumpet if I may say so the these numbers and he's going to tell a story that that this is due to him and I have to say that I have no idea if that's true You could make a claim I've heard people make this claim. Smart People Actually Ah should add that yes. He deserves.
"shiller p e" Discussed on EconTalk
"Twenty nineteen and my guest is author Communist and Nobel laureate Robert Schiller Oviedo. Oh University where. He is the sterling professor of Economics. He appeared on E. Kentucky in September of two thousand and eight talk about housing and bubbles his latest book and the subject. Object of today's conversation is narrative economics. Bob Welcome back to contact my pleasure. What do you mean by narrative economics for me? Narrative economics is the study of popular narratives that relate to economic behavior. People change their thinking about economic issues sued time and this causes events economic events. I believed and the form that their change of thinking takes is stories. They don't write down equations or draw diagrams they they they tell stories narratives stories with a bit of moral to them or more are lessons in them and then if those stories go viral we see economic changes so the idea is to study them to Cadillac narratives. The group group them look at their history. We have occurred before however they changed. That's the idea along the way you talk about a little bit about the neuroscience of of this idea and it certainly we as human beings like stories were attracted to stories where we're more likely to remember remember stories that's right And this has always been true. Book I can recommend is The Roman Senator Cicero's book written two thousand years ago on rhetoric artery And he tells you how to make your speeches into a story And I think that Good speakers have learned how to stimulate audiences so that they'll talk about it and remember it. That's going fire. You could go viral role in ancient Rome. They did this are dead. We still remember him. This is true. I'm reminded of DEIRDRE. mccloskey's series of books on the transformation of the world standard of living were argues that the belief the belief that it was okay to be Schwab the belief that it was honorable to Lead what we would call a middle uh-huh class or successful life helped create the conditions that lead to more and more people Having that standard of living and I'm a little bit skeptical that argument. But that's the kind of argument that you're making your out this book. Yes that's one example of a narrative that's peculiarly early American narratives. This country was founded on people who were refugees from economic. And other stresses and who heard about this country that there's no royalty over there they don't believe in aristocracy or any of that nonsense. It was a powerful narrative. And it's still with us and it still helps define America. Well interestingly her her narrative begins in Europe And you know with with Smith and others who who created this idea of of growth and prosperity as what you might call and you referred to this idea. Number Times in the book is a self fulfilling prophecy or a self-fulfilling narrative and certainly There's a psychological psychological theories that if you believe strongly enough in something you raise the chances of of it happening for yourself confidence in yourself. I'm a little bit skeptical about all these arguments that they tend to abstract from or dismiss Underlying what what would be traditional economic arguments for economic change and economic events I I guess the the question that that came to my mind reading your book is how do we know that. These stories that we tell ourselves and that becomes shared stories raise which is crucial for this You know becomes a national story in the case of America's you're talking about. How do we know they're not just what we tell ourselves that that our beliefs are just sort of window dressing what we actually do care about as opposed to causal first of all? I'm not dismissing traditional economics. Adding a an element to them Secondly the if you doubt you what modern economics does is I look for. Natural experiments are do control experiments. In that regard I can tell you that there's many controlled experiments armaments that show that narratives affect human behavior and these controlled. Experiments are not macro the economic experiments. Those are very difficult to do Ethically problematical but they are experiments. They show that people respond to stories in fact outside of economics that's in marketing or in journalism and communications our other departments. It's just It's perfectly natural at one of my book. Talks woman came and it was a journalism person and her questions she said. Why isn't all of this? Obviously true So I don't think it's completely obvious but Ask what is really changing talk. Yeah sometimes you know when they invented locomotives that was a technological thing that we had economic significance. It's and it produced a rail railroad industry but on top of that there was also the those trains where the coolest thing people wrote poems about when they first came out. Amazing seventy five miles an hour and it seems to be perfectly. They saved just amazing. This is the future here so the narrative was also part of the story. And why are we had bubbles in railroad stocks. When they first appeared food? I think could be true. That last part. I'm not sure that that's true. I think the I don't. I don't doubt I think everyone would agree. That that there that the products we buy can be affected by how we perceive their relationship to our identity for example sample what they say about us. And that's certainly part of our personal narrative right. I mean that's I. I agree with that but I think the broader claim you're making although you say you're not Dismissing Standard economic things. You write you. Write the book. Key proposition in this book is that economic fluctuations are substantially driven Evan by contagion of oversimplified and easily transmitted variants of economic narratives. That's wrong climb right that that's goes against what most backward communists believe. I'm I'm interested in the claim I think it could be true but most macroeconomists would say. Are you out of your mind. It's fiscal policy. Its monetary policy. I mean some people might say it's mostly monetary by it's mostly fiscal. But that's the debate. The idea that it somehow driven by say Keynesian animal spirits which we like to quote route but we believe that title with accurate off. But but what's your what's your response to those macro-economists who you say it's come on. It's not what people are what's not what's in the newspaper about stories that people come to accept. It's all about economic forcing variables of taxes and money supply growth or contraction. It's about spending well. It's difficult to embrace all of these theories but my first thought to answer that it would be to say we are undergoing a data revolution now. And it's going to change some of our thinking. We now have. Digitize is text newspapers books magazines. Diaries sermons all kinds of legal brief all kinds of things you can search and we're are developing tools in computer science at enables us to search these more so that means now going forward in coming coming decades. This data will be dominant in new economics because we can finally find out what people are thinking when Milton Friedman said. Don't ask people why they do things That was another day that was in another era of information at look back. Then that if you talked about those stories it looked kind of frivolous because you can't prove anything where you can't develop a concrete database knowledge about those stories. Well you technically could you could go to the library and ask for the Microfilm Room and you could spend years trying to find out what newspapers papers were saying by reading them without any ability to search them. But that didn't happen but I'm thinking going for we're going to see more and more. It's going to take take decades for economics to fully embrace. This is the new thing I think it will be the new thing and it will change the way we think about. There's another new thing which I don't stress as much in the book and that's Neuro Economics and the human brain as we learn more how it works. We don't have to build such abstract models of how people actually make economic decisions. We'll have more direct information. That's starting to happen too long. Going to stick with stick with the first part the increasing gator. We're going to have on what people said about. Various advances captured newspaper Sermons Cetera. Aren't aren't we really just learning about what people say they think matters. I mean to defend Milton Friedman for a minute I think I think he would argue that And I know George Stigler like to point this out as well that when people do things they might say why they do things but that often isn't what actually motivated them and argue more importantly we don't even. It's not so much deception of others when I answer that question. I deceived myself all the time. So survey data say which you refer to a little bit in the book. It's not the main point but survey data for example that asks why did you do. XYZ Why did you buy a house was motivated by speculative motive or not. aww How much those are interesting. They teach us something about what people say. Motivate some really teaches. What actually motivates them? Well I wasn't actually proposing that we asked them. Why did you do this that that is actually? I think that's a useful first step admittedly. Yeah people won't be able to tell you. Why didn't you buy a new car this year? When you you know charge sales have fallen in are? They can't quite say they're all they'll say something like like the old one is still working. I can keep it going. I didn't get around to it. They don't remember exactly. They can't articulate your Milton. Friedman was right on on this they could probably say definitively that something wasn't on their mind. I never heard of that but but in terms of what actually that is hard to explain sometime Or why right now at this time in history they say that. US consumption when demand is high. Yeah it it gets into psychology or maybe even into psychoanalysis now Saikal psychoanalyst's don't believe leave that to first explanation you'll give up. Your behavior is right. That's anathema to psycho analysis that you have a subconscious thoughts that I think And so I think this isn't in my book at all. Freud wrote a book called interpretation of dreams. This okay. So why did he look at dreams instead of looking at what people say it's because he believed long with Milton Friedman that you can't trust with the stencil reasons they give you have to listen to their stories. Dreams are stories. Here's another piece of information. Why evidence why narratives matter because they come to us in our in our dreams that are most undefended moments and they take the form generally of human interest stories about people? That's what you dream. You don't dream equations or geometrical shapes so there's something about the human brain. That is very attuned to stories and driving lessons from them. But the lessons might be hard to articulate and We have to work at it. So I'm not averse to letting some psychoanalysts into this game too but let's think about macroeconomics on accent and in particular the beliefs people have say about the state of the economy or thinking of Ed Lemurs Macroeconomic Gum Textbook. He says I think at the beginning. Very beginning of that book that human beings are Pattern seeking storytelling animals. Also and we have all these stories we tell about the economy Both everyday people but also as professional economists. And there's not that much evidence that their true You know just take the example. He points to if you step back and you look at the evolution. GDP over the last seventy five years goes up the down and up and down but mostly it's a pretty steady up between two to three percent a year. Everyone's Every once in awhile it. There's a recession and it gets back. Typically on track track the two thousand eight. Great recession may be an exception to that. But in general the economy just bumps along it bumps along the pretty much the same rate regardless listen. There's high tax rates low tax rates. Loose won all kinds of different. It seems to be very in variant to the things that economists are obsessed with and you know our narratives We have our own narratives. It's not clear there correct so I'm not sure I thought if your book wars knows isn't your main focus but I thought of it is illuminating the way we as professional economists have these somewhat absurd views of what makes the world tech on the left and the right we we we have different narratives depending on where our our ideology is but not obvious how how we know whether they're right or not. I don't think Korver good at that. Well I think we are affected as economists narratives as well so there is the recession narrative that has been top. Stop you there ever since the nineteen thirty seven thirty eight recession that you don't say the D. were depression. 'cause that's considered like shouting fire in a crowded theatre but it's okay to talk about recessions but you know you're absolutely right if you plot gross domestic product back to the beginning and the official numbers. That's one thousand nine hundred twenty nine. You see that most of the time..
Gold closes out 2019 with its best annual gain in 9 years
"Gold prices in the US rose faster in October as buyers competed for a limited supply of homes for sale the S. and P. CoreLogic case Shiller twenty city home price index was up two point two percent from a year ago September's annual gain was two point
Home Prices Rose at a Slightly Faster Pace in October
"U. S. home prices rose a tenth of a percent in October according to the S. and P. CoreLogic case Shiller price index year over year prices are up three point three percent among twenty largest cities Phoenix Tampa and Charlotte reported the highest year over year gains home prices in Phoenix were up almost six percent from a
"shiller p e" Discussed on The Meb Faber Show
"It's interest interest rates are fixed if you have a high inflation of a big rise in inflation. Their top line sales increase while they're big chunk of interest expense. This is fixed their margins improve. So this is the explanation for the empirical observation. That high yield bonds tend to do quite well in inflationary. Mary Environment Another group of assets would be all manner of emerging markets the currencies bonds local currency bonds and emerging market equities for the rather obvious reason that emerging markets tend to be much more influenced the commodity cycle and largely service oriented post-industrial economies characterize. The developed markets were cautioned and not every company or even every country in the emerging markets is heavily dependent upon commodities prices. So this is not foolproof nonetheless. Taken as whole all the emerging market asset class much more commodity sensitive and likely to do relatively well in I inflation environment relative to develop the market accountable. So I think that's sort of a structural opportunity do reposition portfolios towards better diversification and away from The mainstream stocks and bonds to the provocative such fabulous returns over the past several decades. It's funny you mentioned some of these asset classes. Investors are probably their queasy thinking about some of these because like commodities. I mean if you go back ten years maybe twelve years ago in. So how many of these were Kinda hot products where a lot of people are rushing into him at the time. When oil was peeking up around one hundred twenty eight hundred and fifty and everyone was was super worried about inflation? Of course and then you don't have much over the past ten years. I mean bank loans. That was such a hot category for years. And it's funny to think about. We often think about. We say what's going to cause people a lot of pain often it's environments where most of the money managers have an experienced financial crisis. I think was in many ways difficult call for a lot of investors because the most similar market in my mind was similar to the nineteen thirties. In you start to have at this point twenty coming around and twenty twenty. We starting to lose a lot of the investors retiring. Or whatever they're doing that were around in the seventies that experience that and their career and for the better part of forty years you no. It's been a story of disinflation or outright low inflation and be curious to see how many people are prepared for that for sort of environment so stay on policy a little bit longer before going full Canon ball into the investment world. Lot Of em-empty ideas and a lot of the ideas getting had abandoned about seemingly similarly come from the brainwork or foundation of inequality based on all sorts of different stuff and unionize paper a couple of years ago. But I think it's still relevant elven today on public policy profits populism and already the first sentence or two and then let you run with it but you said public policy. Prioritization of economic stability that it's coincided with slower new business formation fewer and larger publicly traded companies increase monopoly pricing power ballooning or promises sharp decline the cost capital and stagnating wages. Refocusing Policy Way from inhibiting change toward fostering growth through creative destruction would reduce polluted. Monopoly profits raise wages and increase yields on investment securities. Kerr's highly organized special inches profit handsomely from today's status quo stand in the way implementation of such healthy reform may fail POPs. Reaction could dramatically increase the cost capital and their are by raise the Labor share. Talk to me a little bit about this. This is as the new elections. Come down the pipe not too far down. The road gives your thoughts on this paper for and with a look towards the future. Let me talk a little bit about what I read. And how I come to this understanding and then relate that to the present environment in a little more colorful terms. I think I read a fantastic book. Several years ago by Edmund Phelps for those listeners you might be a little younger than me or not as frequent and reader of economic textbooks. Edmund Phelps is a Nobel Prize Win Economist. Missed who after his work that he won the Nobel prize he then went to when after the wall style and became an advisor. Eiser too many East European governments trying to help them make the transition from communism to capitalism and since returned and written his terrific book called called mass flourishing amass flourishing by Edmund Phelps and. He describes the problem that we have drifted into in many Of the most advanced economies in the world including much of Europe Japan and the United States and the US the current buzzword. What we've got is more crony capitalism than free markets? There's just a huge amount of time and attention applied by the world's world's largest companies to manipulate the system and the regulatory environment in their favor. And we have a set of governments events that knowingly or unknowingly and I think there's some of both collaborate and facilitate the capture of policy by large corporations. Sometimes sometimes it's completely just really unconscious. I would say for example Tim Geithner believing that bailing out all of the banks and all of the bankers were part of his social and professional circle since probably before he.
Home prices rise modestly while new home sales slip, but solid overall
"US home prices increased modestly in September rising two point one percent over a year ago according to the S. and P. CoreLogic case Shiller home price index home prices have been outpacing wage growth for several years in the markets constrained by buyers capacity to pay in the meantime the commerce department reports the sales of new homes dipped slightly in October slipping point seven percent last month but that's following a robust gain in September and new home sales remained a hefty thirty one point six percent above one year ago sales have been fueled by falling mortgage rates and residential construction I'm
"shiller p e" Discussed on Capital Ideas Investing Podcast
"Rated bonds statements attributed to considered advice and endorsement or recommendation any reference company product or service decisions and is not intended to serve as impartial investment or fiduciary advice American funds audiences in Canada please visit capital dot com slash ca for capital route insights for change frequently and has performance may not be repeated capital group funds are available in candidates registered a group dot com slash ca for more information American funds are not available in Canada for business in India the Maratha the liability of numbers is limited in Australia this communication dizzy by capital investment Sydney?.
"shiller p e" Discussed on Capital Ideas Investing Podcast
"The investments are not FDIC insured nor are they deposits of or guaranteed Sir recurring narratives have the power to shape our thinking and move our economists I sat down with Professor Schiller or Bob is he likes to be called on his home turf like narratives have in common with influenza which prevalent economic warriors with Bob It's well known that economists says both citizens and investors yet the professions prestige took some hits in Taylor who won the Nobel Prize in two thousand thirteen and who's new book Narrative Economics Schiller is sterling professor of economics at Yale a frequent contributor to the New York Times met Bob Schiller Welcome to Capitol ideas my pleasure let's just start from the beginning why and then as after many years in the science and appreciating much of what had been done arriving kind of blind spot in economics that you see can you talk a little bit about that yeah here mix it's psychology anthropology history political maybe the wrong word but you're you're trying to nudge the profession to say you need to get back to this kind of great recession is that they were not involved in thinking changes will take place over decades we have so much more data on what people are saying at this research can take a step back from minute kind of the the big picture a demon and the idea of contagious disease talk about that well very important they study epidemics they study diseases as we say the different models but the basic principle is an epidemic can grow only if the contagion so epidemic centers suddenly appear for no reason and then they go away for on an eighteen nineties in his book the crowd or Richard Affect in economics and that's really what you're trying to lay the groundwork for in you talk about that have been important in history and keep recurring but you what the stories are that people tell about them has should we think about that by economics it's a good assumption as far as it goes but it has limited value there were not completely and about what saving rate you should be using in your in your lifetime I think the fundamental imperative for science is you face up to reality I'm expression has been pulling back this is new with my book from maybe at the submissions we got for the annual meeting and I I have to say the under earth than it was half century ago so that's promising than you're you're hopeful and I'm thinking all of those things enabled us to get closer to what people are thinking what have been thinking in the past you say you're nine big ones that have recurred through history before we dive into the bubbles or booms and bus but what's the purpose of going through these narratives influenza that is always out there but it's often not growing and the people take heat of that and many or most of them get vaccinated I think dynamics people get interested in a narrative for awhile and it grows or them coming back so for example thought that the narrative of machines replacing discussion of that one there's kind of two variants you have in these perennial economic narratives on same more about both recurred through history but also why do you say that that could impact the current they did have things like water wheels that'd before Christ a long vo spread their thinking in colorful ways with human interest so the story of imaginary leader called King Ludd who nobody ever met who is he some of them punished for that that's a story that story went viral now gene this is agricultural machines replacing jobs and and artificial intelligence so automation you picture a factory with almost no agents is now with the machines are smarter than you are right and so you were saying encouraged by new inventions to scare people more and then what they would do Asian at home with the family and not to buy new clothes because right this issue of cheerful that you were then you stop spending and so each of these narratives has mike so for example driverless cars that's a sort of robot telephones in the nineteen thirties where they're actually being applied on a wide scale they usually a she would connect you and now it's a robot replacing her and it scared to put words in your mouth but your hope is if that narrative doesn't seem true to what is real your hope are professionals move into an epidemic region and they talked to people that's do this your neighbors are doing this and that actually stops the epidemic and so if thirty year horizon or who knows you're hoping that WHO Jerome Powell President substantially as make America great again the years leading up to the Great Depression and it worked for a while and then it failed catastrophically it comes in we still remember today an effort like it's did inspire people then and it would marked the turning point from the worst of the great lable this first fireside chats on the bank crisis and it's remarkable in his kind of patrician we'll get through this that's a reminder that we didn't need the Internet title ideas on Itunes is there more you'd want to say about those narratives on it seemed like this is the turning point there may well be a day when there is a turning-point but it hasn't been as predictable or as definite as you would have thought in the the horsepower of the machines in the world they had some fantastic number like billions great depression because it made everybody pull back and hunker down and that's right one the economy and markets how should we think about that narrative and what's the popular thinking not pretentious thinking and by reading newspapers to use a modern term more psychologically sophisticated the panic of eighteen thirty seven the panic of eighteen fifty seven the panic of eighteen seventy three the model of what could happen before eighteen fifty there was almost no use doc is going to go under he said you'd better get right down to the bank right now they've locked the doors and as a sign saying bankrupt that story got stronger save us from that panic he was a private financier so they decided to create an institution and that changed the language we don't have any more bank runs financial and bank failure and Washington Mutual Mu failure -bility psychologically like mass psychology deposit insurance and I private institution something like the Fed was informal bankers would get together but then we decided to formalize that with the Federal Reserve now one of the hitting episode of William Jennings Bryan and the desire to have silver bimetallism is a little bit like Bitcoin is a new monetary standard you're in the Midwest at that time it was a story about the people they had debt and they couldn't pay the if became an emotional cause that crowd of angry people the Student newspaper published an apology the people like William Jennings Bryan that some of US still remember today over a hundred years runaround monetary policy debates and desire for gain this was somehow corrupt or immoral and debasement of virtue I guess but really yes toby come back trump's voters call them stupid it's an insulting Nice people cut off spending because they want to boycott the evil people so what's The relevance Kazan of something that's become a name or a narrative what's the relevance of that older hi Dea should be both silver and gold backing our currency and so I'm interested in the emotions so on bitcoin dot org that we rely too much on the government and the governments are corrupt you can't even get at Password and it doesn't have any center so they opportunity to invest so if you are someone who feels like you're not learning experience so if you have you ever had multiple reasons to invest in Bitcoin and it was so easy to do if these things with certainty and yet you cite often there's some stories about when you think things are bubble other in law but I've had a bitcoin discussion with her really does become a kind of society I'd have to deming so it wouldn't you think we can stop it from coming so far away no we can't room together with someone now while it's not a major feature of the book one thing I justed in is the story of Roller Board suitcases talk about because I've always who actually tell the story of this is part of one of your narratives what's the story well I actually traced for a wheeled suitcase in the late nineteenth century and they just never the light and they laughed it was funny and so you know I it just but then was it finally it was it was a pilot or someone associated with an airline who came is to the chemists who developed a lithium ion battery you don't get famous for doing wonderful things unless you have something the book where you're talking about why because we can now measure almost the way you know investors Thomas Perhaps In collaboration with other specialties or academic areas to surprises in the past but the problem is it's the division of Labor in both universities graduate students who came here wanting to learn mathematics and economic models the teach to the exam they were taking comprehensive exams they're not gonna ask them about narratives serve either way are closer to current reality but they're not as good at history apple to look at what at least to someone who's not a an economist but those of us who work in the economy keep hearing criticism well he's not central to the discipline he dabbles and to me that he was trying to be a universal man and there is no place for him in a universe they give them credit for accepting a creative genius. What's been the reception to your case I was worried I would get booed when I gave my lecture to nine hundred economists about giving but we have to get into exactly that because we're trying to predict their behavior nothing good about narratives to I I don't mean to say that they all are fake news narratives whatever you you tell a story this guy your neighbor he's really sick is important even if it looks silly at some level in our waning moments mark UC while the stock market is high I have a most quoted ably pull out of the market and put it in interest berry because interest rates are low are at the peak in two thousand six I think that one thing one can do is be international join but not too much not too much last one I wanted to touch on is the whole question to what he views as a recession narrative that he argues is being pushed by his he gets the power of narrative is trying to fight back against what he thinks is read his books you have to be a little boastful to get ahead in life and AAC we could go on all day and there's so much in the book narrative economics but just as I've last word we are trading today what they think they can sell it for the next lives so keep that in mind when you judge many things are missed priced talking about unless you try hard to be a contrarian that's an old ribs automatically it will give you something of an edge if you're willing to work at it we liked back way back when was Amazon founded nineteen ninety s it narrative economics pleasure to sit down on the campus to talk with us Bob Schiller thanks so much us an email to capitol ideas at cap group Dot com for capitalizes expenses this and other important information that's contained in the fun prospectuses and summary Perspectives rations periods of the liquidity entice volatility as more fully described in the perspective these risks relations value and risk of loss.
"shiller p e" Discussed on Masters in Business
"I I think finances a good field because it solves problems and it's not the government solving problems other it can also be the government finances well. and behavioral finances just financed coming into reality. I think it's not as behavioral finance is not a job category like finances but I think in order to be well rounded. Once should should know something about it. I tell my students to in my course financial markets. Even if you don't want to go into finance you should take this course because finance is about making things happen realistically. How do you finance activities that are useful for society quite interesting and our final question. What is it that you know about the world of economics and narratives today that you wish you knew forty years ago I think I'm stalling on this one. I wish I knew everything that had come up in. There's so many details in one one thing I I just visited the behavioral insights team in the UK last week and very impressed with all the things but not now these are sprouting up everywhere. They're they're they're consulting groups effectively that helped people do their their financing more effectively in in an account of of what we know and there's so much a lot of it is experimental and you have to try things out and see what how people react how people react is not for not and mostly predictable based on just the first theory quite interesting. Thank you Bob for being so generous with your time we have been speaking with Professor Robert Chiller of Yale University his new book Narrative Economics. How stories go viral viral and drive major economic events was released on October? I if you enjoy this conversation be sure and look up and down an inch on apple I tunes and you can see any of our prior two hundred and fifty or so conversations we've had over the past five years. We love your comments. Indeed back end suggestions write to us at podcast at Bloomberg. Dot Net go to apple. I tunes. Give us a nice review. We really appreciate that. I would be remiss. Safai did not thank the crack staff that helps put this together each week. A Tika Vowel Brun is our project director. Michael Boyle is our booker slash clash producer Caroline Rhea. Is Our audio engineer today and Michael Bat Nick is my head of research. I'm Barry Ritholtz. You've been listening to masters in business on Bloomberg radio the Bloomberg business of sports podcast. How did the Yankees become this mega valuable to where the money is flowing inside sports around the globe from the marketing perspective where the dollar spent from union heads team owners Scottish Nick and Michael Barr speak to the names that power this multibillion dollar industry off the Red Sox CD GO SAM Kennedy National Hockey League Commissioner Gary Bettman Bloomberg Business of Sports. Listen Today on Bloomberg Dot com the Bloomberg business APP or subscribe on Apple podcasts..
"shiller p e" Discussed on Masters in Business
"It's it's a younger generation with certain political beliefs love the idea of this independent currency free of government restraints although that really hasn't seem to be the way it worked out has it. It was a great story yeah. The government is capable of taxing. You we now know that on your bitcoin profits office so that they can get your they can as have hackers you know they're they're all sorts of new telephone hacks and they're using it to go after people's bitcoin wallets and on top of that a lot of the trades on the bitcoin exchanges are fake trades a real just to most on some of them. Yeah yeah the MO-. Are you going to say. Most of the bitcoin trades on certain exchanges are are fake or not real well. I I've read this so I'm sorry I ah I don't WanNa accused of a crime but they're not regulated and they're doing the story is this is a narrative which I'm repeating is that the wash trades to they want to show a lot of volume which makes it more credible as a currency ah yeah that's how you get there has been in the history a lot of stock manipulation to and the the we have to thank the SEC for for clamping down on that because that that would happen so some of the things we've talked about have been conspiracy theories series to some degree why in the modern era with our access to all this science and technology and and factfinding finding in truth sites why have have these conspiracy theories become so prevalent. Is this something fundamental about human human beings and the way our minds operate. I mean not just the moon landing hoax but anti vaxxers. There's a rise of flat Arthur's. What what is that. What about well? There is a first of all there are conspiracies in his we know that there are conspiracy so rational person has to be alert to possible conspiracy Chrissy but we also know that there is a personality type that or maybe it's yeah personality type hype that is very influenced by conspiracy stories they used to in the American Psychiatric Cricket Association Diagnostic and Statistical Manual. They used to talk about paranoid schizophrenic people they have hallucinations about conspiracy Chrissy but in the latest edition they've separated it from schizophrenia and they now have something called paranoid personality disorder so these are the extremes right right and they're they're not schizophrenic. They're just something out about them. They're constantly imagining conspiracies so there are certain fragment of our population and people who who who are not suffering from any disorder but who are very inordinately focused on on conspiracies are even more numerous so if you find someone who believes one conspiracy talk to him further and they'll probably be many more conspiracies that this person if it goes a little bit you can get a little bit crazy so the Federal Reserve has been a subject of all manner of conspiracy theories going back to the book the creature from Jekyll Islands. What is it about central bankers that lend themselves to these theories. Is that just a good narrative. Tale of a bunch of bankers secretly manipulating the economy from behind the curtain. What what makes this such a compelling and there's a whole a group of people who whose narratives are they just hate the Fed. We should end the Fed. Get Rid of earth. What is it about central bankers that lends itself so easily to to these theories series well. I think it's it sounds okay. I'm trying to focus literary expert who explains why some story is popular it's partly because we're impressed by monetary impressed by Bitcoin or bimetallism so it's it's a story about something mysterious. We have these pieces of paper in our pocket and why are they valuable. They're just pieces of paper kind of a mystery. It has to do with power and feeling small. It makes you feel bigger and more important. If you discover a a conspiracy resentment of people who maybe look more successful than you and it's it's yeah. It's a bit of a mystery story to that you've you. You've uncovered something that nobody knows are. The most people are naively assume isn't happening so you can tell it's it's a good narrative so oh so since we're talking about central bankers in the book you reference Stephan Invest Governor of Sweden's Rick Spank who said quote. I'm a weatherman. I'm a showman and I'm an economist but above all I'm a storyteller. I tell stories about the future yeah how true is that for for central bankers. Yeah I think he's right. The question to me is what's more important and the actions they take or the word's they say after the of Fomc Meeting the meeting or is it the press conference or or the nature of their statement so I I like to think that win the Fed cut the lower bound to the federal funds rate to zero in right after the rate recession that that story brought up another narrative that is dangerous injuries and that is the narrative of Japan in the nineteen nineties when they cut their interest rate to zero the Bank of Japan and and they were and they had it stuck at zero or negative. It's still is at thirty years later and they had lost decade. GonNa turn out to be lost decades. The story was that Japan looked like the greatest strongest economy in the world in one thousand nine hundred eighty s they wrote lots of books about out that and then something went wrong and then they couldn't get out of it so I think it was a mistake to put ourselves into the camp of of zero interest rate countries they could have kept it at twenty five basis points and not use z word as I call it right the the zero bound because then it makes the Japanese narrative are narrative right if you look at the Nikkei bubble in the eighties I believe I've I've seen some some analyses that say they were four times as expensive as the DOT com stocks. It was a giant right really so that collapses still unwind yeah. The Cape ratio was getting up sixty or seventy it was really high and what will we in the thirties. during the dotcom collapse well we got up to the maximum at the DOT. com peak was forty six right in the United States so this is almost double that yeah it was a lot higher. Wow that's that's amazing. Let let's talk about another narrative that I found fascinating from the from the book the shift from conspicuous consumption to the modern frugality and early retirement. How does something like that change over. What was it twenty years from the conspicuous consumption consumption era to spend as little money as possible and and the fire group the invest in retire early group yeah that might be happening that is not we still have very strong consumption demand at this point in history that might be something that would turn around with the next recession when it comes but the big time when it did turn around and this legendary is the.
"shiller p e" Discussed on Masters in Business
"A story and I think these two feedbacks interact for further research someday that I mean qualitatively tatum say what's happening. The great recession that we just went through ten years ago was partly a result of the standard Keynesian multiplier but it was also just people telling stories it re it resurrected the story of the Great Depression and you can see that in Google trends or other uh other ways of various kinds of searches. There was a huge impact of the Great Depression. The nineteen twenty nine stock market crash that suddenly became vivid like this is happening again. that's interesting 'cause during the let's call it. Oh Oh Tutu oh seven earlier eight period. It seems that a lot of the stories were hey. You can make a ton of money just buying houses and flipping it and and people's greed monster got stirred up. Hey My neighbors making all this money buying and selling houses I can also how much of that is also narrative. Um Enviro early going back to the nest. Actually the term flipping houses began to appear near the end of the it was often used burst pejoratively. It was created. This is getting crazy right now. Take started to appear around two thousand five a couple of years or three years before the recession really hit do you recall when some of the shows started showing up on HDTV in those channels flip this house right and there was a run of by house fix it or sell it television shows. I think the first one was property ladder in the UK and then that was such a successful. We'll show it it. D- It displayed flippers had called them flippers but it display people who bought a house fix it up a little bit use their interior decorating rating instincts and they made a lot of money fast that was a powerful narrative because first of all it feeds your ego a lot of people decorating their own home and they think they're pretty good ahead. Write even Donald Trump thinks he's pretty good decorating hotels so that's what that's a source of ego gratification justifiably. Some of these people are talented so but that doesn't mean Lina. It's their talent. That's creating the profits. It's the housing bubble that's creating the Prophet and people find it difficult to think logically and rationally about that. I have the success because I'm smart hers. They just chance just just a little bit of luck. Let let's discuss fake news in the book you wrote Unquote. The brain over time forgets that it wants deemed stories unreliable. Explain what that means yeah yeah the way the brain you you remember stories that you heard in the past as a story and you don't always have well tied to that story in the linkages in your brain. What is the source of the story and is it a reliable source so the source connection is somewhat weak. You have to remember where you heard the story. If you're if you're going to be telling the truth all the time and we try to do that but I think there's a human defect so you just don't remember where you heard Urda story but you're in casual conversation with somebody. What difference does it make. You know I might be telling a story. That's not right but it's a good story and I'm not you. You know I'm not saying that is in bad faith. Not trying to deceive anyone. Nobody really knows what the actual truth is so all kinds of untruthful stories spread red viral and it isn't anyone's ill-will that accomplishes that you also explain in the book that quote truth is not enough to stop false false narratives so that raises two questions. I is why not and second if truth doesn't stop a false narrative what does well it does often stop false narratives so it's not all together but the problem with theories are for narratives that counter a false narrative is that they might not be contagious. It's just not fun not as compelling. We people you like to entertain each other in conversations so I if if I told you dramatically that something you believe was wrong you might find that entertaining but typically you know you heard some stories somewhere and it's May or may not be true but not fascinated by the story that it was wrong it it just kind of it all depends on the exact nature of the story and it can easily be there. I don't you know I didn't really care to hear this correction. I had a nice story that I was telling. Everyone and you're telling me now that it was wrong. Okay maybe so little cognitive dissonance kicks in but the entertainment value is so so in the book you tell the story about a British pop singer named Lily Allen supposedly did a GIG in nine and turn down the opportunity we need to be paid in Bitcoin and if she would have taken that and then held onto the bitcoin she'd be a billionaire so first compelling story second. Was it true yeah this May or may not be true who cares right nice story. I never verify whether it was true. I mentioned in the book but it relates to a basic human emotion of foam. Oh fear of missing out and that that is a driving force so you you also want to take investing investing tips quickly before you you know have ruminated on them for a month so you have to act quickly so you fear of missing missing hours and important instinct that maybe it goes back to our caveman days when you had the rush to grab the food before some other. Caveman God was a matter of survival not just making a private in the market quite quite fascinating so let's talk a little bit about markets and if we're talking about markets we have to talk talk about bubbles. If I had to guess the viral nature of bubbles and the story surrounding them had to be a key driver in your a desire to write this book bubbles or perhaps what your best known for your work in bubbles and behavioral economics very very much stood in contrast to the traditional economic thinking that markets are efficient and people are rational how much did bubbles have to do with the ideas behind this book. I think that bubbles was a kind of the story that markets are efficient is a half truth that has been mentioned mentioned going back a hundred and fifty years but it never really became dominant until Eugene. Fama wrote his famous article so in the late nineteen nineteen sixties I think and you and I both shared the twenty thirteen Nobel prize. Yeah that was ironic. it was an interesting experience during Nobel week when I had to spend a week with Eugene Fama who who is still on the view that I was totally wrong but it was it's kind of it was kind of Nice because turns out that we didn't really disagree much on much that was factual. We agreed on the fact. It's like it's a different narrative you've so I like to describe people as swayed by narratives and he thinks of it as what is it. It's changing tastes. Maybe are changing in risk aversion. the people are different. He's trying to incorporate these things into a theory. He has a company called Dimensional Fund advisors he he he works for DFA. Yes so he's the inspiration I found David. Booth is the founder of that. He's been with them for what forty years something like that so I I was congratulated him during Nobel week for showing decisively how he can beat the market through DFA and he didn't like that. That's not the way he wants to to put it so. I stopped doing it I was I think it was becoming unwelcome. I congratulate him. He doesn't think that he's telling people how to beat the market. He's is helping people to manage their risks. What I find fascinating that you and fauna won the Nobel. The same year is that there is if you draw the ven diagram grams of your separate narratives. There's a big overlap in the middle. The overlap is essentially markets are Kinda SORTA efficient and it's very hard to be he he will admit that it's very hard to beat that your narrative also ads and people are irrational in sometimes it leads. It's the market's going wildly out of off kilter before they returned back to normality. I don't think Pharma is a big believer. That bubbles can be either identified or even defines. It's just markets reaching extremes. That's one thing he said during Nobel Week I challenge you to say when it was that someone could identify a major turning point in the market but I I agree with that. It's hard to it's hard. It depend on when the turning point is going to come so maybe maybe we're not that by the way I admire higher the man he's brilliant. He's done some tremendous work. let's talk about one other narrative that has gone viral. What do you make of negative interest rates essentially exported here I from Japan and now Europe. How do these happen or are we. GonNa see these in the United Tate's I recall you had said a long time ago. Well negative rates can never happen at violates the Basic Laws of economics yeah I used to teach that an hour out of minus a half percent and in the EU so that's but never it can't get down to minus five percent it can't because you would hold cash instead right and it just reflects the difficulties of actually storing cash rush and especially when there's so many trillions of dollars of it sloshing around the system right so it's an interesting observation and now I wonder why. Do you know this where they're negative. Interest Rates fifty or a hundred years ago. There probably were at some point. I don't recall ever reading about negative interest interest rates before the nineteen eighty-nine Japan Situation but I have to imagine that at one point in time they must've been right right. It's not part of our narrative. The ECON department right it must be that somebody in the nineteenth century had a million dollars in cash and he wanted to store it somewhere and summoned so I'm going to charge you. I don't you know if you think about the gold standard. That's effectively the equivalent of negative interest rates because you have to pay for storage and security for gold bars. How is that any different than negative interest rates for bonds if they're effectively the same credit risk so we used to talk doc to our students about the zero lower bound. It's because it's kind of cool just like the gold standard Wisconsin. They talk about the gold standard in my book. Then the the public didn't really talk about the gold standard they were just on it so it was a given but then it became a moral value in the eighteen ninety s particularly when there was talk of by metallization bimetallism meaning. Oh Yeah I compare it with Bitcoin. I think the emotional content of the narrative was very similar to bitcoin. It was a new financial innovation talked about on the eighteen seventies. Let's go off the gold standards have to standards and it's going to it's going to stimulate the economy that was a time when they were partly right because it would expand the money supply and that would cause inflation and that would wipe out the real value of debts it would help farmers who were oppressed by deflation so it has some element limited but the point is it sounds like bitcoin. It was a shocker that someone would have would go off the gold standard. We we've everything there's been predicated on gold as the real thing and you. WanNa put some cheaper model year debasing the currency. That's a crime and he got very emotional no and he got emotional in ways that were regional that east coast intellectuals tend to be in favor of keeping the gold standard and people people out west who maybe less college the most of them didn't have college off. They were thinking they were pretty smart to have discovered this new by. I Metal Ism was it William Jennings Bryan who said we. We don't need to be hung on a cross of gold. I know angling that somewhat yeah. That's in my book to it turns out he did. During the Eighteen Ninety six Democratic Convention William Jennings Bryan said You shall not crucify us on a cross also gold but it turns out and that's that is so famous quote that people still remember it today. the crowd went wild wild there they they they thought it was the second coming of Christ or something like that. IT turns out that William Jennings Bryan was quoting somebody else and he he didn't say so the other guy who said it was a congressman who just editing some speech didn't get noticed it was it was that moment he was giving his acceptance of the Democratic nomination for the Presidency Ethic Invention and there were newspaper reporters there and the crowd went wild old and it just became a narrative that never got forgotten other. We've forgotten. We've forgotten bimetallism pretty much. We still remember over that quote. We don't know what it means anymore. gwen interesting we were talking earlier about bitcoin and of all the stories that that that have narratives around it. The bitcoin narrative seems to be quite fascinating. I think of it as millennial libertarian gold right. It's it's a younger generation with certain political beliefs love the idea of this independent currency free of government restraints although that really hasn't seem to be.
U.S. home prices rise a modest 2.1% in June
"A new report shows home prices in the US are rising at a slower pace despite falling mortgage rates Steve Beckner reports mortgage interest rates to fall on a full percentage point from a year ago but another key part of home affordability is moving in the opposite direction the S. and P. CoreLogic case Shiller national home price index rose three point one percent in June from a year earlier two tenths slower than in may prices rose much faster in such cities as Phoenix
"shiller p e" Discussed on WCBM 680 AM
"I speak to save energy saving your same bland everything's the same it went from sixteen to nineteen after twenty eight maybe it's time to start looking at our winds it may be just as delicious but a much better value but this is a good example we're sharing this story with you today because this is exactly what's happened in the stock market again one of the most valuable market forecasting tools that we use to help determine if stocks are on sale fairly priced a ridiculously expensive it's called the Shiller P. E. ratio and it's named after Robert Shiller who the Nobel Prize winner won the Nobel Prize in economics you see the fair cost of stocks is about sixteen dollars many the stocks are fairly priced when the Shiller P. E. ratio is a sixteen here's the rub we are nowhere near that no but stocks are still selling at twenty eight dollars just like that bottle of wine so maybe it's time to have a look at other options that he just as delicious but give you a better value consider this the Shiller P. E. ratio is it's really high right now and the only time that it's really been higher is back in get this December of nineteen ninety nine right before the dot com bubble burst think about that the market lost almost fifty percent of its value in two years took a big hit for almost two years that's why when preparing for retirement income plan we approach things differently with with our exclusive on track review.
"shiller p e" Discussed on FT Alphachat
"They didn't initially no all the things that journalists today know about how to create a of article that goes viral one of the tricks that news media people use is to read each other and read newspapers and other countries or news broadcast in other countries. Because they they might have an idea that is contagious. And you wanna you wanna use that idea? Speaking of contagion, should economists be on Twitter or is there more danger there than reward? Well, I'm on Twitter, although I'm very cautious about what I say. So I'm not. I'm not saying the game of trying to go viral on Twitter. I think that the the professions have a duty to maintain their independence from current narratives and speaks the truth. And I take that as something that can be done on Twitter at sequential of how you how you how you choose your words. Let me let me leave you with one last question five or six years ago, and I've never forgotten this. I was writing a profile Tyler Cowen the economist. And he said, what is a model is a novel model, and he left the question hanging there, and I don't have a good answer. But sometimes I suspect that novels are just as good if not better and creating narratives at at at helping people understand very simple mechanisms to understand how the world works. I I think there are models. I think there are novels that have been everybody's influential in how we see the world. And how we think about economics is as models particular genre of novel is the historical novel question. It's interesting question, which should you read should you read historian, or should you read a historical novel, then the historical novel with invent dialogue. Now, you know is invented. But if if it's a good novelist that novelist will try to capture the true essence of a time in in dialogue. That has created ultimately our judgments are very focused by dialogue in even a fictional dialogue. Maybe more effective way of writing history. I think the movie the big short, which features your friend, Richard Thaler, did exactly that it invented dialogue was honest about the invented dialogue. But I think is probably more definitional in terms of how. America understands what happened in the crisis than possibly any other work that's done. Because it's such a compelling piece of narrative some novels have been historically important. I'm thinking of Harriet Beecher stowe's eighteen fifty two novel uncle Tom's cabin about abuse of a slave named uncle Tom evidence is that that novel had such emotional impact that and why did it? It was just a very well written, and how they impact on people's feelings that ultimately, you might argue that to the American civil war, and the abolition of slavery people are debate over whether the civil war was really a war over slavery. How can we resolve that debate? But one one is suggestion I have for anyone who wonders about that read uncle Tom's cabin. You will know it will generate even today one hundred more than one hundred years later. It will generate emotions in you that you could see you can feel how they could lead to war over chiller. Thank you. My pleasure. Alpha chat is produced by Dan Richards at the road center for international economics and finance Brown University and Amy Kean from the financial times, we posting show notes on alphaville with links to Robert Schiller's speech in papers on market narratives. But as always this is a reboot, and we genuinely want to hear from you. We want to know who you are. How you listen. When you.
"shiller p e" Discussed on FT Alphachat
"I watched a clip again, and again, and again because I was fascinated by it of Jim Cramer on CNBC talking about exactly this. And the narrative was the fed doesn't get it. I get it. Because I'm making the phone calls to people in markets who are terrified right now. This was in about October. I think and the narrative was the people he must have been calling in markets must have been these people who have so much riding on the equity markets. Right. Who were so leveraged that the price of their the stock price of their company makes a massive difference in a way that it wouldn't for me. But that narrative, I'm calling people. They know stuff the fed doesn't get it. I get it. They can't raise that's an incredibly powerful narrative with the potential to infect all of us and not just people who have a stake in highly leveraged corporations. I think that's. A little overstated that they had doesn't get it people on the fed, and the moves that they've made up is not that dramatic because I current rate of inflation the real interest rate on federal funds is just a little bit above zero. And and it's been almost ten years since the bottom of the market. So isn't it time to go back to a normal market? So I don't think these people are crazy and just don't get. But you may be right that it's a narrative. That's so I agree. I don't think the fed is crazy doesn't get it either. I that's why kept on watching that clip. Is it was fascinating the way he was portraying the fed. I mean there there. I mean of of all the groups of people who are trying to look at problems rationally and come up with rational answers. The the Federal Reserve system is pretty high on my list. So I I don't agree with him. But I do think that he provided a powerful narrative if you're inclined to believe him. So Jim Cramer has two personalities when I've met him individ-. Usually perfectly rational reasonable guy. But he he is now the star in a show called mad money and he's deliberately putting on a show. I mean, I think he would admit it. If pressed its show that he may be crazy, but he is insightful. And so he's very successful because of the contagion of of the mad money narrative. Well, it is not traditionally the job of an economist to create narratives, it's the job of an economist to understand the world as best as he or she can. And in fact, I have a job, thankfully, because it's my job create narratives based on all that data. If there are narratives out there, and they affect markets in ways that aren't completely based on any kind of rational appraisal of actual data do a communists need to learn how to not just write papers. But right narratives to combat the other narratives that are out there. Some economists who have to do that. It's a difficult. There's has no science to doing that. However, some economists becomes speechwriters for politicians. That's when you have the opportunity of perhaps to experiment with Nick, it's it's just not an exact science and to know what to do. Go back to the nineteen twenties, which I was talking back Calvin Coolidge was president then and he kept trying to talk up capitalism in the market. He was trying to create a narrative and he was a success for moderate success for a while. And then it suddenly turns on him. And the narrative is that. He's at fault for having created a crisis and Herbert Hoover during the early nineteenth thirties. When the depression was underway kept saying it will be over soon thinking that that would create confidence, and he was supposed to be a smart president who would do stimulus policy to overcome the depression..
"shiller p e" Discussed on FT Alphachat
"Just to make sure I understand it correctly, you famously put together this historical time series of equity valuations. And so we can look at it. And we can sort of see that it's historically stock markets the United States or historically overvalued still. But when you look at the declines of the last two months, you don't necessarily see something based on any kind of data manufacturing data anything internal to the stock market. You actually see something based on a I'm sure you'll have a better word for this. But a mass psychosis. I tend to avoid using the term psychosis. It seems kind of strong language. The same thing happened in one thousand nine hundred twenty nine famously the stock market rose thirty percent in the five months before the peak of the market in twenty nine and then it crashed for no apparent reason that earnings were high the economy was moving well, but suddenly it crashed. And again, it was talk. I think there was a a new narrative that developed in one thousand nine hundred ninety nine just as there is a new narrative developing today, you know, sometimes I look at that chart that we can get off of your website that just looks at historical Cape, data priced equity ratio. And I think well it's got to happen sometime. So why not now is is narrative? Yes, it is. There is a narrative that stock market movements repeatedly go between booms corrections and bear markets. And so, but then the question is is this it back in January February of twenty eighteen there was a ten percent drop in the stock markets and people were wondering back, then is this it, ultimately, they decided it was not it and the markets stabilized. How did they reach that decision? What why did it stop? And why has it resumed recently? I don't have an exact science for this. I think it has something to do with the the whole array of stories that are current at that time, and it's a noisy feedback. It's not logical irrational there, there were some leading figures who raise the issue that maybe this is it this is going to be a. A serious bear market. And they they sounded particularly convincing at the time. It may also have something to do with politics. That's getting edgy more evidence of polarization the emotions associated with that. Maybe more conducive to thinking that this would be a time of bear market. And we can see that in other economic sentiment data that there is a spread between the way Republicans feel in the way Democrats feel about markets that can't be justified by anything other than politics. Yeah. Economists have to take account of politics that those are the major things that drive the market. Well, of course, Donald Trump promised to cut corporate taxes, and he did. And so that puts an upward impetus on the market. So you have to judge the politics of the situation. Now, it doesn't seem like it's especially clear where we're heading in US politics at the moment. And that has something again to do with the market. But there wasn't overall shift in sentiment looking at the Michigan consumer surveys and the shift in sentiment was overall down. But it was almost it wasn't tireless compiled of downward movements from Republicans after the loss of the house in November. That to me is fascinating is that this this shift in sentiment is actually just about Republicans feeling bad? I don't want to minimize Republicans feeling bad. But it's very it's very sharply polarized measure, but this relates to very basic fact that we we all have different narratives and the markets, depend on the aggregate of all these narratives, I think that in the future. We'll have more of a science to understand these things than we do now because the economics profession is not in the habit of looking at narratives but afterwards when when we become more data or we have a lot of data that relates to evidence about narratives as this develop. Further. I think we'll have better ideas. So more broadly, not just talking about this moment in markets. What do we know about how a narrative starts, and what do we know about how it spreads? Well, I would say that narratives are like diseases influenza epidemic. Come. They don't know. They can't forecast them how severe well. They know it seasonal, but they don't know how severe the next one will be in disease epidemics starts with typically a mutation..
Home-price growth slows again, Case-Shiller says
"Yeah, probably not, good for, buyers. But is there any good news in the rising home prices data well that's the big question could rising mortgage rates and sky high prices finally, begin weighing, on home price, gains in June. The case Schiller home price index showed nationwide home prices rose six point three percent. On average that increase though was less than it was in may was six and a half percent that month now that's still three times as much as average wage growth but it could mean the. Incredible spike in prices may be coming to an end another big change for the first time in nearly two years Seattle is not the. Worst city in the nation for spiking home, prices. Las Vegas is the new king prices they're up thirteen percent in June sin city was followed closely by Seattle San, Francisco Denver In