Monday, March 22, 2010

Tenth anniversary of Irrational Exuberance by Shiller

1o years since Irrational Exuberance and we do not have agreement in what is a bubble. The anniversary should be a time of celebration on our knowledge of how the economy works, yet it seems like we still have a lot of lessons to learn about bubbles. It is 13 years since Alan Greenspan talked about irrational exuberance in the stock market, yet we are at least two bubbles behind in trying to get a regulatory handle on bubbles.

We may have a bubble in Chinese real estate. We are still trying to prop-up the real estate bubble through loan modification programs and accounting gimmicks. What have we done to protect the general economy from the next bubble?

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