Comments at Seeking Alpha

For those of you who don't know this, lots of commentary that appears here also appears at Seeking Alpha and Yahoo! Finance. Of particular interest in the last week was the story about economists being naive which appeared here at Seeking Alpha and here at Yahoo! Finance.

It elicited a number of interesting comments on the Seeking Alpha site, which is the reason for this post. They are reproduced below:

davidli wrote on Tue Jun 12th @ 9:04 am
You are overstating the case. I read the WSJ article as well, and thought nothing of it. After all, when an "economist" is under the employ of an organization, he/she has to take his/her employer's viewpoint. "Suspending belief" is not the same as "ignoring facts;" the former is subjective, to which everyone is entitled, while the latter is objective, non-mentioning of which disqualifies one as a professional, be that person an economist or a security analyst. omooc

Dean Palmer wrote on Tue Jun 12th @ 10:08 am
Regarding your comment about the truck driver and his being upside down on his condo: When did we start feeling sorry for human beings for being stupid when getting into shaky financial deals? The subprime market wouldn't even exist if people would use their heads instead of emotions when getting into bad deals.

Emily Moorefield wrote on Tue Jun 12th @ 10:49 am
Dean's comment does not take into consideration the power of a) watching everybody else in the country profit from real estate, which herd mentality is certainly not unknown among Wall St investors; and b) the power of marketing, which has *everything* to do with why we make the choices we do. It's easy to point to the other guy andf say "Fool!" esp. if the other guy makes a lot less than you, or works a less prestigious job.

But most big decisions (marriage, for example), and especially most big purchases, get their start in life as an emotional pull -- which marketers know very well. A home purchase in paarticular has a large component of emotion, as anybody who's ever bought a house knows -- even if it's an investment property. And the last year or 2 of the bubble was a very emotionally charged time. People felt that it was now or never -- get in however you can, or miss the profit boat completely! -- and real estate professionals, including subprime lenders, were most definitely feeding that frenzy, you would be very naive to think otherwise.

Ernest Hampson wrote on Tue Jun 12th @ 1:48 pm
Economists breed in the vacuum of academe, completely devoid of reality. Their only contact with humanity is through clueless professors and the books and papers they and their colleagues create to justify their existence. Their biggest crime (sin?) is representing applied economics as a science. It is, at best, soothsaying and fortune telling through the correlation of distorted and manipulated data.

Alan Greenspan was a living proof of this phenomenon; a perfect example of the Peter Principal run amok. His talent was obfuscation and disingenuous deflection that he used to great effect on the clueless purveyors of deceptive twaddle who masquerade as fully qualified and knowledgeable U.S. Senators and Representatives. That Wall Street followed his dictates was proof positive of their dedication to the purported philosophy of B.T, Barnum: “There’s a sucker born every minute”.

In their continuing adulation of this B.S. artist, his followers chose to forget, or ignore, that little Alan lead this country’s into 7 major recessions that he manufactured from a booming economy. How many fortunes were made through short selling by the mavens of Wall Street as they encouraged their deluded followers to buy, buy, buy?

At a reported $150,000 per speech/presentation, little Alan continues to exert undue influence on world economic issues. For the protection of our current and future economic successes, he should be incarcerated in an old age home for the demented as quickly as possible and denied any further contact with the world. He speeches, books, papers, and utterances should be gathered together an taught in advanced business schools as an example of the success that can be achieved through the application of the absurd and the Big Lie. Alan was a true master and guru of this economic philosophy and his applied skills in the application of deception, misinformation, disinformation, boredom, and disingenuous babble. If he had chosen another life career, he would have achieved untold wealth as an evangelist and faith healer!

To further prove the contention that economics is a tool of the highly successful con artist, take a long and educated look at the housing market. For the past several years, based upon glowing predictions of vast wealth possibilities in real estate and the endless future of the bull market, people were encouraged to spend whatever it took to acquire a house or invest in housing. With the resources of the many stretched to the breaking point, these economic gurus and investment advisors reversed their prognostications to foretell of a housing market collapse. I won’t go into all the related manipulations that are, now, coming to light, but it is obvious that voodoo of economics was, once more, applied to make unconscionable profits for the insiders, on the way up and on the way down.

And, the beat goes on! Long live the economists! Without them, politicians and Wall Street mavens would have to find honest jobs.

LeeCarlson wrote on Tue Jun 12th @ 2:25 pm
Can't help but agree with Ernest (Above),..as for me, I just don't read what the economists say as they don't live in the real world ! Even the NAR economists,...With regard to Emily, above,..buying a home for yourself may be partly an emotional experience, but buying investment property, especially for immediate resale, is super high risk as many have found out ! This is where "crunching the numbers" and asking the right questions from those that have gone on before, would have helped a lot ! Having lived in FL for the past 27 years, I have seen nothing to compare with the insanity that took place in the past few years,..people buying million dollar tiny waterfront condos that cannot possibly pay for themselves tells me that the buyers of those properties had more ego and money than brains, and being "emotionally charged" means nothing more than they left their common sense at home before making that kind of decision ! Being a Realtor for the past 26 years, common sense told me to avoid selling those properties when they started !! Sure I could have made a fortune during that short time, but then I would have had to listen to years of complaining by "emotionally charged" SELLERS now, who suddenly realized that they made a very big bad mistake and simply want to get their money back !!
This is the kind of situation that Economists should report on, but most are fearfull of their Employers ,..meaning builders, bankers, NAR, etc. Zero down loans and subprime loans were never mentioned by those famous Economists and a one month uptick in the market does not indicate a "Trend" !! In my experience, following the "herd" is very poor advice ! Want proof,..just look at the stock market plunge just before the start of the new R.E. BULL market ! Real Estate is a safe investment , right ? YES,..if you buy it right and do the math,..or is that asking too much ?

sunpointeproperties wrote on Tue Jun 12th @ 8:13 pm
I've been a real estate investor since the late 1970's and have witnessed several up/down market cycles. Eventually everything reverts to the historical mean. When prices increase too much...they correct downward and when prices decrease too much it leads to the next up cycle. Not rocket science...just common sense. Those who buy in at the top get hurt and either lose money, or must hang on until the next up cycle to bail out.

The problem with the latest boom is that in many ways it was artificially created...with massive liquidity because of extremely low rates. The current correction may be worse than those in the past. Once liquidity is reduced demand stalls and prices drop. It will likely take longer to revert to the mean this time because prices increased so much in a short period of time. It shouldn't require an economist to figure this out. Just ask anyone who bought at the peak(s). They'll tell you more truths than most economists. It boils down to street smarts rather than book smarts!

Interesting - it seems a nerve was touched.

The original post at this blog can be found here.