Wall Street Selling Up as Down, Down as Up

I find this amusing. Here is the infamous Henry Blodget, the infamous "analyst" who talked people into buying the dot com bubble. He has now morphed into a financial "journalist". Across from him is a Yale professor, Robert Shiller, famous for his books on Irrational Exuberance. What is wrong with this picture?

How can any of this be trusted when the media recycles talking heads who give "free advice" that has cost people billions of dollars?



I guess the answer is: you get what you pay for. Here is a "free" video of talking heads giving you "free advice". What is it worth? Well, Blodget in the late 1990s gave you "free" advice that lost people billions. Is today's "free advice" worth more than this?

Personally I don't see much in this video. It is faily clear that Shiller is becoming a shill. That he is not the least bit uncomfortable being interviewed by a first class shill is evidence to me that he is now "in the business" and will be tailoring what he says to "what sells".

So what is Shiller selling? He is selling his new book The Subprime Solution. In reality he is selling fear:

• Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s. With prices already down almost 20%, it's not a stretch to think we might exceed that drop this time around.
• There are about 10 million homeowners whose debt is higher than their home value, which has broad implications for how Americans feel about their wealth and spending habits (read: more pressure on consumer spending).
• The current hopeful consensus -- that house prices will bottom soon and then begin to recover -- is most likely a dream. Housing markets don't usually have "V-shaped" recoveries. And even if house prices stabilize in nominal terms, after adjusting for inflation, most homeowners will continue to lose money.