Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'd be interested to know how economists differ in their views with analysts.
Well, one group appears to understand that there actually aren't any cycles while the other one appears not to. If there were or had been actual cycles underlying any of the myriad economic data sets that exist and have been investigated, their presence would have been detected by the levels of analysis brought to bear upon them. After many years of trying, there is still nobody home.
In many cases the misuse of a word in some unrelated context would do no harm. But in some cases it does. As in when it suggests to readers or listeners that the world is a very different place from what it actually is. That is never a good thing.
I'm not sure if you're being dismissive of his use of term cycle out of disdain or ignorance.
As I have said, it's more the fact that cycles simply don't exist. Use of the term as a glib catch-all shortcut buzzword is fine in front of an audience apt to understand it as such, but use of the term before a general audience suggesting an explanation not actually existing for behavior that seems to be vaguely like behavior that has been seen before is an example of some form of intellectual puffery and dishonesty. And it doesn't matter who does it. In Prescott's case and as he undoubtedly understands, there is actually no such thing as a "business cycle". The normal state of the economy is slow steady expansion prominently driven by population and technology growth. Diversion from that sort of path is not a part of any inherent or underlying process. It is merely a sign that something has gone wrong. This fact does not impact on or undermine any of Prescott's work. It merely takes to task the sort of slipshod vocabulary that his and other work becomes embedded in.
Quote:
Originally Posted by jayrandom
I'm not claiming that there's a regular period for economic activity that can be predicted, only that there are irregular cycles of boom and bust. Most macroeconomists agree that these cycles exist.
Though they have been dampened somewhat over recent generations, there have plainly been booms and busts. That's not at issue. What's claimed however is that these are a part of some sort of cycle. Irregular, non-predictive, and undefinable perhaps, but still a cycle nonetheless. Well, there is not really much left to call a cycle absent all of those things. Perhaps it is the case that "business cycle" is just a convenient but otherwise unimportant label for an area of study related to examples of economic expansion and contraction but having no real implication or significance beyond that.
Quote:
Originally Posted by jayrandom
For someone who claims I need to speak with or become an economist, you're remarkably unaware of the terminology commonly used among economists.
I guess that these fifty years of collaboration with high-end academic and professional economists have not been enough then.
Quote:
Originally Posted by jayrandom
And you take a very hard-line approach to the concept of randomness and noise. There is randomness and noise in most fundamental physics measurements, but scientists are able to separate the noise and the signal and make valid observations despite the randomness and noise.
You assume that there actually is a signal to detect. What happens when there is not?
Quote:
Originally Posted by jayrandom
The fact that economic indicators are auto correlated means that there is some signal in addition to the noise--pure noise is totally u correlated.
If there were some actual cycle-signal to detect, it would have been detected and you and others would have been able to describe or perhaps even define it by now. Pure noise by the way is random. If noise were totally uncorrelated, it would not be random. You are essentially claiming a non-existence of false-positives in real world data and that 123456 cannot be considered an example of a random 6-digit number.
I never imagined that the fed would print $7 trillion dollars out of nothing and that the banks would be forced to grant NINJA loans to people who cannot pay the loans back.
Neither of those things actually happened, so you were correct in those imaginations at least.
There are some markets which are overheating, others that are healthy, others that are depressed.
I'm currently looking at condos here in Indianapolis and am amazed at what I can get for under $100k in nice parts of town. Some of these condos are fairly well updated and can be had for a song.
I've also been looking at potentially moving to central Florida (Tampa to Orlando) and am surprised at what I can find there to.
I'm from TN and Nashville's RE market seems to be way overheating and the area going through a boom that will probably deflate fairly soon. It's difficult to find anything with reasonable access to downtown Nashville for under $200k, yet the wages there aren't much better than rural areas of TN, at least for jobs I've applied to.
I'd like to do something similar if the job market allows.
Well, one group appears to understand that there actually aren't any cycles while the other one appears not to. If there were or had been actual cycles underlying any of the myriad economic data sets that exist and have been investigated, their presence would have been detected by the levels of analysis brought to bear upon them. After many years of trying, there is still nobody home.
In many cases the misuse of a word in some unrelated context would do no harm. But in some cases it does. As in when it suggests to readers or listeners that the world is a very different place from what it actually is. That is never a good thing.
There were definitely brokerage firms and individuals (e.g., Goldman Sachs and John Paulson, respectively) able to detect the 2007 real estate bust through the proper use of risk models. Our firm, an asset management shop, was able to see the cracks forming when REITs (e.g., Duke Realty, Mack-Cali, and Kimco) were aggressively developing/acquiring suburban office and commercial shopping properties in highly speculative locations, with pre-leasings and cap rates far below our minimum thresholds. We subsequently divested large swaths of financial sector bond holdings and took up positions in regulated utilities with little generation portfolio exposure.
While boom and bust cycles are difficult to detect, at times, there are definitely leading, coincident, and lagging indicators, which both economists and analysts alike make known to the public in their research publishings.
I have noted a 17 year cycle of real estate booms and busts.
we'll see , won't we.
So, you're claiming that real estate prices crashed in 2008, 1991, 1974, 1957, 1940, 1923, and 1906? That doesn't match with this article, Home Prices since 1900.
There were definitely brokerage firms and individuals (e.g., Goldman Sachs and John Paulson, respectively) able to detect the 2007 real estate bust through the proper use of risk models. Our firm, an asset management shop, was able to see the cracks forming when REITs (e.g., Duke Realty, Mack-Cali, and Kimco) were aggressively developing/acquiring suburban office and commercial shopping properties in highly speculative locations, with pre-leasings and cap rates far below our minimum thresholds. We subsequently divested large swaths of financial sector bond holdings and took up positions in regulated utilities with little generation portfolio exposure.
While boom and bust cycles are difficult to detect, at times, there are definitely leading, coincident, and lagging indicators, which both economists and analysts alike make known to the public in their research publishings.
This is true. I remember reading a couple of articles talking about potential real estate bubbles at least a year or more before the crash but I seriously doubt that anybody actually expected the financial disaster that eventually hit a year or so out.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
