On bubble hysteria

http://www.themoneyillusion.com/?p=29826

What it does show is that people are very receptive to data that supports their preconceived bubble theories. And this is a part of my anti-bubble theory. I’ve done posts on how the Economist magazine once bragged that it correctly predicted a bunch of housing bubbles, whereas the article it cited was actually totally, spectacularly WRONG about the future course of house prices in a number of countries. Prices actually rose in markets where they predicted declines. And yet the Economist put their “successful” prediction into an ad for the magazine. Someday China will have a big crash, and the people who have been predicting it for a long time will say, “I told you so.” And I’ll say, “Market prices rise and fall, that’s what markets do.”