[lbo-talk] "Save subprime borrowers, not bloated bankers" by Dean Baker

Doug Henwood dhenwood at panix.com
Tue Aug 21 12:47:20 PDT 2007


On Aug 21, 2007, at 3:24 PM, Jordan Hayes wrote:


>> I'm not sure why shortening the time period gives you more reliable
>> results.
>
> Because the world has changed?

As they say on Wall Street, some of the most dangerous words in the language are "This time it's different."


> Hell, let's look at real estate prices
> over the last 5000 years. That ought to be the same, right?

No. Capitalism is, at a stretch, 800 years old. The U.S. has had a national economy really only since the end of the Civil War.


> It's the
> same reason you can't look at combat casualties over the last 100
> years:
> everything has changed.

See above. In any case, asset prices do follow patterns over time. Despite everything having changed, you couldn't tell a stock market chart from the 1920s from one from the 1980s or 2000s.


>> There's that 1% long-term trend followed by a really anomalous period
>> again.
>
> I don't get why you keep saying that a house beats inflation by 1%
> over
> the long term and then come to the conclusion that it's no way to "get
> rich" ... Give me 1% over inflation any old day!

GDP averages 3.5% over inflation. Productivity, over the long term, about 2%. Stocks, around 7%. Houses are a real laggard.

Doug



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