[extropy-chat] 'a process of non-thinking called faith' 2 (2)

[Brent Neal]

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On Nov 27, 2006, at 2:54, Eugen Leitl wrote:

> On Sun, Nov 26, 2006 at 04:21:13PM -0500, Brent Neal wrote:
>
>> What I'm seeing in the consensus estimates is that a correction of
>> 10-20% is likely, lasting around 18 months (although some sites have
>
> I think 30-40% would be more accurate. Oh, and how does Dow Jones
> of 2000-3000 sound like?
>

You'll note that in the article I sent through right afterwards that  
the author claimed that 30% would bring housing in line with CPI and  
40% would bring housing in line with historical affordabilities.

I think affordability is probably not something that is reasonable to  
expect to remain constant.

Your Dow numbers - do you have sources or some logic to support that?



>> tossed out the number of 3.5 years as 'typical' for these corrective
>> cycles.
>
> This cycle is unprecedented in the magnitude, though.

Everything is unprecedented in magnitude. :)  The size of the world  
economy is unprecedented. The number of houses on the market is  
unprecedented.



>
>> There are a couple of articles I've read (there's one in particular
>> I'll try to find to send) that point out that in order for housing to
>> reach "historical affordability levels" (i.e., return to some
>> arbitrarily chosen growth curve) that the correction would have to be
>> around 30%.  This article was sort of interesting in that they also
>> chose to point out some ameliorating and otherwise optimistic
>> assumptions being used by most of the "consensus" reports, and goes
>> in with a deliberate bias towards choosing more pessimistic outcomes
>> in order to get a worst-case-esque scenario.
>
> Everybody should cover for low-probability high-risk outcomes.
>
>

Of course.  The interesting problem is estimating the probability to  
low-frequency events (humans suck at this, as PJ's article points  
out) and choosing an appropriate action on that basis (which humans  
also suck at.)

B




- --
Brent Neal
Geek of all Trades
http://brentn.freeshell.org

"Specialization is for insects" -- Robert A. Heinlein


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