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Bob Shiller Didn't Kill The Housing Market


Parsad
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Fortune article about economist Robert Schiller...some interesting points about Shiller in it.  I have a lot of respect for his research.

 

http://money.cnn.com/2009/07/06/real_estate/robert_shiller_housing_market.fortune/index.htm?postversion=2009070710

 

I'm kind of flabbergasted by his comments on his company hedging all sorts of risk.  Surprised that he believes he can do so, especially after how their original hedge against oil prices had to be shut down and examples we've seen of LTCM and other hedge funds.  Cheers!

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Sanj,

 

He is smart man but very academic.  His solutions to the mortgage crisis is to have a mortgage that adjusts to the mortgagers salary amongst other complicated insurance products.  A product that in theory would be good but no one would ever take the other side of the mortgage unless given a very high return. 

 

The CS Futures have non-existent volume and his concepts of hedging housing price risk will be used by speculators more than hedgers.  I think the major flaw in his product ideas are they are hedging illiquid assets (which is what got CDSs in trouble) and are to complicated to work .  He has done some good historical study work but beyond that I have found his ideas high unworkable.

 

Packer

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