Bill McBride Profile picture
Author of Calculated Risk economics blog, Old Photo! Real Estate Newsletter at https://t.co/ZKd69Ycier
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Apr 10 22 tweets 5 min read
There have been a few posts recently about the housing bubble not being a “bubble”. This is incorrect, and this long thread (with a few detours) will explain why that view is incorrect.

First, what is a bubble? There is no formal definition, however …
1/ In early 2005 I defined a bubble as follows:
calculatedriskblog.com/2005/04/housin…

“A bubble requires both overvaluation based on fundamentals and speculation. It is natural to focus on an asset’s fundamental value, but the real key for detecting a bubble is speculation.”
2/
Apr 4, 2020 5 tweets 2 min read
When I wrote this ten days ago, I was hoping I was wrong about the number of deaths. Sadly, I wasn't. But have the actions taken place at the Federal level? No. 1/ Do we have national stringent shelter-in-place? No. It is piecemeal. On a national order, Dr. Fauci said: “if you look at what is going on in this country, I do not understand why we are not doing that. We really should be.”

marketwatch.com/story/fauci-ur… 2/
Mar 19, 2020 8 tweets 2 min read
On Testing: Maybe sometime next week the US will be up to 70,000+ tests per day. We need a plan in place to dramatically expand tracking and surveillance testing - we need to look for the asymptomatic carriers. 1/ Finding the asymptomatic carriers is key to getting the economy back on track (and not just slowing the spread, but preventing another surge in cases). 2/
Mar 14, 2020 6 tweets 2 min read
Some comments on testing. Several doctors have argued that widespread testing is no longer necessary since community spread is well established. They believe widespread testing would be a misallocation of resources. This is incorrect for several reasons. 1/6 First, the FAMILIES FIRST CORONAVIRUS RESPONSE ACT requires a positive COVID-19 test for some people to qualify:
appropriations.house.gov/sites/democrat…
Mar 2, 2020 6 tweets 1 min read
Containment of COVID-19 has failed (but delayed onset).

What should the government do?

1. Let the experts brief the public, not politicians.
In 1918, "happy talk" delayed action. The government's lies killed lives.
See: smithsonianmag.com/history/journa…

1/
2. The government should take the advice of the experts at the CDC and elsewhere and increase funding immediately.

2/
Feb 16, 2020 6 tweets 2 min read
The real causes of the bubble were rapid changes in the mortgage lending industry, rating agencies that didn't account for those changes, combined with a lack of regulatory oversight. 1/ As an example, the lenders used to use the three Cs: Credit, Capacity, and Collateral. Instead of using the three Cs, the private lenders innovated and just used FICO scores, and then eventually little or nothing to underwrite the loan. There were other "innovative changes" 2/