The Housing Bubble, Illustrated

This graph comes courtesy of the New York Times Week in Review section. Click on the link in the previous sentence for a larger, viewable version. The graphic is presented without further comment.

Also, there have been some believers in fairies and unicorns who have been predicting that corporate capital investment will offset losses in consumer confidence and spending to save the economy, once the housing bubble crashes and consumers find out they can no longer afford their overextended lifestyles. Yeah, right. All my clients boost capital investment when people are not buying stuff and inventories pile up. Then they cut me checks that bounce and I find new clients.

Seriously, I'm trained in psychology, not economics or finance, but I've become more aware of how my training and experience make me at least as competent to offer comment on these things as the so-called experts are. Markets are just the accumulated actions of people and their perceptions, and that's a matter of psychology. People are not rational and information is never perfect.

I did not see the stock bubble-burst coming, not really, in 2000. That was back when I believed what I heard people say on CNBC.

Now I know better.