[quote=temeculaguy]I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]
Your own words are the clue to your quandry. I’ve read enough of your posts to know that you TG, are an analytic type of guy. You like to look at the numbers, the data and make rational decisions. (You like to drink good wine and make wise guy remarks late at night which make us all laugh too!) All good and well, but you and most economists today suffer from the belief that most people are like you. They are not. They listen to what they hear at the hair salon, or what they hear while watching Johnny play soccer, and they trust that. Data just confuses them.
The point being that the vast majority of people are not “rational consumers” and any analysis or economics based on that is deeply flawed. This expectation that people would be rational is what is hindering your understanding of the bubble going up, and why you’re going to misjudge the overshoot that is coming.
