Thursday, January 28, 2010

Shiller's Check-List To Diagnose A Form Of Psychological Malfunction

According to NYT's DealBook, Robert J. Shiller, a well-known Yale economist, suggested on Wednesday:

After all, a bubble is a form of psychological malfunction. And like mental illness there’s a tricky gray area between being really sick and just having a few problems...

The solution: a checklist like psychologists use to determine if someone is suffering from, say, depression. So here is Mr. Shiller’s checklist.

- Sharp increases in the price of an asset like real estate or dot-com shares
- Great public excitement about said increases
- An accompanying media frenzy
- Stories of people earning a lot of money, causing envy among people who aren’t
- Growing interest in the asset class among the general public
- “New era” theories to justify unprecedented price increases
- A decline in lending standards

So, watch after your mental health ... and get lite with shit in books on strength?

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