Blogger’s Privilege: What “The Sopranos” Tells Us About The Housing Bubble

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From time to time we bloviate, and here it comes: last night’s ending of ‘The Sopranos’ -- which we enjoyed -- brings to mind the futility of predictions. How many correctly predicted this non-ending ending? No one I know. Tony, the conventional wisdom had said for months, will be whacked. Or arrested. Or will sing to the FBI like a, well, soprano.

Similarly, we are flooded these days with well-reasoned conventional wisdom about what will happen to the housing market: It’s a bubble, rapidly deflating. What Goes Up Must Come Down and This Will Get Ugly. Foreclosures will pile up until prices drop 20%. Or 30% Or 50%!!! Or, conversely, The Fed Won’t Let That Happen! The Fed Will Bail Out the Lenders and Rescue Housing. Or, L.A. Housing Is Different, It Will Never Collapse! No, It’s Not Different! Etc.

To us, these predictions are fascinating, great fodder for argument and debate -- but ultimately meaningless. What happens to the housing market here will probably be more complicated, and maybe even more surprising, than these predictions (Example: The subprime lending collapse, which now makes perfect sense, came as a surprise to just about everybody involved).

Even if you accept the argument that housing in Los Angeles is unsustainably expensive, remember that unsustainable economic conditions can last a long time. Our national trade deficit -- which in theory will ultimately devalue the dollar and rob us of national wealth -- has been rising for a decade, a mostly prosperous decade.

One more thought about bubbles and predictions: The most famous ‘bubble talk’ of modern times -- Greenspan’s ‘Irrational Exuberance’ speech -- was wrong. He made that speech in 1996, when the Dow stood at 6,437.

Thanks for reading. Thoughts? Comments?
More on ‘The Sopranos’ here, at LATimes’ Showtracker blog.
Photo Credit: HBO