Fighting Fire With Arson: A Response to Yale Professor Robert J. Schiller’s misguided but not unexpected piece on the housing bubble, titled “Infectious Exuberance” and appearing in the July/August 2008 Atlantic.

Shiller believes our two recent “epidemics of financial optimism” (the dot-com and real estate bubbles) could be followed by a more disastrous financial epidemic if “irrational pessimism and mistrust” manage to spread from the lips and fingertips of sourpuss chicken-little financial pundits to the wider population. According to the author this third epidemic is easily …

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