Robert Shiller: How Animal Spirits Drive the Economy

In this video, Robert Shiller (Yale Professor) discusses the global home price bubble. This is in context to his new book, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism. Video originally blogged by CalculatedRisk.com.

Here are my high-lights (if you don't want to watch the entire 2-hour video):

• View the 44-45 minute mark, Brad DeLong discusses the P/E Ratio (10-year average). Note that this measure is used by Buffett and Dodd extensively in assessing the valuation of securities. When the earnings target keeps changing, this proves to be a challenge for individual Securities Analysts.
  

• View Chapter #19. This is Jeff Madrick's commentary on "Efficient Market Hypothesis."

• View Chapter #28. Comments on the automobile and bank bailouts make a lot a sense.
  

To paraphrase on Chapter #28, Jeff Madrick thinks the government should spend more time obtaining more information on the problem, be more critical on the assumptions (that the auto/banks have "hit bottom") and be looking more closely at the financial books of these companies.

Disclosure: Long Ford.