Robert Shiller was one of three people to be awarded the 2013 Nobel prize in economics.
The Nobel committee praised Shiller's work in forecasting asset prices.
Among his many accomplishments, Shiller predicted that the U.S. housing market was in a bubble during a time when everyone thought prices had nowhere to go but up.
And many are pointing to David Leonhardt's prescient August 2005 New York Times article titled "Be Warned: Mr. Bubble's Worried Again." In speeches, in television and radio interviews and in a second edition of his prophetic 2000 book, "Irrational Exuberance," he is arguing that the housing craze is another bubble destined to end badly, just as every other real-estate boom on record has.
...He predicts that prices could fall 40 percent in inflation-adjusted terms over the next generation and that the end of the bubble will probably cause a recession at some point.
..."This is the biggest boom we've ever had," said Mr. Shiller, who bought into the boom himself in 2002, with a vacation home near one of Connecticut's Thimble Islands. "So a very plausible scenario is that home-price increases continue for a couple more years, and then we might have a recession and they continue down into negative territory and languish for a decade.
"It doesn't even attract that much attention," he continued. "There will be many people thinking it was a soft landing even though prices may have gone down in real terms by 40 percent."
The then "largely unknown Yale economist" nailed it.
Here's a chart of the S&P/Case-Shiller Home Price Index showing that home prices peaked not long after this quote.
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