WEBVTT - Interview With Bill McBride: Masters in Business (Audio) 0:00:03.240 --> 0:00:07.560 This is Masters in Business with Barry Ridholes on Bloomberg Radio. 0:00:08.080 --> 0:00:10.920 This week on the podcast, I have an extra very 0:00:11.000 --> 0:00:15.280 special guest. His name is Bill McBride. He is the 0:00:15.320 --> 0:00:21.040 founder and runs the website Calculated Risk uh one of, 0:00:21.239 --> 0:00:25.000 if not the best economic blogs out there, according to 0:00:25.040 --> 0:00:30.120 pretty much everybody. So this was not my typical podcast 0:00:30.600 --> 0:00:33.520 in the regular interview when I'm supposed to be doing 0:00:34.080 --> 0:00:38.240 is asking questions and listening to what the guest responds, 0:00:38.560 --> 0:00:42.280 and asking follow up questions and going uh huh uh huh. Yes. 0:00:42.840 --> 0:00:48.240 But here's the thing. I know Bill since the first 0:00:48.320 --> 0:00:51.960 day he started blogging, we were exchanging emails. I was 0:00:52.080 --> 0:00:56.280 linking to him. I could I think I could honestly 0:00:56.320 --> 0:00:59.920 say I linked to Calculator Risks before anybody had an 0:01:00.120 --> 0:01:03.680 idea who they were. And um, I have been using 0:01:03.800 --> 0:01:07.160 his research and his charts for the better part of 0:01:07.880 --> 0:01:12.280 I don't know, ten eleven years, and we have always 0:01:12.600 --> 0:01:16.360 had an email relationship. I think we had a couple 0:01:16.400 --> 0:01:21.200 of telephone conversations, but I had never met Bill before 0:01:21.800 --> 0:01:25.040 until the night before we recorded this podcast. We went 0:01:25.080 --> 0:01:29.240 to dinner and I purposefully, with with eight people, I 0:01:29.319 --> 0:01:32.720 purposely did not speak to Bill and told him, I'm 0:01:32.720 --> 0:01:34.200 not going to talk to you until the two of 0:01:34.280 --> 0:01:37.800 us are in the studio, And so this is supposed 0:01:37.840 --> 0:01:41.800 to be an interview, but it's not. It's it's supposed 0:01:41.840 --> 0:01:47.040 to be a podcast Q and A. But it really 0:01:47.280 --> 0:01:51.360 is a genuine conversation between two people who know each 0:01:51.400 --> 0:01:54.280 other for a decade and really have never sat down 0:01:54.320 --> 0:01:57.760 and had a conversation before. So if you're looking for 0:01:57.800 --> 0:02:00.680 the usual Q and A that that I try and 0:02:00.720 --> 0:02:04.080 provide each week on the show, this isn't it. This 0:02:04.160 --> 0:02:06.520 is me and Bill just shooting the breeze. It's two 0:02:06.520 --> 0:02:09.919 guys who know and respect each other for a long time, 0:02:10.120 --> 0:02:15.280 and I found it illuminating and fascinating. Um, there's probably 0:02:15.360 --> 0:02:18.359 too much of me and it relative to what should be, 0:02:18.720 --> 0:02:22.079 so I'll apologize for that in advance. But hey, if 0:02:22.120 --> 0:02:25.480 you've ever known someone for what seems like forever but 0:02:25.639 --> 0:02:28.000 never met them, when you finally get to meet them, 0:02:28.040 --> 0:02:31.120 there's gonna be a lot of back and forth, and 0:02:31.520 --> 0:02:36.160 truth be told, I thought the conversation was fascinating. I'm biased, 0:02:36.440 --> 0:02:39.200 So let me stop babbling because you'll hear enough of 0:02:39.200 --> 0:02:43.160 that throughout the rest of the interview with no further 0:02:43.200 --> 0:02:47.480 Ado my two hour bull session with Bill McBride of 0:02:47.600 --> 0:02:54.840 Calculated Risk. This is Masters in Business with Barry Ridholts 0:02:55.040 --> 0:02:58.760 on Bloomberg Radio. I have a very special guest here 0:02:58.840 --> 0:03:02.359 is somebody I have known for quite a long time. 0:03:02.800 --> 0:03:05.720 Let me give you a quick background on Bill McBride, 0:03:05.800 --> 0:03:10.400 who is the proprietor of Calculated Risk. He launched the 0:03:10.440 --> 0:03:14.120 website in two thousand and five. The idea behind it 0:03:14.639 --> 0:03:20.000 let's put simple opinion free analysis and charts about economic 0:03:20.080 --> 0:03:24.240 data out in public where everyone can easily access it 0:03:24.320 --> 0:03:28.359 and understand it. Uh. It has been called the best 0:03:28.520 --> 0:03:32.840 of the economic blogs by such luminaries as Paul Krogman, 0:03:33.280 --> 0:03:36.960 The Wall Street Journal, Business Week, Time. Pretty much everybody 0:03:37.000 --> 0:03:39.840 puts the blog in its list of top twenty, or 0:03:39.880 --> 0:03:42.720 Top fifty, or top one hundred or top ten blogs. 0:03:43.520 --> 0:03:48.280 Bill's background is uh. He has an NBA from University 0:03:48.280 --> 0:03:54.040 of California, Irvine, with a background in management, finance, and economics. 0:03:54.440 --> 0:03:57.640 And he had been running a public company or involved 0:03:57.640 --> 0:04:01.560 in a public company in the he retired and was 0:04:02.120 --> 0:04:05.480 looking for something to do. UM. Bill McBride, welcome to 0:04:05.480 --> 0:04:08.400 bloom Bark. Thanks for having me, Barry. Let's start with 0:04:08.520 --> 0:04:11.400 your background so you're you're running a public company. You're 0:04:11.400 --> 0:04:14.400 one of the co founders of a medical devices company, 0:04:14.440 --> 0:04:15.960 is that right? That's correct. Yeah, I was the head 0:04:15.960 --> 0:04:17.960 of R and D. So so tell us about this 0:04:18.040 --> 0:04:21.719 what what was this company about? Ultimately it got sold 0:04:21.760 --> 0:04:24.920 to a larger company. Yeah. Where we started in the eighties, 0:04:25.480 --> 0:04:29.560 we were designing cardiac telemetry, which is it's it's like 0:04:29.600 --> 0:04:32.039 a little box that you wear on you in the 0:04:32.080 --> 0:04:35.160 hospital that connects the picks up your e c G 0:04:35.680 --> 0:04:37.719 and sends it to a central monitor in the hospital. 0:04:37.760 --> 0:04:40.400 It's for in hospital use. Did you have a background 0:04:40.440 --> 0:04:43.040 in in medicine? I had. I had worked previously in 0:04:43.080 --> 0:04:46.799 a telecommunications company, so it was more technology than medical. Yes, 0:04:46.880 --> 0:04:49.520 and my mindergraduate grease and chemistry, so you know, it's 0:04:49.560 --> 0:04:52.200 kind of a mix of things. And so what we 0:04:52.240 --> 0:04:55.960 did is we um we kind of revolutionized that industry 0:04:56.000 --> 0:04:58.600 because in the eighties was when everybody was making the 0:04:58.640 --> 0:05:01.520 transition to digital in a out of different areas, and 0:05:01.560 --> 0:05:04.000 we used some of the cell phone technology to make 0:05:04.000 --> 0:05:07.640 the first digital cardiac telemetry. So so when someone gets 0:05:07.680 --> 0:05:12.120 an e KG in a hospital or the monitoring UM, well, 0:05:12.200 --> 0:05:17.479 you know, if you're in particular awards in the hospital, um, 0:05:17.640 --> 0:05:21.359 postcardiac surgery. If they once they like to take you 0:05:21.400 --> 0:05:24.960 off the bedside monitor and put you on a little 0:05:25.160 --> 0:05:27.760 telemetry unit so you can get up and walk around 0:05:27.839 --> 0:05:30.479 and still be monitored. And so that's the use for it. 0:05:30.680 --> 0:05:32.800 There's other We also pick up other parameters in addition 0:05:32.839 --> 0:05:34.480 to E c G and then we sent it back 0:05:34.480 --> 0:05:36.800 to a central monitor with With that, then they can 0:05:36.839 --> 0:05:39.039 have a nurses station, they can monitor the people walking 0:05:39.080 --> 0:05:41.960 around the hospital. So what happened with this company in 0:05:42.000 --> 0:05:44.880 the nineties, So well, we we we grew very quickly. 0:05:45.360 --> 0:05:49.280 We we designed telemetry for most of the major medical 0:05:49.320 --> 0:05:51.960 device companies. They started using ours under their own name, 0:05:52.440 --> 0:05:56.080 and then uh we took it public in nine and 0:05:56.120 --> 0:06:00.200 then sold it to ge Medical. And at that point 0:06:00.360 --> 0:06:04.799 you are gainfully unemployed, that's correct, as one of the founders. 0:06:04.839 --> 0:06:09.040 So the site launches in oh five. What led you 0:06:09.080 --> 0:06:13.160 to say, I have an idea, let's analyze economic data. Well, 0:06:13.560 --> 0:06:16.200 economics is always a hobby for me, and uh I 0:06:16.240 --> 0:06:18.080 specialized that and when I got my m b A, 0:06:18.440 --> 0:06:22.599 that was my focus. Um, you know I in the 0:06:22.600 --> 0:06:24.320 early two thousands, I had a few things that I 0:06:24.360 --> 0:06:26.800 was doing in two thousand four. I remember thinking, what 0:06:27.040 --> 0:06:29.119 is a blog? And I think I stumbled across yours 0:06:29.120 --> 0:06:32.000 said the big picture. Uh I if you remember Angry 0:06:32.000 --> 0:06:34.800 Bear when it was rich the three PhD economists, and 0:06:34.880 --> 0:06:36.400 so that kind of inspired me. I said, well, you 0:06:36.440 --> 0:06:38.120 know what to really understand that, I'll just do one. 0:06:38.279 --> 0:06:40.240 So I'll start a blog, but I'm not going to 0:06:40.320 --> 0:06:44.120 write it about politics like most of the blogs I saw, 0:06:44.880 --> 0:06:47.880 And what I want to focus on is housing because 0:06:48.040 --> 0:06:50.640 of what I was seeing in southern California had just 0:06:50.880 --> 0:06:53.200 gone off the rail. Yeah. You know, I was at 0:06:53.200 --> 0:06:55.760 the gym one day and I was talking to this 0:06:55.920 --> 0:07:00.760 attractive young lady who was a secretary for the Hurly 0:07:00.800 --> 0:07:05.920 T shirt company. Oh sure, I know exact stuff. And 0:07:05.920 --> 0:07:08.200 and uh, one day she came in and she goes, Bill, 0:07:08.240 --> 0:07:12.400 I just bought a condo. Now this condo she bought, 0:07:12.440 --> 0:07:15.200 she bought for four hundred and some thousand dollars. And 0:07:15.200 --> 0:07:16.800 she had already told me she was making. She had 0:07:16.840 --> 0:07:19.320 moved up. This is No. Four, This is a No. Four, 0:07:19.440 --> 0:07:21.760 and she was she was probably making. You know, she 0:07:21.800 --> 0:07:24.640 had had gotten up to about forty a year and income, 0:07:24.800 --> 0:07:29.160 so forget the old rule of two times tend to 0:07:29.560 --> 0:07:32.760 tend to one with no money down. And so after 0:07:32.840 --> 0:07:34.800 she told me the story, I said, how can you 0:07:34.840 --> 0:07:36.720 afford that? When she started telling me about the teaser 0:07:36.760 --> 0:07:38.400 rate she had for the first year or two, and 0:07:38.480 --> 0:07:40.960 I said, well, what happens when that that comes do? 0:07:41.560 --> 0:07:44.120 And she goes, well, I'll just either you know, might 0:07:44.120 --> 0:07:47.040 either I will have more income, or I'll sell the unit. 0:07:47.040 --> 0:07:48.560 And I thought, well, she if this is happening all 0:07:48.600 --> 0:07:49.960 over the place, there's gonna be no one to sell 0:07:50.000 --> 0:07:52.440 it to. So I went home that day and started calling, 0:07:52.800 --> 0:07:55.000 you know, some mortgage bankers I knew, and I said, 0:07:55.080 --> 0:07:58.040 is this really possible? Oh yeah, you know, you don't 0:07:58.080 --> 0:08:00.240 have to have you know anything, you know in um 0:08:00.800 --> 0:08:03.280 you know the ninja loans, no income, no job, you know. 0:08:03.360 --> 0:08:05.920 She she was, yeah, no, acid she was. She was 0:08:06.000 --> 0:08:10.800 a great client, she had a job. Okay, So so 0:08:10.920 --> 0:08:15.880 you launched the blog and you decided to do something 0:08:15.920 --> 0:08:21.280 a little different than most blogs. Calculated Risk is fairly 0:08:21.680 --> 0:08:25.880 opinion free every now and then, and it's much more 0:08:26.000 --> 0:08:29.040 rare than the average blog. You'll come out and say 0:08:29.600 --> 0:08:32.120 this is my opinion about X y Z. I mean, 0:08:32.320 --> 0:08:35.880 that's like an annual event. Most of the time, you're 0:08:35.880 --> 0:08:39.240 just saying, here's the data, Here's what it means. Why 0:08:39.280 --> 0:08:41.400 get why do you know? I do slip in a 0:08:41.440 --> 0:08:43.640 sentence or two here and there about what I think 0:08:43.840 --> 0:08:46.520 is happening with that data. And then every once in 0:08:46.520 --> 0:08:50.160 a while, I will, like you're saying, right, a overview 0:08:50.200 --> 0:08:52.040 piece of where I think we are in the economy 0:08:52.080 --> 0:08:54.640 and where we're going. You know, back in in two 0:08:54.640 --> 0:08:57.400 thousand five, one of the things I focused on was, uh, 0:08:57.880 --> 0:09:00.800 I was actually calling up regulators and asking them why 0:09:00.840 --> 0:09:03.120 they're not doing anything? So I I, you know, I 0:09:03.200 --> 0:09:05.679 and I would write about how which either regulators are 0:09:05.679 --> 0:09:08.960 not doing their job and here's why I'm Barry Ridolts. 0:09:09.120 --> 0:09:12.640 You're listening to Masters in Business on Bloomberg Radio. My 0:09:12.720 --> 0:09:16.720 guests this week is Bill McBride. He is the founder 0:09:16.760 --> 0:09:22.080 and chief author of the highly regarded economics blog Calculated Risk. 0:09:23.120 --> 0:09:27.400 Let's jump right back into this. You've developed an expertise 0:09:27.440 --> 0:09:33.240 in in mortgages and housing and real estate economics. Was 0:09:33.280 --> 0:09:35.480 that something that you had done in a previous life 0:09:35.559 --> 0:09:38.520 or is it just you gravitated it towards that because 0:09:38.520 --> 0:09:41.520 you were in southern California and real estate in the 0:09:41.559 --> 0:09:44.560 early two thousands had just gone insane in California. Well, 0:09:44.720 --> 0:09:46.840 it really is a combination of things. My dad was 0:09:46.880 --> 0:09:48.880 in real estate, and he was and he was a builder. 0:09:49.760 --> 0:09:51.800 My mother was a real estate agent. So it was 0:09:51.800 --> 0:09:55.320 always supper time conversation. Did you have that sort of 0:09:56.000 --> 0:09:58.800 I at least saw what he was doing and chatted 0:09:58.840 --> 0:10:01.440 with him about it. Uh, you know, after I started 0:10:01.480 --> 0:10:05.120 my career, I was more science and technology oriented, but 0:10:05.600 --> 0:10:08.560 I always have been interested in real estate. And so 0:10:08.960 --> 0:10:10.640 you know, I mean I and and you know, I 0:10:10.640 --> 0:10:12.400 had that a little bit of a background of what 0:10:12.520 --> 0:10:15.120 they went through. And I saw my dad go through 0:10:15.240 --> 0:10:17.360 the ups and downs. Where was he a builder? What 0:10:17.400 --> 0:10:19.840 part of the country in down to San Diego? Ah, 0:10:19.920 --> 0:10:22.640 So that was really an interesting and fast growing But 0:10:22.960 --> 0:10:26.000 your dad was in the Navy. There's a huge naval 0:10:26.000 --> 0:10:28.000 base since in fact, I think that's how we ended 0:10:28.040 --> 0:10:31.360 up there. That makes sense, Cornado Island in that whole area, 0:10:31.920 --> 0:10:34.600 So we went from the Navy to San Diego to 0:10:34.600 --> 0:10:37.959 San Diego and housing. So post war that had to 0:10:38.000 --> 0:10:40.920 be just a huge boom over there. Yeah, san Diego 0:10:41.000 --> 0:10:43.199 was booming the whole time. I you know, when we 0:10:43.280 --> 0:10:45.400 moved there when I was five, and so you know, 0:10:45.440 --> 0:10:47.480 I was there until I went away to college. It 0:10:47.559 --> 0:10:50.840 was boom time back in the it was the sixties 0:10:50.840 --> 0:10:55.280 and seventies and and but even then there were big 0:10:55.280 --> 0:10:58.320 waves cycles. Yes, you could you could see the ups 0:10:58.320 --> 0:11:00.319 and downs. There were times when my dad was clearly 0:11:00.320 --> 0:11:04.000 struggling financially, you know, elctially, my mom was a elementary 0:11:04.040 --> 0:11:07.760 school principle, so she had a good, steady income. Uh 0:11:07.800 --> 0:11:10.360 so they could offset each other. So so, how do 0:11:10.400 --> 0:11:14.680 you respond to the comment that was everywhere back in 0:11:14.720 --> 0:11:17.960 the early two thousand's, you know, we've never had a 0:11:18.000 --> 0:11:22.000 downturn in the price of housing in the United States. Well, well, 0:11:22.040 --> 0:11:24.559 first of all, that's not true. It's utterly false. There 0:11:24.559 --> 0:11:27.080 have been repeated examples all the way back to the 0:11:27.080 --> 0:11:29.520 Great Suppression. You know. One of the things is if 0:11:29.600 --> 0:11:31.560 if you remember, I'm sure you do, back in two 0:11:31.640 --> 0:11:34.120 thousand and five, is the data wasn't very good or 0:11:34.200 --> 0:11:37.360 very available, especially on house prices. You know, we we 0:11:37.440 --> 0:11:40.400 had the what's now the f h f A house 0:11:40.440 --> 0:11:42.960 pricing decks just based on the Fannie and Freddie mortgages. 0:11:43.360 --> 0:11:45.960 But we didn't have Case Shiller publicly available, or core 0:11:46.040 --> 0:11:48.839 Logic public or several of the other you know, Zilo, 0:11:49.000 --> 0:11:51.640 that was just that wasn't even somebody's thought yet, you know. 0:11:51.800 --> 0:11:54.560 And so now we have so much better data, and 0:11:54.600 --> 0:11:57.080 some of those guys case Shiller and core Logic have 0:11:57.720 --> 0:12:01.080 published their data back to previous times, and you can't 0:12:01.080 --> 0:12:03.240 see those ups and downs. And so the people that 0:12:03.280 --> 0:12:05.240 were saying there were no ups and downs, there was 0:12:05.240 --> 0:12:08.199 no real good data for them to make that argument. 0:12:08.480 --> 0:12:10.760 And and obviously they had never lived in southern California, 0:12:10.760 --> 0:12:12.720 because I had seen the ups and downs in the 0:12:12.760 --> 0:12:15.640 house prices absolutely and and like there was a there 0:12:15.720 --> 0:12:18.640 was a real boom in the eighties. House prices peaked 0:12:18.640 --> 0:12:21.800 around nineteen nine in my area, and they slid all 0:12:21.840 --> 0:12:25.280 the way to the same exact experience in New York 0:12:26.120 --> 0:12:29.800 seven crash shakes Wall Street, a little bit alan Greenspan 0:12:30.000 --> 0:12:33.600 cuts rates. You have a little bit of a surgeon 0:12:33.800 --> 0:12:36.680 in real estate throughout the eighties, and then it rolled over. 0:12:36.679 --> 0:12:38.760 If you bought a condo or co op in New 0:12:38.840 --> 0:12:42.160 York in nine, you did not get back to break 0:12:42.240 --> 0:12:46.640 even on that purchase price until plus or minus. And 0:12:46.640 --> 0:12:49.599 you can see in the charts. But during the Great Depression, 0:12:50.040 --> 0:12:53.160 we know real estate prices of course plummeted, and I 0:12:53.200 --> 0:12:55.800 think it was someone at Columbia, I'm not positive did 0:12:55.800 --> 0:12:59.280 a study on Manhattan real estate and they estimated that 0:12:59.320 --> 0:13:02.920 real estate price has dropped sev during the Great Depression. 0:13:03.280 --> 0:13:05.840 I mean, how do you just shrug that off in 0:13:05.920 --> 0:13:09.480 your models? It's it's impossible. I never understood why people 0:13:09.600 --> 0:13:11.439 say real estate prices I never go down. I never 0:13:11.480 --> 0:13:14.040 understood it because there's there's plenty of evidence. Even though 0:13:14.080 --> 0:13:16.079 we don't have the data that we have today, there 0:13:16.120 --> 0:13:19.200 was still plenty of evidence. So so let's talk about 0:13:19.920 --> 0:13:23.200 I've I've been using the charts and the information you 0:13:23.240 --> 0:13:26.480 put on cafe thank you for for how long? I mean, 0:13:26.520 --> 0:13:31.840 it's got to be at least a decade. And I 0:13:31.880 --> 0:13:34.400 got into a fight with the Wall Street Journal about 0:13:35.080 --> 0:13:38.240 it was I want to say, oh six or oh seven, 0:13:38.840 --> 0:13:41.880 and they were doing the look real estate prices are improving, 0:13:42.600 --> 0:13:46.199 and the response was, well, no, it's June. They oh, 0:13:46.320 --> 0:13:48.000 you're looking at it month over month. You have to 0:13:48.040 --> 0:13:50.760 look at it year over year. So I grabbed and 0:13:50.800 --> 0:13:52.480 I brought a copy of it. I'll put it up 0:13:52.480 --> 0:13:56.560 on the site. I grabbed your existing home sales year 0:13:56.600 --> 0:14:02.360 over year by month that shows the same seasonality it right, 0:14:02.559 --> 0:14:06.040 you know it it's at its nata in December and January, 0:14:06.120 --> 0:14:09.800 it slowly rises throughout the spring, peeks later in the 0:14:09.800 --> 0:14:12.880 fall and rolls off. You can't just look at June 0:14:13.000 --> 0:14:16.120 versus February and say, oh, housing is fine. But that's 0:14:16.160 --> 0:14:18.640 what a lot of media was doing. Yeah, you know, 0:14:18.880 --> 0:14:20.720 I think that was one of the issues back in 0:14:20.760 --> 0:14:23.560 two thousand and five was the media. I don't think 0:14:23.560 --> 0:14:26.080 they really knew how to report housing. There was some 0:14:26.800 --> 0:14:29.160 but to say that people missed it completely is wrong. 0:14:29.200 --> 0:14:31.680 There were some excellent articles, for sure, and and there 0:14:31.680 --> 0:14:36.280 were some award winning articles. And and give us David Strettfield, 0:14:36.480 --> 0:14:38.000 who was at the l A Times at the time, 0:14:38.040 --> 0:14:40.440 now he's in New York Times. He won awards for 0:14:40.520 --> 0:14:43.840 his housing articles. They were excellent. And uh, you know, 0:14:44.040 --> 0:14:46.360 I mean so so there were there were plenty of 0:14:46.400 --> 0:14:48.640 good articles, but I think they got lost in the 0:14:48.640 --> 0:14:50.640 bad articles. And and you know, and you know how 0:14:50.680 --> 0:14:54.400 the balance media works in classic false equivalent. If you 0:14:54.520 --> 0:14:57.160 if you, if you talk to somebody who was very 0:14:57.200 --> 0:14:59.240 concerned about housing, it could make a good argument on 0:14:59.280 --> 0:15:02.800 the making mortgages. They would always go talk to somebody 0:15:03.040 --> 0:15:06.160 who was impressive background who would say they own house 0:15:06.200 --> 0:15:09.080 prices never go down. Uh, there's nothing to worry about, 0:15:09.160 --> 0:15:12.360 you know. And and so I think for the average 0:15:12.400 --> 0:15:15.240 person who was getting their information that way, it was 0:15:15.320 --> 0:15:17.800 difficult to see that there was a problem. Now. I 0:15:17.880 --> 0:15:20.000 run into people all the time to say, you know, 0:15:20.040 --> 0:15:22.920 I thought there was something really wrong. So most people 0:15:23.160 --> 0:15:25.520 in the back of their minds, especially people in areas 0:15:25.600 --> 0:15:30.760 like you know, southern California, Florida, you know, Nevada, they 0:15:30.800 --> 0:15:33.120 were thinking, I think a lot of people are going 0:15:33.160 --> 0:15:35.960 there's something wrong here. How much of that is hindsight 0:15:36.040 --> 0:15:38.680 bias where but by the way, it could be. You 0:15:38.840 --> 0:15:44.200 recall the number of people legitimately in prints in a 0:15:44.360 --> 0:15:48.760 verifiable way warning about housing prices. There were a handful 0:15:48.800 --> 0:15:51.600 of people, a handful of us. You were one, well, 0:15:51.640 --> 0:15:53.640 you me, you know, I, I know a few other 0:15:53.680 --> 0:15:56.520 people they were doing it. But now every person I met, Oh, 0:15:56.560 --> 0:16:00.280 of course I knew the housing crisis was about to collapse. Well, well, 0:16:00.320 --> 0:16:02.600 I just I just looked at certain data and said, 0:16:02.960 --> 0:16:07.120 this ratio which has been consistent home price to meeting income, 0:16:07.520 --> 0:16:10.760 the cost of renting versus cost of owning. You covered 0:16:10.800 --> 0:16:13.800 a ton of this stuff how how frustrating was it 0:16:14.080 --> 0:16:17.360 when you saw the train wreck coming, but you couldn't 0:16:17.360 --> 0:16:20.640 really convince the average person that hey, something wicked this 0:16:20.680 --> 0:16:23.960 way comes. Well, you know, I I was really focused 0:16:24.000 --> 0:16:27.320 on trying to to to get the regulators to pay 0:16:27.360 --> 0:16:30.360 attention to it, and and that was a very frustrating 0:16:30.400 --> 0:16:33.840 process because they because they were paying attention to it, 0:16:34.120 --> 0:16:37.320 but they couldn't do anything. Their hands were tied. And uh, 0:16:37.440 --> 0:16:39.560 you know, the the regular person. Uh, you know, I 0:16:39.600 --> 0:16:42.320 started my blog, I was writing. I was writing for 0:16:42.400 --> 0:16:46.440 friends and relatives, you know, so I was mostly just saying, hey, 0:16:46.600 --> 0:16:48.920 you know, if they asked me, I would tell them 0:16:48.960 --> 0:16:53.000 don't buy please, don't buy anything. You know. Uh you 0:16:53.000 --> 0:16:55.080 know it's but you know, you put a blog out 0:16:55.120 --> 0:16:56.760 there in public, and so all of a sudden people 0:16:56.800 --> 0:16:59.920 start reading it. I'm very hults you're listening to mass 0:17:00.120 --> 0:17:03.000 was in Business on Bloomberg Radio. My special guest this 0:17:03.040 --> 0:17:06.280 week is Bill McBride. He is the founder of the 0:17:06.359 --> 0:17:11.480 Calculated Risk website, lauded by everyone from Business Week, Wall 0:17:11.480 --> 0:17:14.639 Street Journal, uh New York Times as the single best 0:17:14.720 --> 0:17:19.280 economics blog there is. Um I put out a request 0:17:19.400 --> 0:17:22.040 on the Big Picture as well as on Twitter uh, 0:17:22.080 --> 0:17:25.000 if any of your readers had questions for you, and 0:17:25.040 --> 0:17:27.760 I got a long list of stuff, let's let's jump 0:17:27.840 --> 0:17:29.399 into some of them. I think some of these are 0:17:29.440 --> 0:17:34.200 really interesting. First question, you're one of the few bloggers 0:17:34.200 --> 0:17:38.199 who still maintains a comments section, and it's a mess. Sorry, 0:17:38.240 --> 0:17:43.199 but I think that's honest. Why maintain comments? That's a 0:17:43.200 --> 0:17:48.240 great question. And and uh, you know, comments early in 0:17:48.440 --> 0:17:53.440 the blog were unbelievably outstanding, amazing. As a matter of fact, 0:17:53.440 --> 0:17:55.320 I thought the comments, who are one of the key 0:17:55.359 --> 0:17:59.639 elements to the blog. The comments turned more into just 0:17:59.760 --> 0:18:06.560 a at session about unrelated information, off topic, trolls, spam, 0:18:06.880 --> 0:18:09.520 it's gone off the right. Yeah, well you know, NPR, 0:18:09.600 --> 0:18:12.080 by the way, just killed their common sense. You know. 0:18:12.119 --> 0:18:15.439 We we do have a comment section where people have 0:18:15.520 --> 0:18:19.840 to register so that you can't just get the drive 0:18:19.920 --> 0:18:24.120 by commentors, so the trolling goes down, but the it's 0:18:24.200 --> 0:18:27.920 it's basically off topic most of the time. BuzzFeed does 0:18:27.960 --> 0:18:30.719 this thing now where you can comment, but only if 0:18:30.720 --> 0:18:34.040 you register through Facebook, which is your real identity, so 0:18:34.160 --> 0:18:36.919 you lose a lot of the really off the change. 0:18:37.080 --> 0:18:41.280 But the racist nonsense, yeah, you know, the they and 0:18:41.320 --> 0:18:43.959 we don't have that for the most part. And you know, 0:18:44.359 --> 0:18:47.080 those people that are racists are bigoted in some way. 0:18:47.119 --> 0:18:51.240 We've tried to band but the I keep it because 0:18:51.240 --> 0:18:54.159 a lot of the old timers are still there, but 0:18:54.240 --> 0:18:57.080 they chat more than they more than the economic content, 0:18:57.119 --> 0:18:59.720 and they're kind of friends so they so, you know, 0:18:59.760 --> 0:19:02.600 I just I leave it for them. If people don't 0:19:02.640 --> 0:19:05.000 like the comments, then don't don't participation, don't read the 0:19:05.000 --> 0:19:08.399 comments exactly. That's my view. And I if there's you know, 0:19:08.440 --> 0:19:11.800 if there's ever you know, the anti semetic things I 0:19:11.920 --> 0:19:14.439 banned so many people, well, it gets to be a 0:19:14.480 --> 0:19:19.400 giant curation time sockets complicated. I had some people write 0:19:19.440 --> 0:19:21.720 me when I killed comments on the Big Picture, which 0:19:21.760 --> 0:19:26.159 is years ago. Um, well thanks for the site, but 0:19:26.280 --> 0:19:28.639 I'm done. If you don't have comments, you know, you 0:19:28.800 --> 0:19:31.520 understand how many hours a week it is to maintain 0:19:31.560 --> 0:19:35.680 the comments, and you guys don't see the really horrific comments, 0:19:35.720 --> 0:19:38.480 and it just got to be a total dreg But 0:19:38.640 --> 0:19:40.880 that was a lost era. I thought the comments were 0:19:40.920 --> 0:19:44.760 fantastic on you could read a really interesting article and 0:19:44.800 --> 0:19:48.520 then spend a half hour reading some really smart, insightful 0:19:48.600 --> 0:19:51.520 feedback on that audit there. Well, you know. I'm sure 0:19:51.800 --> 0:19:53.800 some of your commenters are asked you any many of 0:19:53.840 --> 0:19:56.280 mine were, Uh, one of the one of the I'm 0:19:56.320 --> 0:19:58.760 sure we're going to talk about my code blogger, Tanta. 0:19:58.800 --> 0:20:02.480 At some point I met Tanta through the comments. Yeah. 0:20:02.520 --> 0:20:06.360 She she showed up and was commenting, and every time 0:20:06.520 --> 0:20:08.240 she would either correct something I had said. If I 0:20:08.280 --> 0:20:11.560 said something about the mortgage industry, and I would call 0:20:11.600 --> 0:20:13.680 it my mortgage banker friends, and they go, oh, yeah, 0:20:13.680 --> 0:20:16.639 she's right, all right, So I instantly corrected on my 0:20:16.640 --> 0:20:19.960 blog and I'd credit Tanta and and uh, or she 0:20:20.000 --> 0:20:22.119 would say, hey, yeah, that's you know. She she was 0:20:22.160 --> 0:20:25.119 really sharp, she knew everything, and she was very quick witted. 0:20:25.359 --> 0:20:27.679 And so that's how I actually got to know my 0:20:27.760 --> 0:20:30.360 code blogger. Through the comments. That's where I met her. 0:20:30.480 --> 0:20:33.199 So so let's talk about that she starts writing for you, 0:20:33.400 --> 0:20:37.160 and well she this is what happened, and she commented 0:20:37.160 --> 0:20:40.720 a lot in two thousand five. In two thousand six, 0:20:40.760 --> 0:20:44.640 she disappeared from the comments. About six months later, she 0:20:44.840 --> 0:20:49.359 reappeared and she told me that she had been diagnosed 0:20:49.400 --> 0:20:54.200 with stage four ovarian cancer, had had left her job, uh, 0:20:54.240 --> 0:20:56.800 and she had stopped commenting because she wasn't able to 0:20:56.960 --> 0:20:58.520 and she didn't even think she was going to live 0:20:59.240 --> 0:21:02.040 and so uh, I then asked her, well, why don't 0:21:02.040 --> 0:21:04.719 you come and write for the blog if you're not working, 0:21:04.920 --> 0:21:08.000 because she's working in the mortgage industry, and uh, and 0:21:08.240 --> 0:21:10.520 it took me a little convincing, but she started in 0:21:10.960 --> 0:21:13.560 I think her first post was in December two thousand six, 0:21:14.440 --> 0:21:17.199 and almost two years before she passed away. So she 0:21:17.320 --> 0:21:18.960 was a regular on the side for a while, but 0:21:19.040 --> 0:21:22.040 and ultimately succumbed to the illness. Yes, but you know, 0:21:22.080 --> 0:21:26.480 she was stunning before she started writing for the blog. 0:21:26.560 --> 0:21:30.240 I probably wrote longer pieces. And then when she showed up, 0:21:31.000 --> 0:21:35.680 she undergraduate Greems in literature. Her pieces were brilliant. Uh, 0:21:36.000 --> 0:21:38.400 they were they they One of her goals, she said, 0:21:38.440 --> 0:21:41.359 was to make blogs entries could be long and still 0:21:41.440 --> 0:21:45.520 well read. And she accomplished. Uh. She would explain mortgage 0:21:46.000 --> 0:21:49.320 uh issues in complete detail and all that stuff still 0:21:49.359 --> 0:21:52.680 on the blog. Um. And you know, people from the 0:21:52.720 --> 0:21:55.800 Federal Reserve were crediting her and in papers they were 0:21:55.840 --> 0:21:58.960