This link is appropriate to the topic – it gives Joel Nardoff the highest accuracy rating and credit for predicting the real estate bubble

http://www.philly.com/philly/blogs/phillyinc/Bloomberg_picks_Philadelphias_Joel_Naroff_as_top_economic_forecaster.html

Very interesting paper! Thanks for linking to it.

These items are jewels:

“The contrast is with neoclassical economics on which equilibrium models are based, where wealth plays no (or only a small) role and money is incidental to the economic process, which is seen as driven by real-sector fundamentals. This emphasis on financial balance sheets and the monetary nature of the economy is what distinguishes accounting models also from input-output models, which describe flows of goods and
services perhaps denominated in money terms, but without finance and the flow of funds it generates playing a role in the model dynamics.”

And this about Say:

In his Treatise on Political Economy he wrote that “[i]nstead of first observing the nature of things, or the manner in which they take place, of classifying these observations, and deducing from them general propositions, they commenced by laying down certain abstract general propositions, which they styled axioms, from supposing them to contain inherent evidence of their own truth. They then endeavoured to accommodate the particular facts to them, and to infer from them their laws; thus involving themselves in the defence of maxims evidently at variance with common sense and universal experience…” (Treatise on
Political Economy, Book I, paragraph 47).

This reminds of Reisman’s book “Capitalism” in which he uses an accounting approach to Austrian economics, and of what Skouzen wrote in his “Structure of Production” that accountants and finance people tend to use Austrian economics without knowing about it.

Steve Keen is our very own Aussie who saw this crisis coming. Steve has been pushing the need to look at neo classical economics with the view that it needs changing. For those interested in Australia we have managed to avoid most of the financial canage – so far. However the ticking time bomb here is our housing market, median prices are 8 times income (LTA is 3.5 times) our private debt ratio to GDP is 160%. Of course our RBA (FED) says there is no bubble and have even convinced our govt to boost first home ownership by providing a gift of $21K to first home owners – Sub Prime anyone. Australians to have enjoyed the feeding frenzy with easy credit over the past few years pushing house prices to double in the last 6 years.
Steve has a great blog for those interested it can be found at http://www.debtdeflation.com/blogs/.
Steve was recently acknowledged as the only Oz economist to see this coming but all here disagree strongly with his prediction that house prices here will deflate by 40% sometime in the next 10 years.
Ian – bubblepedia.net.au

About Steve Keen. I have actually had a few email exchanges with him and he threw me for a loop when he defined inflation as “increase in price”. He rejects the concept that monetary expansion can cause increase in price, something that I hold quite dear. While I acknowledge that a strict expansion of money does not GUARANTEE price increases because commercial banks do not HAVE to originate loans, but in a normal healthy economy where banks are not afraid to lend – they will and this will invariably lead to significant problems.

I personally define inflation strictly as expansion of money and I am glad someone here mentioned that Keen is a post-Keynesian. Bravo to a post-Keynesian for predicting the collapse though.