We'll never get out of this mess without honest analysis of how we got here

Bad analysis - both factually incorrect and intellectually dishonest - continues to make the meltdown worse, because it permits folks to be comfortable with the wrong solutions

Two items from this morning (and the day is young!):

1. Warren Buffett on CNBC repeating 3x already that 'no one thought real estate prices could go down'. The second time he said this he added the qualifier 'much'. File this under 'factually incorrect', and it's infuriating. There were hordes of experts who were terribly afraid for a very long time that housing prices were headed for a crash. They just weren't part of the echo chamber on Wall St (and in Omaha, apparently). Start here, as ever, with Robert Shiller of Yale. Here's a transcript from ABC's Nightline, from March 26, 2006 (three years ago!): http://cowles.econ.yale.edu/news/shiller/rjs_06-03-26_prophet.htm Excerpt: "You have to recognize that we've been building a lot of houses. And that supply is coming on. So we could see major price fall. The kind of enthusiasm that we've seen recently in real estate reminds me of the enthusiasm that we saw for stocks in the late '90s". Not enough warning for you? Perhaps he was too early for your taste? Maybe a Nobel Prize winner might convince you? Then try this on for size, from September 2007: Two top US economists present scary scenarios for US economy ... "US homes may lose as much as half their value in some US cities as the housing bust deepens, according to Yale University professor Robert Shiller. Meanwhile, Martin Feldstein of Harvard University says that experience suggests that the dramatic decline in residential construction provides an early warning of a coming recession. The likelihood of a recession is increased by what is happening in credit markets and in mortgage borrowing. Feldstein says that most of these forces are inadequately captured by the formal macroeconomic models used by the Federal Reserve and other macro forecasters."
2. Then tune into MCNBC (what's up with these GE networks?) to hear the loathsome Joe Scarborough assert in his usual smugly authoritative fashion: "too much spending and debt got us into this mess; how is spending and debt gonna get us out?" File this one under 'intellectually dishonest'. Dishonest in that it's glib, superficial, and purposely conflates consumer behaviors with governmental ones. Yes, too much consumer spending and debt got consumers into trouble. So much so that it will take the better part of the next decade to nurse consumers back to health. But consumer spending and indebtedness has no relation whatsoever to governmental spending and indebtedness - especially the US government, which own the world's de-facto central currency. The difference between consumer spending and governmental spending in an economic crisis is Econ 101 stuff. Especially now that the fed Funds rate is effectively 0%. Shall we do a little refresher? Lets, and we'll turn to another Nobelist, Prof. Paul Krugman: Here: Return of depression economics. And here: Media Matters post Note that these links, from a month ago, are in response to, yes, good ole Joe, who seemingly cannot listen, cannot learn, and surely cannot get Ronald Reagan off his mind. But he keeps on repeating the same lies... Here's Krugman: Right now, the interest rate is zero. The Fed can't rescue us this time, and that's why we can't do the things we did in the '80s. We have to have an approach that harks back to the things that worked very well in the first four years of the New Deal until Franklin Roosevelt was persuaded to go orthodox all over again

I like Buffett (who doesn't), and loathe Scarborough (ditto). But when they both spout nonsense within minutes of each other on national television we're all in trouble....