so whatever the underlying value of an asset, once it is being fueled by consumer debt there's a bubble; when ppl start selling in a slump to make payments, debtors are underwater, *pop*
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(in theory if pros bet with borrowed money their risks are hedged... and if they lose they stay solvent... and if they fail there is no contagion. in theory.)
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But foreknowledge of that depresses the net present value.
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foreknowledge of the volatility of the price of the asset depresses the npv, yes. (counterfactual) foreknowledge of the timing of a specific bubble doesn't (but i imagine you know that)
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If there was foreknowledge of timing we wouldn't have a bubble.
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right, or at least it's subject to lucas critique-like conceptual problems
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That's exactly where I was headed.
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