The Importance of Expectations in the Bubble

I think that during this bubble, absolutely, there was that to use Schiller's phrase, irrational exuberance. And I would like to say that I think I originated the expectation argument in the context of Aussie property. For so many years, for over a decade, I have had countless arguments with all stakeholders to eviscerate the view that you could only have a big full on house prices if there was a big increase in unemployment. Every economist in Australia has peddled this entirely fallacious perspective and it is absolute BS.