Breaking news: Financial markets don't always go up

The liberal blogger-fest known as Eschacon '08 is wrapping up now with a panel called DFH Economics. The "D" stands for "dirty," while the "H" stands for "hippie." If that's true, then it sounds like the hippies know more about economics than the suits. Among the speakers are Atrios/Duncan Black, who has a Ph.D. in economics from Brown, and Princeton's Paul Krugman, the New York Times columnist.

The bottom line is this: They said they knew the market was headed for trouble when people began to speculate on houses, which unlike the Internet of the 1990s bubble is something that's been around for about 5,000 years.

"It's not some radical new technology -- it's housing," Krugman said. "There's this idea that if you believe in capitalism, you have to believe that markets always go up." In fact, Krugman said he read that sentiment on the editorial page of the Wall Street Journal. In the meantime, many economists were predicting that ever greedy hedge funds could drive a collapse, including a 2001 mock study of such a fund that the author called Capital Decimation Partners.

Economists have a sense of humor -- who knew?

Overall, I'd have to say that the political mood here at Eschacon '08 is a little more upbeat than the economic forecasts, but decidely mixed. There is great pride that the Internet and blogging has given a voice to many people who felt powerless earlier in the decade, during the Florida recount and the runup to war in Iraq.

On the other hand, there is a sense that there is a long way to go, in ending the war, in overhauling healthcare, in winning more media accountability in an era of shrinkage, and -- most importantly for the attendees -- electing a Democratic president in a year when all the broader indicators would point to a GOP defeat, but it's not necessarly playing out that way.

The media piece is critical -- I'll have some more to say about that on Monday.