CeraWeek: Rogoff predicts home prices to fall 25 percent

In a media Q&A Harvard economist Kenneth Rogoff reiterated his belief that U.S. housing prices could drop by 25 percent thanks to the current subprime mortgage crisis. But that needs to be framed in the perspective of the massive increase in home values the country has seen in recent decades.
Essentially this would amount to “… giving back half that gain.”
And, despite the look politicians give him, Rogoff said uses every opportunity to bring up the notion of a carbon tax — as opposed to a cap and trade system for reducing carbon dioxide emissions.
“The one policy most economists agree on is absolutely necessary is a carbon tax in some measure,” Rogoff said. “I don’t think there’s any doubt in the next 20 years there will be a tax.”
Cap and trade schemes — where polluters are allocated a fixed number of emission credits per year which are reduced over time — tend to be particularly complicated and ultimately inefficient, Rogoff said.
“The failure of the U.S. assert leadership here is a staggering error,” Rogoff said, but he doesn’t just blame the Bush administration.

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