Yale economist says world has entered a ‘Late Great Depression’

April 30, 2012 – ECONOMICS – The world is in a state of a “Late Great Depression,” well-known economist and author Robert Shiller told CNBC Monday. The Yale economics professor, who helped devise the Case-Shiller index for housing market trends, and famously called the dotcom bubble of the early 2000s and the housing market bubble later in the decade, told “Squawk Box Europe” that the world is in a “New Age of austerity.” “Our whole economy has been affected by variations in confidence. Central banks are sort of trusted, but the actions they have often affect people’s confidence by appearance rather than substance. We’re not in the most trusting mood now,” Shiller said. Many economists believe that the embattled euro zone has already entered the second part of a double-dip recession, with official figures due out this week expected to confirm as much. Shiller said that the U.S. housing market was “really hard to forecast” at the moment, but added: “The general presumption is that home prices are going down and that’s good — it’ll make them more affordable.” Continued weakness in the U.S. housing market, including new lows for the Case-Shiller Index, has led to concerns that the market will take a long time to start climbing up again. Shiller argues that a gradual decline in the cost of buying a home could help people diversify their finances rather than just relying on their homes as an investment. “Fifty years ago, there wasn’t this talk of housing as an investment. It was a zeitgeist of the early 2000s, and it has gradually gone,” he said. –MSNBC