Can't We Have Better Economic Critiques Of The Efficient Market Hypothesis (EMH)?

Brad DeLong is unhappy with a Robert Lucas Economist article defending the effcient market hypothesis.

The following is a comment I posted on Brad DeLong's Blog, Grasping Reality with Both Hands, about his posting,"Why Oh Why Can't We Have Better Nobel Laureates in Economics (Robert Lucas Suddenly BFF with Ben Bernanke Edition)."

My comment to DeLong's posting follows:

"The disappointment with economists is not because there were none of us who forecast the possibility of the crisis we are in, but rather that economists like Robert Lucas and myself [Brad DeLong] did not listen with sufficient care and attention to hte Michael Mussa posse."

You inadvertently are the best defense of Robert Lucas, his article and the efficient market hypothesis. If a respected economist at a top ten economics school, such as yourself, did not find the analysis and predictions of Dean Baker, Richard Thaler, Robert Shiller, and Michael Mussa compelling so that you would take action, make investment decisions based on their advice, and argue for policy changes, what can be expected of other economists, policy makers, and home buyers?

Additionally, you admit you were in the midst of writing a paper, presumably with economically cogent, logical and correct arguments against the conclusions of the economic doomsayers.

It is not that Shiller saw the heightened potential of the decline in home prices that is important. What is important is that there was no reason to believe that his predictions and analysis were any more or less accurate than any other prediction in the noisy environment of future home price predictions. Economic research on bubbles shows that they can also last a long time and revert to fundamental levels gradually as opposed to crashing.

Is timeliness an important factor for your respect of the predictions that home price levels were unsustainable or can a bubble crash prediction be made a few years too early and still be respected? Is predicting the extent of the downturn important? Was Shiller's prediction any more than what goes up must come down?

I assume that the economists you mentioned have made other predictions over the years. How accurate are their other predictions as to results, timing, duration and severity? Were these four and others who made the same predictions just lucky this time?

Your behavior is a defense of the efficient market hypothesis. Given the information that you knew and that was available to you, you could not credibly see the coming decline in home prices and you did not act or invest as if a decline was coming. That is all the efficient market hypothesis says. Available information is not actionable to the extent that it will allow someone to make profits beyond that expected by chance and risk.

Thank you for showing through action that Robert Lucas, Eugene Fama and many other EMH proponents are right.