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He predicted the tech-stock collapse. He foresaw the housing bust.

So naturally, everyone wants to know what Robert Shiller thinks of today’s stock prices, now perched at a four-year high. Or about the direction of home prices.

Keep your hopes in check. Shiller is disinclined these days to offer specific predictions about the direction of stocks, home prices or any other asset whose prices can surge or plunge before we can fully grasp what’s going on.

In his 2000 book “Irrational Exuberance,” Shiller warned of a stock-market bubble. Five years later, Shiller detected a bubble in home prices and argued that it posed a grave threat.

Shiller, a Yale economist, is co-creator of the widely followed Standard & Poor’s/Case-Shiller home price index. He has been widely ranked among the most influential economists in the world.

Despite his accurate past warnings, Shiller, 65, is generally skeptical of his profession’s ability to foresee shifts in the economy. Much of his recent work focuses on behavioral economics _ how psychology drives financial decision-making.

He believes home or stock prices flow from the confidence of consumers or investors. Confidence, in turn, reflects the story lines people invent to frame their memories of events _ from stock crashes to housing booms. Ultimately, he says, our financial decisions reflect our emotions and memories more than the state of the economy.

Shiller thinks home prices nationally could fall further. But he isn’t certain.

He doesn’t think the rising stock market has formed a bubble. Shiller doesn’t detect the kind of investor overconfidence that he associates with dangerously high stock prices.

In an interview with The Associated Press, Shiller spoke about the housing market, the stock market, the economy and human behavior. Excerpts appear below, edited for length and clarity.

Q: A lot of housing market experts think home prices have bottomed. You’ve been more bearish.

A. It’s not so much that I’m forecasting falling home prices as that I question whether anyone is able to forecast them right now. They won’t fall forever, but they can fall for a long time. I don’t know where home prices will be in 10 or 20 years.

Q: If prices do fall further, does it follow that many homeowners will feel less wealthy, and they’ll reduce spending and that will slow the economy?

A. Yes, we find that the “wealth effect” is stronger for housing than it is for the stock market. Many stocks are held in retirement portfolios, so people are not as likely to respond to a decline in value there as they would if it were something more immediate. In recent years, the home-equity loan has become very important as a way of sustaining consumption. Now that home prices have fallen, those loans are not so available. It seems pretty obvious that it’s going to affect consumption.

Q: What trends would you need to see for a strengthening of prices and then a sustained rise in home prices?

A: One thing that has been encouraging: The National Association of Home Builders’ housing market index has been shooting up. Builders are seeing signs of increasing demand. But it remains at a low level. So it’s ambiguous evidence. But that might be taken as a sign that the market is improving.

Q: If you were a national housing czar with unilateral authority to do whatever you deemed necessary to help the markets and restore faith, what steps would you take?

A: This crisis was caused substantially by a failure to manage real estate risk properly. And so we should be thinking like financiers about that risk, and how it should be managed. The mortgage institution we have is traditional. There’s no reason why we shouldn’t rethink it completely. The Dodd-Frank Act called for a study of shared appreciation mortgages. Those are mortgages where the risk of loss and gain on the house is shared with the lender. So if home prices go down, it’s not all on the shoulders of the homeowners.

Q: Do you see more rentals and apartments over the next decade? Do you think single-family homeownership will continue on maybe a slow but steady decline?

A: After the Great Stock Market Crash of 1929, people soured on stocks as investments. And I could see that happening with housing. The assumptions people have been making that buying a house is the American dream and that that’s what you have to do _ that kind of assumption is not ringing so true anymore.

Q: Will the foreclosure settlement for about $25 billion between states and the five biggest mortgage lenders strengthen the housing market?

A: The problem is that the decline in the housing market dwarfs this agreement. The total decline of the housing market has been in the trillions, and negative equity in housing, by one estimate, was about $700 billion. So this is too small to be very effective. It all helps, I suppose, but it’s not big.

Q: Do you think there’s a bubble forming in the U.S. stock market or in any other asset?

A: It doesn’t seem to me that we’re in a bubble situation as we were, say, in the 1990s. In the 1990s, there was just a general mood that we’re entering a new millennium, with Internet technology and advanced technology and America soaring. It was a bubble all over the world, really. I don’t know that we’re in that state of confidence now.

Q: Do you think any asset bubbles are forming in China?

A: China had what looks like a bubble, but the government has taken steps against it. This is another reason not to expect bubbles so much. The stock market bubble of the 1990s and the housing bubble of the 2000s were still at a time when central bankers and government authorities believed much more in free-market efficiency than they do now. The authorities are now thinking that it’s their responsibility to choke off bubbles.

Q: If you had to put all your money for the next decade in either stocks or super-safe, inflation-protected securities from the U.S. Treasury (TIPS), what would you do?

A: Stocks. They’re highly priced, and they’re risky, but they’ve had a good historic record. And last time I looked, inflation index bonds have a negative real yield.

Q: Is there any recent good book on consumer psychology or a non-econ subject that you’ve read?

A: Well, I like Danny Kahneman’s new book, “Thinking, Fast and Slow.” This reflects a psychological literature that the human mind is designed to build memories around narratives, especially human interest stories. Our mind stores memories as sequences of events with an ending. The story of the Great Depression is a story that’s in our memories. Another story is the patriotic one of the greatness of our country that may resonate more at some times than at others. And when it does resonate, it encourages people to be spending and investing in an optimistic way.

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Optimism over the state of the U.S. economy supported markets on Friday ahead of a weekend meeting of the finance ministers of the leading 20 industrial and developing nations in Mexico, where Europe’s debt crisis will likely be a key topic of debate.

With Greece pressing ahead with demands to get its hands on a euro130 billion ($173 billion) bailout, market concerns over an imminent default by the country have diminished, and that’s helped the euro spike to two and a month highs against the dollar.

On Friday, Greece is expected to launch a public offer for a massive bond swap designed to knock euro107 billion ($142 billion) off its debt held by banks and other private investors.

“We have reached a point where concerns over Europe have been abated for the time being, allowing investors to focus properly on the rest of the global economy, and what people are seeing is pretty positive,” said Simon Furlong, a trader at Spreadex.

Particularly encouraging has been the recent economic newsflow out of the U.S., especially with regards to jobs. Later in the day, investors will focus on the closely-watched consumer confidence survey from the University of Michigan and figures on new house sales.

Economic recovery in the U.S. is hugely important for the global economy because it could help Europe’s ailing economy, further ease the debt concerns and shore up confidence in financial markets.

Last summer, when Europe’s debt crisis became particularly acute, worries over the U.S. economy, symbolized best by Standard & Poor’s decision to strip the world’s largest economy of its triple A rating, fueled the turmoil in the financial markets.

In 2012, signs of calm in Europe coupled with encouraging U.S. economic indicators have supported markets, with many of the world’s leading indexes back at levels they were trading at before last summer’s massive sell-off.

The positive momentum continued on Friday, when the FTSE 100 index of leading British shares was up 0.1 percent at 5,941 and Germany’s DAX rose 0 instant payday loan lenders.8 percent to 6,866. The CAC-40 in France was 0.5 percent higher at 3,465.

The euro traded up 0.2 percent at $1.3394, its highest level since Dec. 12.

Wall Street was poised for a similarly solid opening _ Dow futures were up 0.2 percent at 13,002 while the broader Standard & Poor’s 500 futures rose 0.3 percent to 1,367.

Over the weekend, investors will be interested in what transpires at a meeting of the G-20 finance ministers and central bank governors in Mexico. While the gathering will focus on promoting global economic stability and growth, Europe’s debt crisis will remain a key topic.

In particular, European officials will press for countries like the U.S., China and the U.K. to allow the International Monetary Fund to contribute more money to eurozone rescue measures. Several countries are reluctant, however, to expose the IMF to more risk in Europe.

Earlier in Asia, Japan’s Nikkei 225 climbed 0.5 percent to close at 9,647.38 and South Korea’s Kospi added 0.6 percent to 2,019.89. Hong Kong’s Hang Seng rose 0.1 percent to close at 21,406.86.

Mainland Chinese shares were boosted by speculation local governments would relax restrictions on the property market and monetary authorities would tweak policy to stimulate growth.

The benchmark Shanghai Composite Index climbed 1.2 percent to 2,439.63, its highest close in more than 3 months. The smaller Shenzhen Composite Index gained 1.4 percent to 972.62. Shares in real estate, cement and coal minters led the advance.

One growing concern is the price of oil, which has been driven higher by tensions over Iran and the weakening dollar _ kept Asian markets in check because of worries it could crimp the U.S. economic recovery.

Benchmark crude for April delivery was up 66 cents to $108.49 in electronic trading on the New York Mercantile Exchange.

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After more than 12 hours of talks, the countries that use the euro reached an agreement early Tuesday to hand Greece euro130 billion ($170 billion) in additional bailout loans to save it from a potentially disastrous default next month.

The deal is expected to bring Greece’s debt down to 120.5 percent of gross domestic product by 2020 _ that’s around the maximum that the International Monetary Fund and the eurozone consider sustainable.

The euro surged as the news of a deal broke early Tuesday. The accord should take some pressure off the 17-country currency union that has been battling a serious debt crisis for two years.

Without the deal, Greece was facing a potentially calamitous default next month and possibly being forced from the eurozone. The talks stretched into the early hours of Tuesday as ministers wrangled over how to cut Greece’s debt to a level that it could eventually pay back while not raising their own commitments.

In the end, the country’s private creditors were asked to take substantially more losses on their holdings than previously anticipated, cutting Greece’s debt by an estimated euro107 billion.

“It’s no exaggeration to say that today is a historic day for the Greek economy,” said Greek Premier Lucas Papademos, who rushed to the meeting to lend weight to his country’s pleas for help.

Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the meetings of eurozone finance ministers, said Greece’s private investors _ mostly banks and investment funds _ have been asked to take a face value loss of 53.5 percent on their bonds.

On top of that, Greece’s public creditors _ central banks and the eurozone countries _ also agreed to give Greece a break on its debt.

The eurozone countries will cut the interest that Greece has to pay for its first package of bailout loans to 1.5 percentage points over market rates from between 2 percentage points to 3 percentage points currently, cutting both its debt load and limiting the need for new rescue loans.

At the same time, the European Central Bank and the national central banks in the 17 countries that use the euro will also forego profits on their Greek debt holdings, again reducing the costs for Greece.

EU economic affairs commissioner Olli Rehn says Greece’s new compliance with the terms of a new bailout will be ensured by a separate account containing enough money service its debt for three months.

That close monitoring was demanded by some members of the eurozone who are frustrated that Greece has not always enacted painful reforms and budget cuts on time.

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The U.N. secretary general says Iran must be more open about its nuclear program because its claims that it has not worked on developing atomic arms are not convincing.

Ban Ki-moon also warns against possible military action against Iran, saying “there is no alternative” to diplomatic pressure in the standoff over its nuclear program.

Ban spoke to reporters Friday after attending ceremonies marking the 15th anniversary of the Comprehensive Nuclear Test Ban Treaty Organization, a Vienna-based U.N. agency set up to detect secret nuclear weapons testing.

A team from the International Atomic Energy Agency is set to meet Iranian officials in Tehran early next week. They will attempt to probe suspicions that Iran has engaged in weapons-related experiments _ allegations denied by the Islamic Republic.

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Japanese Finance Minister Jun Azumi said his nation

Treasury five-year note yields fell to the lowest level ever after Federal Reserve officials unexpectedly said their benchmark interest rate will stay low until at least late 2014.

Yields on the securities set three consecutive records after Fed Chairman Ben S. Bernanke said Jan. 25 that the central bank is considering additional asset purchases to boost growth. U.S. government debt rose for a third day yesterday as a report showed the U.S. economy grew at a slower-than-forecast 2.8% annual pace in the fourth quarter. The Labor Department is expected to report on Feb. 3 that unemployment remained at 8.5 percent this month.

An Iraqi police official says gunmen have attacked the house of a police officer near the northern oil-rich city of Kirkuk, killing one of his guards.

Kirkuk’s police commander Brig. Gen. Sarhad Qadir says the officer was unharmed in Saturday’s attack in the predominantly Sunni town of Hawija, a former insurgent stronghold located 150 miles (240 kilometers) north of Baghdad.

Suspected Sunni insurgents have frequently targeted Iraqi security forces to undermine the confidence in the Shiite-dominated government and its efforts to protect people from violence without American backup payday loans in one hour.

Attacks have surged amid an escalating political crisis in Iraq. At least 160 people have been killed since the beginning of the year, raising fears of civil war a month after U.S. soldiers left.

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Businesses increased their stockpiles in November to meet rising consumer demand, a gain that likely boosted economic growth in the final months of last year.

Inventories rose 0.3 percent in November, the Commerce Department said Thursday. That followed October’s 0.8 percent gain. Sales increased 0.3 percent after a 0.6 percent October increase.

Companies are building up their stockpiles again after cutting them over the summer amid fears of another recession. The increase is a positive sign for growth because it means many businesses are filling their shelves in anticipating of higher consumer spending.

Inventories rose in November to a seasonally adjusted $1.55 trillion. That was 17.7 percent above the low hit in the recession year of 2009.

This week, the Federal Reserve issued a report saying the final six weeks of 2011 were among the economy’s best last year. The report pointed to higher holiday and auto sales, along with increased travel.

The job market has brightened, too. Employers added 200,000 jobs in December. And the unemployment rate fell to 8 bad credit personal loan lenders.5 percent, the lowest in nearly three years.

Many analysts predict that economic growth rose to an annual rate of roughly 3 percent in the final three months of 2011. That would be an improvement from the summer, when the annual rate was just 1.8 percent. And it’s much better than the 0.9 percent growth rate in the first six months of 2011.

Many businesses reduced their inventory restocking in the summer after consumer spending slowed last spring in the face of higher food and gas prices. The slowdown, along with supply disruptions caused by March’s earthquake in Japan, weakened U.S. manufacturing and contributed to worries of another recession.

Stockpiles at the wholesale level account for about 27 percent of total business inventories. Stockpiles held by retailers make up about one-third of the total and manufacturing inventories represent about 41 percent of the total.

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Stock markets shrugged off signs of a slowing Chinese economy on Tuesday, as investors hoped for strong corporate earnings from the U.S. and looked to a new round of talks in Berlin for progress in solving Europe’s debt crisis.

The U.S. economy has shown new signs of strength recently, and investors are hoping that will boost corporate earnings results due to be announced in coming weeks. In particular, signs that the U.S. labor market is improving has raised the possibility of a recovery in American consumer spending, one of the main motors of global economic growth.

Britain’s FTSE 100 index of leading shares rose 1.0 percent to 5,668.89 and Germany’s DAX rose 2.4 percent to 6,158. France’s CAC-40 rose 2.1 percent to 3,194, while indices in Spain, Italy, Switzerland and elsewhere across Europe also recorded gains betwen 1 and 2 percent.

Ahead of the opening bell, Wall Street appeared set for a higher opening as well. Dow Jones industrial futures rose 0.5 percent to 12,402 and S&P 500 futures gained 0.6 percent to 1,283.10.

Moods were tempered by relatively gloomy indicators out of Europe.

The European Central Bank said Tuesday that the amount of overnight deposits that the region’s banks held with it rose to euro481.93 billion ($613 billion) on Monday, breaking the record euro463.56 billion set only a day before.

The high deposits mean banks are keeping spare cash in a safe place even though they earn low interest. They also reflect large amounts of cash put into the banking system from ECB emergency loans of euro489 billion taken up by more than 500 banks in late December.

Dutch electronics giant Royal Philips Electronics NV kicked of corporate Europe’s earnings season by warning that its fourth quarter profits were worse than expected due to a weak European market that made it difficult to charge customers as much as it wanted to for light bulbs.

“Our expected fourth quarter financial results have been affected by the weakness in Europe, which has impacted our health care business, as well as pricing in our consumer lighting business,” said Chief Executive Frans van Houten in a statement.

Philips shares fell 6 percent to euro14.715 in early trading in Amsterdam.

On the day that international debt inspectors were returning to Athens, Greece successfully raised euro1.625 billion ($2.07 billion) in the sale of 26-week treasury bills, at a marginally lower interest rate than a similar auction last month.

Debt-crippled Greece relies on international rescue loans to keep solvent. Although unable to issue long-term debt due to incredibly high borrowing costs, it maintains a market presence through regular treasury bill auctions business card templates.

Greece’s situation will be discusses at an “informal” meeting between Germany’s Chancellor Angela Merkel and International Monetary Fund boss Christine Lagarde in Berlin Tuesday evening.

Ahead of that meeting, Fitch Ratings said a number of euro countries, including Italy, may see their credit ratings downgraded by one or two notches by the end of this month as they struggle to cope with the debt crisis.

Fitch’s head of sovereign ratings David Riley says Tuesday the agency will give its verdict on several countries by the end of January. Fitch currently has Italy, Spain, Belgium, Ireland, Slovenia and Cyprus on so-called “ratings watch negative.”

Much interest in the markets centers on Italy, which Riley says is the “front line” of Europe’s debt crisis.

Overnight markets in Asia were marginally higher thanks to improving economic data out of the U.S., said Cameron Peacock of IG Markets in Melbourne.

The optimism was tempered by news that China’s import growth decelerated sharply in December in a new sign the world’s second-largest economy is slowing.

The customs agency said December imports rose 11.8 percent over a year ago, down from November’s 22.1 percent gain. Exports rose 13.4 percent, down only marginally from the previous month’s rate.

The country’s politically sensitive global trade surplus widened to $16.5 billion.

Weaker Chinese demand for imports reflects a slowdown in rapid domestic economic growth after Beijing tightened lending and investment curbs to prevent overheating. A slump in global demand for Chinese goods has prompted the government to reverse course and promise measures to shore up growth.

Japan’s Nikkei 225 index, reopening after a three-day holiday weekend, added 0.4 percent to close at 8,422.26. Hong Kong’s Hang Seng index rose 0.7 percent to 19,004.28 while South Korea’s Kospi jumped 1.5 percent to 1,853.22. Australia’s S&P ASX 200 rose 1.1 percent at 4,152.20. Benchmarks in Singapore, Taiwan, and Indonesia also posted gains.

Benchmark crude for February delivery rose $1.46 to $102.77 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 25 cents to settle at $101.31 in New York on Monday.

In currency trading, the euro rose to $1.2799 from $1.2762 late Monday in New York. The dollar fell to 76.85 yen from 76.89 yen.

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