>[ I'm "against" the idea that this is a "bubble" -- I think that
>word should be reserved for situations where, when it pops, it's
>gone ... like a bubble. Housing isn't like that, for all the
>reasons that I've said before (and Wojtek continues to misrepresent
>:-) ... but parts of the housing market have gone nuts and will
>correct at some point ]
This is an excessively narrow definition of a bubble. The S&P 500 was in a bubble in 1999. It popped and didn't go anywhere near 0.
Here's a more standard def, from Wall Street Words <http://dictionary.reference.com/search?q=bubble>:
>A price level that is much higher than warranted by the
>fundamentals. Bubbles occur when prices continue to rise simply
>because enough investors believe investments bought at the current
>price can subsequently be sold at even higher prices. They can occur
>in virtually any commodity including stocks, real estate, and even
>tulips.
>Doug's original message (I can't believe I have to keep reminding
>everyone who is trying to "prove me wrong") was an appeal for
>sympathy to those who are "mad" because there couldn't possibly be
>any reason for those mortgages to exist except to hasten the end
>times.
It wasn't an appeal to sympathy, nor was it a prophecy of end times. I thought it was a sign of our old friend, irrational exuberance, and a lot of people are going to get hurt when the bubble bursts. And, because of negative wealth effects, it could have some nasty macro fallout. That's a long way from "end times"; I've never been big on forecasting that.
I have very mixed feelings on the sympathy issue, as I did with the dot.com mania. Sure, some people are duped, but on the other hand a lot of others are looking to get something for nothing (i.e., wealth without risk or work). Of course it's happened in a lot of times and places, but Americans, with our unusually intense mix of optimism and money-love, seem to have a particular affinity for it.
Doug