> It's a little scary, looking at this chart, to realize that the U.S.
> had one of the smallest housing bubbles.
> http://www.ritholtz.com/blog/2011/11/a-global-view-of-the-housing-bubble/?source=patrick.net
In retrospect, after observing the crisis unfold, it is clear to me that what turns outstanding debt/equity into a bubble is not size per se. It is the flexibility (or lack thereof) of the political system to deal with a default cascade. More specifically, it depends on the relative ideological and political clout of the bond holders. De-leveraging doesn't need to be a disruptive process. Basically, what we need is socialists taking over and dealing with the situation.
I guess we need to see case by case, but it's not necessarily bad that people got to acquire houses in all those places. Now what we need is for working people to keep those houses, and have jobs, etc.