What can a person trust? Econo-Girl was perusing the business section of the New York Times, where someone was dismissing the effects of a real estate price collapse. After all, he pointed out, only 10% of homeowners owe so much on their homes that a 'value' reduction would cause real problems for them.
Hmmm. 'Only' 10% of homeowners. Do you know how many people that is? A hell of a lot of them. And what would be the effect of their belt-tightening? Fewer goods and services sold in general.
This guy mentions that an increase in home values is really not translatable into real increased wealth unless you sell your home. True. But is that really how people have been approaching it? Haven't people been using their sudden home equity to buy, buy, buy? Yes, yes, yes.
The effects of a downturn in the real estate market will be felt across the economy. The question is, what's next? Employment is picking up, which is good. The deficit is astouding. Is there another bubble we can all get obsessed with? Readers will remember Econo-Girl's prediction that the next asset bubble is gold. She is staying with her prediction.