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It's been fascinating for me to watch the US and Canadian media fixate their worry on the "housing bubble." It started as a little bit of dripping here and there about four months ago or so. I attributed the rapid spread of this story to and among other media outlets to be bandwagon jumping. But, the nuance of the stories has changed a little: it's gone from wonder (i.e., "What if. . .?") to prognostication (i.e., "When . . . because . . . and so . . ."). A recent piece from the Globe and Mail points this way: The latest worry: A housing slump leads to economic bust.
Alan Greenspan, the human starting gun, poured gas on the embers last week by raising the issue of real estate and the "wealth effect" problem with a pull-off. So, from the Globe article, we end up with business school professors providing both deep detail and colour commentary:
"Housing wealth tends to have a much more dramatic impact on consumer spending than equity wealth does," [UCLA's] Mr. Thornberg says. "The consumer spending impact of housing wealth seems to be about six to seven times larger than equity wealth.Psychologists and practitioners of certain Eastern religions will tell you that you are what you think. That happens if for no other reason than because others will generally respond to you as you project yourself: be a schmuck, they'll treat you like a schmuck; be a mensch . . . You get the drift. That's at the micro level. Watching the storyline unfold viz. real estate might be an excellent -- if not costly for those fortunately enough to have generated wealth from real estate gains on their home(s) -- opportunity to see if it works at the macro level as well. Posted by Grayson at June 14, 2005 08:03 AM