Paul Krugman: 'Running Out of Bubbles'

In today's Nytimes op-ed section there is an extremely informative opinion by economist Paul Krugman regarding the current housing bubble.

Here is a quick summary of what he says:

• There is a housing bubble
• The housing bubble is generally concentrated in big wealthy areas (notably California & Florida) .
• If housing bubble will burst
• When the housing bubble bursts "the economy would still be in big trouble"
• If housing prices start declining "pushing the economy right back into recession"
• Some say that there is no bubble. "But someone will always come up with reasons why seemingly absurd asset prices make sense."
• Alan Greenspan now ' admits that we have "characteristics of bubbles" in the housing market, but only "in certain areas." '
• " The important point to remember is that the bursting of the stock market bubble hurt lots of people - not just those who bought stocks near their peak. By the summer of 2003, private-sector employment was three million below its 2001 peak. And the job losses would have been much worse if the stock bubble hadn't been quickly replaced with a housing bubble."
  

Krugman concludes with saying that the economy will head into a recession unless there is a new bubble "to take its place." Finally, he concludes that it is "hard to imagine what that might be." Krugman is right on the money.