The coming economic collapse...

army.mil

I've been subscribing to the housing bubble theory for a while. That when the stock market bubble collapsed, there was only a mild recession (lasted 2 quarters) despite the tremendous loss of wealth. The money, I speculate, went to another bubble -- the real estate bubble, which is about to burst, with dramatic consequences for the U.S. and the world. There aren't many economists who come out and say this (although many academics do). Stephen Roach did, and then changed his mind. Now, Nouriel Roubini follows with his thoughts on a recession:

I have analyzed in detail in my last blog why we will soon have a housing related recession; these views have been widely picked in the press, most prominently by Paul Krugman in his Friday column in the NYT. While, as Krugman correctly points out, I may be the only “well-known” economist who is arguing that we will have a housing-led recession, many other very prominent economists – including Krugman himself as well as Ed Leamer (who calls a soft landing scenario a “fantasy”), Jim Hamilton (see also here) and Bob Shiller (who predicted the tech bust stock of 2000 and is now predicting a housing bust) – are now of the view that there are serious risk of a housing market bust that could then have macro consequences.

Will the "strong dollar" finally fall? If it does, it could have beneficial effects on the trade deficit, but disastrous effects on the country's ability to borrow, not to mention loss of equity for all the global investment in the dollar. A "dollar bubble" burst? Hurting the entire world? Nasty!