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[Don Bowen <don.bowen AT earthlink.net>]

The recent Paul Krugman column had an interesting twist on the housing 
bubble.  He is not sure of it himself but some are saying that Greenspan 
encouraged the housing bubble to keep the economy going after the stock 
bubble burst.  The housing bubble was to go only as long as needed until 
the economy picked up but the bubble continues to grow beyond expectations 
while the economy is still limping.  Signs of the bubble bursting are 
starting to show in very high priced markets in California and Florida.

The column last week had another interesting twist in that China is in some 
ways responsible for the low interest rates.  Much of our debt is being 
picked up by China largely with what is in effect our trade surplus with 
China.  This surplus cash is holding interest rates down in the face of a 
steadily increasing prime rate.  If China were to hold back on its bond 
purchases the bubble would burst and maybe take down the whole 
economy.  One figure I recently heard is that 50% of the jobs in California 
are related to the housing industry.

Don Bowen                          Awl Knotted Up

My travel journal
http://www.braingarage.com/Dons/Travels/journal/Journal.html

My present location is the star on the map in the link below
http://www.mapquest.com/maps/map.adp?latlongtype=decimal&latitude=33.506083&longitude=-117.099019