Krugman on the housing bubble and the economy

[T]hese days Americans make a living by selling each other houses, paid for with money borrowed from China.

contrast krugman's plainspeak with alan greenspan's jargon-laden economistica...

"[T]his vast increase in the market value of asset claims is in part the indirect result of investors accepting lower compensation for risk. Such an increase in market value is too often viewed by market participants as structural and permanent. [...] [H]istory has not dealt kindly with the aftermath of protracted periods of low-risk premiums."

say, what...?

here's krugman's scenario...

[I]f, in particular, the housing bubble bursts before the trade deficit shrinks - we're going to have an economic slowdown, and possibly a recession. In fact, a growing number of economists are using the "R" word for 2006. [...] So there's a rough ride ahead for the U.S. economy. And it's partly Mr. Greenspan's fault.

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