With summer narcolepsy beginning to infuse Wall Street like embalming ether, we'll turn our attention once again to the far more interesting topic of the housing bubble. The bubble surely exists, no matter what anyone says to the contrary, but one wonders whether its inevitable collapse is being delayed by anticipation itself. Anyone not from Mars will have noticed by now that the mainstream press has been devoting more and more ink to the subject. Just last week, USA Today splashed its money page with a feature on how owners of high-priced real estate can 'cash out' before the crash. And the staid Economist, rarely given to sensationalism, believes 'the whole world economy is at risk�the biggest increase in wealth in history was largely an illusion.' True enough, as any economist who hasn't forgotten what he learned in college could tell you. But one suspects that it could take a while, and some genuinely hard times, for the illusion to lose its power over an American middle class with so many material blessings to count. For the time being, though, with mortgage rates down near 5.5%, and 0% balance-transfer offers arriving in the mail regularly, it seems unlikely that the economy is going to run out of gas in a mere month or two. To be sure, we have probably seen a peak in discretionary spending, as well as in GDP growth. However, the real damage will come when consumers drastically curtail buying out of fear the economy is sinking. Not right now, though. With money still relatively loose, and the dollar's buying power waxing in global markets, the economy-chilling kind of fear will probably remain in remission at least till autumn. No Illusions Regardless, we shouldn't allow ourselves to fall sway to the illusion that the Fed has tight control
LATEST TRADES
