04 February 2009

The Troubles With Bubbles

Economists Fear Stimulus Package Aims to Return to Housing Bubble Spending Levels

By Mike Lillis 2/4/09 9:25 AM

Last July, as the extent of the nation’s housing collapse was just being realized on Wall Street, The Onion ran the classic headline: “Recession-Plagued Nation Demands New Bubble to Invest In.”

The device, of course, was satire. But the clever message raises a question that some experts are encouraging lawmakers to consider as they haggle this month over legislation to buoy the sinking economy: How to measure the bill’s success in the wake of an economy propped up by an inflated housing market? Some economists fear the goal is an attempt to return to the same unsustainable levels of consumer spending the housing bubble allowed.

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