'Our Economy is as Safe As Houses'

An excellent column today by New York Times columnist PAUL KRUGMAN, who opines that the only reason the economy looks good is because of the jobs and wealth created by the housing boom. When the housing bubble bursts, so will housing related employment, he says:

... the economy is expanding. But because that expansion depends so much on real estate - without the housing boom, the economic picture would look dismal indeed - you have to wonder how much to trust it.

I've written before about the reasons to believe that current house prices in much of the country represent a bubble. When that bubble begins to deflate, so will housing-related employment.

Perhaps more alarming are the points he makes about what's going on with borrowing from foreign countries:

How solid, then, is America's economic recovery? The British have a phrase that applies: "safe as houses." Our economy is as safe as houses. Unfortunately, given current prices and our dependence on foreign lenders, houses aren't safe at all.

Be sure to read the full column at this link.