All the Little Bubbles Go Pop, Pop, Pop

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All head bangers line up.

Face the wall.

Procede to bang your head.

It's the only remedy for what you are about to read. And believe me, I'm there with you as I write because this makes absolutely no sense at all. Americans, it turns out, are more optimistic about the economy than they've been in three and a half years, at least as far as the Conference Board is concerned.

How do you reconcile this with the other report this week, the one that said Americans are spending everything they're making and more. That carefree, drunken-sailor spree has pushed our national savings rate lower than its been since the Great Depression. In other words, Americans are saving like they have nothing at all while spending more than they earn, and grinning all the way to the plastic surgeon, the boat store and the plasma television outlet. They have all the confidence of lemmings chasing each other's tails.

Has this housing market made everyone wacky? Are they so fooled by these rising home prices that they actually think they don't need to save? Do they really believe they'll be able to just refinance their way out of debt throughout their lives? You fools! What are you doing?

When all the little bubbles go pop, pop, pop, where will you be? Where will we all be? This has disaster written all over it.

— The Boy in the Big Housing Bubble