Housing Bubble Good? Ok the above article at Slate.com seems to indicate that there might be some benefits to the pop of the housing bubble, namely that the housing bubble was the only force for job creation in an incredibly anemic recovery and that without it, we would be much worse off. The examples cited in the article of the dot com boom was the excessive build out of the telecommunications market which resulted in cheaper phone rates. Ok I am not certain how the disappearance of 30 trillion in wealth is worth some 30 billion dollars of telecom build out. Let's go with the premise that the author has developed.

Due to the massive capital investment in basic infrastructure, we now have much cheaper high speed internet, phone bills etc. What does the massive investment in housing buy us? Well according to the article it created a bunch of local jobs (as construction dollars are spent locally) which range across all of the economic spectrum.

But what the author is ignoring is that many many Americans have been using their homes like an everflowing ATM and have been spending the proceeds. Nor does housing build out a huge infrastructure like telecommunications which can be the engine for further growth. Of course if the housing bubble pops, that resulting ripple effects through out the economy are more than likely going to result in yet another recession.

Housing isn't like telecom. We don't get nearly free houses from investing in it.

Labels: bubbles, housingbubble, investing, mortgagebubble, telecombubble

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