Bubbles

On more than one occasion, Milton Friedman has recently praised Alan Greenspan's handling of the money supply. Considering the source, this is very high praise. The price of Greenspan's guidance was a credit-induced investment boom in the late 1990s --with the post-2000 bust being the standard result. We now have a credit-induced housing boom -- and people are rightly wondering when and where the other shoe will fall.

Yet, everyone knows that housing is different. We also know that the various investment cycles are never in synch.

And a recent FDIC examination of a large number of housing booms shows that most of them end in stagnation and not in a "bust".

Besides, as this morning's WSJ "Ahead Of The Tape" reminds us, "bubbles don't end when everybody is screaming about how there is a bubble ..."