by Calculated Risk on 8/07/2005 10:15:00 PM

Dr. Paul Krugman writes in Monday's NY Times:

This is the way the bubble ends: not with a pop, but with a hiss.

Over on Angry Bear I added a chart showing the slow, steady price declines associated with previous housing busts. Krugman also addresses bubble "denial" in his commentary. Krugman writes:

Of course, some people still deny that there's a housing bubble. Let me explain how we know that they're wrong.

One piece of evidence is the sense of frenzy about real estate, which irresistibly brings to mind the stock frenzy of 1999. Even some of the players are the same. The authors of the 1999 best seller "Dow 36,000" are now among the most vocal proponents of the view that there is no housing bubble.

His commentary is short, and for those looking for proof of a bubble, Krugman doesn't come close. But as I wrote in the comments to the previous post:

I now understand there is no way to convince everyone there is a bubble. I suppose that is a third "bubble" characteristic:
1) Fundamentals out of line.
2) Excessive Speculation.
and 3) Denial!

Krugman thinks the bubble may have already started deflating. If inventories rise as much as I expect, I will agree.