IRRATIONAL PESSIMISM; OR, THE OPPOSITE OF A BUBBLE:

Who’ll Stop the Pain? (PAUL KRUGMAN, 2/19/09, NY Times)

So will our slump go on forever? No. In fact, the seeds of eventual recovery are already being planted.

Consider housing starts, which have fallen to their lowest level in 50 years. That’s bad news for the near term. It means that spending on construction will fall even more. But it also means that the supply of houses is lagging behind population growth, which will eventually prompt a housing revival.

The pain will be stopped when the 8 million employed illegal immigrants can be legal participants in the housing market and that amnesty brings millions more in their wake.

Posted by Orrin Judd at February 21, 2009 11:06 AM