Robert Shiller asks - "If house prices crash in the US, the bastion of capitalism, could it destroy confidence and end the boom in other countries?"

Robert Shiller, yes, my favorite housing bear and truth-teller, had this op-ed today in the Korea Herald, where he raises the point that's been in my head for a bit - can the US housing crash kill housing bubbles throughout the world?

Obviously I'm living in bubble-central, London, England, where I see daily reports now in the papers on the US crash. But Londoners haven't put 2+2 together, and they seem to think what happens "over there" won't affect psychology "over here". Guess what - it will. The exposing of the Ponzi Scheme in the US will draw light and heat to the same Ponzi Scheme anywhere else it's being played. Especially in London.

Also, as HP'ers know, Robert Shiller (author of the ultimate bubble book "Irrational Exuberance") is a professor of Economics at Yale, and he looks like he's taken an Economics class or two in his day.

Compare his writings and thought pattern to the incompetent, corrupt and intellectually challenged Nicholas Retsinas, head of Harvard's REIC-polluted Joint Center on Housing Studies, who looks like a struggling freshman at ASU by comparison.

Here are some of Professor Shiller's latest musings on the ongoing housing bust. Read the whole article, and also google him and read his past stuff too. Yes, he was early in calling the bubble (again). But yes, he also got it right.

Many places around the world have been in a housing boom since the late 1990s. As I argued last year, in the second edition of my book "Irrational Exuberance," the boom is rooted in speculative investment by ordinary homebuyers, fueled substantially by the worldwide perception that capitalism has triumphed, and that all people must look out for themselves by acquiring property. Convinced that private ownership has become essential to smart living, buyers bid up home prices.

Moreover, the fear that one must get in on the boom before it is too late often drives people to bid up home prices faster now.

But the boom generated by such beliefs cannot go on forever, because prices can't go up forever, and there are already signs of a hard landing.

In the United States, newspapers and magazines are trumpeting reports in the last few months that the decade-long boom in home prices may be at an end, and that the bubble may be bursting. The psychology has suddenly changed, creating widespread fear of sharp drops in U.S. home prices.

If home prices crash in the United States, the bastion of capitalism, could it destroy confidence and end the boom in other countries? If so, could a worldwide recession follow?