I don't so much see an unwinding of a housing bubble as the first signs of unwinding of a CREDIT bubble (all caps for emphasis). And that bubble has been inflating for a long, long time in the US.
When the things came undone in Japan, they really came undone, in the stock markets, in real estate, in bank lending, late 80s to early 90s. Ultimately with interest rates ratcheted up to shut down the flow of credit, the yen got super strong against the dollar, and for a brief period of time, the Japanese economy was larger than the US's. The long-term effect of the rather high yen was of course deflation. High oil has helped put an end to that, though the economy still feels 'recessionary', certainly not bubbly. I might add that a lot of the speculation and easy credit went to foreign interests, who helped run up the markets in everything here in Japan. They didn't come back til the Asia crash of 97, in order to buy up distressed assets, but that time well armed in private equity groups. I have yet to see anything of the likes happen in the US. But one sure sign--said with surety in retrospect of course--of a real bubble in Japan was when I would talk to seemingly ordinary Japanese who had leveraged themselves into deep debt to buy a second or even third condo in Tokyo, with the idea that the price would go up further and they could always sell on for a profit. Timing is everything if you are going to do that in the midst of a real bubble, and they missed. A lot of them are planning on working til 70 or later to pay for their mistake. At least they still have some health care and retirement intact. And some of the properties, if they managed to keep hold of them, have edged their way back up in value. C. Jannuzi Fukui, Japan
