One reader is looking at the macroeconomics surrounding the housing bubble. "The nation’s factories are close to capacity. Productivity, with the exception of last quarter has been excellent. Consumer confidence is high. All these things point to a bright economic future. And yet.."

"The current account deficit hit a record, the budget deficit is near record highs for an expanding economy. The housing bubble shows signs of deflating. Question: If the average, NATIONWIDE price of homes in America drops 10%, is the general economy growing sufficiently to prevent broad economic meltdown."

Another replied, "About the factory capacity. You’re forgetting that we used to produce more than we consumed, which is not true anymore. Yes, as of now, we might be at near-full-capacity in factories, but capacity of what? Of the equipment we have today, or compared to 30-40 years ago, when there were a LOT more factories open then?"

"Another thing is, check it out: 'Net inflows into US markets dropped below the level needed to cover the trade deficit for the first time in seven months in December, prompting concern about the dangers of the current account deficit.'"

"'The Treasury reported net inflows of $56.6 billion in December, down sharply from $91.6 billion in November and failing to match the $65.7 billion December trade deficit. As a crude measure, net inflows that fail to balance trade outflows imply less demand for dollars and therefore suggest the potential for a slide in the US currency.'"

The reply continues, "I don’t think the economy is growing enough to prevent the meltdown. There are other things involved, like inflation, losing faith in the US dollar, geopolitical tensions, lowering real wages and job characteristics, costs of building materials rising, rising interest rates, regulators starting to work on lenders in being more responsible in lending practices, resetting of creative financing, ad nauseum."

"This year, we have about $80 billion in loans that reset to a higher level, such as the ones with less-than-full-interest payments, interest-only payments, whatnot. Next year, $300 billion of loans are estimated to reset, then in 2008, $1.2 TRILLION (10%!) in these loans will reset. My former rentor (not a landlord, since she couldn’t afford to keep proper maintenance on the house) was forced to sell the house I rented from her. She got one of these loans. She had two houses, and she was a school administrator. I think she ended up having to get both houses off her hands."

"I see a concern about people being here because they’re looking to buy a house after the real estate collapse. I’ll let you know that for as long as I can’t buy a house with cash, I won’t buy one. It could mean that I will die houseless after all, but who cares? I can’t take it with me anyway, and I have seen too much happen in just a few years time, LOOONGGG before you’re even half-way through paying for the house."

A third reader added, "Don’t forget the yield curve inversions."