Fear this

One of the side-effects of the various international trade imbalances has been the huge pots of foreign reserve cash held by various governments. This money has been sent out to look for work, and has found it providing financing for real estate deals. This has resulted in rapid increases in property values all over the world that make the dot-com crash look mild by comparison. The Economist explores where things stand and what might (will) go wrong:

Never before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?

According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history.

UPDATE: Bill Fleckenstein blames Greenspan. I don't think he's to blame for the root causes, but he ignored the problem (and even cheered it on!) so if someone is to be blamed, he's the best candidate.