This credit bubble has morphed over the last several years. It was focused initially on residential real estate – amateur hour. The housing bubble obviously hit the wall in July, 2005 yet the stock market is up over 20%. What’s going on? It’s a credit bubble, not a housing bubble, and as the air has gone out of that balloon the torch has been passed to the professional speculator who shows up in commercial real estate, hedge funds, and private equity. It’s amazing how this bubble has changed its spots over the past few years. It also makes it more dangerous, because we have a new bubble on top of the older bubble. The new bubble has masked the damage of the older bubble, so we’ll end up with both deflating at the same time, which could be quite spectacular.
~ Kevin Duffy, "This Time It's Value Traps," Dollar Collapse.com, June 13, 2007, by John Rubino