The crash that wasn't 

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But lately I'm finding it hard to believe that a major crash is coming at all. The pundits have been crying "Wolf!" for so long that I've stopped flinching. The truth is, after five years of living with the fear of popped bubbles and a debt crisis, nothing we have been told to fear has come to pass.

In fact, there are even some grounds for optimism: the unemployment rate dropped to a four-year low back in December, the economy is still growing (albeit at a slower rate than predicted), consumer confidence is inching upwards, our dollar never dropped anywhere close to the 10 per cent that was forecast for this year (although that would have been good for Whistler), and low inflation — less than one per cent last year — has offset the impact of stagnating wages. Even the price of fuel seems to be dropping.

Everything seems to be happening so slowly that there's a good chance that a crash might not happen at all. Home values are falling, yes, but by small, almost reasonable amounts given the insane real estate markets of years past. If we can stave off a major correction with a few years of flat growth then the housing bubble will shrink to a more manageable size as inflation catches up. A house that's considered overvalued by 30 per cent today may only be overvalued by 10 to 15 per cent in five years.

And the bubble only matters if people need sell their homes or walk away from mortgages, and so far people seem to be working hard, staying in their homes and making their payments on time — buying equity back from the banks that will only make it harder to walk away in the future.

We've also seen the American market rebound from the lowest of the lows, which kind of takes the urgency out of things — if they can recover from a meltdown that spectacular, then we have nothing to worry about. Homes may lose paper value in the short term but if we don't sell and wait things out then there's a good chance we'll still wind up ahead in the long run. Bubbles don't always pop after all, sometimes they just fizzle away.

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