Tempest, meet teapot

In response to the alleged "crisis" posed by recent sagging of the US house-price-inflation bubble, the US dollar has gone.....up against the other main world currency, the euro. In hindsight this was to be expected. Any fear of crisis will set investors skittering toward the safest available haven -- and that's the US economy, even if whatever instability is making them nervous also originated here.

The actual effect of this "crisis" on the real economy, like that of the tech-stock bubble a few years ago, will probably be pretty negligible. These things follow a pattern. Pundits fret and assure us that some sort of cataclysm is at hand. Stock markets drop a few percentage points. We are told that billions or trillions of dollars in wealth have vanished (which is nonsense -- all the houses and cars and factories and so forth are still here and still just the same as they were -- all that's happened is that exaggerated estimates of the potential selling prices of some of these things have been corrected). Some people who thought that house prices (or tech-stock prices or whatever) are magically immune from the same economic factors that govern the prices of everything else will take a hit, and so will banks that made ill-considered loans, but punishing stupidity is one of the things a free-market economy is supposed to do. There may even be some temporary impact on the one economic indicator that actually affects ordinary people -- job creation. But the central banks will fiddle with interest rates, the broad vitality of the overall economy will reassert itself, and in a year or two we'll only vaguely remember that some of us thought this was going to be a big deal.