During the June 23 edition of his Fox News program, Glenn Beck falsely claimed that Nobel Prize-winning economist Paul Krugman is one of “at least a dozen of the same economic bean heads who missed the industry's $8 trillion housing bubble.” In fact, Krugman began “getting worried” about a “real estate bubble” as early as 2002, when he wrote in his New York Times column:

More and more people are using the B-word about the housing market. A recent analysis by Dean Baker, of the Center for Economic Policy Research, makes a particularly compelling case for a housing bubble. House prices have run well ahead of rents, suggesting that people are now buying houses for speculation rather than merely for shelter. And the explanations one hears for those high prices sound more and more like the rationalizations one heard for Nasdaq 5,000.

Moreover, Krugman wrote in May 2005 that “America's housing market, like the stock market at the end of the last decade, is approaching the final, feverish stages of a speculative bubble”:

But although the housing boom has lasted longer than anyone could have imagined, the economy would still be in big trouble if it came to an end. That is, if the hectic pace of home construction were to cool, and consumers were to stop borrowing against their houses, the economy would slow down sharply. If housing prices actually started falling, we'd be looking at a very nasty scene, in which both construction and consumer spending would plunge, pushing the economy right back into recession.

That's why it's so ominous to see signs that America's housing market, like the stock market at the end of the last decade, is approaching the final, feverish stages of a speculative bubble.

Some analysts still insist that housing prices aren't out of line. But someone will always come up with reasons why seemingly absurd asset prices make sense. Remember “Dow 36,000”?

Also, in August 2005, Krugman noted that “it's an economy driven by real estate” and that “given current prices and our dependence on foreign lenders, houses aren't safe at all”:

So it's an economy driven by real estate. What's wrong with that?

One answer is that it has been a pretty disappointing recovery. Two new reports, one from the Center on Budget and Policy Priorities and one from the Congressional Budget Office, compare the current economic expansion with other postwar recoveries. By any measure except corporate profits, which have done very well, this one comes up short.

Even the good months would have been considered subpar in the past: the administration hailed last month's job growth as something wondrous to behold, yet there were 68 months during the Clinton years when employment grew faster.

Still, the economy is expanding. But because that expansion depends so much on real estate -- without the housing boom, the economic picture would look dismal indeed -- you have to wonder how much to trust it.

I've written before about the reasons to believe that current house prices in much of the country represent a bubble. When that bubble begins to deflate, so will housing-related employment.

Beyond that, there's the disturbing point that we're paying for the housing boom (and the military buildup and tax cuts) with money borrowed from foreigners.

Now, any economics textbook will tell you that it's fine to borrow from abroad if the money is used to expand the economy's productive capacity. When 19th-century America borrowed from Europe to build railroads, it was also enhancing its ability to repay its debts later. But we aren't borrowing to build productive capacity. As a share of G.D.P., investment other than housing construction is below its average between 1980 and 2000, and way below its level at the end of the 1990's.

In other words, a fuller answer to my former neighbor would be that these days, Americans make a living selling each other houses, paid for with money borrowed from the Chinese. Somehow, that doesn't seem like a sustainable lifestyle.

How solid, then, is America's economic recovery? The British have a phrase that applies: “safe as houses.” Our economy is as safe as houses. Unfortunately, given current prices and our dependence on foreign lenders, houses aren't safe at all.

From the June 23 edition of Fox News' Glenn Beck:

BECK: Is there any wonder why 52 percent of Americans say the stimulus is working? Fifty-two percent, that's down 7 percent in two months. Confidence in the Midwest is dropping faster than any place else.

If you look at Elkhart, Indiana, this -- I love this -- this is the R.V. capital of the world, where Mr. Green -- Mr. Clean Energy, Barack Obama, launches the stimulus program at the R.V. capital of the world.

The unemployment rate is 19.2 percent now, and that's not the worst place in America. And yet, at least a dozen of the same economic bean heads who missed the industry's $8 trillion housing bubble -- yeah, those guys -- including our best bud, the 2008 Nobel Prize winner Paul Krugman -- they're now calling for a third stimulus.

Why are we listening to these crowds? I mean, most of them didn't get into specifics, but former Clinton treasury official Brad DeLong suggested guarantee all of the states' debt, all of them, all 50 states, just take that and just guarantee it. And, why don't you throw -- let it -- let it ride, put another $500 billion in aid on top.

Let me ask you something. We have survived worse, but we haven't had our event yet. How do we survive this with our parents? You think America's family is going to survive? The answer is yes -- but in what condition? We're all going to be living under a bridge soon, fending off bums with a beer bottle.