, Columnist
A Dangerous Combination: Bubbles and Debt
When a debt bubble bursts, it hits people where it hurts.
Some of them are worse than others.
Photographer: David Mareuil/Anadolu Agency/Getty ImagesThis article is for subscribers only.
I still remember that day in the spring of 2000. I was sitting in my dorm room at Stanford University when I heard people shouting in the hall. It turned out that all the commotion was about the stock market crashing -- in particular, technology stocks. In fact, it had been crashing for days, but only now had people decided that this was The Big One.
But the real question is: Why didn't the economy crash as well? Sure, about $8 trillion in notional wealth vanished and we had a recession 2001. Yet the decline in gross domestic product was minuscule, the contraction lasted only two quarters, and the unemployment rate peaked at just 6.3 percent.