The notion of a bubble bursting and the whole price level coming down ... as a national phenomenon is really quite unlikely,

It is difficult to argue that there is a bubble on a national level since it more of a coastal story, such as California and Florida. There has also been a reduction in speculative buying.

Developers see no sign of a 'bubble' bursting.

If there were a lot of homes in inventory, we could anticipate a bubble bursting, but there isn't,

Fear and euphoria are dominant forces, and fear is many multiples the size of euphoria. Bubbles go up very slowly as euphoria builds. Then fear hits, and it comes down very sharply. When I started to look at that, I was sort of intellectually shocked. Contagion is the critical phenomenon which causes the thing to fall apart.

Manufacturing capacity is not a rigid level against which one bounces. When you are dealing with a world economy, with a flexibility to employ production facilities other than one's own, then the concept of capacity is vaguer.