Apples and Oranges: Dotcom vs Housing Bubbles

The Comparison
Talk of the housing boom and bust often leads to our previous great collective mania, the dotcom bubble. Even Warren Buffett mentions them in the same breath. When history books are written, they "will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s," the Sage of Omaha wrote this year.

Why It Works
Government lent a helping hand: a sales-tax moratorium spurred the Web economy, and low interest rates encouraged home purchases. Both busts sent stocks tumbling by more than 30 percent, and the real economy sank into recession. In the aftermath, corruption became apparent: Bernie Madoff follows in the footsteps of Enron's Ken Lay.

Why It Doesn't
Magnitude. Today's bubble inflated not just stocks but bonds and derivatives. Plus, this recession will be uglier: unemployment, which peaked at 6.3 percent last time, could hit 10 percent. And the dotcom bust left behind useful infrastructure, like broadband cable lines. This time? Empty McMansions and toxic assets.