Once You Pop, You Can't Stop

I talked about the next housing bubble back last December, a good eight months ago. I've been giving more warnings since then. Turns out I'm far from the only one who believes we're heading right back into the soup again.

The housing market, which already has been battered by the worst collapse since the Great Depression, could be setting itself for another bubble, well-known economist Robert Shiller told CNBC.

With home affordability at a 40-year high, there is "absolutley" a possibility that the housing market will face another bubble in the next five years, said Shiller, an economics professor at Yale, co-founder of MacroMarkets and co-developer of the monthly Case-Shiller home price index.

"The low interest rates, the affordability is leaning that way and the ratios are back down," Shiller said in a live interview. "I get glimmers of excitement among some people, but we still have a high inventory of unsold homes, and we still have a lot of weariness because of the recent experience."

Although the most recent Case-Shiller report showed that US home prices posted their first monthly increase in almost three years, the sector—and the economy—are still a long way from recovery, Shiller said. Another round of stimulus money and revival of the credit markets is the only way the economy will shake out of this rough patch, Shiller said.

"It's clearly not over yet," he said. "It's not obvious that people are really ready to spend again. That may take years to rekindle that normalcy."

And keep in mind Shiller's "normalcy" is in fact a housing bubble. It's where America's been since the early 90's. Every time the housing bubble has burst, the economy has gone south. We keep reinflating it. It made a massive rupture last time, and we're still in a housing depression, now a full-blown real estate depression, because of it.

And now we're trying to recreate and reinflate that bubble once again. And when this one pops, we're really going to know the meaning of the word "depression".