LONDON — These are worrying times for the world economy, and perhaps even more so for the armies of highly paid analysts who failed to predict the current slump in world stock markets.

A few wiser heads have been saying for a year or more that the whole structure of stock prices was unsound — that stock prices in relation to prospective corporate earnings (the famous P/E ratio) were far too high. But they were in a tiny minority compared with the experts from big banks who were forecasting future stock levels that now look like pure fantasy.

Yet for all the pessimism in the financial community — the dire warnings about the value of pensions, the forecast of another 1929 crash and other blood-curdling predictions — the general public, at least in Britain, has seemed curiously unmoved by these dramas.

It is as though, at the level of the ordinary citizen with common sense, everyone always knew that shares surge up and down and that all balance sheet arithmetic, along with spuriously precise rules of the accountancy profession, needed to be judged with a pinch of salt. As in other branches of economics, it turns out that solid-sounding concepts like “profits before tax” or “total assets employed” depend on impressions and value-judgments rather than on concrete numbers.

Add these uncertainties to the mad, bubble world of dot-com hype — when all sensible business values seemed to go out the window — plus the suspiciously arcane procedures of “energy trading” businesses, and one had all the ingredients guaranteed to produce an Enron collapse, or a WorldCom scandal, or a dozen other doubts and queries about those pages of big numbers in glossy company reports.

So while stock market pundits rush from cheerful hope to apocalyptic gloom, the rest of us are probably right to wait for the pendulum to stop swinging so violently and settle down. The underlying economic situation remains not all that bad, so why panic?

Yet a disturbing thought hangs in the air, one that might even rock the most detached and stoic member of the general public: that the stock market collapse may be followed by a property collapse. And since most British citizens have far the largest part of their wealth tied up in their homes, that would spread anxiety faster than any big slide in share values.

The property-price bubble in recent years in Britain has been even more pronounced than the now-deflated share-price bubble, although the size of the increase in the price of a home depends on where one lives.

London, the southeast and the southwest of England have experienced rocketing prices in the past decade; in recent years some prices have doubled. The average cost of a home in London is now more than eight times the annual salary of a nurse and five times that of a police officer. Smarter houses in central London have trebled or quadrupled in value. The £1 million townhouse is now considered a bargain!

Cheap borrowing costs have driven the demand for houses to even more frenzied levels, while the actual building of new homes has slowed to the lowest level in decades as environmentalists and rural interests fight ever more tenaciously to protect green fields from being gobbled up by developers.

Meanwhile, in northern England and parts of Scotland, prices have languished, and in some areas homes stand empty and virtually worthless.

This extraordinary imbalance is rapidly leading to crisis. Key public sector workers in the south, such as firemen, social workers, policemen and hospital workers, simply cannot afford homes. The government is convinced that this situation will not cure itself (for instance, by people moving north to cheaper homes) and has now stepped in with a plan to build 200,000 more “affordable” homes (meaning subsidized in some way) in the already crowded southeast.

Typically, this government initiative may have arrived at the very moment when the problem is about to cure itself in the most painful sort of way — namely by a burst of the property-price bubble. Suddenly the immense demand for homes is faltering. People are getting frightened of being stuck with high mortgage loans and declining property values. The rented housing sector has already gone sour. By the time the government’s extra “affordable” houses get built around London, the price of housing generally may have crashed.

An ominous thought occurs. Could it be that Europe and America are simply following the pattern set by Japan over the past decade? The sequence there was a share-price collapse, a steep decline in sky-high property prices, minimal inflation with price deflation in some sectors, and stagnant growth.

Both Europe and the U.S. now have three of these four symptoms. Only on the housing price front is gravity still being defied. But that could change very soon, and the property bubble could go the way of all other bubbles, as happened in Japan.

Perhaps Japan, far from lagging behind in the world economy over the last 10 years, was ahead of the game after all.

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