There has been a housing boom, but it is not a bubble. It is more like a soufflé with the air slowly leaking out.

If you go into what I call a bubble boom, every bubble bursts.

UC Merced will continue to be the economic engine for Merced County and surrounding areas and the Central Valley of California. It will diversify the economy and strengthen the economy and connect the region to the rest of the world.

Silicon Valley has become a clearinghouse, an intermediate station on the way to producing products, ideas and companies.

San Francisco is coming back. Corporations are once again locating in The City and a rebound in Silicon Valley is helping the entire Bay Area. San Francisco's position as a gateway to Asia is also advantageous given the strength in the Asian economy.

I think what we have in store is a slow deflating of the housing bubble, not a bursting of the bubble. But if mortgage rates rise more sharply than I am expecting, then the downturn in housing could be more severe.