A bubble is a bit like the well-known description of hard-core pornography uttered by the late U.S. Supreme Court justice Potter Stewart, who could not come up with a definition: “I know it when I see it.”

Or do we?

Bubbles remain hard to define, hard to measure and, like recessions, can only be accurately assessed after they have burst. Economists have wrestled with bubbles for generations, but have yet to devise an adequate scientific means of analyzing them, comparing them or providing us with an early warning system that would safeguard from their worst effects.

But lately, bubbles – or bubble fears – seem to be everywhere. From Chinese real estate to U.S. Treasury bills to global commodities, analysts point to a flood of simple credit that has helped to inflate values.

Now, soaring prices are triggering bubble fright on the Canadian housing front.

For much of the global downturn and financial crisis – which was triggered by the bursting of the U.S. housing bubble – Canada stood as an island of cool. House prices never reached the stratospheric levels of the subprime era south of the border and their decline was nowhere near as precipitous when the Canadian economy weakened.

Most housing watchers insist Canada is not in a bubble just yet. But they acknowledge there is no precise science that determines exactly when a market shifts from merely heating up to bubbling over.

“If it walks like a duck and quacks like a duck … ” said David Rosenberg, chief economist and strategist with Gluskin Sheff and Associates in Toronto.

Mr. Rosenberg pronounced Canadian housing in a bubble late last year, fuelled by the usual culprits: tight supply, extreme valuation, and dramatic credit expansion.

Mix in simple mortgage conditions luring more people to jump into home ownership – the current national rate of 68.4 per cent stands at an nearly 40-year high and a full percentage point above the U.S. level – and you have the recipe for a classic bubble.

“Housing values are anywhere between 15 and 35 per cent above the levels that I would mark as being consistent with fundamentals.”

When it comes to housing bubbles, Mr. Rosenberg’s opinions carry some weight. He started his career as a housing economist.

And as a Wall Street strategist in 2004, he correctly called the U.S. bubble and its eventual devastating impact, at a time when other leading analysts were nearly uniformly bullish.

“If price increases come down and we see the sales numbers moderating, then I won’t be so worried,” said Tsur Somerville, an associate professor of real estate finance at the University of British Columbia.

“If things continue at the pace they’ve been at the last six months, that’s a lot of cause for worry.”

While much of the focus is placed on national housing data, Mr. Somerville noted that only a handful of U.S. states, led by California and Florida, truly had housing bubbles.

But the hurt they did spread everywhere by way of mortgage-backed securities and other financial products.

“Another element is that the Canadian government is driving this,” he added. “CMHC has been buying so much product. Functionally you’ve had this huge liquidity dump from the government into housing finance.”

The largest program Finance Minister Jim Flaherty unveiled to combat the crisis and ease the flow of credit through the recession was Ottawa’s Insured Mortgage Buy Program, which has bought more than $65-billion worth of mortgages from the banks.

The Finance Department announced last fall it would extend the program until the end of March.

If you want to locate a bubble in the making, following the money, or at least the credit, is the best road map.

“There is always excess leverage involved,” said Arthur Heinmaa of Toron Capital Markets in Toronto.

“Where the credit is greatest, that’s always where you will find the bubble.”

Just don’t expect any policy maker to acknowledge that misguided government policy typically aids and abets bubble formation.

Nor will they ever agree publicly with the notion that a bubble mentality has taken root and that it has to be nipped in the bud.

“Imagine the political backlash if a politician or central banker told people their house is worth 20 per cent less than they reckon it is – and they’re prepared to do everything in their power to ensure that it is worth less,” Mr. Heinmaa said.