This blog post originally appeared on RealMoney Silver on Oct. 3 at 8:31 a.m. EDT.

Last night, I appeared on CNBC's "Kudlow & Company" and went face to face with Larry Kudlow and Dr. Arthur Laffer, but this time, I had Herb Greenberg in my corner.

Larry and Dr. Laffer argued that the all-time high in personal net worth and the surge in equity prices are safeguards against a recession in the U.S.

Herb and I disagreed. What follows are the arguments I used.

I said that the stock market is now assuming a more critical role in the domestic economy than ever and that relying on such an asset to sustain economic growth was a slippery slope for both the economy and for investors. Far too much could go wrong.

I asserted that economic bears (such as myself) contend that a record high in consumer debt service as a percentage of disposable income, combined with two years of massive mortgage resets, pose a considerable headwind to personal consumption expenditures in 2007-2008.

When pressed again with the all-time high in personal net worth argument, I told my opponents that there are three parts to net worth: individually owned businesses; stocks and equities; and housing. And housing is being taken out from underneath the consumer, which in turn has resulted in an economic over-reliance on share prices.

In support of my argument, I illustrated the expectation for 2007-2011 home prices, according to market participants in the Case-Shiller futures market. That market, which is predicting mid-single-digit home price declines in 2007, anticipates that by 2011 there will be as much as a 25% cumulative price drop in several key housing markets, with most markets seeing 15% to 20% cumulative declines in the five-year period.

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