Bubble? Crash? ==> Questions on the Economy Abound

A newspaper article on page A9 in The Oregonian’s Sunday, Oct. 12, 2008 issue was called Bubble? Crash? In terms of the economy, it defined a crash as a sudden reduction of 20% or greater in the value of anything. What does that mean?

Questions:

1. A value decline in anything confuses me. I see prices going up on Main Street. Does this mean we are paying more, a lot more, for items that are actually worth less than before the price hikes?
2. What about the exceptions? Gas has gone down a bit. Like oil-based products are ever valued at their actual worth anyway. Take the housing market as an example. Now I think I understand that. Less value on Wall Street, less value on Main Street?
3. Why can it cost more to purchase less?
4. Where will interest rates go?

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