To quote Krugman "Americans will face increasingly strong incentives to start living like Europeans.
Paul Krugman's article and your post indicate that Americans need to embrace public transit and higher population densities. I disagree with the notion that is necessary or even desirable.
Public transportation is economically unsustainable throughout most of the country without taxpayer support. There simply isn't enough demand. I'd prefer not to manufacture demand through higher gas taxes.
We have the 3-4 unit structures you describe already. Condo's don't sell as well as single family residences. Personally, I'd like more room around my residence, not less.
I love bikeable and walkable communities. They are more livable and something we should strive for. Sidewalks, bike paths, bike lanes should be included in the overall transportation plan of a city/region. On the other hand, I abhor, higher taxes on gas and being pushed to ride public transportation. I have no urge to ride the bus or the train or payer higher taxes so others can. Given the background, here's why I don't think it's necessary to move that direction.
Vehicles are becoming increasingly efficient and new technologies are being developed due to the higher energy prices (such as electric vehicles and hybrids). In addition, North America has a huge supply of Natural gas that could fairly easily supply our vehicles with fuel if we set up the refueling infrastructure (which I believe is going to happen due to private market forces). Finally, technology is allowing many white collar workers to telecommute, rendering transporation costs as a significantly smaller portion of their budget.
On the housing front, we can and should be encouraging higher energy standards on new homes and retrofit of existing.
In closing, if someone wants to ride their bike to work, take public transporation, or live in a high population density area, that's fine with me. I don't, however, support tax and spending policies that force the country as a whole in that direction.
I don't think people need to be pushed into living into condo's and riding public transporation in order to avoid financial crisis. They simply need to live within their means (or below like those of us on this site).
Midwest