Bubble-Topia
Our national politics and economics have come to be defined by the inflation and violent pricking of bubble after bubble. There is a rhythm to our endless economic and political adulation and repudiation. I can not say I have solved the riddle, I can say it is high time we paid some real attention to it. There was a Bill Clinton bubble, there was a GW Bush bubble, an Iraq War bubble, a Global War on Terror (GWOT) bubble, a NASDAQ bubble, a housing bubble and now a commodity and Barack Obama Bubble.# There was a US invincibility bubble, a US Dollar bubble, a deficits don't matter bubble. I have barely scratched the surface. The inflation and pop list could be pages long. Not to worry, I will spare you the full treatment.
What do I mean by bubble? I am referring to a phenomenon usually associated with asset prices wherein a self reinforcing cycle develops. Allocations of wealth and attention create sustained upward pressure "based" on the desirability, profitability and forward price trajectory of an asset or class of assets. Prices rise attracting more money and confidence, this pushes prices up further. People, pundits, papers and passions settle into a sense of euphoric confidence in the true and scientific basis for their expectation driven inflation. The asset or asset class is seen as different and immune from the normal pressures, economic fundamentals or gravitational pulls that have wrecked havoc in past bubbles. In the depth of the euphoria, anyone silly enough to question the bubble wisdom is doomed to be attacked as foolish, evil or both. So, here I go.
Having limped out of disastrous Bush, Iraq and housing bubbles we are heading -- with great excitement -- into a commodity price and Obama bubble. We seem determined to find salvation and absolute good in the investment class and politician de jour. Massive inflation defines public perception of Obama. The pages of this Huffington Post have hosted violent and intense defenses against any and all who dare question. Affronts against the change messiah -- real and imagined- result in floods of defense e-mails, rabid and foaming attacks. This has nothing to do with Obama as a man, politician, intellect or leader. It is the bubble dynamic that has pumped massive air into this candidate at the present time. The process is frighteningly similar -- if from a different group -- to the inflation of Bush from President Select into master of world destiny and great leader of attack weary and reluctant super-power. It is the same logic that drove the housing and consumer debt bubbles to heights of amplitude and pressure that created carnage in an explosive and ongoing pop.
Why? When did we become a nation so unhinged from careful study and skeptical analysis? Why is hero worship and magic bullet status required for social legitimacy, investor dollars and political support? Every asset class or politician benefited by this process is also, eventually eviscerated by it. We are racing from bubble to bubble. Each cathartic attack on yesterday's sacred cow gives way to new and equally delusional euphoria about the new super investment, magically transformational politician.
What would happen if we asked what roles these bubbles played in perpetuating and deepening the political and economic problems that are making us so desperate for change and distraction? We had better do so soon. Our prestige, currency, macro economy, housing stock, political system, health care system, infrastructure and energy policy are crying out for a serious hard nosed overhaul. Bubbles don't fix problems; they explode in a hail of damage and disappointment.
# The proof of the Obama bubble should be obvious from the many angry emails and comments defending Obama -- who I am neither attacking, nor blaming in this article. There is nothing wrong with tech stocks, oil, agricultural commodities, housing or the candidates, as such. The point is to investigate a growing, powerful and unhealthy trend in American economic and political life.
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Max,
Forget about all those "pop" bubbles.
This is the business page.
Focus on the economic/financial bubbles.
Each ended with another contraction and another grab of wealth as the paper losers fed the paper winners. MONEY going from the many to the few.
Bubbles themselves are a setup mechanism.
They are inexorably marked by expansion of the money supply by the private banking cartel that controls the economy of this country. Those with THE MONEY POWER (MVB).
Each iteration of those bubbles since the big war has resulted in another wealth re-distribution, again from the many to the few, mainly those with THE MONEY POWER.
Do you know why?
There are two reasons.
First, because the COULD.
There is no accountability to those with THE MONEY POWER to do anything about employment or price stability, nor to income equalization.
And don't think of income equalization as a handout program.
Think of it as more free enterprise and less money-centric financial management.
But the latest reason is much more telling.
Because they HAD TO DO IT.
The jig is UP !
There were no other options for preventing the calamity unfolding.
Each current iteration of FED policy that opens American taxpayer pocketbooks to those with THE MONEY POWER is not done unflinchingly.
The jig is UP.
Either those with THE MONEY POWER must give it up, or they NEED to screw as hard as they can the American people to the wall.
Feel this bubble a-bursting.
A return to the boom-bust cycles of the 1800s, when laissez-faire ideology reigned supreme and there was not even the half-assed regulation we have today.
And yet the myth of endless growth will persist.
No matter how big recent bubbles have been, our economy is much less cyclical than it was even decades ago. The United States hasn't seen a significant recession now since 1980-1981. The recent 1990-1991 and 2001 downturns were minor, even smaller than the two 1950s recessions and the early 1960s recession. And, of course, the FDR induced recession of 1937-1938 recession was terrible with nearly a 33% drop in industrial production (whereas production is currently up year over year) and a 17% unemployment rate (compared to 5.6% now), and had much to do with his tax increases and Wagner Act which increased union activity and thereby reduced investment. We need to be carefull with too much government meddling. We're been ridding ourselves of government regulation since the mid-1970s and the economy has growth substantially since those efforts starting seeing results in the 80s.
And if you go back a few more years you'll see that we had your laissez faire system in the late 1800s and it just wasn't that pretty. The economy went through massive boom and bust cycles with depressions, not just recessions, in the 1830s, 1870s and 1890s. Not to mention fun things like 8-year-olds working in coal mines and textile mills.
A bubble is nothing but the result of a "get rich quickly" mentality. The average gain of human society year over year is five percent. Trying to extract more than that by speculation simply increases the risk, some people get rich, many more lose their shirt. There are many perfectly well know ways of mitigating this, all of which would require some level of civic education to be viable.
As for Senator Obama, he appears to understand perfectly well that all he can do is to put this nation on the right path. In his speeches he carefully analyzes the underlying problems that plague this nation and he lays out the little nudging steps that we can take today to come closer to a solution. While many supporters do not understand this and are getting their hopes up too high, the man himself understands where we all stand.
This country has a long way ahead. Two terms of an Obama presidency will be barely enough to repair the worst damage that we have inflicted on ourselves. It will take the full dedication of a generation of voters, politicians and citizens in general to put the US back together again.
And that is not a bubble. It is a real challenge. If we can master it collectively remains to be seen.
Bubbles sustained by a Country with too many ignorant people and a shallow short sighted cultural foundation. As a nation we need to grow up, at that point the media will mature. The alternative would be to force the media to actually report facts in some sensible manner that would allow people to effectively make judgments about the world that reflect he reality. We abandoned the standards of truth in journalism long ago in exchange for tabloid style sensationalism which has mutated into full blown corporate, and government propaganda. We had the terrorism bubble also perhaps it has not burst yet but it should have long ago.
There was a tulip bubble years ago. People get nuts over this stuff. Let's be courageous and say no terrorism bubble. We are strong and don't need the might white old macho males to protect our sorry butts. We can do that by getting them out of office.. Have a lovely evening everybody.
Independent for Obama '08
The bubble are in many ways escapes from reality, a reality that becomes increasingly stressful as our society confronts and struggles with so many issues--its imperial domination of the world and the pain this causes, its transition from industrial to post-industrial, its failure to provide for the human needs of a third or more of the population, its exploitative and alienating economic and political systems, its worship of wealth, power and celebrity, its historical legacies of injustices and atrocities, and so on. These issues are never resolved and the anxieties about them build and various fears of the future haunt us. What will tomorrow bring? Will there be more war, another economic depression, disease epidemics, martial law, dictatorship, violent weather, terrorism, etc? There is no viable progressive movement that can confront and challenge the wealth and power distributions that dictate these outcomes. What happened to the anti-war movement, for example, with its Cindy Sheehan bubble?
What would have happened in this decade if some well educated grad student of economics had dared "ponder" the wisdom of negative real interest rates? Negative real interest rates lead to wreckless bubbles. Yet... in hindsight it all looks so stupid? (don't we still "have" negative real interest rates)
You know slavery was a rotten deal in today's view, however it did not seem to bother the masses back in the 1700s. You can imagine when the year 2200 rolls around that people will be aghast at what will then be thought of as intolerable social and economic mores.
The bubbles in many ways are escapes from reality, a reality that becomes increasingly stressful as our society continually confronts and struggles with its imperial domination of the world and the pain this causes, its historical legacy that includes injustices and injustices, its transition from industrial to post-industrial, its exploitative and alienating economic and political systems, its worship of wealth and power, its failure to provide for the human needs of a third or more of its population, and so on. These issues are never resolved and the anxieties about them build. Where will it lead? Will there be more wars, another Great Depression, martial law, disease epidemics, violent weather, terrorism, etc? There is no viable progressive movement capable of confronting and challenging the wealth and power distributions that dictate these outcomes. What happened to the anti-war movement, for example, and its Cindy Sheehan bubble?
Ryan and SD16. You may be addressing the heart of the matter. Thank you. It does appear that we are are confronted with information overload when trying to sift through the media's and bloggers' description and interpretation of reality. In such an easy environment for the dissemination of information and ideas across many minds , it is equally easy and convenient for the powerful with hidden, self-interested agendas to skew the facts towards self-serving truth.
Bubbles or no bubbles, we have a media which is essentially controlled and manipulated. As in traditional societies of yesterday and today, there are certain sensitive issues that are aired infrequently, if at all, in our newspapers, periodicals and television. In some power centers,even to make reference to thier existence is to be ostracisized. Our citizens' natural frustration and sense of helplessness is channeled by our talk hosts towards sensationalism and instant revelations of gossip and factoids that distract attention away from the real issues and towards entrenched power panaceas. And the truth is an orphan for not being allowed a public stage. And our problems fester and go unaddressed for the benefit of anti- democratic forces.
I would question the idea that the media is being manipulated. It is much easier to explain the complicity of the media with an underlying lack of intellect. Wherever I look I fail to see basic logical thinking skills in journalists and opinion leaders, a lack of basic data collection and analysis techniques and generally a tendency to oversimplify everything to the point of falsehood.
This is not manipulation. The simple fact is that truly intelligent people do not write for the newspaper. They create. They lead their fields. They research. But they do not sign up for a job that would require them to dumb down to the level of their audience.
In the past the disconnect between the complexity of facts and the capacity of the journalists' audience to process them was relatively small. This has changed. The facts have gotten a lot more complex and the audience in general has been dumbing down, partly because the audience has expanded from the well educated elites to the general public, partly because both the general public and the elites are showing signs of intellectual decline.
I am sure one can find fine examples of journalists who have been fighting to close this gap for decades. But the majority has not. They have given in to the quick and painless method of adjusting their writing to the level of the audience instead of pulling up the audience to the level of reality.
actually, the news media has been getting worse in this country through time -- not better
anyone trying to improve the media in this country is fighting an uphill battle
Again I have to agree Kill. I am in despair at the prospect of our country EVER coming to grips with a rational energy policy. Look how long the dimwitted argument (I refuse to call it a debate) over oil drilling has gone. It should have taken 15 minutes to show that we simply cannot drill our way to energy independence or even signifigant amelioration of oil prices and the debate should have moved on.
Instead the entire election is hanging on an argument about something that SIMPLY CANNOT WORK! Why? Because nobody wants to believe the days of cheap oil are over.
A rational energy policy cannot be put on a bumper sticker or fit on a 20 second sound byte, and I don't think our political culture is capable of processing anything that doesn't. Americans will have to be bludgeoned into reality by Mother Nature, who wields the biggest blackjack in the world..
I think you just described your own profession perfectly. Every citizen in this country knows it's the media who most effectively create what you are calling "bubbles," with alarming frequency and absolutely no attention being paid to whether something is "true" or not. Everybody in the U.S. gets their information from media sources, one way or another.
The media shouldn't be a "business" in the classic sense, in my opinion. Its effect is too powerful on the uneducated human mind, and it is very easily manipulated by anyone with money or an agenda. Just ask Hitler or Goebbels.
I don't have an alternative structure for the media, but its role as a "bubble machine" is beyond dispute.
It is OK for the media to be a business. Not OK for the NEWS media to be a business.
We can't lay it all on the media. If we weren't buying they wouldn't be selling.
Sadly, we're selling ourselves the bill of goods.
It's way to easy to blame everything that is wrong on the "ignorant" "uneducated" or "stupid". "It ain't so" But our willingness to throw those identity tags at anyone who disagrees with us brands us as arrogant. I'd also add "stupid".
If I understand Sen. Obama correctly then he is trying to "lead by example" not by words. Words matter, but actions matter more. So maybe it's time for all of us to start living what we've been preaching: equal rights, accountability, responsibility, a helping hand when needed; the list goes on.
See Ryan Kauffman's Profile
I believe this bubble phenomenon is a product of having too much instantaneous communication at our fingertips. Now that we can both send and receive information at the speed of light those of us within the information business are almost married to our communication devices. Breaking away from the bubble, starting a new idea and getting it rolling, altering the zeitgeist as it were is next to impossible.
Ryan,
Ditch the pic, man.
It's worth less than zero where people are turning thoughts into words through keyboards and servers.
This is about ideas.
We can all view your profile.
Unless you're trolling for some return pic action.
And, am I getting you in saying that THIS is the problem?
wow!
Thanks.
I'd rather be sailing.
See Ryan Kauffman's Profile
the picture comes from being a blogger with huffpost. I could log in using an alias to get rid of the picture, but then there would be no connection between my comments and my writings. how would you really know me or what i stand for? a profile? those things are a load of BS. you want to know someone over the net you look at their body of work.
this kind of communication is what causes bubbles. i'm not suggesting a reactionary response where we stop using these things (obviously, i blog) but we all need to be aware of whats going on. the more we communicate the less time we have available for quiet contemplation.
An information bubble? What a keen concept. That leaves me wondering what the effects might be when that bubble bursts.
Please allow me to slightly disagree with you. It’s the public that builds these bubbles and it’s the public that bursts them. Easy answers are always well… too easy.
Everyone, of course, has their own ideas about how this comes about and I’m no different, I have my own. I believe it all depends on the mythology each and every one of us accepts and bases our actions on, many of which are widely held.
I subscribe to a blog called “Dr. Housing Bubble” so I’d like to use the housing bubble as an example. It was plainly based on the myth that all real estate would always continue to increase in value. When enough people believe in myths such as this one, they become self-fulfilling. Credibility has its limits however. Once the adjustable rate mortgages began resetting and the mortgagees could no longer afford their payments, foreclosures began and housing values began sliding. Reality set in and the myth was exposed for the fairy tale that it was. California home values have decreased ever since.
The myths you accept have more to do with your wanting them to be true than what you can see with your own eyes. It’s necessary to overcome those desires in order to base yourself in reality.
The South Sea Bubble. That was around 1720. Instantaneous communication may help, but it doesn't cause bubbles. It's greed that does that.
Max. A good try. An implausible premise. If you pointed to the economic bubbles haunting us with ever greater frequency and with deadlier consequences, I could comprehend. If you pounced on failed economic and trade policies, I would agree.
The fickleness and piling on of our citizentry it seems to me results from a lot of sources, some which are obvious: manipulated and false information; declining opportunity for our citizens, especially the young among us; inflation; leadership deadlock; incessant media, specifically t.v. propaganda to manipulate public opinion; sense of helplessness in the face of corporate and Wall Street hegemony; servant paying job offerings job outsourcing, rising taxes and inequality, foreign sabotage of our political and economic well being. and so on.
The failure of American leadership is weakening our citizens' knowledge and skill to make informed decisions. Thus, your perception of the manic-depressive state of citizentry behavior is simply the flailing and stampeding of people unable of controlling or determining their own fate. New leadership may or may not be able to redirect attention and energies toward more constructive ends for all citizens.
I would add in several more sources of the phenomena.
First, an increased consumerism, not just of material goods, but of ideas (both profound and profane), DGI effects and thrill seeking stimuli. In the midst of over stimulation, there is little time or effort put into longer term thinking. You may call it a bubble, I would call it the latest fad.
Secondly, too much pressure put on our public education system to do jobs other than education. Having teachers perform the jobs of social workers, counselors, health workers, and virtual parents takes them away from their job of creating critical thinkers and educated citizens. Our children's time is constantly being interrupted by State and Federal testing, social policy education, and driven mandated curriculum. Teachers are denied the flexibility and creativity to develop a thinking citizenry.
Finally, I am no scientist, but I would be interested in seeing how our fast paced culture has been trained to receive stimulus. I watched the new Batman the other day and sat in wonder at how DGI reality moved so quickly from one intense, DMX sound supported visual to another. If we have the capability to be stimulated so intensely in a wakened mind, and we are being supported and trained to receive such stimuli with little effort (10 bucks is an hour or half hour of labor for most of us.), Do we not start to project such expectations into the rest of our reality?
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