Skip to comments.The next bubble: "The Next Bubble: Priming the markets for tomorrow's big crash"
Posted on 10/11/2008 12:52:04 PM PDT by truth_seeker
A financial is a market aberration manufactured by government, finance, and industry, a shared speculative hallucination and then a crash, followed by depression. Bubbles were once very rareone every hundred years or so was enough to motivate politicians, bearing the post-bubble ire of their newly destitute citizenry, to enact legislation that would prevent subsequent occurrences. After the dust settled from the 1720 crash of the South Sea Bubble, for instance, British Parliament passed the Bubble Act to forbid raising or pretending to raise a transferable stock. For a century this law did much to prevent the formation of new speculative swellings.
Nowadays we barely pause between such bouts of insanity. The dot-com crash of the early 2000s should have been followed by decades of soul-searching; instead, even before the old bubble had fully deflated, a new mania began to take hold on the foundation of our long-standing American faith that the wide expansion of home ownership can produce social harmony and national economic well-being. Spurred by the actions of the Federal Reserve, financed by exotic credit derivatives and debt securitiztion, an already massive real estate sales-and-marketing program expanded to include the desperate issuance of mortgages to the poor and feckless, compounding their troubles and ours.
(Excerpt) Read more at harpers.org ...
Bubbles are not rare.
If one reads back over the financial history of the US, one sees that excess investment in constantly chasing around from one asset class to another. This is our fourth or fifth time down the cycle of “equities->housing->commodities->farmland->bust.”
We’re about to see farmland deflate in value as the final act to this go-round.
You're correct. In addition, a massive deflation in commercial property values is underway, although vey few people realize it.
IN reality America has had more than five panics. In fact, there have been thirteen in all. These thirteen panics have occurred as follows:
The rest is in PDF format.
>> Were about to see farmland deflate in value as the final act to this go-round.
Hope you’re right. I’d like to pick some up.
This is my 5th one. 1972, 1987, 1991, 2001 and now 2008.
What has made them tolerable is to have low debt and low debt on real estate. Twice I got creamed on jobs and was without work for at least 6 months.
Since I have been thru so many serious down turns, I have become a serious saver. I get thru each time and have been able to pick up the pieces that others have left behind.
Never forget, it is not if a downturn is going to happen, it is WHEN the downturn is going to happen..
I figure that should be sometime about June 2009.
Maybe McCain knows so much about all this and it scared the crap out of him. Thus, he doesn’t want to be president and that’s why he’s trying to lose.
False. It passed that act *during* the bubble, to avoid funneling of funds to *alternatives* to South Sea. It was goosing the bubble not regulating it, by stamping on rivals. After the crash came anyway, it was reinterpreted as a piece of prudence, and so understood by the existing joint stock companies, the Bank of England and the East India Company.
I didn’t write the article. Just posted it, because in its ENTIRITY it makes several good points.
As long as interest rates are low for the instutional investors the commercial side will be ok. If your not a instiutional investor funds will be tight and expensive. They are buying deals at 6% caps which keeps values high. A small fry would be laughed out of the bank asking for 4.5% loan.
Thank you for posting this. I am bookmarking to finish reading this later...
Were about to see farmland deflate in value as the final act to this go-round.
Permit me to offer an applicable antidote. I have been looking at online real estate ads for quite a while. My wife and I have toyed with the idea of moving into the mountains. A day or two ago I found an ad not in the mountains but in the NW portion of South Carolina offering a small house and 20 acres with a stream and wildlife habitat. The ad said that the most recent appraisal was for $200,000. but the “motivated” owner had dropped the price by $50,000. which sounded like quite a reduction but the asking price in the ad was even lower, $129,900. I wonder if that ad is an indication of things to come.
I don’t know if McCain is really trying to lose but I and many, many others have said that nobody in his right mind would want the challenge of being the next president of this nation. To any thinking person the fact that Obama wants it so badly even though he is almost totally unqualified by experience and temperament is more than enough to scare you silly. It would take a monumental confidence in oneself to believe that you can straighten out this mess. This looks like all the labors of Hercules at once.
I do hope that Obama KNOWS he’s don’t know. At least that way he’ll surround himself with people who DO know. But it is scary to know that everything he says is something he was told to say.