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Tiptoe through the tulips

By Owen Paine on Saturday September 11, 2010 11:20 PM

The sudden bursting of most "value" bubbles couldn't, by themselves, bring down a national economy. Not even one like the recent house-lot bubble. So why do we think so?

Despite the chatter about the specifics of home ownership, etc., they're largely incidental to this ongoing horror. Anything could have triggered the present slow-but-steady monster mash. It was in the cards from 1971.

Recall the burst bubbles of yore: The S&L bank blowout of '89... The stock meltdown of '87... The dotcom burst of '01... The energy price collapse of the mid-80's... My own favorite, the gold bubble of '79.

I'm no chronicler of hi-fi mayhem, but that's a start.

There's lots of 'em. They go with modern credit-driven capitalistic asset markets. They're bult into the institutions and rules of the game, and so they come and go like cyclones. Most times the economy sails on through with only above deck wreckage

If you want to study the present...impasse, then forget bubble-watching. Leave that to the portfolio crowd. If you're a regular Mcjobbled type, like me, I suggest you rent your digs, spend your takehome, and die somewhere between 70 and 75.

Yup, plow into the here and now, brothers and sisters.

Recall these words: "Which of you by taking thought can add one cubit unto his stature?"

But I wander.

You're a wage slave. Live with it. But if you want to have some fun pretending to be a prophet while you play out your string, then keep the global economy under constant scrutiny.

Yeah, we get bubble-bursts there too, of course. Just recall the Chinese firecrackerish string of forex crumbles in '97-'98, or Mexico in what, '94? Argentinia in '00, or was it '01? The debt crisis that ate the Iberian continent in the mid-80's. Black Africa just about 24/7. Etc. Etc.

But no. I mean the overall international flows of trade, and what is called, with genteel nicety, "investment".

There are, I dunno, 180-20 bounded outfits stationed around the planet. Prolly 30-40 of 'em are significant, and they're all criss-crossed by multinational corsairing crews scurrying about, making bold real crossings and near-invisible virtual crossings everywhere and always.

This gets to be complex and snared. That's where we come in, we wagelingers of the developed zones. If we're not watching, we settle in for some version of what we got right here today: a yellow-flag slowdown, a "stagnation".

These are protracted "outcomes", right there in the cards from the very production of the deck, just waiting to turn up again and again: not as one or two bad cards in a row, to a few players here and there, but to most players and for many hands in a row, game after game, enough bad cards to immiserate nearly every sucker at every table on the surface of mother Earth.

Despite the fact we're mired in a global crisis of deep structural origins, a crisis that has no exit for us little types without great upheaval or much quiet misery, our mainstream liberal press still flings hammers at itself and at Wall Street over the hammy Brechtian drama of fall '08. That curtain-raiser still keeps most of the MSM ink spilling over. How to prevent a repeat of Lehman-AIG?! -- As if there was nothing but handwringing to do about today's panoramic policy of deliberate cruelty that only continues the great recession -- this giant stag party thrown for us deepfried OECD jobbler-gobblers, so we won't have the cash or credit to import 3 trillion dollars worth of Asian products over the next few years.

Imagine if the calls for austerity got explained that way. Better we analyze the details of the lot bomb/toxic paper fire-dance. Better we use that dark morality play to alibi the present criminally intentional macro regime of Darth Ohbummer, der Hungerkanzler!

Comments (5)

op:

http://www.nytimes.com/2010/09/12/business/global/12yuan.html?_r=1&ref=business

the stag shows some "results"

just one of a larger pattern of balance shifts
sustainable ??
we'll see

"data released on Friday by the General Administration of Customs showed that Chinese demand for imports also remained surprisingly strong. The trade surplus narrowed to $20 billion last month.."


of course this stinger got affixed to that bulletin

".. and would have been nearly in balance without China’s $18 billion surplus with the United States"

all this without a major forrex upheaval

good show stagmen !!!!

the forex arbitrage profits
can continue
under the cloak of "balancing " flows

Al Schumann:

Is he gonna cleanse us of our economic impurities? I can't see him doing that from conviction. His training and career spell neoliberal machine politician. They don't take initiative. They're entirely reactive. They sniff out elite consensus. Hence the balls out propping of the toxic paper, which has proven its worth. It really does eliminate bankster risk through broad distribution. The broadest possible distribution.

What's the elite consensus on a Great Cleansing? With stagnation, they're safe. A slow grind keeps the pwogs and the wingnuts nipping each other's ankles and yields just enough unsolicited domestic terrorism to keep nightstick enthusiasm bubbling away.

op:

china's price level is rising faster then ours

and that's reasonably good news
as a faster rise in the chinese price level works to the same end as a reval

but u have to take it as part
of a set of interrelated motions
to get its true impact

essentially if the differential
in sino american wage level increases
exceeds the differential in labor productivity increases

we'll see a slow reduction
in the forex arbitrage
even if the rate of exchange
holds steady more or less

caution
the rate of this adjustment
is likely to be very slow indeed
however
given the present high differential
in labor productivity growth
present closing speeds look to postpone the end of rmb/us dollar forex arbitrage profits
early next decade

just what the MNCs ordered

senecal:

"There are, I dunno, 180-20 bounded outfits stationed around the planet. Prolly 30-40 of 'em are significant, and they're all criss-crossed by multinational corsairing crews scurrying about, making bold real crossings and near-invisible virtual crossings everywhere and always" (OP)

I believe this is the turning point in your exposition: where the REAL economic actors are introduced in place of the IMAGINED ones of bubbles you begin with. If so, this is a good example of why I'm never sure what you're talking about -- a side-ways skip into metaphor where prosaic plainness is called for.

I can guess what you're saying, and make your observation fit into MY general view: that bubbles are merely singular outbreaks of a general imbalance between investment capital and investment opportunities. Of course, that way of putting it totally lacks flair, and SMBIVA would collapse in a week if that's all that appeared here!

hapa:

"A slow grind keeps the pwogs and the wingnuts nipping each other's ankles and yields just enough unsolicited domestic terrorism to keep nightstick enthusiasm bubbling away."

nothing really sharper in any house than scissors for clipping coupons

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