Tuesday, January 12, 2010

Welcome to the bubble

When I’m in the US, I cant help but look at the impact of values. In fact, any visit to a foreign place can do the same.

The news is: this may be another bubble (recent Economist story)

The article makes two interesting points. The first one is probably bereft of ideological bias: “The American market is around 25% below the level it reached in 2007. But it is still nearly 50% overvalued.” The second includes a value judgment and is perscriptive: “Markets are too dependent on unsustainable government stimulus. Something’s got to give

I personally don't agree with the value judgment and indirect perscription, but I do agree that "Something's got to give." That is, the adjustment may not mean the burst of a bubble as we know it. In any case, we have to get out of bubble behavior. That is, get out of unsustainable behavior.

- When you walk into a grocery store and the shopkeeper knows very little about vegetables but a lot about product placement, something has to give.
- When you get a ride from someone who is only thinking about his tip and the dishonesty of “politicians and big business crooks”, and is driving without much regard for the road or other drivers, something has to give.
- When you look for dinner and can only find high sodium, high fat food, something has to give.
- When everyone’s watching TV and all that’s on is about brand, story and publicity something has to give.
- When the only glimmer of freshness on faces are on new hires, something has to give.
- When the climate of business is the climate of fear, something has to give.

Crash or no crash, bubbles are symptoms and results of these problems, and we'd be foolish not to give our attention to what's at the root of these problems. Something does have to give - we do.

Cost without value is bubble economics; erosion of social capital and not measuring the loss is bubble economics.
Moralism not backed up by self analysis & hard work is also, well, just blowing bubbles.

No comments: