"...nanos, gigantium humeris insidentes..."--John of Salisbury
Monday, March 3, 2008
"The Next Bubble: Priming the Markets for Tomorrow's Big Crash"...
Now available online at Harper's Magazine. This is our third post on this piece, the first to link to the whole thing. Read it. Then bookmark for review about the time of the next presidential election. Before you go to Harper's, here's "Here Comes Another Bubble" to get you in the mood. HT: iTulip's "The Bernanke Goat Rodeo and the Next Boom".
A couple tastes:
Total market value: Alternative energy and infrastructure. Estimated fictitious value of next bubble compared with previous bubbles
...The next bubble must be large enough to recover the losses from the housing bubble collapse. How bad will it be? Some rough calculations: the gross market value of all enterprises needed to develop hydroelectric power, geothermal energy, nuclear energy, wind farms, solar power, and hydrogen-powered fuel-cell technology—and the infrastructure to support it—is somewhere between $2 trillion and $4 trillion; assuming the bubble can get started, the hyperinflated fictitious value could add another $12 trillion.
In a hyperinflation, infrastructure upgrades will accelerate, with plenty of opportunity for big government contractors fleeing the declining market in Iraq. Thus, we can expect to see the creation of another $8 trillion in fictitious value, which gives us an estimate of $20 trillion in speculative wealth, money that inevitably will be employed to increase share prices rather than to deliver “energy security.” When the bubble finally bursts, we will be left to mop up after yet another devastated industry....MORE