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Posts Tagged ‘Bubble’

Balloons in Search of Needles

Posted by hkarner - 28. September 2015

By John MauldinMauldin Video

September 27, 2015

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David Kotz: Understanding Contemporary Capitalism, Part I

Posted by hkarner - 11. September 2015

10/9 Naked CapitalismBy David Kotz, a professor of economics at the University of Massachusetts-Amherst and the author of The Rise and Fall of Kotz AmherstNeoliberal Capitalism (Harvard University Press, 2015). This is the first installment of a two-part series based on his book. Cross-posted at Triple Crisis.

Part 1: What is Neoliberal Capitalism?

“Neoliberalism,” or more accurately neoliberal capitalism, is a form of capitalism in which market relations and market forces operate relatively freely and play the predominant role in the economy. That is, neoliberalism is not just a set of ideas, or an ideology, as it is typically interpreted by those analysts who doubt the relevance or importance of this concept for explaining contemporary capitalism. Under neoliberalism, non-market institutions – such as the state, trade unions, and corporate bureaucracies – play a limited role. By contrast, in “regulated capitalism” such as prevailed in the post-World War II decades – in the United States and other industrial capitalist economies – states, trade unions, and corporate bureaucracies played a major role in regulating economic activity, confining market forces to a lesser role. Den Rest des Beitrags lesen »

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Letting China’s Bubble Burst

Posted by hkarner - 30. Juli 2015

JUL 29, 2015 0, Project Syndicate

NEW YORK – The problems with China’s economic-growth pattern have become well known in recent years, with the Chinese stock-market’s recent free-fall bringing them into sharper focus. But discussions of the Chinese economy’s imbalances and vulnerabilities tend to neglect some of the more positive elements of its structural evolution, particularly the government’s track record of prompt corrective intervention, and the substantial state balance sheet that can be deployed, if necessary.

In this regard, however, the stock-market bubble that developed in the first half of the year should be viewed as an exception. Not only did Chinese regulators enable the bubble’s growth by allowing retail investors – many of them newcomers to the market – to engage in margin trading (using borrowed money); the policy response to the market correction that began in late June has also been highly problematic. Den Rest des Beitrags lesen »

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Booming Until It Hurts?

Posted by hkarner - 15. Juli 2014

Date: 15-07-2014Shiller CC
Source: Technology Review


Robert J. Shiller, a 2013 Nobel laureate in economics, is Professor of Economics at Yale University and the co-creator of the Case-Shiller Index of US house prices. He is the author of Irrational Exuberance, the second edition of which predicted the coming collapse of the real-estate bubble, and, most recently, Finance and the Good Society.

NEW HAVEN – In recent months, concern has intensified among the world’s financial experts and news media that overheated asset markets – real estate, equities, and long-term bonds – could lead to a major correction and another economic crisis. The general public seems unbothered: Google Trends shows some pickup in the search term “stock market bubble,” but it is not at its peak 2007 levels, and “housing bubble” searches are relatively infrequent.

But the experts’ concern is notable and healthy, because the belief that markets are always efficient can survive only when some people do not completely believe it and think that they can profit by timing the markets. At the same time, this heightened concern carries dangers, too, because we do not know whether it will lead to a public overreaction on the downside.

International agencies recently issued warnings about speculative excesses in asset markets, suggesting that we should be worried about a possible crisis. In a speech in June, International Monetary Fund Deputy Managing Director Min Zhu argued that housing markets in several countries, including in Europe, Asia, and the Americas, “show signs of overheating.” The same month, the Bank for International Settlements said in its Annual Report that such “signs are worrying.” Den Rest des Beitrags lesen »

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Feeding the Bubble: Is the Next Crash Brewing?

Posted by hkarner - 4. Dezember 2013

Date: 03-12-2013

Central banks around the world are pumping trillions into the economy. The goal is to stimulate growth, but their actions are also driving up prices in the real estate and equities markets. The question is no longer whether there will be a crash, but when.

When 42-year-old hedge fund manager Mark Spitznagel wants to forget about his high-stakes business for a while, he heads to the goat farm he and his wife Amy purchased in the bucolic hills of Michigan. There, he produces cheese according to environmentally sustainable methods, because he views modern agriculture, with its large-scale pesticide use and automated factory farms, as degenerate. In fact, he says, factory farming is “an ideal metaphor” for the economy.

In Spitznagel’s view, the world’s financial and equities markets are also dysfunctional, and what happens there is unhealthy and anything but sustainable. As a money manager, he has also opted for an alternative business model of sorts: He’s betting on a crash.
For his customers, Spitznagel’s multi-billion-dollar fund acts as an insurance policy against the next meltdown in the financial system. When the market is doing well, they lose modest amounts of money. But they cash in as soon as prices take a nosedive, even when all other investments are going up in smoke.

The hedge fund manager has made a lot of money in the past with his prognoses, and he is convinced that substantial turbulence is on the cards for the near future. “The setup is there for it,” says Spitznagel.

‘It Might Go Badly’ Den Rest des Beitrags lesen »

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Back to Housing Bubbles

Posted by hkarner - 1. Dezember 2013

Date: 30-11-2013Roubini CC
Source: Project Syndicate


Nouriel Roubini, a professor at NYU’s Stern School of Business and Chairman of Roubini Global Economics, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank.

NEW YORK – It is widely agreed that a series of collapsing housing-market bubbles triggered the global financial crisis of 2008-2009, along with the severe recession that followed. While the United States is the best-known case, a combination of lax regulation and supervision of banks and low policy interest rates fueled similar bubbles in the United Kingdom, Spain, Ireland, Iceland, and Dubai. Den Rest des Beitrags lesen »

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Disruptions: If It Looks Like a Bubble and Floats Like a Bubble …

Posted by hkarner - 26. November 2013

Date: 25-11-2013
Source: The New York Times

The New York Stock Exchange. The company’s shares are up nearly 60 percent since it went public.

SAN FRANCISCO — It sounds like heresy around here. But here goes: Is this another tech bubble?

Back East, the Wall Street money is starting to worry that it feels like 1999 all over again. Money-losing technology companies are going public at you’ve-got-to-be-joking prices. The founders of Snapchat are getting multibillion-dollar offers — and turning them down. And the Nasdaq composite index, a visible symbol of the ’90s dot-com boom and bust, is a sneeze away from 4,000, a level it last reached just before, well, you know.

It this time different? Out in Silicon Valley, many insist it is. But for the average investor, there are reasons for caution. Den Rest des Beitrags lesen »

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Bubbles, Bubbles Everywhere

Posted by hkarner - 3. November 2013

By John Mauldin

November 1, 2013

– Albert Einstein

Genius is a rising stock market.
– John Kenneth Galbraith

Any plan conceived in moderation must fail when circumstances are set in extremes.
– Prince Metternich

You can almost feel it in the fall air (unless you are in the Southern Hemisphere). The froth and foam on markets of all shapes and sizes all over the world. It is an exhilarating feeling, and the pundits who populate the media outlets are bubbling over with it. There is nothing like a rising market to help lift our mood. Unless of course, as Prof. Kindleberger famously cautioned (see below), we are not participating in that rising market. Then we feel like losers. But what if the rising market is … a bubble? Are we smart enough to ride and then step aside before it bursts? Research says we all think that we are, yet we rarely demonstrate the actual ability. Den Rest des Beitrags lesen »

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Bubbles Forever

Posted by hkarner - 18. Juli 2013

Date: 18-07-2013Shiller CC
Source: Project Syndicate, Robert Shiller

NEW HAVEN – You might think that we have been living in a post-bubble world since the collapse in 2006 of the biggest-ever worldwide real-estate bubble and the end of a major worldwide stock-market bubble the following year. But talk of bubbles keeps reappearing – new or continuing housing bubbles in many countries, a new global stock-market bubble, a long-term bond-market bubble in the United States and other countries, an oil-price bubble, a gold bubble, and so on.

Nevertheless, I was not expecting a bubble story when I visited Colombia last month. But, once again, people there told me about an ongoing real-estate bubble, and my driver showed me around the seaside resort town of Cartagena, pointing out, with a tone of amazement, several homes that had recently sold for millions of dollars. Den Rest des Beitrags lesen »

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The Shale Bubble

Posted by stgara - 11. April 2013

February 19, 2013 Post Carbon Institute and Energy Policy Forum

they tell us

we’re on the cusp of an oil & gas revolution.

But what if it’s all just a short-term bubble?

The Story

We’re being told that – thanks to technological advances like hydraulic fracturing and horizontal drilling – the US is undergoing an energy revolution, leading us in a few short years to become once again the world’s biggest oil producer and an exporter of natural gas. According to the Oil & Gas Industry and their proponents, “fracking” will provide the US with energy security, low energy prices for the foreseeable future, more than a million jobs, and economic growth.

“There’s no doubt that we’re seeing an industrial revolution… taking place because of the shale revolution.”
–Ed Morse, Global Head of Commodities Research at Citigroup

“We have a supply of natural gas that can last America nearly 100 years, and my administration will take every possible action to safely develop this energy.”
–President Barack Obama

“[The Utica Shale is] the biggest thing economically to hit Ohio, since maybe the plow.
–Former Chesapeake Energy Corp. CEO Aubrey McClendon

“[The surge of U.S. oil and gas production] is the biggest change in the energy world since World War II.”
–Fatih Birol, Chief Economist at the International Energy Agency

“Many people in the oil industry were skeptical [that we had reached peak oil], and the extraordinary recent expansion of unconventional gas and oil production in North America proved the optimists to be correct.”
–Christof Rühl, Group Chief Economist at British Petroleum

Pointing to record low natural gas prices and increased production, policymakers and the media on both sides of the political aisle, as well as investors and utilities, have bought the hype and are shifting their plans and proposals with the expectation that the shale revolution is here to stay.

The Reality Den Rest des Beitrags lesen »

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