Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Bubbles are a huge betting game on guessing when the end comes, not if.
If bubbles ended well they wouldn't be bubbles.
Since all the profits quickly are made on the waxing stage until and including when the price starts to level off, those late to the game just prolong the agony of decline as the plateau increasingly tilts and ever more punts fail.
What's usually forgotten in the terribility of the end is that many made serious bank if they bought early.
It's hard to imagine late stage capitalism without bubbles.
Profits are made on successful risk taking. Risks are risky for a reason, and statisical probability is only part of it.
The vagaries of nature and man's animal spirits feature heavily but the gamble is really about the sustainability of demand and the collision of contradictory vested interests, competing monopolies.
Bubbles gradually tempt conservative investors out of lower, safer yields, but everyone pays attention to bubbles as they become more and more the only way to get rich(er) so quickly.
In an economically dynamic, growing economy like the 50's and 60's conservative investors patiently pulled down huge capital gains with blue chip stocks like IBM and GM.
The good old days before junk bonds and high-speed trading, when bubbles were rare and legendary.
Sometimes small bubbles, like localised infections can affect the general health of an economy for better and worse, mostly they distract from a bigger looming bubble that is about to hit peak profit plateau soonish.
Or so many small bubbles pop they compromise whole sections of the economy, a froth of bubbles like the dot come boom/bust.
Usually they're like bitcoin or tulips, something out of left field.
Of course the sum of these bubblicious events distracts investors from contemplating the ultimate bubble under even the seemingly placid parts of the market -the methane under the tundra. One man's placid is another's stagnation!
Namely the whole concept of money as a thing to own, hoard and wield rather than a river to channel to drink from.

Bubbles are like lotteries, the worse the general state of the economy the more they proliferate. The poorer the country, the more beggars selling scratchcards.

Krugman's being disingenuous.

A hearty ho ho ho to the stalwart denizens of ET, may your days be merry and bright.


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Dec 25th, 2017 at 02:50:32 AM EST
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A bubble is a straightforward, reliable way to institute steep inequality.

Eastern Europe of the 90s was overrun by pyramid schemes and three card monte games. Worked like a charm...

by das monde on Mon Dec 25th, 2017 at 05:29:51 AM EST
[ Parent ]
Here in the US, Utah operates the same way.
by rifek on Wed Dec 27th, 2017 at 11:20:11 PM EST
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