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Wednesday, February 09, 2005

INTRODUCTION

Hi,
Welcome to the Bubble Blog. The purpose of this blog is to share insight, analysis, data, and commentary about investment bubbles in order to make better business decisions during these complex market dynamics.

Bubbles occur all the time. They are not aberrations to normal economic functioning. They are normal. Since the 1960s there has hardly been a year where a bubble has not occurred somewhere. Some are big, some are small. They are the driving force of innovation, and change - the fuel that finances creative destruction.

The really big ones do so at terrific cost and risk. The costs are faced primarily by those who are left hodling the bag when bubbles crash. The risks can affect the entire global economy. The last 15 years has seen bubbles that have rocked the world economy (Asian Miracle turned Asian Economic Crisis, Russian Debt Crisis, Long-Term Capital Management, Argentina, the Internet), each time nearly bringing the globe to an economic crisis.

While bubbles are more frequent than we typically realize, they may also be accelerating due to the speed of global capital movements and the pace off innovation.

This blog is dedicated to improving our insight during these period of sweaping transformation so that we can manage them more effectively.

2 Comments:

Blogger Drew said...

Interesting idea for a blog. I will be curious to see where you go with it. Clearly there are bubbles out there at any given time. The first one that comes to mind is real estate, which you mentioned. It has all of the ingredients for a classic bubble, perhaps the most obvious being that people are thinking irrationally about the market and have forgotten the downturns of the 80s and 90s.

I disagree with your assessment of China as a bubble. Clearly that country will experience ups and downs as it grows into the economic giant it is destined to become. But calling it a bubble I don't think adequately describes any downturn that China will surely face.

5:30 PM  
Blogger carlhaacke said...

Thanks. This is an early phase.

I China is a bubble because investors and businesses are making the same kinds of mistakes that they do during the many bubbles of the past. Most simply-They are oversaturating market opportunities, they are investing in companies that should never exist, and nearly everything is overvalued.

9:03 PM  

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