Wikinvest Wire

We've sure had a lot of bubbles in the last 37 years

Tuesday, May 27, 2008

Dr. Ben Steil's idea that a "fiat currency bubble" may be much more important (and more dangerous) than any asset bubble makes more sense with each passing day.

Recall that Dr. Steil's views were mentioned here last week.

While poking around at Wikipedia in an attempt to answer the question of whether the typical definition of a "financial bubble" requires there to be broad participation by the public, this summary of bubbles throughout history was stumbled upon.

We've sure had a lot of bubbles since the U.S. severed the last link to gold back in 1971!
Yes, they have a lot of individual housing bubbles that could be grouped together but the post-1971 bubbles would still outnumber the pre-1971 bubbles above.

The Poseiden bubble???

Note that the answer to the question asked above regarding public participation is a tentative 'yes'. This casts even more doubt on the "bubble" label being properly applied to such things as oil and gold, unless, that is, you have a lot of friends that own oil futures and gold coins because I certainly don't (well, actually, lots of 'internet' friends probably own oil and gold but my 'in person' friends and relatives still think I'm a little crazy).

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13 comments:

Anonymous said...
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Tray Deee said...

I normally agree with these types of arguments but this on is pretty week. All the ~2006 property bubbles had a common cause and should be a single entry. And please remove sports cards and beanie babies...this is not a financial bubble. This is a temporary upswing in a collectible that has happened throughout time. If wikipedia were around in 1700, I'm sure there would have been lots of similar 'bubbles', i.e. fads.

balasr said...

I don't see the 1929 stock market bubble in the list!

Tim said...

I didn't really scrutinize the list and omitting stocks in 1929 is certainly an oversight (how could they have missed that one?) but the basic point is certainly valid - we've had a lot more bubbles since the 1970s than ever before.

Anonymous said...

Still waiting for my sell coins signal- I know some folks with near perfect timing of the peaks. I'll let you know.

Anonymous said...

With the speculators in the oil market, is oil another bubble that may burst when domestic demand takes a downturn?

Tim said...

With the speculators in the oil market, is oil another bubble that may burst when domestic demand takes a downturn?
That's one of the most important questions of the day and anyone who thinks they definitively know the answer to that question is fooling themselves. Note that nearly all demand growth for energy comes from Asia and the Middle East where retail prices are subsidized by the government.

Anonymous said...

What about the porn bubble of the 70's? Some of the greatest pornstars ever came out of that. It was the hayday of porn.

- Justplainmarvin

Tony Danza said...

This casts even more doubt on the "bubble" label being properly applied to such things as oil and gold, unless, that is, you have a lot of friends that own oil futures and gold coins because I certainly don't

According to one of your recent articles a bunch of pension funds, i-banks and hedgies were buying up commodity futures? If this is the case then almost everyone I know owns commodity futures.

Tim said...

Using that same logic, you could say that "everyone owns everything" which doesn't really advance the discussion.

Anonymous said...

Poseiden Bubble is misspelling of
The Poseidon Bubble - Oz mining shares

http://en.wikipedia.org/wiki/Poseidon_bubble

Keep up the good work
fatbear

me said...

I don't see the auto bubble on the list. I was reading about that the other day. Of course its popped now.

Anonymous said...

With time the bubbles are forgotten. The recent list is better reported than the old items. The recent bubbles are not more frequent, just better remembered.

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