Posts tagged ‘bubble’

Debt and Risk Aversion

Our debt has a way of focusing us on downsides, because debt turns a continuous income curve into two discontinuous lines: “solvent” and “insolvent.” More generally, debt has a way of magnifying life events. When things are going well, debt can help them go better: You can buy a house and a car, or you can buy a bigger house and a nicer car. But when things are going badly, debt can turn a slight income loss into a major disaster.

Most Americans now have a lot of debt, whether they’re ordinary workers or commercial landlords. Which means that most Americans have to be extraordinarily sensitive about letting their income cross the line where they can no longer support their debt payments. Which in turn means that already sticky prices may become positively glue-like.

Too Much Debt Is Making Us Sticks-in-the-Mud

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The DC Bubble (DC is Boomtown)

Eighteen Starbucks shops can be found in the three-mile walk from DuPont Circle to the U.S. Capitol. Not one of them had a line less than seven people deep on a recent Wednesday afternoon.

Twenty-one construction sites filled with workers on girders and cranes towering over whole city blocks can be found on the same walk.

Commerce bursts from every angle of this city: small businesses packed with shoppers, hair salons charging more than the monthly mortgage payment on my first house for a cut-and-blow-dry, and main as well as side streets clogged with traffic.

America’s capital seems bubble-wrapped in its own vibrant economic boom, while great chunks of the nation struggle with uncertainty about how to keep the engine going.
. . .
The centralized power and wealth in our nation’s capital are becoming so disconnected from the rest of this country that it is palpable to everyone except those who live in Washington.

In most people’s lives, the driving issue is economic security. Washington’s obsession is with social and cultural issues that drive bigger wedges between Us and Them.

It’s only a matter of time before the rest of America’s complaints will burst Washington’s bubble.

When Will America Burst D.C.’s Bubble?

It used to seem shocking that five of the ten richest counties in the United States were part of the DC Metropolitan Statistical Area, but the 2011 American Community Survey numbers released yesterday show that the DC suburbs now account for seven of the ten richest counties in America.

Loudon, Fairfax, and Arlington in Virginia lead the way followed by Hunterdon County, NJ then Howard County in Maryland; Somerset, NJ; Prince William and Fauquier in Virginia; Douglas, CO; and Montgomery County, MD.

DC Suburbs Now Contain 7 Of America’s 10 Richest Counties

Ozymandias

Unfortunately, it seems that the future Aldous Huxley predicted in 1932, in Brave New World, is arriving early. Mockery, truculence, and minimalist living are best, then enjoy the decline. However, we do need a Revolving Door Tax (RDT), learn what Members of Congress pay in taxes, and prosecute politicians and staff and their “family and friends” who profit from insider trading.

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The best and the brightest…. Tech bubble.

As a 23-year-old math genius one year out of Harvard, Jeff Hammerbacher arrived at Facebook when the company was still in its infancy. This was in April 2006, and Mark Zuckerberg gave Hammerbacher–one of Facebook’s first 100 employees–the lofty title of research scientist and put him to work analyzing how people used the social networking service. Specifically, he was given the assignment of uncovering why Facebook took off at some universities and flopped at others.

“The best minds of my generation are thinking about how to make people click ads,” [Hammerbacher] says. “That sucks.”

This Tech Bubble Is Different,” by Ashlee Vance, April 14, 2011

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Bull Market vs. Bubble vs. Muddle

Bull Market–An asset class that has experienced considerable appreciation in which you currently have a significant investment.

Bubble–An asset class that has experienced considerable appreciation in which you currently have no investment.

–David B. Collum, 2010 Year in Review: Fugly Gives Way to Muddling

2006 U.S. Army Year in Review
Creative Commons License photo credit: familymwr

The Crash Course seeks to provide you with a baseline understanding of the economy so that you can better appreciate the risks that we all face. By Chris Martenson

King World News podcasts – Eric King

Econtalk podcasts – Russ Roberts

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