Today they started talking about recession, are we in? Are we going to be in?
The problem with traditional economists is that they use models that are grossly outdated. My readers know we are in recession since the fourth quarter of 2006 (at best, the 2nd quarter of 2007).
The problem right now? None. We still have to bear through 2008, though, which is going to be a flush year (they will try to make us sell our houses for cheap, our stock for cheap, etc.).
Since 2008 is going to be a tough year, I will update the information as it is available. If the data shows that my current thinking is not correct, I will let you know.
The question right now is what’s going to be object of the next bubble? Our bubble economy needs a next bubble to generate more bubblesque wealth. Is it going to be gold? It looks like a likely candidate.
Short term it should provide a buying opportunity in the following 2 weeks (i.e., I think it’s going slightly down for the next few days).
Mid term it looks on a strong bull market.
Gold (or some form of precious metals wild speculative bubble) is a very nice candidate for the next bubble.
You need to understand that real estate is going to be back a business for those who understand it (as technology investing came back to be a business for those who understand it after 2000).
I was thinking that a new “new technology” could be create around global warming, but a more likely candidate is gold.
Think about it. It is easily available, it is easy to create a good story around it, everybody at one point or another came in touch with it and can form a strong opinion about it (i.e., become an expert). Although there are other conditions that stuff may need to satisfy to become the object of a bubble, these are the core ones. What is important is to keep “the dream” alive. We collectively need to keep believing that we are the next millionaire next door so this economy can keep running (believe me, there has been a mathematical formula that describes this behavior for at least seventy years, if you want to know it, read The General Theory of Employment, Interest and Money by John Maynard Keynes).
As you know, I try to keep ahead of the curve, and I share my thoughts on this blog. When everybody was talking about Iraq, I said the problem on this election was going to be the economy. When Bernanke said he was not going to intervene on the real estate market, I said he was going to.
Taking that into consideration, what is the problem in the future? Hyperinflation. Which should top around 2020.
By the way… Why don’t you leave your comments or questions so I don’t feel so insane talking here to myself?
Franklin @ January 10, 2008