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This page contains all of the posts and discussion on MemeStreams referencing the following web page: The Next Bubble, by Eric Janszen | Harper's, February 2008. You can find discussions on MemeStreams as you surf the web, even if you aren't a MemeStreams member, using the Threads Bookmarklet.

The Next Bubble, by Eric Janszen | Harper's, February 2008
by noteworthy at 9:17 pm EST, Jan 7, 2008

In the February 2008 issue of Harper's Magazine, Eric Janszen writes about the economy:

The dot-com crash of the early 2000s should have been followed by decades of soul-searching; instead, even before the old bubble had fully deflated, a new mania began to take hold on the foundation of our long-standing American faith that the wide expansion of home ownership can produce social harmony and national economic well-being. Spurred by the actions of the Federal Reserve, financed by exotic credit derivatives and debt securitization, an already massive real estate sales-and-marketing program expanded to include the desperate issuance of mortgages to the poor and feckless, compounding their troubles and ours.

That the Internet and housing hyperinflations transpired within a period of ten years, each creating trillions of dollars in fake wealth, is, I believe, only the beginning. There will and must be many more such booms, for without them the economy of the United States can no longer function. The bubble cycle has replaced the business cycle.

Pick up the February issue today at your local newsstand, or read about it at Janszen's web site.

The Next Bubble, by Eric Janszen | Harper's, February 2008
by noteworthy at 7:33 pm EST, Jan 9, 2008

I recommended this article on Monday, but I would like to draw your attention again to one passage in particular:

Because all asset hyperinflations revert to the mean, we can expect housing prices to decline roughly 38 percent from their peak as they return to something closer to the historical rate of monetary inflation. If the rate of decline stabilizes at between 6 and 7 percent each year, the correction has about six years to go before things stabilize, leaving the FIRE economy in need of $12 trillion. Where will that money come from?

Janszen concludes that the next bubble is alternative energy.

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