When did the bubbles start

[and-con]

So, I just passed college economics, and we did not on even a single occasion talk about bubbles. Even though most of my classmates were my age(late teens, early twenties) and our lives have been punctuated by bubbles. During the nineties, everyone bought stock, you weren't cool unless you had stocks. Then most everyone lost their shirts, and ran from that. So they came to land, land never loses value. So we watched our land, and home values spike. Then they hit the other side of that spike, and plummeted. Now gold is soaring, and I don't know if that's the next bubble, I've also heard rumors that T-bonds will be the next bubble, I don't know what will be, but when did our economy become bubbles? What was the first bubble? Am I wrong, there are older wiser people here, feel free to correct me.

[no_hypocrisy]

1. Like the dot-com bubble during the Clinton years?

[MrModerate]

2. Tulips (1630s)? South Seas trading futures (1720s)? Hell . . .

I bet they had economic bubbles in wheat futures recorded on cuneiform tablets in ancient Sumeria.

It's the human condition.

[DinahMoeHum]

3. Economic bubbles have been around since recorded time.

I recommend a book and a website to help you understand the psychology of bubbles:

There is that classic tome Extraordinary Popular Delusions and The Madness of Crowds by Charles Mackay, which has been around since 1841.

http://www.amazon.com/Extraordinary-Popular-Delusions-Madness-Crowds/dp/1453690298/ref=sr_1_1?s=books&ie=UTF8&qid=1281319592&sr=1-1#_

There is a website I stumbled across while perusing websites and blogs on the current real estate bubble and crash titled You Are Not So Smart which also explains the psychologies of deception and delusion/self-delusion.

http://youarenotsosmart.com/

Oops, make that several websites: For a look into the current housing bubble, go to
http://patrick.net/housing/crash.html,
click on links that interest you, then scroll down further to Other Housing Crash Blogs for further insights. My favorites there include Doctor Housing Bubble, Irvine Housing Blog
and if you click on either one, there is a link to Real Estate in the LBC, which is hilarious.

Hope this helps you.

[Make7]

4. The first installment of 'The Ascent of Money' is fairly interesting historical background.

 
The Ascent of Money Episode 1: From Bullion to Bubbles
 

[Kringle]

5. the panic of 1837 .nt

[Statistical]

6. Tulips (likely)

Bubbles have been around as long as commerce has.

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

[pscot]

7. I think they started under Reagan

The crash of '87 was the first one that popped. We still had an economy then. Clinton had real growth for most of his administration but that wasn't enough for Rubin and the hot money guys on wall street, who wanted a casino. They produced the tech crash, but thought they had it figured out. Under Bush it was Tenderloin all the way. No rules. Masters of the Universe untl they broke the banking system. If they do it again there won't be any bailout. The Country won't stand for it.

[applegrove]

8. I'm sure the rich love bubbles because you can make a lot of money in them...and then when

it all crashes the rich just live off their savings for a time.

[Skink]

9. Quinine

this link takes you to a show that in one episode establishes the link between quinine and the soda companies that reaped vast fortunes.

http://www.youtube.com/watch?v=LANnnwG4Y2Q

TLC had these repeats in the mid nineties. One of the best shows ever.

[applegrove]

10. The O'Leary from the Lang & O'Leary Exchange on CBC News Network

in Canada is forever saying capitalism is volatile and for Amanda to "get over it". Poor and middle class people can't do recessions as well as the rich because they don't have savings. So why should the vast majority of the people support deregulation and pure capitalism that would see more bubbles? They shouldn't.

[jtuck004]

11. What makes your rumor source think the T-Bond will be next? n/t

[Statistical]

14. Inflation & Supply is the theory.

T-bond yields are being pushed to ultra lows this means extreme prices (Bonds are priced at inverse of yield).

So 10 year for example has alredy pushed below 2.85%. Say the bubble continues and people flee stocks, corporates, commodities and keep dumping money into T- onds. Eventually 10 year gets below 2% (price is stratospheric).

At that point the bubble is ready and like any bubble it just needs a catalyst.

Inflation could be one such catalyst. With year 10 year <2% the market has price in low/no inflation (or maybe some deflation). Hit a patch of sligthly above normal inflation (sya 3.5% - 4%) and blam prices will tumble and rapidly.

The govt will issue new bonds at say 5% over inflation (due to high supply) so that would be 7.5%-85% on 10 yr. Existing bonds are priced much higher and would fall to match new offerings and anhiliate bond holders in the process.

Short term bonds = not so much risk but the 10yr is the inflection point. It is a relatively long time combined with the shortest bond yielding over 2%.

[jtuck004]

15. I know - I was wanting him/her to tell me what was being said at the school.. n/t

[and-con]

17. The college said nothing

My high school teacher just kind of admitted that bubbles existed, i was driving with a buddy and he happened to mention it as we were talking about bubbles(none of his teachers had mentioned it either).

[jtuck004]

18. That's interesting. And Thanks. n/t

[snot]

12. Per Nouriel Roubini,

virtually all of economic history has been punctuated by bubbles occurring approximately every 10 years, with one exception: the 50 years following the Great Depression during which the Glass-Steagall Act was in effect, which made it illegal for banks that hold deposits to gamble with them in stocks and the like (including derivatives).

Bubbles are NOT inevitable. They are the result of letting the foxes guard the henhouse.

[notesdev]

13. Look up Venice in 1340

Bankers have been blowing bubbles as long as there have been banks... it is why any sane nation keeps them on a short leash with tranquilizers at the ready

[fasttense]

16. Bubbles occur every time you have unregulated capitalism.

So, bubbles developed every time the lucky sperm club wanted to run ponzi schemes and make more money than they already had. Eventually the middle-class-turned-poor revolted but not before the sperm club extracted their money.

Karl Marx has a good description of it in the Communist Manifesto (1848), though I don't agree with his solution.

[PassingFair]

19. Lucky for you...the next bubble is.....EDUCATION.

Happy to loan you hundreds of thousands of dollars
that you may NEVER stop paying back!

Hey, beats tulips!

[girl gone mad]

20. If you want to pursue economics..

my advice would be to quickly forget 95% if what you've just learned.