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All the bubbles are bursting

Sun Sep 21, 2008

I remember sitting down to my interview with the Senior Vice President & Executive Director at the local CVB. He asked me where I thought things were going and I told him my short theory of apocalypse:

Boomers would continue to over-value houses, play shell games with the imaginary capital, try to draw from it in retirement and find no liquid currency left. This would spiral across the economy; the feds would print money to try to stop the bleeding, but this would lead to stagnation Japanese style, baby.

He corrected me, explaining that boomers would receive the greatest handoff of cash inheritance in the history of the world and buy new pools. Duh.

When the housing thing first started pulling apart, the story was that we wouldn't know how bad it was until we hit bottom. I wonder how below bottom we'll find ourselves as this banking bailout plays itself out. That the housing problems are running in a mostly unrelated parallel to the problems in the financial sector shouldn't escape anyone's attention. What we have is a conflation of bad thinking pointing – again – to boomer greed.

This is the savings and loans crisis of the 1980s and ’90s all grown up. The nitwits in charge of that shit were in their 30s then; and these nitwits are in their 50s and 60s. From Enron to AIG to Martha Stewart and Joey Buttafuoco, these are the same people.

At some level, the bubble that needs to burst is boomer optimism. As long as they feel like they can’t fail, they will continue to act recklessly. They need to feel the bottom physically, need to see what many people my age have seen: that failure is permanent. It doesn’t magically go away when you try some new shell game. You aren’t new just because you say you’re new. The things you break stay broken.

 

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