The EXACT cause of the financial bubbles.

Insty is tracking the green energy collapse.  It’s the filling in a bubble sandwich, falling between the crippling of the housing market  and higher education’s reckoning-to-come.

(Let’s leave the “money bubble” out of this discussion, on account of it being too scary to contemplate.)

Doesn’t the collapse of these three seem odd?  After all, the federal government took special interest in each, constantly stepping in and regulating and re-regulating and…

…oh.  No, it won’t seem odd.  It won’t even be news.

But I was also hit with an epiphany.  “Lightbulb over the head” moments are the opposite of odd.  Instead of muttering “Weird” you exclaim, “of course!”

Well…of course!  THAT’S what’s causing these bubbles.  Not government subsidies and regulation.  Government favoritism.

Consider farming and the oil bidness.  America has all kinds of farming subsidies.  I oppose almost all federal farm aid.  But American farming isn’t on a bubble.  The government can’t just “declare” that farms have abundant energy and water.  You can’t pencil-whip a turnip into being two turnips or a truffle.

And sure, petro-chem industries have their little subsidies from Uncle Sam.  “Little” being relative to the size of their business.  But the current Administration hates oil and has made it nearly impossible to expand production.

The result?  Record profits.  Well, of course they saw record profits.  Demand outstripped supply but they weren’t allowed to invest revenue in new production.  The natural gas boom might curb Big Oil, but the government sure didn’t.

I’m no trained economist, but…does that sound about right?  I suppose with PhD’s we could argue the exact opposite with authority and conviction.  But we’d still be wrong.

Final example:  the recreational chemical business.  Do you agree that pot/coke/ meth/X/etc. are not government-approved products?  Drugs dealers aren’t regulated, they’re prohibited.  So when does that bubble burst?  When did Prohibition burst the booze bubble?

Apparently the government can only kill an industry by accident.  And that’s because it can only eliminate things the public finds boring.  The public didn’t care about having fewer renters and more home owners.  But the government did.  And so…poof!  Housing bubble.

It favored “green” energy over all others so…poof!  Solar bubble.

It favors “college” over “no college” and “for-profit education” so…soon…poof!  Universi-bubble.

The explanation is so obvious, it’s very embarrassing to have taken this long to see.  If you’re trying to make healthy legs stronger you don’t want a crutch, you want ankle weights.  And if you want your legs to die off entirely?  Ask for a wheelchair.

So, want to destroy your business?  Turn it into the government’s pet.  This truth is a silver bullet to shoot at every statist calling for government “investment”:

“Why do you want to explode the housing market?”

“Why do you want to cripple solar power development?”

“My God, you really hate higher education, don’t you?”

How is the Chevy Volt doing, BTW?

Here’s a final question, for extra credit:  what year did the “African-American” bubble burst?  For nearly half a century the government has provided crutches, wheelchairs, beds, fluffy pillows, sedatives, pain relievers, etc.  At the start of this treatment the symbol for black people was Martin Luther King.

And today it is…Trayvon Martin.  So obviously the bubble burst.  But when?  I go with 1995.  For the obvious reason.

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About wormme

I've accepted that all of you are socially superior to me. But no pretending that any of you are rational.
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5 Responses to The EXACT cause of the financial bubbles.

  1. midwest bill says:

    hmmm … favoritism shows up as subsidies. Increasing availability to money for education just changes the supply demand equation, Stupid kids take the money, and continue high school but with more drugs and booze … fun fun fun. The flood of money makes costs go up, while education standards go down.

    Solar …. well, that’s just a way to throw money to campaign bundlers, but if the government is giving billions to preferred companies, the true innovators have trouble competing.

    Illegal drugs are expensive because the competition is limited by government. I favor legalizing at least some of the drug … like marijuana. Imagine the fine product that could be produced, and how cheap it would be, and it would reduce the power of the Mexican drug lords. California is producing fairly freely I guess, but I really think there are so many making billions off illegal drugs, that they probably have a lobbyist in DC making sure drugs are never legalized.

    But despite subsidies and favoritism, the main bubble blower I see is the excess printing of money by our government in cahoots with the federal reserve bankers. If rates weren’t kept artificially low, using quantitative easing now, but using the powers of the fed reserve for decades … we would not be able to blow these bubbles. Greenspan is the worst financial terrorist, whether by intent or stupidity.

    that’s how i see it

    • wormme says:

      The money bubble is the scary one. “Quantitive easing…peh!” Cowards always find make up “easing” terms for what they’re doing, instead of “inflation” and “theft”.

  2. Edohiguma says:

    The really funny thing about green energy and e-cars is this: not even the German power grid (which is one of the best of the world) could handle it right now. I’ve heard from German engineers that they’d actually need two power grids, one for the green energy, and one as backup, for the days when the green, renewable stuff doesn’t work so well thanks to the weather. And given how many sun days Germany has (or better said, how little sun days they have), that number of days would be pretty damn high.

    Now imagine the US power grid having to handle the load from uncontrollable and unreliable green energy and e-cars. The US power grid is outdated as is. It would totally collapse.

    We’re not building better infrastructure, which would make sense, instead we’re changing the production without having any infrastructure to carry it.

    • Edohiguma says:

      What is also funny is that, back in Germany again, with their “we must turn off all nuclear power stations cause something tsunami something!”, they’re now realizing that they have absolutely no alternatives ready for taking up the gap. Wind and solar aren’t ready.

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