What if It Was All Just a Big Bubble?

Seeking Alpha ^ | March 24, 2010 | Tim Iacono

[arthurus]

One of the things that many people go through their entire lives without ever realizing is that conditions haven't always been the way they remember them to be. Due to the length of a typical lifetime and the number of those years that individuals are productive, it's reasonable to think that someone in their mid-60s could retire today and look back at the last 40 years only to conclude that what they just experienced was normal.

But, what if the last 40 years were anything but normal?

What if, in the world of finance and economics, it was all just a big bubble?

[Notary Sojac]

I'm no financial genius.

The only decision I made that really made a ton of money for me was selling my Florida house in 2005, when it should have been obvious -to anyone with three working brain cells- that the pin was about to touch the bubble.

Funny how all the Smart Boyz missed the signals I was seeing.

I just don't feel comfortable about giving investment advice on a Internet board.

But thanks for the compliment implied in the question.

[Nowhere Man]

I don’t know if it was a “once in a lifetime event” or not but we no need to do the right things to foster at least a part of it like lower taxes, bring unions to their senses and cut regulations and so on but I’m afraid Capitalism is way down on the list, somewhere between CB radios and “singing with Mitch Miller.” B-P B-(

[Nowhere Man]

If one were to look back at when American decadence really began ... when would you really draw the line? That's I'd put it right about 1965-70 -- attitudes, government reach, economic movement ... it pretty much started then.

Yeah, I pretty much started the era at 1945 in my book for our "golden age" but, yeah, the 1965 to 1970 period, the seeds that we are sowing right now have been planted and allowed to grow.

[MrChips]

I did the same. Sold a home in 2005 and made $$$. Put it into a new home, and I think not very speculatively, but wisely. Now, though, I worry about a collapse of everything.

[Nowhere Man]

Pretty much. And actually, the American 20th century was entirely an abboration in the history of the world.

There was also the fact that at one time we had 80% of the world’s GDP and not even 10% of the world’s population. Americans really have been spoiled this last century when you think about it.

In the history of most great world societies, none of them have been set up whereby someone who was merely average in the end could get to the top of the ladder by just hard work and a little luck alone. You always had to be talented in some kind of way. America lost that in the last century. I think we are returning back to some kind of normalcy. For good or bad.

It seems that way. Although there would have been a point to where we'd be no longer top dog and part of the park, more or less, although wed be one of the leaders, I think if we made the right decisions as a nation, we would not be in this problem right now. With the Zero in office, making the right decisions will not be done, heck, he is out to get all of us.

[DManA]

I also own my own house with a relatively small mortgage.

If I were smart I’d sell it and rent. The fact that I haven’t already done this shows that I know it’s easier to say that then do it. I think housing prices will have to decline along with salaries of the people. We are in for an economic catastrophe. In a matter of years, not decades.

[redpoll]

Wow. Spot on analysis.

[MrChips]

That is my sense, too. If I continue to feel that way for awhile, I will opt for safety.

[MrChips]

. . . and thanks.

[Nowhere Man]

Well, Empires generally last 200 years give or take. We had the British Empire from 1763 to 1963, at the beginning they defeated the French in the “French and Indian War” (well we call it that here where it started in Pittsburgh, PA, our local PBS station did a good documentary on it) or “Seven Years War” elsewhere. Then you go to 1963, the British Empire was almost gone with the massive decolonization of the late 1940’s through the 1960’s. That’s 200 years. If you take us, I would put the beginning of our strength at the “War of 1812.” We might not have won that war decisively but it proved to England and the world that we were not a pushover and could stand up and defend ourselves. If you add 200 years, you get 2012, we are almost there now. Of course, it isn’t always exact, there were some Empires that lasted a little longer or shorter but it seems like they are in the 200 year range.

[Nowhere Man]

It is quite possible that most of what we built up over the last 40 years will have very little future value. Not because we lose it, but just because its value was always temporary.

Not only that but we are a throwaway society. The TV of 1950/1960/1970/1980 were made to be repaired when they needed it, when you get into the 1990's to now, they are much harder to fix and many are just tossed out and replaced. That is one example. There is a small community that likes to fix and repair vintage TV's and radios and other such electronics and many times, the old equipment has some value. To some, a 1965 Zenith color TV with a round screen is very valueable while a current plasma or LCD is not.

Pinging RCA2000, this is an interesting discussion.

[precisionshootist]

“If families were content to live the lifestyle of 1960 then for most people one income would be sufficient.”

If the thieves in government weren’t taking 40 PERCENT OF OUR FAMILIES INCOME we could live our nice lifestyle and pay for our own retirement at a fairly young age. Americans are not living beyond their means. They remain the most productive people on the planet that are being enslaved by out of control government.

Forget this article. There is only one bubble we have to deal with and that is ever expanding government. This bubble must be popped and never allowed to grow again.

[Tallguy]

Well, Empires generally last 200 years give or take. We had the British Empire from 1763 to 1963, at the beginning they defeated the French in the “French and Indian War” (well we call it that here where it started in Pittsburgh, PA, our local PBS station did a good documentary on it) or “Seven Years War” elsewhere. Then you go to 1963, the British Empire was almost gone with the massive decolonization of the late 1940’s through the 1960’s. That’s 200 years. If you take us, I would put the beginning of our strength at the “War of 1812.” We might not have won that war decisively but it proved to England and the world that we were not a pushover and could stand up and defend ourselves. If you add 200 years, you get 2012, we are almost there now. Of course, it isn’t always exact, there were some Empires that lasted a little longer or shorter but it seems like they are in the 200 year range.

I wouldn't go back to the War of 1812. We were way too vulnerable until about the time of the Civil War. Even then the Brits & French were considering intervention.

I would date the US empire from around 1900 when our economic output began to outstrip the British. I think that the US 'Empire' was neatly piggy-backed off the British Empire.

[angelrod]

This is one of the most interesting, and informative, threads I’ve read in a long time. I have always been fascinated by the rise and fall of empires and it does seem to me that ours is about to end, if it hasn’t already.

[Mister Muggles]

American decadence started in earnest in 1968...

“Summer of Love.”

[Freedom_Is_Not_Free]

Applies to everything. What if summer temperatures seem warmer over my insignificant lifetime. OOPS, must be do to man. Never mind the 6 billion years before that...

We have some extremely long economic cycles, and of course how can you compare what comes after dropping the gold standard to what comes after. There is a shift. Your lifetime observed “normal” may be anything but.

I agree.

[Knitting A Conundrum]

Length of empires can really vary...so you can’t really judge by average years. Quicky lookup gave me these dates:

Ottoman Empire: 1299 to November 1, 1922

Western Roman Empire: 44 BC - 476 AD

Eastern Roman Empire: 44 BC - 1453 AD

Holy Roman Empire 962 - 1806

Mongol Empire 1206 - 1264

Achaemenid Empire 550-330 BC

Fatimid Caliphate 909-1171

Akkadian Empire 2334 BC to 2083 BC

Rashidun Caliphate 632-661

And there are others, like the empire of Alexander the Great, that don’t outlast the leader before shattering into smaller groups. There seem to be a variety of factors involved why one organization can grow and stay stable, and another cant.

As for comparing the US to the British empire, well, the US doesn’t really and has never really had much of an empire - we weren’t capturing areas to turn into mercanilist colonies the way Britain was. But the core of Britain, England, and then Wales and later Scotland and Ireland have been a rather stable political unit. If you want to compare the rise of the UK in a fair way, you’d have to push your start back to ca. maybe 1100s with Henry II, or the 1300s, when the Commons really began to assert itself, if you’d prefer, maybe to bump it up to the Tudors , when it began to claw its way out of being a backwoods, nearly third world resource producer status and moving into resource manufacturer and world exploring nation. It may have peaked in power ca. 1900, but it has been a player and a power to be reckoned with for at least 500 years, maybe more.

Don’t know where the US is going at this point...but major countries as important spheres of influence and power often are players more than 200 years...some are flashes in the pan, barely lasting the lifetime of an important leader, some hang on for more than a millennium. It just varies.

[jjsheridan5]

A lot of people believe that America would have fallen in the mid-1900s, were it not for WWII. Basically, this theory is that there is a long up, then down, pattern to major economic powers (the first up wave caused by credit, innovation, and open markets, with the downwave caused by debt, market stagnation, and competition). For the US, this pattern was interrupted because suddenly the US was the only real economy world-wide, and the devastation caused an unprecedented surge in world wide demand.

Anyway, this theory holds that this created a second wave for the US, which was particularly dramatic and rapid. And that our debt, the worldwide glut of everything (from factories, to housing, to engineers, to everyday items), will cause an equally sharp and dramatic downturn.

[Cacique]

btt