The bubble on bubbles
Sean Dougherty writes on Forbes.com about how the business media seems to want to call a bubble on every investment these days.
Dougherty writes, “This is in large part because the business media still feel guilty about missing the housing bubble–even though article after article was written about the ahistorical rise in home values and what a slowdown could mean to the economy. Holman Jenkins of The Wall Street Journal recently listed a string of articles in his paper alone beginning as early as 2001. Few people knew enough to listen, but that doesn’t mean we weren’t warned.
“Now the business media race to declare every appreciating asset class you can name a bubble, so we won’t get fooled again, even if we weren’t fooled the first time. In the past six months, writers for national business media have declared the following 18 asset classes bubbles: real estate in China, Dubai, the U.S., Canada and London, the Chinese economy, Greek bonds, emerging markets, the whole international currency carry trade system, gold, corporate bonds, treasury bonds, municipal bonds, the environment, private equity, church construction, container shipping and garlic, plus — even though it’s not exactly an asset class — ethics. Business Finance, a trade magazine for financial executives, carried a blog in February warning of a surge in honesty brought on by the recession and predicting a rebound for corner-cutting once there gets to be more money on the table.
“Calling the garlic market a bubble was particularly galling because the story, on Fortune magazine’s website on March 24, acknowledged that the price was rising only because the top producer, China, cut back its supply. If we’re going to call any effect of supply and demand an asset bubble, then what does the term even mean?”
Read more here.