RIDING THE BUBBLE

When people were riding the housing bubble, it was as difficult to deal with the reality that it would burst as it is to think of death when you are in the pink of health. Homeowners, speculators and dealmakers loved the easy money and did not see the crippling consequences in the future.

Currently, a new bubble is in environmental control, greening our lifestyle, but especially greening businesses. It is said that the media sees the greening of business as an 'overnight success story' that has been twenty years in the making.

Ian Peter wrote about the Dotcom bubble: The dotcom bubble started without the world wide web, and indeed in the beginning it didn't even recognize the Internet as important. Once Al Gore began talking about the "information superhighway" in the early 1990s, however, the "big end of town" - Hollywood, Silicon Valley, telecommunications carriers, cable companies, and media conglomerates, all began investing.

Between April 1992 and July 1993 all of the major US business magazines had published major features on new communications and the "Information Superhighway". It's worth analyzing what these magazines and feature articles talked about. The first thing I noticed - not one of the feature articles I picked up mentioned the Internet. It wasn't on the business horizon of this brave new converged world of Silicon Valley and Hollywood. They were more interested in interactive television. The Internet didn't catalyse the dotcom bubble. It was merely latched on to as a vehicle when other avenues for investment did not appear to be going anywhere. The bubble was the second California Gold Rush and digital convergence before it became dotcom. The Dotcom mania was really about something that didn't happen and didn't have a dot anyway. Because many of the original dreams didn't look like happening, the arrival of the World Wide Web and an attractive Internet caused all of the above parties to shift gear. "

In March of 2007, Heather Haverstein wrote about the new dotcom bubble in the making, referred by many was Web 2.0 The problem is that everyone wants to buy into, and become a recipient of the largess a bubble offers....for a time. More recently we have had the housing bubble. US foreclosings surged 48% this year. Patrick Killelea writes that it is cheaper to rent than to own in the current market. Inflation is now the gorilla in the room for investors writes Craig Stephen. Inflation is a menace threatening Asia's decoupling story. The question is asked whether the U.S. Federal Reserve's interest rate cuts have blown open the decoupling scenario.

When the light-hearted song, I'm Forever Blowing Bubbles, was sung, no one thought of bubbles as the economically dangerous risk they posed to our economy. Any child knows the danger of playing with bubbles. They quickly learn bubbles do not last. Investors ought to exert the same reticence to touch them but few can resist the siren call of the Gold Rush.