'One More Bubble!'
When I took an editing job at Bloomberg News in March 2000, my arrival coincided with the bursting of the Internet bubble. As once-hot IPOs tanked and the Nasdaq crashed. I would joke to other editors that what the U.S. economy needed was “to build a better bubble.”
Then, to my amazement that was pretty much what happened, except that the bubble moved from the peripheral world of dot.com startups to a cornerstone of the economy, the real-estate sector. Low interest rates, exotic financial instruments and speculation pumped up the economy again, with Wall Street operatives enriching themselves as never before.
Now, as the housing bubble has burst and taken with it trillions of dollars in wealth, President Barack Obama may be right that the future U.S. economy cannot be built on another bubble, that America must get back to manufacturing products that people need.
However, that goal is endangered not only by Republicans, who seem determined to sink whatever Obama proposes, but by the fact that speculative bubbles are what make possible the obscene levels of compensation – and Wall Street is not about to give up on the golden payday.
Without bubbles, Wall Street bankers and their many cohorts could make solid salaries – as they have historically – but not bonuses in the millions of dollars a year. So, there is a powerful incentive for Wall Street to push for a continuation of the bubble economy. Perhaps the new slogan could be, “One more bubble!” [more]