January 03, 2010 | Ronda Jambe

We’re forever blowing bubbles

If you have just hummed that tune correctly, you may avoid being caught with bubble gum on your face. It’s an old tune, probably from the 1940s, but familiar enough to those who like jazz or who grew up with big band music in their background. That cohort has been more risk averse, less inclined to borrow and more intent on being debt free than younger groups.
And the bubbles keep blowing, and popping. Currently we have heard all too much about the housing bubble in the US. Time for the gold bubble to be considered. Has it peaked? Or is it just heading sky high? Purely academic questions for me, as the few bits of gold I own could all be worn at once without weighing me down.
A heavier question is which way the US dollar is going. Will the Aussie reach parity, or will the Yankee dollar make a full recovery and hold the world’s economy on its back, a greenback Atlas?
Paul Krugman has bemoaned the past ten years as a decade of zero growth and zero learning. The belief in the good sense and good management of US corporations has popped like the other bubbles, yet the regulators don’t seem to have made many substantial changes to the ways that lending is done and accounted for.
‘We’re on a road to nowhere’ – a song that puts you more in my generation. By definition we’re headed somewhere towards a future, we just can’t say where it is going.
After much lively discussion with my Canberra friends on a quiet New Year’s Eve in the bush, we agreed to have a reprise in ten years, assuming we are all present and accounted for. The division was between those who think Australia’s economy is so solid that it will remain more or less impervious to the global storm surges of over-population (which we all agreed on), over-capacity for production and environmental challenges vs the more pessimistic who maintained that in ten years time certain chickens will be coming home to roost, and that China will no longer be the prop for our economy that we have come to take for granted. And that climate change will be biting hard by 2020, with particularly adverse affects on an Australia that has made little attempt to wean itself off fossil fuels for electricity, transport and export.
You can easily guess where I stand in this divide. But of course I was full of bubbly at the time.

Posted by Ronda Jambe at 2:42 pm | Comments Off on We’re forever blowing bubbles |
Filed under: Economics

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