Introduction

We are going through a series of popping financial bubbles, led by a housing price bubble collapse, not a down financial cycle. Unlike a down cycle which is naturally followed by an up cycle, a bubble pop isn't followed by an up cycle- it simple pops and any profit is gone forever.

This is how I begin many of my presentations to financial and non-financial audiences.  As this book is being finalized for printing, we are being bombarded by the news that there are signs that the recession is coming to an end.  Headlines from leading financial figures saying “Bet on America” or “The Recession is Almost Over” are the norm.

Also, the numbers are showing that the decline in GDP is slowing and there are other indicators of a slowdown in the contraction.  Of course, the assumption is that this slowdown in decline presages an up cycle.

But, even if the decline slows down or stops, and even if there is a small increase, the recession is not over for the long term.  Saying the recession is over is more like saying “Mission Accomplished” before the real Iraq War even began.  It’s hiding from the underlying problems that have been created by thinking we can cheerlead our way through it.

The economy won’t bounce back.  It is a bubble economy.  With the popping of the housing bubble will go the consumer spending bubble and private credit bubble and the stock market bubble and the dollar bubble and finally the public debt bubble.  It won’t all pop at once, it will pop over time, but it won’t bounce back, not very much at least, before the popping resumes.  Once the bubbles start popping, as they have with housing, it’s not over until the fat lady sings, and the fat lady is the dollar and its evil twin, the government debt bubble.