Thursday, May 26, 2011

Bubble economy ..Bugling versus burgeoning .....

Last 20 years are years of irrational exuberance and whole economic spectrum is like huge balloon, you control one end of the balloon ,another end bulged, for instance stock market bubble in late 80's , technology bubble in 2000, housing bubble in early 2000 and now commodity bubble , oops ! I associate the reason of bubbles even in biggest economic turmoil after 1929 to the human psychology. Since the breaking of Soviet Union and ending of cold war people freed from constantly lingering fear of 3rd world war. People are positive and fearless first time in modern history.However, overly optimistic environment is new for us but think how this protuberance of irrational exuberance cause hardship for millions of people , increase the disparity of the distribution of wealth.
The whole new economic paradigm is tough to understand and it takes time to adjust to new economic realities.There are opportunistic group of people who may be manipulating in this new paradigm and encourage bubbles.

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