Posted by chip arnold on Thursday, October 9, 2008
Trouble With a Bubble on a Tube
Now I've been trying to picture a housing "bubble". We'd like to think it's a sort of innocuous little soap bubble on the surface of that glorious creation of and servant to mankind we call capitalism. If it busts there'll be some soap splatter to clean up but no big deal. But there's an uneasy and discomforting flaw in that little picture. The flaw is that capitalism itself is a bubble. Yup, it's really true. I'm mortally ashamed to find myself host to such an unpatriotic, anti americanism but it's true after all. Capitalism needs to be ever expanding and growing. Capitalism has to feed. Just like my cats. Now my supply of cats seems to be growing exponentially while my supply of cat food is shrinking at an equal but opposite rate. There's gonna' be some hungry cats around here one day soon. But at the moment the cats are happy enough. Medical care has fallen by the wayside and canned food is a distant memory but still and all, times are good for my cats. All they have to do is show up and food is provided every day. They've even got a row of cardboard boxes on the porch to call home and give them shelter from the elements.
But back to capitalism which is really an awful lot like my cats.......... Well no, lets talk about tires for just a minute. Back in the days of unlocked doors when soft serve icecream was still a novelty, there was something inside our tires called a tube. Now the tube is what held the air inside and kept the tire nice and round and bouncy. Kids patched up discarded tubes and floated in creeks and farm ponds and even fished from them. I can still remember the smell of that rubber on a hot day in August. But tubes were bad to develop a "bubble" here and there. Trouble with a bubble on a tube is that when it busts there goes the whole air supply and you're over your head in the farm pond with nothing to hold on to. This was no mystery and every country boy understood it. See, the "bubble" on the surface is filled with air from the tube which itself is just a big bubble. The little bubble blows and WHOMP!!!! the big bubble is just so much saggy rubber on the bottom of the pond.
Now me being uneducated and ignorant I'm stuck having to get hold of big important things by seeing them in simple ways. I've brought this on myself with my idle ways and all and I accept that I'll never fathom the subtleties of higher understanding. But it seems to me that capitalism is a lot like my cats. It can't just rest on it's laurels and kick back for a lazy afternoon. Nope, capitalism has to be on the job every day consuming faster than it produces. Back when there weren't so many of us feeding on the porch capitalism didn't have to consume as much or grow near so fast as it does nowadays. But there being only so much to feed on, it stands to reason that one day capitalism would start getting hunger pangs. Well my cats will suplement their dry food with rodents, songbirds, bugs and other stuff that's weaker than cats. We thought capitalism was to be the engine of hope and prosperity for the world. Now it's running low on something to eat and just like my cats, it's hungry; prowling through the weeds stalking the weak and defenseless ones.
And our economic system is piled on the back of capitalism. If capitalism is the engine, then the economic system is the drivetrain getting the power to the wheels of our little world. Which gets me back to the innertube that's inside the wheel. And the housing "bubble". The housing bubble is like the innertube bubble. It shares the same air as the capitalism bubble. It's just a little bubble on a big bubble. And it's had a blowout. And our representatives in the big city of Washington are trying to fix it by pumping more air in. It won't work for a country boy in a farm pond and it sure as hell won't work on Wall Street. But as I said before, I'm not educated and just have to see things in simple ways.
Thursday, October 9, 2008 @6:56:30 PM
Capitalism is regulated by supply and demand. It doesn't have to consume faster than it produces, except for the fact that it has to support the non-capitalistic crowd that demands and doesn't supply. But this is a political topic that is prohibited on BHO.
chip arnold Says:
Thursday, October 9, 2008 @8:16:48 PM
Just a tounge in cheek comment on our economic situation and not intended to be poitical. I appreciate your comment :-)
Thursday, October 9, 2008 @9:28:03 PM
I've noticed that so many politicos are such blowhards that it's a wonder their heads don't pop. After hearing one pontificate a guy is in major need of banjo and/or fiddle therapy.
Friday, October 10, 2008 @6:48:48 AM
Dang, Chip. I teach marketing classes at our local technical college and your explanation is about as good as I've read/seen anywhere.
Unfortunately, your conclusion is equally as accurate. If there is good news, in-spite of what the US is now doing with a "bailout", capitalism a "self-correcting system." So if we can withstand the short-term pain of correction, we should find a "new/improved" system on the other side,
I don't endorse it... like everyone else, I'm just trying to live with it.
PS - Glad Tish is on the mend.
Paul R Says:
Monday, May 15, 2017 @5:14:50 PM
You nailed it, Chip.
The buzz word is "growth". We never stop hearing that word. But you can't keep growing in a finite world. Then growth is like cancer - keeps growing but is self-defeating in the end.
As for the housing bubble: The house in Toronto we paid $95k for in '82, we sold for $459k in '02 (and could have gotten more if we'd held out), and now its market value is $1.5m! That's ridiculous, and not sustainable.
Your metaphors are great!
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