The Boom and Bust Cycle continues... even if it is muted by the Fed

WEB 2.0 ... more like BUBBLE 2.0

Keep drinking the kool-aid people. Yes, its true your blog has fifty widgets and gets a bunch of hits from people like Eric and Steve, but the big dungeons and dragons party that is your blog is a bubble... wait, is that me.??

Your favorite tech bubble is back again, round two, valleywag talks about being a jerk about it.

This is just the beginning of this bubble as you hear of once famous unprofitable social networking names struggle to make money and finally either get out before its too late, or come crashing down. As I'm sure you have read in many places, 2007 is the year the no profit party stops, and many of these "social networking" (there I said it) sites take a swim in the swirling waters of the toilet. I just don't see the problem in a facebook or a myspace charging $1.99 a month for the service it offers. After all, server storage space isn't cheap on that scale, and some peopl who have 500 pictures uploaded on Facebook, are generating cost in energy, storage and maintenance that they are not paying for.


HOUSING BUBBLE

This has driven the boom in America and softened the technology and stock market bust from 2000. Americans are moving from one boom to the next as the last boom busts. Sounds like a stupid tongue twister, but people are questioning what is the next boom that will sustain the economy through the next five year period. Enthusiastic people who are joyfully watching the housing market crash can be found at the following links:

http://thehousingbubbleblog.com/?p=470

http://www.salon.com/tech/htww/2006/04/12/flippers/index.html

Mainly, the housing market has been the result of low interest rates read cheap debt, speculation, and the frenzy characterized by any bubble. However, those that believe that a continued cheap debt situation will exist as productivity growth is slowing and inflationary pressures still exist in the economy are in for a hangover. Fix your rate if you can and hold on as the equity in your home falls. Good news, your income might go up, bad news, that vacation condo/investment you bought in "that new luxurious area" in Florida, just next to the garbage dump that is being turned into the golf course, is out of funding, and the garbage dump is doing better than ever, they might even put in an incinerator.


COMMODITY AND ENERGY BUBBLE

Metals, oils and other commodities have been coming off their highs now only after a long five year boom cycle. The prices for copper, zinc, nickel, aluminum, oil, corn, everything has been going through the roof. I will focus on metals, because as some of you know, I am in the copper industry.

Most importantly, a sudden idea or perhaps you think myth of peak oil and a shrinking of other resources has driven up the price of commodities. In oil and metals, a surging India and China, particularly China, has sent people into resource scarcity mode. Mostly, people get scared into behavioral finance and drive up the prices of natural resources. Do you want Vladimir Putin on the gas spiget...or some other dire prediction.

Even though some of these problems may turn real, markets cool and in terms of commodities, which can fluctuate tremendously, the highs and the lows can create some serious ulcers. Although there will continue to be a sustained higher price in commodities due to increased demand, a great deal of supply continues to come on in some of these metals. Oil is an entirely different discussion. However, one thing is for sure, prices are inflated and corrections are always made, just ask the partners of Amaranth.

In conclusion, as we move from boom to bust and back again, I leave you with the words of a smart Jew, Bernard M. Baruch with the following quote:

"I made my money by selling too soon."