Josh Guetzkow, who has outed himself as that person who is reading my blog, is a professor at Arizona and works on income inequality and mass imprisonment (though he masquerades as a sociologist of sociology). He passes along an interesting article on bubbles and the new new real estate downturn. This is appreciated, and I think it’s his trying to make sense of
his own decision to buy property at the top of the market my earlier half-assed attempt to explain housing CMOs.
As for the article, I have a sneaky suspicion that the author is full of it. His contention is that bubbles are preceded by legislation (this is similar to Neil Fligstein’s contention that legislative activity precedes merger waves), and:
That the Internet and housing hyperinflations transpired within a period of ten years, each creating trillions of dollars in fake wealth, is, I believe, only the beginning. There will and must be many more such booms, for without them the economy of the United States can no longer function. The bubble cycle has replaced the business cycle.
The rest is an analysis of the dot-bomb and the new housing troubles.
I think it’s worth disentangling the housing bubble, which may well be what we are facing here, and the new global financialization, which is less well-understood. Greta Kripner is doing some work on this, with an emphasis on the US economy. For those ambitious graduate students out there, I would say that global financialization may be one of the most important master-narratives since modernity and the industrial revolution at the end of the 19th century (I’ve had this conversation with Ryon Lancaster as well, we may well be on the same page I think). And there were, you know, a couple of good books written about that earlier transformation.