Prediction

by

Writing shortly after the 2001 recession, a famous (Nobel) economist had this to say

The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

We live and learn. The current recession, as we know resulted from the burst of the housing bubble. Therefore, to get out of it, we need to create another bubble to replace it. It is reasonable to assume that the next bubble will be either in clean/green/whatever energy sector or health care information technology. The big contributor to this bubble will be google – overvalued stock, clean energy initiatives and flu trends. All this will be brought down spectacularly by an Antitrust case. In light of this, you could make money by

a) going appropriately long/short on GOOG.

b) copy-pasting this post in longbets. Any win/loss is yours. I only demand credit for my idea.

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5 Responses to “Prediction”

  1. Grammar Nazi Says:

    Just came across this news. Thought you’d be interested. 🙂

    http://www.gourmetkazoo.com/our-blog/view/290/

  2. Alan Smithee Says:

    wow! Frankly, I picked up this balsamic vinegar crap from top chef or iron chef. I might have tasted it unknowingly, and did not know the appellation involved until now.

  3. Ritwik Says:

    Hey, just bought myself a Glenlivet 15 yr old from the duty free, after some rummaging through your posts. Hope it’s good. Thanks!

  4. Alan Smithee Says:

    Are you Ritwik from IIMA? Isn’t Ahmedabad a dry city? Anyhow, let me know how it tastes.

  5. Ritwik Says:

    Yeah, the same one. And I’m not in IIM-A anymore, graduated this March. Anyway, Ahmedabad is not really dry, you know.

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