Alternative Energy, Alternative Media, & Asset Bubbles

Jan 21st

If you have ever wondered how the mainstream media works, watching Manufacturing Consent does a great job of displaying its sordid underbelly. The bias is not always this obvious, but it is always there:

The most recent issue of Harper's has an article by Eric Janszen about financial bubbles throughout US history named The next bubble: Priming the markets for tomorrow's big crash. A couple key quotes:

We have learned that the industry in any given bubble must support hundreds or thousands of separate firms financed by not billions but trillions of dollars in new securities that Wall Street will create and sell. Like housing in the late 1990s, this sector of the economy must already be formed and growing even as the previous bubble deflates. For those investing in that sector, legislation guaranteeing favorable tax treatment, along with other protections and advantages for investors, should already be in place or under review. Finally, the industry must be popular, its name on the libs of government policymakers and journalists. It should be familiar to those who watch television news or read newspapers.

The media rides the story up and rides it back down. We always need something to talk about. It happens to the media offline just like it does to niche publishers online. But the memory and analysis are short and shallow, quickly pointing a finger at a false cause, fixing symptoms like antidepressant drugs do:

The U.S. mortgage crisis has been labeled a "subprime mortgage crisis," but subprime mortgages were only a sideshow that appeared late, as the housing-bubble credit machine ran out of creditworthy borrowers. The main event was the hyperinflation of home prices. Risks are embedded in the price and lurk as defaults. Even after the faith that supported a bubble recedes, false beliefs continue to obscure cause and effect as the crisis unfolds.

It puts the formation of the alternative energy market in a fascinating perspective, especially as I finished reading about the demise of ACA and hung up the phone from an automated call from a sleazy telemarketer company calling me at 8pm, stating their partnerships with non-profits to help consolidate the debt that I don't have due to the country's current credit crisis.

When economic fraying appears at the weak edges of the market it hints that more is to come. Long time bulls are turning bearish and the stock markets are hurting worldwide. And so history repeats itself for the people, yes.

Published: January 21, 2008

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Comments

January 21, 2008 - 3:36pm

Americans are addicts for the next big thing, and without moderation, as we could learn a lesson from other countries. In my recent history, I recall the frenzied hype by business and govt. over the internet and then the housing market. It was always full steam ahead - buy buy buy - all of the pundits and big media were hysterical. But where was the leadership, a call for moderation? Our nation resembles one big Las Vegas, where we are gambling addicts leading lives of boom and bust, over and over.

Now to avoid recession, we rob Peter to pay Paul. Even the recession is being hyped, because companies are able to profit from it. The free market takes no prisoners.

January 22, 2008 - 2:00am

Noam Chomsky is brilliant. One thing he did point out in Manufactured Consent is that it would be a full time job to weed out the amount of information we are bombarded with to find out the truth behind things we hear. Since most people are wage slaves and are chained to their desks between 9 and 5, and in their free time choose to watch sports or Entertainment Tonight, I do not see the cycle ending any time soon.

The model is simple, keep most people busy with work and distractions leaving the few who know what is really going on to profit.

January 22, 2008 - 10:45am

I agree with Christen, the recession is being hyped, and it has been for some time in the UK. There was talk of an economic downturn since before the Northern Rock crisis, so in some ways the writing has been on the wall for months.

If the stock market doesn't fluctuate madly, people who know how to game it can't make huge profits. And its ups and downs are largely driven by people's gut feelings and emotions, which in turn are exacerbated by media hype.

January 23, 2008 - 9:15am

Well, a model is something one engineers methodically or adopts a set of working principles, whereas the economy is sort of like organized chaos, allowing a minority of opportunists to exploit. Wage slaves, from poor to the rich (many millionaire wage slaves) are along for the ride and why shouldn't they be. They have entrusted in political leaders.

I believe in fiscal responsibility (wise govt spending 'n accountability) but am more social when it comes to controlling the economy against the bands of wall street and Washington thugs that play with our economy.

Will online advertising budgets change in a recession? What are site managers doing to prepare?

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