This Is Not a Down Market Cycle; It’s a Big Multibubble Pop, Pop, Pop

As we’ve said many times, we are not in the middle of a down market cycle. The economy is not merely fluctuating back and forth between an “up” business cycle and a “down” business cycle. The overall U.S. and world economy is fundamentally evolving, and therefore we are not going backward to whence we came. Instead, we are going forward to where we have never been before. At this moment in history, forward involves the bursting of a series of interconnected economic bubbles. On the way up, these expanding bubbles created tremendous wealth both here and around the globe. On the way down, these bursting bubbles will destroy a very impressive amount of wealth, as well. How much of your wealth will be destroyed in the months and years ahead is entirely up to you. Ignore the problem, or react as you may have in the past, and things could get away from you rather fast.

Each falling bubble will put increasing downward pressure on the others, creating a combined, cascading, multibubble fall. Hence, our key advice during the Bubblequake and Aftershock is to purge your mind right now of the false idea that if you just wait long enough, economic gravity will somehow disappear and the asset values that are currently falling (like stocks, real estate, etc.) will defy gravity and automatically return to an “up cycle.” These popping bubbles are not going to float back up just because we want them to!

People who tell you otherwise are simply trying to cheerlead the economy. As you may recall from the discussion in Chapter 4 about the psychology of how people react to changing economic conditions, we are currently in the Market Cycles stage of psychology regarding the evolving economic collapse. In the face of the evidence, people can no longer say everything is fine, so the next best way to ignore reality is to say we are experiencing a “down” market cycle. We know beyond any doubt that this is no more than cheerleading because these same experts who are now insisting we will return to an up cycle soon, never once said a word about a coming down cycle back when stocks and real estate were soaring high. Yet now we are supposed to believe that an automatic and reliable up cycle is inevitably on its way. It’s all just part of the broader attempt to cheerlead the economy and keep investors relaxed. Just be patient, they say. Everything will get better soon. The economy (and your particular stocks, bonds, real estate, etc.) will be just fine.

Please don’t fall for this! Multiple, linked, collapsing bubbles cannot and will not magically reinflate.

Copyright © 2001 Peter Steiner.