MFG 2.0

Six Bubbles Bursting (Guns, Green Tech, China And More)

A recent Business Pundit article detailed the inflation, and potential pop, of 12 economic bubbles from around the global economy. A few of these are of especial relevance to manufacturers looking to avoid -- or profit from -- such a wave of Greenspan-ian irrational exuberance.

Gun Sales: With the value of certain models of guns increasing, many see “cents” in senselessly stocking up on assault weapons. However, since most of this market is fueled by hysteria (no doubt happily stoked by gun manufacturers, gun dealers, and lobbyists), the one safe bet is that rationality will not alter this economic dynamic. (The fact that this bubble is bringing together both total morons and heavy arms is a topic for another forum.)

Cap & Trade: Rachel Morris of Mother Jones warns of what may ensue if the Senate passes the American Clean Energy and Security Act. Morris says the act could permit companies to profit on pollution and gamble on global emission standards, leading to all sorts of unplanned consequences like "offset futures" and "allowance swaps". Sounds pretty bubbly to me.

China: Manipulation of the Shanghai markets by the Chinese government has experts such as Contrarian Edge’s Vitaliy Katsenelson, questioning whether China’s export-driven economy will be able to survive the recession. One determinant factor in most bubbles is bad data, and the author points out that most economic data coming out of China is nothing more than a smokescreen.

Alternative Energy: The press for alternative energy sources and governmental energy subsidies may be creating a new market for energy-related derivatives, speculation and asset price inflation, writes Jeff Brady of NPR. Brady says that increasing credit for green ventures due to the hype cycle, and the lagging behind of infrastructure to take advantage of these sources, will over time create market overvaluation.

Food: Will the demand for food and water exceed the supply, creating a food bubble? Rumors of money to be made, fueled by news of food shortages, could cause a run on agricultural stocks and increased food prices. Plus, it's not like global population is going down anytime soon. (That is, unless we run out of food and water.) I'll buy 100 shares in Malthus, myself.

Incandescent lightbulbs: Of incandescent lightbulbs, Business Pundit author Drea writes that the phasing out of these bulbs in the EU is causing a demand spike that won't last, both because CFL technology is catching up and because given no new production, stores will likely soon run out of stock -- a sure fire way to end any bubble.

TAGS: Innovation
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