All Economy's Bubbles Have Burst at Once

Dominoes tumble from real estate to credit to commodities
By Kevin Spak,  Newser Staff
Posted Oct 7, 2008 4:07 PM CDT
Bubbles have been begetting bubbles around the world, and now they're all crashing at once.   (Shutterstock)
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(Newser) – The real reason the global economy is tanking is because a huge set of financial bubbles are all bursting at once, explains Steven Pearlstein in the Washington Post. The US real-estate bubble started the party, leading to a burst in the credit bubble, the corporate takeover bubble, and the commodities bubble. Thanks to cross-border trade, that chain reaction now “threatens to take most of the global economy into recession.”  

All those bubbles boosted US consumption, leading to export bubbles in Asia, which fed an Asian stock bubble and the global commodity bubble, which in turn bubbled up under Russian and Middle Eastern stocks. And so forth. These bubbles are so related, that their simultaneous bursts shouldn’t surprise, writes Pearlstein, but the result is a “vicious cycle” which “no country, and no industry, can escape.”