Bob talks to Bubba

Bob: Bubba, you have been responsible for the two greatest economical bubbles in history: the stock market bubble in the nineties and the real estate bubble at the start of the twenty first century. That’s a major achievement. How did you do it?

Bubba: First of all, let me thank you for those kind words. I’m glad to be here talking to you. I understand you are from the great state of West Virginia. You know Arkansas and West Virginia have much in common. We are the backbone of this great country. And, also, the women are…

Bob: Excuse me, Mr. Bubba, you’re rambling. I need you to focus on the bubble phenomena that you created. Can you please just respond to that?

Bubba: I feel your pain, Bob. With my vast intelligence, it’s hard for me to focus primarily on one aspect of a myriad of subject matter which might enter my brain. I usually focus on pulchritude, but I’ll give you a few views on the bubbles.

Bob: Thank you, sir. First of all, how did you create the environment that allowed the stock market bubble to expand and then explode?

Bubba: Well, first of all, I would take umbrage at your phraseology insinuating that the stock bubble has burst. It’s only in a flat phase now that the Republicans are in office. When I get my wife in there in ‘08, you’ll see exponential growth in the stock area.

Bob: You’re dodging the question, Mr. Bubba. I want to know how you personally affected that bubble effect.

Bubba: Well, Bob, you would need a business degree from Princeton to understand the intricacies of economical manipulation, but I can give you a layman’s version, if you like.

Bo: Go ahead, sir.

Bubba: First of all, I took Mr. Greenspan under my wing and showed him the wisdom of my ways and then cajoled Tony Blair to join me in this mockery. What we did was essentially declare that there was a new order in place. We declared a new economy, with ever increasing profits and margins. Because of the credibility we three had, the American public bought into it and began investing feverishly into the market. I should also say that the dot com boom was also a major factor in the initiation of the bubble. In addition, I created an environment which permitted prevarication to be the rule of the land. This allowed companies like Enron and Global Crossings to reap tremendous profits.

Bob: Yes, but, Bubba. This action caused tremendous hardship for investors.

Bubba: Yes, maybe. But, we need to look at the big picture. What effect did this bubble have on long term, global economics? I say that twenty years from now, we’ll look back at the nineties as the beginning of the world economic boom.

Bob: Okay, okay. Enough of that. What about the real estate bubble? I understand that the bubble has burst in England and some parts of the United States are showing vulnerability.

Bubba: Well, the real estate bubble stems from the 1997 law which I championed. We essentially eliminated capital gains tax for the first half million dollars of profit from selling a home which one occupied two of the last five years. This law allowed the stock market investors who could see the flattening of the stock market to invest in a market where profits were essentially tax free. Also, because of the flattening of the stock market, Mr. Greenspan had to lower interest rates to stave off inflation and to stabilize the economy. As a result, almost anyone could qualify for a home loan and become as indebted as they desired.

Bob: But, didn’t that law give the real estate speculator a huge advantage over other investors?

Bubba: Why, yes. That’s why we did it. The erudite immediately saw the wisdom of investing in real estate. The strategy is simple. Buy and flip.

Bob: But how does that help the economy as a whole?

Bubba: Well, idiot, uh, I mean Bob, wouldn’t you like to turn a twenty five percent profit on your investment for ten years in a row. That’s what the common man has available to him.

Bob: But, Mr. Bubba, if one sells his primary residence, doesn’t he need to buy another house at the same inflated prices?

Bubba: No, not necessarily. For example, he could sell his house in a bubble market like northern Virginia and move to a more stable market like Arkansas.

Bob: But, wouldn’t that be somewhat of a culture shock?

Bubba: Let me say this. Studies have shown that there are many more Rhodes scholars from rural Arkansas than the rural Virginias.

Bob: Good one. Kind of like you not breaking the drug laws in the United States when you were smoking weed in England.

Bubba: I have no recollection of making that comment in Virginia. Or West Virginia, for that matter.

Bob: So, what’s in the future for the real estate market? All I hear is gloom and doom. It seems that most people will be shut out of the market as interest rates rise, and then the bubble will burst.

Bubba: Let me say this about that. The median price of housing in the United States has never declined for more than two successive recession periods. Look it up on google. So, in the worst possible scenario, the seller may have to wait several months to sell at the price he desires. But, there will always be buyers and there will always be suckers.

Bob: Thank you sir, for your enlightenment. You are a true American hero.

Bubba: Thanks, Bob. By the way, here is a Hillary ’08 button. Wear it with pride.