We’re in a crumple.
William Watson coined the word in a Sun column last week:
A bubble, as we have all learned, is a run-up in prices going beyond anything that reasonable economic calculation can justify….
But here’s where I find all the bad news encouraging. If social contagion and information cascades can carry us all off to manic highs, presumably they can also drive us down to unwarranted lows…
In effect, we’re in a negative bubble. (I think of a negative bubble as “a crumple.”) We’re quickly talking ourselves into depression. We’ve gone from the subprime to the ridiculous, you might say.
Why do I find this encouraging? Because a crumple is no more reasonable or justified than the bubble was. And because it may turn around just as quickly.