It could just be a sign of healthy, techno-related skepticism, which is a good antidote for what may seem like hype to the large percentage of people who only spend 10% of their time on the computer.

But, I generally agree with your viewpoint. Without rational reasons, knee-jerk dismissals and negativity are just as bad as fawning over the latest fashionable online thing.

The current bubble paranoia is typical of those who lost their shirts in 2000-2002 and still haven't figured out why. Then they didn't believe in bubbles, and now they think that any run-up is just another bubble lying in wait for them.

The last top was marked by Jeff Bezos on the cover of Time. Paul when I see your face there I'm gonna move into cash pronto.

I love the disruption and the innovation and the wealth creation too. If only we could find some way around the wealth destruction that inevitably follows :-)

(p.s. -- Schumpeter rocks)

Spoken like a guy who profits from bubbles! (as you've said).

Bubbles are BAD capitalism. They are misallocation of resources. They are no more praiseworthy than hurricanes being good for the homebuilding industry.

Spoken like a guy who profuts from bubbles! (as you've said).

Bubbles are BAD capitalism. They are misallocation of resources. They are no more praiseworthy than hurricanes being good for the homebuilding industry.

Bubbles are good capitalism. People who speak derisively about "misallocation of resources" are central planners at heart.

A bubble throws massive resources exactly where they are needed. It allows for experimentation and incubation. Progress entails waste, if you are afraid of the waste go back to the comintern and design a superior structure for social progress--you certainly won't make much commercial progress.

As a person who has been working in web design and development the last few years, I really don't believe that Web 2.0 is a bubble but I fully agree with the return to the spotlight that the internet has gotten. We do need the wealth creation, the innovation, and the enthusiasm in this country but the best way for that to come about is not if it is a bubble, but if it is something founded on strong business models and not just half-baked maybe-it-will-work ideas. I feel like that's what Web 2.0 has been giving us. The new companies have the technology to actually revolutionize the way we use the internet and the way we work and collaborate. New companies seem to be on more solid footing than the web companies of old and those with the purse strings seem to understand the logistics of running a web company and have more realistic goals. Let's hope people don't get carried away and turn the web revolution into another web bubble. But, yes, on with the exponential growth and brilliant new ideas.

Capitalism should be an allocation method of goods and services, not a religion - the manias and boom/bust cycles endemic to an purely laissez-faire implementation are no more "exactly where they are need" than getting roaring drunk and having a massive hangover is "exactly what's needed" because it's someone's free choice to do it. And saying that's negative doesn't make me a prohibitionist.

Seth your analogies are cute. But the wild parties and excesses of '99 *were* an allocation, and the system self-corrected exactly as it should have. Never, never try to repeal human nature, that's the genius of capitalism. The invisible hand works well even while the speculators are drunk. It is the prospect of unlimited growth that intoxicates and causes the bubble. There were railroad bubbles (1877) and a radio/auto/movie bubble (1929), a Web 1.0 bubble and we *are* going to witness a Web 2.0 bubble--informed by those experiences. Fasten your seat belts it's gonna be a bumpy ride. :)

No one was forced to invest in companies with flawed business plans, no one was forced to join companies that made no money. The last bubble did indeed have a sobering effect and that was an innoculation for the next speculative bubble. Those who didn't learn will get their hangover this time...

Oh, the reason we didn't have a television bubble in the 1950's was that the speculators of '29 were still alive and actually thought that their speculation caused the spanking they got with a decade of depression. The crash of '29 didn't cause the depression (monetary policy did) but it was widely believed in the '50's that the roaring '20's cause the depression.

Again, having a vomiting fit is a self-correction to drinking too much. In that sense, throwing-up is a health-restoring reaction to mild alcohol poisoning. This doesn't make a drinking binge a healthy action, even if it doesn't kill you from doing it. That's misallocation in action - even if it feels good at the time, and the system works enough to prevent death.

"Nobody poured those drinks down anyone's throat" is a very poor rebuttal to the above.

It gets really, really, tedious to have to deal with the same dogmatic ideologue reply to every point.

Seth, your formerly cute analogy has become over-ripe...

I was going to post something similar to what Seth has been saying so I'm going to side with him in his argument with Andi. Andi is playing the familiar role of the capitalist in the capitalist-communist debate, attributing the communist role to Seth even though Seth has only pointed out known flaws of capitalism that every capitalist should know about. Of course, Paul wants another bubble; he wants his investments like dabbledb to sell at ridiculous prices so he can make out. The bubble talk can start once web companies start producing revenues. Who is doing this so far? Only google, that's why they have their own individual bubble in their stock.

>>> Seth has only pointed out known flaws of capitalism that every capitalist should know about.

Yes, he's belaboring the obvious about bubbles and lamenting the broken eggs instead of feasting on the omlette which casts him as a central planner. No, I never once thought he was an actual Marxist--and I do actually meet an astonishing number of those in these latter days.

While I'm certain that Paul enjoys the profit taking aspects of the bubble culture I believe that he (like me) revels even more in the advances in scientific, commercial and social innovations that accompany every bubble, casualties notwithstanding.

Ok i go to a high school and i was dared to drink a bottle of bubbles and i did it for a dollar i was wondering if it hurt me in anyway because it made me puke a lot. People are wanting me to do it again should i or shouldn't I??

Andi's "A bubble throws massive resources exactly where they are needed" is spot on, though I think anyone hoping for lightning to strike twice (web 2.0 after web 1.0) is in for a reality check when they realize that the same industry rarely (ever?) "enjoys" a bubble twice. To Andi's point though, massive resources are no longer needed for internet innovation; alternative energy is where I'd look for the next bubble. As is Vinod Khosla - and who's gonna argue with THAT guy's track record at calling bubbles ahead of time with his investments?

>>> alternative energy is where I'd look for the next bubble.

There has to be the promise of extraordinary returns for bubbles to form. A giant oil shock (Strait of Hormuz maybe?) would provide such an impetus but other economic dislocations (liquidity) caused by an oil shock would retard bubble formation. There will be a lot of money lost on pie-in-the-sky alternative energy schemes but I don't anticipate enough frenzy to form market-wide bubbles--not this decade. It's too bad, we really need a Manhattan-Project-like push for alternative energy, I just don't see many greedy investors getting behind it without the shock of $100+/bbl oil.