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« The Third Annual Biophysical Econonics Conference | Main | Overpopulation: Here is the Solution »

April 19, 2011


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George, how would one extend the metaphor to include Bubble Ben Shalom Zimbabwe's perpetual QE in crediting banks' balances sheets with hundreds of billions of fiat debt-money dollars?

Perhaps, rather than bubble bath soap, what he is pumping in is hot air from a finite, high-entropy energy source, the result of which will be such a high price for bubble bath soap that it's cold showers thereafter for the lot of us. :-D

So Very Doomed

George, with respect to the Real World, when do you think the bubble formation stops?

Phil Henshaw

How about a "complex bubble bath"? I watched a number of the videos from the INTE - Bretton Woods conference, and found them all excellent. I think it would be particularly worth listening closely to what George Soros observed in the changing complexity of the economic system, and its recent change in form.



Phil, Soros is among the principal parasitic rentier-financier oligarchs whose values and behaviors have created and perpetuated the financialization of the global economy. Therefore, he benefits from the increasing complexity and lack of transparency and understanding of the system, i.e., he makes it up as he goes along to serve his own parasitic interests and that of his peers.

Financialization will not work hereafter with falling net energy returns to liquid fossil fuels in terms of real per capita consumption and GDP; rather, increasing financialization post-Peak Oil implies an even higher future cost to labor product, investment/production, and over all GDP.

IOW, with the onset of global peak oil production and oil exports, further increases in complexity from financialization and increasing connectedness at longer distances of the global supply chain will result in an acceleration of diminishing returns to the Oil Age imperial trade regime worldwide.

I have no doubt that Soros is aware of this, but he wants to be sure that he influences the debate to ensure he keeps his share of the shrinking global pie of financial wealth before he has to check out and leave his billions behind.


Good analogy as far as it goes, but you need to get out of your Archimedean bathtub and spend some time with nature in the wild. Consider the foam that is kicked up by breaking waves at the beach. Some theories of the origin of life suggest that the foamy bubbles were the first cells where self-replicating organic reactions first occured. Such foams will be around for as long as there is open water on this planet.

Or consider the foam at the base of Niagara Falls. How long has that patch of foam been there? Longer than civilization, and it will persist even when the Falls have degenerated into a series of rapids. Lake Ontario will not stop draining in any sudden way that can be seen as similar to somebody turning off a tap. Unless it's the New York Power Authority's Niagara Power Project bypassing the Falls -- but that just moves the foam someplace else, to the generator outlets that feed back into the Niagara River.

George Mobus


Comment 1: Yes I would agree that a good deal of the froth being created everywhere in the financial world today is just hot air and nothing more. Actually it isn't even hot! All it takes is blowing lots of air. Most of the derivatives markets are nothing but froth.

Comment 2: What you say of Soros is possibly true of most of the financial movers and shakers. They can't be so stupid as to not see what is happening.

So Very Doomed,

I think the water spigot is already down low so the creation of new bubbles is already in decline. I.e. our economy is already running out of capacity to invest in useful assets. We are just investing in paper assets, which are not assets at all in any meaningful way.

Whatever bubbles are being generated now are from the desperate hand waving of the financial movers and shakers, like Paulson, Geithner, et al. Aided and abetted, of course, by Mr. Obama.

When will everything crash. Well it already is crashing. It may be a while (6 months to 2 years) before more people start to understand what is really happening. First we will visit what economists call a double dip in the recession, i.e. we will soon be seeing a decline in real GDP due to the price of oil having been above $90 a barrel (WTI) for so many months (see It's the Area Under the Curve). But then they will have to see that it isn't just a dip, but the beginning of a long decline to a new, deeper low, probably what everyone will recognize as a true depression.

Only then will more people be able to question the conventional wisdom purported by neoclassical economics. Those of us in the Biophysical Econ arena hope to be ready with answers and realistic scenarios.


Missed you at BPE.

I understand your point, but this analogy was meant for more general readers. I didn't want to press it too hard.


Sorry but I'm having trouble following your point. I would say the sustainability of a "foam" depends on its source of maintenance energy. The Archimedian bathtub had a finite limit of energy input. Stop the sun from shining and your pre-biotic foam will cease to maintain also (wave energy might have stirred it, but sunlight sustained it).


Phil Henshaw

George, No I didn't get invited to give a talk at BPE, and didn't have a paper I thought people would want to discuss this time either. I actually don't have money to go places unless it seems it would help my somewhat dangerous plan to become self-sufficient on my research... ;-)

Nemesis, I agree with your opinion on Soros from an environmental point of view. I still see his remarkable insight into how the world financial system is coming unglued, with apparently unresolvable conflicting political conflicts largely in control of events they don't understand. If you read my post on it, and think the way he explained how he made his money, by riding the natural bubbles of the economy up, you'll see why in a chaotic world he can't do that now. Hopefully you'd also see that I'm talking about something like reversing a part of his method as how to make finance sustainable now.

Dean, I think yours is an excellent comment, in that the organic processes of environmental systems don't work by Archimedes' principles of weights and measures. They work by the emergence of individual cellular systems. Whether foams were the a structure that biological cells developed from seems like a good test concept, and toss in the extremely high energy cavitation events that occur in making them too, I think. So I wouldn't rule it out, but I think how the bubbles of foams develop their shapes might not be as the limit of an emergent growth process. That's the way the body shapes of both single and multi cell organisms, weather systems, cultures and other cellular designs of nature seem to develop.

Core Drilling Machine

Wow..The blog is well written and you have done a wonderful comparison of economy with bubble bath..Great!!Thanks for sharing it..
[Moderator edit: removed commercial URL]

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