Bubble Bath

"The mother of all evils is speculation--leveraged debt."
--Gordon Gekko (Wall Street II)

People have slapped the 'bubble' label on a number of markets over the past decade. The internet bubble, the housing bubble, the credit bubble.

All bubbles have a common factor--government intevention. This intervention primarily takes the form of cheap credit, which allows risk takers to lever up. When risk appetite reverses, prices collapse as people deleverage.

Seems to me the world's largest bubble is government spending. We can see the leverage in the form of debt:GDP ratios.

Market forces are pushing against this bubble, seeking to pop it.