Mark Grant Explains The Art And Science Of Blowing Magic Bubbles

Tyler Durden's picture

By Mark Grant, author of Out Of The Box

The Art And Science Of Blowing Bubbles


“Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.”


              -George Soros

Sometimes people, a vast majority of people, just don’t get it and so the present tense of the world goes on for a while until reality pops up or is forced upon them. It is rather like momentum which proceeds until the fuel runs out. Sometimes it is like living on Earth; the lack of recognition that hydrogen and oxygen surrounds you does not negate the fact that these two gases are present even though you cannot see them; you are still alive and breathing afterall. What we are used to, what we look for, are bubbles that reflect one asset class or another. In the past it has been Real Estate or or high tech or equities or bonds so that the search is constantly defined by some sector. Present conditions, however, dictate something entirely different, in my opinion, which is not one asset class or another as defined by relative valuation but all of the world’s asset classes as defined by global policies set by the world’s central banks acting in collusion. We are living in a gas house bubble.

[The Treasure Box Opens:] “The Bubbles, the Bubbles, the Bubbles.”


              -Finding Nemo


I am often amazed how complicated people want to make things. It must take a great deal of time and effort to turn one + one = two into a geometric statement, set in algebra, defined by calculus and tortured into nuclear physics and then spewed out on television or in some board room presentation. The hours that it must take in hopes of aggrandizing the intelligence of the speaker must be agonizing.  I prefer to spend my time in another fashion however. I find the mental exercise of turning the complicated into the simple to be a much more satisfying affair. No one may think of me in the first class of some brain trust perhaps but at least people can understand what I am trying to impart. The rigor of understanding you know is quite worthless if it cannot be explained and if you can’t understand something then the whole discussion is pointless.

“I’m blowing bubbles. Have you ever blown magical bubbles?”


             -Ginny, Harry Potter

The black magic has been created by two bipolar experiences. Mr. Draghi, the Wizard in residence at the ECB, has promised unlimited amounts of new paper if the boys in Parliament give the nod and the bank itself, in the meantime, has bought football cards, shoe laces, soda caps and cereal box tops, declared them to be valuable assets, lent money against them and floated small pieces of blue paper in the breeze that can be used for lighting fires, cooking dinner and warming the hearth. In America we sell “full faith and credit” like Hallmark cards at the drug store and then we buy them back once they have been used and call them relics, antiques and valuable memorabilia. We merchandize in the Treasury, collect the artifacts at the Fed and spread decaying rose petals along the way. Everyone calls it art, everyone participates in the finger painting and no one is yet the wiser or if they are; they look the other way.


“Good morning to you sir. Would you care to blow a bubble?”




Now many folks think, and will tell you quite loudly and sometimes with hysterics, that this bubble will go on forever. They will rant and rave that the world is improving and they talk of green shoots, growth in the spring and they point to what they hated just moment ago, the markets, regaling in the fact that yields are declining. They do not mention the world awash with small new bits of green and blue paper of course or the printing machines in Washington or Frankfurt but they point to the yields and tell us that things are better; much better. They somehow, an oversight I am sure, forget to tell us that the actual economies, upon which all this is based, are in decline in Greece, Portugal, Spain, Ireland, France, Italy and the United States. Yes, for all of you that mistakenly think that I ignore the plights of my own country I hate to disappoint you but no blind eye is turned here. I can see Emperors clothed and unclothed and while I may miss a beat I do not miss the tune.

“As long as the roots are not severed, all is well. And all will be well in the garden.”


            -Chance the gardener, Being There

So it will be Inflation or Valuation but the winds of change will sing once again. One day soon the world will awaken to find that the houses of Draghi and Obama have more debt than their equity value and the small pieces of green and blue paper have Kings and Queens and Jokers painted on them and then the story shall take a decidedly different turn. A mighty castle cannot be supported on a pinhead and the weight of the added debt will cause the bough to break. Carry on in the meantime, the roulette wheel rolls but just wait until the casino lights are turned off and you will discover just how difficult it is to play in the dark!


“Many can blow smoke rings but I can blow smoke squares. Just ask and I will show you.”


           -The Wizard

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Cognitive Dissonance's picture

Individuals are oftentimes completely rational while groups are always insane. These two opposite ends of the same universe are not mutually exclusive, but in fact illustrate how completely distorted our worldview has become.

When our overall collective worldview is not based in reality we tend to make irrational decisions as a group while retaining our individual sanity. This in turns makes us extremely vulnerable to external manipulation and control.

Pladizow's picture

"You can ignore reality, but you cant ignore the consequences of ignoring reality." - Ayn Rand

GetZeeGold's picture



You can if you surround yourself with children.

Pladizow's picture

"Everything is fine today, that is our illusion." - Voltaire

SAT 800's picture

Wow; nice pair of quotations, Pladizow; I wasn't aware of either of them. Voltaire is certainly quotable; what a literary hammer and sword he was.

jonan's picture

for a second there, i thought this article was really about the science and physics of bubbles...

nofluer's picture

Asset bubbles are common, ordinary.

But bathtub bubbles are special!

Straw Dog's picture

Two books books on "group behaviour"

Extraordinary Popular Delusions and the Madness of Crowds
Charles Mackay

The Crowd
Gustav LeBon

Both make for informative reading.

SAT 800's picture

Yes; thank you; I was too lazy to get the title and author right; The Mackay book should be required reading; I read it for the first time when I was 13; and I firmly believe it influenced my interpretation of what the "growups" were doing from then on. It was about that time that I decided that the "grown-ups" were pretty screwed up and didn't really have a handle on things as they claimed. this basic idea has been very useful to me many times. There are a whole list of things I just let slide by and didn't really "participate" in. But that was alright. In many respects our whole social consensus, or "culture", (one gags to call it a culture), is a Popular Delusion.

SAT 800's picture

"---our worldview has become distorted--" I would say there's never been a time in history you can point to that didn't have serious and significant distortion in its worldview. Nor do I agree with the statement that "this" makes us vulnerable to external manipulation and control. Other factors in human genetics are primarily responsible. The fact that we're social mammals, we like to belong to tribes, (parties, cults), and we like to have "leaders". that's where the external manipulation and control come in; or in modern times; are deliberately utilized. And where the real mischief comes in; is when the leaders are going to "fix" something for us; frequently something that wasn't broken in the first place.

takeaction's picture

LOL  Blowing the one Bernanke is Blowing...well he can blow me.  You see what happened to the premium on Silver Eagles in the past couple days.  Wow. "And there gone."


mayhem_korner's picture



$4 - $5/oz premium...they will still fly off Apmex's shelves.  Wouldn't surprise me if they announced a stock out. 

cherry picker's picture

And the telepromper can blow square smoke rings out of his ears while the flame of deceipt rolls off his tongue.

The Citizen

El Oregonian's picture

Bernanke blew bubbles in the bathtub and up bubbled a nice giant turd. It was known as a Shibble...

caimen garou's picture

Please! nobody light a match! these shit bubbles are liable to blow up new york! bloomberg needs to ban bubbles!

El Oregonian's picture

It's ok. he's declared a 7 bubble limit...

I need more cowbell's picture

Damn straight don't light a match....

" Sometimes it is like living on Earth; the lack of recognition that hydrogen and oxygen surrounds you does not negate the fact that these two gases are present even though you cannot see them."

Mark, I believe you may have meant Nitrogen not hydrogen, unless you see a Hindenburg Omen and this was a Freudian slip.

Anusocracy's picture

He didn't actually refer to molecular hydrogen or oxygen. There is water vapor present.

SAT 800's picture

He meant Nitrogen, or something; but he was "educated" in North America; hence what comes out; ignorant rambling.

SAT 800's picture

"Stalin"; "gfreat leader" of Soviet Russia. good quote to keep in mind.

DeadFred's picture

If we are really surrounded by hydrogen and oxygen the popping bubble could be very explosive. Chemist's inside joke

mumbo.jumbo's picture

to understand this joke around here (and above 30) it's enough to be done with elementary school...

mayhem_korner's picture



The shills (Cox and Liesman) over at CNBC were debating yesterday when Ben is going to pull back the punch bowl.  They honestly believe that the printing would, could, and should stop if the BLS-manipulated UE number dropped to 6.5%.  They have no idea - none - as to what is happening, why, and how QE in its various forms is simply propping up stuff.

I've convinced myself that when the debt bubble pops and they are proven wrong, I will wish they were right.  Because it is going to be that bad and some people will not deserve the pain that will be thrust upon them for simply being naive.

Cognitive Dissonance's picture

"Because it is going to be that bad and some people will not deserve the pain that will be thrust upon them for simply being naive."

Being naive is a luxury no one can afford for long, but it is precisely the state of mind the elite controllers want their prey to be in when they are hunting.

At some point personal responsibility compels all to either wake up or suffer the consequences. Unfortunately for those who are awake and preparing, they must take into account that their greatest enemy will not be the banksters or the government.....but those who previously were living the life of naive luxury and now don't wish to pay the piper.

The tyranny of the majority will be brutal and the controllers are counting on that fact.

philosophers bone's picture

So, if I understand you correctly, you thought Nikki Minaj was a great choice for AI?

three chord sloth's picture

The saddest thing is, when the bubble pops they will NOT be proven wrong... in their own eyes. The neo-Keynesians and MMT guys have locked themselves in a non-falsifiable bubble -- no matter what happens, no matter how the collapse plays out -- it will NOT be their fault. It CAN'T be their fault as we could always have borrowed more, printed more, spent more... and zoomed on up the the sunny highground of eternal prosperity.

After the collapse, when the dust clears, the magic money guys and the central planners will still be standing... pointing their fingers at anyone and everyone else. And the shills and the desperate will believe every word of it.

new game's picture

life is just not fair. but somehow the majority get what darwin deems fair.

with humans, thats another story, but suffice to say the 100 year hydrocarbon/ food / 7billion mouths cheat-balance-story will slam to an ending that culminates in

the most brutal ending of all time; something no bankers will be able to manipulate...

death will be an escape.

Anusocracy's picture

The '100 year hydrocarbon/ food / 7billion mouths cheat-balance-story' is not the problem.

The problem is government interference creating such problems.

SAT 800's picture

Exactly. And the distinction is crucial; and it's completely lost on 99% of the people; including the "public intellectuals" and the educated classes. Private interference isn't too helpful either. Bill Gates wants to "save" 500,000 African children a year, or some such fantastic number, from Malaria. Where are they gonna live and collect their welfare food packages; in his driveway? Ruthlessness works alright on a planetary scale; also known as Darwinism; "let's help somebody"; so we'll feel more holy about ourselves; doesn't work so well.

SAT 800's picture

In this regard, the UN; the world government, or the worlds' conscience, is by far the worst offender.

SAT 800's picture

No, Life is not fair; thank God.

SAT 800's picture

Yeah, very true. The great leaders are never wrong; Stalin was never wrong; none of his five year plans were ever wrong; Mao was never wrong; Al Gore with his ridiculous Messianic Message about a human warmed planet, will never be wrong. None of these wing-nuts are ever wrong.

LongSoupLine's picture

bubbles are quiet, and sometimes hard to see.


With that, the ADHD lemming public has Cramer, X-Factor, HopeBama and too much 5-hour energy in their system...easily distracted by the fucking corporate thought-seek MSM assholes.


Fuck you Bernanke, crooked fucking shithead.

tooriskytoinvest's picture

British Prime Minister David Cameron: "The EU “will fail” in a doomsday meltdown and Britain will LEAVE unless its deep problems are tackled.

King_Julian's picture

The irony being that London is a major cesspool of dirty bubbles and rehypothication.

SAT 800's picture

The irony being that England's "economy" is dead in the water, flotsam, dead or dying; in the same condition as John Clease's Parrot; at this point carping at their fellow financially exhausted "magic socialists" on the other side of the Chunnel is useful for public distraction and morale; but "leave" ? What's that supposes to mean? Leave the planet? They're going to wish they could leave the planet; but I don't think that's going to be practical. Reality is a bitch and some really bad ass chickens are coming home to roost in jolly old whatnot; the consequences of 40 years of shiit-brain "decisions'.

Mrmojorisin515's picture

easy to find bubbles, just look for something that people think will make them money without work. Human herd mentality can make anything a bubble.  My first memory of a bubble was pogs when i was in 5th grade

SAT 800's picture

Yes. "Apple is going to $1,000"; the tree that's going to grow up to the sky is usually a good tip-off. The original book; madness and the delusions of crowds; or someought like that; is available in the library; it should be required reading; but of course, it isn't.

Floodmaster's picture

Credulity is the most important factor in valuation, just look at the Canadian housing bubble.

nofluer's picture

All the world's a stage...

From Shakespeare's "As You Like It"

AgLand's picture

Oh what a tangled web we weave,
When first we practice to deceive...

sbenard's picture

Blowing bubbles is Bernanke's specialty! Bubbles Bernanke!

alt.hedge's picture

Hey Bernanke, did you blow bubbles when you were a kid?

Bernanke: Well sure.

Well he's back in town and he's asking for you.

joego1's picture

Timmy, I keep adding capital cartridges we should be seeing some velocity soon, real soon. Ben, look here Krugman found some new economic instructions that come with the tool kit. It says here "Once capital cartridge is loaded strike primer"

Vegetius's picture

Anyone with eyes can see the shadows lengthening

SAT 800's picture

"Pay no attention to the man behind the curtain".