Monday, August 6, 2007

Blowing bubbles

Just discovered an interesting Freakonomics post about The Benefits of a Bubble, Even When Burst, complimenting Daniel Gross, author of Pop! Why Bubbles are Great for the Economy. Quick excerpt:

These bubbles are right; these bubbles work. Thanks to the American penchant for creative destruction and the U.S. bankruptcy system, investors — and the economy at large — tend to get over bubbles quickly. … The stuff built during infrastructure bubbles — housing and telegraph wire, fiber-optic cable and railroads — doesn’t get plowed under when its owners go bankrupt. It gets reused — and quickly — by entrepreneurs with new business plans, lower cost bases, and better capital structures. And when new services and businesses are rolled out over the new infrastructure, entrepreneurs can tap into the legions of users who were coaxed into the market during the bubble. This dynamic is precisely what has made Google the “it” company of this decade …
Reminds me a little of last week's 10x commentary and Marc Andreessen's thoughts. Good stuff.

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