Bubble, bubble, toil and trouble

The ever insightful US economist Nouriel Roubini reminds us of the sadly predictable cycle of euphoria and despair (first described by Hyman Minsky) with a simple set of stages that starts with investors meeting their investments out of cashflow, which then moves on to speculative borrowers, and finally crashes with Ponzi borrowers who can't service either the interest or the principal. This multi-stage evolution mimics many economic/product cycles that start with a good idea, then move on to a more risky version that usually involves some form of charged up return using debt. Then there...