Thank you for dropping in on this blog. The Social Networking Bubble is my second blog on WordPress. My primary blog, Contemplating the Human Direction, is more broad and philosophical in nature. Although The Social Networking Bubble is focused on what I believe to be the next major stock market fraud and scam, there will be some philosophical and broad posts that tie this event to broader topics.
I believe the social networking sector is yet another scam, Ponzi scheme, rip off, or fraud, which is being performed before us by the same actors responsible for the Dot Com bomb and the housing derivative debacle. These crooks or shysters include venture capital firms, founders and high-level management of the companies involved, investment bankers or Wall Street, and some powerful forces in the media.
My purpose is to track the evolution of the Social Networking sector as more companies go public this year and to provide insight into the scam. I will source and pull in articles written by quality authors that make good arguments regardless of their pro or con position on the Social Networking sector. But, I will also call out or criticize those that appear to be printing mere propaganda to exploit the public to further fuel the fraud.
I could end up being totally wrong and that would be a pleasant and humorous outcome, but if I am right we will see a few crooks get excessively rich at the expense of the public. And I will highlight who those individuals and entities are by tracking their stock positions and rhetoric before and after the bubble bursts — if indeed a bubble forms and pops.
The Social Networking Bubble 
I will be watching. We live in the era of bubbles for sure. Some others to examine may be US Bond prices with yields near zero to 2 percent, gold, and farmland in the Midwest that went up 25% last year. What about Apple stock too?
Hi Randel. Yes, gold is a good one to watch. Apple and Google very high prices but at least they offer something sexy or useful at their core as opposed to these social network/media companies that either simply provide a means of communication (which is a commodity long-term) or some service than can be easily copied. Now farmland is something I can understand as to why the price might be going up. There are 7 billion people to feed and only so much fertile land with the right weather conditions.
By the way I use the same theme at http://www.pilogic.net
If you have the WordPress CSS enabled upgrade, I can send the CSS code that will turn your subhead from italic to normal, or different color, or larger font. Just let me know. I found the default a bit hard to read.
This will be an intriguing project to follow. I look forward to it. As you know, I recently went on a Golf trip to Nevada. Some of the guys I played with were big on gambling at night after the rounds. We had dinner at a Steakhouse in a Casino one night–after dinner this one guy asked me if I wanted to go into the Casino with him. He had this bizarre “anything can happen I might win the Lotto” attitude. So off we went to some slot machines. He started pumping in money and pushing buttons, got lucky, and doubled his input. Smugly he turned to me and said–“I just got back the money I spent on that dinner.” It struck me immediately that this somehow encapsulated the whole Wall Street mentality–that one can basically “make money” and acquire goods by doing and contributing nothing, by pushing buttons and pulling levers and manipulating a kind of virtual world of numbers that is entirely severed from material reality. Disgusted, I removed myself from the situation saying that I needed to turn in due to the early tee time the next morning. When I met him on the tee the next morning I asked him how he fared the rest of the evening–as is to be expected, he ended up losing everything he had “won” and more.
As I was threading my way through an entire building full of people engaged in the same behavior on my way to bed, another thing struck me. This was what I might be inclined to describe as a shift at some point in the idea of what the “American Dream” is about. I think there was a point when the American Dream consisted of the idea that if one worked hard, put in a honest day’s work, contributed something of value and even of innovative and creative substance, then one would ultimately be rewarded and might–even might–become wealthy (and deservedly so) as a result. Then, at some point, that idea changed, and it became about the idea that one could “get rich” by doing nothing and contributing nothing at all, and that this was “right”. It suddenly became about “get rich quick schemes”. It became about “outsmarting” and hoodwinking and using one’s fellow beings, and believing that one was “superior” because one could do so. I can’t specifically point out the exact place at which this shift took place, but I would definitely call it the “wrong turn” in the American Dream.
It seems we cannot extract ourselves from this wrong turn. I know your views on “inflation”, and I agree with the mechanics you expose (i.e. printing money, et cetera). Inflation for me, however, is about inflated values and, as the converse underbelly, deflated values–how it comes to be that “Lady Gaga” is “worth” billions of dollars, but the teacher who educates one’s children is “worth(less)” not even a hundred thousand dollars. I don’t see how an economy, or a social structure period, can survive or be healthy under such grotesque disproportions and misrepresentations of actual value. The “Rock Star” mentality is the ultimate expression of that “wrong turn” in the American Dream. It is the notion that through some exaggerated gimmickry–not hard, sustained, developed, honest work–one can and should become “rich”; and that this is the “meaning of Life” and “what America is all about”. Basically, America is the place where one can do nothing at all, and “live like a King” (or a “Rock Star”). Facebook, Twitter, Yelp, et al, are all perfect examples of this mentality. And the photos you post of the individuals involved are perfect–one look at these people, and anyone with eyes can see what it is they are really up to. They are “pushing buttons and pulling levers” in the Casino of Corrupt Capitalism–and they are out to “hit the jackpot” . . . at everyone’s expense. The same old game, played in the same old way, but differently. And as your statements imply, the end results will be the same, and we will all pay the price . . . again.
One wonders when, if ever, this cycle will end. But that leads back to your other Blog . . . 🙂
Wow…we all know who the writer is in the family! If I give you the basic figures and background will you write the posts? You hit the nail on the head. The only way to do your post justice is to take one paragraph at a time.
In your first paragraph you illustrated an individual’s perception of what can be gained by the casino operation. He can put some money in and make enough to cover his expenses for a dinner he just enjoyed. His thought process then evolves into perhaps I can “invest” some more money to pay for my round of golf…and then my hotel costs….and then the money I spent on the flight. But here is the problem. The casino holds the odds. And just like the casino, Wall-Street insiders hold the odds because of the structure.
Wall-Street has evolved into an institution that controls the game from IPO, to government created regulations and laws (or lack thereof) via lobbyists, to huge players that have immense wealth to move the market up or down and take buy or short positions, to Federal Reserve support offering money to banks (Investment Banks and Banks now linked) at almost 0% interest, to less banks and investment banks enabling collusion and monopoly like practices, to control of the SEC, to control of the media that receives their income from advertising paid for by huge corporations and financial institutions. The public gamblers that put money in the market via investments or 401K’s are merely the suckers sitting in front of the slot machines or a dealer. Wall-street uses their chips simply to make a few insiders more money.
Now, in your second paragraph you bring up the key observation that at some point in time the idea of making more wealth for doing nothing is the “smart” way to achieve the end goal — to become wealthy. This is only possible in the Human world given debt/credit, investments, and money that is supposed to equate to “value created”. As you know, these instruments and assumptions are loaded with the potential for abuse. But I don’t want to go off to the philosophical realm as I would be repeating arguments I already made on the other blog. Instead, I have to point the finger at Ronald Reagan and the government leaders that perpetuated his belief in deregulation of business. The moment we bought off on the idea that the free market was the correct philosophy for the citizens of American is the moment that the majority of the citizens became vulnerable to the instruments and assumptions I just mentioned. Combine this deregulation, instruments, false assumptions of money equating to value created, with a declining education system and you have set the table for the casino to rock and roll. Suddenly, the majority of people were viewed as pawns, sheep, cows, and the hawks could move the pieces, shave the hair, and milk the teats to their hearts desire. The key to this feast was credit and debt, which is what has fueled the new American economy for decades. And the principles of a free unregulated market required a safety net for the losers. And since the free market cannot have higher taxes to fund the safety net, enter government debt. We can have it all…winner takes all and losers cared for by the government. Wrong. We are now playing a game of kick the can to some future generation that will be looking in the can for scraps of food.
Your final paragraph mirrors my original post on the other blog and they are ideas I formed from your thoughts as well as my observations. Twitter and Facebook are the prime poster children for this concept. Justin Bieber “Tweets” that his restaurant is great and the sheep flock to the doors. Wall-street, big business, Hollywood, the media, the politicians, all use “marketing experts” to devise schemes to move the sheep to profit from the massive movements in this direction or that. If we can move this number of people to perform this act, we can make billions. And this my friend underscores the lack of intelligence and critical thinking skills of our populace. One needs to observe out education systems. Do our education systems educate our young people to think critically and logically for themselves? Do we have an intelligent and enlightened public? Do we have a culture that is driven towards worthy goals? No. We educate our young to prepare for the corrupted American Dream that centers on wealth accumulation. And credit/debt can make them feel like they have attained this goal. It is a grand Ponzi scheme performed by those that run the casino and they have penetrated every important function of the country. The casino executives are cancer and the country is terminal.
Your comments on this subject are far more in depth and developed than mine. I particularly like how you tie in the connection between the absence of true education and the exploitation of the resultant ignorant masses–this is key to how the whole scheme operates, and something that few will point out. There is a reason why so little is invested in educating the people, and why so much is invested in keeping them stupid and sedated. And those who profit from this scenario never bat an eye or ask themselves what the real costs of their “gains” are, what is being sacrificed to their financial fantasy world. They sell themselves on the illusion that they are somehow entitled to this fantasy at whatever cost, no matter how many millions of human beings are destroyed for the sake of their precious, bloated selves and the insulated little fantasy island they inhabit.
Well stated DragonStrand.
I think we need to delve more into when America made that turn to casinoism. My best guess is when New Jersey allowed casinos in Atlantic City in the late 1970s. That may be the marker. Until then it was hidden with bookies, and only legal in Vegas. But the NJ action legitimized the casino to the point where every state has them. Right after NJ we got Reagan and tax cuts that pay for themselves some how, and which never did. And that was the begiining of the cable tv era and pc. Folks could trade on their PC and watch CNBC. So I say 1978 to 1988 was the wicked turning point.
Well, Randel, both you and TC reference the Reagan era in connection with that wrong turn. Hard to argue with . . .
Once again I have posted an acknowledgement, acceptance and appreciation of a fresh bunch of Awards that the “Ben Naga” site has been offered. To see details, go to http://bennaga.wordpress.com/2012/06/01/a-quartet-and-an-oxymoron/.
The reason I am informing you of this is that your site is included in the list of my nominees to continue the chain(s). My post contains details of what you need to do if you wish to participate.
I recognise that several folk may wish to say “Thanks, but no thanks”. If you are among them, let me repeat a slightly rephrased version of what I wrote there: –
“I know several people featured here don’t like to participate in the offering and receiving of awards. No blame; indeed I may join you one day. Meantime, if an unwanted invitation arrives at your site please ignore it, beyond knowing that it was sent to demonstrate the esteem in which I hold you and your site.”