Peter Thiel: If you want to frame it very precisely, why have we had 25 or 30 years of one bubble of extraordinary proportions after another, starting with Japan in the late 1980s? You had South Asia in the mid ‘90s. You had the tech boom in the late ‘90s, and, of course, three incredible overlapping bubbles, housing which peaked in Q2 of ’06, finance and financial leverage that peaked in Q2 of ’07, and then, arguably, emerging markets which I believe is an equally serious bubble that basically came to an end in late 2007 and early 2008. One of the questions we should ask is why have there been so many bubbles? And I think the events of the last two months perhaps will lessen the appeal of the conventional answer to this, which for the last 20 years has been that one cannot talk about bubbles, that it’s not coherent to talk about them. To paraphrase Alan Greenspan, the bigger a bubble it is, the harder it is to see, so there may be lots of little bubbles but we can never see a big bubble, which is of course, spatially, a very odd metaphor, since one would think that the bigger something is, the easier it is to see. I think the question of the systematic distortions is once again going to become a real question in a way that it has not been for a very long time.
Recorded: October 23, 2008