I know, the opening sentence is terrible. But perhaps appropriately so.

Crossposted at Booman Tribune as well.

When is the best time to put it at Daily Kos?

Minsky's theory is "most applicable to a closed economy". Some bubles might have to collapse by now already, but the process of globalization spreads markets and the pool of outsiders entering them. Hence, the bubbles may keep growing. The recent stock market "corrections" are good indications of this process: the Shanghai dip of 3 weeks ago was provoked by rumours that Chinese government may try to curb market speculations more seriously.

The global economy is a closed economy, by definition.

"It's the statue, man, The Statue."

Minsky seems to follow a long line of thinkers who find capitalism inherently unstable.  Of course, "it's just the normal business cycle", right?

Just for the fun of it, I googled "Veblen Minsky" together.

Title: A Veblenian View of Minsky's Financial Crisis Theory
Author(s): Patrick R. Kelso, Barry L. Duman
Journal: International Journal of Social Economics
Year: 1992 Volume: 19 Number: 10
....

Abstract: Compares and contrasts the views of Hyman P. Minsky and Thorstein Veblen concerning the systematic development of financial crises in capitalistic economies. Advances the argument that Minsky and Veblen have both successfully met the challenge of providing a reasonable explanation for the speculative mania and related excesses critical to any theory of cyclical fluctuations. They agree that upturns tend to euphoria and ultimately, over-capitalization and subsequent economic decline. Their rationales differ. Veblen stresses the effects of rising prices on collateral values and argues that the cumulative effect is over valued assets. Minsky seems to emphasize the ever-growing fragility of financial structures. In the view of the authors, this article places Veblen′s contributions in a contemporary setting and ties Minsky more closely to the institutionalists.

Echoes of Veblen's theory of business enterprise in the later development of macroeconomics: Fisher's debt-deflation theory of great depressions and the financial instability theories of Minsky and Tobin

Authors: Robert W. Dimand

Abstract: Irving Fisher's debt-deflation theory of great depressions, first published in 1932 and 1933, was invoked by Hyman Minsky and James Tobin as a crucial precursor of their theories of macroeconomic financial instability. This paper argues that Wesley Mitchell was right to perceive a close intellectual affinity between Fisher's debt-deflation theory and Thorstein Veblen's Theory of Business Enterprise (1904), and that this affinity also exists between Veblen (1904) and the analyses of Minsky and Tobin.

Minsky's Analysis of Financial Capitalism

Authors: Dimitri B. Papadimitriou, L. Randall Wray

Abstract: In this paper, the authors discuss Minsky's analysis of the evolution of one variety of capitalism-financial capitalism-which developed at the end of the nineteenth century and was the dominant form of capitalism in the developed countries after World War II. Minsky's approach, like those of Schumpeter and Veblen, emphasized the importance of market power in this stage of capitalism. According to Minksy, modern capitalism requires expensive and long-lived capital assets, which, in turn, necessitate financing of positions in these assets as well as market power in order to gain access to financial markets. It is the relation between finance and investment that creates instability in the modern capitalist economy. Financial capitalism emerged from World War II with an array of new institutions that made it stronger than ever before. As the economy evolved, it moved from this more successful form of financial capitalism to the fragile form of capitalism that exists today.

[People] have conditions today that resemble those of nearly a century ago that evoked Thorstein Veblen's (1904) observation that capitalism encouraged the pursuit of pecuniary gain at the expense of social provisioning. Not only do corporate managers attempt to please security holders by encouraging regulators to relax environmental standards and by increasing their market power, their ruthless expense cutting has, as described by Minsky and Charles Whalen (1996-97), increased economic insecurity and inequality for most working families.

Can I get you to cross-post this?  It makes a wonderful counterpoint with Techno's Veblen piece, which was also cross-posted.

The Crolian Progressive: as great an adventure as ever I heard of...

It seems that the most widespread technical term for the (yet "mysterious") processes that preclude financial crisises is overheating. For example, there is much concern at the moment about overheating in the Baltic markets. Here is a global news report:

Is Latvia's economy following in Iceland's overheated footsteps?

WARSAW: Latvia is giving some emerging market investors a sense of déjà vu.

A year ago the economy of tiny Iceland went into a skid. It was a wake-up call for traders who chased high yields around the globe with little regard to economic risks.

Now, another small, red-hot economy in Europe's cold north is in the spotlight, and markets are taking a hard look at its peers for signs of trouble brewing elsewhere.

The verdict is that many show similar worrying symptoms -- an unsustainable pace of growth fueled by booming consumption and credit, high foreign debt, surging wages, current account deficits topping 10 percent of gross domestic product and low currency reserves.

[Danske Bank] analyzed 11 "vulnerability indicators" for the 10 European Union members from Eastern Europe, putting Latvia and its neighbors Estonia and Lithuania, as well as Romania and Bulgaria, in the red danger zone.

The booming Slovak economy got a yellow warning light.

The process is admittedly enigmatic, but they have vulnerability indicators. Just do a Google search on "overheating vulnerability indicators", and you will get many PDF articles returned on the stuff.

How much common or different is between these three terms?

1. Overheating
   
2. Financial bubble
   
3. Minsky's Ponzi financing

Is "overheating" just a less scary euphemism for the same thing? Are we having a global financial warming?!

Here are a couple of links from IMF:
The Challenges of Predicting Economic Crises
The Asian Crisis: Causes and Cures

Even with most official terminology, prediction of financial crises looks very much like fortune telling, as evidenced by this abstract:

This paper examines the view that the recent Indonesian crisis was largely unforeseen. The broadest macroeconomic indicators were of virtually no help in presaging the crisis; neither were high-frequency financial indicators. But warnings were there, just below the surface, in some of the macro indicators and in certain structural weaknesses that were long recognised as threats to financial stability. That said, none of these warnings suggested crisis of the magnitude that eventually occurred. The Indonesian experience indicates that macroeconomic stability should never be taken for granted. Signs of vulnerability to financial instability include: the degree of reliance on gross private capital inflows (taking into account maturities and the implications for rollovers); the extent of unhedged foreign exchange positions; and certain indirect indicators, such as policy slippages and key personnel changes. Finally, in a world of volatile capital flows, crisis will tend to occur before standard economic data suggest that crisis is imminent.

Hmmm... Reliance on gross capital inflows...