A principle that, according to U.S. Federal Reserve Board chairman Alan Greenspan, defined much of the world economy in the 1980s and 1990s.

On Dec. 5, 1996, Greenspan gave a speech in Washington, D.C. purportedly about Japan, in which he asked: "How do we know when irrational exuberance has unduly inflated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the last decade?"

What it means

High finance is a gamble, mostly based on the idea that you, the investor, have a better idea than the other guy how a given investment is going to pay off in the next little while.

If a lot of people think an investment is going to pay off big, they buy into it and drive up the price for future investors. If you buy in, it means you think it's going to do even better than its current price indicates other people think it will. (You can also bet against an investment by selling short, but the concept there tends to make otherwise intelligent people's minds break, so we won't go into that.)

One way of judging a stock, in particular, is by its "price-earnings ratio," which compares the price of the stock to how much money the company in question is actually making right now. The higher the ratio, the more spectacular investors expect its growth to get.

OK. If investors get irrationally exuberant, that means they're wildly optimistic about how their investments are going to do. They buy stocks (and other investments) without regard for evidence about their past performance or how well they're likely to perform in the future. They buy on faith. Stock prices soar, reinforcing the idea that everything's going just great and is going to get even better.

If things get really out of control, they start borrowing money to invest it. They sink money into just about anything with an "Inc." in its name. They make really, really bad investments.

Eventually, investors realize that the companies they've bought into aren't actually pulling off the miracles they expected. Prices fall. Investors pull their money out. Their investments lose value on paper, so investors feel like they have less money, so they spend less. The "real" economy, the kind that's based on actually making stuff and selling it and using it up and buying more, starts to shrink. Companies go bankrupt. People lose their jobs. If they invested irrationally, they can't pay their debts and go personally bankrupt.

What Greenspan was warning about

Although the long boom had been going on since the '80s (with a hiccup in the early 1990s that didn't last very long), in 1996 the high-tech hyperboom was really getting going. The boom was based in the United States, but extended into most of the developed world. It was based on smoke: price-earnings ratios were through the roof, with companies with no products pulling off billion-dollar initial public offerings, because investors believed. Greenspan saw that they were believing in mirages and tried to warn people, subtly, without panicking them.

It didn't work.

NOTICE: I highly recommend that you view Irrational Exuberance before reading my commentary on it. “Everybody say YATTA!”

http://www.verylowsodium.com/fanimutation/exuberance.php

Irrational Exuberance, the flash movie by Greg Falcon, if you watch it closely, contains a whole lot more than funny wackiness. (Yes. It is wacky. It is funny. I laughed my ass off. I cried.) It also contains some serious commentary about consumer culture, presented in a humorous way, of course.

The majority of the work (it is a work. The guy spent 30 hours on it, for cryin’ out loud.) is bordered by a parody of the The Price is Right screen border, those twinkling, dazzling lights. The Price is Right is, at the same time, a game show and a really long commercial for myriad products. A perfect frame for a wild, sarcastic criticism of everything a sane person should be outraged about in a sea of ever-growing, corporation-driven nonsense.

The video opens with a direct parody of The Price is Right mimicking the way the camera pans around the audience at the beginning of the show, except nearly all the chairs are as empty as the head of your average, brainless consumer. Flashing words, “SPEND, BUY, PURCHASE, COLLECT, CONSUME” fly out at the viewer. The words, “PRIZES BRING TRUE HAPPINESS” fill the screen. This is what marketers want you to believe and do, although they never say it so directly since a concept tends to stick more if it’s stealthily introduced. This is what Falcon is pointing out, as he makes fun of the silly Japanese music. Then we see “SPEND! SPEND! SPEND!”

The video then digs right in, starting with Apple Computer and a low, but oh so true blow at Mac junkies. When we get to the parody clothing companies, “Banana Joe” and “Banana Public Inc.” The movie starts to throw out some high-impact sarcasm.

Tastefully designed clothes for the discriminating asshole.

FUN FACT: The clothes you wear determine your value as a human being.

The fact that these words are written next to a singing banana, with nutty Japanese pop music in the background enhances the power behind those words. With a smile the movie sends out a sweet fuck you to the pervasive, consumer culture conformity that’s stifling anyone with at least half the brain that it takes to notice what’s going on around us. It’s not true that your clothes determine your worth as a human being… or is it? If it’s true in the mind of the majority of others you encounter, that makes it at least a sad half-truth. It’s sometimes hard to keep the skewed perception of others from screwing up your own self-image.

Irrational Exuberance shows a number of products attacking the screen as they sometimes do in commercials, surrounded by the flashing border. The emphasis on the products, with “Yatta”, replacing the original names, simultaneously comments on the importance of products in consumer culture and destroys those preconceptions at the same time by presenting well-known brand names in a different context, depriving them of the power and integrity their proponents have instilled in our minds.

The two Dave Thomases have a verbal duel as their jobs are compared at the bottom. At the bottom of the screen we see, “Remember Worthington’s Law: More money = Better than”. The picture of the richer Dave Thomas eliminates the other one, and the words, “WINNER!” flash on the screen below him, an angry cry at the unfairness of a culture that allows the wealthy minority to step all over the little people, and get away with it 95% of the time.

When the words, “I’ve got a psycho bear!” fill the screen (because that’s what it sounds like the singer is saying) the movie turns into a mock advertisement, offering to sell you the “plush and ready” (ready? A reference to plushophilia?) bear for 19.95, plus shipping and handling, of course.

A picture of Dr. Ruth pops unto the screen with the text, “Embarassingly small? Your self-confidence will improve if you buy an oversized motor vehicle to make up for your undersized penis.” With “brought to you by the Yatta Motor Company" in very small letters on the bottom right corner. The next YATTA logo to attack the screen looks like the Ford one.

The emaciated Ally McBeal shows up. “You look up to eating one calorie? 73 pounds of comedy tonight on FOX.”

The name Irrational Exuberance fits this movie well. Although, he makes direct references to Alan Greenspan in the movie, I believe Falcon is putting the phrase to a new use a very apt one. The phrase can easily be applied to the overzealous, charged way in which advertisers and corporations try to foist their products onto consumers, without a care for how they may damage the collective mind of our culture, such as intentionally destroying individual self-esteem in the interest of selling a product. Although the humor of this piece alone gives it priceless merit, the scathing sarcasm, and the blatant disregard for consumer culture icons makes it an effective, intelligent, and powerful commentary on serious contemporary issues.



My thanks to Greg Falcon for the creation of this excellent flash movie, and all the enjoyment it afforded me.

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