
The Everything Bubble [infographic] - wjSgoWPm5bWAhXB
http://ggc-mauldin-images.s3.amazonaws.com/uploads/editorial/170919_Bubble_infographic_newfinal.png
======
twobyfour
The reason? Too much capital, not enough growth to invest in because demand
isn't growing.

Demand isn't growing because 60% of the population is barely scraping by.

How do you increase demand? Roll back the tax cuts to the wealthy who have
nowhere to put that money except into speculation and bubbles. Redistribute it
back to the working class in the form of tax cuts, credits, higher minimum
wage, and social programs. They will immediately put it to work by spending on
things they need to get by. Demand increases.

That money trickles back up to the wealthy who receive the profits from that
spending, and invest it back into the industries where demand is actually
growing.

Voila, more growth, fewer bubbbles.

~~~
saint_fiasco
Among the things that people can't afford and really need, the most common
ones are healthcare and housing.

The problem with giving people more money to stimulate demand for those things
is that it only solves half of the problem. Healthcare is limited by the
supply of doctors so no matter how much government subsidizes it, the amount
of people who can be seen by the constant number of doctors will be the same.
In practice, this means the price will increase every time you try to give
people more money for healthcare.

Housing is similar in that even if you give people money for new houses,
everyone wants their house to be in a nice location and there are only so many
houses that can fit in a constant amount of desirable real estate.

Without reforms to medical school and medical residency programs, healthcare
might never be affordable. Without reforms to zoning laws, housing might never
be affordable.

Without at least allowing for an increase to the supply of nice things,
increasing the demand of nice things won't be very helpful.

~~~
Nokinside
US spends significantly more money per capita to healthcare than other
countries. US healthcare problem has nothing to do with lack of resources
(human or financial resources).

US could save money in healthcare while improving it by reorganizing the
healthcare. Even wealthy people get worse treatment than they could because
the way incentives work.
[https://www.reddit.com/r/medicine/comments/6addvo/the_wealth...](https://www.reddit.com/r/medicine/comments/6addvo/the_wealthy_patient_dilemma/)

~~~
WhoIsSatoshi
healthcare sucks a lot more out of the customer in the US than elsewhere in
the world, so the fact that the US spends more is combined with healthcare
patients spending more money per capita in the US. Having experienced both, I
can tell you that I am terrified of having a motorcycle accident in the US. Or
breaking a leg.

~~~
Nokinside
There is this weirdly strict moral aspect of what someone 'deserves' in the
realms of public policy. In private finances, deserving is not an issue at
all.

If pure cold economic calculation would be applied to public policy, it would
become clear that healthcare is not just personal issue, good healthcare
provides positive externalizes for all. Your neighbors good teeth are not
completely unlike investing in a bridge or other public infrastructure.

If someone stays healthy and can work full time 5 years more because he had
free healthcare, he pays 5 years more taxes, generates more profits fro
employer, and consumes less medical services during his lifetime.

~~~
saint_fiasco
To be completely fair, we don't actually know that health care pays for
itself. The RAND Health Insurance experiment and the Oregon Medicaid
experiment found little improvement in health outcomes and a significant
increase in medical spending when insurance was expanded.

Those studies are hard to make because it's hard to measure medical outcomes.
For example, for the Oregon experiment they couldn't look into differences in
death rates because death rates were too low even among uninsured people. They
had to look at cholesterol, blood sugar and other proxies for health outcomes,
instead of the outcomes themselves.

This suggests that at some point further spending in health has diminishing
returns and we don't actually know if we reached that point yet.

[https://en.wikipedia.org/wiki/Oregon_Medicaid_health_experim...](https://en.wikipedia.org/wiki/Oregon_Medicaid_health_experiment)

[https://en.wikipedia.org/wiki/RAND_Health_Insurance_Experime...](https://en.wikipedia.org/wiki/RAND_Health_Insurance_Experiment)

------
firebird84
Meh to almost everything here except maybe housing.

Corporate debt is high because DEBT IS STILL CHEAP (fed is changing that). Of
course they're going to borrow fuckloads of money, it's practically free by
some measures!

The indexing "bubble" is actually a correction for a lack of value from active
funds. I don't expect the correction to be corrected.

The cryptocurrency bubble is tiny. 65 billion? That's a rounding error.

5 Stocks accounting for most of growth is troublesome when corrected, but
still not catastrophic. If we lose ALL of that growth then we go back to 2016
levels? Ok.

~~~
otakucode
The housing bit interests me but I can't take it seriously when they're
pointing at the single most irrationally priced area in the nation to make the
overall situation look similar. Yes, if you want to live in SF you can expect
to pay utterly idiotic amounts. But that's pretty much isolated to SF.

~~~
mabbo
The value of my condo has gone up by over 60% in two years. Canada, Toronto
especially, is in for some rough times in this housing bubble.

The real issue is that the big cities like Toronto are the economic centers of
the region. When they pop, everything else will be in trouble too.

~~~
Nokinside
The value of your condo going up gives very limited information if there is
bubble or not.

If you want to figure out what the correct price level is, find statistics
that compares price of housing to median income in your area over time. That's
the single most important metric determining the correct property valuations.

Prices can go up as long as incomes go up. Major cities have higher
productivity and prices can go up until they start to eat too much from the
income. In declining areas prices can go down and houses are still overvalued.

~~~
mabbo
Wages did not go up by 60% in two years. They barely went up at all.

~~~
Nokinside
Of course they didn't. But that's not the issue.

What is the price/income ratio now compared to long term average? How much of
the 60% can be explained with prices rebounding to long term normal.

ps. I'm almost sure that house prices in Toronto are exceptionally high
compared to income. I'm not arguing against that. I'm arguing against people
using wrong numbers to measure things. Find relevant numbers and use them.

[https://www.numbeo.com/property-
investment/rankings.jsp](https://www.numbeo.com/property-
investment/rankings.jsp)

------
agentultra
This infographic is about as useful as that "legendary investor" who claims
the world is going to end in chaos every year.

What indicators are predicting a "pop" or that this is a "bubble?" What
exactly are they predicting will happen?

Just seems like a lot of numbers and infographic fear mongering otherwise.

~~~
BatFastard
And a lot of cherry picking of data.

------
karllager
Fun fact: Capitalism depends on crises - they are not the exception, they are
the rule. People forget that and treat it as something that happens, like a
natural catastrophe. This is unfortunate, because this is a purely man-made
thing, but still, even the high end media is kind of left in the dark about
this central theme (let alone economists, who sometimes get lost in the
details of their specialisation).

Now the real analytic question to ponder is: where exactly does this
destructive element of capitalism originates from (left as an exercise for the
reader).

~~~
mercer
Well I'm glad you cleared all this up for us!

~~~
karllager
I'm sorry for being short on content, but I wish, more people would really go
deeper into theory and open their eyes on the things around them and realize,
that capitalism is an extremely aggressive beast that has sucked up
everything, that is not itself.

Three days ago, I wondered (time and again) about all the fuzz about this site
called facebook - within ten years it took something, that was not really
exploited (social relations) and made it a first class business. Startup hubs
are still dreaming of the next social startup - meaning exploiting special
kind of relations (neighbours, potential partners, coworkers, what have you).

And we won't stop here. Think your dreams belong to you? Maybe today, but I
can see large enterprises exploiting your very being for profit, soon. You
find that disturbing? But why?

~~~
kristiandupont
There are several issues to be aware of with the way society and technology is
evolving for sure, but when you just shout "wake up sheeple!" and offer
nothing but hand waving, you are not contributing much in that regard.

~~~
karllager
Yes, true. But I am not a salesman to sell you a solution.

All I ask for is to be more conscious about these, sometimes subtle, sometimes
less so - things.

If it helps you, here's a simple framework of mine to develop some kind of
directional feeling for technology: If it helps to lessen the power of a
single entity it's perfect, if it enables you to do new things it's good,
otherwise, it might only be a distraction.

Linux and free software is perfect, it is free and a huge enabler for all
kinds of things - even for businesses. Bittorrent is good, because it is a
huge enabler and took power off content distributors. Raspberry Pi is perfect,
because it puts computing into a lot of hands. AWS is only good, because it is
an enabler, but it actually feeds a single entity - so that's bad.
Cryptocurrencies in theory are perfect, since they take power off single large
entities - but they are not robust yet. Solar power is perfect, because it can
a human make independent of a single large entity.

So, it is somewhat simple: There are things that liberate you - you as a
person and let's you _voluntarily_ choose to cooperate and there are things
that lock you in - facebooks walled garden, adtech in general, where
information asymmetry only grows - and many other things, that only make sense
in the capitalist framework (in however shiny colors you want to paint its
advantages).

Maybe that's a start?

~~~
bloby
Very sane reply. It is greed which is the source. To keep it simple.

------
molestrangler
One issue:

Big business have got drunk on low interest rates and corp. debt so cheap,
making it very good for big business but negative for the majority of the
worlds population.

So they like to see interest rates to remain very low, and have leverage with
governments saying their business it at serious risk if interest rates were to
return to 'more sensible levels'. Which is kinda true!

Also:

People with sufficient savings or disposable income have choose one of the few
obvious/easy investment options and buy into property, either upgrading or
buying more properties.

The wealthy who have access to good financial tools have also invested into
property, both commercial and residential. Hence so many empty properties in
London, that people complain about.

Driving up the price, so further squeezing the population who are not able to
follow.

Hence the rise of Trump and others, promising to make America great again, cuz
so many voters are being squeezed.

Low interest rates is like a drug addiction, but the addicts (big business)
are not the ones suffering.

Hence the rise of popularism and the likes of Trump into powerful positions,
but he is sitting on the side for businesses and not the person. He
incorrectly believes recovery can only be found with big business, but I
believe this just perpetuates the addiction.

Interest rates need to rise (ouch!) and companies must be forced to pay the
taxes they owe. Also giving individuals with big investments (risks) into
property to exit gracefully without the property market crashing, which hurts
everyone.

------
lukewrites
Why is more investors indexing a “bubble”? Is it just because of the growth
line?

While there surely must be some crappy indexes out there, one could argue that
more indexing by (individual) investors is a sign of a more people
understanding the difficulty of stock picking and harsh effects of management
expenses on investment returns.

I’m very happy indexing in my retirement portfolios, but am curious as to what
the arguments against it are. The few I’ve read have seemed to be active fund
managers scared at the prospect of losing their livelihood to a better
product.

~~~
AnimalMuppet
The term "bubble" gets thrown around a lot, sometimes incorrectly. It doesn't
just mean that money is flowing into an asset class.

Let's take an S&P 500 index fund as an example. Vanguard or whoever does some
marketing, and people decide that index funds are a good way to invest, and
money flows into index funds. That's not a bubble.

The economy starts doing well, and stocks go up, and a bunch more people
decide that they want to be in the stock market, and so they put their money
into an S&P 500 index fund, not because they really want to be in the stock
market, but because it's what's going up. That's still not a bubble.

Vanguard gets a bunch of money for its S&P 500 index fund, which it has to use
to buy stock in the companies that compose the S&P 500. As a result of all the
new money coming in, the stock in the S&P 500 companies go up - more than the
fundamentals of their business indicate, more than stock in, say, the Russell
2000 goes up. Because the S&P 500 has gone up more, _more_ money pours in to
S&P 500 index funds. Now the S&P 500 is going up because of all the money
being invested in it, and all the money is being invested in it because it's
going up. _That 's_ a bubble - a positive feedback loop that has become
detached from the fundamentals of the assets involved.

That's a bubble, but it doesn't really get bad until borrowed money enters the
picture. If people are borrowing money to invest in S&P 500 index funds,
because the funds are going up faster than the interest cost on the borrowed
money, now it's a bubble that can cause serious damage when it pops, because
it may damage the lender as well as the borrower.

So, for example, people were talking about bonds being in a bubble because
bond prices were so high (extremely high by historical standards). That was a
flight to safety, not a bubble. People were not buying bonds because they
expected bond prices to keep rising, they were buying bonds because they
expected other prices to keep falling.

------
0xcde4c3db
I have no great difficulty believing we're due for another pop, but the only
one of these that I find remotely alarming is the auto loan one. The rest seem
to be one of: utterly irrelevant (number of cryptocurrencies in circulation?),
lacking any frame of reference, or readily attributable to the economy still
not being really recovered from the 2008 crisis.

~~~
protonfish
I'm not concerned. Auto loans are inherently secured - they just repo your
car. And unlike houses, auto prices are not drastically over valued.

~~~
EvilGrin
So when they repo lots of cars due to a downturn the second hand market will
crash. Which means the book value for all cars goes down the toilet.

~~~
sigstoat
> Which means the book value for all cars goes down the toilet.

which isn't that big a deal, because average people aren't buying their cars
as investments (or repeatedly refinancing them). your car still gets you to
work just fine even if it is worth less than you owe. and that state of
affairs would resolve itself in <5 years, even if you just bought it.

> So when they repo lots of cars due to a downturn the second hand market will
> crash.

that would only happen if folks could no longer service the debt on their
vehicles. the amount of auto loan debt isn't evidence that will happen any
time soon.

folks were able to "suddenly" develop problems servicing their mortgage debt
because they'd gotten adjustable rate mortgages. adjustable rate loans for
automobiles are much less of a thing.

~~~
mcguire
I'm not entirely sure leases aren't the ARMs of the car world.

------
thriftwy
We have ever-increasing amount of money in the system (banks figure out ways
to create money)

But there isn't much real growth in useful, appreciating assets. E.g. most of
production capacity these days operates with ever-thinner profit margins.

Therefore money flows in a few vehicles still considered performing. Such as
real estate. This creates a lot of bubbles in the absense of real growth.

This is not unlike to when a ship sinks, everybody clutters at the ever-
smaller area still over water.

------
smashingfiasco
They missed the higher education bubble to include in the list.

~~~
ianleeclark
It's not a bubble in the traditional sense, just a tremendous burden on up-
and-coming generations.

------
tootie
This is extremely unconvincing.

~~~
TACIXAT
I don't know, these big numbers completely out of context are pretty
intimidating.

It feels a lot like when people talk about the national debt without putting
it into context of GDP.

~~~
madamelic
The housing index went from 53 to 453. Wooaaaaah.

Totally on-board. A lot of these numbers are really silly. Comparing the # of
UN recognized currencies to # of cryptocurrencies is like comparing the number
of kindergarteners to the number of world-renowned physicists; it doesn't make
sense.

I could spin up a cryptocurrency in about 10 minutes, I can't do that with a
UN-recognized currency.

------
relaunched
Some of the debt statistics fail to account for the cash Corp America is
holding on their balance sheets, so that's an incomplete picture.

Also, I posit that a lot of the inflation in indexes relate to redistribution
of wealth. When fewer people have more, they are willing to pay more for just
about everything: cryptocurrencies, stocks, houses in prime areas, etc. Bubble
status would require some proof points suggesting we have reached
systematically unserviceable levels of an underlying fundamental.

~~~
rayuela
I think that definition of Bubble status is only useful when looking at things
in retrospect. Money is only drawn to an asset because at present it's
valuation looks sustainable.

------
cjoh
The great thing about predicting bubble bursts is eventually you’ll be right!
(And if you’re wrong, so what)

------
lifeisstillgood
Whoa - five stocks (Amazon, Facebook, google, Apple and ?) account for most of
the gains in SP500 this year?!

Seriously?

~~~
empath75
Netflix

~~~
joubert
In fact, Netflix was the #1 performer twice in the last 5 years.
[https://www.fool.com/investing/general/2017/01/22/will-
netfl...](https://www.fool.com/investing/general/2017/01/22/will-netflix-
stock-be-the-sp-500s-top-gainer-in-20.aspx)

------
ocfnash
Can the figures for "Real Residential Housing Price Index for Canada" be
correct? The quoted index values are:

2010: 36.3

2016: 413.9

I simply cannot believe there was an 11-fold price increase on this index over
this period.

Googling I cannot match either of these figures to various Canadian real
estate indexes reported on the web.

------
fludlight
The increase in corporate debt is worth watching because most of that will
have to be refinanced and is thus sensitive to rising interest rates. Much of
the proceeds were used for questionable purposes like repurchasing stock near
historic highs instead of investment in the underlying business. This is a
proven way to boost short term stock price and EPS, but not so much the
capacity to repay.

That said, it's disingenuous to compare 10yr treasuries to indices comprised
of bonds with a maturity of >=1yr. Issuance skews shorter term that 10 so
those indices probably do, too.

------
akeck
I prefer the Shiller PE for my doom-and-gloom. ;-)

[http://www.multpl.com/shiller-pe/](http://www.multpl.com/shiller-pe/)

------
arbuge
As bubbles go, this one seems rather localized. Looking at that infographic,
one can see than in the real estate and stock market sections most clearly. In
the former, most of the gains went to certain select markets, mostly in
coastal cities. In the latter, most of the gains went to the usual few
suspects such as AMZN, FB, and GOOG.

It might follow that we might see localized bursting rather than a system-wide
meltdown if this "bubble" pops.

------
FLUX-YOU
"The Stock Index bubble"

Okay, does that actually mean anything unless the companies maintaining the
index portfolios are at risk of going under?

Is Vanguard about to go bankrupt? (lololol)

------
mcguire
"More cryptocurrencies than fiat currencies in circulation."

Yeah. Well, no, that's a completely meaningless point. Even "marketcap" for
Bitcoin is useless---a marketcap is the marginal price that the greatest
current fool is willing to buy one thingy for, multiplied by the number of
thingys.

There may be too much money in cryptocurrencies, but this chart isn't showing
that.

------
bhouston
This is sort of a mashup of ideas of varying quality. I think that you could
make an infographic like this at any time in history.

------
yuhong
My favorite is the ad bubble of course. I have a Twitter thread discussing it
with BrendanEich:
[https://twitter.com/BrendanEich/status/912750677331283968](https://twitter.com/BrendanEich/status/912750677331283968)

------
jasonmaydie
The "worth" of something is an irrelevant metric. What is the actual debt
value?

------
chaoticmass
Bitcoin 'market cap' is almost meaningless to compared to the market cap of a
stock. It's a misleading term in this usage.

------
EGreg
Maybe the Austrian economists warning about easy credit were onto something...
or maybe it's just crypto currencies?

------
huntermeyer
The VW logo above "BMW"...

~~~
lvoudour
lol

But honestly, I've grown tired with all the doom-and-gloom oracles every year,
they irritate me much more than the "everything is fine, nothing to see here"
ilk.

And when a recession finally happens, you'll see all those broken watches on a
daily basis in the media proclaiming they "predicted" it in 201x and _nobody
listened_ and I'll have to really hold myself not to smash the monitor...

On a side note, who (apart from the few investing) cares if cryptocurrencies
are a bubble? It's currently not even a footnote to the global economy

------
jgalt212
ZIRP is the root of all evil.

------
kirykl
crypto will pop if/when interest rates rise

------
guaka
It is a fiat bubble.

