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Ask HN: What is the next bubble in your opinion?
34 points by ooonotooto on Jan 19, 2017 | hide | past | favorite | 43 comments
It's been a while since financial systems in US and around the globe went through massive shock. We have massive supply of money and artificially boosted demand.

Murphy's law says that, "if everything seems to be going well, you have obviously overlooked something".

We had quite a dramatic elections in the US. Student debt is growing. Auto loans are growing. What concerns me more is that, there is significant wealth concentration under global organization such as Google, FB, Amazon, Pharma companies, Retail chains and more.

I am not american by birth, but I love to travel to rural areas and get to know people outside of tech. I can tell you that things don't look great. Hundreds and thousands are leaving the jobs and switching to contracting, driving for Uber/Lyft and/or taking similar jobs.

Since we have computer literate people, founders, risk takers, entrepreneurs, intelligent people on this site, I want to know what do you think is going to be next bubble?

Of course, in finance (federation) based economy, we all may feel financial shocks, but what could cause these massive shocks?



> We had quite a dramatic elections in the US.

> Since we have computer literate people, founders, risk takers, entrepreneurs, intelligent people on this site, I want to know what do you think is going to be next bubble?

I'd argue that "we" are pretty ignorant of what's really going on. (see the recent presidential election)

We live in a world of fast Internet, current-gen personal devices, and Instabizzes that make our life function. Our values (or what our Twitter feeds has told us our values should be) are apparently the new world order.

There's a LOT of people, both red and blue, whose lives need more than an emoji, hashtag, and a Ruby bootcamp to move the needle.

I think our bubble may be the one to pop.


>There's a LOT of people, both red and blue

There's a magnitude more of people who aren't either and wouldn't even understand the meaning of that phrase.


Honestly, I didn't get it at first - I thought it was some kind of matrix reference about the red and blue pill (in hindsight, not even for a particular reason), not about democrats and republicans... Even though I'm not american I feel stupid not having thought of that first.


Here's democracy for you.


It might not be the next bubble (rather next decade's bubble), and not as big as the mortgage securities bubble, but I have my eye on siloed social media in general and Facebook in particular.

I don't know exactly how or when the federated/web-of-trust alternative to Facebook will unfold, but people are definitely working on commoditizing this stuff, and doing so in an unassuming way that has the potential to catch major players by surprise when it finally crystallizes. I'm not convinced that any of XMPP, GNU Social/OStatus, diaspora*, or IRCv3 have all the pieces to solve the puzzle, but the direction they're pulling is not a big mystery, and I consider it a very real possibility that a successor to those efforts does to Facebook what HTML5 did to Flash.


I'd be pretty happy if this were the case. Likewise, I'd be pretty happy if the same thing happened to instant messaging.


It didn't happen with ICQ, AOL Messenger, and others. How do you think it will happen with the current generation of messengers?

Closest thing that federated the messengers was Ebuddy, but that was not protocol i think.


Finally someone who understands. You're spot on.

Why aren't more people talking about this?


The student loan bubble will burst putting colleges out of business or cutting back hard- and as before the public will bear the brunt. from 3 years ago and it is still growing with no slow down http://ijr.com/2014/06/149516-mark-cuban-predicts-burst-stud...


Could you explain this a little. I don't understand.

Usually a bubble is an asset where most of it's value is tied to future expected appreciation. And when price growth starts to fall this decreases future price, and then it crashes down to its fundamental value(or a little below).

I'm not quite sure how this can happen with student loans. Is the discounted future cash flow of student loans widely different from their price?


And wsj linked here today https://www.google.com/amp/www.wsj.com/amp/articles/student-...


how will the bubble pop if you can't escape your student loans through bankruptcy?


I think there's a lot of bad auto loans out there. I just bought a new vehicle, and when applying for the loan I couldn't fill out half of the required information (I didn't have it readily at hand). The business office person just kept saying "that's OK, just skip that part." All in all they had barely enough information to let me prove I was who said I was, much less that I could repay the loan. This behavior reminded me a lot of what I heard up the mortgage bubble, where there was basically free money floating around.


It's pretty easy to repo a car all around the country if you don't pay your bill. Add in the fact that most new cars sell with GPS transmitters built in and many car loans are provided by the car company themselves and you've got yourself a quick way to recover losses. It's harder for a bank to evict a tenant of a mortgage, harder for a bank to get money from a graduate who is buried in debt, harder for a credit card company to recover from people who aren't paying either.

The funniest thing is how much cheaper new car loans are compared to used car loans.


What use is a recovery if liquidating it will get only a fraction of the loan's value back?


If your credit score is bad, you are probably getting quoted a 15-25% interest rate (my first quoted interest rate was 25% at carmax when I first started working). They can recover depreciation pretty quickly in that case.


I'm assuming they don't give you a loan for the entire amount, i.e. just 70% of the value?


Throw in a prior car not paid off, paint/tire/oil protection and an additional warranty - it isn't hard to get up to or over 110% of the car's value.


It's personally weird to me that auto loans can be a serious bubble, since I would not feel comfortable buying a car unless I have 10x the sticker price in spare cash, or free cash flow that covers it. Seriously, since it's just a depreciating asset with maintenance liabilities.


I'm sure you know you are the exception. About 85% of all new vehicles are purchased on credit; the US is approaching $1T in auto loan debt.


1.1 trillion, a number that actually surprised me. According to this article, auto loans are "the second-fastest growing consumer debt market" http://www.huffingtonpost.com/allan-smith/the-us-auto-loan-d...


There's a lot of places in USA where holding a job is entirely dependent on reliable vehicle.

What can you buy, short of some houses, that isn't a deprecating asset?


Do some research and you can get yourself a really nice watch for a grand that will almost certainly appreciate. :)


Is this really the case? Watches and small mechanical things are an interest of mine so I watch the market pretty carefully but I can't readily think of any $1k and under watches that appreciate.

New watches in that price range will be very unlikely to appreciate, even in the high end segment appreciation is unlikely outside of maybe Rolex or some low production pieces, but those are all significantly over $1k. Prices have gotten pretty high in the vintage market as well, and that is fraught with risk since fakes and partially original watches are so common.


On the lender side: I wonder if somehow auto loans are packaged and resold like some other loans, thereby hiding/moving the risk away from the originating lender and into more unsuspecting hands? Not sure how that might work. If it does get repackaged and resold, that may explain some of the reckless lending, if that can be said to exist.


They are - https://www.bloomberg.com/news/articles/2016-03-21/this-is-w...


Thanks for the link! Sounds like at least one rating agency has some concern.


I suspect it will be non-healthcare jobs in healthcare. People are noticing that at the same time their premiums are doubling, tripling, quadrupling, doctors and hospitals seem to have larger and larger staffs of computer technicians, billing specialists, insurance negotiators or whatever the heck those people are doing. It used to be that a doctor could be self-employed, with just one nurse who doubled as a receptionist. Now fewer people are going into medicine, at the same time millions of people are going to be trained to work in the healthcare industry.

I think a lot of the resentment against "Obamacare" is that people can see this non-value-added waste (muda) and they saw government making a deal with the insurance industry to add even more bureaucracy to an already wasteful system. If there is going to be any compromise betwen left and right on healthcare, it may be that we keep the mandate (pleasing the left) but cut the regulation and bureaucracy that creates all the waste (pleasing the right).

That would be good for doctors and patients, of course, but very bad for insurance companies and other parts of the healthcare-industrial complex.


I think advertising may be the next bubble. I mean, there have been lots of comments online about how large a percentage of ad clicks are fraud, so it's likely most sites shouldn't be making anywhere near as much cash from their ads once that's figured out.

Add the increasing usage of adblockers, fears of privacy regarding tracking and ads plus a stupidly high amount of competition, and I can see ads not being able to fund the sites they need to soon. Complete with various news sites, social networks and platforms simply being unable to pay their bills without finding a new payment model.


Actual university education. When public it transforms in debt (Europa) else private in student loans (USA).

The debt of the countries are growing up.

The quality of research papers is a measure of quality of the teaching that is decreasing, since both reproducibility and relevance diminishes (Signal = ln(relevant / noise)).

The over qualification has not resulted in improvement of lower paid works or the raise of wages and it has put kids in situation of disarray whereas they would have survived otherwise hence the word "pro-net-arians". This generation that cannot save money is a generation barred from entrepreneurship, favouring conservative business models.

We are also seeing the first wave of homeless educated and competent coders. Education is also failing at protecting the educated one.

Education has also failed at achieving a fairer society and have resulted in the opposite leading worldwide to a ghettoisation of poor (public) vs rich (private that is often publicly funded).

https://www.google.com/finance?cid=662984

The danger of education is that it is essentially present in public debts that by nature is hard to bankrupt; thus countries (like Europe) may bankrupt as a result of this bubble. Remember that right now debt are obligations that are the safest investment ... if obligations disappear, the market will be explosively volatile.


College bubble will pop. Prices have been sustained longer than normal due to special laws for school debt. But even with the extra protection of wage garnishments and no bankruptcy option, it cannot keep going up. People are starting to get their money underground in a homeless lifestyle or leave the country. It's going to burst and hard.


The bond market. We're all doing some crazy things with our government spending, at local and national levels, and it has to fall apart at some point.


There won't be any big bubbles anytime soon. Only small bubbles. If silicon valley falls apart tomorrow for example, it would be considered a small bubble since it would be very contained (only VC money). In 2000 the entire world was injecting money in Silicon Valley. It was a complete different setup...

So talking about the next big bubble in 2017 does not make sense.


Do you know where some VC's money comes from? Wall street invests in VCs using pension funds, 401k money. So if SV falls apart, the effect will be more than outside SV. Follow the money.


You need to understand the difference between "VC" money and the economy. The first one is about extra cash that can be invested, the economy is about people's money. If a bank loses it's money invested in tech, it won't go bankrupt because the bank doesn't invest its capital into one single thing. It's more complex than you think.


The Euro will collapse


I am placing my bet on either the student loans, state pension systems, or the auto loans.


The carbon bubble in the form of the market cap of carbon-extraction industries. Though it is possible there are non-burning uses for petroleum that will sustain the industry in the medium-term future.


There has been a recession +/- 2 years from the end of every decade for the past 170 years.

Boom and bust. Past pains fade and we get over-confident about our ability to act prudently.


The last one for a while. The money bubble.


> Hundreds and thousands are leaving the jobs and switching to contracting, driving for Uber/Lyft and/or taking similar jobs.

Which is a very good thing...


The question isn't: "What is the next bubble?" The question is: "Which of the existing bubbles will collapse first and cause the rest of them to implode?" Furthermore, the even bigger question is: "Is there creeping contagion forming behind the scenes in derivatives and shadow banking similar to 2007, out of sight of governments and regulators yet again?"

The central banks of the world have gone on a ridiculous 8 year binge to prop up global growth, this binge will have consequences. Probably for Donald Trump, who may buy another two years of bubble activity with his planned economic actions.

Most people are used to the 1999 bubble and the 2007 bubble. Those are just the ones that got really out of control Over the last decade, numerous smaller bubbles have come and gone, mostly deflated by government (foreign or otherwise) intervention and we are generally none the wiser. China has had bubbles in their real estate and stock market come and go (or be suppressed, for now) several times in the last couple years.

If you have seen what China is willing to do to their skies in terms of pollution, imagine what they are willing to do behind closed doors in their financial and real estate sectors. One can only imagine the toxic, over-leveraged stew that is likely lurking behind the scenes. People have been expecting China to implode for years, it hasn't happened.

In the United States there are multiple bubbles now. Students loans are clearly in a bubble. It was announced this week that the government admitted to falsifying data (they call it a "technical glitch," It is not a glitch, it was likely deliberate) around what % of sub-prime students were not repaying their debts.

The private tech stock bubble of worthless, unprofitable Silicon Valley unicorns who can never go public is alarming but seems contained for now and not of a large enough size to tank the stock market.

Sub-Prime Automotive is also a bubble, but so far the numbers are far lower than anything near what was experienced in 2007.

Real estate in the United States in some segments, notably high-end real estate in Miami and Manhattan were both in bubbles as well and seem to have deflated. There was also a significant housing bubble in Vancouver which seems to be deflating due to government action.

So there are numerous bubbles that we know about. But this isn't the real problem. The real problem is that credit, derivatives and shadow banking going on behind the scenes. While many regulations have been passed to ensure that the United States banking sector is more "solid," the financiers of the world always find a way to introduce more leverage.

My conclusion after digging into the various bubbles and their sizes is as follows:

Sub-Prime Automotive is a bubble but the size of it isn't so bad. The biggest problem is repercussions of such a bubble collapsing and becoming contagious.

Real Estate seems ok, nowhere near what happened in 2007 in terms of scale and corruption.

Student loans are a rather large bubble. Still nowhere near the size of the sub-prime mortgage nightmare.

Tech bubble, shouldn't be a big problem if it implodes by itself in the United States

China: I can't even speculate. Everyone has been screaming wolf about China for years and nothing has collapsed yet. China is rated #1 by the Economist as a risk of collapse which would take down the global economy.

I am going with: China or EuroZone banking melt-down that spreads and pops all the United States bubbles.


Mary Jane.




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