BubbleTweet Me

As Wall Street: Money Never Sleeps likes to remind us capitalist societies are just one big bubble after another. One of the biggest was the infamous Tulip Bubble
where the Dutch became obsessed with the flowers to the point where people paid more and more money for just one tulip.  At the peak of the bubble one tulip, rather a piece of paper redeemable for a tulip was worth more than a decent home in Amsterdam. Of course it all came crashing down once people released, shit they’re just fucking flowers!

So what is the next bubble? What will collapse next? The economist did a number of papers on the future of post-secondary education. Some of its authors put forward that the university industry shows all the signs of a bubble ready to burst: “tuition costs are too high, debt loads are too onerous, and there is mounting evidence that the rewards are over-rated” while on the same site others point out, unlike the tulip bubble or the 90s Internet bubble, education still has a real value:

For a start, the latest available numbers suggest that college enrolment continues to boom and that going to university still pays. According to data from last year’s census, average earnings in 2008 totaled $83,144 for those with an advanced degree (ie, a master’s professional or doctoral degree), compared with $58,613 for those with a bachelor’s degree only. People whose highest level of attainment was a high school diploma had average earnings of $31,283.

If education doesn’t have you worried what about the latest craze, gold! Gold is seen as an economic rock that in uncertain times people move their volatile assets into. A stock brokers mantra is buy low and sell high yet that is the opposite of what people do when dealing with gold.

The BBC talks about how demand for gold has skyrocketed especially with the emerging consumer markets in China and India demanding more of the shinny metal for jewellery and gold plated toilet seats. Yet the article goes on to say:

“It is wrong to see gold as an investment,” says Tom Stevenson, investment director at fund manager Fidelity Investments.

“It does not provide an income and is almost impossible to value. The fact that it is has risen in price is not a recommendation to buy; in fact it could be quite the opposite.”

He does not expect the price to fall any time soon, largely due to the weak dollar outlook, but warns that, in the long term, the true price of gold must be linked to the cost of its production, which is much less than $1,500 an ounce.

Anything over and above this cost is just speculation, he argues.

While investors fret over the failure of the education system or the collapse of the price of gold other commentators point to a new Internet bubble. Recently LinkedIn, a social media site,announced that it will release an IPO and expects to get around 4 billion USD for the company.  A huge amount not seen since the 90s. If everything goes as planned other Internet giants like Facebook, will also release public stock possibly creating another Internet boom.

So what do you think the next bubble will be?

2011
Of course it doesn’t matter because the world is ending this Sunday, May 21, 2011

Read more of Yosomono’s posts in Nuclear Power Dilemma and Elderly set to crush japan

Advertisements