Where would the next bubble be? This has become a frequent go-to-question in the last couple of years. Call it paranoia or being prepared, we are not completely out of the repercussions of one bubble-burst cycle before there is speculation of the next. Or have we become so inured that from a growth, expansion and recovery cycle, the economy has now moved to a Boom and Bust cycle!
So today I happened to catch a discussion on CNN about what the next Bubble to rock the economy would be, and decided to bring the speculation to WSO. So let's..
What is your "pet" Bubble?
Junk Bonds? Student Loans? Higher Education? Alternative Energy?
On a serious note, Student loans reached precarious levels last year when the Consumer Financial Protection Bureau reported outstanding loans of $1T - exceeding credit card debt- and increasing delinquency rates. Considering that we are still in a recovery phase, I do not think there would be a sudden crash with liquidity forced shut for new lending, No. But I do believe that this next bubble will be a long drawn out consequence of high debt-low post college pay scenario and years of tightening of wallets as a result.
While the Government has stepped in to implement debt forgiveness and Income Based Repayment policies, these are certainly not answers for rising tuition costs. Moreover, when we consider that $36 billion in student debt is still held by people over 60-years old(according to a Washington Post data), the Government's actions have to be deemed as too little too late.
What do you think? Where do you see the next bubble building up?