Spending and Saving

5 Bubbles Waiting to Pop (Including My Apartment)

Welcome to the Bubblesphere, ‘09. Remember the signs? Irrational exuberance. Excessive risk-taking. You’d think we’d learn our lesson, but it’s tricky to see a bubble until it pops. Nobody has a crystal ball, but there are indications that these five potential bubbles may soon deflate in dramatic fashion.

1. Gold. Twitchy investors are gushing over the soaring gold market, but Martin Hutchinson (breakingviews.com) sees bubble trouble. Strong demand suggests continued high prices, but speculation on futures may have a dampening effect. “Any surge into gold by hedge funds and other speculators could overwhelm the market,” warns Hutchinson. [The Telegraph]

2. Bonds. Is nothing safe? Some predict that the great Flight to Safety is in for a crash landing. “The bond vigilantes slumber,” warns Ambrose Evans-Pritchard, pronouncing U.S. Treasuries one bitch of a bubble. Investors rushing towards risk-free securities may face heavy losses if the boom fizzles. [The Telegraph]
3. Web 2.0. What’s that? The sound of nerves jangling on Silicon Alley? The hype surrounding social media—overseasoned with opportunism and dubious advice—has led some to conclude that we may be Twittering and Facebooking our way to another Internet bubble. CNET’s Caroline McCarthy warns “social media experts” that their jobs may be on the chopping block if this bubble bites it. [CNET]

4. Solar energy. You would think the sun would be bubble-proof, but maybe not. Lux Research predicts a solar industry tipping point: “We project that the supply of solar modules will exceed demand in 2009, that solar industry oversupply and new technologies will squeeze today’s leaders.” [GreenTechnologyInvestments]

5. My Chelsea apartment. Housing bubble? That doesn’t affect us. So say Manhattanites, including myself, in increasingly defensive tones. I watched the value of my Chelsea apartment rise for 7 years, getting giddier every step of the way. Then my savvy neighbor dropped his unit like a hot potato in December. Now Manhattan real estate is languishing on the market as schadenfreudians snicker. Ruh-roh. Paper gains start to seem like so much – well, paper. [WSJ Blog]

Tags: economy, Spending and Saving