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Ask HN: What is the next bubble in your opinion?

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Ask HN: What is the next bubble in your opinion?

#1

Post by ooonotooto »

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?

Re: Ask HN: What is the next bubble in your opinion?

#2

Post by jdavis703 »

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.

Re: Ask HN: What is the next bubble in your opinion?

#3

Post by nicholas73 »

jdavis703 wrote: post #2

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 remin…

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.

Re: Ask HN: What is the next bubble in your opinion?

#4

Post by thesagan »

nicholas73 wrote: post #3
jdavis703 wrote: post #2

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 remin…

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.

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.

Re: Ask HN: What is the next bubble in your opinion?

#5

Post by masonhensley »

thesagan wrote: post #4
nicholas73 wrote: post #3

Earlier quoted context omitted.

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.

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...

Re: Ask HN: What is the next bubble in your opinion?

#6

Post by bdcravens »

nicholas73 wrote: post #3
jdavis703 wrote: post #2

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 remin…

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.

Re: Ask HN: What is the next bubble in your opinion?

#7

Post by kylehotchkiss »

jdavis703 wrote: post #2

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 remin…

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.

Re: Ask HN: What is the next bubble in your opinion?

#8

Post by bdcravens »

> 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.

Re: Ask HN: What is the next bubble in your opinion?

#9

Post by kylehotchkiss »

nicholas73 wrote: post #3
jdavis703 wrote: post #2

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 remin…

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.

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?

Re: Ask HN: What is the next bubble in your opinion?

#10

Post by thesagan »

masonhensley wrote: post #5
thesagan wrote: post #4

Earlier quoted context omitted.

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.
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