The Bubble Question • Hacker News Board

Re: The Bubble Question

#91

Post by brc » Fri, Apr 25, 2014, 4:14 AM UTC

hnnewguy wrote: post #45

brc wrote: post #33

Earlier quoted context omitted.

This is standard excuse trotted out. Of course it is incomplete at best and grossly misleading at worst. Deflation is the opposite of inflation. One is an increasing value of currency, and the other is a decreasing value of currency. People deal with deflation every day - both in their own national economies and internationally - when your currency is rising (gaining value) why would you purchase something today when…

> savers vs creditors. Savers and creditors are the same people.

True. Creditors vs Debtors. Creditors are advantaged by deflation, debtors advantaged by inflation. Except where effects of one or the other affect the amount of bad debts.

Re: The Bubble Question

#92

Post by mcmullen » Fri, Apr 25, 2014, 7:14 AM UTC

pyoung wrote: post #88

mcmullen wrote: post #36

Earlier quoted context omitted.

One of the later episodes of the a16z podcast featured Marc Andreessen and Benedict Evans. They were discussing technology valuations and made some good points. Though I disagreed with their "no bubble" consensus, they were right in mentioning the classic "Russian oil money" and "new players" argument. Previously, most tech investing was done by U.S. venture capitalists. (One of the reasons why non-U.S. start-ups fin…

"just lots of rich people with less money." My original take on the "bubble" was somewhat in line with this. However, the more I think about it, the more I am inclined to believe that this will "trickle down" in many ways. Fewer investments will lead to fewer jobs. In SV, this could lead to a cooling down (or worse) of the labor market. The established players (Google, Apple, Amazon, etc) will probably pull through a…

You're absolutely right that "trickle down" occurs. Basic logic suggests that if lots of businesses have lots of funding, and that funding dries up, there will inevitably be job losses because they have to be funded from somewhere.

However, I wouldn't worry too much because technology is clearly the future and the need for technology professionals will continue to grow. These stupidly high valuations are for, I hope, decent businesses. By that virtue, they will get the funding they need - just not the scale that we have seen. Hence, I used "just lots of rich people will less money" because the people set to lose out are the huge investment vehicles who seem to be huddled around the Valley at present. The highly skilled engineers needn't worry because the likes of Mr. Wilson and Mr. Andreessen aren't going anywhere, and the average Joe Bloggs needn't worry because their pensions aren't at risk. The people who should worry are those who watched the Facebook float and said, "Shit, I need some of that action!"

As always, it's the stupid that lose out. Fortunately, the stupid ones aren't providing our mortgages or issuing our credit cards this time. (Namely, Royal Bank of Scotland, Bank of America, et al.)

But, hey - I'm just a 24 year old CS grad come IT consultant, what do I know?

Re: The Bubble Question

#93

Post by pjc50 » Fri, Apr 25, 2014, 1:42 PM UTC

marincounty wrote: post #85

hagbardgroup wrote: post #54

This is the most honest article that I've seen from a mainstream financial figure about why valuations are so high. ZIRP (zero interest rate policy) means that money is near worthless to financial institutions that can run the carry trade on Treasuries, or other carry trades involving foreign exchange. VCs manage money for those guys, along with pensions and other enormous concentrations of capital. What you want are…

"In order to raise rates, the US would probably have to either confiscate a lot of assets (which would harm its international status as the cleanest dirty shirt), raise taxes, raise retirement ages, implement means testing on medicare + social security, and cut military pensions/VA expenses. There is no real solution that does not involve provoking some sort of major crisis, so it is much easier for everyone to keep…

You can't legally selectively default on debt; see the ongoing Argentinian "pari passu" saga as documented by FT blogs. Doing it illegally is basically hanging out a "we're now a rogue state lol" banner in New York to welcome businesses.

Having said that, I'm in favour of politely but firmly squashing the tax haven states. There is some work in this area but it's very slow.

Re: The Bubble Question

#94

Post by pjc50 » Fri, Apr 25, 2014, 1:46 PM UTC

pdonis wrote: post #74

silverlake wrote: post #62

Earlier quoted context omitted.

Paul Krugman argues that there's too much money chasing too few assets. Combined with low interest rates we have a bidding war for anything that isn't Zynga. Even Greece has seen money pouring in recently because, really, where are you going to put $10B?

> too much money chasing too few assets And why are there too few assets? To put the question another way, why is it that, even though the Fed has given banks $2.8 trillion in quantitative easing, the banks can find nothing better to do with it than to leave it in their accounts at the Fed earning 0.25%? Is there really nothing more productive going on that they can loan money for? My worry is that I don't see any "m…

Yes, there really is nothing more productive to do. Worse, we're going to end up in a situation where unless we make big investments now with negative current ROI, society will be even poorer in the future once the current capital assets have depreciated and been written off.

Example: sustainable power generation.

Re: The Bubble Question

#95

Post by [deleted] » Sat, Apr 26, 2014, 11:08 PM UTC

mahyarm wrote: post #72

leoc wrote: post #48

Earlier quoted context omitted.

At the same time as this tech boom, S&P 500 companies are (I'm told) busy borrowing fistfuls of money in order to pass it on to shareholders through dividends and share buybacks. That seems to suggest that investors are happy to have cash right now; it also puts the complaints about excess or wastefulness against the current SV boom into some perspective ...

Isn't that borrowing more because of US tax policy causing vast amounts of money to just sit there in foreign bank accounts for those SV companies?

[deleted]