The Next Economic Bubble: Cheat Sheet
Stuff you need to know:
- A bubble is created when any asset -- be it tulips, homes or Internet startups -- is allowed to irrationally and unsustainably increase in value.
- From a purely economic perspective, bubbles aren't necessarily bad or good. They simply signal the extreme variations of natural market forces.
- Credit card debt is one of the bubbles that could potentially burst. As millions default on their credit card payments, the effects could spread to the secondary markets, where the world's largest banks have invested hundreds of billions in securitized credit card debt.
- Environmentally friendly companies and services benefitted from a boom in "green" investments and a rising interest in protecting the environment. With the economic collapse, fewer investors and average citizens list the environment as one of their top priorities.
- Higher education is another potentially dangerous bubble. The rising cost of college has forced millions of students to take out private loans in addition to Federal loans. These private loans carry higher interest rates that could spell trouble in such a tight job market for recent graduates.
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