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I think you're wrong and I do have a clue. Having lived through the 2000 mess, I don't think corporations are that over-valued and that capital isn't chasing c

by turk73 7y ago

I think you're wrong and I do have a clue. Having lived through the 2000 mess, I don't think corporations are that over-valued and that capital isn't chasing complete and utter pipe dreams this time around. This is nothing like 2000, where Raleigh, NC had nearly full occupancy of all office space due to stupid little startups everywhere. Today's startups are VC-funded, but that VC requires a lot more demonstrated value and due diligence. Sure, there's lots of losers, but none of them are systemic risks. 2008 was caused by serious fraud in mortgage bonds coupled with no-doc, low-doc, neg-am mortgages being rated "AAA" inside of a massive housing bubble blown by Bill Clinton and abetted by GWB. Many banks and big investments firms were over-leveraged with risky bonds they didn't understand. There was also CDS all over the place. We don't have that this time around, either. What are the Black Swans? Student loan debts, maybe. Otherwise, I can't think of much other than the total US Debt if that ever actually becomes a problem. No clue when that will be. Today's market action is just counter moves reacting to China's devaluation. Yawn.

sudosteph 7y ago
Is the Raleigh thing your personal experience, or was that just an anecdote with Raleigh as stand-in for "place that's not SV or NYC and thus has no business operating startups"? Because I live in Raleigh, and there are still a ton of stupid little startups occupying the office space (except now they're all at one of 10 different co-working spots). To be kind to my fellow Raleighites, there are one or two with potential too. Still almost no legit VC funding in the area, but people didn't stop trying. Too many college kids around who don't know any better.
athenot 7y ago
In 2000, was it obvious that the internet startups were mostly pipe-dreams? In 2007, was the repackaging of bad debt into prime a common knowledge? Maybe it was but I learned about the causes way after the proverbial stuff hit the fan. This leads me to wonder what may be going on now that I don't yet understand.
lazerpants 7y ago
Most concerns around a black swan have to do with leveraged loans, corporate debt, and corporate loan/bond payback schedules. https://asia.nikkei.com/Spotlight/Datawatch/Swelling-US-corporate-debt-raises-risk-of-global-financial-meltdown https://asia.nikkei.com/Spotlight/Datawatch/Swelling-US-corp...
vespertine 7y ago
You're mixing hindsight with foresight. It's never obvious at the time what will bring about the next recession. It also doesn't have to be a single factor that causes a recession. The previous two could be majorly tied to a single cause but the 1990 recession cannot. It was triggered by the savings and loans crisis but was also tied to ballooning deficits and an inflated real estate market. (sound familiar?) The hairline cracks of the next recession could already be happening but those that see them will remain quiet as it is in everyone's best interest to project confidence in the market until the point where it all falls down. I was flipping houses before the housing bubble burst and things didn't quite feel right but everyone just kept chugging right along like it was going to be that way for ever. I started feeling uneasy when, at one point, there were 9 large subdivisions being built at the same time. "Where are all these people coming from?" Nowhere, that's where they were coming from. But I remained confident up until the day when I got stuck with 11 adjustable rate mortgages that almost doubled overnight. My gut feeling is we're heading into a recession but I'm probably more overly cautious than I used to be.
fredophile 7y ago
I think any downturn will have an over sized impact on startups due to the nature of that type of business and the requirements for ongoing investment. This time around there are also a lot of startups that exist mainly to provide services to other startups. I expect them to also do very badly in a downturn.

by turk73 7y ago

sudosteph 7y ago

Is the Raleigh thing your personal experience, or was that just an anecdote with Raleigh as stand-in for "place that's not SV or NYC and thus has no business operating startups"? Because I live in Raleigh, and there are still a ton of stupid little startups occupying the office space (except now they're all at one of 10 different co-working spots). To be kind to my fellow Raleighites, there are one or two with potential too. Still almost no legit VC funding in the area, but people didn't stop trying. Too many college kids around who don't know any better.

athenot 7y ago

In 2000, was it obvious that the internet startups were mostly pipe-dreams? In 2007, was the repackaging of bad debt into prime a common knowledge? Maybe it was but I learned about the causes way after the proverbial stuff hit the fan. This leads me to wonder what may be going on now that I don't yet understand.

lazerpants 7y ago

Most concerns around a black swan have to do with leveraged loans, corporate debt, and corporate loan/bond payback schedules. https://asia.nikkei.com/Spotlight/Datawatch/Swelling-US-corporate-debt-raises-risk-of-global-financial-meltdown https://asia.nikkei.com/Spotlight/Datawatch/Swelling-US-corp...

vespertine 7y ago

You're mixing hindsight with foresight. It's never obvious at the time what will bring about the next recession. It also doesn't have to be a single factor that causes a recession. The previous two could be majorly tied to a single cause but the 1990 recession cannot. It was triggered by the savings and loans crisis but was also tied to ballooning deficits and an inflated real estate market. (sound familiar?) The hairline cracks of the next recession could already be happening but those that see them will remain quiet as it is in everyone's best interest to project confidence in the market until the point where it all falls down. I was flipping houses before the housing bubble burst and things didn't quite feel right but everyone just kept chugging right along like it was going to be that way for ever. I started feeling uneasy when, at one point, there were 9 large subdivisions being built at the same time. "Where are all these people coming from?" Nowhere, that's where they were coming from. But I remained confident up until the day when I got stuck with 11 adjustable rate mortgages that almost doubled overnight. My gut feeling is we're heading into a recession but I'm probably more overly cautious than I used to be.

fredophile 7y ago

I think any downturn will have an over sized impact on startups due to the nature of that type of business and the requirements for ongoing investment. This time around there are also a lot of startups that exist mainly to provide services to other startups. I expect them to also do very badly in a downturn.