10/10/2008

The next big thing (to crash)

Five years ago it was the dot-com bubble that burst.

Now it's the housing market.

My prediction is the next big thing (since ultimately nobody will learn from the lessons of today and we're a country just dying to invest in something) will be small-business loans. Someone will get the idea in their head that while lending to home borrowers with the hope of the property value increasing was a bad idea, lending to people who want to start up businesses with the stated goal of making money will be a much better idea. And while the intent will be noble at first, particularly in an economy coming out of a recession and people looking for new job creation, it will become so perverted by special interests that eventually lenders will find themselves giving money to unqualified people with hair-brained business schemes that don't have a chance of turning a profit, much less paying back the money.

Of course, money will have to become available to lend, first, but once that happens, I see us starting our way down this path yet again. This is just my guess at how we'll get there.

3 comments:

Nick said...

Dude... that WAS the dot com bubble. Most dot coms were small businesses which were funded through venture capital for hair brained websites that didn't have much of a business plan.

The fact that at one time some of those companies were valued at millions of dollars doesn't make them large. Small businesses are usually defined by the number of employees... and many of these were quite small. That was part of their draw... little over head. Slap some code on a server and rake in the dough.

David Casper said...

I understand the similarity to the dot-com bubble in my prediction, but now blend it with the housing bubble. Take away the dot-com aspect and replace it with ANY business. Take away venture capitalists and replace them with bank loan officers.

When people say "Hey! This is the dot-com thing all over again," the response will be "No it isn't. We aren't financing internet businesses! Sheesh!"

And it's not like it'll be homes, either.

TosaGuy said...

Since we have shows like Flip This House and Sell This House and now I see there is a show out there where inventor/entreprenural types go grovel for money in front of potential investors that you may be on to something.

Seems to be the new rule of thumb is if you see a show on TV that shows folks making it look easy, then the bubble is on its way.