Comment by jkarni
3 hours ago
> bubbles are notoriously unpredictable and generally don't happen when they are loudly and widely proclaimed to happen any minute now.
Is that true? It seemed to me that the most common opinion before the recent Chinese real estate crash was that it was a bubble; architect friends of mine who worked in China said the government had no doubt prices were unreasonably high; the thing they remained hopeful about is whether a soft landing was possible. Similarly it seems like it was by no means an uncommon opinion in the Japanese asset bubble, NFTs, beanie babies, and even the dotcom boom that this is (to use Greenspan’s phrase leading up to the dotcom bubble) “irrational exuberance”.
I also think its hard to know when it will pop. The Chinese real state bubble you are quoting is indeed a very good example. Everyone knew the prices were super high but no one really knew when it would blow. The state had a problem and they knew they had to stop it eventually. After/during the covid pandemic the state decided to start a slogan "houses are for living not for speculating" and they started to set redlines for leveraging and developing. If you know how financing works in china you know many of it flows through the state and related companies and financial structures. Then also when one of the biggest developers in the country blew up they left it to blow instead of buying it. They essentially popped it with policy.
So many would say the saw it coming but the truth is only people with inside info really knew when it would happen for sure.
Same happens today. Capital is being heavily allocated towards AI inference and infra because of the promised productivity. Nobody knows if its early or late and also nobody knows how will the state react to a possible bubble exploding. Some people would say maybe AI is too big to fall already and its better if we save it when it falls. Some people would say its better to let it blow up but again nobody knows what will truly happen until we get there.
Bubbles are extremely predictable. The problem is predicting when it will come crashing down.