The New Yorker (September 6)
Is China going the way of Japan? Similar bubbles and certain excesses seem to indicate China may be headed for a fall. Chinese real-estate tycoon Huang Nubo unveiled plans “to buy seventy-five thousand acres of Iceland.” The “weirdness” of this recalls similar weirdness during the height of the bubble, such as a 1989 plan by the head of Nomura Securities to make California a joint yen/dollar currency zone. That was three years after “the value of the nation’s real estate doubled in a single year.” It doubled again in 1987, making Japan “the world’s largest creditor, holding thirty percent of U.S. debt, and … home to the world’s ten largest banks, with a stock exchange bigger than Wall Street.” By 1993, it was all over. Does China’s “Iceland moment” signal the end of their bubble? Or “Will it be simply a quirky milestone on the continued ascent?”
Tags: Bubble, California, China, Iceland, Japan
Barron’s (July 25)
There is a social media bubble. “Investor enthusiasm for social-media stocks is way overblown.” To illustrate Barron’s points out that 8 social media companies (Facebook, Groupon, Zynga, LivingSocial, Twitter, LinkedIn, Pandora Media and Zillow) with recent or potential IPOs only earned combined revenue of $3.5 billion. Alone, the Washington Post earned $1 billion more than the eight companies combined, but the market value of the Post is just $3.4 billion. In contrast, Twitter has been valued at $8 billion and Facebook’s theoretical value is $100 billion. While these may be great companies, they appear to be bad stocks for investors.
Tags: Bubble, Facebook, Social media, Twitter, Washington Post
Financial Times (November 29, 2010)
Hong Kong is now the world’s most profitable wine market. Is this the ultimate sign of a bubble? Gideon Rachman writes Chinese are snapping up vintages in a manner “oddly reminiscent of the late 1980s, when Japanese buyers were paying unheard of prices for Impressionist art.” Recently, three bottles of 1869 Château Lafite went for a breathtaking £437,900.” Bubble or not, “For Europeans, staring bankruptcy in the face, China’s wine mania should be encouraging.”
