One Guy Typing

Bubbles U

A few years ago, while the credit fueled housing bubble was building, the powers that were were blind to it, calling it mere froth.  Now, everyone is looking for the next bubble.

And it may be at a college campus near you:

Is it possible that higher education might be the next bubble to burst? Some early warnings suggest that it could be.

With tuitions, fees, and room and board at dozens of colleges now reaching $50,000 a year, the ability to sustain private higher education for all but the very well-heeled is questionable. According to the National Center for Public Policy and Higher Education, over the past 25 years, average college tuition and fees have risen by 440 percent — more than four times the rate of inflation and almost twice the rate of medical care. Patrick M. Callan, the center's president, has warned that low-income students will find college unaffordable.--

Consumers who have questioned whether it is worth spending $1,000 a square foot for a home are now asking whether it is worth spending $1,000 a week to send their kids to college. There is a growing sense among the public that higher education might be overpriced and under-delivering.

In such a climate, it is not surprising that applications to some community colleges and other public institutions have risen by as much as 40 percent.

Over at Reuters Felix Salmon argues that the US rate of car ownership has room to come down, based on a comparison of cars per thousand households compared to similar countries (why a thousand instead of one hundred, I don't know).

True, but part of the equation is number of households.  And that's a function of population and people per household. Population is likely to slowly increase over the medium term, at least.  It will be interesting to see what happens to people per household, which had been trending down.

I'd bet heavily the current sales pace is unsustainably low beyond 2010. In a way it's like the bet on Treasuries, if the US Gov't can't make good it's an indication of severe stress such that no else is likely to be able to either.  Similarly, given the lack of effective options for most US households in the short term, a sustained sales pace below 10 or 11 million would be a sign of severe economic stress on households that would bode ill for everyone.

But, as Ryan Avent points out global auto demand should be just fine:

But check out that league table. Even a very progressive, transit friendly place like Denmark has 408 motor vehicles per thousand population — a low rate for a developed nation. Meanwhile, Brazil has 81 vehicles per thousand people. India has 12 per thousand people. And China has 10 per thousand people. Yes, American consumption rates are likely to approach the upper range of the other developed nations, but so what? If Brazil, Indian, and Chinese rates of vehicle ownership get anywhere near the lower end of the developed nation range, then we’re talking hundreds of millions of new automobile sales. This relates directly to the point I made earlier today concerning oil prices — it’s not about us. I’ve been known to worry about excess automobile capacity in the past, but I’d worry about it more if China weren’t so busy building highways.