Monday, May 25, 2009
Another bubble candidate
In addition to the green energy industry, I believe that the health care industry has potential to develop into our next bubble. The attitude toward the health care industry is similar in many ways to the pre-bubble attitude toward the housing industry. Similar to housing (and green energy), health care is being subjected to a great deal of government tinkering, with the objective of making health care affordable for all (note: I will save my political views on health care reform for another post--in this post I simply wish to point out the similarities between the pre-bubble housing industry and the current health care industry). In addition, many individuals believe that the demand for health care will continue to either increase or remain constant, similar to the "house prices will always increase" belief. Although differences between the two industries (e.g. a lower degree of leverage in health care) may limit the severity of a health care bubble in comparison to the housing bubble, I still believe that health care is a viable candidate for our next bubble.