Will the bubble burst? And when?
This is a question as the saying states “of a million dollars”. More so, billions of dollars. And it is plural – bubbles. We currently have so many potential economic bubbles that may burst that even experts cannot follow closely. It all started with inaccurate planning. The cause is well known – the unpredictable world-wide pandemic. Now we can often hear or read “the demand is high, we cannot produce these amounts in this timeframe”. Here we can find the faulty planning. Of course there is no one to blame, because nobody could have predicted this. Thus, we have huge demand in diverse industries with nowhere near supply. It has caused a spike in costs and prices, a spiral that would take time and a lot of effort to normalize. Coming as a professional from the tech world, I am really concerned about the future cycle and actions. First, we have a continuous problem with the largely increased demand for more that 2 years and suppliers that are defensive in their investments in new production capacities. That has caused a spike in commodities and it transferred among every industry and is influencing the daily lives of each of us. On top, the transportation costs (especially freight) went more than 7 times the regular pre-pandemic price. What followed is gas prices. What is making the situation worse is the electricity. Well, the lack of it. All of these increases in costs are caused by increased demand and politics.
The high demand is as I wrote in my previous articles is initiated mostly by digitalization processes. Which made the availability of many products even worse (as an case worth studying is the automotive industry inability to adapt in short timeframe). But, what is the newest problem on our plates, the lack and cost of electricity could have been somewhat predicted. Why do I say that? Its cause of the fact it is mostly based on political decisions. Countries are not ready to go on a fully renewable energy, but agreed and signed on dates that are unrealistic to close all facilities producing “filthy” energy. Especially in times when humanity is using more and more energy as days go by. Even so, with the constant push towards green transportation. Having these price spikes in electricity and not having enough to go by, together with the instability in gas prices, the inflation is knocking on our doors. The spiral of increased commodities, electricity & gas has reached new heights. The bubbles are filling up and by my modest opinion are getting ready to burst.
The main question is when and how we can live through it as consumers and as businesses.
Are we on a verge of a even bigger crisis then the one in 2008?
What is sure is that we have to be flexible and adaptive to the constant changes more then ever to survive.