Nobel laureate economist predicts possible US stock market bubble …

Nobel laureate economist predicts possible US stock market bubble …

Robert Shiller, 2013 Nobel laureate in economics, told a German magazine sharp rises in equity and property prices may signal a dangerous financial bubble, which could have an extremely bad end.

The Sterling Professor of Economics at Yale University, who
shared the Nobel Prize with two other Americans for research
into market prices and asset bubbles, called the Brazilian
property market and the US stock market areas where care is

I am not yet sounding the alarm. But in many countries
stock exchanges are at a high level and prices have risen
sharply in some property markets,
” Shiller told Der Spiegel
magazine. “That could end badly,” he said.

Describing the overvaluation of the financial and technology
sectors he commented: “I am most worried about the boom in
the US stock market. Also because our economy is still weak and

Shiller is worried about house prices in Rio de Janeiro and Sao
Paulo, saying Brazil as another area of concern.

There, I felt a bit like in the United States of 2004,
he said. The scientist draws a parallel between middle class
growth and investment opportunities in Brazil to a similar
trend he observed in the US around 2000.

The 2008 financial crisis was triggered with the help of a US
housing bubble. “Bubbles look like this,” he commented
to  the magazine. “And the world is still very
vulnerable to a bubble.

Financial bubbles appear when the investors don’t mind the
increasing distance between asset price and market
fundamentals, continuing to inject funds.

The US stock market has risen steadily over the past two months.
The Dow Jones industrial average crossed 16,000 for the first
time and the Standard & Poor’s 500 index rose past 1,800,
to a new record high.


Nobel laureate economist predicts possible US stock market bubble …

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