“I am most worried about the boom in the US stock market. Also because our economy is still weak and vulnerable,” Robert Shiller has said.
Shiller, who won the 2013 Nobel Prize with two other Americans for research into market prices and asset bubbles, has described the financial and technology sectors as overvalued.
According to Reuters, Shiller told Sunday’s Der Spiegel magazine that “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… that could end badly.”
Shiller who is the co-founder of Case-Shiller Index, had earlier said that the momentum in the housing market this fall could not be trusted anymore. He believes that surge in home prices did not mean that the US economic recovery was on solid ground. “We can’t trust momentum in the housing market anymore,” he said on CNBC’s “Squawk Box.”
A growing number of experts are warning that there are signs of a potential bubble in the US stock market ahead.
According to USA Today “Wall Street pros say a bubble is forming in the U.S. stock market. They blame the Fed’s unprecedented stimulus, including its $85 billion in monthly bond purchases, for artificially inflating stock prices. There is concern that if the Fed does not dial back its asset purchases soon, stocks could shoot higher and become even more delinked from business fundamentals.”
An American economist, Paul Robin Krugman, has said in a recent article that the US economy is not recovering from the financial crisis of 2007-2008 but that it has entered a “permanent slump”.
“Again, the evidence suggests that we have become an economy whose normal state is one of mild depression, whose brief episodes of prosperity occur only thanks to bubbles and unsustainable borrowing,” Krugman says.
DB/DB
With permission
Source: Press TV
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