American economist and former Chairman of the Federal Reserve, 91-year-old Allan Greenspan has sounded the alarm of two bubbles in the market — that of stocks and bonds.
“There are two bubbles: We have a stock market bubble, and we have a bond market bubble,” Greenspan said in a Bloomberg’s report.
He also argued that attention should be paid particularly to the bond market bubble.
“At the end of the day, the bond market bubble will eventually be the critical issue, but for the short term it’s not too bad,” Greenspan said. “But we’re working, obviously, toward a major increase in long-term interest rates, and that has a very important impact, as you know, on the whole structure of the economy.”
Greenspan also bemoaned the galloping debt to GDP ratio.
“What’s behind the bubble? Well, the fact, that, essentially, we’re beginning to run an ever-larger government deficit,” Greenspan said. As a share of GDP, “debt has been rising very significantly” and “we’re just not paying enough attention to that.”
Nigel Belle, Readers Bureau, Fellow
Edited by Jesus Chan
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