Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

We Are Not in Midst of Another Bubble

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

We Are Not in Midst of Another Bubble

Article excerpt

As the Dow Jones industrial average moved above the 15,000 mark, bedlam ensued on the floor of the New York Stock Exchange. There were shouts and hand clapping, an unusual show of emotion for that staid institution.

However, it was not the Dow's metaphorical four-digit augmentation that was the epitome of my consternation that morning. Rather it was the seemingly never-ending phone calls asking if we were in the midst of another bubble, circa the dot-com or housing boom eras.

We are not.

Every time there is a strong market rally, the Chicken Little syndrome sets in: The correction is coming, the correction is coming. The fear of impending doom is simply a promulgation of incorrect assumptions based on invalid data. The difficulty arises when you prattle under the auspices of being a purveyor of truth and rational reasoning.

For example, Robert Shiller, one of the creators of the Case- Shiller housing index, says the gain in the housing market cannot last because it is government supported.

Credit Suisse believes it is delusional to assume that you can expect to increase your wealth by investing over the long term in the stock market.

David Stockman, former director of the Office of Management and Budget during the Reagan Administration, says, "Things are not what they appear to be. We are being misled by artificially low interest rates and speculation."

While there are overwhelming data to refute those statements, thanks to the First Amendment you can -- without recrimination -- go off half-cocked blathering prose that is tantamount to carrying a sign saying, "Repent now, the world is coming to an end," or worse: be blatantly wrong to those who trust your expertise.

For example, the edifice of austerity economics rests largely on an academic paper that was embraced by policymakers without it ever having been vetted. …

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