Greenspan's "irrational boom" remained after 20 years of wisdom

20 years ago, the then-fed Chairman Greenspan to not think the following levels of asset prices is concerned, when he spoke briefly to block United States stocks; 20 years later his successor, perhaps cannot help but want to send warnings to the market again. Greenspan pointed out that on December 5, 1996 in a speech: "it is clear that inflation continued low suggests that uncertainty about the future reduction in risk premiums decline that stock and other asset prices higher.

"This sentence alone environment with global inflation eased in recent years, interest rates tumbled mimicked, creepy. Greenspan went on to say: "but how do we know when irrational boom over expansion of asset values, and then subject to a long-term contract, as Japan suffered over the past 10 years as is the case?

」 This is known as "the master" title is a former Central Bank Director of pointers and poor's 500 index into the biggest two-year gain in 40, up 60%. However, he was powerless to prevent rise in 5 years, until the end of 1999 share price index rose by three times.

Meanwhile, United States bonds rose before falling, when United States Government bonds surged, investors extra returns of 10-year government bonds fell to a 20-year low. Back now, United States three major stock indices in recent weeks, a new high. Based on earnings estimates for earnings ratio climbed to its highest point since the 2000 dot-com bubble peak.

Donald Trump after a surprise election victory, stocks soared in the past month, bonds fell.

Even after the fall, bond now looks more like a true bubble-the term premium for 10-year bonds hit in July after the never seen before-0.75%, until three weeks ago, before climbing back to positive. Greenspan recently told the Wall Street Journal access, in the interview published on December 3, he said, compared to the stock, he was more worried about bonds. He also admitted that his warning had little influence if bubbles form, almost impossible to stop.