Greenspan Sees No Stock Excess, Warns of Bond Market Bubble
- Inflation won’t stay at historically low levels, dooming bonds
- Fed Model justifies elevated stock valuations for now
Heeding Alan Greenspan's Bond Bubble Warning
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Equity bears hunting for excess in the stock market might be better off worrying about bond prices, Alan Greenspan says. That’s where the actual bubble is, and when it pops, it’ll be bad for everyone.
“By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman, 91, said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”