By Bloomberg – Re-Blogged From Newsmax
The man who made the term “irrational exuberance” famous says investors are at it again.
“There are two bubbles: We have a stock market bubble, and we have a bond market bubble,” Alan Greenspan, 91, said Wednesday on Bloomberg Television with Tom Keene and Scarlet Fu.
Greenspan’s comments come as stock indexes remain near record highs, despite selling off in recent days, and as the yields on government notes and bonds hover not far from historic lows. Interest rates are expected to move up in coming years as the Fed continues with a campaign to gradually tighten monetary policy.
The Fed on Wednesday opted to leave rates unchanged and markets are pricing in an increase at the central bank’s March meeting.
“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.”