Robert Schiller writes for Al Jazeera:
There have been three colossal stock-market bubbles in the last century: the 1920s, the 1960s, and the 1990s. In contrast, there has been only one such bubble in the United States’ housing market in the last hundred years, that of the 2000s.
We have had a huge rebound from the bottom of the world’s stock markets in 2009. The S&P 500 is up 87 per cent in real terms since March 9 of that year.
But, while the history of stock-market prediction is littered with too much failure to try to decide whether the bounceback will continue much longer, it does not look like a bubble, but more like the end of a depression scare.
The rise in equity prices has not come with a contagious “new era” story, but rather a “sigh of relief” story. Likewise, home prices have been booming over the past year or two in several places, notably China, Brazil, and Canada, and prices could still be driven up in many other places.
But another housing bubble is not imminent in countries where one just burst. Conservative government policies will probably reduce subsidies to housing, and the current mood in these markets does not seem conducive to a bubble. A continuation of today’s commodity-price boom seems more likely, for it has more of a “new era” story attached to it.
Read more here.
See also: Finance Capitalism is Causing Starvation