We’re Partying Like It’s 1928; Are We Heading for a Crash?
BY PETER SCHIFF
TheDailyCoin.cog
JULY 16, 2017
We’re partying like it’s 1928.
Of course, that was the year before the Black Tuesday stock market crash and the beginning of the Great Depression. During a recent interview on CNBC’s Power Lunch, Morgan Creek Capital CEO Mark Yusko said he sees a lot of parallels between today and 1928-1929.
“I have this belief that we’re flowing toward the path of 1928-29 when Hoover was president. Now Trump is president. Both were presidents with no experience who come in with a Congress that is all Republican, lots of big promises, lots of things that don’t happen and the fall is when people realize, ‘Wait, it hasn’t played out the way we thought.’”
During her recent testimony before Congress, Fed Chair Janet Yellen continued to talk up the “strong” US economy. Last month, she said banks are “very much stronger” and another financial crisis is unlikely anytime soon. Stocks continue to climb. Analysts seem positively giddy about the employment numbers.
It’s a veritable party.
But as Yusko pointed out, there are some sketchy things going on in the other room. He says that too much stimulus and quantitative easing have resulted in a “huge” bubble in US stocks.
Yusko isn’t alone. A number of prominent investors and economic analysts have warned about growing asset bubbles pumped up by central bank policy. Nobel Prize winning economist Robert Shiller called stock market valuations “concerning” and hinted that markets could be set up for a crash. Several other notable economists have recently expressed concern about surging stock markets, particularly in the US. Marc Faber has predicted “massive” asset price deflation – possibly of a drop of as much as 40% in stock market value. Billionaire investor Paul Singer recently said the financial system is not sound. And former Ronald Reagan budget director David Stockman said we should get ready of “fiscal chaos.” Even Donald Trump acknowledged it during the campaign, calling the stock market a “big fat ugly bubble.” But since his election, he seems more inclined to join the party and point to rising stocks as a symbol of his success.
Yusko also expressed concern about stagnant economic growth.
By the fall, we’ll have a lot more evidence of declining growth. Growth has been slipping.”
The Rest…HERE
