Growing Concern Among Veteran Investors At Stock Market Bubble That Will Burst With Catastrophic Effect
Sheldon Filger-blogger for GlobalEconomicCrisis.com
When Covid-19 first impacted major economies last Spring, stock markets throughout the world plunged by double-digits in a period of only 3-weeks. Yet, not only have these losses all been recouped; less than a year later equities have reached record levels, led by the Dow Jones index. In addition, other speculative investments such as the cyber currency Bitcoin have soared to dizzying highs. Yet, amid this financial exuberance veteran investors are displaying growing concern for the future. The Financial Times has characterized their concern as seeing “a bubble to rival anything seen in the past century.”
Simply put , there is a disconnect between the equity markets and the real economy, which is in dire straits in virtually every country. The sole reason for the escalation in equity prices is the unprecedented money printing by central banks, combined with equally unparalleled deficit spending by sovereigns. It is only this monetary and financial sugar high which is driving soaring equity prices.
When the first hint occurs that the pump-priming may be receding, however, the investors will run for the exists. What is likely to occur is a global stock market crash of calamitous proportions which, like the 1929 crash on Wall Street, will usher in a period of deep economic depression.