posted at 08:50
Author Name: Sam Ro
Paul McCulley On Bubbles
It's easy to look at charts like the one to the right and conclude that the dotcom bubble of the late 1990s was a lot like the credit bubble a decade later. Regnier asked if we should be worried about bubbles in the stock market like the one we may be witnessing in biotech stocks right now. It doesn't involve the irrational creation of credit, as the property bubble did. An extreme example of occurred during the dotcom bubble, where companies with no earnings exploded in value and then saw that value fall to zero. People went went broke as fast as they got rich during dotcom bubble. While the dotcom bubble did cause some serious economic damage, it was relatively contained and it was nothing compared to the credit bubble that came later. The credit bubble was marked by the U.S. housing bubble. Calculated Risk.The Scariest Jobs Chart Ever.But when that bubble burst, the contraction was for more devastating.

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