US and Brazil key areas of concern

Last updated 10:03 02/12/2013

Relevant offers

World

Ardent Leisure considers developing part of Dreamworld precinct China's Huawei enters PC market to take on Lenovo, HP, Dell Dating site Ashley Madison is 'back' and claiming big numbers of new users The emojis that cost over $3000 Marijuana delivered to your door in the US, just like pizza. But is it legal? North Korea's Unit 180, the cyber warfare cell that worries the West Jessica Irvine: You don't have to be a communist to admit capitalism is in crisis Thanks to US President Donald Trump, Washington's portaloo industry is flush Accused tax fraudster spent A$100,000 on strippers and escorts in four months GM to stop selling vehicles in once promising India, exit South Africa

An American who won this year's Nobel Prize for economics believes sharp rises in equity and property prices could lead to a dangerous financial bubble and may end badly, he told a German magazine.

Robert Shiller, who won the esteemed award with two other Americans for research into market prices and asset bubbles, pinpointed the US stock market and Brazilian property market as areas of concern.

"I am not yet sounding the alarm. But in many countries stock exchanges are at a high level and prices have risen sharply in some property markets," Shiller told Sunday's Der Spiegel magazine.

"That could end badly," he said.

"I am most worried about the boom in the US stock market.

Also because our economy is still weak and vulnerable," he said, describing the financial and technology sectors as overvalued.

He had also looked at "drastically" higher house prices in Rio de Janeiro and Sao Paulo in Brazil in the last five years.

"There, I felt a bit like in the United States of 2004," he said, adding he was hearing arguments about investment opportunities and a growing middle class that he had heard in the United States around the year 2000.

The collapse of the US housing market helped trigger the 2008-2009 global financial crisis.

"Bubbles look like this. And the world is still very vulnerable to a bubble," he said.

Bubbles are created when investors do not recognise when rising asset prices get detached from underlying fundamentals.

Ad Feedback

- Reuters

Special offers

Featured Promotions

Sponsored Content