Tag Archives: Bond Bubble

Shiller: Double Dip, yes. Bond Bubble, no.

If hindsight is 20/20, maybe current perception is more like 50/50. Loads of economists and other experts have recently declared that the bond market has swelled into an unsustainable bubble. Wharton’s Jeremy Siegel among them.

But Yale professor Robert Shiller, an expert in bubbles and the author of Irrational Exuberance, isn’t convinced. Continue reading

Yale’s Goetzmann on Real Estate in the 2000s and the 1920s

Yale Professor William Goetzmann draws a parallel between the commercial mortgage-backed securities of recent years,  and a real estate bond boom in the 1920s. A boom he argues led to the stock market crash of 1929.

“By nearly every measure,” he and his co-author notes, “real estate securities were as toxic in the 1930s as they are now.”

In an interesting paper from the National Bureau of Economic Research, he and  Frank Newman,  a former research assistant at the Yale School of Management, dig into the bonds that financed the greatest boom in the building of skyscrapers ever. In 1925, 23% of all corporate debt were these bonds. Nine years later, the entire class of investments had nearly vanished. Continue reading

Jeremy Siegel says we are in a ‘bond bubble’

Jeremy Siegel, Wharton professor and author of well-known Stocks For The Long Run, published an article this week in the Wall St. Journal saying that we are in a bond bubble.  Bubbles are periods of irrational price appreciation in an asset class, followed by a return to rationality when everyone heads for the door and sells.  With yields from government bonds at multi-decade lows, this is hardly a risky call. Continue reading