Ben Chu: Are markets getting ahead of themselves?
Perhaps America's politicians should commit economic self-harm more often. Everyone feared that the $85bn in automatic spending cuts implemented by Congress this month after members failed to agree on a budget deal would hammer investor confidence. But the news has instead merely bounced off the flanks of bullish financial markets, as the Dow Jones Industrial Average confirmed yesterday when the venerable index of 30 large companies breached 14,198 for the first time in its history.
The absence of panic while Republicans do their best to sabotage the economy through a combination of ideological zealotry and electoral calculation has to be welcomed. But is it entirely healthy?
In December 1996, when the Dow was at a relatively modest 12,194, the then Federal Reserve chairman, Alan Greenspan, warned against "irrational exuberance" among stock buyers who were then already ploughing into some dubious dot.com stocks. Some are wondering whether we might be seeing some similar irrationality now.
And not just in America. The FTSE 100 is at its highest level since before Lehman Brothers went bust. The Bank of England Governor, Sir Mervyn King, has warned that financial markets might be getting ahead of themselves, noting that the enthusiasm of investors did not seem justified by the data emerging on the state of the real economy. It's hard to disagree. But, then again, one of the objectives of the quantitative easing programmes that central banks have been engaging in is to lift share prices. It's a little rich for central bankers to complain when their medicine seems to be working.
Apple agrees deal with Visa on contactless payments
- 1 Is Apple's iCloud safe after leak of Jennifer Lawrence and other celebrities' nude photos?
- 2 Joan Rivers: 'Palestinians deserve to be dead'
- 3 Perez Hilton apologises for Jennifer Lawrence naked photo leak
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
iPhone 6 'hidden code' could indicate sharper screens or bigger phones
Perez Hilton apologises for Jennifer Lawrence naked photo leak
Ariana Grande nude photo leak: 'These are completely fake'
A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
London 'terror threat': Metropolitan police deny tube attack hoax
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
iJobs Money & Business
£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...
£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...
£650 per day: Harrington Starr: .NET Developer C#, Win Forms, WPF, WCF, MVVM,...
£350 - £375 per day: Harrington Starr: Looking for a Java/C++ Developer to wor...