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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

June 13, 2014 at 10:41 AM

Vote: Trouble in the markets?

In fits and starts, stocks continue to extend last year’s rally, even if some valuations don’t make sense. The bond market is troubled, worried. Trading is oddly quiet and plenty of bad bets have been made. Economist Nouriel Roubini calls it a “schizophrenia” facing investors. He has also been concerned about the beginning of a credit bubble.

Which brings us to a fascinating article on the New York Times‘ Dealbook by former M&A banker William D. Cohan. He writes:

…the problem is that — just as in the year or so before September 2008 — the credit markets are once again badly mispricing risk. Thanks to the easy-money policies in ascendancy among central bankers around the world, which have pushed down interest rates to historically low levels, investors are desperate for yield, or higher returns on their money. The ensuing feeding frenzy is causing otherwise intelligent people to lose their minds about the risks they are taking with their own and other people’s money. It’s as if the debt markets can no longer conceive of a situation where things can go wrong, which is usually the precise moment when they do.

Check it out and vote:

This Week’s Links:

Seattle is the new center of a tech boom | New York Times

With data and resolve, Tacoma fights pollution | New York Times

Are we suffering from too many or too few workers? | Beat the Press

Piketty and the diminishing returns of capital | Brad DeLong

Larry Summers and finance | Baseline Scenario

Climate change threatens America’s King Corn | Grist

Our fake book exposed Amazon’s fatal flaw | The Guardian

Commercial real estate didn’t go boom and bust — is this why? | BusinessWeek

The ‘sharing economy’ hype | Naked Capitalism

Today’s Econ Haiku:

New windows function

The slits from a prison cell

Stealing trade secrets

Comments | More in Stock market

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