Are global market bubbles set to blow?

– One of the contributing factors in the Perfect Storm hypothesis is that there’s an inherent and growing instability in the belief that we can continue to grow our economies, increase our populations and satiate our every consumer desire without running smack into the fact that this is a finite planet with finite resources.

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From the BBC:

There is a strange fascination in blowing a bubble, when despite your better judgement, you keep willing it to get bigger regardless of the dangers.

Then, suddenly, the violent pop that leaves you picking bubblegum off your eyebrows, or crying soapy tears.

For many observers, global markets are getting dangerously close to such a bursting point.

Until recently, we have been living in a period of low global interest rates that have let consumers and companies borrow money cheaply.

That has driven demand for mortgages, let companies pay increasingly large sums for takeovers, and allowed consumers to spend freely.

And the results of this credit splurge are hard to ignore:

  • UK house prices have doubled in the past 10 years.
  • China’s main stock index has quadrupled in value since the start of 2006.
  • The UK’s FTSE 100 and US S&P 500 stock indexes are at levels not seen in almost seven years.
  • Commodity prices have been buoyed by strong global demand, pushing some such as copper to records.
  • Merger and acquisition activity has taken off, and private equity firms are now in control of some of the world’s biggest brands.

But as the records have continued to tumble, concerns have kept on mounting.

More…

– Research Thanks to the Cryptogon 

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