Nobel Prize winner Robert Shiller fears a dangerous financial bubble is developing in the US.
Shiller, who won the annual award this year for his research into market prices and asset bubbles, highlighted the US stockmarket and the Brazilian property market as two areas where worrying trends are emerging.
Shiller told German magazine Der Spiegel: ‘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. That could end badly.'
He sees the US as one of the most overvalued markets in the world, saying its technology and financial sectors are among the most expensive. ‘I am most worried about the boom in the U.S. stock market. Also because our economy is still weak and vulnerable,' he said.
Shiller also expressed concern about ‘drastically’ higher house prices in Rio de Janerio and Sao Paulo, where the cost of property has rocketed over the last five years.
He compared being told about the investment opportunities in Brazil as similar to those he heard back in 2000 in the US. ‘Bubbles look like this and the world is still very vulnerable to a bubble Shiller said.
Shiller made his comments following another strong month for US stockmarkets in November in which the Dow Jones, S&P 500 and Nasdaq registered their third successive monthly gain.
The Dow and S&P both touched record highs during the month, while the technology-focused Nasdaq hit 13-year highs.