Bubbles are brewing everywhere, says consumer advocate Dan Barnabic. And not surprisingly, he warns that many of us may suffer when those bubbles pop.
Consumer Advocate Barnabic: Almost Entire US Economy Is in a Bubble
By Dan Weil
“The stars seem to be aligned for the bubble to burst within almost all sectors of the economy. This may spell a serious hardship for an average American,” Barnabic writes in an article for MarketWatch.
“Whether it’s going to happen later on this year, or in the next three years, isn’t a question anymore. The question is, how severe will it be and are Americans going to have enough resources to sustain and recover from it?”
Stocks might be in the third-biggest stock bubble in history, he notes, adding that financial consultant Andrew Smithers of Smithers & Co. estimates stocks are now 80 percent overvalued.
Barnabic calculates that real estate is overvalued by at least 35 percent and maybe up to 50 percent in some crowded urban areas.
“If real estate was to crash simultaneously with the stock market, the future doesn’t bode well for the North American economy,” he cautions.
“It may now be time to sell your stock and real estate and hold on to your cash. Later on, you can buy the stocks and real estate cheaper once the bubble bursts and devaluation takes place.”
Activist investor Carl Icahn apparently is on bubble alert too. Recent comments from Federal Reserve Chair Janet Yellen “suggest, and I agree, that we are in an asset bubble,” he writes on Yahoo.
Presumably Icahn was referring to stocks and some areas of the credit market. The S&P 500 has soared 190 percent from its March 2009 low.