Susan Tompor: Are We Or Aren’t We Looking At Another Bubble?

By Susan Tompor
Detroit Free Press

WWR Article Summary (tl;dr) Federal Reserve governor Lael Brainard, who spoke Sept. 12 before the Detroit Economic Club meeting noted that the Federal Reserve’s assessment suggests that “financial vulnerabilities are building, which might be expected after a long period of economic expansion and very low interest rates.”

Detroit Free Press

Just 10 years after the financial crisis, many people find themselves asking the same odd question that a friend asked me last week when we met for coffee.

“So, are we in a bubble?”

A decade ago, of course, we faced such a deep, brutal financial crisis that we couldn’t imagine ever seeing record stock prices or home values again.

It was an entirely different story as the dominoes tumbled in the financial collapse.

Investment banker Lehman Brothers filed for Chapter 11 bankruptcy on Sept. 15, 2008, triggering even more declines on Wall Street.

Millions of people lost jobs in the Great Recession. Millions lost their homes.

Now oddly enough, many are asking: “Are we in a bubble?”

Seriously.

The blue-chip index fell by nearly 54 percent measuring from its record close of 14,164.53 points on Oct. 9, 2007, to rock bottom when the blue chip index closed at 6,547.05 points on March 9, 2009.

But now the Dow is trading close to 26,000.

People who have money tucked away in mutual funds in a 401(k), and those who own homes in communities where home prices have surged, are wondering what’s next, as they’re seeing record values for much of their wealth.

You’re back watching CNBC; you’re once again opening those financial statements; you’re aware of what the house down the street sold for a month ago.

Everyone, of course, isn’t flush with cash or even back where they started a decade ago.

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