Wall Street Bubble Trouble
Nightly Business Report
Thursday, March 29, 2007
SUSIE GHARIB: Tonight’s commentator says he’s getting a bit worried about Wall Street. Here’s Myron Kandel, president of the New Hampshire Initiative for Corporate Responsibility and Investor Protection.
MYRON KANDEL, PRESIDENT, NEW HAMPSHIRE INITIATIVE FOR CORPORATE RESPONSIBILITY:
I’m worried that another stock market bubble may be in the works. Bubbles
aren’t so bad when they’re growing. After all, it was Mae West, that
sex symbol of a bygone age who said, “you can't get too much of a good
thing.” But the trouble with bubbles is, they eventually burst.
I’m beginning to sense a bubble, at the very least, a bunch of small ones.
Real estate is deflating, exacerbated by the sub-prime scare and the threat of
widespread foreclosures. The economic reports are spotty and there’s uncertainty
over the direction of interest rates. Then there’s the rush of Internet-related
companies to go public, the quicker the better. The original dot-com fiasco was
fueled in part by the greed of supposedly reputable investment houses to promote
and cash in on that craze.
Nowadays there are billions of dollars sloshing around in hedge funds playing sky-high with risk and private equity firms paying sky-high prices for companies they then load with debt. The rush to go public or go private isn’t just for the young and the restless. How about a giant like the Blackstone Group? Then there are societal trends. I get worried when restaurants try to sell $1,000-pizzas and Wall Street moguls spend millions on parties. I’m not smart enough to know when a bubble hits its peak and is about to burst. That may not yet be here quite yet. But my gut feeling is, watch out! I’m Myron Kandel.