>Huh? What makes you think so? I have heard him say, at least in one occasion,
>that he thinks current valuations are justified by the wonderful advances in
>techblah blah blah (though he graciously conceded that he might, gasp, be
>wrong).
He says lots of things. He's also said we may look back someday and call this a bubble. But we don't know. We're not wise enough to know better than millions of sophisticated market participants blah blah.
Like I posted here the other week...
>"We can readily describe this process, but, to date, economists have
>been unable to anticipate sharp reversals in confidence. Collapsing
>confidence is generally described as a bursting bubble, an event
>incontrovertibly evident only in retrospect. To anticipate a bubble
>about to burst requires the forecast of a plunge in the prices of
>assets previously set by the judgments of millions of investors,
>many of whom are highly knowledgeable about the prospects for the
>specific investments that make up our broad price indexes of stocks
>and other assets."
>-- Alan Greenspan, speech at a conference sponsored by the
>Comptroller of the Currency, October 14, 1999
>
>The 1990s have witnessed one of the great bull stock markets in
>American history. Whether that means an unstable bubble has
>developed in its wake is difficult to assess. A large number of
>analysts have judged the level of equity prices to be excessive,
>even taking into account the rise in "fair value" resulting from the
>acceleration of productivity and the associated long-term corporate
>earnings outlook.
>But bubbles generally are perceptible only after the fact. To spot a
>bubble in advance requires a judgment that hundreds of thousands of
>informed investors have it all wrong.
>-- Alan Greenspan, testimony before the Joint Economic Committee of
>Congress, June 17, 1999
>
>"The consensus of judgment of the millions whose valuations function
>on that admirable market, the Stock Exchange, is that stocks are not
>at present over-valuedŠ. Where is that group of men with
>all-embracing wisdom which will entitle them to veto the judgment of
>the intelligent multitude?"
>-- Prof. Joseph Lawrence of Princeton in 1929, before the Great
>Crash (quoted in Shiller [2000], p. 172)