quotes

[Doug Henwood]

"We can readily describe this process [of bubble formation], 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-valued.... 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 Robert Shiller, Irrational Exuberance)