Former U.S. Treasury Secretary Lawrence Summers says there is rising concern that technology stocks are in a bubble as investors shake off their apprehension from the 2007-09 American mortgage and credit collapse.
“Who could have imagined that the concern with respect to any American financial asset, just two years after the crisis, would be a bubble?” Summers, now a professor at Harvard University, said at a conference Friday in Shanghai. “Yet that concern is increasingly raised with respect to American technology, with respect to certain other American assets. That is a reflection of the resumption of confidence.”
LinkedIn Corp., the largest professional-networking website, more than doubled Thursday after its initial public offering, an echo of some of the hottest stocks in the dot-com boom. Yahoo Inc. rose 154 percent when it first traded in 1996.
“Today there are very substantial risks, to be sure, but the economy is growing, unemployment is falling and financial conditions are normalized,” said Summers, who was director of the White House National Economic Council in the Obama administration from 2009 to 2010.
Summers said the “central irony” of a financial crisis is that it’s caused by too much confidence, borrowing and lending, and is resolved by more confidence, borrowing and spending.
