Summers Sees Bubble Concern in U.S. Technology as Stocks Soar

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Summers Sees Bubble Concern in U.S. Technology as Stocks Soar
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By Bloomberg News


May 20 (Bloomberg) -- Former U.S. Treasury Secretary Lawrence
Summerssaid there’s a rising concern that technology stocks are in a
bubble as investors shake off their apprehension from the 2007-2009
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, who is now a professor at Harvard University, said at a
conference today 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 yesterday after its initial public offering, an echo of some
of hottest stocks in the dot-com boom. Yahoo! Inc. rose 154 percent
when it first traded in 1996. Elsewhere, U.S. farmland prices may be
in a bubble, Federal Reserve Bank of Kansas City President Thomas
Hoenig said earlier this year.

“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. He was Treasury chief from
1999 to 2001 under President Bill Clinton, a term that coincided with
the collapse of technology shares. The Nasdaq Composite Index slid 39
percent in 2000.

To contact the Bloomberg News staff for this story: Zhang Dingmin in
Beijing atDzhang14@bloomberg.net

To contact the editor responsible for this story: Bloomberg News atswong139@bloomberg.net

Last Updated: May 20, 2011 01:20 EDT

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