Big Fat Ugly Bubbles

Does this growing stock market make me look fat?

On BusinessInsider.com an article about financial market bubbles drew my attention. In it there is an interesting quote from Carl Icahn, special advisor to Trump.

http://www.businessinsider.com/will-president-trump-prick-the-big-fat-ugly-bubble-2017-1


     In a recent interview on CNBC, Icahn echoed his concerns once again:

Most telling is how Icahn ended the interview, unprompted. "If you're asking me am I concerned about the market on the short term. Yeah I'm concerned about it," he said. "You can look at so many factors here that you have to worry about. Obviously, if you get into a trade war with China, sooner or later, I think we're going to have to come to grips with that, maybe it's better to do it sooner…"

We have known since the recession of 2007-09 that the Fed's purchase of assets created a bit of a bubble in the market. But, what is different about that and a normally occurring bubble, such as George Soror might describe, is that the Fed is not an irregular unpredictable source of those bubbles. It was created as a temporary support and to help spur business activity and it should be withdrawn when the economy is going well and can afford to have the crutches removed. To call them "big fat ugly bubbles" is just impolite considering all the benefit we have received from those supports.


Trade War?

The second thing about the quote which is very important is that Icahn seems to think we need to start a trade war with China. I hope that isn't something Trump would actually consider and I hope other international trade experts would speak up and dissuade him from even discussing or considering that. It can only harm the economy.