News Release

Analysts Available on Stock Downturn


As Wall Street ends a week of plummeting stocks, economists who have warned of a massive price bubble are available for interviews:

Dean Baker has written extensively about the over-valuation in the stock market the last three years, including a recent article in Dollars and Sense entitled “The New Economy: A Millennial Myth.” In an Institute for Public Accuracy news release on March 16 of this year — as the stock market was rising — Baker, who is co-director of the Center for Economic and Policy Research, warned about elation: “The main feature of the ‘new economy’ is a stock market bubble of unprecedented magnitude. When the bubble bursts, the new economy will just be a bad memory. The inflated stock market has created enormous distortions in the economy, the ramifications of which will only be apparent when stock prices return to more normal levels.” Today he said: “The new economy cannot change rules of arithmetic and logic. People value stock because of the profits that they expect companies to earn either presently or in the foreseeable future. There was no path of profit growth that made sense of the stock prices we had been seeing. The only question was what event would set off the correction. The political leaders and economic experts who celebrated the new economy, instead of warning people of the dangers of an over-valued stock market, have much to answer for.”
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Author of Wall Street and the forthcoming book A New Economy?, Henwood is the editor of Left Business Observer. He said today: “It’s ironic the stock market should be tumbling just before demonstrations in Washington against the World Bank and International Monetary Fund, since almost two decades of euphoria on Wall Street have contributed immensely to the prestige of the American economic model, which the World Bank and IMF have been busily imposing on the rest of the world under the guidance of the U.S. Treasury. That model — loose regulations, small welfare state, great income inequality and a big role for big finance — has been delivering mightily for the rich, but now it looks like it’s losing its magic touch even for them.”
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For more information, contact at the Institute for Public Accuracy: Sam Husseini, (202) 347-0020 or (202) 332-5055