Paul Krugman: "There is Madness in the US Stock Market... Concerned About Being Left Out of the Bull Market"

Paul Krugman, Distinguished Professor at the City University of New York

[Asia Economy Reporter Jeong Hyunjin] Paul Krugman, Nobel laureate in Economics and professor at the City University of New York, evaluated on the 28th (local time) that a 'mania' is appearing in the U.S. stock market amid the COVID-19 pandemic.

In an interview with CNBC on the same day, Professor Krugman said, "It is hard to shake the feeling that there is mania in the U.S. stock market right now," diagnosing that the 'Fear of missing out (FOMO)' is widespread in the stock market rally. He emphasized, "Looking at how investors are flocking to stocks of bankrupt companies like rental car company Hertz, it is clear that some mania is underway in the stock market."

In the New York stock market this month, the S&P 500 index showed an upward trend despite the increase in COVID-19 confirmed cases across the U.S. Although it recorded 3,218.44 on the day, down 0.65% from the previous trading day, it has already risen 43.8% since March 23 of this year. Securities firms stated that individual investors have been opening new accounts in large numbers over the past few months in an attempt to make money in the stock market.

Krugman viewed that some stock traders have yet to gauge the extent of the economic damage caused by COVID-19. He diagnosed that as bond yields approach historic lows, some investors have no alternative investment options other than stocks.

As the Federal Open Market Committee (FOMC) regular meeting is held over two days starting today, Professor Krugman defended the Federal Reserve (Fed) for taking proactive measures such as purchasing corporate bond exchange-traded funds (ETFs) to cope with the COVID-19 pandemic, saying that in a crisis situation, they could not have just done nothing and that there was no other way. He emphasized that if policymakers focus on controlling COVID-19 rather than reopening the economy, the conditions for a rapid economic recovery will be established.

This content was produced with the assistance of AI translation services.