Stock market bubble: Will RBI warning of a bubble in stocks require followup action?

 Stock market bubble: Will RBI warning of a bubble in stocks require followup action?
US Department of Justice has opened a probe into the $20 billion implosion of the family fund Archegos Capital Management that led to more than $10 billion (approximately Rs 72,000 crore) losses for several blue-blooded banking giants including Credit Suisse, Nomura, UBS, Morgan Stanley and Goldman Sachs.

The meltdown led to an erosion of $33 bn in value in stocks that the fund had gambled on.

The Archegos saga should serve as a wake-up call for financial regulators and governments all over the world, who have swamped the markets with tens of trillions of dollars of monetary and fiscal stimulus with the objective of resuscitating “real economies” ravaged by the Covid-19 pandemic.

A large part of this torrent of liquidity has found its way into the financial markets creating unsustainable bubbles.

The root cause of Achegos’ meltdown was its avaricious appetite for external debt-funded investments in stock markets and an equally…

Read full article…economictimes.indiatimes.com