Asset price bubble due for deflation

Since September last year, certain equity sectors have experienced something of an asset price bubble. Although relatively rare, such phenomena have been a recurring feature throughout economic history. The technology and telecommunications sectors have risen strongly, a crucially important driver being the performance of Nasdaq. In the beginning, this rally was based on a fundamental reappraisal of relative growth rates, and occurred in markets worldwide. Spurred on by the excitement surrounding the commercial opportunities of the internet, investors rapidly drove up the share prices of...