Irrational Exuberance: The end is nigh...but when?

Not only equity markets deserve the rough side of Alan Greenspan's tongue, say the market bears with increasing ferocity. Look at the debt markets. Fools are rushing into longer risk and less safe credits which should be the hunting-ground of specialists, warn the Cassandras of the capital market.

In January the Republic of Argentina launched a $2 billion 20-year global bond. It was almost four times oversubscribed, priced below the indicated spread range and still tightened 40 basis points in the first two days' trading. The Argentina/Mexico spread differential at 20 years fell from 120bp to 75bp.

As the issue was launched, bookrunner Merrill Lynch's head of fixed income Jim Quigley enthused: "We saw accounts in this that we have never seen in an emerging market instrument before. There were high-quality European pension funds, sophisticated financial institutions which usually buy only triple-A and double-A securities." Other syndicate members confirm...