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Raghuram Ranjan : Tesla’s success should justify its share price.

By Priyanka Verma 
Updated Date

Bengaluru: The economist who correctly predicted the global financial crisis of 2008 believes Bitcoin is the ‘classic bubble.” In an exclusive interview to ET NOW on Wednesday Raghuram Ranjan said while it is hard to say if the world is in for another bust, he cited Bitcoin and Tesla’s astonishing rise as examples of bubblish behaviour by markets, stoked by easy monetary policy and very low-interest rate.

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Economist and former Reserve Bank of India (RBI) Governor Raghuram Ranjan said tesla’s success and spread of vehicles must be viewed firmly and should justify its rising stock price . he added that Tesla is a case of a stock that’s being priced at many multiples of the price of automakers such as Toyota or General motors.

“I think one has to look around the world. Bitcoin reached $40,000 after being at $10,000 in the beginning of, of last year. So Bitcoin is the classic bubble, right, it produces no value. It is an asset, which can’t even be used for payment because it is really difficult. And yet it hit $40,000. So why are people buying Bitcoin, because they think it will go up. And that is bubblish thinking.”

“There are lots of small investors with plenty of money sometimes from the transfer, sometimes from sitting at home and not spending it elsewhere, who are also punting on the stock market. So low-interest rates, the fact that manufacturing is back, and sometimes it’s showing healthy growth, the fact that many large companies are benefiting while small companies are going out of business. I don’t want to be a stock market sort of expert and tell you it’s going to go up by this much and so on. I don’t know. But I do think that it’s a good time to be diversified,” Ranjan said.

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