The San Francisco Business Times reports in a new article that the CEOs of Bank of America and GMO, a global investment management firm, have both commented recently about what they see going on in the financial and asset markets. Their views are similar to those expressed by the CEO of a major private equity fund, as reported here.

The San Francisco Business Times article quotes Ken Lewis of Bank of America as stating, "We need a little more sanity in a period in which everyone feels invincible and thinks this time is different," and "[w]e are close to a time when we’ll look back and say we did some stupid things." A Bloomberg article on his remarks can be found here.

Jeremy Grantham, CEO of GMO, went further and said he believes we are in the first "global bubble" in everything from stocks to junk bonds to land in Panama. His definition of a bubble is also interesting: "Perfect conditions create very strong ‘animal spirits’ reflected statistically in low risk premium," and "[w]idely available cheap credit offers investors the opportunity to act on their optimism." A version of his comments, published in the Financial Times and available courtesy of, can be found here.

I can vividly recall a comment made by a highly respected senior corporate attorney shortly before the dot com bubble burst in early 2000. Although he didn’t use the term bubble, his description of the way venture funds were rapidly investing in companies and how, in turn, the public equity markets were snapping up shares in IPOs, still rings in my ears: "In thirty years of practice, I have never seen anything like it."

Jeremy Grantham of GMO reminds us that "Every bubble has always burst." It’s still hard to tell whether this period is a really a bubble or something short of it, and the recent comments from CEOs and others may be aimed at reducing some of the froth in various asset classes. However, if we actually are in another bubble there’s little reason to think the outcome will be "different this time." If so, at some point we may see a new wave of restructurings and Chapter 11 filings.