Stephen Roach: Still blowing bubbles?

Is the Fed making a mistake attempting to prolong the current housing cycle?

In my opinion, the Fed squandered the opportunity to pop the equity bubble in late 1996 and early 1997. Back then, an “irrationally exuberant” equity bubble was suddenly rationalized by a Fed that embraced the New Economy with open arms. Today‚s script seems hauntingly familiar. An overly extended housing cycle is now being legitimized as a sustainable source of economic expansion. From bubble to bubble — there seems to be no stopping the follies and perils of asset- and debt-driven economic growth.

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