America's Secret Export: Bubbles

From Reuters:

"The bursting of U.S. housing and mortgage market bubbles has suddenly been replaced by emerging markets inflating…

… Suttle said the Fed ease replayed a now almost routine response to western banking stress and looked set to perpetuate a cycle of market bubbles that moved from Asia in the mid-1990s to technology at the end of the decade and housing post-2001…

…The fear is that when money starts to leak from developed to developing markets it supercharges already-elevated assets and stokes inflationary and systemic problems down the road.”

From The Observer:

“In its Financial Stability Review, the Bank of England has conducted a masterly dissection of the shockwaves that have rippled out from the American sub-prime mortgage market. It has also laid bare the risks: commercial property is in jeopardy, as are share prices, the US dollar and heavily indebted individuals.”

From Forbes:

“Like all manias of this kind, the Great China Stock Bubble is rooted in economic realities--the rise of China as a great economic power…

…But like all bubbles, this one comes with a large dose of artificiality and imbalances.

First, as an export-driven economy, much of China's growth is based on an artificially depressed currency. The Chinese government has kept a firm grip on the Renminbi, so that it's appreciated a mere 9% against the U.S. dollar over the last two years--while the Euro has risen about twice as much against the greenback.

Second, to keep the growth machine humming, the government has kept a lid on interest rates…”