Comment: Unwinding the global asset bubble... Danger...

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Unwinding the global asset bubble... Danger...

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Neither China nor the United States has built a sustainable growth dynamic with stimulus. As the stimulus side effects – bubbles and rising leverage – become the main show unwinding stimulus becomes urgent. This is why both countries are likely to take tightening steps.

Unwinding stimulus is usually a dangerous business. One never knows how much hot air the stimulus has created. When it leaks, it could cause a big explosion. For example, the Fed's tightening cycle in the past usually triggered an emerging market crisis. As the United States itself isn't on a strong growth path, the risk at home is substantial.

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