The Cost of Bursting Bubbles

Monthly Review, Nov, 2002

The equity bubble helped to create other bubbles--most notably in the housing market and in consumer spending. Their continued existence poses a serious threat to lasting expansion....There is good reason to believe that both the property and consumer bubbles will burst in the not-so-distant future. If they do, there is a realistic possibility that the United States, like Japan in the 1990's, will suffer a series of recessionary relapses over the next several years. Yet denial remains deep, just as it was when the Nasdaq composite index was lurching toward 5,000. Few want to believe that this economic expansion may be built on such a shaky foundation.

Stephen Roach, chief economist and director of global economics at Morgan Stanley, "The Cost of Bursting Bubbles," New York Times, September 22, 2002, Op-Ed page