A New Asia Bubble

The World Bank and IMF are starting to get it. If a central bank pumps money, it creates a bubble. Alex Frangos and Bob Davis at WSJ report:

The World Bank warned Tuesday that the sudden reappearance of billions of dollars in investment capital in East Asia is "raising concerns about asset price bubbles" in equity markets across Asia and in real estate in China, Hong Kong, Singapore and Vietnam. Also Tuesday, the International Monetary Fund cited "a risk" that surging Hong Kong asset prices are being driven by a flood of capital "divorced from fundamental forces of supply and demand."

Behind the trend are measures such as cutting interest rates and pumping money into the financial system, which have left parts of the world awash in cash and at risk of bubbles, or run-ups in asset prices beyond what economic fundamentals suggest are reasonable.

It should be added, since the World Bank and IMF are new at this type forecasting, that these bubbles can go on for years and years, as long as the associated central bank keeps the printing presses going.