Irrational Exuberance Overtakes Asia
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Dec. 13 (Bloomberg) -- What does Alan Greenspan have to dowith rallies in Indian stocks, hopes for a resurgent Japan andthe blind faith that China can grow at a rate of 7 percentforever? More than you’d think.
Call it the Greenspanization of Asia. The former chairman’stenure at the Federal Reserve, from 1987 to 2006, established anew political compact of sorts, whereby governments abdicatedresponsibilities to unelected central bankers. The “Greenspanput” that flooded markets with cash whenever things got diceyhas become the default position in Washington. In Asia todaywe’re seeing an even more dangerous escalation of the practice -- papering over cracks in economies that desperately needtougher, structural reforms.