US Fed to stop pricking asset bubbles: Roach

Stephen Roach, senior fellow at Yale and former non-executive chairman of Morgan Stanley Asia spoke to CNBC-TV18 about the global environment and initiatives of the US Federal Reserve to boost growth.

"We have got macro systemic risks in the global economy. Due to major global imbalances in current accounts, trade account balances are running at much much larger levels than they have been historically," says Stephen Roach. Also watch the accompanying video
"If you inject all this aggressive Q1 and Q2 monetary easing into the system, you have got a pretty risky and potentially toxic cocktail for traders who have been having a really difficult time in managing risk in this environment."
Regarding the Fed's initiatives, Roach says, "Try to avoid the destabilising of asset bubbles that lead to current account deficit in the US or current account surplus in china. Look, I add up all the current account deficts and surpluses around the world right now-  and they are running at about 4% of world GDP. Back in the mid-1990s that number was 1%."
"I am not putting all the blame on the Fed. We celebrate the Fed as a post-crisis hero and we sort of forget the Fed's pre-crisis role in getting us into this mess by condoning all these asset bubbles."