“I think that this frothiness that we have seen in financial markets is likely to continue, from equities to credit to housing, and in a couple of years, most likely, this asset inflation is going to become asset frothiness and eventually an asset and a credit bubble and eventually any bubble ends up in a bust and a crash. I would say that valuations in many markets, whether it’s government bonds or credit, or real estate, or some equity markets, are already stretched. And they’re going to become more stretched as the real economy justifies the slow exit, and all this liquidity is going to go into more asset inflation.
So two years down the line, we could have this shakeout … 2016 I would say.”
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics