Wolfgang Münchau on bubble to burst sooner

I have come to this article and it is an interesting perspective to view the current status of the equity and housing markets. See for yourself: Wolfgang Münchau "This bubble won't last long", 19/10/2009, http://www.businessspectator.com.au/bs.nsf/Article/A-new-crisis-on-the-horizon-pd20091019-WXUVM?OpenDocument&src=sph

Wolfgang Münchau uses his two favourite metrics of stock market valuation are Cape, which stands for the cyclically adjusted price/earnings ratio, and 'Q', to value the market bubble. He concludes that:

"Cape and Q measure different things. Yet they both tend to agree on relative market mispricing most of the time. In mid-September both measures concluded that the US stock market was overvalued by some 35 to 40 per cent. The markets have since gone up a lot more than the moving average of earnings. You can do the maths. "

He argues that "The single reason for this renewed bubble is the extremely low level of nominal interest rates, which has induced people to move into all kinds of risky assets. Even house prices are rising again. They never fell to the levels consistent with long-term price-to-rent and price-to-income ratios, which are reliable metrics of the property markets’ relative under- or over-valuation."

He remarks:

"In other words, there is danger no matter how the central banks react. Successful monetary policy could be like walking along a perilous ridge, on either side of which lies a precipice of instability.

For all we know, there may not be a safe way down. "