For three consecutive months, Taiwan's business indicators have been flashing a red light, which indicates that the economy is overheated. The situation can be partly attributed to a liquidity glut that has been creating housing and stock bubbles. The phenomenon, however, is not unique to Taiwan, but is a global one. In the wake of the global financial crisis that broke in September 2008, the United States lowered its federal interest rate to near zero. Countries around the world scrambled to follow suit and to adopt a 'qualitative easing' policy, which lead to a global flood of liquidity. In Taiwan, excessively low interest rates are attracting an increasingly larger number of speculators to the housing market. The lower the interest rates and the higher the housing prices, the bigger the bubble gets. The United States has continued to keep interest rates low for fear its economic recovery might stall. However, it's now time to deal with the global economic bubble. If the United States and China make the first move to allow their interest rates to return to normal, other countries, including Taiwan, will definitely follow suit. A plunge in housing prices and a sharp rise in interest rates will pose the greatest risk to the markets. The Financial Supervisory Commission and the central bank must prepare for the challenge. (May 8, 2010) 