"So what the authorities are trying to do is actually to add state leverage, government bond leverage to private sector leverage so that the bubbles go on and the consumption goes on."
The problem is exacerbated by the current easy U.S. monetary policy.
"Because money is free to the banks, the banks do not want to lend that much, so they will actually buy government bonds -- which enables the government to give out some more money," Roche explained.
"If you accept that what caused the credit crisis in the first place was too little savings and too much borrowing and too much easy financing of that borrowing, you're now repeating the same errors."
Roche said he takes issue with the architecture of the recovery as it is "sowing the seeds for future greater instability."
"When the sovereign credit bubble goes (bust), there will be no more policy tools left to bail the world out of its own profligacy."
"It's a situation which is fine if you're going down the chutes."