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Stephen Roach: "I Would Have Voted Against Ben Bernanke"
Some harsh words from the former Morgan Stanley's Asia vice chairman addressed to Bernanke, saying
that "his policy approach has always been since he was an academic to condone
asset bubbles, argue that central banks do not need to pay attention to
asset prices in setting monetary policy, that they had the firepower to
clean up a mess after the bubble had burst." Ironically, Roach has been a steadfast supporter of Chinese monetary policy, which many objective observers have opined is a one-for-one replica of our own Fed's policy right here in the United States, which invoked the question during the interview: "Are you China’s Alan Greenspan?". Regardless, Roach is sticking to his side of the story: "I think it’s really wrong to view China as an
enormous macro property-bubble story." On the other hand, entire ghost cities, empty apartment buildings, massive losses on bank property books and urgent recapitalization efforts by most of the China's top property lenders, seem to indicate otherwise. Either way, how nobody has figured out to put Chanos and Roach in the same room together, tape it, and become an instant millionaire is confusing.
Roach: I’d give it a higher probability than most,
maybe 40% at some point over the next year. We have a weak recovery,
weak labor market, weak consumer purchasing power…and a consumer that’s
unable to rely on property and credit bubbles to support consumption
anymore. So if you have a disappointing consumer and any kind of
unexpected shock you could go down again. […] Double-dips are not as
infrequent as you might think…Weak recoveries leave you vulnerable to
shocks.
On the austerity/stimulus debate:
Roach: I think [Fed policymakers] have done more
than enough at this point. [Interest rates] are at levels that actually
would insulate the economy in the event of a double-dip…I think they
should actually have rates higher than they are right now.
On former Fed Chairman Alan
Greenspan:
Roach: I think that one of the problems we had in
the aftermath of the bursting of the equity bubble is that Alan
Greenspan kept the policy rate too low for too long, set us up for
credit and property bubbles that led to an enormous crisis, [and] I
think Ben Bernanke is just rerunning the Greenspan movie of seven or
eight years ago.
On Chairman Bernanke:
Roach: I would have voted against him, I think he’s a
great public servant, from what I hear a very nice and kind man, but
his policy approach has always been since he was an academic to condone
asset bubbles, argue that central banks do not need to pay attention to
asset prices in setting monetary policy, that they had the firepower to
clean up a mess after the bubble had burst. Well, look at the mess we’re
in right now. That approach really has been rendered obsolete by the
great crisis of ’08-’09 and I think needs to be changed.
On whether the Chinese economy is in a
“bubble”:
Roach: Chinese authorities have a completely
different approach in dealing with maters of asset bubbles, credit
bubbles…they are preemptive, the U.S. is reactive. China wants to build
firewalls between the asset markets and the real economy so they certain
do have, or they did have, I should say, a high-end property bubble…in
April they took extremely tough actions to curtail multiple purchases by
speculators and they stopped! And they did that before the housing
bubble got bigger and ended up distorting the real economy, so they’ve
done a good job. […] I think it’s really wrong to view China as an
enormous macro property-bubble story.
Are you making the Greenspan argument now about China? Are you
China’s Alan Greenspan?
Roach: Oh God, I hope not.
»
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no one has articulated our sad state of affairs better than george did in this 3 minute clip. must watch for all... http://www.youtube.com/watch?v=hYIC0eZYEtI
I'ts a shame he is gone. George always had the courage to speak the truth.
Edit: And a lot of it is damn funny! Not so much this clip.
And he didn't even need a PhD in economics to figure it all out.
Pointing out that the U.S. consumers may not be able to prop up the system again this time around and warning against the cheerleaders that rah-rah the "recovery" is becoming popular; as the truth should be.
Robert Reich has this piece out today:
The Vanishing American Consumer and the Coming Trade War."President Obama has vowed to double U.S. exports within the next five years. That's because exports are critical for rebooting the American economy. It's clear American consumers can't get the economy going on their own. They can't restart the jobs machine. They've run out of money and credit.
It's not just that one out of four Americans is unemployed or underemployed (working part-time, overqualified, or at a lower wage than before). More significantly, the Great Recession burst the housing bubble that had let American consumers turn their homes into ATMs. Now the cash machines are closed."
Cant double exports in the next 5 years and have a stong US$.
So which is it Washington?
Buy CAD$, AUD$, CHF.
+1
How can this arrogant prick not see the hypocrisy of his words??
What a fucking douchebag!
His career was as a sell-side economist
only douche-bags can hold that slot
I second that! Shalom Ben should have been tossed out on his ass long ago!
Additionally, read this:
http://usawatchdog.com/two-stories-that-should-scare-the-heck-out-of-you/
Good link Turd thanks. See the link I shared above from Robert Reich.
Thanks. Not sure I've ever agreed with that little midget before but he has a point.
My question is, which one of these guys in Robert Reich? I always get confused...
http://www.youtube.com/watch?v=k_CAs3q7G48
I vote Roach as he has stated countless times over the years that the Fed should have taken away the punchbowl. Although i must say....."no more Chinese take away's for you Roach"(too much hope on China).
As confucius said once "Man who eat too much chinese food become yellow belly"
(OT, but interesting nonetheless to those of us with expat fantasies.)
Starting Tuesday, it will cost $450 to formally renounce US Citizenship. Currently, doing so is free.
http://www.cnn.com/2010/TRAVEL/07/07/passport.fees.hike/index.html?hpt=Sbin
Currency controls, here we come!!!
someone please explain to me why Roach defends the mother-of-all-jokes Chinese Macro Policy Authorities? What the fuck?
Just more proof, imho, that he's on the side of evil
He may just be sitting on a pair of chopsticks.
I get really hacked off with all these people going on about 'The Recovery' - it's not! It's a DEPRESSION!
Things are not better than 2008, they are getting worse.
Something that's hardly, if ever, discussed is the demographic time bomb waiting for when all baby boomers retire.
DavidC
The fuse is no longer lit. There is no retirement, only death and taxes.
The only economy I care about is the one in which the lower 90th percentile lives in and that still has an outrageously high unemployment rate and 0 income growth.
There is no recovery for real people.
how does a TBTF bank employee come out and attack the people that supported him and not expect serious retaliation, as well as a serious hit to his reputation. this guy must be more politically connected than it looks, or he is just sewing the seeds of his downfall.
that.......or this is calculated to make it look like the ultra rich profiteers and kleptocrats are actually want justice. don't be fooled. just because the message is the correct one, the messenger is still who he is, not what he says.
More rally next week ?
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
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