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Stephen Roach Says It's Time To "Take Out The Baseball Bat On Paul Krugman"
The Chairman of Morgan Stanley Asia is about as direct as one can be in the following Bloomberg interview: "We should take out the baseball bat on Paul Krugman -- I
mean I think that [his] advice [to push China to revalue the Renminbi] is completely wrong.” Well, somebody had to finally say it. So instead of pointing the scapegoating finger somewhere else, which seems to be the norm these days (cue G-Pap and his quadrillionth repetition that Greece is perfectly solvent and that unless somebody bails him out (ignore the lack of logic for a second), he will start playing Russian roulette with a fully loaded gun), Roach looks in the mirror: "America does not have a China problem. America has a savings problem. America has the biggest savings shortfall of any leading country in modern history, When you don't have savings you have to run current account deficits to import surplus savings from abroad and run massive trade deficits to attract the capital... Isn't it the height of hypocrisy that America can articulate a particular position in its currency but the Chinese are not allowed to do that." Also some not so kind words about Senator Schumer: "He always has a view no matter where the Renminbi is, that it is 27.5% undervalued."
In his attempt to salvage some of his "reputation", Krugman proves once and for all why economics is the most moronic "science" in the world:
“I’m a little surprised at Steve for saying that,” said
Krugman, the Princeton University professor and Nobel laureate
in economics, in a telephone interview when asked to respond to
Roach. “What I said is actually based on pretty careful
economic analysis. We have a world economy which is depressed by
China artificially keeping its currency undervalued.”
Hey Paul, what about the fact that the world would have been below a "depression" state, had China not been the defibrilator that kept the heart of the catatonic global economy beating for the past two years. Is there a chapter in the "Pretty Careful Economic Analysis" textbook on selective fact cherry-picking? Right, we figured. In the meantime the NYT's potential "paywall" content is rapidly amortizing to the point where people will soon have absolutely no desire to pay for the NYT's "expert" paid-for opinions. Which means Goldman is about to put the NYT on the conviction buy list.
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"A former top North Korean official has reportedly been executed over his handling of last year's botched attempt at currency reform that triggered widespread unrest."
http://english.aljazeera.net/news/asia-pacific/2010/03/20103183441026346...
We can only dream of similar justice in the USA, Euroland & UK
funny, over there they're executed for botching monetary policy, over here you get your picture on TIME magazine.
indeed
http://www.financialsense.com/stormwatch/2009/images/0724/RubinGreenspan...
http://johndenugent.com/jdn/wp-content/uploads/2010/01/Bernanke-Time-Per...
Are you kidding - he was executed because the people revolted (such that they can in NK) - the deval went exactly as the Dear Leader instructed apart from the fact that the great unwashed apparently didn't like getting dicked over and got a little bolshi. In order to ensure his legacy the Dear Leader whacked Pak. If you want Barry to have Benny whacked get of your backside and revolt.
Don't worry, one day your "dream" will be reality.......
It's coming!
i thought you were going on vacation.
you cant giv it up -----»
reviewing pink floyd tonight. animals±
MST: i am havin fun
oh i was a bad girl
oh the temptation
Log ago, I added Krugman to the list of useless idiots running around pretending to be "experts" on how to fix everything (and getting paid to do it). The world is full of them.
AKA, Group of Thirty...
agreed. Krugman's entire philosophy is based on half-truths and utter fallacies. He should have a cease and desist order placed on his writings and mutterings.
I thought the trade deficit stemmed from exporting our jobs to slave labor/enviro-destructive locations to get higher capital returns.Of course, being able to export entire industries can be very profitable short term...but long term the effects should be obvious.
That anyone would be surprised by this is disingenuous at best
Real national wealth is accumulated by taking raw materials out of the ground and using them to produce finished goods which are exported for a profit.This is in stark contrast to the current scheme of exporting fraudulent financial instruments while running a currency/market ponzi scheme.
Can it be more obvious?Of course, China has paid a terrible price for all that capital.They have polluted their water supply in no small way.It is becoming a toxic wonderland.
And all of this can be laid at the feet of those who demanded instant, huge returns on their capital...long range implications be damned.
I actually think capitalism can work.But only if laws prevent the most heinous of crimes and excess are in force.Imagine the chaos to come if the FED gets all the supervisory power they are asking for.The mind boggles.
You know Krugman is a whore because he knew years ago what he doesn't seem to know now.
Martin Wolf has joined him claiming that China and Germany are "uniting" to "impose deflation".
Just like Greenspan. I wonder what people like Ron Paul have been offered to "forget" Austrian economics.
Those nations which are net debtors have the most to gain from inflation, those that are net creditors have the most to lose. It is becoming abundantly clear that the US intends to inflate its way out of the mess caused by years of excess spending (and I expect the Fed is buying stocks in preparation for this, which is why there is always a bid under the market.)
China is in between a rock and a hard place, as they need the peg for the vital exports market, but Bernanke's ZIRP results in imported inflation, but now, given the pressure from the politicians who's profligate ways have been a major cause of the US problems, they will look weak if they accede to their demands.
Tyler,
If we only we had your RSS feeds (and half of your connect-the-dots power) we could possibly approach the awesomeness of your coverage, if not your prose.
Hope you're taking at least a little time off between posts.
Best wishes...
Here is the long and the short of it, without the smoke and mirrors (oversimplified):
The USA prints dollars and spends them to buy Chinese imports. Under normal circumstances, in time, this would result in inflation in the price of these goods.
The US has been saved from massive inflation because China prints Yuan and uses them to buy those dollars out of the pockets of the exporters. THIS IS HOW China pegs the value of the Yuan to the dollar, buy forcing holders to sell to them at a fixed exchange.
Under normal circumstances, China would suffer huge inflation as a result of printing so many Yuan, but because China has been emerging from developing country status, the growth has staved off this inflation.
If China were to stop pegging the value of the Yuan to the dollar, the inflation valve would be closed, and the dollar would instantly start to devalue.
The way that the peg is ended is to force China to stop mopping up dollars, and presto, inflation followed by hyperinflation.
That's why the pressure on China is crazy. China is seeing some inflation now, and it will accelerate, so the problem of inflation is coming either way, and this issue should have been dealt with long ago, but what I find interesting is how this policy can be advocated without the discussion that it will instantly lead to inflation. It's almost as if they know not what they do...
--Brian
Brian,
No that is EXACTLY why the pressure on the Chinese to let the Yuan FLOAT is needed. The Chinese peg has been a Co-dependent enabler of the $ strength and wicked trade imbalances and resulting destabilizing (and ultimately deflationary) debt bombs world-wide about ready to indiscriminately evaporate credit.
Sadly it is true that the politicians are using this to deflect attention from our own Co-dependent culpability, and the fraud and corruption enabled by 20 YEARS of excessively loose monetary policy enabled by the Chinese peg. That doesn't make it wrong.
While it may not be in the SHORT-TERM interest of the US for a Floating Yuan, it is CERTAINLY NOT in the US long-term interest for this nonsense to continue.
I would have thought a guy named Roach would be more careful with his metaphors.
Where will it end? Will he become the butt, to be stubbed out as it were? Or could things get more....creepy?
He must be a fan of wall street pro.
Comments like that would get him kicked off of ZeroHedge for inciting violence, regardless of whether we agreed with Paul or not.
If their currency is under valued, capital could flee to Asia to gain from both currency and potential growth. I wonder where Roach lives and his business dealings, if MS Asia has or wants business with China GSE's (likely) he will need good relationships with the government and will talk to improve his book of business.
Classic good cop (Roach) bad cop (Krugman).
And now, the rest of the story.... page 3
Alright. So we all apparently are ok with the Chinese policy regarding their currency.
I'd like to know what some of you suggest to re-industuralize the United States. We have 20% unemployment (plus all the soldiers, prisoners etc). We need jobs. If not protectionism then what? When we were the global industrial power we were not "free traders". So, what? I'm asking seriously.
Well, the first thing is to get a political party that actually wants to reindustrialize America. Neither of our current ones do (besides at election time).
Second, cut our current immigration levels by 90%. Again, neither party wants to do it, and we'll get nowhere importing a million serfs a year. And expel the current illegal immgrants. Without both of these, you're just pissing into the wind.
Third, eliminate all one-way globalism, where we generously open our ports while our trading "partner" is allowed to protect their internal interests.
Fourth, smack down the deep greens, and change our enviro policies to clear, well-defined "responsible use" based, instead of the contadictory lawsuit based mishmash we currently choke on.
Fifth, close our markets to mercantilist sovereign-owned "companies". Its not free trade if one party has the full power of his nation backing him up.
The Koreans are very good at manipulating "non-tariff barriers" into tariff barriers that keep American cars out.
Free trade means maintaining spheres of influence. America gives chunks of the industrial base to Korea et al in exchange for being on Team USA on issues relating to our Empire.
I'm getting ready to take a baseball bat to Stephen Roach and anybody else who thinks the renminbi should continue to be kept at such artificially low levels. The Japs had a practice called "dumping" that they used to destroy American companies and steal their business. We put an end to this practice in the late 1980's and Japan's economy has floundered since because they had nothing else. Now the Red Chinese are trying a form of "reverse dumping." They keep their currency at ridiculous levels thus keeping labor cheap and preventing imports, and in this way they are destroying and stealing American manufacturing at an even faster rate than the Nips. Inevitably, however, we will stand up to them just like with the Japanese.
Stephen Roach is a bought and paid for mouthpiece, but Fake TD, your support of the totalitarian dictatorship in China is baffling.
Fake TD!
I was wondering too about the TD's support of Chinese currency manipulation somehow being a good-thing. Does anyone else think that Tyler has gone into hiding and has been replaced by an approved "mouth-piece" of the beast?
Are we going to start seeing support articles for the poor banksters next like CNBC?
Equities, they are at generational lows BUY BUY BUY!
Granted, I don't get to read everything posted on ZH but where is TD saying he supports "Chinese currency manipulation"? I think we all know China's currency is undervalued but that doesn't make what Krugman is saying any less idiotic. Krugman is right (like a broken clock) when he says that China's currency peg is a destabilizing force but wrong about everything else. I think Peter Schiff's response pretty much covered it.
If TD supports China maintaining their currency peg, please provide a link and I'll stand corrected. Otherwise, you're just attacking a strawman.
From the article we are commenting on --
"Hey Paul, what about the fact that the world would have been below a "depression" state, had China not been the defibrilator that kept the heart of the catatonic global economy beating for the past two years. Is there a chapter in the "Pretty Careful Economic Analysis" textbook on selective fact cherry-picking? Right, we figured."
That sure sounds like a defence of Chinese currency manipulation to me. My main point is that this seems so "anti-Tyler"
"what about the fact that the world would have been below a "depression" state, had China not been the defibrilator that kept the heart of the catatonic global economy beating for the past two years." - what about AFTER the Chinese bubble implodes?
and then this: "since they're a developing economy,... they need to have a currency anchor a lot more than [USA]" - and since i'm not a resident of China, I say Tough S**t!
I can't help but get amused every time when very intelligent individuals blow their top when they fear that a couple of jews conspire to f**k with their "slam-dunk" ways to make big bucks. Now they're Krugman and Schumer. Ok, not 2 sharpest knifes in the box, but what do you prefer? Hank Paulton's ways? He spendt half the time there, tried to explain things nicely. Hey, Chinese had more respect for him (genuine respect, from his days as CEO) than for anyone else, including former and current presidents. And they did exactly NOTHING. From cooperation with Iran, to Google, to currency manipulation, to government-sanctioned and facilitated industrial espionage to poison toys - it's time that someone grows the spine and lets the Chi-Coms know that from now on we will "give", not just "take."
Accountability still exists after all. Roach said what needed to be said, and what nobody else would, or could say. Guts of steel.
Bashing Krugman doesn't take guts. It's a national past time (and rightly so).
+1
Very intelligent commentary from Roach.
Krugman is an idiot! I suspect his Nobel prize was given to him using the same criteria as Obama....
We are the cause of the majority of our problems.
When the websites www.wherebankerslive.com and www.wherelobbyistslive.com get up and running, it would be a good idea to go long the stock of Hillerich & Bradsby.
lol... +1
Economics is not a science, it is a believe system.
More or less if you talk about 'mainstream' economics, austrians seem to be different in that respect as they don't pretend that economics is a science, certainly not in a sense like physics is a science.
And can be found propping up the present failed faith based system of privately controlled government & monetary policy....
My first read of the day - today is going to be a super day, I can just tell.
China has been Roach's customer for years, and for years Roach has served them faithfully well.
When a person leads with the kind of remarks that Roach made, you know there is little wind in the sails of his argument, so he must add to it with verbal bluster.
Will Krugman's wife write his rebuttal? (I assume some of you read the profile of him a few weeks back).
Roach is a dipshit and so is Krugman.
China is BUYING our dollars. They WILL NOT let the trade balance normalize.
Nevermind the trillions of lousy debt that funded empty buildings and useless factories. There never WILL be the demand to soak up this capacity...it's already a 100% loss, RoR=-100%. How much more negatively profitable can you get than USELESS?
And China ALREADY sterilized the reserves! As such, they are pretty much useless. Go ahead, let the yuan float on the strength of a ponzi economy run by kleptocrats.
And here I thought I was alone on this perfectly good use for a baseball bat.
has anyone considered the fact that if China revalues, we will have instantaneous inflation here? I mean, instantaneous goods inflation, which will force the Federal Retards to raise rates, and destroy every asset they are so diligently propping up...??
THERE IS ALWAYS AN EQUAL AND OPPOSITE REACTION TO EVERYTHING.
Inflation is EXACTLY what we are trying to create, to stave off the coming debt destruction deflationary spiral. The Yuan PEG is making it impossible for all the reasons you state.
Take a bat to both of dem KNNEEEZZZZ
A baseball bat is insufficient. It's time to start hanging these fools, ALL OF THEM!
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