Stephen Roach And Paul Krugman Are Boxing With Shadows In The Dark With Regards To China
As we have remarked before on here, Stephen Roach is one of our favorite economists. The surly man is often a good source of contrarian analysis in a world of Orwellian group think. But just as we have remarked with another favorite, Marc Faber, Roach missed much of this crisis.
In this recent interview, Roach again is completely wrong in his analysis of the United States and what needs to happen in our economy. His belief that the United States needs to raise its savings rate shows a complete misunderstanding of basic economics. This from one of our favorite surly men. (We like surly women on here too. Haha. )
The United States had the world's highest savings rate before the Great Depression. How'd that work out for you? 30% unemployment, 5,000 municipal bond defaults, 5,000+ bank failures, complete economic chaos and on and on and on. Today, China has one of the world's highest savings rates. Yet it is no coincidence we have remarked repeatedly that emerging markets, including China, with high savings rates are doomed. Continue to watch as the world unfolds. You'll witness history repeating itself firsthand.
Simplistically, from a macro perspective the U.S. economy today can cumulatively be compared to an unemployed individual. So, let me ask you. How many people do you know who are unemployed who are able to save their way to prosperity as Roach suggests? It's a defenseless position of ridiculous jabberwocky.
Savings are completely irrelevant to any discussion of economic recovery. Roach and Krugman (who Roach is actually arguing with in his defense of China's yuan policies) arguing about the yuan or what the United States should do to China is completely irrelevant. These two are in left field arguing about potato salad. Two economists boxing with shadows in the dark. But then, both of them missed this crisis, so why should we listen to their ideas on how to fix it? They still don't even know what the problem is.
Roach is indeed right on one point. The U.S. cannot dictate to another country how to manage their currency. This is indicative of the supreme arrogance of our federal government and its attempt to insert itself in the sovereignty and decision making of every country on earth. The hubris of American imperialism. In the end, the U.S. will eventually implement economic policies that make this matter moot.
In this recent interview, Roach again is completely wrong in his analysis of the United States and what needs to happen in our economy. His belief that the United States needs to raise its savings rate shows a complete misunderstanding of basic economics. This from one of our favorite surly men. (We like surly women on here too. Haha. )
The United States had the world's highest savings rate before the Great Depression. How'd that work out for you? 30% unemployment, 5,000 municipal bond defaults, 5,000+ bank failures, complete economic chaos and on and on and on. Today, China has one of the world's highest savings rates. Yet it is no coincidence we have remarked repeatedly that emerging markets, including China, with high savings rates are doomed. Continue to watch as the world unfolds. You'll witness history repeating itself firsthand.
Simplistically, from a macro perspective the U.S. economy today can cumulatively be compared to an unemployed individual. So, let me ask you. How many people do you know who are unemployed who are able to save their way to prosperity as Roach suggests? It's a defenseless position of ridiculous jabberwocky.
Savings are completely irrelevant to any discussion of economic recovery. Roach and Krugman (who Roach is actually arguing with in his defense of China's yuan policies) arguing about the yuan or what the United States should do to China is completely irrelevant. These two are in left field arguing about potato salad. Two economists boxing with shadows in the dark. But then, both of them missed this crisis, so why should we listen to their ideas on how to fix it? They still don't even know what the problem is.
Roach is indeed right on one point. The U.S. cannot dictate to another country how to manage their currency. This is indicative of the supreme arrogance of our federal government and its attempt to insert itself in the sovereignty and decision making of every country on earth. The hubris of American imperialism. In the end, the U.S. will eventually implement economic policies that make this matter moot.
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