Roach builds a case against Bernanke

August 25, 2009

Stephen Roach has a nearly 1000-word piece in the FT slamming Obama’s decision to re-appoint Ben Bernanke as Fed Chair. He calls it a “very shortsighted decision” and goes on to list what he perceives as fundamental flaws in Bernanke’s thinking prior to the Lehman bailout. It’s worth the read. (For the record, I’m for the reappointment since Bernanke is the best one out there (at least among the names being floated about as possible successors) to engineer the exit strategy, which is going to depend on market confidence – something Bernanke enjoys.

But it made me wonder if Roach is readying for a return to the U.S. considering the amount of ink spilled on Bernanke coupled with celebrity status of other perma-bears like Nouriel Roubini. He’s currently chairman of Morgan Stanley Asia.

Could also be that he has a book, The Next Asia, coming out next month and is looking to get his name out there as much as possible before the release.


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Roach is an idiot.

Working class income growth adjusted for inflation in the U.S. peaked in 1970. The country has been awash in personal debt for decades. The growth on that has been historically fascinating – very few times in history other people were that self-indulgent (Rome maybe, Periclean Athens, Louis XIV France…) or more to the point, allowed to get away with it. Bernanke didn’t cause that. There really, really isn’t a free lunch. The check came due, it bounced.

You can get into all forms of weird analysis on this, drag in Calvinism, Keynes, Marx – who cares. Point is, we are NOT chosen by God, we really have to produce more than we consume if we want to have true economic growth, and we didn’t do that. Sucks to be us, at least for the next ten years or so. More accurately, it sucks to be our kids.

Posted by ARJTurgot | Report as abusive

Well, that sorts that out. Question, what will we do with the balance of produce ? Feed the perma-bears, whatever those are ? Maybe we should consume less ?

Posted by Hour glass | Report as abusive