"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved."
- Ludwig von Mises

Monday, November 15, 2010

Morgan Stanley's Asia Chief, Stephen Roach Warns Asia of a Tsunami of Money

From the BBC, an interview of Stephen Roach.  Some of his points:

- Aisan Economies need to brace themselves for an external flood of liquidity into their markets.

- In these circumstances, capital controls are one option that must be considered.

-The US "did a lot of damage to its economy by allowing bubbles to form in both property and credit and most of all allowing those bubbles to distort nearly 80% of the economy in personal consumption and residential activity.  And now we're paying a price for that, that is likely to result in very weak domestic demand for years to come..."

- America is the biggest consumer in the world.  4.5% of the world's population consumes about 10 trillion dollars... the world's biggest consumer is on ice, there is no consumer who is going to take his place...

-Asia needs to stimulate internal demand, because these export dependent economies need to find a new model.

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