Stephen Roach: Economy Must Get Off ‘Steroids’
Roach talks to Bloomberg’s Carol Massar about the risks to an economy operating at stall speed as well as Federal Reserve monetary policy and economic lessons from Japan’s lost decades. He thinks a recessionary relapse is more likely than most, but still recommends putting in a strategy to reduce monetary liquidity and fiscal stimulus. "You can’t stand in the way of balance sheet repair," Roach says. By the second half of this year, Roach believes policy accommodation can be pulled back if the economy is doing ok. He contrasts the normalisation of monetary policy in the Eurozone favourably to the easy money being provided by the Fed.
Roach also talks about China where he sees a bubble but more aggressive measures to counteract it.