Friday, March 24, 2006

Morgan Stanley's chief economist on US protectionism

Steve Roach is on the money, again:
From Beijing to Dubai, there is a growing undercurrent of economic anti-Americanism.  The irony of it all is truly extraordinary: The US has the greatest external deficit in the history of the world, and is now sending increasingly negative signals to two of its most generous providers of foreign capital -- China and the Middle East.  The United States has been extraordinarily lucky to finance its massive current account deficit on extremely attractive terms.  If its lenders now start to push back, those terms could change quickly -- with adverse consequences for the dollar, real long-term US interest rates, and overly indebted American consumers.  The slope is getting slipperier, and Washington could care less.


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