World On Brink Of Ruin -Stephen Roach (Morgan Stanley )

NEW YORK - Alan Greenspan, that Matador of the Money Supply, the esteemed Impresario of Interest Rates, has suffered precious few slings or arrows over his many years as chairman of the Federal Reserve. Even the White House has had to offer its critiques off the record for fear of roiling the markets or upsetting the chairman's Elvis-in-Vegas-like following. So when the chief economist of one of the world's most prestigious banks calls Greenspan a bum, that's a big deal.

And yesterday it happened. Stephen Roach, the chief economist for Morgan Stanley & Co. (nyse: MWD - news - people ), one of the most powerful investment banks and one of the 50 largest companies in the world, says Greenspan has "driven the world to the economic brink."

Writing in an upcoming issue of Foreign Policy, Roach says that when Greenspan steps down as chairman of the Federal Reserve next year, he will leave behind a record foreign deficit and a generation of Americans with little savings and mountains of debt. Americans, Roach says, are far too dependent on the value of their assets, especially their homes, rather than on income-based savings; they are running a huge current-account deficit; and much of the resulting debt is now held by foreign countries, especially in Asia, which permits low interest rates and entices Americans into more debt.

The "economic brink" line is from the headline of a press release sent by Foreign Policy. In an interview this morning, Roach said, "That's a little extreme." He does admit the nation has prospered on Greenspan's watch. Still, he does not disavow the haymakers he directs at the chairman's chin. "This is no way to run the global economy," Roach says. So far, the Fed has bucked the odds, Roach adds. But the longer the situation exists, the more chance there is that it will spell danger for the United States and the world

http://www.forbes.com/business/2005/01/07/cx_da_0107topnews.html

But, he could be right.

was triggered by the collapse of a British bank. Some institutions like JP Morgan, I believe, are dangerously overleveraged and sensitive to unexpected events. If not that, then a sudden plunge in the dollar could have huge effects -- Mexico, Indonesia, South Korea, and Argentina were small potatoes compared to a crisis in the US dollar.

and the problem with income savings is there is no extra income to save.
my wife finally got a raise in three years-37 cents and i am working for 3 dollars less than i was 3 years ago..we have no savings at all.the only thing we have is 30 thousand in equity in our house. thanks allen and george,to bad you both can`t be brought up on treason charges

a lot of the housing bubble has to do with the increased demand from immigration. If working Americans ever get tired enough of immigration, and vote in politicians who actually do something about it, housing will crash.

I am quite certain the demand for housing here is NOT related to "immigration". I'd like to see how many recent immigrants can afford what's up for sale in this area, generally, unless they are coming in as extremely high-skilled, high-paying immigrants, and not all are.

And I'm sorry. That comment is about as xenophobic as it gets. The housing bubble and our current fiscal crisis boils down to greed. Our government's greed and corporate greed, for all practical purposes one and the same, as our government is now completely corporate controlled.

why don't you prove your assertion, instead. Mine was totally reasonable, and had nothing to do with xenophobia.

at least gays got kicked back to the curb, and the USA is that much closer to regulating women's bodies. GO USA!

benefits will need to be reduced to pay for W's tax cuts he had supported, all this notwithstanding he was a chief architect of the recapitalization of the SS system back in the early 1980s so it should remain solvent for many, many decades? Now those payroll taxes on which the most affluent have typically paid on but little of their income are funding tax cuts mostly benefiting those those who typically paid payroll taxes on but little of their income. What a guy! P.S. This is the heart and soul of Repukedness for almost the last twenty-five years and the masses, clamoring to be f***ed for four more years, are truly getting the government they so richly deserve.

even more money for doing nothing. Thanks GreedSperm, I don't know why Clinton didn't get rid of his ass when he had the chance.