YouSaid · the spoken record

Stephen Roach

lines on the record: 87
first: 2015-12-21
most recent: 2015-12-21
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Well, it's a big debate, as you say. And I think it's appropriate to raise that question. I think, though, that it's really an oversimplification to say that if we had just done what, say, Paul Krugman said, everything would be fine. We went through a Japanese style balance sheet recession.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well This is a seven and a half year average. So, you know, I think I don't want to back anything out of it. I just want to take the numbers as it stands. Consumer demand is weak. And so People forecast the future with an aim toward hiring or investing in plant and equipment, they look at the past as a guide to where we're headed and they're going, wait a second, in a slow demand environment, why am I going to hire? Why am I going to expand my productive facilities? And so this sluggish labor market is very much a byproduct of the demand destruction that occurred and is still with us in the aftermath of this horrific crisis.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and reflecting the fact that demand, the demand side of the system, especially consumer demand, is on an extraordinarily weak trajectory. So without demand, and the numbers are pretty clear, we've had now seven and a half years of growth in real consumer spending, which is 70% of the economy. The annualized average adjusted for inflation is 1.4%. And the pre-crisis trend is a number slightly north of 3%.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Falling for a while though, hasn't it? Well, that's been falling dramatically since the crisis. And I don't think that's an accident. A lot of serious academic work says that, oh, this is just a coincidence. It's occurred reflecting the demography of aging workers who are now reaching the point in their lives where they are just opting out of labor force. I don't think these things happen by coincidence, sparked by a crisis. So I think the long-term job issues very structural in nature.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, if the unemployment rate actually is low. As the official sort of 5% rating indicates, Yeah, I believe in supply and demand. There should be some wage inflation by now, and we've seen none, zero. And so there's a lot of suspicious trends in things like the employment to population ratio, which is barely up off the bottom, the labor force participation rate. Which is still near”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I do write a regular column that's available on the Project Syndicate website monthly that is distributed to newspapers all over the world in multiple languages. So you can check me out on the project syndicate website as well as your local book”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Almost. China moves between 15 and 20 million people a year from the countryside to the city. That's two New York cities a year. And so they don't wait to build shelter and infrastructure for these people after they've arrived, which is the sort of the urbanization model of India, which leads to urban squalor. Sure. But they build in anticipation of it. And sure, they will make mistakes. They will build in areas that ultimately will not be as fully occupied as they would like, but in large part their high investment economy is built to anticipate the future subsequent flow of rural urban migration, which is going to be enormous continuing through 2025, 2030.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“But that's an example That's a complete example of what I just said. We look at unoccupied housing as a bubble. Waiting to burst. The first ghost city that I saw in China was in the second half of the 1990s, a place called Shanghai Pudong. It was the largest urban development in the history of the world at the time. It's now fully occupied by 5.5 million people. China”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And referred constantly to the canals that went through ancient Peiking, when in fact there were no canals in ancient Peiking. The canals were in his native Venice and on and on through more current historical figures, you know, Nixon sitting down with Mao Zedong and saying, oh, we're both from small towns. You're from Chengsha. I'm from Yorbalinda. We have a lot in common. And maybe not, you know. And so when we look today in China through the lens of some of our debt issues or housing bubbles, you know, we're looking into the thing that China's got the same types of problems that we have, and they don't. It's a very different framework and set of issues that they're grappling with in their system at a very different stage of economic development.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's a great question. The first part of it is something that really hit me over the head when I read a book actually published in 1998. By now retired Yale professor Jonathan Spence called the Chan's Great Continent, where he examined forensically Western views of China going back to Marco Polo's 13th century journals right through Nixon and Kissinger. And the bottom line of Spence's extraordinary work was that the West, especially those of us in the US, would always see China through the same lens that we saw ourselves rather than through the experiences from the Chinese perspective. Example being Marco Polo's journals in the 13th century never once mentioned that Chinese women bound their feet.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not being able from time to time to speak comfortably in the language of my host country. I think that's something I always tell young people when they're thinking about their own career choices.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so it came time to just read it. All I was going to do was read it and I look up and I see thousands of students in caps and gowns and I forgot everything I had learned. And so I did it phonetically. And no one blinked. And to this day, I'm convinced that no one knew I was even speaking in Chinese. At the time. So that's when I said, okay, I'm done. I don't know more Mand”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then the final embarrassment came when I was invited actually to give a commencement speech at Nanjing University. Of China's leading universities, and I knew enough not to try to do the speech in Mandarin, but I wanted to close with a brilliant astute Chinese proverb and delivered in Mandarin. And I'm pretty comfortable at public speaking. And I'd rehearse this line maybe 75 times, and I'd had a tutor to help me with the tones”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I studied Mandarin. I had tutors. And a couple things along the way told me that I had no reason to do that. I tried out my Mandarin a few times in meetings with senior officials that I was very close to, and they would usually stop me and say, you know, do us a favor. We understand you a lot better.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I did the usuals Beijing, Shanghai, Shenzhen, Dalian, Nanjing, spent a lot of time in Chongqing. The biggest urban city in the world, Xi'an, you name it, Chengsha, Chengdu. See the pandas there. And China is more than just Beijing and Shanghai. There's a lot that's going on outside of this thriving coastal region of the country that you really have to know. And I was privileged to be able to see a lot of that.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I was a chairman of Morgan Stanley Asia. The office was in Hong Kong where I had an apartment that I spent about one day, a week at. I was on the road constantly. I spent about half my time in the mainland, and it enabled me to deepen my connections to officials, business leaders, academics in China. I traveled all over the country.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right after that Asian financial crisis hasn't looked back since then until right about now when the growth rate is slowing. This is causing a big debate. Japan has struggled two and a half lost decades later is still going nowhere despite the hype and promise of the so-called Abe Nomics policy proposals. And I've been deeply involved in written books and now teach classes at Yale on Asia, on China, on the lessons of Japan ever since and it's really been a very rewarding part of my own personal journey.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it got me sort of excommunicated from Morgan Stanley's Japanese-centric institutional client base in Asia. And my Chinese relationships that I was developing were actually embarrassed by it. They thought that I was going a little bit too far. But it always helps, whether it's Wall Street or Hollywood, to be in the right place at the right time. And China took off.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“To analyze China, but Andy was pretty green at that point and really had a hard time coming up with the types of answers that I thought would be helpful to our team. So I went off on my own, got hooked on China, and never turned back and wrote, I remember my first public article in the Financial Times in probably the spring of 1998 that not only would China put a floor on the crisis, but it would emerge from the Asian financial crisis as the new leader of the region quickly supplanting Japan.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I had been to China a few times. I had a hunch that China might hold the key to the end game of this crisis. And right around the middle of 1997, when the Thai bot was devalued, I started going to China once every other month to figure out if China would be the next shoe to fall, as many believe. And it quickly became evident to me that China was cut from a very different cloth. And I started doing a lot of research on China then. I hired a brilliant young economist Andy Shea.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, Barry, I was running Morgan Stanley's global economics team beginning in the early 1990s. And we had a great team. Actually, we were ranked the number one global team by II institutional investor. And then along came the Asian financial crisis, 97-98. And our forecast was in shambles, the number one when it ranked team. We had the worst forecast of anybody on Wall Street. So this was a great source of personal humiliation to me.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think economists are good at having a disciplined analytical thought process to identify the tensions that build in a system that want to take a system that moves away from stability or equilibrium into a place that needs a correction. And so when I was doing it on Wall Street, I always focused on Tensions and how they might be resolved through a correction in the economy or policy and every once in a while I'd even wander usually mistakenly into the realm of how they'd be corrected by markets.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, yeah, I think that's not a bad image. I mean, again, if you have a central bank that at the first sign of trouble in the market is going to flush the system with liquidity, as the so-called Greenspan put repeatedly did, maybe it's not a free lunch, but it's certainly a highly subsidized longstanding banquet meal.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I regret to say, I only see one independent chairman, and that was politically independent chairman. That was Paul Volcker.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bas But they were part of the Washington consensus that really was disturbed by the lack of fundamentally supported economic growth. So if a central bank could deliver growth beyond the fundamentals by excess liquidity, low interest rates, asset and credit bubbles, who was the Congress to be critical of that? And Greenspan ultimately ended up in his memoirs writing toward the very end, buried in the back that he says, I regret to say that the political independence of the Fed is not carved in stone, admitting that he was very much a part of the political process that guided and shaped Congress, the president, and the so-called tough-minded independent central bank. As I look back on America's central bank and I started my career there, as you indicated in the intro.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I hate to disagree with you on that, but I think we ended up, despite the fact that we extolled the virtues of the Fed as being politically independent, they're not politically independent. They're part of the body politic that wants to squeeze more growth out of the system than the system can deliver on the basis of fundamentals. And so, you know, if you read...”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We can't have a dot-com bubble here, he argued, earlier. I mean, after all, these are new companies that are going to drive us to a new frontier and productivity. And let's not be critical of subprime mortgages, he argued, because that's providing housing finance to a swath of the population that needed shelter. And so, you know, it went on and on and on. The music just kept playing. And nobody wanted to be left holding the bag until they realized suddenly that maybe it wasn't quite as pretty as they thought and it was too late by then, Barry. Just too late.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think it's like how come investors don't see bear markets when a trend is spectacularly in favor of your position, whether it's an investor or a policymaker. You don't want to ever be the one who shouts there's a fire in the room. You overstay your welcome. The Federal Reserve was steeped in the hubris of what it loudly proclaimed as the great moderation. They had cracked the back of inflation. They had gotten the economy to perform very well. Unemployment was low. And sure, you know, asset markets were frothy in their view, but this wasn't a big risk. After all, as Greenspan argued, we can't have a nationwide housing bubble. We could have problems in Las Vegas or Florida, but not for the country as a whole.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that. There's risks that we're going to end up with another type of financial accident. We're still at a period historically, unprecedented period of rock bottom interest rates. Basis points, but not only have we taken interest rates to the so called zero bound and not just in the US, but in Europe and Japan, but the balance sheets of central banks are so swollen that there continues to be a lot of excess liquidity sloshing around the world, and that's where the risk lies in terms of the next potential crisis.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“To grow the economy beyond the fundamentals of the earnings that we were able to squeeze out of hard work and productivity related pay increases. And this disconnect between the underlying income generation that comes from employment and the income that could be extracted from asset and credit bubbles led us down, I think, a very treacherous path. I think that's the dilemma that Janet Yellen faces today is how to put the economy back on a sounder basis, more supported by the fundamentals of wage and labor income generation than by the excesses of asset appreciation.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I think that what the Fed did, and I don't want to single out Alan Greensphan because. We had a system barry that would have created another Allen Greenspan if he wasn't around. We were struggling with economic growth as a nation really beginning in the 1970s. And then we had devastating high inflation. Paul Voker came in and really broke the back of that inflation. But the economy was still laboring under a lot of pressure, especially in its ability to generate income for average American or middle class workers. And so the central bank, under the guidance of Alan Greenspan for 18 and a half years, relied much more on financial engineering to create asset bubbles to generate so-called extra purchasing power.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that doesn't was when there was this catastrophic near collapse of the system in the fall of 1998, sparked by Lehman Brothers. Greenspan never believed that we could have systemic risk coming from any bubble, whether it was a dot-com bubble, whether it was the housing bubble, whether it was a credit bubble. You all believed that these were testaments to the oh, you know, the brilliance of the market-based system consistent with his and Rand libertarian view of the world. Markets always know best and central banks should never interfere with the wisdom and brilliance of markets.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, absolutely. So I think, again, he was sort of, you know, had a one-way view of market disruptions, the so-called Greenspan put. Whenever the market's got into trouble, just turn on the fire hose and inject more liquidity and let it slosh around and the system will take care of itself. And that works brilliantly until one day it doesn't.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the pre-crisis years by steadfastly maintaining as an academic and then as a central banker that monetary policy should play no role whatsoever in containing or controlling asset or credit bubbles, I think he led us down a path that almost blew up the system. And so what I want from a central banker is a much more disciplined approach to focusing on financial stability rather than just targeting an inflation rate, which never seems to budge and which has consistently below the Fed's expectations and has been so for close to eight years now.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And, you know, he has an uncanny knack for starting history when it's most convenient for him. To explain the efficacy of the Federal Reserve's Rescue Act during the crisis. What he fails to really own up to, and Greenspan is the same way, is the critical role the Fed played in getting us into this mess. I commend Ben Bernanke for his heroic actions in the depth of a crisis. But by advocating a monetary policy that was extraordinarily easy.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the Fed, I think, harbors the mistaken belief that monetary policy, whether it's traditional using the federal funds rate or non-traditional using quantitative easing. Holds the key to economic recovery holds the key to controlling inflation, holds the key to controlling risk-taking and driving global economic activity. I think a lot of those assumptions probably are close to being right, but just as many, if not more of them, are really wrong.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Come up and offer a different business model that is potentially just as attractive as the one that Morgan Stanley presented in the early 1980s.”
2015-12-21 · Masters in Business · Interview With Stephen Roach: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source