Bang or Whimper

Barron’s notes that Morgan Stanley economist Stephen Roach is less alarmist on the deficits and U.S. dollar than Paul Volcker.

The global re-balancing that Roach sees dead ahead could occur without
any financial crisis, as long as its pace remains measured. He was
heartened by talks he had with top Chinese and Japanese economic officials
during a recent trip to Asia, who indicated flexibility on "managing" the
dollar lower versus their currencies, despite the negative impact such a
move would have on their own export industries.

He hedges, however…

But a lot has to go right, according to Roach, for the global economy to
avoid a nasty crack-up in the years ahead. Otherwise, things could end with
a bang rather than a whimper.

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