Dad usually chose books that emphasized cognitive development, while Mom emphasized books and exercises that stimulated creativity, and that had happy endings.
To be sure, Morgan Stanley economist Stephen Roach's macroeconomic reports would not have met Mom's requirement for happy endings.
Roach's post-bubble world
Roach, who now also serves as Morgan Stanley's (NYSE: MS) Asia Chairman, takes the pulse of the U.S. and global economies, the housing slump, the credit crisis, and the financial system, in his most recent report. (pdf)
And, consistent with Roach's reputation for sobering analysis, his economic forecast for the quarters and years ahead is not pleasant, and it differs markedly from the current consensus in financial circles.
That current consensus argues that the U.S. Federal Reserve's recently-established liquidity facilities, combined with the U.S. Treasury's back-up measures, will enable banks and others with bad mortgages and bad mortgage-backed bonds to muddle-through, slowly working-off these debts as revenues increase as the U.S. economy recovers. Likewise, the U.S. housing sector and consumer demand also will recover, as home prices stabilize and consumption returns to more-normal levels as U.S. GDP increases. It's a sort of 'end to the banking and housing crises by a growing U.S. economy better-able to service those bad debts' argument.
A plausible scenario, but not one Roach agrees with. Roach's scenario? A stagnant or very-slow-growth U.S. economy. No sustained, private sector growth catalyst. Rising unemployment. Roach says what's needed is a comprehensive - - not a reactive -- approach by Washington: more public investment in people and infrastructure, as well as a higher personal savings rate. An energy policy. An end to undisciplined risk and the start of more-prudent regulation of the financial system. Those are the keys to sustainable growth, Roach says.
Economic Analysis: Under the muddle-through scenario, only minor changes and modest fiscal stimulus are needed to get the U.S. economy moving again. Under Roach's scenario major changes and a larger fiscal stimulus are needed, not to mention a new energy policy. Which begs the question: if $400-500 billion in fiscal stimulus is needed to point the U.S. economy toward sustainable growth, which presidential candidate is more likely to lobby Congress for it? U.S. Sen. Barack Obama, D-Illinois? Or U.S. Sen. John McCain, R-Arizona?
**
What's your opinion? Which candidate, Barack Obama or John McCain, will support more fiscal stimulus, if it's needed?
Or do you think it's just 'more big government' and it would be a mistake for the federal government to become more involved?
Let us know what you think.











Reader Comments (Page 1 of 1)
9-04-2008 @ 3:15PM
bleu said...
McCain told us whimpering fools that there is nothing wrong with the economy. He must have gotten a raise from Cindy. He would not give us a cent, as there is nothing wrong with the economy, so he says. Obama will have the coffers filled with $$ when he stops this frivolous damned war in Iraq and puts the 124 Billion saved each month to good use, maybe distribute some of it between the poor and middle class, or give it to students for scholarships. I take my chance with Senator Obama, he might spend a bit more then the old geezer but, he will also save on military spending. And we all love peace, don't we. Obama it is.
9-04-2008 @ 3:03PM
william lindblad said...
Joe, you really should put yourself on the Congressional newsletter. It comes via e-mail. Congress has been kicking the prospect of an additional stimulus package for months. You could even vote and comment - as long as you are on their mailing list.
As they are already in office I expect that most wish to stay and therefore, they are way ahead of the candidates.
9-04-2008 @ 3:37PM
The Lounger said...
Bleu,
Ahhhhh....spoken like a true Democrat !
The coffers will not be filled under your scenario by redistributing some of it among the poor and middle class, it will just be spent elswhere. How about taking the money saved when the USA is done in Iraq and reducing the national debt ?. Of course this will never happen with Obama in office since he will see it as 'Wow, look at all this money we can spend on some pork !"
9-04-2008 @ 7:58PM
winslow said...
The Republicans always seem to be behind the eight ball. I would rather deal with reality and outcomes. After the economy hits Bush (McCain) on the head with a hammer, the response is "everything is fine".
9-04-2008 @ 5:41PM
Sherry Rose said...
Or course it would be Senator Obama who would ago more stimulus, McCain is for upper class corporate america he cares less about anything else. McCain is a deceiver and a lier he have no intention of helping the poor and less then middle class citizens of this country. Don't be a fool vote for Senator Obama a President that really cares for all people of this country.
9-04-2008 @ 5:47PM
tpcowfish said...
Obama, will be more generous towards poor ,elderly,and middle class,Mccain doest think the poor need help, they need to get another job. which mostly are part time,no one hires full time anymore .With the gov. now, rich get richer,poor get poorer, right G.W.Bush
9-04-2008 @ 6:26PM
aj said...
Bush snr didn't know the price of hamburger meat and I doubt Mc knows the price of milk. US is in bad repair and needs someone who cares about it's people and surrounds himself with capable people not special interest choices. The middle class and poor residents of this country have been suffering far too long. Please let us remove the veil of fear; things are very hard at this time and we need leadership that is capable of exploring the complex issues to bring stability and peace.
9-04-2008 @ 6:36PM
Frank Hummel said...
If the "money whiz-bangs" can't pull enough strings to stave off a day like today at least for a couple of days IN THE MIDDLE OF THEIR CONVENTION(!)... well, what does THAT say about their supposed superiority as the ostensibly "more responsible" political party to run the country and its economy??
9-04-2008 @ 10:25PM
NoInform8tion said...
I agree with Roach. During the Great Depression we allowed banks to fail and markets to crash. Yeah it was a long and painful lesson but we emerged stronger, wiser and wealthier from that lesson. Now nobody wants to face the problem, so it won't be solved. Denial lets us try to avoid the whole mess and then pass it on to someone else in the future. Denial is easier but it won't fix the problems, the weak fundamentals: the deficit and the fact we import more than we export. Which candidate do I think gets this? Maybe neither, but I'm leaning more toward Obama because atleast he admits the economy is bad and wants to create jobs in rebuilding our infratstructure and alternative energies, that's a good start. Now which one of them will put heavy import taxes on companies that don't do business from the US or who don't hire US citizens? Whoever is for import taxes and keeping and adding jobs in the US is the one I'd vote for.
9-05-2008 @ 3:39AM
Sky said...
these posts truly show how dumb America has gotten. Same old bullshit Republicans are for the Rich and Democrats for the poor. Give me a break. Cut military spending? Great just what we need. I am sorry I like sleeping nice and sound knowing my countries military is unmatched. How about programs be put in place to assist with success instead of a damned handout. I am not annoyed with the mothers/fathers on assistance who also work to meet ends meet. I am annoyed at the ones who do not work because they get more assistance or its not so much less that they would rather not work. Socialized Healthcare can also kiss my ass. I like picking my doctors and having those choices.
9-05-2008 @ 8:52AM
DON said...
Wake up America....We need a Real Leader and a Real President....Let's get Mitt Romney in office as our President. Let's start talking about Mitt and forget the two "Special Interest Candidates".