That is not how I read Roach's article:
Roach said "The only way out of this trap, in my view, is for a long overdue global rebalancing — less growth in the United States and more growth elsewhere around the world. Unfortunately, there are no signs that such a rebalancing is in the cards."
I don't want to put words in his mouth, but I honestly don't think he meant that lower U.S. growth is a good thing. As was pointed out elsewhere in the article, what he wants is the U.S. to carry less of the growth in demand. In other words, more growth from Europe, Japan, Latin America, etc.
What I was saying is that as America's trade gap closes, due to a lower dollar, and a shift to U.S. producers happens, that demand will fall elsewhere. When faced with this reality, how will foreign governments respond? Will they sit and let their economies fall (further) into recession? Perhaps, but I don't think so. Their inflation rates are so low and the slack in their labor force is so great that they will be free (forced) to stimulate. This is a good thing. They have been hooked on U.S. demand too long and now it's time they broke the habit. |
