Buttonwood: Soros, Roach on Stimulus, Currency

Hopped over to the Economist’s Buttonwood conference this evening, where George Soros and Stephen Roach were on a panel. I will be tweeting as much of tomorrow’s conference as I can, including Sheila Bair’s talk in the morning and Larry Summers’ talk at lunch.

My Twitter handle is #OptARM.

Here are some highlights from tonight’s session:

First Stephen Roach, formerly Morgan Stanley’s chief economist in the United States, now the Chairman of Morgan Stanley Asia. A well known bear, Roach had more than a few interesting things to say, only the last few was I able to jot down.

• With regard to monetary stimulus: “There is no exit strategy.” And later he noted that “we’re stuck” in a process of “bubbles perpetuating bubbles.” What we need is a Fed that “actively prevents asset bubbles,” rather than one that reacts by blowing bigger ones when the previous ones pop.
• Asked by Michael Panzner of Financial Armageddon who was also at the conference whether Wall Street had captured Washington, Roach demurred. He did note, in reference to Matt Taibbi’s Goldman piece in Rolling Stone, that “we’re not blood-sucking squids.”
• Asked for a prediction, Roach said he worries that mid-term elections next year could bring pressure for a bi-lateral trade war with China. Unemployment will still be high and there will be populist pressure to get tough on our trading partners.

George Soros also had interesting thoughts.

• Asked if the dollar will lose its reserve currency status, he paraphrased Winston Churchill noting that “the dollar is the worst currency except for all the alternatives.”
• He added, ominously: “There is a general flight from currencies.”
• Speaking about IMF Special Drawing Rights acting as an alternative reserve currency he said “The SDR has a lot to defend it, and the Renminbi should be part of it.” I plan to expand on this subject in a future column. Stay tuned.
• In response to Panzner’s question (see above), Soros simply said “yes.”
• Lastly he emphasized that it was foolish to believe global capital markets could regulate themselves. Global regulation is a challenge but is needed.

More tomorrow on Twitter (assuming I can get reception for my iPhone!)

Comments

[naidle:]

Thanks for this.

Oct 22 06:56 PM