America’s Other 87 Deficits
The US has trade deficits with 88 nations, and in 2010, China’s share was about 40 percent. The trade deficits are a consequence of the country’s own spending behavior – with reduced saving by individuals, business and the government – explains Stephen Roach of Yale University. As master of the world’s reserve currency, “the US borrowed surplus savings from abroad on very attractive terms, running massive balance-of-payments, or current-account, deficits to attract foreign capital,” he writes for Project Syndicate. Blaming China is misplaced, even ludicrous, Roach contends, particularly with that nation making strides in currency appreciation. “China-bashing in the US speaks to a corrosive shift in the American psyche,” Roach concludes. “It deflects attention away from those truly responsible for perpetuating the greatest saving shortfall in history. Washington has been seduced by the political economy of false prosperity.” The only solution for the US is to change its ways and not expect others to make accommodations. – YaleGlobal
America's Other 87 Deficits
The US can only blame itself, not China, for racking up deficits with multiple nations; the nation mistook living beyond its means for prosperity
Stephen S. Roach
Friday, November 25, 2011
Stephen S. Roach, a member of the faculty at Yale University, is non-executive Chairman of Morgan Stanley Asia and the author of The Next Asia.
Copyright: Project Syndicate, 2011.