Stephen Roach is pulling no punches now. After quipping “I think we should take the baseball bat out on Paul Krugmanregarding pro-protectionist statements Krugman made earlier this month, Roach has launched a blistering attack on the protectionist rhetoric in America. In an opinion piece released today in the Financial Times, Roach blamed America’s problems on a deficit of savings and warned “scapegoating of China could take the world to the brink… [of a crisis which] would make the crisis of 2008-09 look like child’s play.”
Of course, Roach is entirely correct. The United States has been living beyond its means for a generation, running up enormous private sector debts and running large current account deficits as investment outstripped savings. America’s problem is America, not China.
Singling out economists giving intellectual cover to the protectionism, Roach says: