Andy Xie, former Morgan Stanley economist, tells it like it is. He departed from the firm in 2006 after an outspoken internal email about Singapore's government policy was made public, and he remains outspoken today. Xie successfully called the market crash, and the subsequent market upswing, and has offered wisdom to investors at every point along the way.
Today, in China International Business, he talked about the dismal results that Japan experienced, and the parallels to today's efforts at economic stimulus in the U.S. and elsewhere. Xie points out that economic bubbles, when they burst, require time for recovery and intelligent decisions, not more debt, speculation, and stimulus. These strategies can only lead to dismal results. Read the whole article here.
Xie and I might disagree about the specific nature of the reforms that are needed, but he provides a prescient observation about where today's economic stimulus will lead. None of us want to return to 1970's stagflation or the Japanese "lost decades", but Xie makes a good case that we are headed in that direction. It is time for our leaders to rethink this costly stimulus strategy.
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