Just in time to fuel my concerns about the falling dollar and the deficit, Atrios links to an article in the Boston Herald in which Steven Roach, chief economist at Morgan Stanley, is quoted as saying that at this moment in time, the U.S. has a 90% chance of facing “economic armageddon”. He thinks there is a 30% chance of a slump soon, though we may muddle through a bit longer before the inevitable downturn.
He predicts Greenspan will be forced to raise interest rates even faster, and that U.S. consumers, who are loaded with debt at the moment, will get pounded. Thank heavens for my nice, fixed-rate mortgage. People with adjustable rates on their homes may well face losing everything, if interest rates really begin to rise.
And here I was hoping that the experts were going to allay my fears, not compound them. But it’s pretty clear that we can’t continue to borrow 80% of the world’s net savings, day after day after day. That well has a definite bottom to it, and we’ll hit it sooner or later.