Stephen Roach, the “Mr Asia” of investment banking commentators, is stepping down as Morgan Stanley’s Asia chairman and moving back from Hong Kong to New York to take up a teaching post at Yale University.
But this is no ordinary shuffle off into the mundane world of academica and economy-class travel. Oh no.
In an arrangement that will make him the envy of fellow academics – and possibly the more cerebral among investment bankers – Roach will move to become Morgan Stanley’s non-executive chairman for Asia. In that capacity, he’ll visit the region at least once a month to schmooze meet with clients, officials and regulators.
At Yale, Roach, 64, will hold a joint appointment at the Jackson Institute for Global Affairs and university’s school of management, where he will teach on China, Asia and macroeconomic policy.
As the FT reports on Friday:
Roach, a prominent economist, moved to Hong Kong in 2007 to head the bank’s Asia operations after 16 years as Morgan Stanley’s chief economist, during which time he became a leading authority on the Chinese economy.
Roach became a familiar face among regional economic and political leaders during his three years based in the region, and is known for his bearish views on the state of the US economy.
“This is a new chapter in my career but I will stay focused on Asia both for Morgan Stanley and in academia,” Roach told the FT.
“There are a lot of misperceptions about Asia in countries such as the US and I look forward to playing an active role to correct those.”
We’re wondering if Roach will run across his old adversary Paul Krugman when he’s back in the ‘hood and correct his “misperceptions”.
Krugman published an item on his New York Times blog back in March entitled “Steve Roach goes batty“, in which he accused Roach of subscribing to the “Underpants Gnomes theory of trade balances”:
1. Increase savings
2. ?????
3. Exports!
Roach in an interview with Bloomberg Television had earlier described Krugman’s call for China to appreciate its currency as “very bad advice”, and had said that increased Chinese spending would be a better way to reduce trade imbalances.
In true fighting words (referring to Bloomberg’s characterisation of Krugman’s call as akin to taking a baseball bat to China) Roach told Bloomberg: “We should take out the baseball bat on Paul Krugman — I mean I think that the advice is completely wrong”.
But as Krugman concluded:
What I wonder here is how Roach — or anyone thinks that increased savings would help right now. What would cause an attempt to increase savings to be translated into increased investment, or an improved trade balance, as opposed to simply a more depressed economy? Yes, I know that macroeconomics at the zero lower bound is different from the normal scene — but how can an economist as good as Steve Roach not get that after more or less two years in a liquidity trap?
From now on, perhaps, Yale economics students might be the judge of that.
Related links:
Roach: Pooh-pooh to Chinese bubbles – FT Alphaville
Wolf vs Roach on US-China relations - FT Alphaville
Stephen Roach: New battle plan needed for crisis-prone world – FT
Hu, Geithner, Roach, Ha on China’s yuan policy (video) - Bloomberg