Re: Tomas Palley on China

[Julio Huato <juliohuato@xxxxxxxxx>]

Doug,

> Palley quotes Steve Roach of Morgan Stanley, of course. There ought
> to be a moratorium on this. Roach is a smart & thoughtful fellow, but
> he's a minority view on Wall Street, and his forecasting record isn't
> particularly outstanding. I understand the appeal of citing a Morgan
> Stanley guy, but if you think there's a 40% risk of a hard landing,
> make the argument yourself. An appeal to authority  of this sort
> won't cut it.

A question regarding your views on this.  You seem to acknowledge that
that there'll be *a major adjustment* in the U.S. as a result of the
twin deficits and the real estate/consumer credit boom, but you're
skeptical about the form the adjustment will take.  (Am I right?)  My
question is: Besides the healthy skepticism about always expecting
hard landings, what specific reasons do you have to doubt that a hard
landing will *very likely* be the form the adjustment will take?  (I
understand that the onus falls on those who predict a dramatic change,
but -- for the sake of an interesting discussion -- turn that around.)

Julio