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By Stephen Roach
Published: June 15 2011 11:57 | Last updated: June 15 2011 11:57
The global economy is being hobbled by a new generation of zombies "“ the economic walking dead. American consumers are in the early stages of an unprecedented retrenchment. In the 13 quarters since the beginning of 2008, inflation-adjusted annualised growth in consumption has averaged just 0.5 per cent. Never before in the postwar era have US consumers been this weak for this long.
The zombie syndrome has an important antecedent. It was, in fact, a key symptom of the Japan disease, which led to the first of two lost decades for that country. Encouraged by the government, Japanese banks kept extending credit lines for a broad cross-section of insolvent companies "“ postponing restructuring and inevitable failure.
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