Pages

Unless ROE targets are reduced, the United States and the euro zone will be in trouble

- "Growth is set to be weaker than before the crisis in the United States and the euro zone, due to private sector deleveraging. If companies in these countries maintain their pre-crisis ROE (return on equity) targets, the only way they will be able to meet these targets is to distort income sharing at the expense of wage earners. Growth will be weakened even further by the sluggishness of household income and the problems they then will meet in terms of deleveraging. It is clearly this perverse dynamics we have witnessed in Japan and Germany since the late 1990s. However, these countries’ economies have been underpinned by exports, which is much less the case in the United States, France, Spain and Italy."

Natixis Flash Economics 418 20100826

No comments:

Post a Comment