How should Asian governments respond?
It’s tough to reverse something you’ve encouraged for a long time. And many countries in this region have encouraged exports and kept their exchange rates too low. [I worry that] they’re going to make [the global imbalance] even worse by depreciating their currencies further. We’ve had 20 to 30 percent depreciation in most Asian currencies over the last year. A true effort toward a different growth model would be to have no depreciation or even some appreciation [against the U.S. dollar]. But that’s just not in the cards at the moment. [Asian policymakers] can’t see their own domestic economy and its actors as the answer to their problem. But in natural fact they are.
