On Thursday’s broadcast of CNBC’s “Squawk Box,” Harvard University Economics Professor and former International Monetary Fund Chief Economist Ken Rogoff argued that the issues around banks have not been fixed “at all” because in a world with higher inflation and interest rates and poor growth in China, “we’re in a situation where things are going to break.” He also argued that it’s “surprising something hasn’t happened earlier.”
Co-host Kelly Evans asked, “Ken, talk about the contagion risk here, do you see it? Have authorities stopped the problem in its tracks?”
Rogoff responded, “Not at all. I think that we’re in a world where inflation’s higher, real interest rates are higher, China’s not going to be the growth force that it was. It’s not easy to have a soft landing here. It’s just surprising something hasn’t happened earlier. So, I think they did a good job in preventing bank runs, and credit both what the Swiss National Bank did and what the Fed did. But they can’t necessarily fix the deeper problem in some banks’ books. And it’s not just banks. In the economy more broadly, we’re in a situation where things are going to break.”
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