Jim Walker is the Founder and Managing Director of Asianomics Limited, an economic research and consultancy company servicing principally the fund management industry.

Prior to establishing Asianomics in December 2007 he was the chief economist at CLSA Asia-Pacific Markets. He joined CLSA in late 1991. Over the years Dr Jim achieved numerous ‘best economist’ rankings in the Asiamoney, Institutional Investor and Greenwich surveys of fund managers. In the last few years he is best known for forecasting the US 2007 downturn and financial sector meltdown in his series of ‘Apocalypse’ reports.

Before coming to Asia, he worked in his native Scotland as a research fellow at the Fraser of Allander Institute for Research on the Scottish Economy, and then at The Royal Bank of Scotland’s Edinburgh headquarters. He holds a Bachelor of Arts Honours degree and a doctorate in economics from the University of Strathclyde, Glasgow


Below is the brief of the interview of JIM WALKER to an Indian business channel


Bernanke has committed to an unlimited QE3 which will only fuel asset price inflation...

 Yesterday was the end of the game of money printing or guessing about money printing or QE3.

There is not going to be a QE4 because what Ben Bernanke announced is unlimited. You cannot speculate anymore on what he is going to do because he is just going to print US$40 billion every month.

He has told us everything and from here on, stock and asset prices are going to go down and the only thing that will go up is, the alternative to the US dollar, that is gold.

An argument is that, this is a short term gain but a long term pain because money printing will help the world for one or two quarters but ultimately it is real growth which matters. QE is only a short term solution, more like a band aid approach...

Yes. For Bernanke, it seems as if the last five years did not happen. He has been printing money like crazy. He said interest rates will be zero for five years and unemployment in the US is still 8.1%.

He still thinks that by mispricing capital and keeping the cost of capital so low that companies do not know what to do with their money, he is going to make unemployment go down.

He is now telling us that 2015 is going to be the point at which interest rates might go up. He has lowered his forecast for GDP growth to 2% for this year, no surprise there because these idiotic policies guarantee that we get that growth level. For next year, he has predicted 3%, however, closer to 1% is much more likely. The year after that, probably closer up to zero and the longer he goes on with the zero interest rates, the longer the US is going to become like Japan, zero growth whatsoever.

If the presidency changes in the US, and we go to the Republican Party, Romney is going to sack Bernanke because nobody in the planet needs to be sacked more than him. He is causing carnage all over the place. India will now have massive problems as a result of what Bernanke has done today, which is to force oil prices up to probably above 120 a barrel. That is not going to be good news for India or anybody else that consumes oil. All this guy is doing is fuelling inflation globally in commodities which is bad news for us consumers.

What happens to US equities, global equities for that matter. Equity markets seem to be cheering what Bernanke has done..

Of course they want free money, equity markets love free money. The bankers love it, the guys who have caused all the problems have taken the cash and are putting into equities. I would agree with a sensible trade for today. Tomorrow the hangover begins and from hereon equities will start going down all over the world because the central bankers have done all they can do.

They have promised unlimited amounts of money. There is nothing to speculate anymore. This is time to sell on the news. Just get out of equities, buy gold, fixed income assets, high yielding stocks. Buy safety because from hereon, there is going to be carnage on the streets.

FED is using the 1927 decline as a great example and saying that it is very important to keep markets aflush with liquidity because if liquidity dries up, a recession could convert into depression...

Sure. That is the way that they think. Unfortunately, they have missed that the problems in 1929 and into the 1930s were caused by too much easy money. In early 1920s and into 1929, credit was growing far too fast, interest rates were far too low. What we seem to have learned from that is that you should actually lower interest rates and push people to get more debt onboard in order to solve the problem.

The problem is mispricing of capital and too much debt. You do not solve it by mispricing the capital even more, by lowering interest rates to zero and giving them even more incentive to take on debt. That only exacerbates the problem. So Bernanke's solution is actually the problem and where we go from here is that you keep printing the money and the economy will keep going down.


We are into the fourth year of US recovery and Bernanke has lowered the growth rate forecast from 2.4% to 2%, despite the fact that interest rates are at zero already. This is the most bizarre time in economic and financial history. He now thinks that more of the same next year will actually increase the growth rate. I am sorry, you would be lowering the growth rate for the next 2 years down to zero. The Japanese economy has taught us that zero interest rates encourage people to spend nothing.

They encourage companies to undertake no capital expenditure because the interest rate signal for zero is that there is no growth coming and if there is no growth coming, there is on reason to expand, there is no reason to increase your business activity and employ more people. That is the signal that has been seen in Japan for 15 years and now Bernanke seems set to send that signal to America for the next 3 years, that is a disaster.

What happens to India? Commodity prices going up, oil going up is bad news for India. Our stock markets are at a 7-month high.

The fact remains that oil prices are now higher than they were, 27% higher than they were in the middle of June, this is bad news for India. The government at last has increased the diesel price by Rs 5, they need to do it by Rs 50 to get things balanced and also increase electricity and increase fertiliser prices.

All of these things need to happen, but they are not going to happen in the short term. As far as I can see the Indian budget deficit is going to be well over 6% this year, economy growth probably will be up to 4%. With that, I am afraid Indian stocks are overpriced at this level even if the rupee is cheap.