The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy Hardcover – January 22, 2013
How trade imbalances spurred on the global financial crisis and why we
aren't out of trouble yet
China's economic growth is sputtering, the Euro is under threat, and the United
States is combating serious trade disadvantages. Another Great Depression? Not
quite. Noted economist and China expert Michael Pettis argues instead that we are
undergoing a critical rebalancing of the world economies. Debunking
popular misconceptions, Pettis shows that severe trade imbalances spurred on the
recent financial crisis and were the result of unfortunate policies that distorted the
savings and consumption patterns of certain nations. Pettis examines the reasons
behind these destabilizing policies, and he predicts severe economic dislocations--
a lost decade for China, the breaking of the Euro, and a receding of the U.S. dollar―
that will have long-lasting effects.
Pettis explains how China has maintained massive―but unsustainable―investment
growth by artificially lowering the cost of capital. He discusses how Germany is
endangering the by favoring its own development at the expense of its neighbors.
And he looks at how the U.S. dollar's role as the world's reserve currency burdens
America's economy. Although various imbalances may seem unrelated, Pettis shows
that all of them―including the U.S. consumption binge, surging debt in Europe,
China's investment orgy, Japan's long stagnation, and the commodity boom in Latin
America―are closely tied together, and that it will be impossible to resolve any issue
without forcing a resolution for all.
Demonstrating how economic policies can carry negative repercussions the world
over, The Great Rebalancing sheds urgent light on our globally linked economic
future.
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