THE GREAT REBALANCING
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 Euro 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.
Stats for nerds
5recommend
6mentions
6people
2014–2023years
83% recommend17% neutral
Mentions per year
What Hacker News says
- It is not possible to sell on Taobao with an American/European/Japanese/Australian/Singaporean,etc company, also without a physical rental or property in China. Also this conversation is becoming a bit laboured considering how obvious the differences are:
I will reiterate how easy it is to access the profitability of an American consumer vs any other country from any country.
And the impact it has on the dollars accumulated by selling to Americans is still unchallenged (its still at the top of the list). The key to changing the reserve of US dollars is attacking this fundamental truth as that is the source of the US dollars being a majority in the first place.
I understand the dislike of having US dollars so prominent but the reason they exist is simply they aren't spent by the people who sold to the US. That is the fundamental thing to change to get rid of dollar dominance as it is the root.
I would recommend to you a book by Michael Pettis, a professor at the University of Beijing called The Great Rebalancing who makes this all clear. He is also not sycophantic to the US if that is a concern
- Thank you so much - I’m so glad you enjoyed it!
If you’re interested in this topic I highly recommend “The Great Rebalancing” by Micheal Pettis. A really good book that looks at how currency manipulation and other factors have created imbalance in the global economy.
I’ve also written a book which touches on this - but focuses more on the massive sovereign debt burdens that have been created in large part though these trade imbalances - particularly in an aging world.
- If you are interested in this, I highly recommend 'The Great Rebalancing' by Michael Pettit. He explains the causes and implications of China's high savings rate, and the relationship with other countries' savings rates. His explanation of the causality is contrary to most of what you will have read in the popular press.
- Read his book The Great Rebalancing. There are pros and cons to it, whether you think it's an overall positive or overall negative likely depends on who you are and what interests you seek.
One thing I've learned, most people do not understand international trade or the balance of payments.
- Raising interest rates will actually improve the economy for this reason, but policy makers don't understand this. Read more here http://www.amazon.com/The-Great-Rebalancing-Conflict-Perilou...
- Wow, this is a long read but definitely worth it. I have never read anything by Pettis, but I am thinking about picking up The Great Rebalancing if it explores similar stuff more deeply. It doesn't always come naturally to look at country economies as a bunch of open systems all operating in a closed system, but this read will certainly encourage that kind of thinking.
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