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Indybay FeatureRelated Categories: U.S. | Global Justice and Anti-Capitalism
Banker Admits "We Engineered the Global Financial Crisis"
"We had quite a remarkable time in the last 15 yrs. when globalization really started, normally power is going where the money is going. The west and the industrialized world in the last 10 yrs. alone, we have created hundreds of millions of jobs in the developing nations by outsourcing cheap production and paying with money we deliberately devaluated as well. So we thought we might be on to a good thing here. We forced all the developing countries who produced all this wonderful stuff and took our money for it, to invest the profits into our treasury bonds so we can go on spending. That seems to be if you keep on going forever there, a good business proposition. Did power accumulate and how long and will it last? Can China grow at 8-10 percent forever? We were surprised it lasted as long as it did."
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 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. Demonstrating how economic policies can carry negative repercussions the world over, The Great Rebalancing sheds urgent light on our globally linked economic future.