Different countries have always played different roles in the global economy
The economic crisis has weakened in recent months, which resulted in the appearance of questionable international agreement that the global economy should be re-perebalansirovanna. "We can not follow the same policies that led to this unbalanced growth," - President Obama said during a tour of Asia last month. ECB President Jean-Claude Trichet said in September that "imbalances were at the origins of the current difficulties. If we do not fix them, we will prepare the foundation for the next major crisis. "
These global imbalances are expected to include excessive American consumption, excessive flow of trade from Asia to the West, and the lack of U.S. in Asia, as well as too much stock in conjunction with insufficient expenditure of Chinese consumers. However, what if their own global imbalances - is a myth, a policy aimed at their reduction, will only make things worse?
Unchanged, the fact remains that in any moment of the last century did not have anything like the global economic balance.
Consider the flowering of "American Century" after the Second World War, when Western European countries have been devastated by war, and the Soviet Union and its new satellites slowly recovering. In 1945, the U.S. accounted for more than 40% of world GDP and dominance in world production. The country was in such a dominant position, which was able to spend the equivalent of hundreds of billions of dollars in economic recovery in Western Europe under the Marshall Plan, as well as to Japan during the seven-year military occupation. In the late 1950's, 43 of the 50 largest global companies were American.
1970's also hardly be called balanced, not least because of the gold standard era, when we started the oil shocks, the Arab oil embargo of 1973, inflation and stagflation, which spread to Latin America and Europe.
1990-e were similarly unbalanced. U.S. consumed and absorbed most of the available global capital at its scorching stock market. With the collapse of the USSR and sluggish economies of Germany and Japan, American consumers finally occupied a central position in the world. Innovations in the new economy has caused renewed interest in stock markets overshadowed the debt crisis in South America and the implosion of the currency in South Asia, all of this was due to aggravation of the concentration of capital in the United States and its deficiency in the developing world. When in 2000 the tech bubble burst, there are few that could be done with those global driving forces glut of telecommunication products in the United States and furious abundance on the stock market.
Now, when officials and economists say the adjustment of global imbalances, it is unclear what the reference point they have in mind.
The so-called excessive American consumption, the East-West trade flows, China's savings, it seems, were not responsible for the recent crisis. All this is mentioned instead of the mass of inappropriate rates on the housing market and the U.S. trillion derivatives, came to these baseless funds.
Yes, many woven for himself an irresistible story that relations between China and the U.S. have been distorted because of the fixed and non-convertible currencies in China on the one hand and the American bond on the other, which led to a massive outflow of capital from the United States. However, this money is returned to the United States as China's purchases of Treasury bonds, securities backed by mortgages and other assets denominated in dollars, which then spilled over into our banking system, which returned to the business and the U.S. Treasury, some of whom then went back China.
What some see as an imbalance can be described as a system of constant movement of capital and goods. China's reserves and debts of the U.S. does not lead to the collapse of the reasons it is not in the American consumer. This resulted in even consumer debt, after all, more than 90% of Americans still own takuschimi credit cards and pay the mortgage. These (and much more dirty) the reasons for the collapse were in a powerful combination of financial innovation, electronic instantaneous movement of capital, greed on the part of banks and investors around the world in the midst of an economic merger between China and the United States, which keeps interest rates and inflation lower.
Today's agreement sounds very similar to the orthodoxy of the past year: allow each country to maintain the balance of his system, interacting with other systems to create one mega-balanced system. However, such a balance exists only in theory, and is only possible in the future.
Indeed, if last year's crisis has taught us anything, so what podstraivanie reality under the abstract theory - it is a recipe for disaster. The need for appropriate action at that time forced the central banks and governments of the world by the order to do a really good job during the economic emergency that has engulfed the world. Eclectic requirements of the crisis took precedence over models and theories that it was indeed correct.
And now, when the crisis subsided, the greatest danger of all is our collective faith in something, how the world should work, which stifles creative dexterity policy that adapts to the world depending on what is actually going on there. A policy agreement with the global imbalances can be understood and initiatives of the American government incentives aimed at increasing domestic savings. Sounds good, but if it does not mean reduction in investment in innovation, education and infrastructure.
It can also lead Chinese officials to try to move away from exports and government spending. In the long run it may be useful, but can cause serious damage to internal Chinese growth and global supply chain, if such measures are taken for reasons of urgency. For its part, the EU argues, correctly, that he was not the main cause of the obvious imbalances. But European leaders have been pushing in front of all of this thesis and the belief that China and the United States should correct it.
Fortunately, there is much less risk that the Chinese Government to overturn its basket of apples, at the time, as the American government is acting much more rapidly.
By Mr. Karabell is president of River Twice Research and author of a recent article "Supersliyanie: How China and the U.S. economies have become one" (Simon & Schuster, 2009).
The economic crisis has weakened in recent months, which resulted in the appearance of questionable international agreement that the global economy should be re-perebalansirovanna. "We can not follow the same policies that led to this unbalanced growth," - President Obama said during a tour of Asia last month. ECB President Jean-Claude Trichet said in September that "imbalances were at the origins of the current difficulties. If we do not fix them, we will prepare the foundation for the next major crisis. "
These global imbalances are expected to include excessive American consumption, excessive flow of trade from Asia to the West, and the lack of U.S. in Asia, as well as too much stock in conjunction with insufficient expenditure of Chinese consumers. However, what if their own global imbalances - is a myth, a policy aimed at their reduction, will only make things worse?
Unchanged, the fact remains that in any moment of the last century did not have anything like the global economic balance.
Consider the flowering of "American Century" after the Second World War, when Western European countries have been devastated by war, and the Soviet Union and its new satellites slowly recovering. In 1945, the U.S. accounted for more than 40% of world GDP and dominance in world production. The country was in such a dominant position, which was able to spend the equivalent of hundreds of billions of dollars in economic recovery in Western Europe under the Marshall Plan, as well as to Japan during the seven-year military occupation. In the late 1950's, 43 of the 50 largest global companies were American.
1970's also hardly be called balanced, not least because of the gold standard era, when we started the oil shocks, the Arab oil embargo of 1973, inflation and stagflation, which spread to Latin America and Europe.
1990-e were similarly unbalanced. U.S. consumed and absorbed most of the available global capital at its scorching stock market. With the collapse of the USSR and sluggish economies of Germany and Japan, American consumers finally occupied a central position in the world. Innovations in the new economy has caused renewed interest in stock markets overshadowed the debt crisis in South America and the implosion of the currency in South Asia, all of this was due to aggravation of the concentration of capital in the United States and its deficiency in the developing world. When in 2000 the tech bubble burst, there are few that could be done with those global driving forces glut of telecommunication products in the United States and furious abundance on the stock market.
Now, when officials and economists say the adjustment of global imbalances, it is unclear what the reference point they have in mind.
The so-called excessive American consumption, the East-West trade flows, China's savings, it seems, were not responsible for the recent crisis. All this is mentioned instead of the mass of inappropriate rates on the housing market and the U.S. trillion derivatives, came to these baseless funds.
Yes, many woven for himself an irresistible story that relations between China and the U.S. have been distorted because of the fixed and non-convertible currencies in China on the one hand and the American bond on the other, which led to a massive outflow of capital from the United States. However, this money is returned to the United States as China's purchases of Treasury bonds, securities backed by mortgages and other assets denominated in dollars, which then spilled over into our banking system, which returned to the business and the U.S. Treasury, some of whom then went back China.
What some see as an imbalance can be described as a system of constant movement of capital and goods. China's reserves and debts of the U.S. does not lead to the collapse of the reasons it is not in the American consumer. This resulted in even consumer debt, after all, more than 90% of Americans still own takuschimi credit cards and pay the mortgage. These (and much more dirty) the reasons for the collapse were in a powerful combination of financial innovation, electronic instantaneous movement of capital, greed on the part of banks and investors around the world in the midst of an economic merger between China and the United States, which keeps interest rates and inflation lower.
Today's agreement sounds very similar to the orthodoxy of the past year: allow each country to maintain the balance of his system, interacting with other systems to create one mega-balanced system. However, such a balance exists only in theory, and is only possible in the future.
Indeed, if last year's crisis has taught us anything, so what podstraivanie reality under the abstract theory - it is a recipe for disaster. The need for appropriate action at that time forced the central banks and governments of the world by the order to do a really good job during the economic emergency that has engulfed the world. Eclectic requirements of the crisis took precedence over models and theories that it was indeed correct.
And now, when the crisis subsided, the greatest danger of all is our collective faith in something, how the world should work, which stifles creative dexterity policy that adapts to the world depending on what is actually going on there. A policy agreement with the global imbalances can be understood and initiatives of the American government incentives aimed at increasing domestic savings. Sounds good, but if it does not mean reduction in investment in innovation, education and infrastructure.
It can also lead Chinese officials to try to move away from exports and government spending. In the long run it may be useful, but can cause serious damage to internal Chinese growth and global supply chain, if such measures are taken for reasons of urgency. For its part, the EU argues, correctly, that he was not the main cause of the obvious imbalances. But European leaders have been pushing in front of all of this thesis and the belief that China and the United States should correct it.
Fortunately, there is much less risk that the Chinese Government to overturn its basket of apples, at the time, as the American government is acting much more rapidly.
By Mr. Karabell is president of River Twice Research and author of a recent article "Supersliyanie: How China and the U.S. economies have become one" (Simon & Schuster, 2009).
The Wall Street Journal
December 21
December 21
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