Synopses & Reviews
"Through the past decade of China's financial and strategic emergence, Michael Pettis has been a source of unfailing common sense about the possibilities and limitations of the Chinese model. Now he has put his analysis and recommendations into one concise book. I highly recommend reading and reconsulting his book to put the daily flow of China news into perspective."
--James Fallows, author of China Airborne"This is a brilliant book, one that absolutely must be read by all who are concerned with globalization's future. Michael Pettis debunks the reigning conventional wisdom about international trade, finance, and globalization, and provides the most clear-eyed, unbiased, and unvarnished insights into how the Chinese economy works. From Chinese savers to Greek debtors to American bankers, Pettis shows how we are all connected--and what to prepare for on the road ahead."--Clyde Prestowitz, author of The Betrayal of American Prosperity
"Michael Pettis has written an essential guide to the macroeconomic imbalances that bedevil today's global economy. We ignore his message at our peril."--Dani Rodrik, author of The Globalization Paradox
"This is a profoundly interesting exploration of the causes of the trade and capital imbalances that produced the 2008 financial crisis. Michael Pettis argues that the structural gap between China's domestic consumption and production is the central reason for its pursuit of export-led growth through currency undervaluation. His analysis focuses valuable attention on the deep domestic reforms required in all the major trading countries for the 'great rebalancing' of their international accounts--and the avoidance of continuing crises."--Robert Skidelsky, author of Keynes: The Return of the Master
Review
"Insightful. . . . [O]ffers a sweeping perspective that links trade, exchange rates, and cross-border capital flows to underlying domestic taxation, investment, and fiscal policies. . . . Pettis's erudite, but lucid and very readable analysis brims with surprising ripostes to conventional wisdom. . . . Pettis's stimulating, contrarian take on the present crisis challenges dogma with clear thinking."--Publishers Weekly
Review
"[Michael Pettis is] a brilliant economic thinker."--Edward Chancellor, Wall Street Journal
Review
"This is a book that should be read by: (a) politicians, central bankers and anybody else involved in macroeconomic policy; (b) all economists; (c) all students of economics; and (d) everybody else. The Great Rebalancing: Trade, Conflict and the Perilous Road Ahead for the World Economy by Michael Pettis is as sharp and clear as a cut diamond in its analysis of the continuing global imbalances. The author brings logic, accounting identities and clarity of thought and language to bear on the issue of prospects for the global economy, putting most other commentators into the shade."--Diane Coyle, Enlightened Economist
Review
"[A] book full of easy-to-understand, yet often misunderstood theories, explanations and predictions for what went wrong internationally before the 2008 Financial Crisis, what has been going on since, and where things are likely to head in the future. . . . The Great Rebalancing is probably one of the clearest, most elegant and logically written explanations of world trade, including both how policies affect trade and how trade affects economies. . . . [T]his is not just a China book, but a book encompassing some of the biggest economic and financial questions of our time. The persuasive, clear and well-reasoned arguments behind many of the seemingly unorthodox ideas in the book will make it both pleasing and nicely unsettling for many readers. Hopefully its message will be heard amongst policymakers before some of the more disturbing predictions become realities."--James Parker, Diplomat
Review
"With much pleasure, I highly recommend Michael Pettis' newest book The Great Rebalancing. . . . Michael Pettis has taught me most of what I know about global trade. I also happen to believe he is the world's foremost expert on China in relation to trade and global macro events. I give two thumbs up to The Great Rebalancing."--Mike "Mish" Shedlock, Global Economic Analysis
Review
I've been waiting for this book for over 10 years. . . . Anyone who wants to understand international economics better will benefit from this book. I cannot recommend it more highly. Mike " Mish " Shedlock - Global Economic Analysis
Review
This is a dense and well-argued book. . . . It will be read with interest by the large and growing community that follows China's economy. David Merkel - Seeking Alpha
Review
[F]ascinating reading. James Parker - Diplomat Pacific Money Blog
Review
and#8220;David Mulford takes us on a fascinating and personal journey through momentous world events and shifts in global finance. Read, learn, and enjoy.and#8221;and#8212;George P. Shultz, former U.S. secretary of state
Review
and#8220;A distinguished ambassador to India, an undersecretary of the U.S. Treasury, and an eminent banker in private, Mulford has put forward the trajectory of a fascinating life, much of it given to public service.and#8221;and#8212;Henry Kissinger, former national security advisor and secretary of state
and#160;
Review
and#8220;David Mulford has few equals in the field of international finance. This book is an American story of adventure, persistence, and accomplishment.and#8221;and#8212;Nicholas F. Brady, former U.S. secretary of the treasury
Synopsis
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 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.
-- "Choice"
Synopsis
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.
Demonstrating how economic policies can carry negative repercussions the world over, The Great Rebalancing sheds urgent light on our globally linked economic future.
Synopsis
David Mulford has witnessed and participated in dramatic changes in the world economic systemand#8212;from newly independent countries in Africa and the emerging Eurobond market to the boardrooms of New York, from the Saudi Arabian Monetary Agency to the White House and Treasury Department, and from the halls of Oxford to the developing expanse of India. In
Packing for India, Mulford explores the underpinnings, vulnerabilities, and great promise of a global economy that through the spread of capital, products, people, and technology has transformed economic realities and aspirations around the world.
Packing for India is also a deeply personal memoir of experience and transformation, a firsthand account of key events, and a reflection on world leaders and on the United Statesand#8217; role in international finance. At each stage of his career, Mulford faced radically different challenges, which prepared him to serve successfully as U.S. ambassador to India. How, he is asked by many people, did a person from humble beginnings do so many fascinating things? Mulford answers this question by examining where he has been and what he has learned, and he leaves the reader with his vision for a path toward sustained global growth and stability.
About the Author
DAVID MULFORD is vice chairman international of Credit Suisse and the former U.S. ambassador to India. He also served as undersecretary of the U.S. Treasury for International Affairs and as senior investment advisor to the Saudi Arabian Monetary Agency. Ambassador Mulford holds a Doctor of Philosophy degree from Oxford, was in the first class of the White House Fellows program, and has been decorated by many countries for his outstanding international service.
Table of Contents
CHAPTER ONE Trade Imbalances and the Global Financial Crisis 1
- Underconsumption 4
- The Different Explanations of Trade Imbalance 6
- Destabilizing Imbalances 9
- We Have the Tools 11
- Why the Confusion? 14
- Some Accounting Identities 17
- The Inanity of Moralizing 19
- The New Economic Writing 22
CHAPTER TWO How Does Trade Intervention Work? 26
- Trade Intervention Affects the Savings Rate 29
- Currency Manipulation 32
- Exporting Capital Means Importing Demand 34
- What Happens If China Revalues the Renminbi? 37
- Wealth Is Transferred within China 40
- Does China Need a Social Safety Net? 42
CHAPTER THREE The Many Forms of Trade Intervention 47
- How Changes in Wealth Affect Savings 50
- Wage Growth 52
- Trade Policy as the Implicit Consequence of Transfers 55
- Financial Repression 58
- Higher Interest Rates and Household Wealth 61
- Do Higher Interest Rates Stimulate or Reduce Consumption? 64
- Currency versus Interest Rates 66
CHAPTER FOUR The Case of Unbalanced Growth in China 69
- What Kind of Imbalance? 74
- Growth Miracles Are Not New 78
- The Brazilian Miracle 81
- Powering Growth 84
- Paying for Subsidies 87
- Limits to Backwardness 89
- The Trade Impact 92
- A Lost Decade? 94
- Can China Manage the Transition More Efficiently? 96
- Some More Misconceptions 97
CHAPTER FIVE The Other Side of the Imbalances 100
- Can Europe Change American Savings Rates? 103
- How Does Trade Rebalance? 106
- Globalization Is Not Bilateral 109
- The Global Shopping Spree 113
- Trade Remains Unbalanced 115
CHAPTER SIX The Case of Europe 119
- The Mechanics of Crisis 122
- Too Late 125
- German Thrift 128
- Forcing Germany to Adjust 131
- Two-Sided Adjustment 133
CHAPTER SEVEN Foreign Capital, Go Home! 136
- Swapping Assets 139
- It's about Trade, Not Capital 142
- Trade Imbalances Lead to Debt Imbalances 144
- The Current Account Dilemma 147
CHAPTER EIGHT The Exorbitant Burden 150
- Why Buy Dollars? 153
- It Is Better to Give Than to Receive 157
- Foreigners Fund Current Account Deficits, Not Fiscal Deficits 161
- Rebalancing the Scales 163
- When Are Net Capital Inflows a Good Thing? 166
- Can We Live without the Dollar? 168
- Why Not Use SDRs? 172
- An American Push Away from Exorbitant Privilege 174
CHAPTER NINE When Will the Global Crisis End? 178
- Transferring the Center of the Crisis 180
- Reversing the Rebalancing 183
- Some Predictions 185
- The Global Impact 191
Notes 197
Index 205