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The Great Rebalancing:
Trade, Conflict, and the Perilous Road Ahead for the World Economy
Michael Pettis

Book Description | Reviews
Chapter 1 [in PDF format]

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

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File created: 11/11/2014

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