The Great Rebalancing

The Great Rebalancing

Trade, Conflict, and the Perilous Road Ahead for the World Economy

Book - 2013
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Baker & Taylor
A noted economist argues instead that we are not entering another Great Depression but rather are undergoing a critical rebalancing of the world economies.

Princeton University Press

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.

Book News
Pettis (finance and economics, Peking U.) does not make the subject simple, but he does discuss the status of the world economy in a manner that affords serious general readers access to a clarifying historical and conceptual framework. He begins with trade imbalances and the global financial crisis, explaining the meaning and implications of underconsumption and destabilizing imbalances as well as pervasive misconceptions and "the inanity of moralizing." Subsequent chapters expand on the many forms of trade interventions, unbalanced growth in China, the mechanics of the crisis in Europe and adjustments necessary in Germany. The concluding chapter discusses when the global crisis will end. Annotation ©2013 Book News, Inc., Portland, OR (

& Taylor

Argues that the separate economic issues different countries are dealing with are actually all the result of trade imbalances, and that in order to end the global financial crisis, a resolution for all must be reached.

Publisher: Princeton, NJ : Princeton University Press, c2013
ISBN: 9780691158686
Characteristics: ix, 219 p. ; 25 cm


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Jul 14, 2015

An interesting look at the global balance pf payments and how countries internal policies to promote exports naturally lead to trade deficits by exporting their capital. This book is making me re-think some prior beliefs and fine tuning some others, usually a sign of a good book. Definitely worth reading if you have some knowledge of economics.

Dec 20, 2013

"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." Oooohh, please, Mr. China, a k a Peking University pseudo-econ prof, Pettis doesn't know about credit derivatives and securitization and rehypothecation? Nor does he understand that all those so-called "free markets" (really freak markets) are rigged? Sorry to dispute another clown who never equates the offshoring of jobs, technology and investment to China with the "China miracle" - - in other words, another so-called economist who doesn't understand squat! And of course, Pettis agrees with the macro plan of the super-rich, "Why not use SDRs" (the IMF's pseudo-financial-global-currency construct to supplant the US dollar as the global reserve currency)? Why indeed, Mr. Pettis, but the more salient question is why would anyone with enough neurons capable of reading your book not understand your scam? (I question the sanity of some of the other commenters in accepting anything at face value from the faculty of Peking University -- that's in China, dudes!)

Dec 20, 2013

a must-read for anyone interested in the US economy and its relations with China, the rest of East Asia, Europe and beyond. The author uses his background in economics and trade to explain in mostly non-technical language why our notions must be revised.

Nov 10, 2013

See <//> M. Pettis is outstanding in his relating of economic problems over the past decade or more to trade, specifically to savings, investment, the current account. Easily read and exciting in a enlightening way. Certain shibbiloths are destroyed, myths savaged, and the light of truth is burst forth.
In the matter of China, -- a disaster looms. In the matter of the US, well, boom times may be around that bright corner, and they have not lost their power position. In the matter of the EU, -- breakup eminent unless Germany stops hoarding the savings -- otherwise, a few countries will be leaving --- which might threaten Germany enough to make their governments inflate. A real interesting read from a knowledgible, insightful, intelligent professor --

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