In The News

Fruit of the Boom Threatens to Push China's Economy Out of Control

Jonathan Watts August 31, 2006
China has had spectacular growth, so spectacular that consumers cannot keep up. Luxury apartments in Shanghai remain vacant. Overbuilding and overvaluation, combined with increased debt, have contributed to an overheated economy. Not accountable to voters, provincial governments compete to create building booms and demonstrate accomplishments. Supply exceeds demand for about 70 percent of China’s...

Managing Globalization: A New Trade Bandwagon – Are Rich-Poor Pacts Fair?

Daniel Altman August 8, 2006
Following in the wake of the failed Doha Round trade talks, negotiators turn their energy to bilateral trade agreements, which usually pair rich and poor countries. The US is eager to participate in bilateral agreements, recently making deals with Chile, Jordan and Singapore. In addition to creating more employment opportunities, the agreements also increase exports from each country. Less...

Why Globalization Isn’t a Win-Win Situation

Stephen Roach July 12, 2006
A bilateral US-China trade relationship poses some dangers, according to global economist Stephen Roach. US policies encourage over-consumption and under-production in the global economy, resulting in a low saving rate and stagnating wages for middle-class workers. China’s policies focus on rapid over-production, a massive surplus of goods, a high savings rate, as well as wage inflation of...

Imbalances Can’t Go on Forever

Ernesto Zedillo July 10, 2006
The current strength of the world economy is not enough to protect against the global financial crisis that could result if imbalances such as the US account deficit go unresolved. Economists supply a range of explanations as to what facilitates US debt. Expectations of higher income and productivity make saving seem less urgent, and the US remains an attractive place for other countries to...

Why Dollar Hegemony Is Unhealthy

Thomas I. Palley June 20, 2006
The US dollar holds value for more countries than any other world currency and comprises about two thirds of world’s official foreign-exchange holdings. This dependence allows the US to run large trade deficits in purchasing a cornucopia of goods – from Porsches to t-shirts – by distributing paper IOUs in place of actual dollars. Because of a global faith in the voracious appetite of the US...

Global Capital on the Run

Robert J. Samuelson June 14, 2006
Around the world, stock markets are in a sharp decline, and analysts are trying to determine if herd mentality is at work or if the trend reveals other risks. At the same time, more investors venture beyond national borders in search of opportunities. Thirty years ago, foreign investing was tightly restricted, with the US as an exception to the rule, although the wealthiest of citizens always...

It’s Been Too Good for Too Long

Peter Hartcher June 13, 2006
Consumers, businesses and even countries have indulged in debt, funding all sorts of projects, from the luxurious to the ludicrous. But central banks around the world are acting to end the days of cheap liquidity, removing money and pushing up interest rates, warns journalist Peter Hartcher. After years of low interest rates and excessive spending, the US and its big spenders have most reason to...