Over the past decade, Chinese trade revenues, savings and purchases of US debt increased. Low interest rates encouraged US consumers to spend and housing prices soared. But such imbalances could not be sustained and financial instruments containing mortgages for homes that have lost their value, have proven toxic for the world. Economists and central bankers are still struggling to find a way out of the subprime mortgage crisis. If Japan’s lost decade offers lessons, then deflation must be averted at all costs if there is to be hope for a recovery.. But for the long-run, one magical phrase emerges from experts and that’s “stricter regulations for the banking industry.” Once governments succeed in restoring consumer and investor confidence, they should focus on designing regulations that encourage responsibility and a long-term outlook. Furthermore, policymakers have to recognize the need for global oversight of the banking industry, either by strengthening existing institutions or by creating new international authorities. The timing of the rescue is uncertain, and the certainty of its efficacy remains in question. To put the matter in historical perspective, there is still no consensus on whether government spending policies of Franklin D. Roosevelt or increased demand for goods created by Second World War pulled the United States out of the Great Depression. One certainty for this crisis: there are no localized solutions for a problem that extends throughout the world.

G-20 to Push Current Balance Guidelines

Leaders of the largest economies pledge to resist protectionism and global imbalances
Kim Yon-se
November 12, 2010

Only the Weak Survive

Many nations will lose if the currency wars lead to trade wars
Nouriel Roubini
November 12, 2010

G-20 Pledges to Avoid Devaluations in Push to Defuse Global Trade Tensions

Seeking balance, G-20 chiefs vow cooperation to let markets set currency values
Simon Kennedy, Eunkyung Seo
October 26, 2010

Surprising But True, US Exports Are Growing

Despite China's mounting surplus, the US makes strides in growth with exports
Edward Gresser
October 20, 2010

Jobless America Threatens to Bring Us All Down With It

US refusal to pay taxes increases debt and dangerous global imbalances
Jeremy Warner
October 15, 2010

Reverse Coupling

By building domestic markets, developing nations could revive the global economy
Nayan Chanda
October 11, 2010

Challenges for a Squabbling Europe – Part I

Lack of solidarity and common vision could sink the euro and impede the EU’s progress
Katinka Barysch
September 22, 2010